REVENUE ASSUMPTIONS. Actual Actual Adopted Revised Adopted TOTAL SOURCES BEGINNING FUND BALANCE $

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1 General Government Funds Revenues REVENUE ASSUMPTIONS This section explains and illustrates the estimates for revenue sources included in the General Government funds of the 2009/ Biennial. Key funding sources are described below by category. General Government Funds include the General Fund, Street Operating, Recreation, Debt Service, Strategic Reserve, Equipment Rental, Hotel/Motel Tax, Solid Waste Service and the Accumulated Leave Reserve Funds. GENERAL GOVERNMENT FUNDS Actual Actual Adopted Revised Adopted Adopted TOTAL SOURCES BEGINNING FUND BALANCE $ 9,464,262 $ 9,329,324 $ 6,652,884 $ 7,472,241 $ Property Tax 3,913,797 3,908,792 4,059,670 4,059,670 Sales Tax 1,704,800 1,756,581 1,909,620 2,009,620 Utility Taxes 2,717,942 2,840,706 2,770,135 2,770,135 Gambling Taxes 1,681,266 1,609,682 1,560,000 1,560,000 Other Taxes Licenses & Permits Charges for Services 167, , ,993 5,839, , , ,042 5,365, , , ,105 5,758, , , ,260 5,744,343 Fines & Forfeitures Investment Interest Miscellaneous TOTAL OPERATING REVENUES $ , , , , , , , , , , , ,639 8,930,043 $ 18,641,041 $ 19,126,930 $ 19,289,063 $ Sale of Capital Assets Interfund Transfers 5,262 2,167, ,582,727 10,000 2,287,798 10,000 1,641,331 TOTAL SOURCES $ 30,566,647 $ 29,553,592 $ 28,077,612 $ 28,412,635 $ 6,592,524 $ 5,036,983 3,887,641 3,936,797 1,825,704 1,959,620 3,022,886 3,156,439 1,506,587 1,566, , , , , , ,183 5,838,747 6,026, , , , , , ,208 19,093,899 $ 19,736, ,500 80,750 1,551,797 1,628,778 27,386,720 $ 26,482,932 General Government 2009 Operating Revenue Breakdown Fines & Forefeitures 1% Investment Interest 1% Miscellaneous 3% Property Tax 20% Charges for Services 31% Sales Tax 10% 5% Utility Taxes 16% Licenses & Permits 4% Gambling Taxes 8% Other Taxes 1% 33

2 2009-d Biennial Property Tax Property tax revenue for 2009/2010 is $3,,887,641 and $3,936,797 respectively. This represents 20% of all Government Funds revenues, or 26% of the General Fund revenue property tax revenue is $172,029 less than the amount budgeted in This decrease is due to the voter approved debt levy that was paid off in Since the debt was paid off in 2008 the property tax levy is no longer collected after A one percent levy increase as well as a levy of the city s banked capacity was approved in November The one percent levy increase resulted in estimated $37,772 additional revenue for the city in The capturing of the banked capacity of property taxes totaled $58,493. Even with the one percent increase and levying of the banked capacity, an owner of a $300,000 home will see a net annual decrease of $20 from the property taxes paid in This is due to the payoff of the debt levy, which was about $21 per year on a $300,000 home. The 2009 total property tax levy rate is $1.62 per $1,000 of assessed property value and is comprised of the following: Per $1,000 Assessed Value General Levy $1.27 EMS Levy.35 Total: $1.62 The chart below shows the City s General Property Tax Levy rate history over the past 10 years. General Levy Rate $3.00 $2.50 $2.00 $1.50 $2.29 $2.25 $2.32 $2.35 $2.37 $1.83 $1.80 $1.69 $1.444 $1.27 $1.27 $1.00 $0.50 $ In September 2002 the voters approved a perpetual Emergency Medical Services (EMS) levy of 50 cents per $1,000 of assessed value that took effect for property tax collections beginning in The 50-cent rate has decreased to 35 cents in 2009 due to the increase of property values in the city and the one percent rate increase limitation. The 20-year debt levy for the amount of $2 million was approved by voters in 1988 and was paid off in The $2 million general obligation bonds were used to finance public safety improvements including a new police station, the purchase of two fire trucks and two aid cars, and asbestos removal from city facilities. The overall 2008 property tax levy rate was $1.69 per $1,000 of assessed property value. This did not include levies for the school district, Sno-Isle library district, Snohomish County, Stevens Hospital or the state. When all the taxing jurisdictions are included, the total levy rate was $7.98 per $1,000 of assessed value in The following chart displays the allocation of the total levy rate in 2008 for all taxing districts within the city of Mountlake Terrace. 34

3 2008 Property Tax Rate Distribution State School Fund 24% City of Mountlake Terrace 21% Snohomish County 9% Edmonds School District 40% Stevens Hospital 2% Sno Isle Library 4% Sales Tax Sales tax has been budgeted at $1,825,704 and $1,959,620 in 2009 and 2010 respectively, which represents 10% of the General Government operating revenues or 12% of the General Fund s operating revenues. The budget assumes a 9% decrease from the 2008 revised budget, as sales tax revenues have decreased due to the slowing economy. While the state of Washington passed a Streamlined Sales Tax bill that resulted in some additional tax collections in the last six months of 2008, these revenues have not been enough to offset the slowdown of retail sales in the city. Streamlined sales tax requires all Internet t sales from out-of-state vendors to be taxed at the local sales tax rate to where the goods or services are delivered, and incorporates destination based sales tax where all delivered goods are taxed to where the goods are delivered. The City receives 41% of its sales tax from retail sales, 22% from services, 15% from construction, 13% from wholesale sales and the remaining 9% from transportation, utilities, manufacturing, agriculture and other activities. Utility Taxes The City s utility taxes account for $3,022,886 or 16% of the total General Government Funds 2009 budgeted operating revenues. These revenues are projected to increase by 4% over actual revenues received in 2007, with the exception of City utilities tax which is budgeted at 10% of estimated utility revenues. The following table shows the history and type of utility taxes that the city receives. All of the utility revenues below are collected at a rate of 6%, except the water, sewer, storm water and solid waste, which are collected at 10% Revised 2009 Adopted Utility Tax Type 2006 Actual 2007 Actual Gas $ 260,768 $ 296,667 $ 228,094 $ 308,534 Electricity 644,, , , ,938 Solid Waste 226,, , , ,033 Telephone 839,, , , ,402 Cable 178,, , , ,013 City (Water, Sewer, Strm Wtr) 567,, , , ,966 Total Utility Taxes $2,717,941 $2,840,705 $2,770,135 $3,022,886 $ 320, , , , , ,743 $3,156,439 35

4 Gambling Tax Gambling tax revenues account for $1,506,587 or 8% of the General Government Funds operating revenues in This is 10% of the General Fund s budgeted revenue for The City s gambling tax revenues come from card room, bingo and pull-tab activity. There are currently three mini-casinos within the that pay a 10% gambling tax on net revenues from card games. The table below shows the history of gambling tax revenues and the budget for these revenues in 2009 and Gambling Tax Type 2006 Actual 2007 Actual 2008 Revised 2009 Adopted Punchboards, Pull-tabs $ 229,068 $ 205,352 $ 209,700 $ 200,000 $ 208,000 Bingo, Raffle 56,907 37,750 46,636 30,000 31,200 Card Games 1,395,290 1,366,499 1,303,664 1,276,587 1,327,650 Total Gambling Taxes $1,681,265 $1,609,601 $1,560,000 $1,506,587 $1,566,850 The adopted budget for revenues is $915,767 in 2009 and $945,183 in revenues include state and federal grants, criminal justice program revenues, City Assistance from the state, state Liquor Board profits, PUD Privilege taxes, reimbursement from the Edmonds School District for the School Resource officer, reimbursements of costs from Sno-Isle library, and the City s share of the state s Motor Vehicle fuel tax. Charges for Services Charges for services revenues include user fees for the city s recreation programs, internal charges for vehicles and services, ambulance transport fees, the solid waste administrative fee, plan check and zoning fees and other fees such as passports. There was a $474,176 decrease in Charges for Services from the 2006 and 2007 actual revenues. This is mostly due to the discontinuance of internal transfer fees for engineering work and parks maintenance in Beginning in 2007 engineering labor and materials costs are charged directly to the applicable projects and funds, instead of transferring service fees to the General Fund. The 2009 budget for internal fleet maintenance charges have decreased $202,926 from the 2008 revised budget, due to the implementation of some cost saving measures related to the maintenance and replacement of the City s vehicles. Service 2006 Actual 2007 Actual 2008 Revised 2009 Adopted Recreation Program Fees $2,160,880 $2,187,985 $2,510,182 $2,526,100 $2,624,400 Administrative Overhead Fees (for Admin Services, City Manager, City Council, City Attorney and Property Management Services) 1,466,425 1,508,341 1,476,163 1,644,299 1,686,744 Internal Engineering Services 669, Fleet Management Fund Charges (Gas, Repairs, Replacement Costs) 678, , , , ,605 Ambulance Transport Fees 270, , , , ,000 Solid Waste Admin Fee 151, , , , ,519 Transfers between Recreation and Parks Services 160, Passport Fees 31,988 74,712 50,000 60,000 60,000 Plan Check/Zoning Fees 162, , , , ,392 Other Charges for Service 86,499 80, ,351 89,867 92,650 Total Charges for Service $5,839,184 $5,365,008 $5,744,343 $5,838,747 $6,026,310 36

5 Miscellaneous Revenues ed miscellaneous revenues within the Governmental Funds total $548,808 in 2009 and $576,208 in Most of the $77,831 decrease of 2009 over the revised 2008 budget is attributable to the decrease of $51,000 in lease payments from the Ballinger Golf Course. Miscellaneous revenues include the categories listed below. Description 2006 Actual 2007 Actual 2008 Revised 2009 Adopted Pavilion Concessions $105,816 $111,051 $120,000 $120,200 $120,700 Pavilion Room Rentals 65,942 70,993 66,427 62,000 65,000 Pool Rentals 106,136 92, , , ,000 Other Recreation Program Rentals 59,120 37,279 43,753 38,800 39,900 Golf Course Lease 30,627 84, ,000 84, ,000 Home Monitoring Program 53,030 34,904 75,962 75,000 76,500 Other Rents 12,521 8,808 29,517 8,808 8,808 Narcotics Seizures 52, ,458 15,606 20,000 20,000 Other 21,784 22,188 7,121 15,000 15,300 Total Misc. $506,995 $653,055 $626,639 $548,808 $576,208 Capital Funds Revenues This section explains and illustrates the estimates for revenue sources included in the Capital funds of the 2009/2010 Adopted Biennial. Key funding sources are described below by category. Capital Funds include the Real Estate Excise Tax, Street Construction and the Capital Improvement (CIP) Funds. CAPITAL FUNDS Actual Actual Adopted Revised Adopted Adopted TOTAL SOURCES BEGINNING FUND BALANCE $ 3,834,180 $ 4,815,836 $ 2,504,516 $ 6,188,205 $ 4,607,400 $ 680,387 Real Estate Excise Tax $ 966,611 $ 693,101 $ 655,704 $ 655,704 $ 600,000 $ 621,000 Grants 398, , , ,900 Motor Fuel Vehicle Tax 150, , , , , ,022 Impact Fees , , ,000 Investment Interest 177, , , , , ,740 Other ,777-17,000 17,000 17,000 TOTAL OPERATING REVENUES $ 1,692,768 $ 1,321,585 $ 954,216 $ 1,495,315 $ 1,081,343 $ 2,195,662 GO Bond Proceeds $ - $ - $ - $ - $ - $ 1,500,000 Interfund Transfers 1,327,885 4,701, , ,000 1,650,000 1,005,000 TOTAL SOURCES $ 6,854,833 $ 10,839,081 $ 4,104,743 $ 8,617,520 $ 7,338,743 $ 5,381,049 Real Estate Excise Tax (REET) has been decreasing since the beginning of 2008 as this tax is generated from property sales, which have been decreasing in the City as a result of the recent slowing economy and housing market. Actual Real Estate Excise Taxes received in 2006 (over $960,000) were unusually high due to a large commercial building in the city that sold in State and Federal Grants totaling $860,900 are forecasted and budgeted in the Street Construction Fund to help finance the major street and sidewalk construction projects that are included in the 2009/2010 budget. A portion of the state s motor vehicle tax is credited to the Street Construction Fund and is expected to decrease slightly in 2009 as a result of a continued expected decrease in fuel consumption, which is what the fuel tax is based upon. This tax is set at a fixed rate per gallon by the state. 37

6 In September, 2007 the City adopted development impact fees for both parks and streets on new development. To help pay for growth-related transportation and park projects, state law allows local governments to charge impact fees on development. Revenues from Parks impact fees are budgeted at $170,000 for both 2009 and Transportation or street impact fee revenues are budgeted at $20,000 in 2009 and $260,000 in The includes $1,500,000 in bond proceeds that will be used to finance street and sidewalk construction projects that are included in the 2009/. Also included in the 2009/2010 budget is a transfer of $650,000 and $340,000, respectively, from the Real Estate Excise Tax Fund to the Street Construction Fund. These transfers, as well as the bond proceeds, will be used to finance street and sidewalk construction projects totaling $7.8 million. Utility Funds Revenues This section explains and illustrates the estimates for revenue sources included in the Utility funds of the 2009/2010 Adopted Biennial. Key funding sources are described below by category. Utility Funds include the Storm Water Utility, Sewer Utility, Water Utility and the Water/Sewer Revenue Bond Funds. UTILITY FUNDS Actual Actual Adopted Revised Adopted Adopted TOTAL SOURCES BEGINNING FUND BALANCE $ 7,286,593 $ 6,847,766 $ 2,948,612 $ 6,594,878 $ 4,961,625 $ 3,062,095 $ 6, $ 8, $ 4, $ 79, $ 481, $ 481, Charges for Service 6,104,851 5,887,405 6,552,037 6,542,037 6,977,270 7,386,470 Water Tower Pole Rentals 74,033 68,046 72,165 72,165 75,052 78,054 Investment Interest 267, , , , , ,166 Miscellaneous 7,120 9,710 1,500 11,500 11,500 11,500 TOTAL OPERATING REVENUES $ 6,459,970 $ 6,274,455 $ 6,766,345 $ 6,841,345 $ 7,671,322 $ 8,065,190 PW Trust Fund Loan Proceeds $ - $ 291, $ - $ 83, $ - $ - Loan Proceeds - - 2,000,000 2,000,000 2,500,000 2,100,000 Interfund Transfers 1,716,173 3,301,158 1,252,206 2,763, , ,400 TOTAL SOURCES $ 15,462,736 $ 16,714,579 $ 12,967,163 $ 18,283,289 $ 15,253,847 $ 13,347,685 ed revenues for 2009 and 2010 include $477,000 in federal grants in the Water Utility Fund to help fund major water construction projects. Charges for Service These revenues include charges for water, sewer and storm water services. The City s aging water and sewer mains are in need of replacement, and proper storm water management requires expanding the system and improving programs to improve surface water quality. These projects will be paid for through a combination of rate adjustments and loans. The 2009/ incorporates the rate adjustments for Water and Sewer utilities that were approved in late 2006, and new rates for Storm Water that were approved in September, The utility rate adjustments take effect over a period of six years. The rate adjustments result in an increase to the average residential customer and are displayed in the table following. This table details the rate adjustments for each of the utilities that are necessary to replace the City s aging water and sewer mains. The rate adjustment that was adopted in late 2006 provides for a 30% discount for resident homeowners who are senior citizens with a household income equal to or less than 140% of the federal poverty level. 38

7 Average Monthly Bill Assuming Average Water Consumption for a Residential Customer* Amounts Include Base Rate and Average Consumption Utility Water $17.91 $18.63 $19.56 $20.54 $21.56 $22.64 $23.68 Sewer Storm Water Total $50.58 $52.44 $54.56 $57.04 $59.63 $62.20 $65.35 Net Monthly Increase n/a $1.86 $2.12 $2.48 $2.59 $2.57 $3.15 Percentage Increase n/a 3.7% 4.0% 4.5% 4.5% 4.3% 5.0% *Low-income senior citizens bills are reduced by 30%. Loan Proceeds In addition to the rate adjustments above, the City will be securing loans to finance the replacement of its utilities infrastructure over the next six years. The table below shows the amount of loans that are included in the Adopted 2009/2010 and included in the City s Six Year Financial Forecast. Loan Proceeds Included in Six-Year Forecast to Finance Utility Infrastructure Utility Water $ - $1,000,000 $2,000,000 $1,000,000 $1,000,000 $1,000,000 $ 900,000 Sewer 1,000, , , ,000 1,000,000 1,000,000 Storm Water 1,000,000 1,500,000-1,900, Total $2,000,000 $2,500,000 $2,100,000 $3,600,000 $1,800,000 $2,000,000 $1,900,000 Interfund Transfers The interfund transfers in the 2009/2010 budget include transfers from the three Utility funds to the Water/Sewer Revenue Bond Fund, and represent transfers for payments on outstanding debt. Previous to 2009 there were three Utility Construction Funds; a Water Construction Fund, Sewer Construction Fund and a Storm Water Construction Fund. Interfund transfers were made between the Utility Operating Funds to the Utility Construction Funds to fund construction projects. With the 2009/ budget, and as authorized by an Ordinance passed in 2008, the six funds were merged into three Utility Funds and the interfund transfers are no longer required. 39