City Council - Regular Meeting

All right, folks, we are fresh off one meeting, going to another, so if you could, we'll call this meeting to order, and please stand if you're able for the Pledge of Allegiance.

All right, welcome, everyone. Brie, roll call, please. Mayor King. Present.

Council Member Atlarge-Austin.

Here.

Council Member Waller. Present. Council Member Baskin.

Present.

Council Member Postma.

Present.

Council Member Helley. Present. Council Member Obala.

Present.

Council Member Fisher.

Present.

Mayor King, we have a quorum.

Thank you, Bree. And before us is a 2027 budget discussion, and I'll kick it to Dave to lead us through it. Thank you.

Mayor, members of the council, thank you very much. Jeff and Rebecca, virtual, welcome to the meeting. Members of the staff that are here, people in the audience, thanks for being here. This is an important conversation that begins our process and ultimately will lead to formal action in December when you will adopt a budget and a capital improvement program. This is one in a series of steps, but a very important step. It's important enough where I've put together some prepared remarks to kick it off. And then Emily and I are going to kind of tag team the presentation. And I'm going to start, and she'll jump in, and I'll finish. And there's conversation. I guess the question for you to decide as we go along, should we go through it all? Do we want to take questions as we go? That's entirely up to you and the council. It doesn't matter to us how you want to do that. We've spent, so here I go, have spent a considerable number of hours to get to where we are tonight. I want to thank staff for their patience. I'm sure at times kind of the wonderment of where are we going and what are we doing? And Julie's comment today, which I thought was very interesting about do we know, can we plan on this next year too the same way? And I kindly said, well, it depends on what the new administrator wants to do, Julie. So, you know, you never know. But I'll make an observation about that in a second. Council, I alluded to that. A meeting ago, but I just want you to know because now that I've got to work with him for about two and a half months Your staff are very conscious very very they're conservative people modest with their requests caring committed to do their best in very lean times to a person That's in this room with me that's been on this department a team that's been by my side for a couple months and the people I've got to know as well that work for them and And another thing that I think is really important for you to know is they understand the dynamics upon which they work and pursue their professional chosen career. They understand the political dynamics of the city of Austin and what makes up this community and this culture. And you see that in the requests and the expectations. This isn't an organization that comes in and says, we're going to request this and we're going to get this. This is an organization in the conversations tonight that says, we're going to request this because this is what we want to make our best case for because we know we want to make our best case for that. And this is never even talked about. So I think that's an important consideration. I think it's also important, and it might be kind of stating the obvious, but because we're on record, you know, that the primary main staff, in this particular case the finance director and me as the interim, are different. We're different than the people in the past. Each of us bring different and distinct philosophies, approaches, experiences, and expectations. And I've been doing this sort of budget presentation for decades, but never in a matter where you come join a committee in an interim process, and, oh, by the way, we're in a budget process, and, oh, by the way, you have a relatively new finance director with experienced staff, in some case new staff. Now we need to make a preliminary levy recommendation. Okay, you know, I can handle that, but it's new. I mean, Tom and Craig have been here forever and a long time, had a lot of experience doing this. You know, obviously you have different cast of characters here today that I think it's important to know. And what I'd like to make a case, there's no value judgment placed on that. It's not a right or wrong or good or bad. It's just a statement of fact. And so this context is interesting. And as I was driving down this morning, I was thinking about the most maybe interesting context of making this presentation. And it actually happened at the county board meeting in Scott County very quickly. The sheriff came up to me and the board chair before the meeting and said, an airplane hit the World Trade Tower. And I thought, well, that's no big deal. A little airplane is going to hit a tower once in a while. And so we kind of kept on our business. The meeting hadn't started yet. And he came back up and interrupted and says, no, it's not a little plane. In fact, there's another plane. And so 9-1-1 happened when I was about to make a preliminary levy recommendation, which was a pretty significant deal as it is there. The chair of the board was a minister, so we did a prayer, we took a moment of silence, and then, okay, Dave, here, make your presentation. And it was pretty surreal. In fact, surreal enough that I don't remember any of the presentation at all. And I don't think the county board had any questions after I was done, and we said thank you, and they adjourned the meeting, and you know what happened the rest of the way. Four important considerations.

Dave, is this your way of saying that you have established the bar and are hoping we can get over that for tonight?

I'm saying when I write my book, there's two really odd preliminary levy recommendations I made that night and tonight. Four considerations. This morning we received property value change information from the county. So we were working on our presentation over the weekend and this morning and we got some really good important data. this morning that we couldn't factor in tonight. So on September 8th, we're going to build that into this, and we'll have some additional graphs and charts for you that is going to expand on the information we're going to show tonight. So we got it this morning. We talked to the staff. Didn't have time to put it together. We're reviewing and processing that. It'll help us determine the estimated impact of our recommendation on valuations and on commercial property and non-homestead. We thought we had it tonight. We found out new information. We took it out of the presentation. Three slides came out. this afternoon, and we're going to add them back in on September 8th. We're going to have that information. In fact, the department has met with us at noon today to review the draft, and we made a handful of changes based on the input of the staff you see in front of us, which I'm glad we did that. It was kind of a, hey, we should see what we're going to do before because it's new, and everybody came but Bree because she had some things she had to do at the front counter, and that was really helpful. So thank you to the staff for finishing that. And then two other considerations. One, we're not reviewing or adopting the budget itself tonight, nor are we walking through line items. Yet a significant amount of work toward the budget has happened. Final details, et cetera, will be completed over the next few months. Even though we set a preliminary levy, we can move numbers around within budgets. We can change priorities and those sorts of things as long as we stay within that levy level. And if all goes well, as I said a few moments ago, you'll have a new administrator making a presentation at the T&T hearing. So there you go. How about that? And then finally, we have a series of slides and information to share with you. 26 slides, roughly. We'll go through those at a nice pace. We're not going to get bogged down. Some of them have more bullets we want to talk about. Some are just graphs and pieces of data. Some comparisons with peer cities that we're going to start with. Comparative property tax data with the city, county, school district, and Morrow County. 2027 program priorities and budget. Department summaries, capital highlights, donations, and then ideas for next steps. That's our presentation tonight. A COUPLE OTHER THINGS BEFORE I CLOSE. PHILOSOPHY. THE BUDGET IS A POLICY PROGRAM. THIS IS REALLY IMPORTANT. THIS IS KIND OF A COMMUNICATION TOOL. THE BUDGET IS A POLICY AND A PROGRAM TOOL FOR A CITY. IT REFLECTS THE VALUES AND PRIORITIES OF AN ORGANIZATION, ITS CULTURE AND COMMUNITY. IF YOU WANT TO KNOW WHAT A CITY VALUES, LOOK AT WHERE IT SPENDS ITS MONEY ON AND LOOK AT WHERE IT DOESN'T SPEND ITS MONEY ON. FOR AN EXPERIENCED ADMINISTRATOR LIKE ME, IT'S PRETTY EASY TO DISCOVER, EASY TO FIND OUT. THIS IS AN ACCUMULATION OF DECISIONS AND CULTURE MADE OVER A PERIOD OF YEARS that built on itself to create the organization you are. It wasn't last year or two years or three years. It's been a long period of time that's got us to where we are today. This organization, as you know, operates lean and mean. With little to no redundancy and backup, the classic middle management program and policy roles do not exist in this organization. It's all hands on deck, from my job to everybody in the organization. When one cog in the wheel changes, other cogs are felt. Little or no relief or lowered expectations. And the change in the park staffing and that's impact on time cards and also one decision here impacts lots of other people in the organization. Expectations remain high, and that's just one example. Budgeting is not just about a tax levy or finding ways to cut costs and save money. Rather, it's a time to reflect on your organization, what you can do better, how we can do our job more wisely using taxpayer resources to strengthen the work of the city. And then finally... I believe our job and obligation with the 2027 budget is to invest in areas that will enhance and improve customer service, both internal and external, and serve to make the organization more efficient and effective. I'll just read that for emphasis again. I believe our job and obligation through my role with the 2027 budget is to invest in areas that will enhance and improve our customer service, internal and external, and serve to make the organization more efficient and effective in a reasonable cost effective manner. The organization is not going to grow itself out of its challenges. New money for operations, as this group of staff knows, is not right around the corner. It's not going to come next year. It's probably not going to come next year. There's never going to be enough money. It's happened when I started years ago. It's going to be the case for years to come. This organization, for it to be successful, has to assess, reflect, think, and act its way out of the challenges. To do that, we need the City Council's support and encouragement. I think tonight we're going to show you some examples of how we want to move that forward as part of this conversation. Let's get started. So those are my kind of opening conversations for context. I'm going to just go. You've seen this one before. This is the budget schedule, special work session tonight. Ask as many or as little questions as you want. You can give us direction on what you want us to do on September 8th. Obviously, we're going to have some more information based on preliminary levy idea for its impact on property taxes. The 21st, we'll have a resolution. And then it kind of slows down a little while. It picks up again later this fall with budget adoption at the end of the year. Some considerations for 2027. There's eight of these. There could have been a variety more. We could have had more slides, but there's just a lot of information. We kept it to just these. So the first two meetings and the third and 17th, we talked about the accomplishments and the goals. LGA certified just under $34,000 in new money. We have a slide on that in a minute. Majority the contracts are settled. She's got a couple outstanding remaining. That's a it's a good thing The city's net tax capacity is going to increase we did get that from the county from roughly 20 some million to 22 million We have the exact numbers in a few minutes key personnel changes Administrator finance police chief fire chief. So there's a lot of dynamics going on with that a lot of learning curve opportunities to use opportunities for investments using existing resources those are the fund balances and outside agency requests and then police and fire state aid to be determined that will make a difference for the police and fire budget once we figure that out and get that information sometime later September I think it is. Mayor I'll just go and if anybody has any questions we can keep it. Key resources fund balance policy requires 42 to 48 percent of operating expenses 2025 fund balance we we project it to be roughly 52 percent 2026 although it's too early yet to conclude what it's exactly going to be we anticipate that I'll go slightly to go higher So if you do nothing it could be 52 53 54 it's it's really hard to say why is there of operating fund balance in Minnesota local government because property taxes and state aides are collected mid-year at post May July and the fall and SO YOU HAVE TO RUN A BUSINESS WITH BASICALLY LITTLE OR NO REVENUE OR YOUR BIG REVENUE SOURCES DON'T COME IN UNTIL LATER ON IN THE YEAR. SO STATE AUTO RECOMMENDS YOU HAVE A FUND BALANCE OF ROUGHLY THAT PROPORTION IN ORDER TO PAY YOUR BILLS BEFORE YOUR MONEY STARTS COMING IN. ALL SUCCESSFUL LOCAL GOVERNMENTS HAVE THAT BALANCE LIKE THAT AND IT'S INDICATIVE OF GOOD FISCAL POLICY. WE HAVE A BUILDING FUND BALANCE OF APPROXIMATELY $3.4 MILLION. And one of the things that I think you should know is your departments are tapping into grants and outside resources as best they can all the time. Interesting one observation, and it's probably a little bit out of context here, but it has to do with just, I thought of it this afternoon when I was prepping, is the city has no general obligation debt. You have debt from water bonds and those sorts of things that are paid by revenue, but you have no general obligation debt, which is very unique here. Very unique for an organization. I'm not saying it's good or bad, it's just unique. It's rare to see that. Normally you have some kind of geo-debt for facilities or buildings or those sorts of things. You may elect to do that at some time in the future, but presently you don't have any interest obligations on your debt that are funded by the property tax levy.

Dave, a question for you on that is, I think it's a good thing we don't have debt. I wonder... I mean, should we be looking at something like that? And the reason I ask is I think about like, this is my business lens. So government probably works different, right? But like forever, like at Hormel, we were like, hey, we don't have any debt. We're super conservative. But what you realize is like, if you don't have any debt, you're probably not leveraging the full value of like your financial firepower to drive change in resources. Does it work the same way here? Does debt become like a real slippery slope that starts to constrain your ability to do things long-term?

Mayor, Councilman, it depends on how much you have in your obligations, your property tax base, a variety of different factors. I will, as you said that I thought of this, it is highly likely you will have some geo debt the next few years because you're going to want to do something with City Hall, your law enforcement center, and your fire building. That's my prediction, that the city hall of some usage, law enforcement center of some usage separate from Mauer County and some upgrades, it will likely require you to do that if you don't do something we're going to ask you to do tonight, begin tonight. So we're going to talk about that in a few minutes.

Can I just jump in here? Must be seven times now I've heard Craig Popenhagen present our audit. And every time he says, compared to a city your size, you spend way more in parks and recs and library. And then that dollar figure that Austin spends more than other cities our size is almost always what other cities are spending on their debt. So when we're talking about debt, I just, I mean, that's my red flag of like something's going to go. Once we're paying debt service, something else is going to go or we better have a good plan.

And we're working on that plan. We're going to share with you tonight. But here's another thing. Cities and counties and locals were borrowing money at 1.5%, 2%. And now it's higher, right? So if you look back now, you weren't thinking about doing it, so it's not an opportunity lost for Austin because you weren't planning on it. But if you were thinking about doing it and didn't, and you could have borrowed money at 1.5% with the bond rating that you have, yeah, it might have been an opportunity lost. But because you weren't, it's not to worry about now. But if it's 3% or 4% or 5%, well, that interest cost is going to be a lot higher.

So it's not something we should necessarily be afraid of, but it's not like we need a higher leverage ratio in order to better find out. No, don't be afraid of it. Keep it on the table.

Next one.

So comparison perspective, we did a little bit of comparison with some of our neighbors. Hang on before you go. The city of Albert Lee. I was thinking about this over the weekend. I'm a resident of Eagan, and I make a value judgment when I pay my taxes at Eagan whether I think it's worth it or not. So you as residents of the city of Austin make that same value judgment. You make it based on what? My ability to pay, my perception of the services I get, and my interest in paying it. And interest in ability is different. I can't afford it, or I can. I don't want to pay it because I don't believe in local government or government like that. And the fact that I don't think I'm getting good bang for my buck. So when someone says your taxes are too high, they may be too high to that individual because they're valuing that decision based on those three criteria. What we can do is suggest to you when someone says, hey, my taxes are too high, is we can say compared to what? Right? Compared to what? So it's a limited subset. We could do a lot more analysis. It doesn't make sense. So my conclusion is in these six slides that Austin is competitive. It's taxes. It's city tax. It's consistent. It's not out of sync, and it's comparable to your peers. And I think that's a material fact and a story to tell when you talk about the city of Austin's taxes, not our county school district, the total tax bill, but the city of Austin's.

I think that's a really good point, Dave. And we've had some slides like this, and I'm looking forward to seeing them. One nugget that's just more for probably you to think about and noodle over is in Eagan, you're probably comparing yourself to living in Grove Heights or Bloomington or the surrounding suburbs. In Austin and some of those cities you listed, our competition is often places that are not incorporated. And so they can, you know, access all of our benefits and services. They can go to the library and their Exeter and all these places, but they can remove, because I've seen on your slide, it's a third or more of their tax bill by finding a place that's just outside the city limits. So that's one of the things that we battle in a more rural area.

When I was in Prior Lake, that was the same with the townships surrounding Prior Lake, same with the townships in Belle Plaine. Township tax was $100, the city tax was $1,000, and they basically used everything. So we had this kind of rub with the competition and paying and all that, so I respect that.

Totally understand.

All right, first one, just... City tax rate, it's the total dollars levied divided by the total tax capacity. It's a math formula. You can just see the three. Albert Lee, by the way, is the smallest city in population, about 18.3. The other ones are within a few hundred or $1,000 variable. It's slightly smaller, but the other ones are the same. The average is 53.71. So just looking at that slide, the city of Austin is consistent and competitive with our neighbors, saying we're doing the same sorts of things as our neighbors are doing. If we weren't, we'd be way higher. We'd be way lower.

Next one.

General fund expenditures per capita. There's your population factor in there. The average is one. We're right at the average. So our general fund expenditures are right at the average of our comparable communities. A little higher, a little lower. Right in the middle. Next one, local government aid. Slightly under $10 when it only gets $12. The question, I think Stephen had the question or someone had the question, how is it determined? Emily was going to look it up. I actually Googled the formula and printed the two pages. So if you want to talk about how it's determined, it's based on need and it's based on people that are a lot smarter than I am to come up with that or legislators to come.

I took a look at this because when the new aid got, I just kind of scrolled through, and Winona's the highest, actually. Winona's getting the highest amount of government aid from the state, and Austin was either two or three.

It's based on need, and there's formulas, different housing, population size. That's a good thing. I mean, it's a good thing in the extent of money. It's also a representative of your community and the makeup of your community, and so it's indicative of your community dynamics. Next one, city property tax and a median valued home. Median is from 1 to 10, the fifth number five. It's not average because you could have homes that are really, really high and really, really low. It skews the average, so this is median. Just $670. Average is just about $1,000. Again, competitive, consistent, in sync, not out of line.

What is the median home? Do you know what the valuation is on that median home?

I don't know. I had it in another slide, but we can get that. We'll get that for you. That'd be great. Thanks. It actually was, you don't?

If I remember off the top of my head, it was about one, I want to say in the 180 range, maybe. Something like that.

That sounds right.

Does that sound about right?

It used to be 100 when I first started. I would say 180s. Yeah, it's in the ballpark anyway. Thanks.

Yep. And if we don't know an answer to a question, we'll get it from No Habit Linux. And then the next three slides, then, are a representation of 2026 payable. So go to the... Did we lose our connection? Oh, there we go. So we have three. We have homestead, non-homestead, and commercial. Homestead taxes, county, city, school. School also has the voter-approved property tax levy added to it. Those are all in addition to their general levy. The watershed district and the HRA. There's your four-sample, $100,000, $225,000, $300,000. So to lower your question, so it's 668, so if 100 to 225, so it's going to be around in that 175, 180 range, because that would have been 668 for the dollars. And you can see how that's apportioned, roughly what is paid per value of a homestead. The next one is non-homestead, which is obviously rental or other types of residential property that's not homesteaded. You can see the difference in the costs and changes in how that increases. COUNTIES. WE'RE ALL. AND THEN COMMERCIAL. AND WE WERE WORKING ON THIS AND I THINK JASON SUGGESTED A MEETING OR TWO AGO WITH ME, HEY, MAKE SURE YOU INCLUDE SOME COMMERCIAL REPRESENTATIONS IN THERE. SO WE DID THAT. WE JUST PICKED THREE VALUES. WE COULD HAVE PICKED SOME OTHER VALUES KNOWING MOST OF THE BUSINESSES IN AUSTIN ARE SMALL BUSINESSES AND THAT MIGHT FIT THEIR VALUE RANGE. And this is payable 2026. Now the school district and the county are all working on their preliminary levies. We can't represent total payable in 2027. We can represent the payable 2027 with our preliminary levy recommendation and what it would mean for these type of values of homes at the next meeting. And then the property tax rate. And 50.54 was the rate that we showed in comparison with those other cities a few slides ago. The county, the school, and it makes up a total property tax bill.

So I'm just going to ask the stupid question. What does this mean, property tax rate?

Yeah, I have the definition. I don't really know what it means. I mean, I could try to come up and sound smart, but I can note for the question and we'll come back. Yeah, I don't know. I mean, I'm honest enough and forthright enough to stand before you and not try to make up an answer. We'll get it.

Thank you.

Well, I think it's, Dave, I appreciate you guys putting this together because it's helpful context, right? Because we're talking, obviously, the city aspect of this, and that's most humane to where we're at. I think, you know, from a taxpayer standpoint, that's certainly the pain point that people start to feel is it's like this and, and, and, and then you throw on the inflation and things like that. And so, I mean, having kind of read through, I think it's a fairly reasonable statement. conversation that we're having tonight I appreciate kind of the work that we've done but I think that drives some of the perception of it plus obviously if the local government aid has been relatively flat the last several years but turns out stuff costs more just leads to the overall kind of feeling of well by taxpayers yeah please of course it does

And just so I don't say city, county, or school, one of the three or two of the three could do 0% levy, and the other one could do a lot, and the taxes are going to go up when you get the phone call and say, why are my city taxes going up? All three could go high, all three could go low, and they're doing the best they can in the county and school to do what we're doing. In fact, a week or two ago, I emailed Dr. Page and Matt, and I said, where are you guys at? They said, we're not there yet. I go, where are you at? I go, we're not there yet either. I'm not going to tell you, but I'm going to give you my number here. So the next slide, and this is, I said to the team today about 1130, I said, this to me is probably the most important slide that I have. You know, there's a lot of data, and Emily's going to come up in a minute, and she's going to show you some numbers that make up the foundation of where we're going. But this is the priorities we want to fund in 2027. And I do want to talk about these at a nice pace. Maintain operations at a lean level. There's no FTE requests in this budget. That doesn't come with some angst and some disappointment from people who want to add to their team, to offset some of the things that are going on. But one person requested it. Formally requested it others informally would desired it, but we didn't include any in because I thought if I could one How do I look the others and? Say no to them But it comes with a cost you know comes with morale and stress and pressures and and Local government staff that I've learned over the years are sometimes your own worst enemy because we want to do the job so well that we figure out a way to get it done at costs to some of our personal life, some of our time, some of our health, and all those sorts of things, because we're so proud of what we do and we're so happy with what we do, and it's hard to say no because they wanted to get it done. Yet in private and confidential moments, I tell you, it's difficult. It's difficult, but that's likely true in many industries and many places. Second, strategic use of fund balance, and that's really the philosophical change maybe from prior years to today is we have the resources available to us, and we can strategically use those, the general fund and the building fund, and still remain strong financially and accomplish some objectives that have been in the CIP or desire to be achieved that we didn't do before.

And I think those are important.

Recapture the street construction levy. We're going to show you that slide in a few minutes before we're done where Stephen talked about it, I think, at a meeting a couple meetings ago where you're setting aside money. to do your street projects and you're not bonding for them because you have capital to do it. You've done that for a number of years. It was at X. It dropped to 140. We're going to actually raise it back to 175. And you're going to see a slide that suggests that to support that the projects are going to continue to increase in cost, we want to add some additional dollars to that beginning next year. Create a supervisor development curriculum. We have roughly 30 supervisors in the organization and And we need to invest in our supervisors. They're the frontline staff of this organization. They're the ones who drive the ground. They're the ones who face the most pressure from management and the most pressure from their staff. They have a lot of new supervisors, experienced supervisors. We can easily invest $15,000 or $20,000 to get a curriculum started that's going to invest in our people to support them and help them do a good job. I think that's so important. And frankly, I didn't tell this to you, Stephen, but it just came to me after our meeting the other day. It just dawned on me that we've got to start doing that. So credit to you and your team for stimulating that idea. And here's the next one is the same model that we're doing with street reconstruction. This goes back to the question about debt set aside. And I'll give you the example that we used in Scott County. So Scott County's jail is old and dilapidated, but During the era when that was being built in the early 2000s, other counties, Washington County commissioners turned over. There was a lot of angst about jails. Who wants to spend millions of dollars to house prisoners? Nobody does, right? Hugely important state-mandated program, state pressure. And we finally said to our county board, let's just start setting aside money for five years, levy money, put it in a cash fund, and then when we issue our bonds finally to do it, the property tax is going to go like that. And they did it. And it worked, and everyone voted for every particular aspect of that project, and the taxpayers didn't even know. I mean, they knew it happened, but they didn't have any impact. So everybody's worst is a $50 million bond issue or whatever, your taxes are going to spike. So if you start investing, I'd like to recommend that the council initiate a city facility set-aside levy. with $100,000 to kick it off in 2027. And if you do $100,000 or whatever amount you do over a period of three or four years, when you do something in this building, you do something with these two gentlemen, you can issue bonds or something like that without any issue of raising the levy. I've just got to work with a financial advisor. You've got to figure all that out at the right time. But that's the way to do it. That's the plan you need to do. in order to not spike your levy and have outrage when it comes to a bond issue and increase in taxes. You're doing it for the street project very successfully. Why can't you model that for your city facilities that are going to need some work? Strengthen and enhance public safety. I've learned one thing about your new chief is he's persistent and he's got a lot of ideas and he wants to do some stuff and I support him and I support the fire chief on what they want to do with uh, with, um, body cameras and with encrypted radios. And I think we can do that using fund balance because we have the resources there and not use property tax levy.

And I think we should do that.

And then here's a really important one. And this is kind of the catchall that's going to go past Dave, right? That we want to set ourselves up. So if we have an existing levy that's been used in the past for, um, for settlements, insurance increases in settlements that gets distributed, I credit Tom and everybody else at the council for setting aside that amount for that levy. Well, most of the settlements have been hacked, so we can use some of that levy base that already exists. It's not new levy, and we're not going to target money for these necessarily, but that levy base is available for the council, the administration, and staff in 2027 for stuff like space. We're not going to remodel City Hall with that levy base, but there's some things that have to happen in here that are going to need some resources to do in the short term, I believe. Technology, it's vastly needed more, better here. That's the efficiency side of things. We're going to do our assessment. Michael and I are meeting tomorrow. Hopefully we can get that completed this fall. And the council has to, I recommend the council set aside some, at least in their mind, some of that levy base for hardware, software, manpower, person power to support technology. It just, it goes back to what I closed with a few minutes ago that we can't grow ourselves out of our challenges. We have to reflect, think, and act. And reflect, think, and act means we have to invest in technology to support efficiency and effective improvements to take the pressure off the staff who are asked to do more with no more people and greater pressures. So we have to give them the tools. How do people determine a culture and a place? Sowering benefits is not even at the top. It's their relationship with their supervisor, i.e. supervisor development, the tools they have to do their job, and the support they get to do the job. Well, let's train them, let's support them, and give them the tools to do their job. And this is a message for that. And then strategic planning, I hope you get back to finishing the job that you started. And so in that levy base, there's flexibility for you to apply some resources to do something that you might want to do as an outgrowth of your strategic planning process sometime down the line. 2020's budget priorities, some things very specific in there as part of our levy, and some things targeted potentially that you might want to tap into based on some things that are going to happen with reports. and space planning in the next months ahead. Turn it over to you.

All right. So we will dive right into the preliminary numbers that we have come up with. Again, like Dave mentioned, these are our first round of budget numbers. There are some areas that we will need to refine over the next couple of months. There are some unknowns that we'll still need to plug in. But overall, staff has worked very, very hard to get to where we're at. And this is my first budget process, obviously, with the city of Austin, not my first budget process with the city in general. And I will say this is probably the leanest I have ever seen departments come in with their requests. Everything is very reasonable. Nobody came in with any wild ideas. It's all very streamlined. So fiscal responsibility is definitely at the forefront in this process. Again, we'll go through the numbers. They're subject to change. We do have, like I said, a few areas that we need to address in the upcoming months. But overall, I think everyone will be pretty pleased with what we have come up with as far as staff's recommendation. moving forward the next couple weeks. I won't go line by line and read numbers. I think everybody can get a pretty good idea based on the slide what we are looking at. Number that everyone is most concerned about is the levy increase. This number is an area that Dave and I have gone over a couple times, made sure that we are fully comfortable with this. I know staff is probably a little nervous with our proposal, but we have some pretty good ideas, like Dave mentioned, as far as using some existing resources that we have. So overall, this increase is pretty minimal considering what our overall budget is. Again, very fiscally responsible. No major increases outside of personnel, which we'll dive into that closer in a few slides. Like Dave mentioned also, if you have questions, if you want clarification on anything, just stop me and we can go over as needed. So this first slide is just a general overview of the expenditures as we discussed today during our meeting with directors. Personnel is our number one expense because we are in the service industry. Our goal is to serve the community and the only way to do that is with our people. So as with other cities and we kind of We're talking about maybe at some point coming up with a graphic to show what other cities comparable to us look like as far as their personnel budgets. Just kind of a rough run through. Most cities look at anywhere from 70, 75% in this area for personnel. So we are, like Dave mentioned also, we are very lean in the personnel area. Again, subject to change based on final numbers for insurance. But overall, this is a pretty good number to be at, and we are coming in a little bit lower than some of the surrounding areas as far as what we look at. when it comes to our personnel expenses. Again, not going to go line by line, but you can see where the majority of our other expenses are. I grouped these as best I could without getting into a whole lot of detail. Each department has line items in these areas listed. This is all encompassing. This includes every department within the general fund and the levy. SO I WON'T GET INTO SPECIFICS JUST NOW, BUT THESE ARE PRELIMINARY NUMBERS THAT ARE MAKING UP OUR 7.5 LEVY REQUEST. 2027 PROPOSED REVENUES, AGAIN, THAT IS A BIG CHUNK OF THAT IS GOING TO BE OUR LGA AND OTHER INTERGOVERNMENT FUNDING DEPARTMENT REVENUES. THAT IS A PRETTY BIG CHUNK THAT ACTUALLY MAKES UP All of our fees for services, that includes parks and rec, police department, public works, any department that collects revenue that is outside of our intergovernment taxes, interests, those things, this is what comprises this total. And then interest on our investments, that also definitely helps us out. We have a very robust investment plan. Our portfolio is really good, so you can see the returns on that. And the next two slides are going to compare 2026 adopted budget to what we are currently proposing for 2027. Again, I won't go into the specifics. I think everybody can see those. But as you can see, you know, right away, the biggest increase is going to be personnel, and everything else has stayed pretty close, if not the same, from 2026 to 2027.

Emily, on this one, I guess just in general, as I think about this, like, do we know, like, if we did nothing, like, just based on the contracts, the, like, hey, we're going to keep status quo, the same number of people, just based on contracts for police and fire and public works that we've approved, health care, do we know what levy increase level that is?

That is pretty much what we are proposing, with the exception of, you know, $100,000 THOUSAND OFF THE TOP OF MY NAME. THE DEPARTMENTS HAVE DONE VERY, VERY WELL AT COMING IN WITH VERY STREAMLINED BUDGETS. MOST OF THEM, THE ONLY INCREASE WE DID SEE WAS IN PERSONNEL. SOME OF THEM DROPPED IN CERTAIN AREAS WHERE THEY FELT LIKE THERE WAS SOME GIVE. BUT FOR THE MOST PART, AND DAVE, IF YOU WANT TO JUMP IN, with anything to add go for it but the you know you'll see as we move into the capital projects that's where we're going to tap into the other resources to help kind of buy down this levy and get us those one-time items that we need or one-time purchases that you know if we were to just put it in the levy would be you know we'd be looking at a much much higher levy so So yeah, long story short, to answer your question, what we are proposing is really just the personnel increases with a few minor things here and there.

I think that's helpful as we think about the public framing and the public context of it. It's not like we're going out and hiring 5,000 people. It's the, okay, well, do you want us to fire two police officers? Nope, probably not. Do you want a firefighter that shows up at your house? Probably. Right.

And like what we had discussed earlier today, you know, being here to serve the citizens and the community, you've got to have the manpower to do that. So that's where we're investing the majority of this increase. And revenues, how they compare to 2026, very similar. We didn't really see a whole lot of changes. You know, what little in LGA additional that we're planning to receive in 2027 helps, you know, and every little bit helps. So that is reflected in this slide just to kind of show where those breakdowns fall.

Can I get a little context as to what the utilities contribution is?

And that is one that I'm not sure if I can speak clearly on. And I don't know, Stephen, if you know.

Yeah, like what is the $1.6 million? Is it literally they just give us a check because they operate here? Okay, so it's pilot basically, like a pilot. Pay in lieu of taxes? Yep, pay in lieu of taxes. Does that number ever change, or is it just set every, you know, the same number?

I remember asking that to Mr. Dankert and Clark before they left, and the comment was it was recently reviewed. Maybe when I say recently, maybe it was, I don't know a date, but they felt comfortable with where the number is currently. That's all I can say as to that.

Okay. Is that Tom the finance director or Tom the utilities director?

What I recall they might have said was the last time it was reviewed was when utilities built their new building out there.

So that's been 10 years now.

That's an accurate statement. That's what I recall.

Okay. That might be worth looking at, revisiting.

Thank you, Stephen. Didn't mean to put you on the spot there. Okay, and then this is just a little bit further breakdown into the general fund. Looks pretty comparable to other cities as well. Public safety is usually your biggest area, and you see that in this chart. Overall, pretty standard. I won't dive into the numbers. I think everybody has a pretty good feel for that.

Just a handful of additional slides. You've seen the picture of that slide before in August 3rd and August 17th, but you didn't see what was on the far right column. So that's new. My conclusion, and I think Emily and I agree, both new to the City of Austin, the City of Austin is a team player in this community with your contributions. That's a lot of contributions to civic organizations. A couple of them, Human Rights Commission won, and I think the High Water Music Series aren't necessarily non-profits, but they fit into this particular category, so the title could be qualified a little bit differently. Impact Austin had a $70,000 request. We had a meeting with them, and we recommended $40,000 for that. Austin CVB, we have a $4,000 recommendation for that. That one is a new one on here that came in after we received a letter from the Coalition of Greater Minnesota Cities. They went 58. It's going to be roughly 65.7, so that one went up. Otherwise, by and large, the leagues is still an estimate. We won't know that until later this fall. Mayor, help us there, would you please? I'll do it. Yeah, and so it's 250, that's 2.5% of a levy. You know, if levy's roughly $100,000 roughly, that's two and a half. That's a great contribution. To the extent that we can maximize the value of this as opposed to just sending them a check and saying thank you, is we should. To tell our story that this city council and this organization invests in all the important things that make up the culture of the community. That's what these are, the culture of your community. And you do that with the whitewater contribution and with the other things that you're considering. So I think it's important to identify that and to call that out. $253,000 is a significant investment in your community. The next one, and this is kind of Jason's question a little bit, but if we wouldn't recommend using fund balance, then that slide that Emily showed would have been 18%.

Just turning the calendar.

Yeah, just roughly 18%, if we wanted to do what we want to do. And if we want to do what we want, or we would sit here in front of you and have, literally, we'd have Troy come up and try to argue for his alert system compared to Jason's this or Stephen's that. The last year. No, that's not the way to do it.

We still get a meme of the mayor this year, though, because I kind of missed that.

Yeah, right?

I'm sure it'll show up.

Roughly $1 million in use of existing fund balance that continues to maintain appropriate levels of fund balance for the city of Boston. We would not recommend something that would do that. These are one-time significant investments that have been asked for that either have to be paid for by the levy. Some grants sought out, and some of the departments can talk about specifics if you want.

Dave, can I ask a question on that? Is this a sustainable approach or are we setting ourselves up for a shortfall in the future or is this a savvy strategic way to think about it?

It's an insightful question, and it really depends, Jason, on what the requests are for 28, 29, and 30. And those are going to come this fall because we haven't started talking about 28, 29. So we don't know what we don't know yet in terms of do we need to use fund balance or not. These are ones that have been on the list for a while or desired for a while that we've just not decided to fund because we're going to do them out of the levy. And now that we can do them this way, these go away. There are probably going to be other things that come up, but I don't think to the $201 million. I just don't.

The one that has concern for me, I had a list of questions since this is here. Those who have been on the council well know I'm very supportive of the body cameras. You know, when I got on council like six years ago, that was the thing I was kind of pushing for. I do know after talking with our new police chief, we had a great chat at the coffee house a while back. It's going to be kind of a subscription model. And so I'm concerned about taking fund balance, because that just means we're pushing the levy increase to next year. At some point, we're going to have to, if it's an annual expense, account for that out of the levy for those body cameras.

For the operational expense, but not for the equipment. This is equipment we're buying. Okay.

Don't we have to have a subscription for the software data part of it?

I mean, overall, yes. You ultimately have to have a subscription, which we can decide over five or ten years. Like I said, my biggest thing with where we're at for the 80 right now is to match a grant that we're hopefully going to get. I just checked today and they don't award those until either September or October. So we won't know for a few months still on that. But in the end, it's kind of all into one. You're talking about the data, you're talking about the equipment, you're talking about the systems, the evidence storage softwares that go along with it. Pretty much everything's all encompassed in that. So it will need to be a subscription-based.

So is there a hardware upfront cost? Because I think my understanding – I understand you're new, so you might dig into it. But, like, for instance, my organization went from buying copiers every five or ten years and having to replace them to we just pay a contract every year, and every three years the company brings us a new copier. It's the same cost. You know, every year the contract goes up a little bit. And I suspect that these cameras are the same way, where we just get new ones every couple of years, but there's not necessarily an upfront hardware cost when you do that five or ten year subscription.

Correct. This would be that you're paying whatever is agreed upon every year. The nice thing with some of the companies that I've talked to is that number can change in between the years. For example, one first year is $80,000, next year is $100,000, but the total in the end is still going to be the total in the end. So if it's 1.2, we have to hit 1.2 at some point in 10 years. If we want to do 200 one year and 100 the next, fine. They don't care. But the end number is not going to change.

So this isn't really an appropriate fund balance purchase. I'm not sure it is. It's not $80,000 this year and then $10,000, $10,000, $10,000. It's $80,000 and then at least $80,000 or maybe more in year 2, 3, 4, 5.

Probably. You easily have $80,000. You don't have to do fund balance, so I'm not going to. $80,000 is easily paid for out of fund balance. But it's also something you could levy for next year.

Right. Well, that's what I'm saying. We would. At some point, the levy is going to have to pick it up, or we're just going to keep drawing down the fund balance just on body cameras. So, I mean, if it's just like the levy has to pay for two new cars for the police department every single year, so I would never want to take that because we just keep buying two cars every year, I would treat the cameras kind of the same way. So I'm just throwing that out there that if there's some other things that could come out of fund balance instead to kind of get those cameras out of the levy because it's going to be there the year after and the year after and the year after, that's how I'd like to approach that.

Yeah, I would agree. I think we've got to be real strict about using the fund balance on truly one-time expenses.

I mean, I don't know. I mean, we've got to go back and look. I mean, there's a variety of different CIP things, but if we can't, then it's going to go up 80%, so it would be 8.8%.

Yeah.

Or something else would change.

Or something else could flip. that's currently levy supported, you know, even if it was a different department. We can move the numbers around. It's more I just want to have the levy set up next year so that a recurring cost doesn't get thrown on there. I respect that.

And this is all real time. I mean, you just got some of this information this weekend. And so we've been thinking about using fund balance for the last 45 days.

Yeah, you know the whole scary thing that we all think social media is like eavesdropping on us. After we had the meeting and we talked about a specific company and the cool technology, Literally, I had a CBS Facebook thing that showed me an officer pull the gentleman over who spoke Mandarin, and the officer pushes a button on her camera, and all of a sudden it's translating in Mandarin to him as to why she pulled him over. And I was like, man, that's like the best advertisement ever. I think the chief can make a case that body cameras are vital.

I think staff can make a recommendation on how to pay for it and how to fund it. If you agree with that, then direct us accordingly. If you don't, say, no, you don't want to do body cameras for whatever reason, and then we'll pull it out.

I think it's time to do cameras. I just want to make sure we're doing it smart and that we don't end up with the situation where we'd really like to add an FTE, but we can't because we've already promised those dollars to not do cameras.

I think the liability is more expensive than the purchase of them at this point.

I think they make a ton of sense. I'll give you my perspective on it. Philosophically, I like the idea of only using fund balance for one-time things at the same time. I do think we tend to have a fund balance every year. I'm okay with us looking at it, making an assumption that we do, and if this is a strategic use of it, and maybe we make a different decision with a different council in 27, talking about a 28 budget in terms of where it comes from, but I think for the facts that, my perspective, I respect either one, I think for the facts of where we're at right now, I don't have a problem taking it out of fund balance, and honestly, we need to get going on it for our police force and for our communities, so supportive of it and open to where do we think this is the right spot to come.

Your fund balance is strong and your operating costs are weak. Your fund balance is strong, your operating costs in this organization are light. So that's what we're trying to do is capitalize on those resources that have already been taxed to the citizens that can be put to use for public safety purposes. That's the point. So here's the CIP. So move to the senior center roof. Stephen's done an analysis of that. It's been in the CIP. That's a building fund. It's a roof, right? And we have sufficient resource. Otherwise, it'd be two and a half percent of the levy. Fund balance for encrypted radios, one time, that's both police and fire. And the police are going to give some to the fire. So you've got a partnership going on with law enforcement and Public and fire there, that's pretty cool. We'll take a look at the dash camera number. Library, two requests have been in the CIP for a while. Both of them are building related. There's no reason to do a new levy for those. Staff workstations and work area have been how many years? 30 years that they've had the same. So I would suggest to you that that's appropriate use of the building fund. And then the meeting room and programming furniture update. If you have any questions, Julie can talk about that. Radio's station alert system. Troy and I talked about that with Emily today. That's important for the fire department. That's a building equipment, and then you have some other things from the nature center.

Can you remind me, how do we get money in the building fund? I'm assuming it's a chunk from our levy that gets set aside every year. If so, how much is that chunk? Yeah, so I got a piece of paper on that.

I love it. I had that same question, and it doesn't 100% answer. The building fund of the city, this is from page 66 of last year's CIP. I was trying to figure it out myself. The building fund of the city of Austin is supported by the investment earnings of the city's other funds. Investment earnings. The building fund is guaranteed a minimum of $450,000 unless interest earnings fall, which is predicted for the next few years, but I think that's changed, right? For whatever the council deems appropriate, but generally has been allocated to construction projects that benefit the community. To me, I thought The ones that we're recommending benefit the community. Some allocations have been made on a continual basis, such as the debt service needs to pay off the bonds for the Austin Library. I don't think we have Austin Library debt service anymore. Do we? So that sentence needed to come out. It just wasn't updated. Other allocations are approved by the council through the normal resolution process. The building fund is reviewed on a needed basis and adjustments are then made. As I was developing this over the last couple weeks, I think it would be really important for the council to spend time talking about the building fund, a policy for the building fund this fall. Here's the building fund we've had from the last five years. Here's where we predict it to be in the next five years. What's the dollar amount? How does the money go in there? What do we want to do this long term? You can use some of that money for remodels and that, but it's not levy money. It's cash spent gone. So that's not something you're going to use to pay off bonds. So I think the council would be wise to do a deeper dive into the building fund and learn a little bit more about its history, its purpose, its use. And so as I read this and we've talked, I think our recommendations fit that for 2027. And then there's one that's missing, Emily. So we have the, see the band shell and pickleball? Jason's here, he can talk about that. Those were two that we talked about fund balance today. Pickleball, you talked about the council actually talking about using fund balance last year. You want to explain that?

Yeah, so last year when the council allocated funds, matching funds to go towards the construction of Pickleball, the funding was to come out of building our fund balance. It was $150,000. The total project cost was about $500,000. At the time, just before councils, we have the money. or we can build eight courts and come back next year, meaning 2027, to finalize things like shade and ventures and things like that. And council's pleasure was to build eight courts with the thought that we'll never build eight courts for that amount of money ever again. And so council asked us to come back in 2027 for additional money. The cost estimate we have for that is 55,000. I think it's just missing from this slide. for the pickleball upgrades, so benches, tables, signage, shelter, things like that.

Is there any talk of having some of that money also be privately raised by the pickleball folks through, you know, because I know they've been raising funds and whatnot.

So there is. Right now, in fact, we have a meeting Wednesday morning with the pickleball group, the MAPA. I know they're looking at, they're already purchasing some signage that will be installed next year and They're looking at possible windscreens and some other things. And then keep in mind, one of the informal agreements with the local pickball group is to set aside a maintenance fund of $10,000. We told them, let's not worry about that right now. Use all of your funds to build these courts. But then at some point, we'll have that $10,000 in maintenance funds if you have to replace nets or anything like that. We are talking about They are continuing their fundraising efforts, and we are talking about things like some of the benches, certainly the windbreaks around the exterior of the backseat, and some other things. We're going to really narrow it down when to do the actual stuff.

Yeah, if we could get a price list on some of that stuff, that would be great.

Two more on our end, and Stephen's here. He can address this as your... you're set aside that's allowed you to do these rodent projects without doing geo-bonds or geo-assessment bonds. Two things are important to note within the existing levy base that we have, not new levy, is in... Tell me, Stephen, what year was it?

2026, year 2015. We're proposing to get that back up to 175 140 and then in addition to that so getting that back up to 175 will help us to maintain about a 65 or 70 year rotation on our street reconstruction and then also as we see costs continuing to increase year after year in reconstruction the goal is that it would have been at 175 there for three straight years so instead of Getting it at a number and having it locked in there for multiple years, as you can see, kind of happens. The goal would be to make just smaller incremental increases. So we're proposing 185 for 2027 to stay caught up with inflationary cost increases on materials and street reconstruction to be able to stay at that 65 to 70 year rotation on our street reconstruction program.

Basically getting hold and then adding 10.

I think that's a good approach to it. I mean, that's kind of one of those things. I know we took some of it out last year when we were trying to get to the right number, but I mean, I'll just speak for myself. That's something that as we, I've spent a lot of time thinking about over the last 12 months, as you drive around our streets, you realize we've got a big job in front of us anyway. You know, we've got a lot of 50, 60, 70 year old streets that, I don't know that we can afford to turn it into a 90-year cycle for some of these things. And so it feels like the cost versus the long-term benefit is pretty well outweighed. So I appreciate that we brought that back in.

So, Stephen, should one of these 226 budget squares probably year two, that should be a lower number, right?

Yeah, the 2026 one should be 140 instead of 175 in the 2026 column. Okay.

No chance that some sort of street life prolonging technology is around the corner. We're going to suddenly be able to get 90 or 100 years. Are you? Okay.

Please patent that for the city. We could use some... Stephen's retirement plan.

The next steps, further questions and conversation this evening. We've taken some notes. You've raised some questions. We've got to do some Our research on the county's information today will allow us to take, we can do a range too. We can do other percentages if you want based on the anticipated growth in home value. So let me explain. So we had graphs that shed tax increase on $100,000, $200,000, $300,000, $400,000 in commercial value, $100,000 home. With this presentation, they actually were basically flat or went down a little bit. Pretty excited about that, right? Well, it's too good to be true because home values don't stay the same. Home values go up. So if you have a $100,000 home, it's going to go up to $107,000, $108,000. Well, that value then impacts what the percent is. So there will be an increase. It will not be flat or low. There will be an increase in city taxes based on that levy. We could do some ranges for you if you want. It's pretty easy to do. So you can get a sense, a real feel for what the dollars are with that levy versus just the percent. So direction, plan discussion. I'm going to host some city staff budget meetings. So we want to be open and transparent. So we haven't got any of that figured out yet. But once you adopt the plan or levy, then we'll invite staff in and we'll talk about the budget and priorities and what we're looking at and stuff like that. And then just open for conversation. Consider hosting some community and civic budget engagements. Not public hearings, not council meetings, you know, hearings or those sorts of things, but this would be maybe staff generated an invitation around town, small group, medium-sized group, just to tell our story, talk about what we're doing, why we're doing it, what we're prioritizing, what our levy is, and educate the people in this community to the extent we can in this fall about what we're doing here. You know, because the next time that you'll see public is December 7th. Nobody comes to that meeting. Yeah, September 7th. And so let's go out to the public and let's touch base with them. Tomorrow I have my Right Here, Right Now podcast. I'm going to talk about the budget with John. I'm going to talk about what we're doing and some of the things we're recommending. And then continue to refine the 2027 budget for the rest of the next few months.

Great job, Dave. Thank you. I think just two things. You mentioned Minnesota City's increase. I recall it's going to be 4.1%. So it'll be about $1,050, I believe, a little over $1,000 for the city of Austin as their increase. And then also I love that you led with kind of our culture and philosophy and how lean we are at the city of Austin. That's absolutely true. Our culture is lean. Our employee ratio speaks for itself. Back in the 90s, we were 190. employees. We're sitting around 140 now, 145. I'd love for the comparison sake, as you did other cities, to see what their city employment numbers are. Because maybe I'm going to be wrong, but I'm thinking that we're lower than those folks. Because that just speaks to our leanness. We don't hire folks. We do put upon folks, our people. And that's why I hope that that technology thing does take hold and we can continue to be lean in staffing, but but the technology's got to come along. And I know Michael's a one-man show, and I fear with what happened with the county being compromised by a hacker and attack that we're one bad day away from that happening here. And having some redundancy in that department rather than just one person I think is important. If Michael goes down, we got nothing. And so there's probably other departments like that, but I know off the top of my head that the IT department is very, very lean. So, again, if we could get some perspective on other cities and what they have for employment numbers, that would be great, employee numbers. Otherwise, I think it was a great discussion. I'm pleased with where we're sitting at right now. I can't ask for any better. I appreciate the staff's comments of saying this was a good process, and it does feel just better than last time. Council, questions, comments? Okay.

Is now the time that we want to go? I feel bad because I know I've asked the most questions, but those weren't even the questions I really came here with.

I'll let somebody else take a turn. Thank you, Mayor. This is a great presentation. I really appreciate it. I have a question on page 54 for the Cane Bowl Court under the Pickle Bowl. This one has been in the discussion for the last, I would say, three years now. And the group, last time they came to present for Mr. Sheehan, what do the group need to do to have their project move forward? I have seen, comparing it to Pickleball, we see the community come up with fundraising, they do all their good stuff, and then their case has been moved. as the track phase to, you know, complete the project. The reason I mention this because currently the group they've been moving from park to park, you know, playing can ball. Now they're playing by the Western Manor, that small court there. And these will cause more main for park and rec. And they've been still asking questions, what do we have to do?

So I've recently gotten in contact with an individual named John,

John Su?

Yes, right. No offense to anybody else, but he, I think, has the most knowledge about game ball. We talked about the courts that were built in the cities, and I'm going to go visit those courts. So my initial email back and forth with him is to see if we can get a group of individuals together so we can meet. The thought is finalized locations. We're thinking probably Todd Park. They do play there quite a lot. And then figure out if they can come up with some funding for painting the courts and doing some other portions of the project. The courts are basically built on concrete foundation. Some courts play on concrete.

Sometimes they play on artificial turf on top. So perhaps phase one would be concrete surface.

Phase two could be the group doing some fundraising efforts to...

extend to the artificial turf surface.

And then I'm hoping that they can come up with some funding for like the nets and some of the other amenities. So we haven't met yet. I kind of wanted to see if this got some support before we really start that whole conversation. But I will say it did start in conversations through the Parks, Recreation, Trails Master Plan. There was a group of individuals that came. attended meetings expressing interest in building caneball courts. It actually just came up this morning, or this afternoon, with a meeting with the president of Riverland College. She commented that one of the reasons she hosted a meeting a couple of years ago to talk about indoor recreation facilities. I think he might have been there at that meeting. Caneball came to mind. She was looking at a place to build caneball courts, and she was pleased to hear that That was something that the city might be considering. So to shorten the answer, we're in the process of starting those conversations to see how they want to work with the city to finalize the project. But we can pour the foundation and do most of that work in-house at a reasonable price, which is why you see a small price tag to go to these schools.

Okay.

Yeah, I used to work with John. That's why I knew. And... I was in the office with him the day that the Master Plan open house happened. So that's why you may have seen an unexpectedly large amount of game ball dots. But I think that's great. And actually, Obala, I'm wondering if we could connect that group with the Austin Area Foundation. I know you work with them.

Mm-hmm.

Have like a fiscal host for some of this stuff, because that's probably the piece that they're not sure how to do. And Jason, if I can help be a part of that, make those connections or meet with them, I'd be happy to.

Yeah, I think that would be great.

But as it stands now, there's funds budgeted to get a court built. It will be a no-frills court, but their group could do no fundraising and wind up with a court by the end of 2027. Correct. That's the budget we've proposed. Okay, awesome.

The interesting thing is that I've heard since I started here that there was a group that had funds to build a fort, and I've yet to find that group.

I don't think it's an official group. There's no board of directors. I think the bank might be some jars in somebody's house. But I think if you tell them, like, hey, we're going to build you this concrete with a net, but we know you really want the artificial turf because you'll land on this in some crazy positions, and that's going to be $20,000. I think you'll be surprised how quickly you might get the 20 grand from them.

And the other thing, or an additional course. Yeah. That's not right along the line with these two courses.

Sure.

If they really want a third course on it, then start some fundraising efforts.

I appreciate your comment on the Austin Area Foundation as well, and that's probably a great... Yeah, because they're going to eventually need some sort of fiscal host that's not us for some of this stuff, I would think.

Yeah, I can work with them and see. The reason why I bring it up, because they will be more happy when they hear it, hey, this part we did not brush it off. And when they hear about this, I think they will start. Because I know some of them that are really passionate about it. And I think that will kick the balls.

I feel like it's a good trend. This council has commented that the work that the Austin area Austin, Minnesota Area Pickleball Association did to raise funds to get a match from the city to go to the Formel Foundation to make those courts a reality is the right way to do something. And it's a great way to look forward to future projects and to use that system. And so if we can do it again with cane ball, that would be great.

And at this point, so the first blush is 7.5% levy increase, and I think it was a great presentation. The largest question we have is what the insurance number comes in at, because that's the unknown yet. At this point, was it 15% projected increase? What are we planning at right now to get the 7.5?

In the budget, it's 15%.

15%, and we're fairly confident that's where it's going to come in. It's just a guess right now.

We're not sure, but 15 was a good estimate.

Okay. In the levy set aside last year that was used for insurance and for settlements and where we're going to use some of the money for the programs, there's a significant amount in there still that could offset health insurance increases if they go higher than 15%. Beautiful.

Thank you.

There was a spreadsheet in the folder with this as well. Is that something we should be looking at? I had a couple of questions off of that, but I don't want to derail the PowerPoint presentation that's going on. So how should we treat that document?

Well, here's what, Mayor Mike, I would recommend. If it's in a particular department or area, I'd just reach out to the director or the department head and talk to them directly. Is there a department you want to flag?

No, there was just a couple, like I noticed an increase, I think it was in the pool revenue. And I was just kind of curious like how that was projected and are we even going to have an open pool next year? I'm not sure we know that sort of stuff.

Reach out to the directors.

Okay.

Yeah, for specific, because if you have specifics on a line item, reach out to the staff. Okay.

I have a question. Sure. So the proposal that came forward is not adding any FTEs, but I'm aware that some departments have lost staff due to attrition over the year. So by holding steady with no additional FTEs, what does that really mean? Public Works is down two people due to attrition?

Well, like...

Who didn't even get their FTEs put back in order for us to stay at this zero FTEs?

They were always budgeted for.

I would ask Stephen directly. We didn't dive into it. We do know that we have one. Julie is doing one where she's swapping positions. Jason and I have had several conversations about what to do with the park maintenance employee. And the park staff member in the office and where do we put any value and what do we want to do there? That's a decision that needs to be remade, but that's not a new FTE. Feel free if there's particular departments. I don't know, Councilman.

To our knowledge, the four positions that were cut from the 2026 budget are not, There were no requests from my department and streets to bring those two back, just based on where the budget situation was.

So Public Works lost four FTEs to attrition?

No, Public Works lost two.

Plus two. Parks lost one to the early retirement.

What was the other one?

We had one go to Pantown, which is the IT company. Okay. So we went from 36 to over 35.

Okay.

Okay.

and FIRE isn't officially asking for more FTEs this year? Okay.

No. I know you don't imply this and don't mean it, but I'm comfortable I can say it. I'm certainly happy to add them back in, but you know what that means. It just means that the levy changes.

So the fund balance is a little on the high side. A couple of questions is, one, how did it grow? I suspect that some of it was just some of these staff positions that were budgeted, like the police, they've never been staffed. We even stopped sort of budgeting for one of those positions last year just because we knew it wouldn't get filled through no fault of their own. So I'm kind of curious how the fund balance has kind of grown. Is there reasons beyond that? And then if we were to do, you know, close to a version of this with all the money coming out, what does it drop us down to? Because you said we were at like 52 or 54%. What does that bring us down to? I'm just kind of curious.

you know mike to be real fair about the fund balance growth we'd have to do a deeper dive in for me for me to just just you know it's revenues it's expenses under revenues overall you take every line item every spreadsheet you have in front of you all hundreds of those pages of document take all the expenses all the revenues that's the fact that expenses were lower than revenues in every city and every county wants that and historically it's been that for decades right so I don't know what it's been in 2022, 23. We could ask Tom, maybe, or go back and look, 22 through 23.

Well, normally, I think it probably comes with the end of the audit, but Tom has shown us in the past, like, we're right at 99% or 100, I think, almost every year for the most part. So that's why I'm curious.

But we can check into it. Okay. But we are 43 to 48 is the policy. We're at 52 as of 2025. We might get to 53. And... If you spend down to 48, it's like $2.5 million. So what we're recommending for fund balance is half a million dollars, and that doesn't account what 2026 fund balance is going to be.

So we could still be over the policy percentage-wise with what we're spending down. Still be over the policy.

That's good because we know there's some bigger ticket. As Dave has insinuated, we've got some big ticket things coming down the pike real soon.

Anybody else have anything for the discussion online or staff?

I guess I'd just chime in. Based on that discussion you just had, obviously the $80,000 for body cameras coming out of fund balance could be something that could continue to come out of fund balance for several years the way we grow our fund balance. So I wouldn't have any problem keeping that as a use of fund balance to fund those body cams. I guess the only other question I had was, and you did get into the building fund and how that is funded, and I guess I believe historically we've kind of used it like what I'm thinking you're planning with this facilities fund, but we can talk more about that on an individual basis.

Okay, thank you. Anybody else have anything to add to the conversation?

I think the only other, just a couple quick thoughts on my end. One is, I mean, Dave, department head, staff, I mean, huge thank you. I know there's a massive amount of work that goes in, and I think this is a huge improvement over where we've been in prior years. I mean, I feel really good about the fact that we've looked kind of at the totality of what we're dealing with and come back with some pretty smart recommendations for it. I think it's a good balance of needs, wants, how do we drive the community forward, and so thank you for the work with that I'll ask maybe the opposite question of where Laura was in terms of where do we add things in? Can we help? I guess I'll leave it to the deferral of how we do this in the best culture building way, but can you help us understand if we wanted to go lower on the levy, what are we giving up? And I ask that not necessarily with the we've got to get down to the absolute minimum, but more I think that helps us as we explain to the public the Yeah, we could give you a 4% levy or a 3% levy, but here's the trade-offs so that we can feel good about the, are these trade-offs that we're willing to make? And probably not, right? Because when we look at the majority of our, you know, our biggest expenditure being on things like public safety, I don't know, the public's looking to pull back on it, but that would just be helpful for us to be able to say, hey, we've looked at it, but this is why we feel good about this.

Yes, and I have an answer for that. Without being specific. I would not suggest you drop your levy for your salaries and your benefits and your operating costs. It's that stuff. It's right there. It's the capital. It's the capital that fall under the levy. I mean, because if we have capital requests that, I mean, imagine if we would have the million dollars all competing with all of that, or half a million even. It's been way over the seven and a half. It would be to go in there and say, you know what, we're just, don't get offended. We're just not going to do the concrete surface repairs and ADA upgrades as we're going to move it off. So there's two-tenths of one percent. I'll go to the next slide. You know, no, the one before that. The digital signage, 33, nice, but we'll figure some other way. There's a half a percent right there. Don't get mad at me. So that's how I do it, Jason. I'm just being honest because I don't want to touch the salaries and benefits. That's got to be, we're not going to cut staff. Or look at other, some of the priorities we have that we could do.

So I would say in previous years, we've heard from people who aren't in this room anymore, that Austin's really strong in our capital, that we've always set aside an appropriate amount for capital, that that's been a kind of a foundation of our financial health is that we, you know, if we own a square of carpet, we have a plan of how we're going to replace it and when, and we have the dollars allocated to it. Do you think that that is correct? And are we, if we start cutting capital, are we, Potentially starting down a slippery slope where now we're going to have some carpet squares that get ancient and we don't have any money to replace them.

No, I don't think that, but every organization like you looks to fine-tune their budget, has to take a look at some of the priorities. I mean, there's a lot of capital. You do really well on the capital. Does all of it have to be done in 2027? No, it's probably all made it because we're using fund balance to support the rest. If we weren't using fund balance, not all of that stuff would have been up there tonight. But because... we use fund balance, we're allowed to be able to do that. I don't think it's a slippery slope because every year is going to be different. Every year is going to be different circumstances, different set of facts, different set of information. And so what decision you make tonight, it leaves an impression and a decision, but it's not, it's not, it can be changed.

And then, Dave, last question from my perspective. Is there a way that we can get, like, here's kind of ballpark how much we think the tax base is expanding? Because I think that also makes it easier for us to say, it's not like we haven't added new businesses or homes or things like that. So a 7.5% increase, if that's where we land, is not a one-for-one 7.5% increase for every single person because we've got other people. If you go to the cities, which you're well familiar with, their tax levies increase every year, but it's also because they've got an Amazon warehouse and they've got new homes built and things like that. I mean, obviously for us, Police cars are going to continue to cost more. Libraries are going to need books. And so we're going to need to figure out how do we continue to expand the tax base. And it's helpful for us to be able to connect those two together.

We will. And go flip back, Emily, through the one where way back toward the beginning. We have that. No, you keep going. I won't waste a lot. I thought we had the number or actually already the gross number from 20 some million to 22 million. That probably was in one of the slides we took. We have it.

So we're waiting on the county valuation estimate?

Yeah, we got it this morning. And so there's no way we could have factored it in tonight.

That's an important number, though, too. It does give you perspective on each home, or range of homes.

Well, sorry. The number that we were provided, everything we had was correct. It was really good information. It just didn't take the taking into account your home value in 2026 was at X amount. This is what it will look like in 2027. We needed to make sure that we match exactly what the county had, so we're not sending out contradictory information. But yes, the capacity has definitely increased for 2027. And those numbers, once we get those parts updated, to make sure that what we're putting out matches what the county's putting out. We'll definitely get that out to everybody.

And it may or may not impact what you think is 7.5. Right, absolutely. You may think it's good or you may not. So I reserve judgment on that. I mean, it looks good today, but when you see the net per gross, you might say, ooh, it's...

That'll be a discussion point, absolutely.

So could I request that we not necessarily wait until the September 8th packet comes out if you get some of these answers that they can go out to the council before the September 8th packet? Yeah. That would be helpful. Thanks.

All right.

Anything else for the good of the cause, folks?

Just I might say I apologize for not having some of the specific answers to some of the questions like why this or why that. I just either didn't ask or didn't learn it or we need some history or study on my end to be able to do it. Obviously, previous people would have been able to rattle it off because they know and I just didn't. I'm sorry about that.

It was a great presentation and I know for a fact you'll get that information as you come upon it, but it was really a good exercise here and I'm looking forward to the continued budget talks on the 8th and then before we have to have a resolution on the 21st of September. Anything else?

No, I think these numbers look good. Thank you, department heads and staff and Dave and Emily and all your work. This budget looks great. Thank you.

All right. So we'll look forward to a motion to adjourn. So moved. Second. All in favor with the people on the Zoom?

Thank you. Roll. Aye.

Roll call. Do we have to?

Okay.

Roll call. I don't want to have to come back if they don't take it.

Council Member Postma.

Aye.

Council Member Helle. Aye. Council Member Obala.

Aye.

Council Member Fisher.

Aye.

Council Member Waller. Aye. Council Member Baskin.

Aye.

Council Member Atlarge-Austin.

Aye. And also just want to say thank you to Dave and all the department heads. A little bit behind the eight ball going into this. You guys did a great job. This was a much smoother process than I expected. So thank you all.

Thank you, meeting adjourned.