City Council - workshop

that works across the city because many of them don't get enough thanks. We look forward to this coming year. We just ask for your guidance and your direction. Well, as we start this budget hearing, I want to thank our city manager and city staff. I know there's been several reports this week, but it shows that you are already working towards know solving our you know our budget challenges that lay ahead that are certainly common in cyclical years and uh but i appreciate that and i know people may have questions but i know that's what we're going to be answering today so thank you

Mayor, I'll go ahead and get us started. We'll have a presentation next by HDR on our water and sewer rates by Grady Reid. But before we move into that, Mr. Reid, I just want to make an opening statement. This is the third work session as we work through preparation for the FY27 fiscal year budget, which begins October 1st. As we've mentioned in prior workshops, ESSENTIALLY OUR EXPENDITURES CONTINUE TO EXCEED OUR REVENUES. we continue to dip into our fund balance. And it's not necessarily unique to the city of Beaumont. That happens, of course, in cities and states and governments and our own homes. So we're used to that. And here at the city of Beaumont, kind of like at your home, what we need to do is take a hard look at our spending and our revenues and essentially tighten our belts. At least, well, we've already started to tighten our belts this fiscal year. and we're planning to tighten our belts for next fiscal year, FY27. The idea being that that will give us time to allow revenues to catch up with expenditures and then we can return to maybe a little bit different strategy. So again, that's the strategy that we're essentially presenting in today's work session. And again, for the benefit of the public, this is a work session to, again, continue discussion as we work for the final document, which will need to be adopted in September. Some of this is going to be a little bit redundant because Ms. Schmidt, our budget officer, is going to present some of this in a moment, but I wanted to go ahead and hit some highlights on some of the things that we have been doing to tighten our belt in 26 this fiscal year, as well as 27 as we move forward. We've talked and will talk about a hiring freeze. This is for positions that aren't necessarily public safety related. and what this means is essentially we would just have to look at every single position outside the scope of public safety to see if if indeed we can hold it at the end of the day we need to make sure that the city functions properly and the things that we do to keep the city running continue to do so continue to happen so we will It's a difficult process to review each exact position, but the idea is that we're going to reduce expenditures by doing that. Also charging the directors with efficiencies. They more than anyone know where there are opportunities to save. A substantial amount of our general fund budget and other budgets do go towards personnel, and so There's not a lot of room for efficiencies, but we can certainly find them and take advantage of them where we do. You know, consultants are important. We have a couple of them here today and they help what we do, help us be more efficient and deliver our services. But part of what we're doing now is looking at consultants and those contracts to see where we can reduce where we can. eliminating positions where we can so this goes beyond hiring freeze so even in offices like the executive office we're looking at positions to eliminate and so again that would save travel and training you'll see today that that if you look at citywide our budget travel and training is quite a big number we just do have to keep in mind that Much of the travel and training is essential for certification to make sure that we do our jobs properly, efficiently, and in accordance with state, federal, and other regulations. We may look at conducting an efficiency study, especially regarding water and sewer, billing collections, things like this. Is there a way to do things better? But only do that if we can convince ourselves that there will be a positive return on investment in doing so. Ms. Schmidt will talk about additional revenue sources like fees again when we talk about fines and fees it is only to cover our costs it is not to make revenue it is not to make money it's simply to cover our costs which again as I mentioned our costs out exceed our revenues we'll hear today about talking about employee benefits I think as we know it's a nationwide issue with essentially healthcare costs continue to go up year after year. And so part of our challenge is related to that. So we're going to study what opportunities there are to save money in that realm. then one thing I'll close with is we will conduct a essentially a mid-year budget review in April so because we've had these challenges we want to take a hard look at the mid-fiscal year in April to see how we're doing before we even get into the FY28 budget cycle so look forward to that for the purpose of today's workshop We do ask a few things of council coming out of it, again, just because of the challenges we have. We're going to ask if council has any additional services that we deliver or programs that we deliver that council wants to add. It would be good to know that today. if there are services that council wants to reduce or change that would be good today to know today it would be good to know we have no control really on our a lot of our rates but the one rate we do control to some extent although their limitations is what we set our property tax rate at so it would be good to know what the comfort level is with council and then you know we talk a lot about our rev our basically our rainy day fund our fund balance general fund fund balance and so right now by policy we set it at 20 percent of the expenditures annual expenditures and so we'll talk about today in terms of because I know we talked about in prior account prior work sessions that if we continue doing what we do have been doing the the general fund fund balance will continue to be depleted and so again we're trying to make corrections but what what level would council like to see that out would it 20 19 18 as I mentioned in prior workshops the standard usually is you want to have at least two months which translates to about 16 and a half percent and so we're not advocating that and just giving you a point of reference and then finally because i know that's a lot to ask there's a lot to this and again we will be presenting and discuss discussing this matter in august and then again in september when we present the final proposed budget to council but if coming out of today council feels like we need another budget workshop just because of the challenges you know we need to be good to know that today as well so but with that I will I'll go ahead and move into the first first item on the agenda and that's a presentation by HDR on our water and sewer rate study and for the benefit accounts the public you know we we have a quite an extensive water and sewer system and so we work with hdr to essentially try to set rates not just looking at fy27 but looking out in the future to make sure that the rates are sufficient the rates that the citizens pay for these services are sufficient to make sure that we can continue to invest repair and invest in our water and sewer delivery system so with that i would invite mr reed to to come and make the presentation

Thank you and good morning, mayor and council. Before I get started this morning, I just want to take a quick minute and thank your staff, not only Mr. Boone, but also Ms. Hubbock, who has jumped in kind of at the in the middle of all of this and her and her staff have done a fantastic job of getting us the information that we needed in a timely manner. And then and then after that, setting up and Setting up times to meet with us and provide feedback. So I just wanted to thank your staff. They've been a They've been really great to work with As we go through this, if you have questions, don't feel like you have to wait until the end. Feel free to stop and ask me questions as we go. I'm going to try to go as quick as I can, but at the same time, I do want to try to explain some nuances and some of the assumptions that we've made just so everyone's aware of how we are looking at this. As we as we go through and your city managers already talked a little bit about fund balances and reserve requirements. So the utility fund is currently meeting its reserve requirement for the utility fund. We set a 25% reserve, which is about three months worth of reserves. So that's just three months worth of your total expenses on hand. The fund balance is above that right now. Three months is typical within the industry. Certainly for wastewater utilities, that's what they would use. There are some water utilities that they will set a higher reserve. REQUIREMENT. BUT TYPICALLY WE SEE THAT IN UTILITIES THAT ARE MORE NOT COASTAL COMMUNITIES BUT MORE ENTITIES LIKE IN CENTRAL TEXAS AND NORTH TEXAS WHERE THE RAINFALL TENDS TO BE A BIT MORE VARIABLE AND THEIR WATER REVENUES TEND TO SWING A LITTLE BIT MORE FROM YEAR TO YEAR. SO THAT'S GOOD FOR THE UTILITY. THE FUND BALANCE IS THERE. SINCE THIS IS A PERCENTAGE OF SINCE YOUR RESERVE REQUIREMENT IS A PERCENTAGE OF YOUR EXPENDITURES as your expenditures increase which which they are we have them projected increase obviously you have fun balance has to continue to grow if you want to continue to meet your reserve requirement for this upcoming fiscal year the total water and wastewater expenditures were estimating those to be seventy two point two million dollars that includes a debt issue about forty two and a half million dollars in this upcoming fiscal year for capital projects and we'll get we'll get to those in a minute We do assume on the debt that you're issuing that debt basically kind of in the middle of the year so that you're making one payment or an interest-only payment instead of making a full payment, just so you're aware of how we handle debt. And then we do have additional debt issues, and every year has been the norm. Those are typically running around between $42 million to $50 million, depending upon the list of projects and any given year. So that is, you know, obviously that is sizable. And as you'll see, that's kind of what's driving a lot of your increased expenses in your water and wastewater utility. A lot of it's just the increasing debt load. So we're going to try to take your utility and split it into two utilities. So it's water and wastewater. It's within one fund. But we try to look at them individually. And the reason that we do that is because in a perfect world, we don't want water revenues coming in and being spent on wastewater items and vice versa. We don't want wastewater revenue coming in and being spent on water items. And so we try to look at them, we try to separate all of the revenues, all of the expenditures into this is a water revenue expenditure, this is wastewater revenue expenditure. On the water side, we try to plan for an average year, and I put average in quotes. AGAIN, YOU DON'T SEE AS MUCH VARIABILITY IN YOUR PER CONNECTION WATER USE AS SOME COMMUNITIES THAT ARE NOT LOCATED, NOT COASTAL COMMUNITIES. BUT WE STILL WILL SEE SOME VARIABILITY YEAR TO YEAR IN HOW MUCH WATER. say a household is using, and that's largely driven by weather, which obviously we don't know what the weather is going to be like next year, next summer. Summer is Christmas time for a water utility. And so if we have a summer that's like it is outside right now, your water revenues are going to be depressed. But if you have a hotter, drier summer, you would typically have higher than expected revenue. So we just try to average that out as best we can. Plan for an average year. We're assuming that the average single-family residential connection would use between 5,000 and 5,500 gallons of water per month. We have just under 43,000 connections in this upcoming fiscal year is what we're planning for with a total build water use of 5.6 trillion gallons. The city has been growing, but that growth has been rather limited. And so we are not projecting a lot of growth in our rate model looking forward. We look out to the year 2031. We look out five years. WE DO HAVE SOME GROWTH BEGINNING IN 2028, AND 2028 AND 2029 WE'VE ASSUMED ABOUT A HALF A PERCENT OF GROWTH. AND THEN IN 2030 AND 21, 30 AND 31, WE'VE ASSUMED 1 PERCENT GROWTH. AND THAT'S IMPORTANT BECAUSE YOUR EXPENSES TEND TO GROW, YOU KNOW, IF WE JUST ASSUME A NORMAL RATE OF INFLATION, THAT'S 3 TO 4%. AND SO WITH GROWTH THAT'S BELOW THAT, IF YOU JUST DO THE MATH, THAT MEANS THAT YOU'RE GOING TO HAVE TO DO RATE INCREASES TO KIND OF MAKE THAT UP. IF YOU'RE GROWING AT THE SAME RATE THAT YOUR EXPENSES WERE INCREASING, THEN EVERYTHING WOULD BE OKAY. BUT THAT'S TYPICALLY NOT WHAT WE'VE SEEN OVER THE LAST SEVERAL YEARS HERE. On the water side, we're assuming of that $72.2 million, that $39.8 million of that is gonna be water expenses. Again, this is somewhat, if I'm being honest, this is somewhat of an arbitrary number. Within your budget, there are items that are clearly water. AND THERE ARE ITEMS THAT ARE CLEARLY WASTE WATER AND THEN THERE'S ITEMS LIKE ADMINISTRATION THAT ARE BOTH. AND SO WE TAKE THOSE COMMON EXPENSES, ADMINISTRATION, YOUR PAYMENT IN LIEU OF TAXES, THOSE TYPES OF THINGS, AND WE ALLOCATE THOSE INTO EITHER A WATER EXPENSE OR A WASTE WATER EXPENSE AND WE TYPICALLY SPLIT THEM BASED ON THE PROJECTED REVENUE COMING IN JUST SO EVERYONE'S AWARE. But that $39.8 million, it's not a number that you're going to see in your budget anywhere, but we're trying to, as best as we can, to figure out this is what we think our total water-only expenses are going to be. That $39.8 million, we would project that that would increase to $47.7 million by the time we get to fiscal year 31, and again, most of that increase is due to debt service payments. THIS IS JUST THE CAPITAL IMPROVEMENT PLAN THAT WE HAVE IN THE MODEL. SO IF WE LOOK AT THE FIVE-YEAR TOTAL ON THE WATER SIDE, IT'S ABOUT $145 MILLION OF CAPITAL PROJECTS. OBVIOUSLY I'M NOT GOING TO GO THROUGH THESE. I'M NOT AN ENGINEER. Even if I was I wouldn't understand what what some of them are doing But you can just see the yearly expenditures For 2027 we have about 30 million dollars Of that we're assuming that 10.3 million dollars of that would be grant funded Grant funded projects are obviously great because they don't increase rates. They have no impact on rates but but we also do have some debt funded projects of just under 20 million dollars and that we would be assumed that we are issuing debt for. Switching gears real quick to the wastewater side. we look at your utility as a whole it probably maybe falls into some of your other things that that your city manager already talked about where revenues aren't necessarily covering expenses we see that certainly more on the on the wastewater side again just if we look at at our split of the revenues and expenses the wastewater side of that SIDE OF THE UTILITIES NEEDS TO BE STRUGGLING A LITTLE BIT MORE THAN THE WATER SIDE. AND SO THAT'S SOMETHING THAT WE WOULD CERTAINLY WANT TO TRY TO ADDRESS. ON THE WASTEWATER SIDE, WE'RE ASSUMING JUST UNDER 41,000 CONNECTIONS, TOTAL BUILD USE OF 35.38 TRILLION GALLONS. Again, limited number of growth and connections. We're using the same growth rate on wastewater as we are for water. Total proposed expenses, slightly less than water, $32.4 million for this upcoming fiscal year. That does assume a debt issue. And then we're expecting that $32.4 million to grow to $38 million by the time we get to fiscal year 31. And again, most of that is due to debt payments. on this is the wastewater cip that we're using in the rate model against slightly less than water total five-year expenditures of about a hundred eight point five million dollars and twenty twenty seven this upcoming fiscal year total projects just under twenty six million dollars four point six million of that we're assuming is being grant funded with the remainder being a defunded so kind of getting down to uh where does this leave us with with rates uh for water we would recommend no increase to the water rates um which i i would hope would be viewed as as positive news it is important to remember that last year the majority of your customers last year also did not see a water rate increase we changed the rate structure so that meters larger than five H inch did see a rate increase that every customer that had a five H inch meter did not see a water rate increase last year so this would basically be two years without a water rate increase for for the majority of your of your customers. one thing that we do want to spend a little bit of time discussing as the senior citizen rate senior citizens do pay a differential rate in the past that rate was just differential on the demand side so your water rate is made up of two parts a demand charge in which you you pay regardless of how much water you use and then a volume charge that is dependent upon your water use In the past, the senior citizen charge on the volume charge, it was the same. On the demand charge, their demand charge was less. Last year, that changed, and so now they have a differential rate for both the demand and the volume charge, not only for water but also for wastewater. After I made my presentation last year, I think there was some further discussion about the senior citizen rate, and we went back and basically modeled that that rate would be frozen at its current level. So we took any rate increases out of the senior citizen rate over the next five years in our rate model. We went back and we re-looked at that and revisited that a little bit, and we're proposing that the senior citizen rate, at least how we have it modeled in our rate model, that it would increase at half of the residential rate. This is a decision that council would just need to make and provide feedback on. And the rationale behind it and I do understand and the city should be lauded for For doing what they can to try to reduce expenses for senior citizens or those on a fixed income But if we're looking at it strictly from a cost standpoint It doesn't cost the city any less to serve a senior citizen as it does a normal single-family household And so they do have a rate differential already WITH THIS PROPOSAL THAT THEIR RATE WOULD INCREASE AT HALF THE RESIDENTIAL RATE, THAT DIFFERENTIAL IS GOING TO CONTINUE TO INCREASE, BUT IT'S NOT GOING TO INCREASE QUITE AS MUCH AS IT WOULD IF WE JUST FROZE THEIR RATES. AND MY CONCERN WITH FREEZING THEIR RATES IS THAT DIFFERENTIAL IS JUST GOING TO CONTINUE TO GROW AND GROW AND GROW. and then at some point if we wanted to go back and try to correct that we would have to end up doing a larger rate increase for senior citizens and perhaps your other customers and that's obviously something that we would want to avoid It doesn't make a great deal of difference in your revenues, quite honestly, but for every dollar that someone doesn't pay, for example, for senior citizens, for every discount that they do get, that's a dollar that has to be picked up by your remaining customers. Your expenses don't change. So just something to keep in mind. The other positive news is that last year when we were here, we did project that the water rates would go up 5%. So the fact that we're recommending that we don't change them at all is again, good news. We wanted to try to focus as much as we could on wastewater. Again, as I said earlier, if we just look at your two utilities and separate those, it seems like wastewater would be struggling a little bit more than water. So we wanted to try to take this time to say, hey, let's try to hold off on water. You do have fund balance there to use. Obviously, as your city manager said, you can't continue to do that forever. But we can do it in the short term. So let's try to use that fund balance in this case to try to hold off on doing any water rate increases and let's focus on wastewater. So we would recommend a 10% across the board rate increase for wastewater. No changes to the wastewater rate structure. Just every wastewater rate would go up 10%. So that would equate to about $3.72 per month for 5,000 gallons of use. Your typical single-family residential customer is only being billed for about 3,000 to 3,500 gallons of wastewater, so their actual bill increase would be a little bit less than $3.72. Again, for senior citizens, we're proposing not that their rates remain frozen, but that their rate would go up at half the residential rate, so they would see a 5% increase TO THEIR WASTEWATER RATES AND NOT THE FULL 10. LAST YEAR WHEN WE WERE HERE WE WERE PROJECTING THAT WASTEWATER WOULD GO UP 10% AND SO WE'VE KIND OF HELD TO THAT AND ARE STICKING WITH THAT. So basically what this means is that for total for water and wastewater your if you look at your utility bill it's almost split fifty fifty between water and wastewater between the two utilities so holding water the same and going up ten percent on wastewater basically mean that. Most of your customers would see about a 5% increase total on their water and wastewater bill. With that increase, this kind of sets the stage. The bad news is that we do have other rate increases looking forward, obviously, again, because we talked about how your expenses are really going up faster than your growth. And so the only way to kind of rectify that is to keep doing some rate increases. But looking forward, we do have a plan to kind of keep you above that reserve target. This just shows what future bills would be with no water rate increase and a 10 percent wastewater rate increase. And again, you can see most bills for most of your customers, residential, commercial, doesn't really matter. Would go up about five percent senior senior citizens Would go up just under two and a half percent as what we what we would predict So looking at the looking at just the water utility again this kind of summarizes your expenses are the are the bars and then your future revenue is the is the dashed line and you are we would have you projected around a little bit of a deficit on the water side it's not it's not something that's insurmountable obviously it's not something that you can continue to do year after year but again since you do appear to have adequate reserves a little bit above your target we think that the best use of those reserves is probably to just for go water rate increase for this year let's see how things shake out and reevaluate things for for twenty twenty eight WE DO HAVE FUTURE INCREASES IN THERE. THOSE ARE ON THE BOTTOM. SO FOR 2028 WE WOULD PROJECT BOTH A 5% INCREASE ON WATER FOR 2028 AND 2029 AND THEN MAYBE THAT WOULD GO DOWN A PERCENT IN THESE OUTER YEARS. JUST ON THE EXPENSES, I DO JUST WANT TO POINT OUT that the the red on the very top that is new debt service um so again as we continue to issue that debt year after year both on water and wastewater to the tune of again anywhere between 42 to 50 million dollars a year that is really what is driving your increased expenses um your o m expenses are certainly going up we've assumed between a three and a five percent increase in omics own expenses depending on what the line item is but the real driver is that I believe that you do have some debt coming off as we go throughout the projection period and so that does help but new debt is coming on faster than old that his is going away. SAME SUMMARY FOR WASTEWATER IN HERE, JUST KIND OF THE TAKEAWAY IS A LOT OF THE SAME THINGS THAT I SAID EARLIER. YOU CAN SEE THAT THE REVENUE IS FALLING EVEN SHORTER OF EXPENSES FOR WASTEWATER. WE WOULD EXPECT THAT TO CONTINUE NOT ONLY IN THIS UPCOMING FISCAL YEAR BUT 2028 AND 2029 A LITTLE BIT AS WELL. and hopefully by twenty thirty and twenty thirty one. You would be where revenues of kind of caught up caught up to expenses. The downside of that is that we are projecting pretty significant waste water rate increases. Again this changes from from year to year just kind of depending on how things go and what your expenditures actually are. WHAT YOUR FUTURE BUDGETS LOOK LIKE, WHAT THAT CIP LIST LOOKS LIKE, WHAT YOUR FUND BALANCE LOOKS LIKE. BUT I JUST TRY TO ALWAYS SHOW THIS SO THAT IF YOU ALL HAVE ME BACK NEXT YEAR THAT I DON'T SHOW UP AND HAVE A WASTEWATER RATE INCREASE IN HERE AND IT BLINDSIDES EVERYONE. SO I'M JUST SAYING THAT GOING FORWARD, IT APPEARS THAT THERE MAY BE HIGHER INCREASES TO THE WASTEWATER RATES THAN THE WATER RATES. But again, that's subject to change. It will change as we move forward and know what 2028 is going to look like with more clarity. BUT AGAIN, YOU CAN SEE THE RED BARS AT THE TOP INCREASING. AGAIN, THE POSITIVE NEWS IS THERE IS DEBT THAT'S FALLING OFF, WHICH CERTAINLY HELPS BY THE TIME WE GET OUT THERE TO 2031, AND SO AT LEAST FOR A YEAR, YOU MAY HAVE SOME KIND OF STABILIZATION IN YOUR EXPENSES, WHICH WOULD HELP KIND OF HELP YOU CATCH THAT REVENUE UP TO YOUR EXPENSES. THIS JUST LOOKS AT THE UTILITY AS A WHOLE. SO AGAIN, YOU CAN SEE WE DO HAVE YOU PROJECTED KIND OF DEFICIT SPEND IN 2027, 2028, A LITTLE BIT IN 2029. BY THE TIME WE GET TO 2030, WITH THOSE RATE INCREASES, THE GOAL IS THAT YOUR REVENUE WOULD BE PRETTY MUCH EQUAL TO YOUR EXPENDITURES. We talked a little bit about reserves and this is just a very simple chart that just shows that the twenty five percent kind of goal and then the dashed line is what we would actually project your reserves to be so again we're for twenty twenty seven it does appear that you're going into the year with with higher reserves than that what is required and so and our our assumptions are that we're going to use those reserves while we do still have significant rate increases in here we are trying as best as we can to use those reserves to limit those rate increases to the to the point possible I will address this just because always get asked is well if we have more money than its then we really say that we need why are we doing any rate increases at all I guess that question all the time And really, I kind of use this analogy. If you want to view that dashed line, imagine a ball kind of sitting on that dashed line. You could do no rate increases at all, but it's going to pull you down to your target really quick. And that ball is going to roll down that dashed line really quick. And when it hits that target, that 25%, it's going to have a lot of momentum. In order to stop that momentum, you're looking at large rate increases. So even though you're above your required fund balance, it is still a good idea to do rate increases. Try to draw that fund balance. We're trying to control the drawdown of that fund balance. Draw it down slowly over time so that we don't end up in a situation where we have to come back and say, hey, you've used up all of your reserves. We haven't done any rate increases for a year or two. And so now you're looking at a 20 or 30%. rate increase that's what we're trying to avoid is let's do planned smaller rate increases rather than trying to hit hit your residents with a really large rate increase at any point in the future. Some more positive news just kind of if we compare you to surrounding cities this is for residential customers were using five and 10,000 gallons of water and sewer there's nothing magical about those numbers that's what the Texas municipal uses in their annual bill surveys that they sent out so we're using that because it's data that's really available. So if we compare you to your peers, you're currently kind of at the bottom end of that table and with the projected rate increases on sewer, you would move up a couple of spots, but you're still kind of below most of your peers. I will say and we've talked about situations that we're trying to avoid and without naming any of these cities, there are Some cities that this past year they have seen some rather large rate increases because they haven't been they haven't been doing great increases and they've been kind of falling behind. Whether that's and see IP projects or maintenance rehabilitation or just the ability to hire and keep staffs staff within your water and wastewater utility to have the skills required to keep providing your customers with a high level of service. And so because of that and I've kind of falling behind they they really kind of been challenged and finally I think we're starting to see some of them just kind of bite the bullet and do rather large. Water and waste water rate increases and that's the situation that that I I recommend that you try to avoid I know it's I know it's good and I know it's great to to say hey we don't want to do any rate increases but my experience eventually that ends up. THAT ENDS UP TURNING BAD AT SOME POINT IN THE FUTURE, JUST BECAUSE YOU FALL BEHIND ON PROJECTS, YOU FALL BEHIND ON MAINTENANCE, STAFFING, ALL OF THAT TYPE OF STUFF. SO I VIEW THAT THIS IS GOOD NEWS. YES, BILLS WOULD GO UP, BUT YOU'RE STILL PRETTY COMPETITIVE COMPARED TO YOUR PEERS. same thing on commercial side again we're using fifty and two hundred thousand gallons that's just what tml uses. This would put you with the proposed rate increase for wastewater on a commercial side this puts you about in the middle of your pier cities that we have been using you're certainly very far from the top. You're kind of right in there and that and that middle middle group if we look at bills for commercial customers. WITH THAT, I'LL STOP TALKING AND I'M HAPPY TO ANSWER ANY QUESTIONS THAT ANY OF YOU ALL HAVE.

NEW SPEAKER COUNCILMAN TURNER NEXT.

NEW SPEAKER THANK YOU, MR. MAYOR. sir generally it seems like from last year we uh always refer to this as the enterprise fund but today it's been all utility fund we're talking about the same fund correct it's the same fund yes okay is there a reason why we've moved away from enterprise and we've started using utility i i just call it the utility fund your water and wastewater fund is an enterprise fund basically it's a it's a business it's it's a business gotcha just just making sure we're talking about the same fund uh on um AND I APPRECIATE YOU PROPOSING A ZERO WATER PERCENT INCREASE. THAT'S VERY HELPFUL. THIS COUNCIL LAST YEAR AND IT WAS SOMETHING THAT I PUSHED, DID NOT WANT TO INCREASE RATES FOR OUR RESIDENTIAL CUSTOMERS AND I WAS PROUD TO SEE THAT AND WE DID NOT DO THAT AND WE WON'T DO THAT AGAIN THIS YEAR. THAT SAID, IT SEEMS TO ME LIKE I DO BELIEVE AN INCREASE ON OUR INDUSTRIAL SIDE IS APPROPRIATE. AND I THINK THAT INCREASING THAT NOW AGAIN HELPS US IN THE FUTURE WITH HAVING TO INCREASE RATES ON RESIDENTIAL AND COMMERCIAL ACCOUNTS. ABOUT WHAT PERCENTAGE ARE OUR INDUSTRIAL CUSTOMERS? I WANT TO SAY LAST YEAR YOU TOLD US 10 PERCENT.

IS THAT STILL ACCURATE? LET ME GET THERE AND I CAN SHOW YOU OR GIVE YOU A NUMBER. DO YOU WANT THE REVENUE PERCENTAGE? SURE. SO YOUR INDUSTRIAL CUSTOMERS, THEY WOULD BRING IN ABOUT $1.2 MILLION IN REVENUE. which is about 3.4% of your total revenue.

It's only 3.4%, so it's not 10%. No, sir.

Okay.

And on the wastewater side, is residential about 40% and commercial and industrial represent about 60%?

I'm not sure that I have this in the right models. I'M JUST GOING TO CALCULATE IT AGAIN REAL QUICK. RESIDENTIAL IS ABOUT 33%. AND THEN THAT'S JUST SINGLE FAMILY RESIDENTIAL. THAT DOES NOT INCLUDE MULTIFAMILY. Okay, the second part of that question was about commercial and multifamily.

Commercial and industrial so it's about 3565. Yes, so if we needed to get to the overall waste water increase of 10% that you're proposing what would the net increase have to be if if the council made the decision only to increase commercial and industrial accounts. um i i i can figure that out i would i would appreciate it if you would let me look at that uh over the next couple of days yeah yeah yeah no problem so i think you can kind of see where i'm going with this similar to what i proposed last year instead of raising residential rates for wastewater i would propose that we increase number one industrial uh as as much as possible i would be fine with even a 20 increase on the industrial side on the wastewater rate uh and then maybe a commercial increase of somewhere around uh you know seven to eight percent um that way uh our residents um are not feeling any type of an impact and i know you said that it's only four dollars a month but uh you know you'd be surprised how quickly that adds up and I hate to see those rates increase for our residents. So, yeah, take your time to figure out what that number would need to be to get to the increase in revenue that you're looking for on the wastewater side. But I would greatly appreciate if we could look at only raising that on the industrial.

That's one of the things that we'll look at, and we'll let staff or myself report back.

Also, I apologize because I know this is going to go against what you're proposing, but I just really feel like continuing the freeze on seniors is important. I understand you were saying something about changing the wording or something so that it's a slight increase or something and moving away from the word freeze, but that's what they understand. That's what I understand. I have a feeling that's what probably the majority of the council understands so it would be my preference that we would continue with the freeze for seniors because I think that that's something that's important to them and that seems to be something that I recall being very popular with the council last I'd like to talk about know it seems like to me and i'm not trying to be critical i'm just uh being real with you it seems like to me you know anytime we talk about what we can do to increase the the balance for the enterprise fund or the utility fund that we want to talk about increasing rates uh i'd like to talk to you about what we can do to include increased collections okay uh i've heard rumors that um you know the city has an issue with uh uh active taps versus taps we're actually collecting on uh do you have any data for us that you can share with that so far as what are the active number of taps right now in the city of beaumont compared to what taps are actually uh the percentage are actually uh paying what they're accurately using i i i do not um but i can i can request that your your billing department should have that data okay so we could request that data from your from your billing department because I'm you know I'm always concerned that the minute some you know family falls behind on their water bill you know we're running out there and ready to turn it off but we have giant corporate customers here in Beaumont that owe the city hundreds of thousands of dollars and back water bills because we've been billing them an estimated amount and not an actual amount of their use and we're not collecting that money and so that that that concerns me what about can you give us any good news on new taps I know you said we've kind of been stagnant but Do we have any numbers so far as new taps from last year to this year that would show us maybe some positive news on increase?

I wish that I could. Okay. If we looked at your, if I compared your billing data that we were sent last year versus this year, there really was no increase or very slight increase. CONNECTIONS AND ACTIVE CONNECTIONS OKAY SO SLIGHT INCREASE THERE WITH NO INCREASE GOT YOU.

All right. So, yeah, I think you kind of pick up there on where I'm going with all this. I would like to see the staff do a better job with collections. I would be against a wastewater increase for our residents or our residential accounts and look at an increase only on the industrial and commercial side. And I also think an industrial rate increase is appropriate on the water side. And I would like to continue to freeze with seniors. Thank you, Mr. Mayor. Thank you. Councilman Turner and then Councilman Hilliard.

Thank you, Mayor. I appreciate it. For our city manager, I agree that I struggle with a rate increase on residential buildings. citizens as well as our senior citizens one thing that I'm concerned about and I recently met with a developer about two months ago about doing a massive project in Beaumont and one of the first questions was what is your city's impact fees I'm not okay that we don't have impact fees when you're having massive development going into our sewer and drainage system when it's kind of standard in most cities that are growing throughout the state of Texas. I know it's an uncomfortable conversation, but I don't think we're in position to not do it when it's being successful in other places. even if we come with a formula that makes sense, it kind of offsets us talking about the two and a half percent for the senior citizens. But if you're going to come in and a big industry puts in a plant and we got to go and boil water notice and it's no type of fees that they're plugging into our water system, but our residents are being know penalized for it not being able to utilize water i don't think that's sustainable for the city of beaumont especially when we have instances where we do have to go on boil water notices if anything is getting to our systems that our regular residents utilize so i would like to see us look into that or something be proposed to council before we even start talking about putting an increase on our residents

So and I know we struggle with complaints of developers who may develop in maybe smaller communities in our area with the fees and processes that we have. So we do stay cognizant of that. However, impact fees are commonly used. I would ask, Grady, do you have just a quick summary in terms of impact fees and how they're used throughout the rest of the state?

yes so so what impact fees are for those that may not know it's a one time charge that gets lovely to only new developments so it does not affect your existing customers. The point of impact fees is that they are designed to help recoup the cost of providing water and wastewater service to that new development. So, you know, as you're building infrastructure, water lines, increasing treatment plants or storage or whatever you happen to do, lift stations, it is designed to help recoup that cost. Not only for new projects, but you can also use impact fees if you have the data to go back and recoup existing costs that the city has already incurred. put in impact fees are are common certainly for fast-growing municipalities it gives them another source of revenue sometimes you know multiple millions of dollars a year depending upon the city and just what their impact fees are and how fast are growing for a city that's not growing HONESTLY, I STILL DON'T THINK THAT THEY'RE A BAD IDEA. I WAS HERE AT ONE POINT AND WE HAD THAT CONVERSATION. IT WAS A VERY INTERESTING CONVERSATION THAT WE HAD WITH THE CITY ABOUT IMPACT FEES. AND THERE WAS CERTAINLY SOME DISAGREEMENTS ON WHETHER THAT WAS A POSITIVE OR A NEGATIVE FOR THE CITY. I STILL TEND TO THINK THAT WITH IMPACT FEES, EVEN FOR A SMALL GROWING entity it's it's additional source of revenue maybe it's a couple hundred thousand dollars a year and some years but maybe you get a large development or large industrial customer that comes in and you have a one year you know if it's a million or two million dollars whatever that that helps I mean it's not a huge dent but it is a dent so it is something that the that the city could look at again with with limited growth I wouldn't I wouldn't expect that that's going to solve your rate increase woes, you're still going to need rate increases because I would think that the revenue coming in off impact fees would be fairly minimal. But it is another source of revenue.

so just to follow up on what i was stating residentially we may not be growing but economic the city of beaumont and jefferson county is in the economic boom so i i tend to disagree that we don't want to utilize that for the industry right now because right now numbers are higher than they've been in a long time so I think we are missing out on that opportunity, especially the amount of development that are going into our communities and the influx that is going into our infrastructure. We can't sustain or be sustainable if we're not willing to figure out ways to bring in more revenue. And I don't think the way to bring in more revenue is always taxing your citizens, especially when you got new customers plugging into your water lines. And sometimes we, like I stated earlier, Attempting with experience in boil water notices with some developments that they haven't even been existence for two years So I just I struggle to support taxing citizens and we're not actually Making those entities pay that part.

Yes, sir. We can certainly bring a program to the council impact the impact fee program.

Yes, sir And then councilman Hillary Thank You councilman Turner

UM SO I APPRECIATE YOU BEING HERE AND I AGREE THAT WE SHOULDN'T I'M AGAINST RAISING WATER RATES BUT I'M ALSO AGAINST RAISING WATER RATES ON OUR BUSINESS CUSTOMERS BECAUSE YOU HAVE THE TRICKLE DOWN EFFECT SO EVEN THOUGH YOU RAISE THE RATES ON THE COMMERCIAL CUSTOMERS THEY'RE GOING TO RAISE THEIR RATES AND THE CITIZENS ARE GOING TO END UP PAYING IT BUT I THINK THAT WE NEED TO LOOK AT NUMBER ONE THE WAY WE READ OUR METERS I believe and it's been brought to my attention that there's millions of dollars that's being left on the table because we are not reading the meters properly. So it has to start at the fundamental level. We have to make sure that we have a plan in place that we're reading the meters correctly it's been brought to my attention that over two hundred thousand dollars have been billed to two different customers that they had no idea that their meters were not being read properly so we can raise the rates but if we're not reading the meters correctly then we're going to continue so i would like to know how many millions of dollars in unread meters or saying the meter was unreadable or could not be found and people have been paying just an estimated rate For so long. So, you know, we can raise the rates, but if we're not reading the meters properly, if we're not charging the customers properly, then we just continue to raise rates. And so we need to start at the fundamental level and we need to have a check and balance system in place to say, hey, I couldn't find the meter. So a supervisor needs to go out. And if the supervisor can't find it, then we need to find it and read it so that we're properly billing each customer that we service water to. Because right now we're not. And I would estimate probably in the tens of millions of dollars over the last 10 years that have not been read properly or have not been billed properly. so you know i mean we got to start at the fundamental level we got to make sure that the people on the ground are reading the meters and that we're billing properly and right now we're not doing that that is something that we could we could work with city staff to get get those numbers yeah councilman again grady they're modeling the finances in terms of how much revenue we need to cover our expenses and our bond issues to try to get our infrastructure up to where we need it to be

But I think what you're referring to is, you know, some internal operations. And we're looking at that with our group, you know, with our financial staff, with the group that reads the meters. And I don't want to put you on the spot, Grady, but do you have a sense of – is there a and again, it's less financial, but it's kind of financial. So do you, is there a, um, kind of a target percentage of meters that maybe don't get read, uh, just for one reason or another, maybe it's technological because the meter, uh, transmission doesn't work. And again, I know this is more operational than finance, but I didn't know if you had a sense of, you know, uh, kind of a standard metric is a certain percentage. Don't, don't get it.

I don't know of anything published that would give those metrics. Um, MY PERSONAL SENSE IS THAT YOU SHOULD TRY TO KEEP REALLY YOU SHOULD BE READING 100 PERCENT OF YOUR METERS. THAT'S THE GOAL.

NEW SPEAKER I RECEIVED A PHONE CALL THIS LAST WEEK AND THAT'S JUST TWO AND WE'RE TALKING LIKE ALMOST $300,000 IN MISREAD METERS AND THAT'S JUST TWO CUSTOMERS.

NEW SPEAKER SO AGAIN THAT COULD BE SOMETHING THAT THAT YOUR BILLINGS, I'M NOT FAMILIAR ENOUGH WITH YOUR BILLING SYSTEM, BUT A LOT OF BILLING SYSTEMS, THEY HAVE WAYS AND FLAGS THAT YOU CAN FLAG METERS THAT ARE ZERO READS OR METERS THAT ARE ESTIMATED. AND CERTAINLY THOSE HIGH WATER USERS, YOU WOULD WANT TO FOCUS ON YOUR COMMERCIAL CUSTOMERS. AND ALSO IF YOU DON'T HAVE AN ESTABLISHED METER testing and meter change our program that would be something that I would recommend as well and you typically would want to start that with your your higher end customer your your high use customers yes thank you great into your point that we are we are studying that and trying to resolve that as we speak yes councilwoman Sherwood I heard you say something about when they brought up impact fees recouping fees if you can prove the cost

What do you mean by that? Can you explain that a little bit?

Yeah, so talking about impact fees, there's some nuances in how they're calculated, but in their most simple terms, how you calculate an impact fee is you take... projects you would look out 10 years and you would say okay these are all the projects that are related to growth so that is a distinction with impact with impact fees things like water line replacement typical operations and maintenance expenses those types of things those are not you cannot include those in impact fees you can only include projects that add new capacity to your system as the way that the statute is working okay so So the way that impact fees are calculated is we basically take that subset of projects. So you have a CIP list. Not all of those projects are eligible for impact fees, but some are if they're adding new capacity to your system. So we take that cost. The thing that we have to do is we have to look at how much of the capacity of that project we would expect to use at the end of that 10 year period. and so we're going to reduce the cost of those projects a little bit because we can only recoup the cost of those projects that that that is related the capacity that we're using but then you take that cost whatever that cost is and you would take that cost and in simple terms you would divide it by the number of the growth and what we call a living unit equivalents are really we and then that becomes your new that becomes your impact fee well that Once you get there, there's one other step. You either have to take that number and cut it in half, or you have to do a rate credit. But at the end of the day, that's how we would calculate them. It's a cost divided by growth. And then those impact fees, they do only get assessed to new growth, again, not existing customers. And typically, those fees are all over the... ALL OVER THE MAP. SOMETIMES IT'S, YOU KNOW, SOMETIMES WE'VE SEEN FEES AS LOW AS, YOU KNOW, $2,000 TO $3,000 PER OUE. CERTAINLY IN CENTRAL TEXAS, FAST-GROWING AREAS WE'RE NOW SEEING IMPACT FEES APPROACH $30,000 PER OUE. SO IT IS A COST TO NEW DEVELOPMENT, BUT IT IS ALSO A SOURCE OF REVENUE TO THE CITY TO PAY FOR A SUBSET OF THAT CIP LIST.

NEW SPEAKER OKAY. ONE OTHER THING. Realistically, council is saying no rate increases, but in all honesty, when there's no growth, how do we not increase fees? Because I don't think that we're being honest and realistic about prices and usage and expenses, right? I mean, we need to be honest about what we are going to be facing with the community feeling good and not wanting to say or do certain things. It's cute, but in reality, what are we facing when we say no increase to rates?

If I'm being honest, and I'll do reference to Councilmember Crenshaw, you need rate increases. I think to Mr. Crenshaw's point, it's trying to decide where do we levy those rate increases? So whenever we're doing rates, again, if we want to get a little bit technical, your expenses, those are your expenses, but in rate making, we call that your revenue requirement. That's the amount of money that you have to bring in. And then we're basically allocating those costs out to your different customer classes. So this is residential, commercial, so on and so forth. So, you're asking the question of I think the question that has to be answered is how do we propose to recoup that revenue requirement? Do we want to place more of the burden on commercial customers, which I agree a lot of times is the easy answer? but it's not always the best answer. I honestly believe that in most cases, I do know that rate increases for citizens and single family residential customers is not popular. I do understand that. However, A lot of times when we talked about this when we use the term enterprise fund and so the difference between an enterprise fund and like a general fund is you're typically you're running your water and wastewater utility as a business you need to view it as a business. And so you are providing a service to your customers and so. Certainly in every other aspects in our everyday lives, we've seen costs go up because expenses has gone up. There was a period not too long ago where expenses were going up very quickly. AND SO I TYPICALLY THINK THAT YOUR CUSTOMERS, THEY UNDERSTAND THAT. THEY SHOULD UNDERSTAND THAT. OUR COSTS GO UP. WE NEED TO PAY OUR STAFF MORE. SOMETIMES WE NEED TO DO CATCH UP ON SALARIES SO THAT WE CAN BRING IN TALENTED STAFF THAT WILL STAY WITH THE CITY SO WE CAN PROVIDE A HIGH COST OF SERVICE TO OUR CUSTOMERS. AGAIN, THIS IS A BUSINESS.

and you're providing a service and so you want to make sure that you're able to provide a high level of service to those customers i'm ranting yeah and i mean i hate to cut you off but i think that we have to get realistic and honest about what's actually happening gas went up to four dollars a gallon you didn't quit running your car because gas went up you paid the four dollars because that's just a part of it kind of like expenses When expenses go up, you don't cut the cost and say, hey, I'm not going to charge you. You say, hey, I got to increase the rate. I understand it. But I think realistically, we've got to be honest with our community about what it's going to take to run this job and this business, because that's what it is. I mean, that's just me.

And so that's, but that is one of the things that we will look at. We will look at presenting, you know, you have one option before you that we've presented. We can look at other options of what if we keep the residential rates unchanged? What would that look like for your other customer groups as well?

And I know Councilman Williams, I'm going to go to him next. And one thing that we hadn't brought up and I've had conversations with our city manager about I think in the last four years, we had a lot of deferred maintenance in our water and sewer for years, and oftentimes people aren't complaining when their water and sewer works fine, but when somebody else is, when somebody's having a problem, they really care. We've made great strides, but it's been because we've been doing, I believe, a better job servicing and maintaining our lines, but that costs money, and I see the projection of the anticipated cost. My concerns, if which i would not want to see happen with rate freezes or rate holes is if we end up deferring maintenance for future projects that right now we know need to happen but we take the money away from three years from now which ends up having an effect six seven eight years from now and you know i want us to be mindful of how we got ourselves in this situation and it was through i believe too much deferred maintenance on our water and sewer system in years past and now we're overcoming that which there's a cost there's always a cost but with that we have to pay that cost and uh And so there's nobody on council that ever wants to increase taxes or increase rates because people don't like that. But also people do want city services. People go to Chick-fil-A as opposed to some other places because of the service and the quality of the food. We want people coming to Beaumont because of the quality of the service that we provide. having less problems so we as long as our administration which i know they will will keep that in mind that we want to aggressively still uh repair and maintain our system so that we can get out of the problems that we're currently having and so I'M JUST SAYING THAT MORE AS A POINT OF CONTENT, BECAUSE I AGREE THAT PEOPLE DON'T LIKE RATE INCREASES, AND THAT'S NOT SOMETHING WE ALL, WE LOVE TO BE ABLE TO NOT DO, BUT I ALSO DON'T WANT IT TO, IN FACT, AFFECT OUR FUTURE MAINTENANCE. COUNCILMAN WILLIAMS.

NEW SPEAKER I ENTERED A LOCAL CHICK-FIL-A LAST NIGHT AND HAD GREAT SERVICE.

NEW SPEAKER THERE ARE OTHER GREAT CHICKEN PLACES IN BOMUT, TEXAS. I APOLOGIZE THAT I USE CHICK-FIL-A AS AN EXAMPLE.

NEW SPEAKER I'LL HAVE TO SAMPLE THOSE NEXT TIME I'M HERE.

NEW SPEAKER YES. NEW SPEAKER THANK YOU, MAYOR. I AGREE WITH A LOT OF WHAT'S BEEN SAID. I THINK MY BIGGEST STRUGGLE IS, YOU KNOW, BUSINESS OWNERS ARE RESIDENTS, TOO. I MEAN, THERE'S PEOPLE SITTING UP HERE THAT DON'T AND SO TO ACT LIKE just raising on businesses won't affect residents. I struggle in seeing how, you know, we want to say Beaumont's a place, come open and do business. But whenever we need to balance our books, we're going to do it on the backs of business owners. And so I think we should be careful going down that path. And from looking at this, you know, it feels like whatever, if we don't do anything, we're just kicking the can. And so when's the last time we had A WATER RATE INCREASE?

NEW SPEAKER P. LAST YEAR.

NEW SPEAKER P. FOR CERTAIN CUSTOMERS LAST YEAR.

NEW SPEAKER P. WE HELD THE SENIORS. NEW SPEAKER P. OKAY. AND PRIOR TO THAT, WHEN DID IT NEW SPEAKER P. GET YOU THE FULL SEVERAL YEARS IN TERMS OF INCREASES. AND WE CAN GET YOU THE AMOUNT.

NEW SPEAKER WE'VE BEEN TRYING TO DO SMALLER RATE INCREASES ANNUALLY INSTEAD OF GETTING TO THE POINT WE HAVE ONE LARGE RATE INCREASE. LAST YEAR THE WATER RATES FOR EVERYONE WITH A 5-H INCH METER REMAINED THE SAME. IF YOU HAD A LARGER METER YOU DID SEE A RATE INCREASE. But all most of your single-family residential customers or small businesses last year that just have a five agents meter They would have not seen a water rate increase last year. Okay Thank You councilman.

We can councilman durio.

I just want to dress One of our jobs being on council, you have to have courage to make decisions that might not be popular because our job is to balance this budget. And if that's the only way we can do it is raising these rates, we're going to have to do it. Like I said, it might not be popular. politically but it's what we're our job is it like it takes courage to be up here because a lot of stuff we do is not popular but it's needed to run this city and also have another question on the misread meters are they being misread are they getting charged too much or is the city not charging enough they're not charging enough okay so yeah just just to be clear so

We have about 42,000 customers in the city. And so the issue that we've discovered is because there are so many, there are always meters that aren't functioning properly. And so we also have a radio system that, you know, used to be mechanical meters. You'd go out and read them. And so those... Those were a little more reliable. Now we have a radio system which helps us collect the readings. And so you're always going to have some that aren't reading correctly or they're difficult to find. So that's always going to be the case. But we have discovered a few, especially higher usage customers that have essentially the meter has not been read and so there's an estimated amount and so it's typically a lower amount can be higher in some cases but once the meter is read properly and we can determine how much usage has been made, then you make an adjustment. And so we've had a couple, well, we have several higher volume customers. And so again, we're working through that now, especially to prioritize those larger volume customers because those are ones that obviously would have the larger impact and basically how we can try to minimize that in the future and recover that revenue.

One other thing. A few years ago, when we may have just gotten on council, they came to us and they wanted to do a rate increase of 4%. But they said it really wasn't going to help because we would have to do another 4% the next year. And so we went on ahead and done 8% because that's what we were supposed to do. That might have been in 21, something like that. But that's what they recommended. They came with a rate increase that wouldn't help. REALLY BECAUSE WE WOULD HAVE TO DO IT AGAIN THE FOLLOWING YEAR. SO WE HAD TO DO MORE THAN WHAT THEY ASKED. JUST TO LET YOU KNOW.

NEW SPEAKER COUNCILMAN TURNER. NEW SPEAKER AND A FOLLOW-UP QUESTION, MR. BOONE. I KNOW WE DISCOVERED SOME OF THESE ACCOUNTS WERE BEING COLLECTED ON. if possible i think it's important that council receives a follow-up on what is the plan of action to get there uh what took place with the reasons we were inefficient was it lack of equipment was it simply not training was it someone not following up with their roles and responsibilities of what needs to be done I THINK WHEN WE'RE LOOKING AT REVENUE LOSS, I THINK IT NEEDS TO BE KIND OF SHOT OUT TO US TRANSPARENTLY BECAUSE I'M HEARING IT, BUT I WANT TO KNOW THE DETAILS OF WHAT GOT US TO THIS PLACE.

NEW SPEAKER YES, SIR. WE CAN GET YOU A FULL ASSESSMENT OF NOT ONLY HOW WE GOT TO THIS ISSUE, WHAT IS THE ISSUE, HOW WE GOT HERE, BUT ALSO WHAT STAFF IS DOING TO ADDRESS IT.

NEW SPEAKER THANK YOU. COUNCILMAN DURIE? NEW SPEAKER WHAT DO YOU DO TO ADDRESS IF YOU CAN'T FIND A METER?

how long do we keep on estimating if we can't find a meter before we do we go and replace the meter or well that's just it you have to identify first of all you have to find it in some cases it's difficult to find you might have um a person who's not you might have a different person a new person you know again there are 42,000 meters out there so as you can imagine a single-family home pretty easy to find if you get into an institution a large facility a school a college something like that they can be a little trickier to find and so what happens is if they can't find it then they'll estimate it but what we're trying to work through now is okay that's fine but let's have a process to make sure that we can get out there as soon as possible to find the meter and to try to avoid minimize having estimated but knowing that they're always going to be some but you want to try to minimize it because it affects not only affects our revenues but it affects you know it affects the customers because then it messes up their their accounts payable so it's it's it's again it's always an issue with that many meters but we want to try to eliminate it because we can't just keep estimating forever just because we can't find it do you all ever actually just just go and install another meter if you can't find that one Well, so if the meter's broken or maybe the radio system, the relay system's not working, we repair all that. But we don't want to be in a position of not reading a meter. But that's what we're trying to resolve.

We find all the meters eventually.

Eventually we will find them.

THANK YOU, COUNCILMAN DURY.

COUNCILMAN HILLIARD. I JUST WANT TO ECHO, WE ARE A BUSINESS, WE'RE A CORPORATION, AND IT'S IMPORTANT THAT OUR BOOTS ON THE GROUND ARE GETTING THE NUMBERS WE NEED SO THAT WE CAN LOOK AT AN ACTUAL BUDGET THAT REFLECTS what we're collecting and what we're spending. Because right now, I'd be willing to bet that if we put the numbers to it, this has been going on for quite a number of years. And it's probably in the millions of dollars. And if we can breed all them 42,000 meters, and actually i mean i i have i don't know 15 or 20 000 customers and i can promise you that we never miss a chance to build them when we do service for them and so you know if we're missing the service we're not billing the customers and we're talking about large water use customers that would really offset these numbers so it's important that we get a and i think that you've made some changes i think we've uh we've moved that over and i think that uh uh the water department now is in charge of that and mike and i think that we're going to make some good head waves so i think it's in good hands thank you councilman hilliard oh i got ink on my mouth too huh they're just they're setting me up up here it's real bad um good okay you know i'm gonna tell you um

No, I'm going to keep it real. So I had a question about have we ever done like an efficiency study or, you know, because of all the things that we're discussing, have we thought about doing something about efficiency, like if this department is, you know, operating to the best of its efficiency?

right so there's multiple things involved some of it's more of a financial billing and i know our city attorney has helped delve into some of that resolve some of that but then of course some of its operations so we talk about you know meter reading and and again we're getting a good better handle on it but that's out in the field that's operational that's you know trying to collect all that information but to that end we are considering YOU KNOW, POSSIBLE EFFICIENCY STUDY IN A VARIETY OF AREAS, AND THAT MIGHT JUST BE ONE OF THEM.

NEW SPEAKER I JUST WANT TO PUT IT ON THE RECORD. WE NEED TO MAKE SURE THAT WE'RE OPERATING OPTIMALLY. THAT'S A BIG DEAL FOR ME. NEW SPEAKER YES, MA'AM.

SO TO THAT POINT, WE DID, AS THE MANAGER MENTIONED, DO A REORGANIZATION OF THE DEPARTMENT A WHILE AGO. FOR EXAMPLE, THE INDIVIDUALS WHO WERE METER READERS WERE ORIGINALLY REPORTING UNDER WATER CUSTOMER SERVICE. THEY NOW REPORT UNDER MIKE HARRIS BECAUSE THOSE GUYS WERE ALREADY IN THE FIELD. THEY WERE ALREADY DOING THE WORK. SO THEY'RE NOW DOING THAT. to allocate crews appropriately um and we've been able to to that point relocate or determine to find new meters to to address some of those billing issues that's why they're coming up now it's like those guys are in the field they're doing that work so um there has been some changes made and that's why a lot of this stuff is surfacing now um and so as you continue to move forward we'll need to the manager will be bringing forth other things to redirect okay

And I do want to add that last year we had John Hopkins University come and do a study and work with our water and sewer department to look at efficiencies. And we got a real good report and that was at no charge to the city.

Yeah. And one of the things I'll mention is You know, we have pretty good data, pretty good mapping, but there are cases, and again, we've got a lot of infrastructure spread across 80 square miles. So, but one of the things we're talking about is maybe a concerted effort to, you know, identify to the best we can, you know, what lines we've got where. Again, we have most of this information. Locations of valves. you know that can be that could present a problem when we have droughts and we have broken lines we have to identify and isolate lines to repair we again we can find most of them it's just some of those hard to find ones and so mapping meters could also be a component of that mapping effort so that anybody in the field whether it's their first day or whatever would be able to have a gis and a gps that could take them right to a valve or a meter or a line and so that's it's a tall order for 80 square miles but it's something that you know i know we worked on the past but we probably want to take a renewed effort to try to have that data because once we have the data you know it goes goes back to a variety of things work orders where we discover a line that we thought was here was actually here and again can't map at all but try to take a a renewed effort to try to upgrade our maps and gis

Thank you, city manager. And another question from Councilman Turner.

And that was my question. I know about two years ago, we discussed the GIS system to kind of locate all meters. Is that something we still are working towards or that was something that was just brought up to make it more efficient?

Well, so we have a pretty extensive GIS system, and most of our things are mapped. But to answer your question, I don't think we ever enacted the project to basically, and it would probably involve hiring somebody to come in and help us geolocate exactly where all the meters are, geolocate where all the valves are to the extent we can. But to answer your question, I don't believe that that was enacted, but that's what I'm talking about.

I understand. I appreciate you. But after listening to, you know, Councilman Crenshaw and Councilman here about some of the building issues, I think that may be something it'd be pretty important to present to the council soon in the future.

And again, with 80 square miles, it might be an expensive effort. But the return on investment, when we're talking about lost revenue, we're talking about, you know, getting lines closed during droughts when we have waterline breakage. I think it would pay for itself eventually.

THANK YOU. NEW SPEAKER THANK YOU ALL VERY MUCH. I WILL WORK WITH STAFF TO ANSWER THE QUESTIONS THAT I CANNOT ANSWER FOR YOU ALL TODAY AND EITHER STAFF OR MYSELF WILL REPORT THOSE ANSWERS BACK TO YOU. NEW SPEAKER THANK YOU, SIR.

NEW SPEAKER THANK YOU, MR. REED. AND NEXT WE'RE GOING TO HAVE A PRESENTATION BY HOLMES MURPHY ON EMPLOYEE BENEFITS AND INTRODUCING OUR OWN SUSAN KROSTOFIAK OVER BENEFITS.

NEW SPEAKERS. GOOD MORNING. YOUR PHARMACY HAS BEEN PERFORMING A LITTLE BIT BETTER HISTORICALLY IN 2025 DUE TO THE CONTRACTS THAT YOU HAVE THROUGH YOUR CURRENT PBM. AND THEN RIGHT NOW WHEN WE'RE LOOKING AT OCTOBER THROUGH 2025 THROUGH MAY OF 2026, YOU'RE KIND OF PROJECTED, THESE ARE THE EIGHT MONTHS OF PROJECTED CLAIMS RIGHT NOW, YOU'RE KIND OF TRACKING A LITTLE BIT BETTER FROM THE PHARMACY SIDE THAN YOU WERE IN THE PAST AND CERTAINLY BETTER FROM THE MEDICAL SIDE THAN YOU HAD IN THE PRIOR PLAN YEAR WHEN WE'RE LOOKING AT THE WAY THAT YOUR PLAN HAS BEEN WHEN WE'RE LOOKING AT OUR HIGH COST CLAIMANTS, THIS IS REALLY WHERE THE CLAIM SPEND HAPPENS. SO IF YOU LOOK BACK IN 2025, YOUR TOTAL CLAIM SPEND FOR 2025 FOR YOUR HIGH COST CLAIMANTS, THOSE OVER $100,000, WAS $11 MILLION IN CLAIM SPEND. WHEN YOU LOOK AT THE PRIOR YEARS, YOU CAN SEE THOSE NUMBERS WHILE THEY'RE SIGNIFICANTLY LESS. YOU CAN ALSO SEE THE NUMBER OF CLAIMANTS OVER $100,000. YOU'RE AROUND IN THAT 30 EMPLOYEES OR SO, 30 MEMBERS RANGE. SO REALLY WHAT THAT REALLY TELLS US IS WE HAD SOME REALLY HIGH COST CLAIMS THAT HAPPENED FOR SPECIFIC MEMBERS. WE DIDN'T HAVE AN INCREASE OF THE NUMBER OF PEOPLE THAT WERE HIGH COST CLAIMANTS, JUST THOSE INCREDIBLY COMPLEX HIGH COST CLAIMS THAT REALLY DID A LOT OF INCREASE YOUR TOTAL SPEND ON YOUR MEDICAL. YEAR TO DATE YOUR MEDICAL HIGH COST CLAIMS ARE AROUND LITTLE UNDER $2 MILLION. PHARMACY CLAIMS IS AROUND $700,000. SO PERFORMING CERTAINLY BETTER THAN YOU HAD PRIOR WHEN WE TALKED ABOUT YOUR HIGH COST CLAIMANTS. THE CITY OF BOWMANT HAS WHAT'S CALLED STOP LOSS INSURANCE SO WHAT THIS DOES IS A LAYER OF PROTECTION SO ANY CLAIMANT THAT'S INDIVIDUAL CLAIMANTS OVER $275,000, THERE'S AN EXTRA INSURANCE POLICY THAT KICKS INTO PLACE THAT BASICALLY PAYS THE DIFFERENCE OVER THE 275. SO IT'S AN INDIVIDUAL DEDUCTIBLE FOR ALL EMPLOYEES ON YOUR PLAN. IF YOU LOOK IN THE PAST YOU CAN SEE THE NUMBER OF CLAIMANTS OVER THAT $275,000 THRESHOLD, 10, 13, 12, BUT WHEN YOU LOOK AT THE REIMBURSEMENT THAT RED LINE SECOND FROM THE BOTTOM IN 2024 WE HAD AROUND $2 MILLION OF REIMBURSEMENTS IN 2023 AROUND 3, 2025 WE HAD ALMOST $5 MILLION IN REIMBURSEMENTS. YOU CAN SEE THE NUMBER OF CLAIMANTS DIDN'T INCREASE WE JUST HAD SOME INCREDIBLY COMPLEX EXPENSIVE CLAIMS THAT HAPPENED. CURRENTLY YEAR TO DATE WHEN WE'RE LOOKING AT IT WE HAVE TWO CLAIMANTS OVER THAT AROUND $1.3 MILLION IN PREMIUMS BUT ONLY $218,000 WORTH OF REIMBURSEMENTS. So this usually happens for most employers will have a flux of large claims that happen. We call them the flood years. So you kind of look back and you say when you track back several years, you can see it's been tracking pretty well and then you have a big blip and then it'll go drop back down again. That's very common. Part of the reason why you have a fund balance to be able to offset those years that you're performing poorly. But in this particular case, last year was a very difficult year when it came down to the number of high cost claims specifically that we had.

Can you explain what exactly are the reimbursements? Who do the reimbursements go to?

They come back to the City of Beaumont. So any individual person that goes over the $275,000 threshold, those dollars go back to the City of Beaumont. Basically, we get a reimbursement for those individuals. And so in last year, you had almost $5 million of reimbursements for those individuals that went over that threshold. Okay. Yeah.

Thank you.

Of course. WHICH IS GOOD FOR YOU ON THOSE YEARS WHEN YOU'RE HAVING LIKE FOR EXAMPLE LAST YEAR THAT HELPS CONSIDERABLY. WE BUDGET FOR ABOUT A 15% INCREASE TO PREMIUMS SO IF YOU LOOK ON THE PREMIUMS LINE YOU CAN SEE WE SPEND AROUND $2 MILLION IN PREMIUMS A YEAR FOR YOUR STOP LOSS BUT OBVIOUSLY YOUR REIMBURSEMENT LEVEL WAS INCREDIBLY HIGH FOR LAST YEAR. THE STOP LOSS IS A FULLY INSURED PRODUCT SO IT'S IN A POOL OF OTHER EMPLOYERS SO THAT 15% MIGHT SEEM LOW BECAUSE IT'S A POOLED PRODUCT IT'S PROBABLY NOT AS LOW AS IT COULD BE ESPECIALLY SINCE YOU'RE PERFORMING WELL THIS YEAR. AND WHAT THEY DO IS WHEN WE DO OUR STOP LOSS MARKETING WHICH WILL BE A LITTLE LATER IN THE YEAR WHEN WE HAVE ADDITIONAL CLAIMS DATA, WHEN WE DO THAT MARKETING THEY TAKE INTO ACCOUNT HOW YOUR PLAN IS CURRENTLY PERFORMING, YOUR CURRENT CLAIMS ACTIVITY AND THOSE TYPES OF THINGS. SO THEY LOOK AT YOUR PAST AS WELL BUT WE'RE ALSO LOOKING AT THE CURRENT AND TO SEE HOW YOU'RE GOING TO PERFORM AND THAT'S HOW THAT RENEWAL WILL COME THROUGH. AND THIS IS A LITTLE BIT BLURRY, BUT I DID WANT TO SHOW YOU, SO LARGE CLAIMS OVER $200,000 PAID YEAR TO DATE. AND SO I HID A LOT OF INFORMATION IN HERE BECAUSE THERE'S PHI IN HERE AND I DON'T WANT TO GIVE YOU PROTECTED HEALTH INFORMATION FOR ANY INDIVIDUAL CLAIMS, BUT I WANTED TO POINT OUT A FEW THINGS ON HERE. SO FOR EXAMPLE, THE NUMBER ONE INDIVIDUAL ON HERE, YOU'LL SEE IT'S MEDICAL CLAIMS, IT'S ONLY 23,000, ALMOST $24,000. PHARMACY CLAIMS ON THIS INDIVIDUAL IS CLOSE TO $400,000. THIS INDIVIDUAL IS GOING TO CONTINUE, AND THE WAY THAT PURPLEY SECTION WITH THOSE LITTLE BARS IN THERE, THAT MEANS EACH MONTH THAT IS A DARKER COLOR IS WHEN YOU SEE THAT THEY HAVE HIGHER CLAIMS EACH MONTH. SO THIS PARTICULAR PERSON, FOR EXAMPLE, WHEN I WAS TALKING ABOUT THE STOP LOSS RENEWAL, THIS PERSON MAY HAVE CONTINUING ONGOING CLAIMS BECAUSE THEY'RE A PHARMACY CLAIMANT. WHERE YOU LOOK AT THAT NUMBER FOUR PERSON, YOU CAN SEE IT'S A DARK PURPLE IN APRIL FOR THAT PARTICULAR PERSON, BUT IT LIGHTENS UP AFTER THAT. SO THAT INDIVIDUAL MIGHT HAVE HAD A LARGE CLAIM, HIT IN APRIL, SO SAY FOR EXAMPLE A SURGERY OR SOMETHING LIKE THAT, AND THEN THEY'LL TRACK LATER, THEY'LL DROP OFF A LITTLE BIT LATER ON IN THE YEAR. WE KEEP TRACK OF ALL THAT FOR SEVERAL REASONS. IF THERE'S AN INDIVIDUAL THAT'S ON A HIGH-COST PHARMACY MEDICATION, WE WORK WITH THE PHARMACY CARRIER TO MAKE SURE THAT WE'RE GETTING THE BEST PRICING FOR THOSE TYPES OF THINGS TOO. SO WE TRACK THAT TO DETERMINE IS THIS A BLIP ON THE RADAR OR IS THIS SOMEONE THAT'S GOING TO BE AN ONGOING LONG-TERM HIGH-COST CLAIMANT. SO A LITTLE BIT OF INFORMATION THAT WE KIND OF PULLED THROUGH. YOU'LL NOTICE THAT AT THE AVERAGE HEAD COUNT WE MAINTAIN THE AVERAGE HEAD COUNT WHEN WE'RE LOOKING AT OUR FISCAL YEAR BUDGET SUMMARY WITH NO CHANGES SO WE LEFT THAT AT THE 1350. I KNOW CONSIDERATION IS POSSIBLY HAVING A HIGHER RING FREEZE. WE WANT TO KEEP THAT NUMBER THE SAME. SO WHEN WE'RE LOOKING AT THE GROSS CHANGE TO BUDGET SO WHAT WE HAVE AT THE TOP IS THE PEPM GROSS COST SO THAT'S THE COST OF WHAT YOUR PLAN IS, MEDICAL, PHARMACY, ASO FEES, STOP LOSS INSURANCE, THOSE TYPES OF THINGS. AND THEN YOU HAVE YOUR EMPLOYEE CONTRIBUTIONS. THAT'S A BLENDED RATE SO THAT GOES ACROSS ALL YOUR TIERS. SO DEPENDING ON WHERE THEY'RE AT, IT BLENDS THAT TOGETHER FOR YOU TO GIVE YOU THAT 283. WHEN WE LOOK AT THE PEPM GROSS COST FOR THAT FIRST COLUMN, THE 2025-2026 BUDGET, WE PROJECTED TO BE 1521. BUT THE REFORECAST IS SHOWING COMING IN AROUND 1479. THE REASON FOR THAT SPECIFICALLY IS YOUR PHARMACY IS COMING IN A LITTLE BIT LOWER. WE DON'T HAVE AS MANY HIGH-COST CLAIMANTS. WHEN BUDGET WAS DONE LAST YEAR, WE KNEW THAT YOUR HIGH-COST CLAIMANTS WERE A BIG REASON FOR THE INCREASES THAT WE'RE LOOKING AT, SO YOU KIND OF LEVEL THAT OUT AGAIN OF HOW YOUR PLAN IS HISTORICALLY PERFORMED. AND SO WE'RE REALLY COMING AND PROJECTING AND COMING IN A LITTLE BIT UNDER BUDGET FOR THIS PLAN YEAR OR THIS FISCAL YEAR. FOR NEXT YEAR, YOU CAN SEE THAT 8.5% GROSS CHANGE TO BUDGET OR 10.2% NET CHANGE TO BUDGET. THAT GROWTH CHANGE TO BUDGET REALLY IS FOLLOWING WHAT TREND IS. TREND FOR MEDICAL IS SITTING AROUND 9.3, PHARMACY IS SITTING AROUND 11. SO YOU'RE EVEN COMING IN BLENDED BETWEEN THE TWO OF THOSE UNDER WHAT MEDICAL TREND AND PHARMACY TREND IS CURRENTLY. SO THAT 8.5% FOR YOUR GROWTH CHANGE EQUATES TO ABOUT $2.5 MILLION.

YES. WHAT IS THE AVERAGE EMPLOYEE CONTRIBUTION TO THIS? I'M ASSUMING WE DON'T PAY 100%?

YEAH, IT'S THE 283 CURRENTLY IS THE AVERAGE. THAT DEPENDS ON WHAT TIER THEY'RE ON. SO IF THEY'RE EMPLOYEE, EMPLOYEE SPOUSE, EMPLOYEE CHILDREN, EMPLOYEE FAMILY. SO 283 IS AVERAGE WHEN IT COMES TO IT. AND I ACTUALLY HAVE THE RATES IN HERE ABOUT THE PROPOSED RATES WITH THE PROPOSED INCREASE FOR THIS YEAR. SO I CAN SHOW YOU WHAT THAT WOULD BE. BUT THAT'S THE AVERAGE. YES. SO THERE'S A LOT MORE NUMBERS ON THIS SLIDE, BUT REALLY WHAT I WANT TO POINT YOUR ATTENTION TO IS THE PROJECTION WITH CHANGES, WHICH IS THE FOURTH COLUMN OVER. THAT WILL SHOW YOU THE AVERAGE EMPLOYEE PER MONTH CONTRIBUTIONS INCREASES FROM THE 283 TO 300. THIS IS A 9% INCREASE. SEEMS LIKE A LOT, BUT I'LL SHOW YOU THE PREMIUMS ON THE NEXT SLIDE, WHICH WILL SHOW YOU, BECAUSE WHEN WE'RE TALKING ABOUT THE CONTRIBUTIONS FOR EMPLOYEES, 9%, YOU KNOW, IS NOT A SIGNIFICANT DOLLAR AMOUNT FOR INDIVIDUAL EMPLOYEES. WHAT THAT DOES IS OFFSETS FOR AROUND $300,000 TO THAT $2.49 OR $2.5 MILLION INCREASE THAT WE'RE PROJECTING FOR EMPLOYEES GOING FORWARD. AND THEN THIS IS THE SEMIMONTHLY, SO THE 24-PAY PERIOD PREMIUMS THAT ARE RECOMMENDED, THAT 9% INCREASE. SO IT WILL SHOW YOU THOSE MONTHLY RATES FOR THE INDIVIDUALS. YOU CAN SEE THE MEDICAL RATES ON THERE AS WELL AS THE DENTAL AND THE VISION AS WELL. I'LL PAUSE ON THERE.

I SAW YOU HAVE A QUESTION. do have a question it's a little off topic um but so i brought this up previously but i know that at the county they have like a sick call a sick call hall kind of like you can go in if you've got a cold or if you need things and see like a clinic model kind of like a clinic model that would it alleviates some costs right because now we've got a doctor or nurse or whomever that's on staff or Even I went, my back was hurting, and they cracked it in there. So I'm saying that to say this. You can go in with little issues that now you don't have to go to the doctor. Does the city have a place like that or anything?

No, there's not. Sorry for interrupting you. There's not. I have a few things in here about what the clinic model could look like. So we do have the opportunity to look at something like that. What I would strongly suggest is doing a full RFP for that. SIMPLY BECAUSE IT IS A LARGE EXPENSE TO START OFF WITH. IT'S NOT AN INEXPENSIVE ENDEAVOR TO PUT THAT IN PLACE, AND REALLY IT'S THE SAVINGS ON THOSE MODELS, 100 PERCENT IS CONTINGENT ON THE ADOPTION OF YOUR EMPLOYEES ON THE PLAN. IF YOU DON'T HAVE PARTICIPATION, YOU'RE NOT SAVING MONEY. SO THERE ARE SOME MODELS THAT WILL DO THINGS LIKE THEY'LL HAVE A GUARANTEE IN PLACE SAYING RIGHT NOW YOUR CURRENT SPEND IS THIS MUCH, WE'RE GOING TO GUARANTEE WE'RE GOING TO SAVE YOU $2 MILLION NEXT YEAR. if we don't save you the two million dollars we're going to pay you back the difference and so if we are going to explore something like that i would perform a full rfp or propose to do a full rfp because to me there's a lot of differences in what those models do so this one cracked your back some of them don't do chiropractic so it depends on what we're looking for and then also what it would look like for long term what is our projections generally speaking for most clinic models if you're breaking even i would say you're doing great WHICH, YOU KNOW, IS NOT NECESSARILY SAVINGS, BUT IF YOU GET A LOT OF ADOPTION INTO THOSE PLANS AND A LOT OF PARTICIPATION, YOU CAN SAVE MONEY. IT JUST TAKES TIME TO BUILD UP THAT MODEL. NO, NO, NO, PLEASE.

NEW SPEAKER THANK YOU.

NEW SPEAKER I LIKE THE QUESTIONS. THOSE ARE HELPFUL. ANYTHING ELSE ON THE RATES THAT YOU HAVE QUESTIONS ON? YES.

NEW SPEAKER SO I SEE WHERE I HAVE CTH MEDICAL DENTAL AND THEN CLEAN DENTAL AND THEY HAVE DIFFERENT. CORRECT. WHY THEY'RE NOT ALL UNDER THE SAME?

THERE'S A COLLECTIVE BARGAINING AND I THINK THAT FOR THE POLICE SPECIFICALLY, THIS IS HISTORICALLY ALWAYS HAD SEPARATE RATES AND SO YOU CAN ONLY INCREASE FOR SO MUCH DEPENDING ON THE DIFFERENT DEPARTMENTS ESSENTIALLY.

THIS DOESN'T INCLUDE RETIREES, DOES IT?

NO, THIS DOES NOT HAVE THE RETIREES ON HERE.

NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS.

NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. AND SO ONE OF THE OPTIONS THAT WE LOOKED AT WAS INCREASING DEDUCTIBLES, SO WE HAVE FOUR DIFFERENT INCREMENTAL INCREASES THAT WE CAN LOOK THROUGH. AND SO WHEN WE'RE LOOKING AT THE DEDUCTIBLE, IF WE RAISE IT TO $1200 FOR AN INDIVIDUAL PERSON, THAT IS AN ADDITIONAL $104,000 SAVINGS BASICALLY TO THE CITY. SAVINGS IS KIND OF A, YOU KNOW, IT IS WHAT IT IS. IT'S BASICALLY A COST SHIFT ESSENTIALLY. BUT BASICALLY IT'S $104,000. YOU'LL NOTICE IT LOWERS DOWN. IT'S NOT DOLLAR FOR DOLLAR WHEN YOU INCREASE AN ADDITIONAL $250 BECAUSE THERE'S GOING TO BE INDIVIDUALS THAT MEET THAT DEDUCTIBLE AND THOSE THAT DON'T. SO WHEN YOU GET TO THAT $2000 MARK YOU'LL HAVE A SUBSECTION OF YOUR POPULATION THAT WILL NEVER REACH A $2000 DEDUCTIBLE. SO YOU CAN KIND OF SEE IT'S A LITTLE BIT INCREMENTALLY DIFFERENT. $250 INCREASE TO YOUR DEDUCTIBLE. NEW SPEAKER Thank you. NEW SPEAKER YOU'RE WELCOME. THE OTHER THING THAT WE WERE TALKING THROUGH IS INCREASING THE EMERGENCY ROOM COPAYS. RIGHT NOW IT'S CURRENTLY $250. I HAVE A SLIDE IN HERE I'LL GO THROUGH SHOWING HOW YOUR EMERGENCY ROOM UTILIZATION IS PRETTY HIGH. YOU HAVE TELEMEDICINE OPTION AND YOU HAVE A LOT OF EMERGENCY ROOM VISITS THAT ARE NON-EMERGENCY CARE. SO ESSENTIALLY PEOPLE GOING IN FOR YOUR CHILD HAS AN EAR INFECTION, THEY'RE CRYING AT NIGHT, YOU TAKE THEM IN BECAUSE THAT'S WHAT YOU DO. WE HAVE OPTIONS TO HELP PROMOTE THAT WE CAN PROMOTE THAT ARE LOWER COST ALTERNATIVES BUT ALSO MORE CONVENIENT FOR YOUR EMPLOYEES THAN HAVING TO TAKE A 3-YEAR-OLD TO THE E.R. AT 10 P.M. SO THERE'S ABILITIES TO DO THAT SO THAT WAY WE MAYBE CAN DISCOURAGE PEOPLE FROM USING THE EMERGENCY ROOM AS THEIR PRIMARY CARE OR URGENT CARE. BECAUSE THOSE CLAIMS ARE INCREDIBLY EXPENSIVE AND I'LL GO INTO MORE DETAILS ON THAT WHEN I LOOK AT THAT A LITTLE BIT MORE. THE OTHER THING THAT WE HAVE IS WE HAVE THE CIVIL SERVICE CONTRACT REQUIREMENTS. WE CAN'T DO A TON TO YOUR POINT ABOUT THE DIFFERENCE IN PREMIUMS. THERE'S NOT A LOT THAT WE CAN DO WHEN IT COMES TO THE PREMIUM SPREAD ON THOSE. BUT WE CAN HAVE THE OPTION POSSIBLY OF ADDING A HIGH DEDUCTIBLE HEALTH PLAN IN THE FUTURE. IT'S JUST WE MIGHT HAVE SOME CHALLENGES WITH THAT WHEN IT COMES TO THE CIVIL SERVICE CONTRACTS IF WE'RE ABLE TO DO THAT. BECAUSE YOU HAVE TO HAVE ENOUGH OF A SPREAD BETWEEN PREMIUMS TO MAKE THAT AN ATTRACTIVE PLAN. FOR YOUR EMPLOYEES, HIGH DEDUCTIBLE HEALTH PLANS FOR A LOT OF YOUR EMPLOYEES WILL BE A BENEFICIAL PLAN. IT SOUNDS DIFFICULT BECAUSE YOU SAY HIGH DEDUCTIBLE SO IT SOUNDS LIKE IT'S GOING TO BE MAYBE NOT ADVANTAGEOUS. BUT IF THE CITY HAS SOME SEED MONEY THAT GOES INTO THERE, YOU HAVE A SECTION OF YOUR POPULATION THAT NEVER SEE A DOCTOR. SO FOR THEM A HIGH DEDUCTIBLE HEALTH PLAN WITH LOW PREMIUMS IS NOT A BIG DEAL. THEY CAN CONTINUE TO ACCUMULATE DOLLARS INTO A HEALTH SAVINGS ACCOUNT. AND SO IF THEY DO HAVE A CATASTROPHIC CLAIM, THEY HAVE MONEY SET ASIDE TO BE ABLE TO OFFSET THOSE COSTS. SO THEY'RE ATTRACTIVE FOR LONG TERM, ESPECIALLY INDIVIDUALS, AND THEY'RE GREAT FOR PEOPLE THAT ARE MAYBE JUST STARTING OFF AND BUILDING THAT HEALTH SAVINGS ACCOUNT. AND THEN AGAIN, PEOPLE THAT ARE GETTING CLOSE TO RETIREMENT, YOU CAN HAVE THOSE MONEY SET ASIDE IN A TAX DEFERRED ACCOUNT THAT CONTINUE TO ACCUMULATE THAT YOU CAN USE LATER ON IN LIFE. SO THERE'S SOME BENEFITS AND ATTRACTIVENESS TO THESE PLANS. We do have a challenge, though, when it comes to your current contracts because the spread of the premiums can't be enough that will attract people into those plans. So keeping that as food for thought. The other thing was the on-site clinic versus traditional health care. So you asked the best question on that. As far as that goes, there's a lot of words on this page. But what I really wanted to point out is there's a lot of options when it comes to what's out there. AND SO IT'S EVERYTHING FROM DIRECT PRIMARY CARE WHERE YOU HAVE BASICALLY A RELATIONSHIP WITH A PRIMARY CARE PROVIDER IN THE CITY AND SAY THIS IS OUR PERSON, TO AN ON-SITE CLINIC, NEAR-SITE CLINIC, VIRTUAL CLINICS, THERE'S TONS OF OPTIONS OUT THERE. SO FOR ME, AS YOUR CONSULTANT, I WOULD RECOMMEND, HIGHLY RECOMMEND DOING A FULL RFP ON THIS TO BE ABLE TO DETERMINE WHAT'S GOING TO SAVE YOU DOLLARS. LONG TERM. WHAT KIND OF GUARANTEES DO WE HAVE IN PLACE? WHAT SERVICES ARE BEING OFFERED? AND THIS SHOWS YOU KIND OF AN IDEA OF BASED ON 500 EMPLOYEES HOW MUCH THESE MODELS CAN COST. AND SO YOU'LL SEE THAT DEPENDING ON WHAT IT IS, IF YOU'RE DOING A FULL BUILDOUT OF A CLINIC MODEL OR IF YOU HAVE SPACE CURRENTLY OR IF IT'S A SHARED SITE CLINIC, THERE'S A LOT OF OPTIONS OUT THERE. AND AGAIN, TO MY POINT BEFORE, IF YOU HAVE A ROI THAT'S ONE TO ONE, YOU'RE JUST BASICALLY BREAKING EVEN YEAR ONE, YOU'RE DOING GREAT. the big key to that is having people be able to utilize it. And if you don't have utilization, you're not going to have savings.

So question. Yes. Would this be something that could be run or housed at our own health department?

It can be. Yeah. So basically what we do is determining on what you're looking for. The RFP can be written in such a way that we have space here and this is what we'd like to do. Or it could be written as what's your options? And we do a full evaluation on what's available and what the costs would be for any of those things.

And you know, one thing that I've been thinking about in my mind is you got a lot of parents that take kids to the doctors for fevers and all kinds of stuff that don't even make sense. Stuff like this is you at the emergency room and we don't need that. That's costing us thousands and thousands of dollars. Yeah, you're correct. I mean, my mind be thinking like,

And I don't believe we do, but do we have any incentives for employees to use telemed?

Your telemedicine visits are $5. So it's less expensive than going to your PCP. It's far less expensive going to the emergency room. The issue with the emergency room is you go in, you might have a $250 copay, but you don't have to pay it at the time of service. And so you're not necessarily discouraging people from going to do that. I will say for telemedicine, the $5 copay is really inexpensive and it's an option. I think a lot of people don't realize that it's there. and what they can treat, I think is part of the piece.

I have a question too. So a lot of these programs that offer services on demand without having to physically go there. I don't know who's in charge of promoting that. Who's in charge of making sure that our employees know this is an option and it's $5. Like, I mean, I think sometimes people miss it because they don't know, right? It took me a while to realize that I could dial a number on the back of my car to see a doctor. I didn't even, you know, I'm saying that to say who's promoting. It's

It's a combination of several factors. So obviously during open enrollment and when your new hires come on board, that's one piece. The carriers can actually send out postcards, mailers, flyers. We can help with that as well, communication. So if you're looking to do posters inside bathrooms, let people know that something's available, you know, things like that. So promotion is key. So you're correct. There's several ways that we can promote. And I think that I actually have a flyer that I did for someone really recently where the cost of your care is depending on where you park your car. And so if you're parked in your own driveway, it's $5 for the City of Beaumont employees. But if you go to the emergency room, it's $250. So it gives you an idea of what that's going to cost and what they can treat. So we can certainly do a lot of promotion around that.

Yeah, and, you know, I would be even interested in, like, maybe a monthly text or something that goes out. Hey, did you know? Did you know? Were you aware? Whatever. It go right to your city phone or whatever, directly to you. This is a service that we offer that you don't, you know, whatever. I don't know. But people check their texts. And so I think, you know, sometimes a text going out is a reminder.

The did you know? Yeah. Did you know? I mean, the challenge you always have with health care in general is most people don't realize what's there until they need it. And then when they need it, they don't realize what's there because, you know, it's a complicated system just in general. And so you have to get in front of people a lot, to your point.

Also, it could go out. You said people check their texts. They check their checks also. Go out with your check or with your statement.

Good idea. Yeah. that in the private sector, in the business sector, I know the best that we can get for my company, and I speak for probably a lot of small businesses, I mean, we're looking at $900 to go to the emergency room, and the best we can do is a $6,000 deductible with a $12,000 family. So this is incredible insurance. It really is. And I don't know if we... the people in the city realize what kind of a policy they're getting here and how terrible it is in the private sector.

Yeah. And, you know, kind of going back to your point, you know, looking at those deductible increases, even a nominal increase of $250, you know, it's not a lot on the individual person. CERTAINLY DOES SAVE THE CITY SOME DOLLARS, BUT YOU'RE CORRECT. WHEN WE LOOK AT BENCHMARK WHEN IT COMES TO DEDUCTIBLES, YOU'RE CERTAINLY ON THE LOWER END WHEN IT COMES TO WHAT THE MARKET LOOKS LIKE. AND NOT JUST THE MARKET, BECAUSE I ONLY WORK WITH MUNICIPALITIES, AND SO FOR ME, MY BOOK OF BUSINESS IS A LITTLE BIT DIFFERENT THAN THE PRIVATE SECTOR BECAUSE MUNICIPALITIES TYPICALLY HAVE RICHER BENEFITS THAN PRIVATE SECTOR EMPLOYERS. SO EVEN WITH THE MUNICIPALITIES, I HAVE A COUPLE THAT STILL HAVE $500 DEDUCTIBLES. BUT MOST OF THEM ARE SITTING AROUND THAT $1,500 RANGE WOULD BE PRETTY FAIR FOR A STANDARD PPO PLAN. SO $1,000 IS A LITTLE LOW, BUT YOU COULD STEP INTO IT IF YOU WANTED TO. THERE'S OPTIONS CERTAINLY WHEN IT COMES TO THAT. THE OTHER THING, THERE'S SOME COUNCIL CONCERNS RAISED A COUPLE YEARS AGO, SO I WANTED TO TALK THROUGH A COUPLE THINGS ON THIS. SO THIS IS YEAR OVER YEAR, PER MEMBER PER MONTH SPENDS. SO BASICALLY WE USE A PER MEMBER PER MONTH TO NORMALIZE IT. AND ONE OF THE THINGS I WANT TO POINT OUT IS PLAN YEAR 2025, THE PLAN PAID $644 PER MEMBER PER MONTH AND BOOK OF BUSINESS BENCHMARK FOR BLUE CROSS BLUE SHIELD WAS SITTING AROUND 463. THAT IS REALLY TRULY BECAUSE OF HIGH COST CLAIMANTS, THAT IS NOT NECESSARILY BECAUSE YOUR EMPLOYEES WERE UTILIZING, THERE IS SOME UTILIZATION PATTERNS THAT OFFSET THAT, BUT HIGH-COST CLAIMANTS IS TRULY WHAT HAPPENED THERE. BUT THE OTHER THING I WANT TO POINT OUT IS THE PLAN PERCENTAGE RIGHT THERE WHERE IT SAYS 88.1% ON THE PLAN YEAR 2025. THAT IS WHAT THE PLAN PAYS VERSUS WHAT EMPLOYEES PAY. USUALLY WE SEE THAT MORE AROUND 85%. AND SO YOUR PAN IS A LITTLE BIT RICHER JUST IN GENERAL. THAT GOES BACK DOWN TO THAT $1,000 DEDUCTIBLE. SO TO OFFSET A LITTLE BIT, IF YOU RAISE THAT DEDUCTIBLE, IT'S NOT NECESSARILY KEEPING OUT OF LINE WITH THE MARKET WHEN IT COMES TO THAT. SO GENERALLY SPEAKING FOR MOST PLANS, YOU WANT TO SEE AN 85-15 SPLIT. THE PLAN PICKS UP 85%. THE MEMBER PICKS UP THE 15. THE OTHER THING I WANTED TO POINT OUT, THIS GOES BACK TO THAT EMERGENCY ROOM. EMERGENCY ROOM STATS. THERE'S A COUPLE OF THINGS ON HERE. SO WE NORMALIZE THIS OUT FOR EMPLOYEE NUMBER OF VISITS, ER VISITS PER THOUSAND MEMBERS, AND THAT'S JUST BECAUSE BOOK OF BUSINESS FOR BLUE CROSS BLUE SHIELD, THAT'S THE BEST WAY FOR THEM TO NORMALIZE THAT. YOUR PER THOUSAND IS ALMOST 300 WHERE THEIR BOOK OF BUSINESS IS 240. SO YOUR FOLKS DO UTILIZE THE ER. THERE'S A COUPLE PIECES ON HERE. YOU HAVE INCREASED UTILIZATION FOR NON-EMERGENCY CARE. And then you also have larger claims with more complex care. So that goes back to your high-cost claimants. We can't impact those. If I have a blood condition and I have to go to the emergency room or a heart attack, that's what it's for. What we're trying to offset for is for those people that are going in for non-emergency situations. And so that's what we're really looking to. Because at almost 300 per 1,000 versus under 250 per 1,000 in the book of business, your folks are utilizing the emergency room more than they need to. emergency room does this include like the emergency clinics that they have around so it depends it depends on those clinics so some of them it depends on the way that they have it so some of them will say urgent care and then next to it will have a door that says emergency if you walk through that emergency room door it pays as though it's an emergency room if you go after certain hours it pays as an emergency room so those freestanding emergency rooms will pay just like if you go to the hospital emergency room um the plan will pay that just like so THEY CAN BE INCREDIBLY EXPENSIVE. WE WOULD RECOMMEND PEOPLE NOT UTILIZING THOSE IF THEY CAN. BUT AGAIN, MY ARM FALLS OFF, I'M GOING TO THE EMERGENCY ROOM. I'M HAVING A HEART ATTACK, I'M GOING TO THE EMERGENCY ROOM. BUT YOUR KID HAS AN EAR INFECTION, YOU PROBABLY CAN USE TELEMEDICINE AND IT'S, AGAIN, MORE CONVENIENT FOR YOU AS A MEMBER AND ALSO EASIER JUST IN GENERAL ON A PLAN.

NEW SPEAKER If they go in that urgent care door, though, THAT'S A LOT CHEAPER THAN GOING IN THE EMERGENCY ROOM.

NEW SPEAKER YES, BUT IT DEPENDS ON WHAT TIME OF DAY YOU GO. SOME OF THOSE URGENT CARE FACILITIES AFTER A CERTAIN HOUR WILL SWITCH OVER AUTOMATICALLY TO PAYMENT STRUCTURE AS AN EMERGENCY ROOM. SO IT DEPENDS ON THE PARTICULAR FACILITY.

NEW SPEAKER THANK YOU, COUNCILMAN.

PREVENTIVE CARE. A COUPLE THINGS ON THE PROFESSIONAL SERVICES. A COUPLE THINGS ON THIS. SO YOU CAN SEE YOUR PROFESSIONAL SERVICES. PRIMARY CARE USE HAS DECREASED. SO VISITS PER THOUSAND. YOU'RE AROUND 12,500. SO YOUR FOLKS ARE GOING TO THE DOCTOR. SO THAT'S A GOOD THING. YOU'RE ABOVE BENCHMARK. YOUR PAID PER MEMBER PER MONTH IS HIGHER THAN BENCHMARK. GOES BACK DOWN TO WHEN WE'RE LOOKING AT PROFESSIONAL SERVICES. HIGH COST CLAIMANTS. YOU GO TO A SPECIALIST. THOSE ARE GOING TO BE MORE EXPENSIVE IN GENERAL. BUT THE COST OF VISITS HAVE INCREASED IN GENERAL. I THINK THAT GOES BACK AGAIN TO THE COMPLEXITY OF SOME OF THE CARE THAT YOU'VE HAD, AND THEN YOUR SERVICES PER THOUSAND IS HIGHER THAN BENCHMARK, BUT AGAIN, THAT GOES BACK TO SEVERAL DIFFERENT FACTORS. WHEN WE LOOK AT THE PAID PER SERVICE, YOU CAN SEE THE PAID PER SERVICE, THAT IS WHAT A MEMBER PAYS PER SERVICE, AND YOU CAN SEE THAT IS BELOW BENCHMARK. SO BENCHMARK ON AVERAGE IS $86. WE'RE SITTING AT $68 PAID PER SERVICE. THE PLAN IS PICKING UP MORE THAN MEMBERS ARE WHEN IT COMES TO BLUE CROSS BLUE SHIELD BOOK OF BUSINESS WHICH YOU KNOW IS A SIGNIFICANTLY LARGE BOOK OF BUSINESS. SO WHEN WE'RE LOOKING AT THAT, THAT'S SOMETHING THAT WE CAN EXPLORE. EVEN WITH MY MUNICIPALITY BOOK OF BUSINESS, IT'S STILL YOUR PLAN PICKS UP MORE THAN WHAT A STANDARD MUNICIPALITY BOOK OF BUSINESS WOULD PICK UP. Preventive care. This is actually a good news one. If you look at your benchmark for cervical cancer, colorectal cancer screenings, and then mammograms. So mammograms and cervical cancers, you can see that we're above benchmark on those, which is great. I love seeing that. The colon cancer screenings, a little bit below benchmark, but I've seen ones that are in the single digits. And so not as concerned, would love to promote that more because obviously when it comes to screenings, IF WE CAN CATCH A CANCER EARLY, AND A STAGE ONE, STAGE TWO, YES, IT SAVES THE PLAN MONEY, BUT QUALITY OF LIFE FOR AN INDIVIDUAL CHANGES SIGNIFICANTLY, LONGEVITY FOR THAT INDIVIDUAL CHANGES SIGNIFICANTLY, SO SCREENINGS ARE IMPORTANT. YOUR ANNUAL PHYSICALS ARE BELOW BENCHMARK, BUT THAT IS NOT SURPRISING. YOU HAVE FIRE, AND I BELIEVE POLICE MIGHT HAVE THEIR OWN PHYSICALS THAT THEY DO, BUT I KNOW FIRE DOES, SO THAT WILL USUALLY OFFSET OR LOWER YOUR ANNUAL PHYSICAL PERCENTAGE BELOW BENCHMARK IN GENERAL. YOUR CHILDHOOD IMMUNIZATIONS, WELL INFANT CARE, WELL CHILD CARE, AND THEN THE SCHOOL AGE CHILD CARE. SOME OF THOSE GO UP OR DOWN A LITTLE BIT. SCHOOL AGE CHILD CARE, THERE MAY BE PROGRAMS THAT YOU HAVE LOCALLY THAT PEOPLE CAN JUST TAKE THEIR KID FOR A SPORTS PHYSICAL OR SOMETHING LIKE THAT THAT'S A FREE THING THAT THEY DON'T NECESSARILY GO TO THEIR PCP FOR. THOSE BEING A LITTLE BIT LOWER THAN BENCHMARK DOESN'T USUALLY CONCERN ME TOO MUCH. IF THE IMMUNIZATIONS ARE PRETTY MUCH IN LINE WITH THE BOOK OF BUSINESS AND THEN YOUR WELL INFANT CARE IS CLOSE TO BOOK OF BUSINESS, DEFINITELY MAKING SURE PEOPLE ARE GETTING THAT CARE DONE. CURRENT DRIVERS OF SPEND. SO A FEW THINGS ON HERE. I DID WANT TO POINT OUT THAT ONE OF THE THINGS THAT YOU MIGHT NOTICE IS BLOOD. YOU CAN SEE THAT IN 2024 VERSUS 2025 A SIGNIFICANT INCREASE. AGAIN THAT GOES BACK DOWN TO HIGH COST CLAIMS. SO YOU HAVE A HIGH COST CLAIMANT OR TWO THAT INCREASES YOUR PEPM SPEND FROM $6.88 TO $65.49. SO A VERY SIGNIFICANT INCREASE. THAT IS NOT SOMETHING YOU CAN CHANGE WITH A CLINIC MODEL OR SOMETHING LIKE THAT, SOMETIMES YOU JUST HAVE THOSE HITS THAT HAPPEN BASED OFF OF HOW YOUR CLAIMS ARE GOING. THE OTHER THING I'D LIKE TO POINT OUT IS HEALTH STATUS. THIS ONE YOU WANT TO SEE ABOVE BENCHMARK. THAT'S ABOUT HALFWAY DOWN. IT'S A GRAY BOX ABOUT HALFWAY DOWN. Health status is basically people going to the doctor. So when you have people going to the doctor to get their annual physicals, to checkups, those types of things, we want to see that a little bit higher when it comes to health status. But overall, when we're looking at this, you can see that some of these are higher than book of business. And injury and poisoning is another one that I like to point out. So you're paying last year was $47, almost $48. Book of business is $33. HIGH COST CLAIMANTS. SO NOT A WHOLE LOT WE CAN DO TO IMPACT THOSE SPECIFIC THINGS, BUT WHEN WE COME TO CANCERS AND MUSCULAR SKELETAL AND THOSE TYPES OF THINGS, WE CAN IMPACT THOSE BY DOING PROMOTIONS, MAKING SURE THE CARRIER IS GETTING INFORMATION OUT TO PEOPLE, PEOPLE GETTING THEIR ANNUAL PHYSICALS, SEEING THEIR DOCTOR ON A REGULAR BASIS. AND I THINK THAT'S ALL I HAVE. SO IS THERE ANYTHING SPECIFIC THAT YOU WANT ME TO ADDRESS, TALK THROUGH THAT WOULD BE HELPFUL FOR THIS CONVERSATION?

I don't believe so. Thank you very much.

Okay. Perfect. Thank you. Thank you, Julie. Okay. Next item is to Amy Schmidt. Our budget officer will discuss the proposed draft budget. And you should have a hard copy of Ms. Schmidt's presentation in front of you. Yes, sir. It's the same thing that she'll be presenting right now.

All right, now the fun begins. GOOD MORNING, MAYOR, CITY COUNCIL. I WOULD LIKE TO START OFF BY SAYING LIKE MANY LOCAL GOVERNMENTS ACROSS THE COUNTRY, OUR CITY IS STILL CONTINUING TO EXPERIENCE INFLATION, RISING OPERATING COSTS, INCREASING EMPLOYEE HEALTH CARE EXPENSES, CONTRACTOR WAGE OBLIGATIONS AND MARKET ADJUSTMENTS. THE COST OF GOODS AND SERVICES THE CITY RELIES UPON TO DELIVER DAILY OPERATIONS HAS ALSO INCREASED. IN ADDITION TO THESE COST PRESSURES, THE GENERAL FUND CONTINUES TO SUPPORT TRANSFERS THAT ARE CRITICAL TO MAINTAINING CITY SERVICES, INFRASTRUCTURE INVESTMENTS AND LONG-TERM OPERATIONAL NEEDS. WHILE THESE TRANSFERS ARE NECESSARY, IT FEATHER LIMITS THE FLEXIBILITY AVAILABLE WITHIN OUR OPERATING BUDGET. I WOULD ALSO LIKE TO TAKE THE TIME TO EXPRESS MY SINCERE APPRECIATION TO THE CITY MANAGER, DEPARTMENT DIRECTORS AND STAFF FOR YOUR COLLABORATION, DILIGENCE AND THOUGHTFUL INPUT THROUGHOUT THIS BUDGET PROCESS. WE WOULD NOT BE ABLE TO DO THIS WITHOUT EACH AND EVERY SINGLE ONE OF YOU. ALL RIGHT. SO TODAY WE WILL WALK THROUGH THE KEY COMPONENTS OF THE BUDGET PROCESS, DISCUSSING THE FINANCIAL CHALLENGES AND EXCEPTIONS THAT INFLUENCE OUR RECOMMENDATIONS AND HIGHLIGHT THE STRATEGIES THAT WE HAVE IMPLEMENTED TO ADDRESS CURRENT AND FUTURE NEEDS. ALL RIGHT. SO WE'RE GOING TO START OUT WITH THE BUDGET CALENDAR. SO AS YOU'LL SEE, WE'RE JUST GOING TO KIND OF HIGHLIGHT THE NEXT IMPORTANT DATE. AUGUST 18TH WILL BE THE NEXT IMPORTANT DATE WHERE THE CITY MANAGER WILL DO THE PRESENTATION OF THE BUDGET TO THE CITY COUNCIL. WE DID CHANGE THAT FROM THE 4TH TO THE 18TH, SO DO PLEASE NOTE THAT. WE WILL BE GETTING THAT OUT TO YOUR CALENDARS AS WELL. ON THAT SAME DAY COUNCIL WILL RESOLUTIONS OF THE PROPOSED FY27 BUDGET AND THE CIP. ALSO ON THAT DAY WE'LL DO RECORD VOTE ON PROPOSED TAX RATE, SCHEDULE PUBLIC HEARINGS ON THE BUDGET AND THE TAX RATE AND THE CAPITAL PROGRAM. ON THE 20TH WE WILL PUT THE NOTICES FOR THE TAX RATE PUBLISHED IN THE NEWSPAPERS AND ON THE WEBSITE. THE 21ST, WE WILL DO THE NOTICE OF THE PROPERTY TAX ON THE CITY WEBSITE. AND THEN THE NEXT DAY WILL BE SEPTEMBER 8TH WHERE WE'LL HAVE THE PUBLIC HEARING ON THE BUDGET TAX RATE AND THE ORDINANCE ADOPTING BUDGET AND ACCEPTING THE APPRAISED ROLE. AND THEN ON SEPTEMBER 22ND WILL BE THE ORDINANCE ADOPTING TAX RATE AND ROTIFYING THE PROPERTY TAX. ALL RIGHT.

SO JUST SOME IMPORTANT DATES TO REMEMBER.

NEXT WE'LL GO INTO AN OVERVIEW OF OUR PERSONNEL. YOU PROBABLY REMEMBER THIS SLIDE FROM THE LAST PRESENTATION. JUST KIND OF A REMINDER THAT PERSONNEL REPRESENTS ABOUT 71% OF OUR TOTAL GENERAL FUND BUDGET, WHICH SIGNIFICANTLY AFFECTS THE FINANCIAL STABILITY, OKAY? SO WITH THIS CHART YOU'LL SEE EACH YEAR OUR TOTAL FTE AND THAT IS total full-time equivalents. In 25, we started adding part-time into that total. So you'll see why that increases there. In the middle is our added positions that we did each year. So you'll see in 24, we added 13 new positions. 25, fiscal year 25, we added 15. FY26, we added 11. And we're proposing FY27 to zero currently. THIS IS A PIE CHART THAT JUST SHOWS OVERALL PERSONNEL WITHIN THE GENERAL FUND BY DEPARTMENT, JUST TO KIND OF HIGHLIGHT HOW MUCH EACH DEPARTMENT MAKES UP OF THE PERSONNEL OF THE GENERAL FUND. AS YOU CAN SEE, POLICE AND FIRE WAGES AND BENEFITS ARE ESTIMATED AROUND 62% OF THE TOTAL GENERAL FUND OPERATING BUDGET. all right so let's start looking at numbers so here are the general fund numbers as we sit currently these are all projections fy26 projections that we have gotten from each department on expenses these are revenue projections this is also what we are projecting for fy27 to this point so keep in mind as i go through all these numbers we are still lots of work to be had lots of things to still work through but let me talk you through these numbers so included in these numbers you have your police wage increase of five percent for fy27 which is approximately 1.2 million dollars You have your fire wage increase of 3%, which is approximately $727,000. You have a civilian COLA increase of 2%, which is about $800,000. You have additional general fund transfer of the 1.3 to transit for FY26. FY27 transit transfer will be 1.9. ADDITIONAL GENERAL FUND TRANSFER THAT WE HAD TO MAKE OF 1.5 TO EMPLOYEE BENEFITS IN FY26, AND THAT IS ALSO REFLECTED IN THE FY27 NUMBERS. CAPITAL RESERVE TRANSFER IS SITTING AT 2.9 AT THIS POINT IN THIS SCENARIO FOR FY26 AND 27. YOUR FIRE PENSION INCREASE TO 23% IN FY27. IT WAS AT 22% IN FY22. I MEAN, 26, I'M SORRY. have your ters reflected in fy26 and fy27 so that's hers reallocation comes out of that property tax number on the pro also on the revenue side we have our property tax here set at current rate which is the 0.659663 at a 97 collection rate okay so as you can see your total revenues For FY26, it's projected at 172,352. Your expenses is 178. So that leaves us with that ending fund balance of $34,880,505 for a 19% fund balance. Moving over into 27, as you can see, our total revenue projection at this point is $172,798, and our expenses are $181,175, leaving that fund balance at the $28,000 at a 15% fund balance.

saying that the 20 is something that council said and as we go through the budget we'll have some additional alternatives with the different different assumptions but i just wanted to point that proposed two percent but again that's that's what's up for discussion proposed two percent but again that's that's what's up for discussion in terms of as we finalize that but correct so this current increases in wages salaries benefits

NEED TO KIND OF BE IN LINE WITH WHATEVER THE STATE AVERAGE IS. AND IF I UNDERSTAND CORRECTLY, Y'ALL CORRECT ME, WE'RE ABOVE STATE AVERAGE ON SOME OF THESE WAGES, INCREASES AND BENEFITS. IS THAT CORRECT?

So as it relates to your fire pension fund, we did a negotiation. We were not above state average. And as a matter of fact, that's why the pension board for the firefighters, when we went to Austin together, challenged us to kind of get in line before they had to take over their fund. And so this has been an ongoing thing. The fire pension board, we evaluated their benefits. AND THE CITY AND THEY INCREASED THEIR CONTRIBUTIONS AND THE CITY COMMITTED TO INCREASING OUR CONTRIBUTIONS OVER A PERIOD OF TIME TO GET TO THE AVERAGE. In some of that, they said that our contributions on the city side should have been somewhere closer to 25%. I think at the time we were just like at 20. So not all of our contributions are over. As it relates to police, during their contract negotiation, they presented data that said that their salaries for... FOR INCOMING AND I BELIEVE SERGEANTS, I'M LOOKING IN THE BACK FOR THEM TO KIND OF CONFIRM, WAS BELOW THE STATE AVERAGE. AND SO THEY WERE FOCUSED FOR THEIR CONTRACT FOR THE LAST TWO CONTRACT CYCLES HAS BEEN ON RECRUITMENT AND RETENTION AND GETTING THEM ABOVE THE STATE AVERAGE. So increasing more great ones, but also retaining them when they promote up to that five and two year range, because that's what they kind of said that it trailed off and they were no longer at the state average. So those are some of the data that kind of do that. Now, as it relates to our benefits, I do think that we are in line. I know she said that we were kind of underperformed in some areas, but in terms of what we pay across the board, I think our benefit packages are in line.

I THINK TO A LARGER POINT, WHAT I'M SAYING IS THE AMOUNT OF MONEY THAT WE DEDICATE TO PUBLIC SAFETY IN TERMS OF STATE AVERAGE, WHERE DO WE FALL AS FAR AS HOW MUCH OF OUR BUDGET THAT THEY REPRESENT STATEWIDE, WHERE DO WE FALL IN A PROPORTION TO HOW MUCH OF THE BUDGET THEY REPRESENT?

When you say they... Public safety.

Public safety. Particularly fire and police.

Right. So we can get those benchmarks for you. In terms of a total general fund budget, every city is different, but maybe a better metric is per thousand. Okay. In other words, per thousand, how much is public safety?

I'd be just interested to know statewide averages on where do we fall with... 62 of the budget being how does that line up statewide we can get you that yes okay yes councilman crenshaw thank you councilwoman

the 6.6 million in uh that were over budget in projected for 26 and the 8.4 million that were over budget for projected 27 that does not include please tell me the proposed 3 million a year in cost savings with the temporary hiring freeze can you repeat that not this scenario no sir okay so assuming the hiring freeze which i'm very much in favor of that uh the city manager has implemented uh those numbers end up being accurate we're talking about three million coming off the six point six and three million coming off the eight point four and we'll show that in a part in the next slide okay

That if we can write down some questions, because I think some of those questions are going to be answered in proposal that they're making today in terms of adjustments. It's not that the questions aren't valid. It's just that I think they're going to address some of those.

Correct. Anything else for now? So next, these slides were used in our last presentation, so I'm just gonna briefly go over these again. Budget challenges and past practices that led us to this current situation, the current numbers. So again, you have your contractual bargaining agreements with the wage increases for police and fire. You have your fire pension increase that we have done since 25, it was at 20%. And then in 27, it's gonna be at the 23%. You have the annual vacancy positions that we've done for fire that we implemented this year. and then you also have your civilian wage increases as a result of the salary survey that we've done over the past three years that is complete at this point you have your civilian cost of living increases that we've also done um over the past several years um transit cost of living they had a they got a five percent in 26 a 3.5 and 27 and then you also have increase in overtime due to vacancies and additional services OUR EMPLOYEE HEALTH BENEFIT, THE HEALTH CLAIMS CONTINUE TO TREND UPWARD, REQUIRING INCREASING REFUND SUPPORT TO THE EMPLOYEE BENEFITS FUND. AND FY26, WE HAD THAT ADDITIONAL $1.5 MILLION TRANSFER TO RESTORE THAT FUND BALANCE, TO HELP TRY TO RESTORE THAT FUND BALANCE. YOU ALSO HAVE THOSE HIGH CLAIMS THAT WE'VE DISCUSSED PREVIOUSLY. AND FY27 YOU HAVE THE ADDITIONAL LEGISLATIVE MANDATES OF THE 15,000 FOR THE CRITICAL ILLNESS POLICY AND FOR THE RETIRED FIRST RESPONDERS AND THAT $200,000 FOR THE FIRE CANCER SCREENING THAT WE HAD TO IMPLEMENT AS WELL. Then you have your ongoing capital needs, particularly fleet replacement. In prior years, fleet was funded by operating cash. In FY26, we decided to do that 3.1 tax note that was issued to be able to keep us to have fleet purchases. In FY26, the general fund transfer to capital reserve was budgeted at 2.9. At this point, it was. Ongoing inflation continues to drive increases over costs in goods and services across all departments. Voter approval rate, tax rate is always subject of topic. The city's also issued an RFP for an ERP system that is highly needed to require, and that's going to require upfront investments throughout several years. It won't be a 1.7 cost all upfront. It'll be several different phases. The general fund transfers continue to grow to support other funds. So projections for 26 is 14.8. current budget challenges that we're facing so revenue uncertainty uncertainty um your capital investments um general fund transfer of capital investments um general fund transfer of 4.3 is what we're proposing for 27. um current expenditure set at 6.4 um again we did that tax note for 3.1 for fleet to purchase fleet in 26. We also have technology and cybersecurity needs, so system upgrades and software licensing, limited funding for that. We have the new ERP, and then we have the CityWorks software that is end-of-life that we're going to have to replace. So just to kind of give you an idea, dive a little bit deeper, our annual wage increases, these are our increases that we've been contracted to with FIRE. So you can see 4743, we will be back in negotiations with them next year. Police contractor wage increases, their new contract goes through 2030, so they get 5% the next four years. And then our civilian COLA, 24 was two, two, three, and then 27 is two or zero. Here's a slide that shows our general fund overtime. Just so you can get a little perspective, this is by each department that is in the general fund, what our overtime budget is. So estimated for FY26, we're projecting to end the year at $10.5 million in overtime. FY27, we're at 8.8 projected as of 27, as of right now. And you can see our actuals in 25 ended at the 10 point, is that 10.8? I should have worn my glasses. 10 million, we're gonna say 10 million. So you can see a lot of money is spent in the city in overtime. The next slide, you'll see our general fund transfers. So I'll talk about the transfers a lot. These are all the transfers that the general fund transfers out to other funds to support them. So you'll see the transit transfers, the capital reserve transfer, the employee benefits, the general liability. So totaling 14.4 for 26 and 14.5 for 27. Our travel and training. As one of our proposed, we're going to looking at that travel and training. So this is broken down for budget by each department within the general fund. So as you can see, our projections for FY26 is $767,000. Our proposed 27, our projected 27 is $924,000 in travel and training. So you'll see actuals for 25, we actually spent in 25, $654,000. OUR BUDGET IN 26 WAS 955, SO WE'RE COMING IN UNDER AS FAR AS PROJECTIONS ON THAT. OUR ACTUALS TO DATE FOR FY26, WE'RE AT 541,000. Potential solutions. Again, these are slides that we presented in the last budget work session. So just going over our voter approval rate again on our tax rate. We had limit supplemental requests for FY27. Hiring freeze for non-public safety. Travel freeze for non-extensional travel. Limit fleet and equipment purchases to extensional only. review all rates and fees charged by the city including solid waste and industrial outside city water rates add a supplement health benefit to reduce overall health care cost evaluate inter-fund transfers online training only required for continued education hours when available lease vehicles instead of purchase outright add disconnect fees to unpaid water accounts review city sponsored events Review city services for efficiencies and outsource various tasks that can be done more efficiently or cost-effectively Continue to look for grants and corporate sponsorships So if not all most of all of those have been done in the in the last several weeks and So now we're going to come into our FY27 supplemental request. The list is way too long to share all of them with you. So just to kind of sum up the supplement, we ask every department every year to give us a list of what new requests they have for the new fiscal year. So with doing so, we had 91 total supplemental requests amongst all departments. They included anything from carpets, roofs, HVAC systems, office furniture, canine kennels, traffic study, flood monitoring sensors, a dishwasher for testing, a washer and dryer for animal care, and I can go on. The total estimated costs were $21 million of all those supplementals. Just to pinpoint and highlight some of the supplementals for FY27. At the top, those listed are necessary because we desperately either need it or it's end of life or it's already been approved by council. The enterprise ERP system, we already have an ERP out there. So that's $726,000. CityWorks software is end of life, so that's $767,000. The sex offender registration software is $34,000. That was approved last week. um additional park cameras of thirty six thousand five hundred that's a big topic of for council um and then uh various i.t end of life system upgrades and licensing that licensing that has to happen that we really don't have much control over is a total of two hundred and fifty seven thousand estimated cost of two hundred fifty seven thousand some of the other supplementals that were key that At this point, have not been included in the FY27 projections. Park camera phase three of $225,000. The washer and dryer for animal care of $12,000. Concessions cabinets at Jefferson, $15,000. Canine kennels for PD, $2,800. CDL training for public works, $27,000. And additional clear and demo costs of $60,000. Just to highlight a few. And these are these are key supplementals that department these departments kind of really like to see push through so that's kind of why I'm highlighting them IT also requests from each department the requests every year for them to submit their requests of them for any IT Supplements that they any new IT supplements that they're requesting their requests ended up being about 2.9 million Facilities maintenance does the same thing from every department request supplementals each year and those requests were 5.6 million So lots of requests from our departments that we need funding for.

Yes, Councilman Crenshaw. Can we do a tax note for any of those supplemental expenses?

I mean, the fleet, we could look at doing possibly fleet again, like we did this fiscal year.

What does fleet represent out of the 21 million?

I have a separate slide for fleet. This is not even including fleet.

Okay, but out of the 21 million, anything identified in there that could be used with a tax note?

I'm not going to say no, but I wouldn't suggest. We're just issuing more debt.

I get that. I'm just trying to come up with a way that we can satisfy our fund balance and spread this out over a number of years with the idea that we're going to have more industrial revenue coming on in the next several years.

it can be looked at but it's a lot of operational items like just daily you know operational items that they need so it would depend upon there there are some supplemental supplemental requests that we're looking to see if we can consolidate and use co bonds to pay for gotcha

SO A LOT OF YOUR FACILITY MAINTENANCE, WHICH IS YOUR AIR CONDITIONING, YOUR HVACS AND YOUR ROOFS, WE'RE MORE THAN LIKELY GOING TO SHIFT THAT TO CIP SO THAT WAY THOSE THINGS CAN GET DONE. THOSE ARE MORE YOUR INFRASTRUCTURE. So the next is your fleet request. So just to give you an idea, the fleet general fund purchase request was 6.1 this year. Lease request is 840,000. For your water fund, there's 2.5 million. Lease would be 786,000. Solid waste has got a request of 5 million for a grand total of 13.6 for your purchase and then 1.6 for your total lease. And we are looking at this year to be able to help fund our fleet is doing more of the leasing, especially for our public safety programs, because it would be cheaper. We are looking at maybe possibly going that route as well. So we have two different options we can do. We can do another tax note, or we can also look into leasing, which will lower that cost significantly. by closing the gap between your revenues and your expenditures, or expenditures rising more than your revenues. So as we've mentioned, that hiring freeze, that would save us about $4.2 million. Decrease in operating supplies and equipment is $300,000. Cut travel budgets by 60%. That will save us $555,000. The increase in employee benefit contribution to 9% would be $300,000. So let's look at this scenario. So if we take everything from that first set of numbers and everything that we just kind of went through that we're proposing for FY27, so we have this one. So if we, our revenue, we're keeping our tax rate the same, the 0.659663 at a 90% collection rate. This includes all of your necessary supplementals for FY27, including of that is the ERP of 726, the City Works 767, your IT necessities, the additional park cameras, the sex offender registration, and then we have to increase the capital reserve transfer from general fund in order to support a lot of these supplementals. Most of these supplementals will go into your capital reserve. so which general fund supports the capital reserve fund so that transfer has to increase by that 1.4 to support that now i will say the erp and the city works is also shared with the water will be shared with the water fund so that split does reflect here there is a split there So that leaves our FY26 fund balance still at that 19%. FY27, we're to that $24 million and leaving us at that 14%. Scenario two. let me say this too as i've been talking about the tax rate we do not have the final numbers yet we will not have those until AUGUST 7TH IS THEIR FINAL DEADLINE. SO THESE WILL MAY AND WILL PROBABLY CHANGE OUR BEST GUEST ESTIMATES AT THIS POINT, OKAY? SO THIS SCENARIO IS EVERYTHING THAT I'VE JUST INCLUDED THAT WE JUST SAID IN THE PREVIOUS ONE, BUT THIS IS TAKING INTO ACCOUNT OUR COST SAVINGS THAT WE CAME UP WITH, WHICH IS REDUCTION OF THIS 60% REDUCTION OF TRAVEL AND TRAINING, REDUCING 500 AND THAT'S THE COST SAVINGS OF 555,000. REDUCTION IN OPERATING SUPPLIES AND EQUIPMENT THROUGHOUT THE CITY, SAVINGS OF 300,000. DETERRED SUSPENSION OF 1.7. AND THEN THIS IS ESTIMATING OUR VOTER APPROVAL RATE AND THAT 97% COLLECTION. SO THIS DOES INCREASE OUR PROPERTY TAX AND IT DOES TAKE IT TO THAT VOTER APPROVAL RATE SO THAT WAY THE TOTAL TAX RATE ESTIMATED WOULD BE THE .70 IN THIS SCENARIO. this does not include any fleet what would it do if we left the rate the same and it would be the that the previous one it'd be your 27 phone amounts would be 14 percent so the difference and this also this takes in the hiring freeze as well OF THE 4.2. I'M SORRY, I FORGOT TO MENTION THAT. THIS ALSO HAS THE HIRING FREEZE OF THE 4.2. NEW SPEAKER OKAY.

SO IT'S NOT JUST THE TAX RATE.

NEW SPEAKER CORRECT. IT'S ALSO 4.2 OF THE HIRING FREEZE ON YOUR EXPENDITURE SIDE.

NEW SPEAKER SO WHAT WOULD THE NEGATIVE 960,000 BE IF WE LEAVE THE TAX RATE THE SAME? IT'S NOT GOING TO BE 10 MILLION BECAUSE YOU DIDN'T FACTOR IN THE HIRING FREEZE. And all the savings on that slide you had was close to $5 million.

So... Well, it was 4.2 and then the 3. So it'll be... $5 million. It'll be the difference in... So your difference in your property tax is 6.1. So that's the revenue that it would generate by going to voter approval. So it's a difference of 6.1 in revenue.

SO YOU'RE SAYING WE WOULD BE NEGATIVE 7 MILLION? BECAUSE RIGHT NOW YOU'RE PROPOSING WE WOULD BE NEGATIVE 960,000. SO IF WE DON'T INCREASE TAX REVENUE BY 6.1 MILLION, WE WOULD BE.

I WOULD HAVE TO DO THE NUMBERS JUST TO MAKE SURE, BUT YOU WOULD TECHNICALLY BECAUSE YOU'RE SO IF YOU'RE TRYING TO GET TO THIS SLIDE. me get back to it this right here your is that your is that your current tax rate so here you would take in to effect the sorry hang on i don't want to give you wrong numbers i don't want to quote anything so there you would just take out you would add the hiring freeze to minus your expenditure so that would be that 4.2 here Because that's 84, right?

I'm looking at your closing the gap slot. It's the salary freeze is 4.2.

4.2, correct.

And then the decrease in operating supplies and equipment, 300,000. Cut in travel budgets, 550,000. Increase employee benefit contribution, 300,000. That is about 5.4 million. SO WHY CAN'T WE TAKE 5.4 MILLION OFF OF 9.9 MILLION? AND THAT WOULD GIVE US, I'M GOING TO CALL SCENARIO X, WHICH IS NO INCREASE IN TAXES AND WE'RE ONLY GOING INTO THE RESERVE FUND BY ABOUT 4.5 MILLION. THAT WOULD BE ACCURATE, CORRECT?

NEW SPEAKER YES. WE'LL GET YOU THAT NUMBER. AMANDA CAN CALCULATE IT REAL QUICK.

AND WHY DON'T WE HAVE SAVINGS BETTER IN THE FISCAL YEAR 2026 PROJECTIONS IF WE'RE IMPLEMENTING A HIRING FREEZE NOW?

WE'RE LATE IN THE YEAR.

YEAH. I MEAN, WE ONLY HAVE I GET THAT.

BUT YOU'RE ONLY REFLECTING A TOTAL OF A $300,000 IN SAVINGS FOR THIS YEAR BY IMPLEMENTING A HIRING FREEZE AND THE CUTS IN TRAVEL. BUT DON'T WE REALISTICALLY THINK THAT THAT NUMBER COULD BE HIGHER? BECAUSE THESE ARE POSITIONS THAT HAVEN'T BEEN FILLED IN A WHILE. ARE WE TALKING ABOUT LIKE 100 JOBS?

NEW SPEAKER CURRENTLY THERE ARE 100 VACANCIES, CORRECT.

NEW SPEAKER THOSE HAVEN'T BEEN FILLED JUST FOR THE NEXT THREE MONTHS. THOSE HAVEN'T BEEN FILLED FOR THE SEVERAL MONTHS PRIOR TO THAT. SO WHERE I'M GOING WITH ALL THAT IS I'M TRYING TO SEE WHERE ON THE 2026 PROJECTION IS GOING TO SEE BETTER NUMBERS OBVIOUSLY AS WELL AS THE 27 PROPOSED. that way we get that fund balance percentage up higher than the 19 percent of the 14 percent.

So if you take that back to the if you take the on that third one if you take the because it includes everything all the cost savings that we're doing everything so only we're going to change is that property tax rate if we take it back down to current then that gets you at a 16 percent fund balance. I mean to make this confusing. That's okay.

We just want to follow the scenario. So taking into consideration the hiring freeze. Correct.

So that would be your last slide. So the only thing that we're changing on that scenario two would be the difference in the tax rate. So if, like, Mr. Crenshaw is wanting to keep it at the current tax rate, so you're going to back out that 6.1 out of that property tax rate. So then that gets you, that lowers your revenues, your expenditures stay the same, that lowers your revenues, and you have to redo the calculations, and Amanda did it, and it gets you to a 16% fund balance.

But my question, and I think his question is, WHERE'S THE SCENARIO WHERE WE TAKE INTO THE CONSIDERATION, THE 5.4, WHERE IS THAT SCENARIO? SO WE ONLY HAVE TO- IT'S BUILT INTO SCENARIO TWO.

THIS IS TRAVEL CUT. THIS IS OPERATING SUPPLIES CUT. THAT'S YOUR SALARY SAVINGS CUT. SCENARIO TWO HAS GOT ALL OF THAT IN IT. THE ONLY DIFFERENCE IS WE GOT THAT VOTER APPROVAL TAX RATE CALCULATED IN THERE TO SHOW YOU IF WE We can get to that. We can get to a 19% fund balance. That's the scenario. If you don't want to do that, then you're going to back out that voter approval rate and you're going to back at about $6.1 million in your revenue. And then that will give you to the 16% fund balance.

I think what we're struggling is these numbers don't, the math ain't mathing. If $5.4 million is being cut in scenario two and we only moved 1% on fiscal year 2026 and 2027,

so the where's the the five because you're going from 19 you're going from 16 to 19 so that's a lot of percentage because it takes about i think it's like 1.3 or 1.4 million each percentage that you have to cut to get down a percentage scenario two has all the cuts i just I could have done a third scenario, you're correct.

Ma'am?

I said yes, I should have done a fourth scenario, you are correct.

I would encourage, we always have a scenario where we don't increase taxes.

You know, first one. The first one, correct.

Yeah, but it's not accurate because it doesn't have any of the cuts in it.

Yeah. 5.4 million are not in proposals.

correct it is not so can we get a proposal one with the cuts yeah we're trying to see it so that we can see yes i can do that real quick actually if y'all want to give me numbers are drastically different in one and two if we include the 5.4 million you you basically go up to a negative 7 million by saying that we have to add 6.1 million in tax revenue that we're getting up but if we look at proposal one and we subtract five point four million in savings it should be around the four point five million dollar mark so that that's where we're confused so and we're talking about for twenty seven you have to so that that that revenues over under expenditures again as you're taking your revenues minus your expenditure so if you lower that revenue number

THEN WHICH IS WHAT WE'RE GOING TO DO BY REDUCING THAT TAX RATE. SO YOU LOWER THAT REVENUE NUMBER, THEN THAT NUMBER IS GOING TO BE HIGHER. THAT NEGATIVE NUMBER IS GOING TO BE HIGH. BECAUSE YOU'RE MINUSING YOUR EXPENDITURES, WHICH IS GOING TO BE HIGH. WHICH IS STILL HIGH.

IT'S LIKE I FEEL LIKE IT SHOULD BE AROUND 4.5 MILLION, BUT YOU'RE TELLING ME IT'S GOING TO BE AROUND 6.

I HAVE TO DO THE MATH. I HAVE TO DO THE COMPLETE CALCULATION TO GIVE YOU AN EXACT NUMBER.

COUNCILOR TURNER, DO YOU HAVE A QUESTION? Just a few questions. We're talking about we would be roughly $4 million off, but I know we asked you guys to sit with the tax assessor collector. And what is our current percentage on collection right now? Is it still roughly 97%?

We don't have that yet. We won't have that until the end of this month. We don't have the exact number yet, but we're expecting it to be around 97%. That's what we're budgeting for.

I thought I read something that said it was low, like 90%.

Yeah, that's what I'm struggling at because we're talking about revenue and money, and I think I asked this a couple of months back, but... If we're not collecting at a decent rate, if we are not around 90%, I don't know if this is correct or not, but I read the same thing Councilman Crenshaw read. Man, we're talking about roughly $3 to $4 million. If we're at 90% out of 100%, there you go.

and i agree with you and i agree with you so and i do and i do think that that collection rate is like i said i don't know what that is yet they give that to us i'm not sure what that exact number is yet but i do just look looking at the projections for fi 26 i mean we're already all the way through june and what we've collected so far is is is less it's a it's a lot less so um so that collection rate has is probably decreased if i can only imagine IT HAS. JUST ABOUT THE PROJECTIONS OF 26.

I UNDERSTAND THAT, BUT WE KIND OF ASKED FOR SOMETHING TO BE PRESENTED TO US, AND IT'S AT A POINT WHERE, YOU KNOW, BECAUSE I KNOW IT'S JEFFSON COUNTY, BUT WE'RE THE LARGEST CITY IN THE COUNTY. WE JUST NEED TO KNOW WHERE WE AT, WHAT'S THE ISSUES, AND WHAT CAN WE DO TO ASSIST. I KNOW WE'VE MET WITH THE TAX ASSESSOR COLLECTOR, And it's not an attack at all, but yeah.

And again, some of the feedback is they were, they were going to get with line barter and, and try to do better. And so.

I mean, it was pretty much they're doing everything they can and that line barter has gotten better at collections. It's pretty much what we got. So yeah.

I'LL LEAVE THAT ALONE RIGHT NOW.

YOU CAN SEE IN THIS SCENARIO, EVEN IN THE SCENARIO, YOU CAN SEE WHAT OUR BUDGET FOR 26 WAS AND WHAT WE'RE ACTUALLY PROJECTING TO RECEIVE. SO, I MEAN, YOU'RE LOOKING AT A $3 MILLION DIFFERENCE ROUGHLY.

I KNOW. THOSE NUMBERS ARE KIND OF SIFT EXPLANATORY WITH THAT 10%. THE OTHER THING I WAS KIND OF WONDERING, WE'RE SAYING WE'RE CUTTING ESSENTIAL TRAVEL

man can we be specific what do you guys mean by essential travel who's essential who's not right so basically every travel request well first of all i'm going to ask every and have asked every department director to review every travel request and not to submit it to the city manager for review unless it's absolutely essential now you say well what is essential obviously the very essential is to maintain a required certification or license with the state or some other agency that's essential we also have training requirements so you have promotional situations you have new employee situations and so they've got be trained and then it goes on kind of down the line professionals have to have continuing education credits that's where it starts to drop off there are opportunities for online in a variety of ways to try to get some of those credits so those would have to be looked at on a case-by-case basis and then of course you know there are conferences and You know, we go to Texas Municipal League and things like that, Gold Triangle Days, and those things are valuable because not only are you, you know, being able to network, but more importantly, learn about new legislation that's either in the works or coming down the pipeline that's going to affect the things we do. Amy mentioned the state mandate on some additional benefits imposed by the state, how to handle that. So, you know, so it's not just, you know, seminars and networking. You are actually learning, you know, what's going on, best practices and all that stuff. But that's where it really starts to drop off. So we're starting with what's licensing required, what's mandated. Because, again, it's just you saw the slide on the total amount. It's just under a million. So it's going to be a tough challenge.

And my last question, Mary, is it's a huge disconnect in who's responsible for property values and going up in Beaumont, Texas. I've been in several places where we're told the city raised my property taxes. And I know we've have decreased property taxes since we've been on the council can can staff explain that process on the record so people understand how that works with the appraisal district and we have no authority over the appraisal district

I mean essentially the city does not set the so your taxes when you get your tax bill are kind of made up of a couple components one is the value of your property and that's set by the appraisal district which is a separate body we do not set that what this body does and other governmental bodies do they set as the tax rate and so take that value and apply the rate and so

lion's share of a lot of that increase is related to values yeah but it puts us in a tough spot you know when the values are going up and we have no control and people don't know who to speak to who to talk to like how do we give them direction that's right that's right and

you know we talked a little bit about the voter approval rate most folks know this but just for the benefit of the public we are limited on what rate because again that's something that we can control to some degree but the state law obviously limits us on what that rate can be and if it gets too high then the voters have to approve it so that's all calculated as well

I KNOW COUNCILMAN WILLIAMS HAS BEEN.

DOES THE PROPOSED HIRING FREEZE HAVE ANY IMPACT ON OVERTIME IN THESE NUMBERS?

i mean what we would what we want to do and what we would like to do is look at every department and kind of have them reevaluate their departments and see where employees can be better situated or or how how you want to word that um because then the because then you're right the the the shift then focus to focus is to retention right we need to keep our employees that we have here we need to make sure that everyone can do the work effectively And so then it goes to retention. So if that means we have to, you know, just some positions and that's what we'll look at doing to make sure that it will affect overtime the least amount as possible.

But there's that's not reflected in these numbers. Any impact over time?

No, no. Overtime is set as, you know, what we're projecting over time to be, which is which is that $10 million range.

Councilman Duryea, did you have? So these vacant positions that we currently have, are we currently filling those with overtime? The ones that we're not going to, that the hiring freeze is going to affect?

So there are, a lot of departments have said that, yes, their overtime is due to not being able, retention of employees, not being able to keep employees.

We're going to continue to do that, to fill the vacant positions.

well so again it depends on the position every and again public safety we're not looking at that but non public safety which again we talked about a hundred vacant positions you know the works got to get done okay and so we have to look at every single one outside of that on a case-by-case basis so And to that point, yes. I mean, if we just start making a blanket, we're not hiring anybody. We have to look at it case by case because then, yes, all of a sudden the work has to get done. So now all of a sudden it shifts to overtime. And, of course, the pay rate is much higher. And so that's the challenge.

Like the current weather that we had with the flooding and unable to flush toilets and stuff like that. I mean, we're not going to hire people. If they have vacancies there, we're not going to hire people to fill them. So services are not going to be, they're going to be worse.

the goal is to not the the goal is for the public to not feel this right and so while some things there might be a little slow down urgent things public safety things the goal is to not and again that's why you know the experts are department heads or division managers they know and so you know maybe they've got seven positions and they say you know what i can

i can redistribute some of this work work a little more efficient efficiently and and i can i can do without that position for now um and so but we're gonna have to look at it case by case um you said your your main goal is is retention well if you're going to go up on how much you're charging for insurance and not going to give them a pay raise that's not going to help with retention

Yes, sir. So, again, we included 2% in this, and so that's our hope.

Well, on the page it said 2% or zero. Right. Yes, sir.

And one point of reference, because we've said this several times for the public, contracts, we have contracts with fire and police, so when we talk about hiring freezes, it doesn't affect those contractual obligations that we have.

I'M CONCERNED ABOUT, I'VE GOT A CONCERN THAT THE NUMBERS THAT YOU'RE SAYING THAT YOU'RE GOING TO SAVE WITH THE HIRING FREEZE, DOES IT TAKE INTO ACCOUNT THE OVERTIME? NO CONSIDERATION ON THE OVERTIME WITH THE HIRING FREEZE, YES OR NO?

NO. THE OVERTIME HAS REMAINED THE SAME AS PROJECTED. EACH DEPARTMENT IS GIVING ME WHAT THEY PROJECT THEIR OVERTIME IS GOING TO BE AND THAT INCLUDES THAT. IT'S NOT BEEN REDUCED ANY. SO IT'S BEEN STAYING AT CURRENT WHAT THEIR PROJECTIONS ARE.

OKAY. That's with the savings of the hiring freeze, right? So I'm saying it's your hiring freeze. Now, we're not filling these positions. It doesn't really matter. But in the projection, is the overtime going to be considered with the positions that's not going to be now filled, no longer looking to fill?

because we're saying we're going to create more overtime by not filling these positions right they have projected their overtime but you know I mean I think one thing we need to be clear on there are many variables from weather to other events that can happen that can affect our ongoing budget and yes I mean councilman Durio your point is when we have less money it can it's gonna it's gonna take some serious management to minimize the effect to our residents and that's one reason when we look at whether we have any increases whether they would prefer you know smaller increases in continuation of you know the same services that'll be a decision that we're up to but you're right when you cut revenues it does it's gonna there's there's no way it's not gonna affect just like in your household if you reduce your income you're going to have to make some reduction somewhere else if nothing else just in savings and retirement but it will affect you somewhere it's going to hit you and it's going to hit us in my household my wife would not accept it i'd have to find that revenue you'd have to get another job that's right Well, and I'm city council in another city to two city councils.

Well, no. And I mean, the honesty in that is we've got to be honest about these tough conversations. So I'm glad I hope that people tune in and we share it as a broadcasted or whatever, because the transparency in it is that there are some tough decisions that have to be made. And if the citizens aren't participating or we don't hear from them and we make these decisions and then they say, well, you did this and blah, blah, blah. No, we need to make sure that we're honest about what's going on.

How long is the power and freeze? You're going to do it for the length of this budget or you're going to see how everything going or case by case?

So we've enacted it already. And again, it's review case by case. but it's built into the proposed FY, basically the remainder of 26, which we only have 60 days or just a little over 60 days left in 26, but it's baked into the proposed 27. But again, as I mentioned, we're going to do a mid-year, mid-budget year review in April to say, hey, hopefully things are better and we can ease off of it.

So does this just affect

the vacancies that are current or if anyone leaves and we're unable to retain some employees during this budget we're not going to fill those either right so we're constantly with this number of employees there's constant churn promotion new folks leave and come and so basically it applies across the board again with exception of public safety so if somebody retires you know at the end of this week then that's going to have to be looked at that position.

And I know as we talk about this one of the things that when you were promoted and hired for the city manager you mentioned that population growth and attracting more people to the city is at the top and that certainly could impact these numbers but we also have to live in the reality when they're when we're not experiencing that right now so as that would change that could greatly impact our our revenue stream but until it does it's not anybody's fault

that the cost of everything's going up and our revenue is going down it's just a reality we have to deal with yeah and again i'll restate and and amy's shown i mean we're it's not it's just going to be tough i think for the short short term the idea because our revenues are still going up it's just we need to kind of pause slow down a little bit and let them let them catch up

So to circle back around, Mr. Crenshaw, I just did the report real quick. So with scenario two, taking that property tax back down to current property tax rate, your revenues totals $174,423,710. Expenditures become $179,820,046, which gives you the negative 5.3. And then your fund balance is $29,784,000, which gives you a 7. I was off by a percentage. It gives you 17% fund balance.

okay and uh that was uh negative five point four five point five point five point point if you weren't around yes five point four five point four million and uh it would be a uh you said seventeen percent seventeen percent your ending fund balance is twenty nine million seven eighty four one sixty nine okay and then any better savings that we could guesstimate for uh 26 projections Because it doesn't really seem like with the proposed cuts that you're making that we're really getting much savings in 26. And I know that's a hard number for you to come up with right now standing in front of us, but can't we be realistic and say that there's a very good chance that that negative 6.3 might actually be something closer to the five numbers or the four numbers?

NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS.

NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS.

NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. WE HAVE THOSE 27 SUPPLEMENTALS IN HERE THAT ARE NECESSARY. WE CAN RELOOK AT THOSE AND SEE HOW NECESSARY THEY ARE. THE ONES THAT ARE IN HERE, JUST THE ERP, THE CITY WORKS, IT STUFF, WE CAN LOOK AT THOSE AGAIN. AND THEN IT'S JUST, I MEAN, THEN YOU GET DOWN TO OPERATIONS. I MEAN, OUR OPERATIONS, WE RUN SO lean now i feel like every department does a really good job of really looking at their expenses and really only using what they absolutely have to spend so it just then you start looking at bigger pictures do we want to have to do salary cuts. I mean, that's a majority or positions because that's a majority of our budget. So if you want those big numbers, you have to start looking at the bigger picture because as I said, every percentage is like $1.4 million you have to cut. So that's a lot. It's a lot.

And I guess where I'm going with this, Mr. Boone, is that I'm trying to figure out a way. It's great that now we're up to 17%, but I'm trying to figure out a way that if THE 26 PROJECTIONS IMPROVE, WE'RE GETTING CLOSER TO THAT 20% MARK SO THAT WE DON'T HAVE TO DEVIATE FROM THAT AND WE DON'T HAVE TO RAISE TAXES OR REDUCE SALARIES OR ANYTHING LIKE THAT. ALSO, THAT 17% OF THAT 29 MILLION THAT YOU JUST GAVE US ON THE REVISED SCENARIO, THAT ALSO INCLUDES A 2% COLA INCREASE.

NEW SPEAKER Correct. WE CAN EXCLUDE THAT.

AND I'M NOT IN ANY WAY ADVOCATING FOR EXCLUDING IT YET, BUT I WOULD LIKE JUST CLARIFICATION. WHAT DOES THAT 2% REPRESENT? NEW SPEAKERS.

ABOUT 800,000. NEW SPEAKERS.

SO THAT'S ALMOST ANOTHER MILLION. SO THAT WOULD GET US CLOSER TO 4.5 MILLION IF WE DID NOT DO THAT. NEGATIVE FOR 27. NEW SPEAKERS.

CORRECT.

NEW SPEAKERS. ON LAST YEAR'S BUDGET, WE WERE GIVEN THE OPTION to do a tax increase below what the voter approval rate was. But we're not giving that, you didn't put that option on here this year.

so i just got it at that voter approval rate yes you're right we can always go down we just could you just once you set that rate you just can't go above that rate so you can always decrease it absolutely you just can't go beyond that so that's why i just said it just we just did projections based off that right going down on it would not help us no no i'm not going down i'm talking about staying below you can go up but stay below the voter approval rate right

that's right and that's those are the scenarios we're looking at is whether or not to go up to that voter approval rate or not and you can go certainly lower but as as ms schmidt mentioned in august when we when we meet again on this um we'll ask you to set a rate and whatever that is but once you set it you can't go lower you can't go higher

And at this point, we're approaching noon, and I know we're going to be going at this for a while longer, so I'm going to say we're going to have a recess here for lunch and restroom, and I would say let's go with 1240 to be realistic, and we will start at 1240. That's not a... Huh? Do I?

40 minutes for lunch.

Well, not everybody's going to stay here, I'm afraid. Do we need to? We can go with 30 minutes, 33 minutes. We'll do it at 1230.

I was thinking longer.

But we do, there is food in the conference room.

I'm sure there is. That doesn't mean I want to eat it. I've got to go by my contract or something.

Okay. So 1 o'clock would be fine. If 1 o'clock works, we'll return at 1 o'clock.

Thank you. Here we go.

Thank you.

Mayor West. Present. Mayor Pro Tem Turner absent. Council Member Durio. Here. Council Member Hilliard. Here. Council Member Williams. Here. Council Member Sherwood. Here. And Council Member Crenshaw.

Here.

Thank you.

Mr. City Manager.

Mayor, Council, we're going to ask Amy Schmidt to continue the presentation.

OKAY. SO WHILE WE WERE DISMISSED FOR LUNCH, I WAS ABLE TO DO THAT THIRD SCENARIO. YOU GUYS HAVE THE HANDOUT ON THERE. SO THAT IS WITH ALL OF OUR PROPOSED CUTS, INCLUDING THE HIRING FREEZE, TRAVEL REDUCTION, OPERATING SUPPLIES REDUCTION, AND THAT'S BRINGING THE PROPERTY TAX RATE TO THE CURRENT LEVEL. SO THAT BRINGS US TO THAT 17% FUND BALANCE IN 2027. SO THEN OUR NEXT SLIDE IS A LOOK AT OUR PROPERTY TAX RATES OVER THE LAST 10 YEARS. As you can see, through 21, it stayed at 0.71, and then starting in 22, it started decreasing. That total tax rate as to where we are in 26, we're at that 0.659663. And it has been that rate for 25 and 26. next slide is our m o rates and revenues so let me explain this slide so this is each fiscal year this is what our revenue was projected to be with the voter approval rate versus our adopted rate revenue now this is full value this is it for for 100 collection okay so this is not actually what we actually received in each of these fiscal year. This is just kind of give you a big overbroad picture of an over a big view of what that revenue would look like. SO AS YOU CAN SEE, IN 22 AND 23, THERE WAS THAT VARIANCE OF 22 WAS 115,000. 23, THERE WAS AN $8 MILLION VARIANCE. 24, 25, THERE'S NO VARIANCE BECAUSE THE RATE WAS THE SAME. AND THEN 26, THERE'S THAT 3.4 VARIANCE AND AN ESTIMATED 27 IS A 4.5 VARIANCE. And this is just showing on a sliding, on a lines graph that difference, that orange line being the voter approver revenue, and then that green line being the adopted revenue. Kind of just shows where that trend goes. WE HAVE OUR SALES TAX REVENUE. SO OUR SALES TAX REVENUE IS CONTINUING TO TREND UP, WHICH IS GREAT. SO PROJECTED FOR 26, WE'RE AT 50, WE'RE PROJECTING THE 57 MILLION, AND WE'RE PROJECTING THAT TO ALSO INCREASE FOR 27. SO CONTINUING TO INCREASE, WHICH IS IN ALL THIS WHICH IS GREAT NEWS. all right so that kind of concludes our general fund slides um so next we're going to go into some of our other funds um first one being the employee benefits funds you guys as we know we have we're having issues with this fund these numbers are not obviously total numbers yet we still have a lot of a lot of work to do in this fund to get this into a positive fund balance but as you can see we're still we still have a lot of adjustments and a lot a lot of work to do and um to to get this FUND BALANCE AND THE POSITIVE. AND THAT'S JUST DUE AS THE PRESENTATION EARLIER THIS MORNING DUE TO THE HEALTH CLAIM COSTS AND THOSE HIGH CLAIMS THAT WE'VE HAD. SO WE'LL BE CONTINUING TO LOOK AT OPTIONS AND SOLUTIONS FOR THAT FUND. then you have your water utilities fund so um our projections for 27 those revenues are 71 million our expenses would be at 74 leaving that ending fund balance at 26 million for a 35 percent fund balance their requirement is is 20 percent we upped it this year to 20 from 15 to 20 percent but our goal ultimately is to keep them above 25 percent Then you have your solid waste fund. FY27 projections are revenues at $17.2 million and expenses at $15.3 million. That fund balance ending at $5.3 for a 35% fund balance. This fund has a 15% fund balance requirement. Just a quick slide on landfill revenue. Fernando is proposing to do some increases, this for fiscal year 27. And I think Chris is going to speak on that.

Yeah, just real quickly. For the benefit of the public, of course, the city does operate its own landfill. If you look at the slide in front of you, maybe that second bullet point you can see and this is really talking about tipping fees so not so much residential commercial collection but tipping fees at the landfill if you look the average and these are tceq numbers the rate is 15.93 cents per compacted cubic yard $13.85 per uncompacted cubic yard. But if you look at the first bullet point, we are only charging $7.10 per compacted cubic yard, and then $6.31 per uncompact. And then there's also a TCEQ fee that gets added into that. So again, we own and operate our own landfill, which is great. The issue with any landfill, of course, is capacity. And so every every roughly seven years you have to construct a new landfill cell where you put the you put the waste of course and those depending upon the year they can range to construct a cell like that five million dollars six million dollars of course if we look out into the future so what i'm saying is that we need to do another a new cell in the next couple years and so as we look at much we're charging for tipping fees in our landfill they're just well well under the state average so what we are proposing is an increase my proposal is five dollars this year to both of those compacted and uncompacted and then a five dollars next budget year and the idea is because you'll see in the fund we have we have available funds but we need we need to start putting aside funds so that we can pay for the next cell but again we are we are we are just way under charging for tipping fees

Councilman Crenshaw, Councilman Duria, and Councilman Hilliard.

RIGHT SO I CAN INVITE FERNANDO AS OUR MANAGER OUT THERE BUT ESSENTIALLY TIPPING FEES IS WHEN YOU BRING A LOAD AND A LOT OF THESE ARE COMMERCIAL ACCOUNTS AND THEY'RE COMING IN AND THEY'RE PAYING A RATE FOR COMPACTED VERSUS UNCOMPACTED AND THEY PAY US TO TIP. NOW THEY HAVE OTHER OPTIONS SO IF WE RAISE OUR RATES TOO MUCH THEY MIGHT DECIDE TO GO TO A DIFFERENT LANDFILL. SO WE HAVE TO BE A LITTLE BIT CAREFUL ABOUT WHAT WE CHARGE.

NEW SPEAKER REGULAR CITIZENS. Have to pay that fee also?

No, they can show their water bill and not. Yes, sir.

That's right. I like the increase in fees. I agree with that. I also, if we could go back to the slide before, I think it's great that we're taking the fund balance from 20% to 35%. I think it's good to have a good, healthy fund balance. At the same time, correct me if I'm wrong, but if we wanted to pay our CDL drivers more than what we're paying them, that would come directly out of the operations and wages budget. It would not come out of the general fund, correct?

That's correct. So this, we talked about enterprise funds. It's like a business. This is one of those funds which would come out of this. Yes, sir.

So my proposal is at least a $5 per hour increase for our CDL drivers that are driving our solid waste trucks. And I would like to see that. And I realize that that would mean our fund balance would not be as high as the 35% projected. but it would still be well in excess of our 20%. And I think that that's not only needed for those employees that work hard and do a great job, but we also have a really hard time retaining them because we are below the average in CDL pay. I looked into this, I think, last year, and Republic Services pays – FAR BETTER TO DRIVE THEIR TRASH TRUCKS THAN OUR CITY CDL SOLID WASTE DRIVERS ARE GETTING. AND I DO BELIEVE THAT THAT WOULD BE HELPFUL FOR NOT ONLY OBVIOUSLY THOSE EMPLOYEES BUT FOR SOLID WASTE IN GENERAL BEING ABLE TO DELIVER QUALITY SERVICE AND RETAIN EMPLOYEES. SO I WOULD ASK THAT WE WOULD LOOK AT THAT SINCE IT WILL NOT HAVE AN IMPACT ON THE GENERAL FUND.

NEW SPEAKER Yes, sir, we can run those numbers.

NEW SPEAKER NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS.

NEW SPEAKERS. NEW SPEAKERS. NEW SPEAKERS. and do that certification and it's water it affects water it affects public works it affects solid waste i mean it affects multiple departments within the city that i think you know ultimately would be a great idea for us to be able to implement to retain those cdl drivers

I thought that was, you took my thunder away. I was like with water department, they have CDL. And you know, it's so hard from going from a municipal to look at funds with CDL drivers. And I know that Republic probably pays more, but they don't have the gold standard health insurance plan that we do. So even though they're paying them more, they're probably paying more for their health insurance. And that's where people don't understand. I run through this with my employees, but you know, if they're paying more, And you're just offsetting the cost really when it washes out. And so, you know, I would like to see our, especially our water department and those getting a raise also.

That's what I was saying. I don't think we could just give CDL drivers that work in one department a raise without giving the rest of them a same raise. I second that.

And I would say let's pump our brakes and get the numbers on that first before we start issuing our $5 raises, okay? Councilman Turner?

I had a question in reference to the landfill. Do we have one line for all customers? Is it a commercial line and a residential line? Is it one line for all customers?

I believe it's one, but I'm going to invite Fernando.

Yeah, the reason I ask is because I know commercial customers are willing to pay way more if they had two separate lines, if we had the capacity to do that. Councilman?

mayor signature at this point in time there's only one line everybody goes to the same line but we charge it by the cubic yard so it rolls by pretty quick we identify the customers and it's there's no issue I mean they're there they're fine

I'm just asking because I did have a guy approach me. I'm eating and he was like, look, we don't mind paying more commercial to get out of the residential line so we can kind of get in and out.

That's a two-fold question there. Going onto the scale, once you pass the scale, the problem is not the scale. They can get off the scale as quickly as possible. It takes more than, I think it's no more than three minutes to get on and off the scale for each customer. ALL RIGHT, NO PROBLEM. THE PROBLEM'S GOING TO BE WHEN YOU GET UP TOP, UP ON TOP OF THE WORKING PHASE, THERE IS A LINE BASED ON FIRST COME, FIRST SERVED, FIRST GUYS. BUT WE ARE TRYING TO EXPEDITE ALL THE COMMERCIAL CUSTOMERS THROUGH BECAUSE WE HAVE SOME CUSTOMERS THAT ARE HAND UNLOAD OR THE LITTLE MOM AND POPS THAT DON'T HAVE THE EQUIPMENT TO DO THE JOB, SO WE SET THEM ASIDE TO ANOTHER SPOT. SO WE DO SEPARATE THEM UP TOP. BUT SOMETIMES WHETHER OR NOT PERMITTING, We can't do it all the time. So sometimes when weather affects us, yes, there is a long line, there is a wait, but that is just the nature of the beast when it comes to that.

understandable and one thing that i want to point out our required balance is 20 but we're sitting at 35 and kind of what councilman durio spoke to earlier we had the option not to do it years ago to be in position to maneuver these funds but we made the decision to do it at some point you have to increase things to be able to afford things you can't keep increasing expenses if you're not willing to increase revenue and i get it we don't want it always on the citizens but at some point you have to have money to take care of things it has to come from somewhere yes sir that's right yes councilwoman this is not on this slide here because i want to go back to 27 but i guess i'll let us finish here but put a pin in i need to go back to 27.

THERE'S NO FURTHER QUESTIONS FOR ME. I'LL TAKE MY SEAT.

NEW SPEAKER THANK YOU, SIR. NEW SPEAKER SO IF YOU COULD, IT'S THE NEXT ONE I THINK. SO IF YOU COULD KIND OF EXPLAIN THIS BECAUSE I THINK THIS NEEDS TO BE EXPLAINED A LITTLE BIT MORE.

NEW SPEAKER SO THAT ORANGE LINE IS IF THE VOTER APPROVAL RATE WAS ADOPTED, THAT WOULD BE THE REVENUE THAT THE CITY WOULD AT 100% COLLECTION WOULD RECEIVE. THE GREEN LINE IS THE ADOPTED TAX RATE EACH YEAR, WHICH IS WHAT WAS THE PROJECTED REVENUE THAT THE CITY WOULD HAVE RECEIVED. IT'S AT 100 PERCENT COLLECTION, SO IT'S NOT ACTUAL WHAT WE RECEIVED, BUT THAT SHOWS THE DIFFERENCE IN THE NUMBERS AND THE REVENUE VERSUS VOTER APPROVAL RATE VERSUS ADOPTION RATE. THE ADOPTED RATE. SO IT JUST SHOWS THAT GAP.

NEW SPEAKER Okay. I JUST WANTED TO GET SOME CLARITY ON THAT.

NEW SPEAKER YES, MA'AM.

NEW SPEAKER COUNSEL We had our salary, our compensation study done. It showed that a lot of our employees were below state average levels. Are we working on getting that fixed? Yes, sir.

I don't know what happened. We're in the third year of the Evergreen study, and that has been implemented. Yes, sir.

That was probably my, I clicked something too soon. I was click happy. Yes, it is. okay so solid waste and then we have our hotel occupancy tax fund hot fund so as you can see our fy 27 projections the revenues is 3.5 expenses is three three point five leaving that fund balance at that six hundred and twenty seven thousand dollars and they don't have a required fund balance in this fund all right so in that concludes the presentation um in closing i would like to state as we we're going to continue to refine and make adjustments to this 27 budget process we do ask respectfully for your continued support partnership and collaboration the financial challenges we face require all of our collective effort and together we can develop solutions that will maintain essential services support our employees AND INVEST IN OUR INFRASTRUCTURE AND PRESERVE THE CITY'S LONG-TERM FINANCIAL STABILITY. WE LOOK FORWARD TO WORKING WITH EACH AND EVERY ONE OF YOU THROUGHOUT THIS PROCESS TO ENSURE THE FINAL BUDGET REFLECTS THE BEST INTEREST OF OUR RESIDENTS AND OUR COMMUNITY. SO WITH THAT BEING SAID, I WOULD LIKE TO GO INTO YOUR COUNCIL COMMENTS. PLEASE FEEL FREE TO GIVE FEEDBACK, COMMENTS, QUESTIONS, SHARE ANY COMMENTS ON POLICY DIRECTIONS OR ANYTHING THE DIRECTION YOU WOULD LIKE FY27 BUDGET TO GO AS WE continue to present the proposed budget in August.

Yes, ma'am. I think Councilwoman Sherwood has a question.

Yeah. After I looked at just one of the questions that I had about public safety and typically through the state averages. So fire and police typically consume 30 to 40 percent of a city's general fund usually. And in large cities, it's 50 percent. And I think ours is close to 58 or maybe in your perspective. packet it says 62. how did how did we get there how did we become where police and fire public safety is between 62 and 58 of our budget how did we get there and why are we so far out of line with state average

so that would be a reflection upon the number of fire and police that we have in our contractual agreements within those two departments so as each year as we go into into um those agreements the wage increases that are approved the certification pays that are approved all that adds up throughout the years and becomes that bigger percentage and council person you know every city is different unique um

that's one metric you know we could also look at you know for example just taking police basically sworn officers per capita and I know we're typically higher than a lot of cities our size but some cities that are our size have many more police per capita and so YOU KNOW, IT'S JUST YEAR AFTER YEAR OF DECISIONS MADE BY, YOU KNOW, COUNCIL AFTER COUNCIL IN TERMS OF PRIORITIES, AND SO PUBLIC SAFETY, FIRE, AND SO... NEW SPEAKER Thank you.

Councilman Turner?

Yeah, in theory, in theory is us. But again, we're council isn't negotiating the day to day operations in the contract. And that's one of my concerns I've asked in the past. Are we looking at financial forecasts before we're making these recommendations to counsel on what these increases should be? Because it's not looking like it's aligning that we're actually looking at the financial forecasts. I think one contract I think was 7%. Yes, sir.

And again, I think that is taken into account because we're looking at the budget, but I agree that any time you're looking at whether it's police, fire, or civilian, you know, 1%, what does that translate to in total dollars? And so that definitely should, I'm not saying it hasn't in the past, but it should be part of that consideration. Because again, if you're if you're especially the expenses or personnel are so high, you know that can continue. One thing I will point out is EMS used to be under public health and so that would have been more of a separate operations. So when that got shifted over four or five years ago, that did jump into FHIR's line items. When you look back at trends to say, okay, what percent was FHIR, a percent of the general fund expenditure, there's a big jump, but you have to remember that, oh, well, that was when EMS was transferred from public health to FHIR.

I agree. My point is when we were talking about solid waste, the comparison was made. We want to be in line with state average. So I think if we looking at state average, me personally, I would prefer to be in line with that across the board.

Yeah, and I agree. I think I think And I'm not saying we haven't, but yeah, in other words, what are good metrics for all these decisions and, you know, benchmarks like, you know, Holmes Murphy presented some good benchmarks in terms of our employee benefits. And so, and again, we do use benchmarks and targets and things like that. How do we compare, you know, as I mentioned earlier, number of sworn officers per capita, you know, what's a good benchmark, knowing that every city's unique. But I think as we move forward, incorporating that into all these decisions to say, you know, we may be an outlier, but the question is why?

Mayor?

Councilman Durio? On another subject, what, it may be in here and I didn't notice it, what is the voter approved tax rate? What is it? 65?

The voter approved, let me see.

We don't have what it's going to be yet. We don't have that. It's not set yet. So we don't have that.

What I'm trying to figure out is how far under it are we and how far we can go up without reaching that rate and what amount of revenue would that bring in at each step?

So, Amy, you did an estimate, but we won't know the final until we get by August 7th we should have the final numbers because that rate is dependent upon what the values are.

BUT WHATEVER IT IS, WE'RE GOING TO BE UNDER IT RIGHT NOW.

NEW SPEAKER Well, that's where we're trying to work towards setting. BUT AGAIN, WE NEED THOSE VALUES BEFORE WE CAN SAY, LOOK, THIS IS THE VOTER APPROVAL RATE. ANYTHING ABOVE THIS RATE, YOU GOT TO GO TO THE TAXPAYERS.

as i'm just trying to figure out our current tax rate should be below what that next rate is is what you're asking whether that's 67 cents or 68 right so if you look at 25 tax 25 tax rates the voter approval then was 0.691065 and if you go to 25 our to what we adopted as our total tax rate was 0.659663 so we were under it yeah yeah

What I'm asking is we can, like I said last year, they gave us an option to go up without going up all the way to the voter approved tax rate. Have y'all figured that option out and see how much revenue that will bring in?

SO UNTIL WE GET THE FINAL UNTIL WE GET OUR FINAL NUMBERS, WE WON'T BE ABLE TO PROJECT THOSE EXACT NUMBERS. SO OR BETTER ESTIMATED NUMBERS. SO WE'LL HAVE THOSE IN THE NEXT COMING WEEKS. AND SO THEN WE'LL BE ABLE TO SO BY THE AUGUST MEETING WE WILL HAVE THOSE NUMBERS AND THAT MEETING WE'LL BE ABLE TO GIVE YOU A TRUE MORE ALIGNED ESTIMATED PROPOSED TAX RATE NUMBERS. AND WE CAN DO IT ON DIFFERENT LEVELS AT THE DIFFERENT RATES IF YOU WOULD LIKE TO.

IF WE HAD DONE IT LAST YEAR, THAT WOULD HAVE BROUGHT IN AN ADDITIONAL LIKE $3 MILLION WORTH OF REVENUE?

CORRECT. IF WE WOULD HAVE DONE THAT, CORRECT.

YES. That's correct.

Councilman Crenshaw.

Thank you. Just to comment on the public safety spending in comparison to other cities. Two points. One, to build off of what Mr. Boone said about fire and EMS. THERE WERE DECISIONS MADE BY PREVIOUS COUNCILS TO MERGE THAT. AND THAT WAS NOT A DECISION MADE BY THIS COUNCIL. BUT WE DID FINISH THE JOB AND GET THE MERGER COMPLETED. AND THE CITY COULD HAVE TAKEN A MUCH CHEAPER ROUTE. AND THAT'S 60% OF OUR BUDGET GOING TO PUBLIC SAFETY WOULD BE MUCH LOWER IF WE WOULD HAVE KEPT EMS SEPARATE. from fire and we would have proceeded with what other cities near us do, like Port Arthur, where they have a fire department that responds to fires and then they have a private EMS service that responds to EMS calls. That would be a much cheaper way to do it, but we were told numerous times by our fire chief that that would be substandard service and that we have a much higher quality level of service for our citizens by having a merged fire and EMS where we have firefighters and paramedics and medics run those med units instead of us having a separate, cheaper, ambulance service. So I get that we could be lower and be like other cities but we are delivering a more quality service to our citizens and I think that at the end of the day our citizens probably appreciate our budget for public safety being higher because we have We're running, I think, four or five med units now that are much more qualified and well-trained medical staff. So that's my first point there. My second point on police, while we may be spending more than other cities our size on police, we also, unfortunately in our city, have a really high crime rate. And I think that when you've got a high crime rate, spending more on police to try to do what we can to protect our citizens and serve that is appropriate. And so while we are spending more of our overall budget than other cities do on police, I think it's much needed because our crime rate is as high as it is. So those are just the realities of what we're living in. And while I wish it was closer to the state average of 50% because of the uniqueness of our community and the challenges that we have here, I'm proud of the quality of service that both our police and our fire deliver for our citizens. And I think spending at the 60% level is necessary. Thank you. Thank you, Councilwoman.

oh yeah i just want to echo that i'm not against the level of service or whatever we're providing and the way that we're doing things or whatever the case may be i'm just all for transparency honesty and openness i just realized that people i don't think want things for free they want things right so that matters in what we're doing we just got to be honest about how much it costs and where we're going to get the money from so yeah i agree i'm not against it thank you councilman turner

and that's my point when we speak of a declining fund balance if we are the ones approving the expenses for the fund balance declining i don't want to point at staff if we're the ones approving the expenses for the fund balance to actually decline but me personally i am more in line of if we're going to try to remain within state average with everything i want to make sure we're close to state average i don't want to be the outliner that's that high above NOW IF OUR REVENUES ARE DOING GREAT I CAN CARE LESS BECAUSE PUBLIC SAFETY IS A PRIORITY BUT RIGHT NOW WITH US GOING FROM 20 TO POTENTIALLY 14 I JUST WANT US TO BE CAREFUL ON WHAT WE ACTUALLY RECOMMEND TO COUNCIL TO APPROVE YES SIR COUNCILMAN DURIA BEFORE THE MERGER WAS EMS PART OF PUBLIC SAFETY

My recollection is EMS used to be under public health.

So they weren't considered with that 62% before the merger. They weren't part of that.

Right. It would be a separate department. So if you were saying public safety, police fire is what percentage of the total general fund budget that would fall outside. So you just have to, as you look back and you say, whoa, there's a big bump in fire, it's because the merger.

But they're both in general fund. It's all in the general fund, though.

Yes. Councilman Hilliard.

On a whole other deal, I have a question. So when we have a fire alarm and the fire department shows up and it's not a fire and it's reoccurring, do we charge? I know we did years ago, but do we do that now? Do we charge for false alarms that are reoccurring?

We'll invite our police chief.

I know it costs us a lot of money for a fire truck to roll out and there not be a fire or problem.

We do. And we require them to have it repaired. But after a certain number of alarms, we have the option of filing charges on them in municipal court.

Okay. I mean, have we thought about charging for false alarms?

We have an ordinance that we can charge for a number of false alarms in addition to filing in municipal court. But our number one deal is to try to get them into compliance to fix what's going on with that particular system so we don't have to respond on fire alarms that aren't valid.

Right.

Thank you, Chief. All right. Well, you did a fabulous job.

great job all right thank you very much i appreciate it thank you mayor i guess as we close out i want to thank you know of course amy amanda hill bridgette evick and all the department directors and division heads who are helping us get through that process and appreciate the feedback we got today thank you all right with that we're going to move into council member comments and i will start with councilman crenshaw today

I DON'T HAVE ANY ADDITIONAL COMMENTS ON WHAT I'VE ALREADY MADE.

NEW SPEAKER Okay. COUNCILWOMAN?

NEW SPEAKER I JUST WANT TO SAY AND KIND OF REITERATE THAT BUDGET SEASON IS EXCITING AND IT'S CHALLENGING. GETTING TO A PLACE WHERE WE ACTUALLY UNDERSTAND WHAT IT TAKES KIND OF REQUIRES a bit of finesse and compromise, but I think that this open, honest dialogue is important, and ultimately you get what you pay for, and I can't express enough that I don't think that people want things for free. They want them right, and with that being said, there's a fee associated with it. We've just got to make sure that we're getting the money that we need to provide the level of service that our community demands. So, yeah, let's...

keep working thank you councilman councilman turner just uh just a question out of curiosity because the merger to my understanding happened uh was negotiated on almost how long ago did that happen i i know it's prior to us being on council or me and chris yeah i want to say it was five or six years ago make it work so how how did the merger even come to fruition was it recommended from council members staff like how did it come to fruition um i may defer to the fire chief on this um

So let me just give the history all the way back. This started, I believe, in 2018. There was a presentation presented to council in regards to the fire pension fund and needed an influx of members. At that time, the actuary said he said that there was Our fire department was unique in the sense that we were one of the few remaining fire departments that was not a fire EMS department, even though most of our guys at the time were paramedic or EMT certified, that we were one of the few cities that had that qualification for our firefighters to be dual certified, but still had a separate operating EMS department. At that time, the actuary recommended that we would need 50 new members in our fire pension fund to make it sustainable. And that is when council and the fire union underwent a lot of changes in the new contract. IN THE 2019-2020 CONTRACT, I BELIEVE THE FIRE PENSION REDUCED, THEY SET UP TWO-TIER SYSTEMS FOR THE EMPLOYEES SO ANYONE HIRED IN WOULD BE UNDER A SEPARATE BENEFIT FUND. THEY ALSO INCREASED THEIR CONTRIBUTION TO 18% AND THE CITY IN THAT CONTRACT INCREASED THEIR BENEFITS STRATEGICALLY UP. THAT'S ANOTHER TREND THAT YOU SEE IN THE CURRENT CONTRACT WHERE WE ARE INCREASING OUR OUR CONTRIBUTIONS UPWARD TO MEET WITH THE TEXAS PENSION REVIEW BOARD SUGGESTED THAT WE NEED TO MEET. GOING BACK AGAIN TO 2019, I'M SORRY, 2018, THAT ACTUARY STUDY SAID YOU DON'T HAVE TO HIRE NEW PEOPLE. WHAT YOU COULD DO IS YOU CAN TAKE YOUR EXISTING EMS DEPARTMENT AND THROUGH ATTRITION AS THOSE EMPLOYEES LEFT THE DEPARTMENT AT THE TIME HE ESTIMATED THAT THE AVERAGE EMS EMPLOYEE DUE TO THE STRESS OF THEIR JOB was about six to eight years. And so he said that they have a high turnover rate. So as EMS employees leave their position, instead of hiring a new EMS employee, you would hire a firefighter. The CFO at the time did a study, and the council at that time passed a resolution to do a pilot program with EMS and fire. And they determined that it would take for every, it took at the time, three individuals on an ambulance, it would take seven firefighters to do that. And so at that time, council approved additional positions removing them from EMS to go into fire. They also, at the time the city manager did a strategic plan because at the time they were already operating, even though they were housed at public health, they were already operating out of the station, right? And so the only way for them at the time, the manager determined that the only way for us to really know when those vacancies were occurring and when we could assess and test so that there was no gap in services was that for them to be under one director. So at that time, it was also, NOT PRESENTED TO COUNCIL, BUT THERE WAS A REORGANIZATIONAL CHART WHERE THAT DIVISION WAS MOVED FROM PUBLIC HEALTH UNDER THE FIRE DEPARTMENT. DURING THE COURSE OF THE PILOT PROGRAM, AGAIN, THAT HAPPENED AROUND 2019, 2020 HIT, AND AS YOU KNOW, THERE WAS A CATASTROPHIC IMPACT TO PUBLIC HEALTH. and EMS workers as well as nurses, fire departments responding to those calls. So there's a whole lot of things going on. And so the pilot program, if you will, was not really monitoring that place. Fast forward to 2022 and 2021, where there was a dispute on and a lawsuit engaged as it relates to um those employees and their status in the department and how it relates and not who we are so there were a lot of things into Councilman Crenshaw's part there was a lot of things that happened in 2018 and 2019 when in the establishing of that pilot program that didn't really flush out a lot of the details on how that would look and that's kind of where we ended up in in 2025 um and 26 with the resolution of the lawsuit So we added new positions, I believe, in accordance with our plan. We added 12 positions. I'm sorry, we've added nine positions initially right off the bat. When we started the pilot program, we additionally added 12. So in the theory of adding a total of 50 positions, we've approximately added 21 positions throughout the course. And that does not include the latest hiring wave of individuals that we did in the testing. And I believe those vacancies

The latest iron is going to get us to the allotted that council agreed as 255 firefighters slash EMT. That is not in addition to the other 40 single civil service employees that only man the med units.

Chief, did we increase the number of available EMS units as part of any of that? Yes.

Yes. Prior to the merger, Beaumont EMS was struggling retaining personnel over at the health department. They were running anywhere from four to five, sometimes mostly four because of like a personnel and a number of calls. Since that time, the merger, we initially went up to nine med units, but made some budget adjustments because of the cost and run eight med units every day. The vast majority of them because of COVID. what Councilman Crenshaw said, trying to deliver a better service to our citizens. We're running very few what we call basic life support units. Most of our units now, we're running anywhere from six to seven advanced life support units to deal with the strokes, heart attacks, stabbings, and stuff, and a better quality of care that our medical director, Dr. Cavispaul, wanted. He wanted that great pre-hospital care. So when they get great pre-hospital care that's less that him being trauma surgeon here has to do, they can go directly up to surgery and bypass the actual emergency room.

But she forgot to mention that they've also implemented some telehealth medicine as well. Yes. Council approved.

For the low acuity calls.

Council approved some budget increases for that that also increases the call for services.

Yes.

Thank you, Chief. Thank you, Chief. I THOUGHT OF THAT. NOTHING ELSE, JUST CITY MANAGER BOONE, APPRECIATE YOU TRYING TO MAKE ADJUSTMENTS AND HEARING EVERYBODY OUT. WHEN IT COMES TO FINANCES, EVERYBODY HAS A MULTITUDE OF OPINIONS, BUT TO BE ABLE TO LISTEN TO ALL OF US AND TRY TO GET WHERE WE NEED TO GO AS A CITY, I JUST WANT TO LET YOU KNOW I APPRECIATE YOU.

NEW SPEAKER THANK YOU. NEW SPEAKER THANK YOU, COUNCILMAN. COUNCILMAN HILLIARD.

NEW SPEAKER NO COMMENT.

NEW SPEAKER COUNCILMAN DURIO.

Real fast, I just want to thank you all for your presentations, and to make sure, I guess at the next presentation, that we have those other options in there as far as the tax rate is concerned, and coming under the voter approved rate, have those options too to see what type of revenue that will bring in.

Thank you, Councilman Durio. Public Works. All right. And Finance, I know you all have had a lot of opportunities today. Bridget?

I JUST WANTED TO SAY THANK YOU TO AMY SCHMIDT AND AMANDA HILL ON A GREAT PRESENTATION AND ALL THE DEPARTMENTS BECAUSE EVERYONE HAS PUT IN A LOT OF BEHIND THE SCENE WORKS TO GET TO WHERE WE'RE AT AND WE STILL HAVE A LOT MORE TO GO SO THANK YOU MR. CITY MANAGER NOTHING THERE

Well, again, thank you all for the presentations. I think they were very enlightening and looking forward to August meeting. Also, I just want to say as mayor, I get a lot of calls about how our employees go above and beyond providing service on a pretty regular basis. And I would say one of my biggest surprises, which since the three years I've been mayor, is the how hard city employees work they're true public servants they work hard to deliver services to our citizens they take it personally they do things that are off the books often because they're seeing things happen in the streets and sometimes we'll get calls and and you know from from grandkids or grandparents saying hey man you know the streets department any solid waste it could be any number of departments that do that work and i i'm particularly grateful for all the hard work that our city employees do and i know with this hiring freeze it's not going to minimize the amount of work that they have so i know from my perspective i really want to look to maintain that two percent cost of living adjustment in this coming year for our employees and i know that uh you know we've things are tight but also they do an incredible job and they are the city of beaumont we sit up here every couple of weeks as city council and we are doing this work but they're out there doing it day in and day out 24 hours a day i'm grateful for the work that they do and with that uh see y'all next week meetings adjourned