City Council - Regular Meeting

Be kicked off by the Pledge of Allegiance to the U.S. flag led by me, your mayor. The Texas Pledge will be led by Chief of Police Larry Berg, and invocation will be led by Councilmember Dave Covington. Please stand. I pledge allegiance to the flag of the United States of America and to the republic for which it stands, one nation under God, indivisible, with liberty and justice for all.

Please bow with me. Father, we love you. We thank you for your grace and for your mercy and for your steadfast love. Thank you for sustaining us and care of us and forgiving us when we fail you. We ask tonight that you give us wisdom as we consider the business of the city and pray that all that we say and do would honor and glorify you. In your son's name we pray. Amen.

All right, you may be seated. We will call this meeting to order at 531. First item on the agenda are public comments. If anyone wishes to make a statement or address the council on any item that we have influence over, they may do so. Limited to three minutes. I have at least one person signed up, but you don't have to sign up. So I have Jordan and Derek Jones. So take the stage. You got three minutes. Let us know.

all right thank you so much council members uh my name is jordan jones this is my father derek jones we are business owners so far just in waco texas of uh cruise texas scooters we would love the opportunity to bring those scooters to belton texas and i'm sure you're going to have lots of questions uh try to answer them in my three minutes here um The way we run our business makes us unique. I'm sure you've seen these kinds of businesses in Austin, Dallas, other places. The big issue with those is always how do you keep the city clean and safe? So what we have done in Waco that has worked out so well, we haven't had a complaint in the 20 months we've been there. And with hand in hand with the city, we place racks for our scooters around town. And that's where the scooters start. They can be rented from there just with your phone. And then in order to end your ride, you must return it to one of the racks that's placed around town. You'll continue to be charged on your account if you don't. And so there's that money incentive. It does help us to keep the city clean and safe as racks aren't left out in pedestrian walkways and in traffic and whatnot. The other thing we do, of course, is we employ individuals who will go first thing in the morning. And just in case somebody does leave a scooter out, those get picked up, brought back, and we change up batteries and we keep the racks and the scooters clean. We would like to work with the city, add to the tourism and leisure industry by bringing our scooters here. We try to make sure we add to this element as well. We provide helmets on each rack. They're free to use. We disinfect the helmets each day. Those are... We don't go around policing it, so we can't make individuals use helmets, but we do keep them there. And yes, sometimes they go missing. We just replace them at our cost because we... Safety is a priority for us. And so we consider the cost in that. We also include a waiver each time I rented. They sign that waiver every time it indemnifies us. And we can also add an indemnifying clause for the city as well so that that the city is not held liable if there is some sort of accident with a scooter. We manage it locally. I manage it right here. My dad happens to, and please don't hold this against him, he happens to be still a Canadian citizen. I used to be, but I'm not anymore. I'm an American citizen and I live right here. And so we manage it locally. We'd love to partner with the city in this if you would consider it. I have some ideas on where to put racks, but Like I said, we would just love to work with the city in that. And in Waco, what we've done is we've also partnered with small businesses, private businesses, put racks on private property. We'd love to do that, but also expand and have them at some of our lovelier parks where they can be used there. I think I've hit, is there anything I haven't hit yet?

Oh, yeah.

Oh, sorry. Yeah, I've got handouts for you to look those over. The other safety, sorry, clause safety issue that we have concern, of course, is age appropriate riders. And so in order to have an account, you have to upload a driver's license to use our scooters. Now, again, we don't police it per se, but we have an AI that verifies that it's a valid driver's license that gets uploaded. so that anyone who uses our scooters has a driver's license, or if a parent, for instance, we don't police this, if a parent signs two scooters, you can sign out up to four, and rides with their kids while their kids now are under their liability, if you will. That's it. Thank you so much. Any questions before I go?

Thank you. We'll direct this to staff. Thank you very much.

Thank you so much for taking the time. Thank you.

All right. Anyone else wish to address the council before we move on to our agenda? There being no other public comments, we will close the floor and reopen deliberation. First item on our agenda is our consent agenda. These items can be enacted by a single motion by the council, or they can be removed for discussion. Item 3 is adopting the minutes of the previous meetings, both July 28th regular council meeting and the workshop. Item 4 is adopting resolution approving a negotiated settlement between Atmos Cities Steering Committee and Atmos Energy Corporation Mid-Tex Division regarding the company's 2026 rate review mechanism filing. Item 5 is approving a facade improvement grant to replace an awning for the property located at 314 East Central Avenue. That is the property next to the church between Miller's and Norena's. And item six is revoking the building life safety grant, the economic development performance agreement with syntax office pros as they have decided not to pursue that project. Chair would entertain a motion or we can remove an item for discussion.

I make a motion to approve consent agenda as read.

Second.

We have a motion and a second to adopt consent agenda items three through six. Any other comments? All in favor say aye.

Aye.

Those opposed? It passes unanimously. Right. Items seven through eleven. Our budget, so the year, so the specific information here before Mr Rogers takes it away, we will be receiving a presentation on the fiscal year 2027 proposed annual budget for the city of Belton. This budget will raise more total property taxes than last year's budget by $1,194,804, 9.13%. And of that amount, $286,488 tax revenue from new property added to the tax roll here. Taxpayer impact statement. is the tax bill for the median valued homestead property in the city of Belton in the current year was $1,509. The estimated tax bill for the same property in the upcoming fiscal year would be $1,444 if the proposed budget is adopted or $1,335 if a balanced budget fund at the no new revenue rate is adopted. All right, I read all the bold letters. So Mr. Rogers.

So you'll recall we've had many budget workshops where we talked about all of the budgets by divisions and things within the fund. So here we are tonight with the official proposed budget for FY27. So everyone in the city on this side of the podium, at least, will agree that this year has been challenging. lots of things happening and maybe unusual things anyway. So first, let me address some of these. I've kind of broken them down to bigger things. Our property values over the last 10 years have grown to an average of 10% per year. For 2027, that's tax year 2026, our property values only increased a percent and a half, significantly less than what we typically see. In addition to that, for 2027, our health insurance premiums to increase considerably. The proposed budget has a 20% increase currently in it. Our insurance consultant, that RFP for insurance is about to hit the streets here, but it's kind of telling us expect somewhere from 20 to 30% increase in health insurance premiums. Just giving you that heads up. We've also seen a lot of employee turnover recently. Unfortunately, a lot of the employees that have been leaving have been doing so for better pay. particularly true in police and public works. And then lastly, we have tried, strived to keep all of our street maintenance funding in the budget for 2027. So you'll remember we increased our street maintenance, contracted street maintenance to a million dollars a few years ago. And then council wanted us to commit to increasing that amount by 5% each year In fact, the increase in FY27 is about $55,000 of contracted street maintenance, bringing the total for FY27 to $1,150,000 for contracted street maintenance. So there's a lot of upward pressure there in costs. And so what we have done is this, and it's actually quite significant, and I kind of want to spend a little time going through that. When I'm getting a little bit ahead, we'll talk tax rates in a bit. But to keep us below the voter approval rate, which is the highest that we can go without having an election, we have to do a lot of things to our preliminary budget. One, we eliminated the charges for irrigation that the Water and Sewer Fund were charging the general fund for water and sewer. That has been eliminated for FY27. We have participated or offered the grant program in this city for a very long time. We've built over 40 homes for people using that money. To keep us below voter approval rate, we have eliminated that for FY27. Mowing of text dot right away, that's along I-35. We've eliminated that. We planned on doing a shared use path from Sparta, connecting us to the path we already have over there through a grant. The $175,000 cash map, we're deferring until a future fiscal year. There's about $85,000 of costs in police and fire that were identified by the chiefs. We've taken that out of the budget. We've also moved one maintenance tech position from the from the general fund into the drainage fund. The general fund was also paying about 35% of a tourism coordinator position. That position has now been moved 100% into the hotel fund. And we've also have no new positions added for FY27. All in all, this is $730,000 that we took out of the budget for FY27. Now, to make things, to address that turnover that we talked about, we have included in FY27 some pay grade modifications, some step changes like that for certain positions in the city. And that adds about $170,000. to FY27. You can see the net of that is a big reduction from normal. And we're doing that intentionally to keep us below that voter approval rate. So let's move on. All funds in Our budget is around $52,000 in expenses, $55,000 in revenues. Revenues increased 3 million, almost $5 million. I'm sorry?

It's 52 million. You said about 52,000. Yes.

Darn. I was trying to slide that by you, guys. Anyway, the end thing to know is That's the change. And almost all of that money, all of that change is really occurring in the TERS fund. So for example, you'll see that as we get to the TERS. The TERS is increasing expenses almost $4.4 million. So most of that is all happening in one place. So looking at the general fund, again, through the budget workshop process, we went into details by division and I'm keeping it, I'm lifting us up a little bit, looking just at the fund level. So resources increased from $25,563,000 in 2026 to 26,407,000 in 2027. That property tax that you see there of $10,573,000 is at the voter approval rate. Again, we'll talk about that shortly. But even with that property tax revenue at voter approval, we will still use almost $200,000 of fund balance in the general fund to balance our budget. Moving on then to the...

Yes, sir. And just as a matter of voter approval is the highest we would go. Mike, any comment on the change from budget to estimate, almost $350,000 there in property taxes?

Yeah, that's a great question. So what's happening is on property taxes, you're referring to that number right there. We are coming in under budget in 2020 in our current year. A lot of that decline is, for lack of a better way of saying it, a write-down of value from the appraisal district through the supplemental process, lawsuits, and they settle value. So the levy that we started with, what we adopted the budget on, was lowered throughout the year through that appeals process that happens throughout these years. Protests, exactly. And I think that was like $250,000 of that decline. On the other side, we're seeing more delinquent payments. I mean, people paying later if there's a current tax component and a delinquent tax component of that big number. And what we're seeing are more people have paid later than normal because our delinquent tax revenue is much higher than it usually is. But yeah, most of that decline are doing the protests.

If it's delinquent or does the tax appraisal district get the extra? Because you pay penalties, right?

Pay penalty, we get that.

We get that.

Yeah.

So of that nine, six, 18, how much of that is recoverable through delinquency versus unrecoverable, which is a protested appraiser?

Okay, I don't remember that number off the top of my head. That's a great, that's a fantastic question. What happens through the protest process, it seems like it was 250 million in value. I may be wrong there. times the tax rate, get you to a number. And that's essentially, like I said, it's not recoverable. Once the value comes down, the value comes down. And that's a large chunk of that. The delinquent part of that's about 150 grand compared to the total. Most of that's current. But yes, we are behind in the current fiscal year.

So, sorry to keep pulling on the thread. So the number you're saying at 1057. The 3, what is that as far as a delinquency rate? So you're basing that on a 100% are you basing that on a 98% collection?

the the it's the appraisal district now that gives us that that collection percentage where it used to be us telling them yeah um the appraisal district now does that and that they do that at a hundred percent collection even though we might come in a little lower than that so but that's not accurate well yeah so is there a way we can adjust that no

We have to use the number they give us.

And that's for us and the school districts as well. They changed that a while back. Yeah, it's been a while.

They give you the three years of delinquency, I mean, current year collections in each of the last three, and they're like 99 point something. And then they go in the number that they want to use for the collection rate. The way that would work is if you use a number less than 100, then the next year when you calculate your property tax through your worksheets, you have to deduct that excess collection between what you actually collected and whatever number you used for collection. So if you collected 100 and you said 90... Well, yeah, that makes sense. Yeah, true it up. Yeah, true it up. Exactly. Thank you.

And then one more. My miscellaneous income, I assume that's interest income, and the budgeted versus estimate rates have remained up. Did we... I wouldn't have thought we would have earned more than we had budgeted for.

So that's correct. So what we did for interest income for 27 is we used the same exact number that we're collecting in the current year. We just carried it over for another year. Some of this Delta, the Delta did the fall from 26 to 27. And this miscellaneous income is due to some grant reporting and stuff that we had. We had 250,000 for grant revenue in 2026 that we don't have in 2027.

Do you know off the top of your head what your forecast is for interest income?

It's the same. I don't do it on an interest rate percentage necessarily. I do it based upon what we've collected and a feel for up or down. And like I said, we're using the same number in 27 as 26.

What?

Assuming flat.

Can I ask this? Back in 26, we all thought there was going to be an interest rate cut, maybe a couple cuts. So we were really conservative on our interest income number. Probably 3.5%.

Yeah, I think you're right. We'll probably maybe get a little more, hopefully.

Yeah.

Anything else on revenues? Good questions. On the general fund expenditure side, so the things to point out here is the increase here in and personnel costs from $15,239,000 to $15,981,000. That $700,000 there is kind of a couple of things, normal, really. We have wages increase $466,000. That's your normal merit increases for employees based upon performance. That's step increases for police. And then we have that additional change that I mentioned earlier for some of those for the maintenance tech positions, lower ones, the turnover issues that I was talking about. We had that in there as well. But then we also have that health insurance and personnel costs as well. So that's part of what's leading that large jump in personnel.

Do we have a surprise of $250,000 in maintenance expense for this fiscal year? I'm sorry, say that again? Do we have a surprise in maintenance expense

1.6 to 1.8. Maintenance is growing.

That jump that you see there, obviously 50,000, there's 50,000 of that is the street maintenance. We also have $100,000 in there for maintenance of Miller Heights Public Safety Center for doing some work there. That 155,000, 150,000 of that increase is what's driving that. Services is primarily trash collection. It's the biggest chunk there. We also had an increase in what Bell County charges the city for its services of about $100,000. Between the animal shelter and the jail services and dispatching, the county has raised their cost to the city of $100,000. You may notice here there's no capital at all budgeted in FY27. That's problematic over time, but that's where we are for keeping us below no new revenue. So total expenditures go from 25.5 to 26.4, just like revenues do. Any questions there on expenditures before I move on?

What was not? done in 26, 950,000 for capital outlay to where your estimate is so much lower?

Let's see. What was that? I can't remember right off the top of my head. I'll have to give you that. I'll have to give you that separately. That's a good question.

I can't remember all of this. Which can we kick in?

Yeah. Moving on then to debt service fund. So debt service fund, relatively flat, as you would expect from one year to the next, 1.5 million of revenues and $1.5 million of expenses in FY27. Moving on then.

Real quick on debt service. I'm sure you've been pleased with our balance, year-end balance. You know, it's minuscule after we service our debt. But I noticed, are we keeping like $175,000 or something?

I think that's about where the number is right now, or will be by the end of maybe 27.

Can you remind me why we're doing that?

Really, it's not necessary. particularly intentional. But a couple of things have happened. One, again, We maintain some balance because just like in the current year where you have, you have to cover this in the event that happens where you're under collecting the year. So you don't want debt service fund to have no fund balance at all. And then some of it is this transfer that's happening there. We're putting money over there from the general fund so we can cover that February payment of interest. And then last, you know, this fund is earning $36,000 of interest as we go. That's a long winded answer for your simple question.

The best had been less than 50,000. I think we're 175 this year. Just yeah. Unless you don't look at it. I'm comfortable keeping. Okay, there's all about

Does that earn interest? Yes. Okay. So if we move it left pocket or right pocket, it'll still earn the same interest. And the interest it earns goes to debt service or does it go to- Goes to debt service.

Once it's here, it's allocated for this purpose. So what you would end up doing, what we would end up doing is, like we did that one year, if this became- half a million dollars or something, we would use that towards the debt service calculation of a certain tax year kind of a thing to draw it down. But, but this one, that caught us about two years ago when we had such a low balance on one of those years where we didn't have current year collection thought, and we ended up having to transfer money from the general fund into this fund. at the end of the year to cover a negative cash balance in the debt service fund. That's why you don't want it to be zero. You got to kind of least plan for that. I agree though, it doesn't need to too fine. So let's move on to the hotel occupancy tax fund. Okay, so this fund here, the better thing to look at, I mean, I usually tell you budget, but really it's more of this estimate to this budget. That way you can see this increase there. When I budget revenues for this fund, I generally use averages the last two years or so. But in this case, I also added some short-term revenue to it. That's why it increased to the 490. I don't remember what the number was. I did 60,000 or some number like that. The answer to your question before you ask it is Hotel Agamese's taxes we've collected is about $30,000, I think, so far. Some number close to that, right? But what's the bigger change here is, and this fund is that, okay, that's $76,000 that I'm showing you there. is that tourism coordinator type position that was in the general fund now is in this fund and will be dedicated to tourism. This category we have called other expenses, that 338 that you see there, other expenses is nothing more than tourism sponsorship, event sponsorship. It's our events. It's those things that we Others put on their events. That increase is trying to spur more ag events at the Cadence Center. I'm sorry. What is it called now? Huntington Bank thing. The big round building. But anyway, those are the big changes in the hotel fund. Moving on then to TERS, I'm going to start here with the expenses that we've seen that I've shown you increases dramatically. Remember I said our budgeted expenses increased about 4.9 million? Well, that's all happening here, or most of that's happening here. An increase from 2,064,000 to 6,300,000. And that's all the transfer line right there. So this is the TERS operating fund. So the tax money comes in and then it gets transferred into the TERS capital project fund. And we have some very large projects that we're moving money to fund in fiscal 27. $2 million for Heritage Park. There's like another $2 million for the cash match for Connell. There's a million dollars in there for road. And then there's like 500,000 for sidewalks along 6th. Projects that were approved by the TURS board to be funded in FY27, according to the CIP. So that's happening there. There's also this 250 there is for kind of a study of the downtown area, the electric where there's lines, what we can do, the feasibility of putting some things underground for downtown. Third's board wanted us to put some money there to study that and at least bring back an option or something to consider for the future.

Mike, what about that other line? We had budgeted almost 550, spent 153, now we're back to 60.

Other here is something I can't remember. Yeah.

Was there some of the safety grants? That starts in... Or is that... This is... The terms was contributing to potential safety grants?

Is that... That's what that is. Thank you. Very good. You want somebody that remembers. That $600,000 is that. It's facade grants and life safety and those sort of grants that are awarded... And this is a carryover. Remember, the way I'm doing that is I'm budgeting a standard amount of about $450. And that's the standard amount. And what happens is when this happens, when you don't use all of it in one year, because we've already awarded that money, I'm just waiting for the person to work. We carry that Delta over into this year. So this is kind of a growing thing. So we're not limiting ourselves beyond that.

And like one of the actions tonight was basically rescinding one of those. So that would then come out of the library. Absolutely.

Absolutely. That's 100%. Thank you, Mayor.

Yes, sir. So not to go down a rabbit hole. So as we make transfers to these capital funds, we see the balance of the tourist fund, the beginning balance, the income, the expenses and the end. But when we make transfers for roofs and air conditioners and trucks and capital projects, those are somewhere else. So this is not all inclusive of the cash balance. These are just the formal funds.

Correct.

Is there a way we can get that in a snapshot so we can kind of at least keep pulse on this is, you know, these are the transfers coming in. These are our expenses. So that way we can kind of get it because we end up having these other funds. Right. Under these funds.

Correct. And I recall I'd sent that via an email earlier. A few months ago with the total transfers and then the total cash balances, I can certainly update that.

It would be good because all of that stuff gets buried. It just would be good to have this as an addendum to the budget documents, at least for council. Because we end up having those questions ourselves. That would help.

Certainly. Thank you. Moving on to water and sewer. You may remember from the budget workshop that we had in water and sewer that I mentioned that we're likely to recommend rate increases, both base rates and volumetric rates for everyone. We're going to talk specifically about the actual rates that we're talking about at the next meeting when we're having our discussion on the fee schedule. Um, but one thing I do want to show you is, is this, um, this is a large Delta right there. Um, and, and in fact, when I kind of updated that number, this bottom number, um, just today, this afternoon, that 13 nine estimate is now like 13, seven 60. Um, so we are, we are not reaching budget for. for water and sewer. Some of that's just, I messed up the budget, you know, when we, when we budgeted it and then, and some of it is, um, based upon consumption, you know, whether early part of the year was pretty damp, you know, that kind of stuff. Um, but all in all, um, revenues for FY 27 are about 5,000 less than that number and about 300,000 higher than that number. And again, there's rate increases, um, that we're planning for. On the expenditure side, Again, a decline here from $14,374,000 to $14,224,000. Nothing terribly exciting here in water and sewer, unusual. Some increase in personnel like we expect. Water purchases is a little bit higher than this number, than our estimate, growing a tad, less than the budget. But nothing really overly unusual in the water and sewer fund for FY27.

Dave Kuntz, Moving on, is it price at all, maybe it's because of rates in our water purchases are Dan or super treatments on. Dave Kuntz, them. Dave Kuntz, or reason less forward seems like our sewer should be down as well. Dave Kuntz, Well.

Dave Kuntz, they're connected because it's water but. Dave Kuntz, But but it's. entirely also possible, and my estimate's wrong. I mean, I don't have a good answer for that.

Well, there's a water usage above the sewer kind of cap, and so it's basically, it's probably saying we're not having the water as much now, and so they're, you know, so.

Yeah, they're independent of one another.

I would assume that water a gallon, that gallon of water going on the toilet has a little extra gallonage in it.

Anything on water and sewer before we move on?

Thank you.

Going on to drainage. So the drainage fee is expected. There is no increase to the drainage fee, but drainage rate increases slightly, about 4%. Again, that's usually based upon just customer count increasing. The fee, we would remain the same. This fund is also going to draw down reserves a bit by 19,560. The most significant change from one year to the other is there in personnel. Bob Watson, Excuse me, and you'll remember, I said that we moved a maintenance tech position from the streets division in the general fund over here into the drainage fund and that's the reason those personnel costs increase. Bob Watson, outside of that everything seems about normal. Bob Watson, Moving on to it here. The more significant thing here is this capital outlay from 349 to 91. We refreshed our data center, spending over $200,000 on that in FY26. And we don't have to do that, thank goodness, in FY27.

I would call those servers, not data centers. Those are servers.

Yeah, not that. Yeah, two words. Server room. Servers. Yeah. Yes. We're not talking about that. Go north for that. You can go right with that. Yikes. Been a long day. Building maintenance, again... Let me just back up. So because costs go down, this number goes down in revenue. All of the revenue that comes into this fund comes from other funds to do this $1.4 million of expenses. Same thing here. The biggest difference in building maintenance one year to the next is that $97,000 for HVAC units for PD and for streets. A very large unit going in at the PD building in 2027. And then lastly, we get to the EDC fund. This fund's sales tax increases, again, 5% over the FY26 estimate, same as I did for the general fund, 4 million of revenues. On the expense side, some changes here. There's no transfers to the capital project fund for the EDC schedule for currently scheduled. for FY27. And then this services, I think there was so many that the EDC is budgeting for engineering work to reimburse the city for engineering work on the I-35 schematic. That's part of that number.

So what are we supposed to do? I had a question about the BDC. when it comes to their balance sheet, they've purchased a lot of property in the last few years. Is there any way we could get kind of like Dave was saying, kind of an addendum that would show how much money they have and land, what's on their balance sheet. Absolutely.

I think, honestly, all these funds that I was referring to, if we just added, like we do some of the others, beginning balance, expenditures, you know, just to show, here's what we started with, here's what we'll do, and sometimes we'll draw it down, sometimes we build it up. It's like for fire trucks, right? Those kinds of things. Yeah.

Statement of fund balance for every single one of these.

Oh, there we go.

It's not on there. If you go here, you'll see them. Anyway. First line, last line on the slides. So what's next? Tonight, we're proposing a tax, we're proposing, I'm presenting the budget to you. We'll propose a tax rate tonight. September 8th is when we'll have public hearings. We're currently scheduled to adopt the budget and tax rate on September 15th. I'm gonna go there, and in case your camera, you wanna take, this will take you to our budget on our website. and which I hope you'll spend a little bit of time at least familiarizing yourself with that. A great place to start is the manager's message that's only about 10 pages and explains kind of all of what we talked about tonight, the issues affecting the city for FY27. Any questions or comments for me before I move on to more fun stuff?

I was just going to commend our staff and EDC and whoever's I think this is the first year that I can remember, even with a tax increase, the average median value goes down, even though our rate is going up. Yeah, taxpayers will be paying less.

We hope so. That's what we're going to show you in two agenda items.

I think it speaks a lot to changing time for both of them.

Okay. I'll stand right here.

All right. Well, that is a, uh, that was the received the presentation. Uh, so that's no action needed on item seven. So next item on the agenda is call for a public hearing on the city of Belton fiscal year, 2027 proposed annual budget. A lot of this stuff. You just heard me read. I will read it again because I think it's official. required to do in the minutes. This budget will raise more total property taxes than last year's budget by $1,194,804, or 9.13%. And of that amount, $286,488 is tax revenue to be raised from new property added to the tax roll this year. The impact statement for the taxpayers is this. The tax bill for the medium-valued homestead property in the City of Belton in the current tax year was $1,509. The estimated tax bill for this property in the upcoming fiscal year would be $1,444, which is less, if the proposed budget is adopted, or $1,335 if a balanced budget funded at the no new revenue rate is adopted.

All right.

So this is calling for the public hearing. We are recommending September 8th, 2026 at 530 to be that public hearing. The chair would entertain a motion to call the public hearing.

Go move.

Second to call the public hearing for the city of Belton fiscal year budget to be September 8th of 2026 at 530 here at Harris Community Center. Any comments or questions about the public hearing? All in favor, say aye. Aye. Those opposed? Passes unanimously. Item nine, discuss and consider a proposed property tax rate, the 2026 tax year, fiscal year 2027. I'll pause right here just for those who need, not familiar with this. What we do is we adopt a proposed rate, which is a rate that we have to set that basically sets the bar. We cannot go above it, but we can go below it. So while we may be adopting a proposed rate, it doesn't mean that that will be the final rate. So this is just procedural, just FYI.

Thank you for that, Clark. That's an important point. Okay, let's talk about property taxes. Okay, so highlights of the 2026 tax rule. You heard me say in our previous meetings that the value for 2026 looked like it decreased by two and a half percent. But instead, once we get the certified roll in, that value actually increased by one and a half percent. The 2025 adjusted value, that's today's value kind of of those properties after supplementals and things. Still based upon last year. It was $2,504,000,000. In 2026, for the current tax year, or next year, whatever, 2026, an increase of $36,993,000 to $2,541,000. And of that... It's amazing. If you get a big enough number, $37 million doesn't look like it changes anything. That's right.

It's a fraction, right? Yeah.

So the first question then is what happened? How come we went up when we thought we were going down? It relates to this number, not the 2026 value. So the 2026 value that they, this $2,541,000,000 is right on top of the value that they were expecting for 2026. I mean, literally within $10 million. What happened was in April, when they gave us their certified estimate and were giving us the value that we thought was gonna decline, that 2.5 for 2025 was like 2.6. So what happened then likely is, again, as the protests continue from April all the way to July, they probably settled some larger properties. And that made the value decline for 2025. So that's why we increased a percent and a half. It's denominator, not numerator. But we do know we changed $36 million in 1993. But of that, $51 million was new value. So if we had 50 million, 51 million of new value, and the total change is only 37 million, that means existing properties actually fell in value by $14 million from 2020 to 2026. So of the $2,541,000,000, 470 million, I can't even think this large, 470 million of that is TERS. So our terse values increased 6.5%. The overall role increased by 1.5%. And that leaves for $2 billion that we used in the to generate revenue for debt service in the general fund.

And this is net of those that have full exemptions or- Correct. Okay. This is taxable value.

I'll show you that shortly. Good point. But what I want you to realize is to put this a little bit into some perspective is our 10-year average of of total value change, that top line, we've typically averaged about 10% each year, and now it's only a percent and a half. And then the TERS has seen, has averaged about 12 to 15% increase every single year, and it only went up 6.7. So you can see here that the values are not what they have typically been in the past for the city. So then exactly to the mayor's point then, how do we get to the $2,541,000,000? Well, our total market value for 2026 is $3,670,000,000. There was $48 million worth of ag exemptions to get you to an appraised value of $3,622,000,000. $93 million of property was capped on the increase from one year to the next. You'll remember homestead properties have a 10% cap on the increase in value from one year to the next. But commercial properties now are still have a 20% cap. It's not just residential any longer. There's also a cap, a 20% cap on smaller commercial. That gets you to a total assessed value of $3,528,000,000. $986 million is exempt from property taxes. That gets you down to the $2,541,000,000. So 28% of our value, of our assessed value, is tax exempt. And so a couple of big ones jump out here. This 677, a lot of that's government, 100% exempt. The disabled veterans exemption increased once again from 201 million to $224 million. So a $23 million increase. We're still not at our 10% threshold that we would make us eligible for possibly some reimbursements. Oh, come on now. This is fun. You don't have to go. It's like a root canal.

Yeah.

Yeah, really. Here's what I want to point out to you. 2026 tax year, beginning in 2026, there is a new exemption. The first $125,000 of commercial personal property. So what that means is basically the equipment and things that businesses use. The exemption was $2,500. the legislature increased that to 125,000 for 2026, beginning in 2026. Well, for us, that's $60 million worth of property that has now become exempt from taxes. So put a tax rate to that, over $330,000 of revenue that we lost because of this exemption. Thank you, state of Texas.

But surely the state will reimburse us.

But surely they will.

Well, yeah, let's, for just a second. The state, the other subdivision of the government that helps govern citizens in Belton, the state, out of their benevolence, have granted veterans, disabled veterans, exemptions, and they are now exempting personal property tax on small businesses. which is paid for by the local taxing authority. Yet they put restrictions on us on being able to compensate by going up on our rate. And they also do not reimburse us to make us whole. So these are not statewide exemptions. These are local exemptions that your local elected officials are granting. I just want to make sure that while the state may be taking credit for it, it's the local entities that should get the credit for these exemptions.

That's correct, Mayor.

You can quote me on that one.

Yeah, the total, I think, is like $480,000 if I did the math right. The additional veteran exemptions.

It's almost $1.3 million in exemptions for military veterans. And I think it's a good program. I do. It's just unfair for those places, I don't know, Highland Park, that don't have that, where places like Harker Heights, Nolanville, and Belton do.

That's 100%.

Anyway.

And whether it's exemptions or business personal property, whenever a taxpayer has their tax bill reduced by a certain amount, the costs associated with that savings still have to be spent in the city. We still have to police those streets. We still have to put out those fires. We still have to make sure the water and sewer work there. And so the tax bill is just picked up by the rest of the taxpayers.

In the local municipal town. Yeah. By the neighbors.

I think the point more so is not necessarily the program. It's the making us whole. Exactly.

Yes.

And I think that's important to recognize, too, that we're really proud. I mean, we're thrilled to be able to offer that. We are. we need to be made whole because there is a consequence and an expense to that so that's to me the bigger problem is that we're not made whole yeah absolutely i don't i mean we're not i don't think anybody here is they're not you're not i was waiting and i didn't indicate i didn't mean to sound that at all i just wanted to highlight that we have got to be made whole by the by our state

If they're going to put these yeah, or don't pass those, let the local if they're big on elections, have a local election where you could have. An exemption and then a corresponding tax increase to go with that exemption. Um.

Yeah, like you mentioned, we're not at the 10% 10% threshold for the TV. Well, where are we and what does that 10% do for us?

It's okay. So, and I'm round, I'm using round numbers here because it's not exactly that, but it's 10% of your general fund revenues or expenses. But it has, it does exclude certain things, but call it 26 million was our general fund budget. So 10% of that.

But, but our, but our general fund property tax ad valorem tax revenue is around $10 million. This is roughly 10% of that. yeah you got if you look at it no if you look at the bottom it says total taxable value 2.5 million dollars i mean five billion dollars of that 2.24 right it's 10 percent yeah 10 percent of our ad valorem tax is exempted for that one particular class yes to get to of our net

But we're not.

Yeah.

The state wants 10% of your gross.

No, they want 10% to also include all your other revenues, which are fees and sales tax and all those others.

That's the reason we haven't reached the threshold because of those other things.

That's correct.

So what happens is first you have to pass that threshold and then you send that in to the comptroller's office and then they may or may not return some version of that back to you eventually. But we haven't made it to that. Again, Killeen's a great example of their exemption far exceeds what they get back in return. I mean, by far. And so you're not made whole, it's just... That's a good discussion. So let's talk quickly about what these terms will mean that we're about to talk about. I won't spend a whole lot of time because you've heard these before, but no new revenue basically used to be called the effective rate, which still makes more sense. No new revenue brings in the same amount of revenues from properties in each year. So whatever those same properties in 2025, the rate that you charge them, those same properties increase. is the no new revenue rate. And that's back to that when values go up, the no new revenue rate goes down just mathematically to bring in the same amount of dollars and vice versa. What it doesn't mean is that there's no new revenue. That's what I'm saying. That's why effective rate makes more sense because this excludes new value added to the role. So you could- Or new exemptions.

I'm sorry? Or new exemptions taken away.

Yes. The voter approval tax rate is a rate that gives you 3.5% more for O&M plus your debt rate plus your unused increment rate. The unused rate is based upon revenue that you could have recovered, could have received if you approved the voter approval rate each year for the last three years. So that's just, you know, that, and then, but you didn't, if you adopted a rate lower than that, that's foregone revenue in each of those years. So you get to go back and look backwards at the last, the foregone revenue over the last three years, basically banking it until year three, and then you can use it and it goes into the calculation. The de minimis rate is for the small cities under 30. That's the rate that brings in $500,000 of new revenue over your last year. So what are those rates for us in 2026? Because we increased in value, our no new revenue rate fell to 5,194. Our current tax rate is 5,225. The voter approval rate is 5,619, 3.94 cents higher than where we are today. And the de minimis rate is 5,597. Well, because voter approval rate exceeds the de minimis rate, which it doesn't always do, it's that voter approval rate is the one that we can't beat without going to voters. So I'm not going to spend much time here because we just talked about this. Your general fund budget has $10,573,000. of property tax revenue in it, the debt service fund has $1,326,000. When you add the tax rate that will generate those revenues is that voter approval rate of 5619. OK? What does that look like in dollars is this. So I'm comparing now where we are today at 25 to a voter approval rate of 5619. And so you can see our increase in values here for overall, and then TERS went up from 441 to 470. That makes our total levy increase from $13 million 88,000 to 14,283,000, a 9.13% increase in the total levy in 2026. So what does that mean when we break that down? Remember, that's total value. Well, that's made up of kind of three components, the general fund, the debt service fund, and then. Well, the O&M rate, let's see, let's do O&M levy here. That's a good one. The total levy is 12 million six. You see our tourist payment increased considerably by 24.2% to 2.3. That leaves this not right there. So the revenue that goes to the general fund to be used to pay for operators and salaries and everything the general fund does, at a voter approval rate of 5619, we gain only 670,000 in general. I say only. A 6.9%, 6.93% increase. The debt rate, I mean, the debt service increases, you know, slightly. Again, remember I said that was pretty steady. Are you coming to get me? Okay. And then, and the rest of that, the difference, the rest of that, the $500,000 that's left goes, is additional revenue that goes to the TERS. What is that? What if you decided to do no new revenue or the same rate we have today compared to what we're proposing of 5619? So if this is where we are now, tax levy of that, you can see currently it goes up. At the proposed rate, it goes up 1.2 million. If you did the same rate, it would go up only 193,000. if you did the no new revenue rate, it would be only $114,000 to the entire levy is what that would do. So if you put that into the general fund, how would that affect the general fund? So instead of increasing 6% to 670,000, Today's rate of 52.25 would bring in 145,000, not less than the proposed. That's 145,000 less than that number right there. So you are literally going backwards. So if you decided to do, and I'm just using those as examples, if you decided to use no new revenue or even keeping the tax rate at 52.25, There's over $800,000 of additional cuts that we have to make to our budget to make that happen. And honestly, I don't know where you're going to get that. But let's look to take a step further and look at what does this mean? Taxpayers. Well, we now have median that we have to, that's all that language that you read, Mayor, is that new taxpayer impact statement is based upon a median home value. But we've always had to keep up with average home value. So here's something interesting. The average home, homestead, that's what we'll call this. It's a homestead, someone with a homestead exemption. The average home value in 2025 was $306,660. The average home value in 2026 fell by 14% to just over $263,000. Okay. So even if we adopted the voter approval rate of 56,000, your average and your median homestead value would pay less in taxes, an actual amount they have to write the check for, would pay less in taxes in 2020 in next fiscal year than the current fiscal year.

Yeah. So help me, I'm going to ask a rhetorical question, but it's not. So help me understand how no new revenue, right, So you said that these rates are based on the appraised value times the rate. And the appraised value times the rate should... So if appraised values go up, our effective rate goes down. If appraised values go down, our effective values go up. So what you would hopefully see is from one year to the next, that delta would be zero, right? But the delta is negative. And it's negative because...

Yeah, this 14% decline in a particular home value would be more than the total decline and the total roll.

No, I think the thing is, you would think on the no new, whatever the no new revenue rate, that that would be calculated based on, well, 263 times a rate that's going to be higher is going to be a change from the prior year of zero.

Yes.

Yes. That's what the definition, when you read their definition, that's what it is.

Right.

But that's not what it is because they took out a lot of exemptions that impacts that number. And now everybody else has to pay more, but we don't get credit for that. I'm just saying, even the way that the math is stacked up is against the local municipality from an optics standpoint. Reality is we got to pay bills. We got to pay for firemen. We got to pay for police. We got to pay for streets. But they changed the math to make it look like we continue to dig deeper into folks' pockets when the state has done so through exemptions. Anyway. I just, it's difficult math. Why isn't it just zero? I mean, if it's no new revenue, it should be zero. Appraisals go up, my rate goes down to zero. It's not.

Right.

But this also didn't deal with a commercial. Yeah.

The, the, yeah, well, this is only homes. The, the no new revenue rate includes commercial. Yes, it includes, it's the entire role as it, but Mayor's, Mayor's correcting that. That's actually less correct. It does kind of, Now, the one thing I do want to say, and I'd say this every single year, is These dots that you see here of 124, $124 less than 65 only applies if your home started at 306, 660 and went to 263, 098. You will always hear me say every single time I do this presentation, your mileage may vary. Remember the little disclaimer when I used to show fuel economy on cars, but your mileage may vary because if you didn't do exactly that, you know, I can't tell somebody that their bill is going to go down exactly by $124. It's your mileage wise. Some will go up, some will go down. So what are we doing tonight? We're proposing a tax rate.

One more question. One penny on the tax rolls brings how many dollars?

$200,000 is a good round number.

Good, $200,000. So our exemptions, $1.2 million plus another $300,000, $1.5 million, is around $7.6 million? $7.5 million. $6.5 million, $7.7 million, $7.6 million. Okay. $200,000. That's great.

Just to cover exemptions.

Yeah, just to cover it. Yeah, 7 cents, just to cover it. Which is more than 10%. Back to it. More than 10% of 56. More than 10%. Yet they say it's not 10%. It's more than 10%.

There are ways you can skin a cat that says 10%.

It's called truth in taxation.

Yeah, that's right. Truth in taxation. Based on our definition.

So tonight we're proposing a tax rate. As the mayor said, we're not adopting a tax rate tonight. City Council is simply proposing a tax rate. And it's that tax rate then that we'll do public notices on and stuff like that. The rate that you propose tonight, you can't exceed when you do a good option in September. because of all the notices that we have to do from this point forward. It's actually too late in the calendar to go over voter approval because it's just too late in the calendar.

Meaning it's too late to call an election to be able to vote.

That's correct. Too late because you don't want to.

I think glaringly there's some when you look at, and I'd like to say we're probably more efficient. There's probably some numbers here that when you start taking these numbers to the public and we like to harp on our staff, I think outside of these few meetings, our job is probably relatively easy as a council because we like to commend our staff for the work they're doing. And I think when you look at quality of service and the number of people we have it takes to do that, I think our per cap is much lower than some of our neighbors. we're doing on X number of people per employee, I think is probably better than some neighbors. And I think that's a point to potentially use in some of these areas. I don't know the exact number. I think we're, last time I had asked, we were- 7.8, is it 7.8?

7.2. 7.2 employees per thousand residents.

Lowest of all the communities.

Temple is 12 something.

We're absolutely the best value, as you'll see on a couple of charts.

And we've talked about the national surveys we've done and things like that and what we're able to provide. And I think those are important numbers to get an entire picture. Because if somebody looks at a... It was like, oh, they're raising my tax. Our tax revenue is 10% higher or 9 point whatever percent it was. We're also doing it on a very efficient, streamlined level. And that's y'all. So I just wanted to add that point in there.

I can add a fascinating addendum to that. I have in my office from 1967, 60 years ago, You know what our employee count per capita was in 1967? 7.4 employees. So we're operating with the same level of employee count as we were 60 years ago. And you think about the services that we're offering today versus what we offered 60 years ago. It's just an interesting little factoid.

The real key to that is keeping that right under the voter approved rate. Um, no new, um, and, uh, being as lean and efficient as we can. I think we're doing an amazing job, but really see the throat stone. So, uh, the folks said, right. But what we deliberate this, and it's so important to us, because we know the impact citizens.

Well, that's the story you just said right there, the, that graph. Yeah, the tax rate, you'd come down.

So you've seen this chart before. And so I just kind of want to point out, this is history of our values and our tax rate. And you can see in the bars are the property values going up. But look at our tax rate back here. Oh, in fact, 60 years ago, our tax rate was what? $1.90. $1.90 per 100. But interesting factoid, that's all it is. Our tax rate back here was over 80 cents. And then the last time we had a larger increase was way back in, you know, over 20 years ago, 2004. I remember that one. We had a little blip there, but.

Station number two.

Another interesting one is this one that you've also seen. So this is kind of a compares what we've done over time versus our kind of our surrounding cities. I won't mark that up too much with this thing. But the green bar is Killeen. And you can see Killeen jumped up to 75 cents or so and have left it left it flat for a long time, then dropped when property values really skyrocketed. And then it's since increased considerably back up going closer to 75 again. The blue is Temple. And you can see it kind of, it had a jump up to from 57, kind of went the opposite way, but then fell again and then jumped again in 2025 tax year. The orange is Harker Heights, black is city of Belton. And you can see that, you know, we're down here. The other thing that's just a little bit interesting is the temple number that I'm showing you there is only the city of Temple. There's about 21 cents for the health district and the Temple College District. That puts them only about up here as far as their total tax burden, total tax rate for Temple. I'm just saying. So what are we doing? So again, tonight we're gonna propose a tax rate and we're gonna schedule public hearings. I have to then post it on the website and put some notices in the paper about the public hearing. The public hearing is September the 8th is what we have scheduled. That's the next agenda item. And then we'll adopt on September 15. Not spending much time here. What triggers an election? Well, if we exceeded voter approval rate, then an election would be required. I'd be happy to answer any questions.

I think we had quite a few, as you went through the presentation. Yeah. Comments? I'm just...

Mike, just for the record, say this. We have approved meet and confer for the fire department and the police department. And those tend for the process, but not for any changes yet. We have not had any agreement or gone the full spectrum of it. But those tend, history tells us that those tend to end with an increase in expenses for those departments. None of that is in this budget, correct?

That's correct. None of that's included.

Just want to make sure. No, that's correct.

That's a good benchmark per point. You mentioned turnover in some of our entry-level positions. What did we discuss increasing our base hourly rate? Did we decide on a number that that's going to?

Megan, do you want to come address that?

I want to make sure we're competitive.

Yeah.

Yeah.

It's different for each position.

And so we've got like our parks maintenance tech.

We just increased to 1750. You know, that for them for streets, it's 19 an hour for utilities. It's 20 an hour. And we were losing people to companies in the area for 24 an hour in utilities. So we're training these people. They're with us for a year or two, and then they're leaving for $4 more an hour at that time. We were paying $1,750 starting out. So that would be, you know, $650 more for them to go to a different place. And so that's a big deal. There's other positions in the city that we have in the budget to adjust. And we were going to bring that in a couple weeks to you guys. And that's some of our police scale kind of change because we are feeling a bleed in the police department.

But for any service employees, anybody caught in the middle would be adjusted accordingly?

Kind of. We didn't do time and position for those. We did rank. So if you had like a maintenance tech one, a two, a three, there's at least a break in between those, but we only have one in between each grade. So it is a compression there, but they at least got some kind of increase. Yep.

Okay.

And if we, for the compensation study that there was this past one, we come up to everything that was recommended in there.

Yes, I mean, we did at the time, but as soon as we did a station study, so did everybody else around us. And so we're essentially behind the mark right off the bat. And when you look at us compared to the private sector that's around us right now, we're far below still. I mean, you've got True Homes paying $20 an hour, Bucky's paying $20 an hour. the only positions we have at that entry level making that is utility tech and they have to get many certifications and things that are required for that position all the rest of our maintenance techs our library staff different things like that are making 16 an hour some of them 17 some of them 18 you know so it's still a struggle for sure right any other questions

Chair, would entertain a motion on the property tax proposed rate, not final.

I move to adopt the proposed voter approval rate.

A 5619? Yes. Second.

We have a motion and a second to approve the proposed prox rate of the voter approved rate of 5619 per 100. I will say this. The legislature has talked about having any time we have an increase, which this would be considered an increase, it would have to go for a vote. There's part of me wants to go up 7 cents above the voter approval rate. So we can vote on the exemptions that have been in granted because if we were able to be made, we could do everything we need to do to take care of our employees. We could do healthcare. We could take care of streets. We could do meet and confirm. We could do all of that. if we didn't have to pay for the exemptions. So in the future, I'm just saying in the future, I think we need to consider going to make whole, basically make that a, you know, and if the state ever makes us whole, then we can go back down the rate. But I think we need to start thinking about that because we're continuing to have to shoulder a hidden cost where the state government gets the benefit of that and we get, anyway. So that's my comment. Any other comments on the rate before we

Amy, grab the mic. So I don't know. We do need a record vote.

Okay. Okay. Roll call vote. Okay. Let's vote. Motion to second. Yep.

Council member Booker.

Aye.

Council member O'Banion. Aye. Council member Pearson.

Aye.

Council member Covington. Aye. Council member Putz.

Aye.

Mayor Pro Tem Holmes.

Aye.

Mayor David Lee.

Aye. All right. Passes unanimously. Item 10, call for a public hearing on the proposed tax rate for the fiscal year 2026. I'm sorry, fiscal, the 2026 tax year, which is the 2027 fiscal year. That's confusing. Sorry. That's confusing. Multiple years in the same year.

Yeah, really.

All right, so the proposed public hearing is the same as the last public hearing, which would be September 8th at 530. Chair, we're in a motion. So moved.

Second.

Motion and second to call the public hearing for the 2026 tax year, fiscal year 27 on September 8th at 530 p.m. here at Harris Community Center. All in favor say aye. Aye. Those opposed?

Aye.

Right. Passes unanimously. Item 11, review and consider adopting the financial policies for the city of Belton. Mr. Rogers.

I was sitting here packing up and forgot all about this item. So every year, every year, this time of year, we ask council to review our financial policies. The only one that really is of any significance is our fund balance policy, which is part of that. And so I'd like to show you some things related to that. Why do we have a policy? And that's because it's a best practice from a finance association that says you should have a formal policy that has an unrestricted fund balance of no less than two months of expenditures. That's 16.67% of your operating expenses set aside in the event a catastrophe type thing happens. Your policy should also include what will you do if you fall below that policy, and it should also prohibit the use of recurring, of use of fund balance for recurring expenditures. So our fund balance policy has said, or currently says, in the general fund water and sewer and drainage and those are our major operating funds um we don't have the same policy for hotel and the internal service funds and stuff it's just for these three major funds um but the fund balance balance policy says that we should maintain a balance equal to or greater than 30 of budgeted expenditures and if they fall below that we have to take action that includes reducing expenditures or revenues or increasing revenues or some combination of those two things. So what's kind of the history of our fund balance policy? Prior to 2022, our fund balance policy said that we would maintain 25% of expenditures plus the annual debt service for any fund supported borrowing. So that really relates to your utility funds, water, sewer, and drainage. Any debt that they would have issued, the annual debt service amount you would pile on top of that 25%. Well, in 2022, I decided to increase that or change the wording of that a tad to where it said, I'd like to maintain 30%, but we shouldn't fall below 25. In other words, putting a little bit of a gap between the floor of 25 and kind of what we hope to maintain. That was the logic in 2022. In 25, the water and sewer fund could no longer meet that 30% plus annual debt service. So we changed the policy in 2025 to just throw out that. That was a little bit or a lot way conservative. So instead of being that overly conservative, we just changed it to 30% of budget expenditures. And that's where we sit today. But, and I'm leading with a but for a reason. So in the budget, the pretty budget document that you're going to go home and click on that link and then spend the rest of the evening looking at. We have long we have a long term forecast, five year forecast in the budget document. And it's based upon assumptions. It's not intended to predict the future. It's not intended to set you guys on a, you have to do this every single year or else kind of a thing. It's just trend analysis kind of stuff and pushes things forward. But so here's what I did. I kind of wanted to kind of test some of that, what we've been using. And so here's what I did. These are our revenues. Starting with the revenue side. I won't do too much of this. Starting with that side. So I looked at the compound annual growth on a three-year basis and a five-year basis. And so what that does is the five-year says, where were property tax revenues in 2021 compared to 2026? And then the three-year compound annual growth rate is what was the property tax revenue in 2023 versus 2026. Anyway, and then what's the growth rate if it happened the same growth rate every single year, what would that be? And these are the real numbers of actual revenues. So tax on a three-year compound annual growth rate, 7.3% or 8.5%. Sales tax is that, et cetera. You see how this goes. And so then I give it a sniff test and then kind of put in a, probably something more, maybe a more reasonable number. Cause sometimes you get some wackiness like that and that. Okay. And generally my assumption is what I tried to do was make the assumption somewhat of an average of these two sort of in the middle, you know, that kind of thing. So then we take these assumptions revenue, property tax revenue growing at 8% each year, sales tax at five, et cetera. Did the same thing here with expenses. And you can see expense growth rate on actuals for the last five years, and then these are my assumptions. So here's what happens when you do that, when you use those assumptions. So now let's compare our 30% reserve requirement to a 25% reserve requirement. The red line that you see there is forecasted fund balance. I mean, that's the ending fund balance for each of those years on a forecast basis. Again, not saying it's going to happen that way, saying based upon our past spending or past trends, this is, but it's the same red line between 30 and 25%, the same exact. What's changing is, are the bars there. So your minimum reserve requirement is above where we will be using those assumptions for the next five years. Therefore, I'm telling you, we can't do 30. It's going to have to be 25. On a 25% basis, you can see that we stay above the threshold. It gets real close there in 2028, but it does maintain, our reserves do increase and remain above our threshold of 25% versus 30. The same thing with water and sewer. It looks like this. So under both scenarios, water and sewer seem to be working out okay. For the sake of simplicity of our policy, and it doesn't have to be that, I'd probably say let's just do 25-hour sewer as well. And then drainage looks like that. Now, here's the trick with drainage, is this big, large dip that you see there in both of these scenarios. What that is, we have in 20, in our CIP, we have a planned debt issuance for two very large, like $2.5 million, I think, or some number of projects in that out year. And if the debt service on that is about 220,000, 230,000 a year. And what that chart is telling you is make that debt service payment. If we just, we're going to have to find another way to pay for those projects or don't do them. And that's, so this is just, again, this is not predicting the future necessarily. This is for the finance director sees that and says, Oh, I got to start paying attention to this. Yeah. Anyway, so my recommendation is let's go ahead and change our policy from 30% to 25% of budgeted expenditures in the general fund, water sewer fund, and drainage fund. And the rest states that change.

Can you go back to the five-year term?

The five-year term? For which one?

That one? No, for the general one. Okay. Okay. So as is current, we're projected to be below 30% at the end of this next fiscal year?

I think you're going to end FY20 below 30. You're going to probably end FY26 at 29-something, based upon what we're seeing.

And then, of course, it would go down $100,000.

Yeah.

It may.

Yes. You never know, right? This is setting the floor, not the ceiling. Yeah. We can always pay some money.

No, that is 100% correct.

I'm with these things.

I once had a mentor tell me, you can have a rock at the top of a hill. Once that rock starts rolling, you can only wedge the rock to stop it. You can never put it back. My fear is if you change this policy, We're going to come back in a year and be like, okay, it needs to be 20. And then we need to be at the minimum 16 all for what? We have to have a policy. But when in reality, it's we have to figure out the actual dollar.

That's correct. I will stand here and tell you, I am never going to tell you to go below 25%. Me personally. But it doesn't mean that you guys can't tell me to do that. But I'm not going to tell you to do that.

I'd also like to tell you the first slide said reduced expenditures or increased revenue. We just talked about the increased revenue part. It could be nearly impossible. So if you're going to have to go to a vote to to any reason, might as well just try to cut the fund balance if you can get it.

Or make sure they're voting on something they really want. If you want to drive on the streets, vote for this. If not, we're shutting them all down.

One of the things you don't see, though, are previous years and when our fund balance was up to 34%, 35%. We were issuing debt. That helped with our debt rating. All that was intentional. Yeah, no, we exactly. To bring in, using money we had saved made sense. And so I think fast moves have been very, very intentional. We're all pretty cognizant of fund balance and drawing that down. We don't want that to be a, we can't let that be a year-to-year situation.

And as you recall, we had a good.

And also state requirements that we can't have below I think it's 25.

Real estate requirements for local governments. But yeah, 25 is very common. And I increase issue with a bond issue. Yes, that's correct. Yeah. If you get too low, you're going to, you're going to price when you have a bond issue.

What's the GFOA punishment for being lower than 25?

I'm sorry, say that again.

What's the punishment? Like what, like, is there a,

Is that what you're referring to?

Well, but I mean, there's no like, it's still just on us to fix the problem.

Just to be clear, this is not doom and gloom because I mean, look where your number is. Your real number is increasing up to nine and a half million, which is a lot of money. And so, I mean, I'm certainly not, It doesn't look like drainage. Drainage is a specific reason for that. The rest of this is, you're just not, your policy can't, this policy can't keep up with it.

So if you go back one more, I think the one thing about your assumptions, I will say this. If you look at sales tax at five years, it's 6.68. Three years, it's 3.35. It's not really averaging. We're seeing a trend down in growth because what we saw is a huge bubble five to six years ago. Everybody started ordering at home. We saw now, you know, so we see a lot of sales tax where we saw leakage to our other communities. A lot of those big box retailers have folded the you know, have folded and instead it's now all delivery. So I think we'll start seeing people shopping out a little bit more. I think appraised values, I don't think that this year is going to be anomaly. I think we're going to see recessed appraised values because they bubbled up. So I think what we're seeing is these property tax, it's not that we're going to hit the average. It's going to go from 8.5 to 7.3 to 6.2 to something that's more of a 30 year average. Yeah. So I think what we need to really look at is look at those 30-year averages, see where we bubbled up and see what returns back to norm. So anyway, I think it's just a dangerous time because of public money policy to put so much debt and cash into the system that it's upset the ALPA card. We're just now finishing some of our ARPA grants and stuff that were part of 2020. Those are going away, but now we got to pay for it. So we went with daddy's credit card, spent a lot of money. Now we got to start paying for it. So it's I think it's going to be hard on local governments for the next three to five years. And it's and it's already and here's and Stephanie will say it. We think it's hard here. Imagine the person that lives one block that way. They're seeing increase in in everything, but their pay is not increasing. Not at the same rate. Their expenses are increasing tremendously. So we have to make sure that we're right-sized to our community so we don't price our citizens out of our community. And that's a hard decision for this group to make.

So I also have some things coming in the future, especially 2030, that could really affect the amount of sales tax we're going to be able to get.

Yeah. Yeah. All right. So that was review and consider. So you need us to. Resolution of 20. You're recommending 25%. Correct.

Yes.

Okay.

For all funds. Those three funds. Yeah.

For those three points.

Second. Second.

We have a motion a 2nd to adopt the 25%. Financial policy free funds presented any other comments or questions.

So, if we don't. If we don't adopt 25%, if we just say we're sticking with 30. Is there a difference in our bond rating between. Your policy 30, and you're not meeting it, or you're just bumping your. your policy down to 25 something needed? I mean, if we have to go issue debt, is there a difference from the bond market?

Our financial advisor said it was only six basic point generally from a, if we got downgraded, there's only like a six basis between if we got downgraded because of this policy change. Well, that's basically zero. So I'm not, even if you did get downgraded, then it wouldn't cost you a whole lot from where we're at. It's just, you know, for my world, I'm a rules guy. I'm being an accountant. And then if you have a policy that's like that 30% and you can't get there, the policy says, now we've got to do something. Then I've got to do something. I've got to come to you guys and say, we've got to do something because we're not. So, I mean, it's self-leasing. Thank you. All right.

So we have a motion and a second to adopt the 25%. All in favor, say aye.

Aye. Opposed? No. No.

to Daniel and Dave voted no. Thank you. All right. So motion passes 5-2. That concludes the regular scheduled council meeting. We will go into executive session. We will not take any action after executive session, so you don't have to hang around for any votes. And I'll go ahead and read this in for the record and take a pause for the cause.