City Council - workshop

I walked down and I thought, good gracious. I can't afford to take care of her every time.

I think the kids are going to see the new Spider-Man today. And Charlie went to the premiere in Gangscape last night.

My son and I have tickets for Saturday.

You're streaming? They were. We are streaming? Yes. They were like $20.

It's 8 o'clock, and we're going to start this workshop for our budget presentation and workshop for 2027. So howdy, Liz and Bea. It is yours.

Mayor, Council, thank you for the opportunity to be here today. This is an important milestone and a process that never stops. We are always in budget season, either building the upcoming budget or implementing the existing budget. But there's never a day in which we are not in budget season. I wish hunting season was the same way, but unfortunately, those are very defined in length. We started building this proposed budget, I believe, in March. And so this has been an ongoing process. And so just in broad strokes, We start with a conversation with the council talking about priorities and issues that you want to see addressed within this budget. And then it goes to staff and staff spends a number of months working through the budget to create a financial plan for our operations the next fiscal year. And then at this milestone, it stops being the staff's budget and it becomes yours. And so we're presenting to you today the budget that staff is proposing for the upcoming fiscal year. And over the next two months, you and the community will have an opportunity to review this budget, ask questions, get clarifications. And this budget can be changed and modified by the council up until the point that it's adopted. State law requires that it be adopted by the end of September. We typically adopt it at our regular city council meeting in September, which would be the third Tuesday of September. But should you decide that you want some extra time, you have that freedom. I believe we just have to adopt by the end of September. And so the plan at this point is we're giving you a proposed budget and it is yours until it is adopted. I do want to say up front, and we'll probably say it multiple times, we printed a hard copy version for you, primarily because state law requires that we produce a budget and file it and give it to you. Our charter requires us to give you a budget. When this book was printed, we didn't have all the final numbers from the appraisal district or for the Hunt County tax. And so the numbers you're going to see on the screen Some of them are going to be significantly different than what's in the printed book because we didn't have final numbers in time for that state imposed deadline. There are going to be a lot of other numbers that are exactly the same. And so the printed book is still relevant, but there's some substantial changes and we'll try to identify those as we go through. We won't print another hard copy book until we have a final adopted. uh and so between now and adopted there is a digital version of this book that's online on our website and the digital version has all of the updated numbers you're going to see today the printed copy you have is going to have some outdated numbers Online goes live Monday. So if you give us any changes or alterations in the workshop today, we'll make those adjustments in an online post on Monday for the community. I always start here. I... I heard a wise man say once that if you say something seven times, half of the people will say they heard it once. And so I say this every year. This is the fifth time we've done this. So two more times than half of you will say you've heard it once. And so as we build our budgets and as we implement our budgets, We try to keep these three guiding principles in mind. First, we are a service organization. The city, the municipal organization exists to serve the community and the citizens that support us. The community does not exist to serve us. We exist to serve the community. And so that speaks to what we do with our heads and our hands every day. We're working to serve the community. But the other important aspect of that is if you look at service industry, those companies are always heavily structured on staff. So a big percentage of a service industry budget is going to be people, but it's people are the ones that provide those services. So there's more money in our budget for people than there is for staff because we're a service organization. Second principle that we hold pretty closely is that every dollar we spend is somebody else's dollar. We don't have any money that we generate on our own that we can claim as ours. Every dollar we have, the community has loaned to us and entrusted to us to use on their behalf. And so we take every dollar seriously, and every dollar needs to be deployed in a way in which we're serving the community that gave us those dollars. There's an expectation from the community that we're using the dollars for their benefit. And so that is something that we keep in front of mind. Third principle for us is the most valuable thing we have is trust. You can't put a dollar figure on trust. You're not going to see trust in this budget as an explicit line item. But it is the most valuable thing in this budget is trust. If we don't build and maintain the trust of the community in us as an organization to work on their behalf, then it doesn't matter what dollars are in this budget if there is no trust. And so we work hard to build and protect the trust of the community. When we make mistakes and violate that trust, we work very, very hard to correct, to be transparent, open and honest about it, because maintaining trust is important to us. Next, just again, some concepts that the council has put in place that direct us as we go. Our vision statement as a community is kind of the roadmap of where we want to go as a community, tried to encapsulate in one statement. City of Commerce will be a vibrant, self-sustaining community where families can put down roots in the soil and grass of a rural setting. raise their children safely, pursue a quality education, and still have access to the amenities of the DFW Metroplex without being surrounded by concrete. So that we tried to capture through our comprehensive planning process the essence of who we want to be when we grow up. And that is a... self-sustaining rural community that offers our citizens a lot of big city things without the big city inconveniences. And so that kind of is the roadmap of who we want to be when we grow up. Next for us is mission. This is really directed more to the staff than anything. It's why we get out of bed in the morning. We work together to build and maintain a community of the highest quality for present and future generations. If I can just briefly break that down a little bit, we work. We as staff don't get out of bed to play. We're not here to socialize and have a good time. We're here to work. And if we ever look up and find ourselves doing things that can't be defined as work, then we have to evaluate whether those things are important or not. We work together. uh we are a diverse organization that does everything from a to w animal control to wastewater treatment and it's easy to get into your little silos of just your group and what you do we work together every department every division every staff has to be willing to help the other department and other staff because together we serve the community But also that means that we work together with other entities within the community, the school district, the county, the Chamber of Commerce, the university, other entities within our community. We work together with all of them. Why? To build and maintain a community. You've probably heard me say this before as well. If all we had to do was build a city, that's easy. It's expensive, but it's easy. A city is just a place with stuff. We can build places and we can build stuff, but the community is the people that live in that city. So our mission isn't to build a city, but rather to build a community, a place where people can gather and be healthy and happy and live together well. So we work together to build and maintain a community of the highest quality. I grew up in an era where everybody said it's good enough for government work, and that was intended to be derogatory in that government work was always successful. subpar in terms of quality and reliability. I don't believe that. I believe good enough for government work needs to be the highest top shelf standard. And so we work to build a community of the highest quality, not a community that's good enough for government work. And we do it for present and future generations. Every decision we make in this budget doesn't just take into account the citizens of today, but the citizens of tomorrow that are coming behind us. And why are we leaving for them in terms of a community and a community legacy? That is why we get out of bed every day. And finally, the values also speaks mostly to our staff. And this is how we do our jobs. And so every one of us do our jobs in a way that is responsive. We meet citizen needs in a timely manner. This is the value and the goal that we aspire to. Many days we accomplish it. There are days that we don't. And when we don't, we learn from it and get better. But we aspire to be responsive, work to be responsive every day on every issue. Second is effective. When we show up, we know what we're doing so that we can meet the citizen needs completely the first time. In many cases, we get that right. Sometimes we don't. But we're constantly pushing to get better at our effectiveness. And the third is accountable. That is measuring how we perform. When we get it right, we celebrate. When we get it wrong, we own it, we learn from it, and we do better next time. So we believe if we show up and do our jobs in a manner that's responsive, effective, and accountable, then we are serving our community in the highest quality that we can. And so all of these things build into how we build a budget and how we manage the dollars within this budget. At the beginning of our budget process, we had a workshop with the council in which you identified big rocks and priorities that you wanted to see built into this budget as we went through the process. And so I'm just going to briefly touch on them. Some of them we'll see more in detail as we go through departments. But the number one priority from the council was street maintenance. We've heard from the community for a number of years. We continue to hear from the community about the desire and the need for street maintenance. We'll talk more specifics when we get to the street maintenance fund. But at a very high level, we've spent the past couple of years getting dedicated revenue from the street maintenance fund. And we've built up a savings account, if you will, so that we could buy the equipment needed to do real maintenance. And we have purchased that equipment. We paid for it with cash. And so that equipment is now on the ground and is being deployed. We've begun doing real street maintenance projects past street maintenance meant throwing what we call bubble gum, throwing some cold mix into a hole, pack it a little bit and drive off, and then the next rain, it all washes out. Street maintenance activities have not been effective in the past. We believe we now have the equipment to do real meaningful street maintenance, and we've already begun that process. So as we go into this budget, The dollars that are for street maintenance are no longer being saved to purchase equipment. Those dollars are now being deployed to actually do work on the ground, and we'll talk more about that when we get to that fund. Second priority was to create a business corridor tax increment refinance zone, or a TERS. We've already started conversations in this fiscal year with our financial advisor. there are consultants out there for a fee that will come help you set this up but when you pay them the fee they just carbon copy what they did for the last community and put your name on it and give you a document that they created five episodes ago and so we're not planning to spend money on a consultant we have a financial advisor we've got some some consultants already working with us that know how to do this We believe we can have a TERS created by the end of this calendar year. That will be one quarter into the new fiscal year. So we're moving on that. Next priority that you identified is that we continue to pursue grant funding opportunities. As you and the community have seen on recent agendas, we've got four or five active grant applications going right now. One of them, again, we're not counting chickens before they hatch, but the state has indicated we've got a very strong probability that we're going to get a million dollar grant to supplement our downtown work. And so we're actively pursuing grant opportunities at every chance. Next objective that you gave us was staff compensation. And so within the current fiscal year that we live in now, we did hire an independent consultant. to come in and do a full compensation analysis, looking at every position in every department of our city and comparing us to, yes, pure cities of our size, but also the communities that are directly around us. Because generally when we're trying to hire a new employee, we're not competing with the 7,000 population town in deep East Texas. We're competing with the other cities and accounting around us. And so their salary data was included into this compensation study. And out of that, we have built a new compensation plan. So every position in the city has a new entry level wage, a market wage and a top wage. And this budget implements that compensation plan. We'll talk more as we go through. But we're taking every position and shifting them into that new compensation plan. And then we're also proposing a 3% COLA. So what that means is every employee is either going to get a salary adjustment that moves them into the compensation plan or 3%, whichever is greater. So if Bob needed 2% to get into the compensation plan, then he'll get another percent, so his total adjustment is 3%. But if Bob needed 5% to get into the plan, he doesn't get 3% on top of that for a total of 8%. You get either the adjustment to move you into the plan or 3%, whichever is greater. And that's what's in the proposed budget before you. And then the final recommendation that you gave us was addressing youth sports and recreation. I understand there will be some in the community that kind of scratch their head. I don't have kids and my kids haven't played youth sports in 20 years. Why is this a community wide issue? I'll go back to our mission statement. We work together to build and maintain a community. I would challenge you and anybody that's listening and watching online, go find the community that you hold as a successful community. Picture in mind a community that you think is successful. And I would say chances are very high that that community has a vibrant youth sports program that is successful for kids all the way through high school. Because nothing pulls a community together like seeing their kids prosper. For our high school in this last year, the football team went deep into the state playoff run. You saw more community cohesion during that football playoff run than you've seen in a long time. And so there's something vibrant in the community when the youth sports programs are successful, that it brings people and community together. And that starts at the youngest age. And so we believe as a community, we need to have quality youth sports programs for our young kids. It keeps them off the street, keeps them busy, it teaches them life skills, and it can build community cohesion. And so you identified that as an important part of our programs. So in the past, we've operated in a partnership with the Boys and Girls Club of Northeast Texas and that they were in the lead of our youth sports programs and we were in a support role. in this budget we're swapping that over and the city will now assume the lead responsibility for our youth sports programs boys and girls club will be a support role because there's national resources that they bring to the table that we don't have access to but we are going to take the lead so there's some staffing changes that come with that we'll get into those details more as we go through the budget so I want to take a few minutes and try to do a high level executive summary of the budget you have in front of you before we start digging into specific funds and departments. So I've got what I call the primary budget and then the other funds that exist within our budget. For those that aren't familiar with governmental accounting, our accounting rules are different and structured differently than a traditional private business. And so we do fund accounting, F-U-N-D, fund accounting. Jamie thinks it's fun, but it's fund accounting. And so that means each department or each work group has its own set of assets and liabilities and its own accounting books. And all of those accounting books are kept separate and apart from each other. And so each one of these funds on the screen is literally a different accounting unit within a in our organization and it all compiles into our total budget. So what we consider our primary budget has historically been the general fund and the public utility fund because the majority of the employees and the work we do lives in those two funds. We've added a street maintenance fund to that primary government mix because of the focus and the priority we have on street maintenance. So you'll see over the next couple of slides primary budget that's just those three funds, and then all of the other funds underneath that. And so what you'll see for fiscal 27, the budget in front of you, general fund is projecting revenues of just over $9 million, and expenditures proposed at just over $8.9 million. So that is a balanced budget with approximately $66,000 in the black. In the utility fund, we're proposing revenues of $7.9 million. And expenditures of approximately $7.9 million. That proposed budget is balanced with about $33,000 in the black. And the street maintenance fund, with the fee that we put through the utility bill, we generate about $250,000 a year. Out of that, we're budgeting $223,000 of expenditures. And so that fund should end up in the black to about $26,000. So our primary government budget is about 17.2 million. Expenditures is about 17.1. And so those three funds are balanced and about $126,000. The other funds, you'll see some of them have negative net fund balances because in those funds they operate differently and they have a fund balance that we're choosing and planning to draw down in some way. And so for the first time in a long time, the capital project fund looking into the full fiscal 27, we're not proposing issuing any new debt. We're not proposing tackling any new projects. We're just wrapping up existing projects that we've been working on for a number of years. We'll probably come back to the table in 2028 with another round of projects. But we feel like we need to finish the projects we've got going before we start tackling new projects. Debt service fund is all of the existing city debt that's supported by property taxes. Grant fund is something of an estimation. We're applying for grants, hoping that we get this revenue in, and there's expenditures associated with those projects. And so it shows to be a negative fund balance, but again, most of that activity depends on whether we get the grants or not. The $1 million... revenues that is assuming we get some of those grants yes yeah and if we don't get those grants and some of those expenditures won't happen either and so there's some assumptions that go there on things that just happened last year economic development funds our edc equipment service fund airport recreation uh Commerce Water District, we'll talk about each of these funds later on as we go. But overall, those other funds are looking at about $4.9 million in revenue. Assuming activity happens, which may or may not happen, $5.6 million. So across those funds, there is a planned drawdown of existing fund balance of $677,000. Those funds aren't pure operation funds. They're more... special funds, and so they have a savings account, if you will, and there's some planned drawdown to those funds. Looking at the primary budget, again, general fund, utilities, and street maintenance. Last year's budget was $16,135,935 there at the top. The proposed budget for fiscal 27 is $17,099,848. That is an increase of proposed budget of $963,914, or a 6% increase in the primary budget. We'll hear many times through this process, a big chunk of that is debt service related to the utility fund. But within the primary government, we typically say we are required to do three things to build a community, public safety, public infrastructure, and quality of life. And so we've taken the activities of these funds and broken them down into those primary areas. So for public safety, that public safety budget's going down by approximately $32,000 or a 1% decrease. Majority of that is because, and it's hard to see in the details, in 26, animal control was part of the public safety group. Animal control has now been moved out of public safety and into the quality of life group. And so that's a $300,000 move. But then dispatch was taken out of fire and created its own fund. and so there's some stuff moving around in that public safety grouping but overall their budgets are pretty flat line public infrastructure last year the budget was 8.2 million this year the budget is 8.8 million that's a 589 000 increase again the majority of that is debt service related to the rehab of our wastewater treatment plant but that's a seven percent growth in that group Quality of life is pretty much everything else that's not public safety or public infrastructure. Last year's budget was 1.2. This year's is 1.7. That's a $500,000 increase. But again, 323,000 of that is moving out of control into that work group. So there's some shifting around that happened there. And then support services are those activities that help all the other groups do their jobs. It's administrative overhead. and so last year's budget that group was 1.8 million and this year it's 1.7 million so there's about a hundred thousand dollar drop in the support services and so that's looking at how this budget being proposed is different from the prior year looking at a little bit differently primary budget for last budget year salaries and benefits for all groups was 7.3 million we're looking at 7.8 million in this new budget so you're having a 546 000 increase in salaries and benefits or a 7.4 increase that is primarily driven by the new compensation plan and the three percent cola And so as a service organization, the majority of our budget lives generally in people. Other services. Yes, ma'am.

Does that include the insurance?

Yes.

And we projected that at what, 15 or 20?

So when we started the budget process, we were told to anticipate 20%. After your book was printed, we were told that has been adjusted to 10%, and we're still working to get that number down lower. So the number on the screen is a 10% increase, but we're still working to try to get that 10% down to some lower number. A complication there, our benefits have been administered by Allstate, And Nationwide Insurance, yes, you just had the jingle play in your head. Nationwide purchased the Allstate division that does employee health benefits. And so they're doing a merger and acquisition and in that shuffle is our rates. And so we're negotiating rates, but some of us with Allstate and some of us with the transfer, it's been complicated. So we try to have that done by now. We don't yet, primarily because of that merger and acquisition. Other services typically includes debt service. It includes depreciation. It includes equipment, which is a form of depreciation. As a service organization, most of the people have a vehicle that gets them to where the work needs to be. And so this is important. our version of depreciation for those vehicles there's a cost to use it and we recognize that cost within our budgets so that we don't get a big surprise in the future when all of a sudden we have to replace a vehicle and we weren't planning on it so all of those type expenses live in this other category and so most of that increase again is related to debt service and the utility fund related to our wastewater treatment plant Maintenance activities is going down by about $90,000. Capital outlay is going up by about $100,000. And then supplies is going down by $234,000. But $180,000 of that $234,000 is in fiscal 26. We did a software conversion, and all of our computer software lives in supplies. And so there was some expenditures last year related to a software conversion that was a one-time thing. It's not happening in this new budget. And so that major drop in supplies is not us buying less stuff for the people. Most of that is a change in computer software conversion costs.

I forgive. On the drawdowns of the fund balances that we currently have, would that have any negative effect on the – recommended fund balance that we'd like to keep of that 25, 40, or whatever that percentage is?

When we get at each individual fund, we'll look at it in more detail, but I'm going to say no at this point. That policy is primarily for our general fund and our utility fund because those are the primary operating activities. These other funds serve a different purpose. The equipment replacement fund doesn't need a 25% fund balance. It should... flush out every year over a year. The debt service fund doesn't keep a 25% fund balance. It should flush out every year. And so each fund in that other grouping is going to have a different set of policies and practices.

All just lumped together.

Okay. And so we'll look at each one of those funds later today. But that's a great question. That drawdown also will not impact our bond rating conversations because the bonds are only supported by general fund and utility fund. And those have incredibly healthy fund balances. So just graphically looking at some of the things that we've just already talked about, primary government, general fund, utility fund, and street maintenance fund. Public safety is about 28% of our expenditures. Public infrastructure is 52% of our expenditures. Quality of life is 10%. and support services or administrative overhead if you will is 10 it's important to note that industry average for administrative overhead is 12 to 15 and we're coming in at 10 so our administrative overhead is better than industry average for deploying resources for our community Primary budget by category, 46% of our budget is people. 39% of the budget is other services. Again, that's the equipment that we use. Included in that is the solid waste contract for trash collection. That's about $1.3 million, so that's a big chunk of other services. Utility depreciation, debt service, and just general liability insurance. Those are the kind of things that live in other services. Then 5% for maintenance, 5% for capital outlay, and 5% for supplies or the stuff that they use to do their work. So that's the primary budget and how it breaks down. I'm going to shift to talk just generally about the general fund as an overview. General fund revenue, 71% of our revenue comes from taxes. Within that taxes, you've got primarily property tax, sales tax, and franchise tax. So 66%, 67% of our tax revenue is property tax. About 25% is sales tax and a little over 8% is franchise tax. For the math nerds in the building, yes, I know that doesn't add up to 100% because there's also a mixed drink tax that is about 0.2% of our tax revenue. And I didn't put it up there because it... isn't a statistically significant number. But someone's going to look at that screen and go, hang on, that doesn't add up. You're correct. Total revenue in last year's budget, again, we projected $8.6 million in budgeted revenue. In the budget before you, we're looking at a little over $9 million. So that's a $421,000 increase, a 4.9% increase in projected revenue for the general fund. Where is most of that coming from? Well, we'll try to explain and we'll talk tax rate in more detail later. But each year the state does a calculation and provides to us the no new revenue rate. And in theory, what that means is for this new upcoming budget, If we're going to get the same revenue as we did last year, what tax rate can we adopt to have revenue neutral tax rates? And so they take last year's value, make some adjustments to it. And so last year's value that should have been for this calculation was $667 million in change of value to our community. So that would have levied $5.6 million in total revenue. Part of that's maintenance and operation that goes to the general fund. Part of that is interest in sinking that goes to the debt service fund. But it should have been a total revenue generated of 5.6. Then they look at this year's values, which started off at 646 million. So we saw about a $14 million decrease in total valuation over last year. Then they do some adjustments for protests and improvements. So our new adjusted value is 657 million. It's about a $10 million drop in value for our community. And so when they run the calculation, Our no new revenue tax rate is .852403 or 85 cents. Our current tax rate is .8306. And so the budget in front of you is proposing to keep the tax rate the same at .8306. And so the budget we've got in front of you is a balanced budget presented with keeping the proposed tax rate the same as it is today. Under that scenario, then the keeping tax rate the same is going to produce total revenue of $4.7 million, which is a reduction of about $900,000 over last year's what revenue should have been according to the state. So we're proposing a tax cut according to the state's definition. But how are we getting new revenue to the general fund if we're doing a tax cut? Glad you asked. So at the bottom of this screen, those green buttons, is our current tax rate, which is 0.8306. Within that tax rate, part of its maintenance and operations, which is 0.594501, and interest and sinking, which is 0.236099. If you'll recall, in the last couple of council meetings, we've had discussions about refunding and refinancing existing debt that's been out there for a long time. We're making a move based on your recommendation. I think next week we'll actually have a special meeting in which we'll sell those refunding bonds. But the line above it, our interest in sinking rate is going from 0.23609%. down to 0.187143. So we're reducing the interest and sinking tax rate required for debt service by refunding and restructuring that outstanding debt. That then means we can take those savings and move it to the maintenance and operations side. So we're keeping the tax rate the same, 0.8306. Maintenance and operation is going up from 0.59 to 0.64. And interest in sinking is going down from 0.23 to 0.18. So we're shifting some of that revenue out of interest in sinking into maintenance and operation. So we're getting more money to fund the operations, but the total tax revenue is actually going down over last year.

Is there any additional years added on to that?

So if you do the no new revenue rate, or is it the voter approval? So the state calculates the no new revenue rate would be $0.85, and the voter approval rate is $0.87. And so within that $0.87, the state calculates some unused increments for the past three years. past two years. So if we didn't take the no new revenue rate over the past couple of years, you've got some additional you can throw at the voter approval rate. And so that's baked into the point 87. But we are not recommending raising the tax rate above what it currently sits at right now.

But in the reconstruction, we're not adding, let's just say we are currently at eight years out, paying it all out. We're not adding years to now make it 10 years out or 12 years out. The debt? Yes.

So when we get to the debt fund, we'll talk in more detail. But generally speaking, think of it like a debt snowball that you may use at home. You've got several different debts that you're paying on, and when one pays off, You take that and throw it at the next one, and that one pays off. And so we've got some debt that's going to pay off within the next 10 years. years to move principal out to that fifth, sixth, or seventh year so that we can get some breathing room this year for our tax rate, but we're not extending the total length of the debt. And so as we pay those short-term ones off, we'll then roll that into the next one. And so they're staggered over time of when they mature and pay out. We've got more money coming into the general fund operations because of the restructure of our debt. But total debt, we're anticipating less revenue than last year because we're keeping the tax rate the same and total valuation for the community went down. Now, for individual taxpayers, Bob's house last year may have been $100,000, and he got a tax bill. If his house appraises at $101,000 and we keep the tax rate the same, his individual bill will go up a little bit. But overall, total community, our values went down. And we did see a significant drop in total residential valuations when we got the final certified roll. I'm passing my 30 minutes for our executive summary, and they were all taking bets on whether I would go longer than 30 minutes. So they all just won the office pool. General fund expenditures, salaries is 65%. Other is equipment and things like that. Professional services, you can see how our expenditures break down. Last year's expense budget for the general fund was $8.5 million. We're proposing $8.9 million in expenditures. That's an increase of 4.5%. And so you'll see revenue we're proposing to go up 4.9, expenditure we're proposing to go up 4.5. So again, we're proposing that revenues will outpace expenditures on the general fund side. General fund by department, police is 25%, fire is 21%, governmental affairs is part of the overhead, that's insurance and things like that, administration, public works, parks and recreation, all the various departments within our organization, that's how the budget shakes out as proposed. Looking at the utility fund revenues, there in the bottom, last year's budgeted revenues were $7.6 million. We're proposing $8.2 million. That's a $522,000 increase to utility fund revenue, or 6.8%. The majority of that is new debt service associated with the wastewater treatment plant. All in, we're looking at about an $8 million investment in rehabbing that wastewater treatment plant, which we have to fund. And so that's being funded through certificates of obligation. If we ask today's citizens to come up with $8 million in cash, there's no way the community could afford paying cash for that project. But those improvements will last 30 or 40 years. So we're financing that over the term so that future users of the wastewater plant are helping pay for the improvements to the wastewater plant. But the bulk of that increase is new debt service. Utility rate adjustment, what we looked at with the tax rate, we'll be looking at utility rates. We are proposing an adjustment. Residential customers will see a $6 a month increase. Majority of our residents do not use more than 4,000 gallons a month. So they'll see a $6 increase. That's about 7% of their monthly bill. The other thing that we track is affordability. EPA standard is 3% of the average median income. So for our community, the average median income is $43,051. Under this scenario, the average utility bill for a year will be $1,056. So that's 2.5% of the average median income. So EPA does consider our rates to be affordable.

Last question on this one. That $6 for the average residence, does that include the water usage plus the sewage? Or is it six and six?

So what we did is we adjusted the base water and the base sewer three and three. Okay. So they were paying 25 a month base, it's now 28 a month base. Three and three.

Not six and six, three and three.

Three and three, yeah. The other thing this does, and we've talked about this over the past several years, historically the residents of Commerce have subsidized the commercial industrial customers. What that means is if you look at the volume of water used and the amount of money they pay, residential customers have historically paid more money into the system than the volume of water they consumed and commercial and industrial have actually paid less money compared to the volume of water consumed and so we've been slowly shifting that to parity this rate adjustment continues to move us they're almost the same i don't remember the number off the top of my head but i think it's One or two percentage points that residentials are still slightly higher than commercial and industrial based on the volume of water they use within the system. So we're continuing to shift it to parity without a sudden slam to our commercial industrial customers. So we've been making that shift over the past couple of years. We also still have the lifeline rate in place and that consumption rate has not changed. So for our fixed income families that live below 4,000 gallons a month, they have a reduced consumption rate to protect that essential health and safety water use. And we've got that still in play. utility fund expenditures miscellaneous is mostly depreciation and equipment. But then you've got salaries at 23% professional services, capital maintenance, but their expense budget last year was 7.3. It's going up to 7.9. That's a $578,000 increase or 7.9. Again, a big chunk of that is new debt service. capital projects in the minor improvement fund. We've got about 518,000 in the general fund, 157 in the utility fund, and we're not proposing any major capital projects in fiscal 27 so that we got the opportunity to finish up a number of big projects that are in front of us right now. That's the executive summary. It is 8.43, so I went over my allotted time by 13 minutes. I'll make up for it somewhere else. Mayor, council, do you all have any questions at this point? All right. Then I'm going to... And we're going to start walking through departments. So the first department we're going to look at is the Administrative Services Department. In your budget book, that's page 97. But there will be some of the numbers that are a little bit different. The numbers on the screen are the correct and current numbers. And so administrative services is going to be city manager's office. It's going to be human resources. It's going to be building facilities maintenance. And so those are the activities that live within this administrative services department. And so you can see personnel, fiscal 25 actual was 730, 26 budgeted was 697,000. We're projecting to end fiscal 26 at 682,000. Disclaimer, there's still a couple of months left within this fiscal year, so those projections change. every week, every month. But right now we're forecasting to end in that fiscal 26 number and then we're budgeting 720. And so that's how personnel services in this department has moved supplies. 3900 actual 25 budgeted fiscal 26 at 4.2 actual fiscal 26 is going to be around 6.6 And we're budgeting fiscal 27 at around 4,200. Equipment maintenance, mostly vehicles. Actual 25 is 7.6. Budgeted 26 was 4.9. Actual is going to be about 6.6. And we're budgeting 4.9. I think we had some vehicle maintenance stuff happen this year that wasn't anticipated. Other services and charges, actual 25 was $33,500. Budgeted $26,000 was $31,000. We're projecting to come in at $33,000 for $26,000, and we're budgeting $39,000 for $27,000. So total department budget for administrative services, actual 25 was $775,000. budgeted 26 with 737,000. We're projecting to end 26 at 729,000 and we're budgeting 769,000 for this department and the proposed budget. Do you have any questions about administrative services? Enterprise user fee. Those are vehicles. And so we've got vehicle for the city manager vehicle for the facilities maintenance manager and the vehicle for facilities maintenance tech and that facilities maintenance tech was moved into this division in fiscal 26 and last year so we brought a new vehicle into the division with them and the enterprise vehicles are on a five-year rotation and so

For example, when we got Howdy's vehicle five years ago, I think we all know vehicle prices have increased. And so what happens is this enterprise user fee is almost like his portion of the depreciation of that vehicle, and we pay ourselves back in the equipment replacement fund. So when we sell his old Tahoe, any profit, we get to keep it. And that goes right into the equipment replacement fund so that that fund is always balancing itself out.

Does that sale go back through Enterprise? Does it get back in? It's their vehicle.

Any other questions on administrative services department? Okay, I'm gonna move to animal control and animal shelter. That should be page 130 in your book. So with the reconstruction and the addition to the animal shelter a couple of years ago, in fiscal 26, we added some staff to the operations. Prior to that construction project, we had two full-time staff and then some part-time contract work. In fiscal 26, we added a third full-time position, and we also have some part-time contract work. So you'll see the growth in personnel primarily because we added an additional full-time staff member. But fiscal 26 personnel, fiscal 25 actuals was 117,000. We budgeted 26 for 165,000. We're projecting that we're going to close 26 at 137,000 because we didn't spend the entire year fully staffed with three full-time people. And then we're budgeting fiscal 27 at $179,000. There is some adjustment for a new compensation plan and the COLA adjustment and the benefits adjustment that exists in that line. But that's about a 3.7% increase for personnel. Supplies for the animal shelter, fiscal 25 was $68,000. budgeted 26 with 73 000 we believe we're going to end 26 at about 79 000 much of that is medical supplies because as we've added to or improved the medical care that we provide to the animals in our shelter we've had to acquire some equipment and some additional supplies to go along with that We're budgeting 73.5 and 27, so we're keeping the budget the same as 26. We're starting a new spay and neuter program. We've actually performed our first operations at the shelter now, but we believe that program is actually going to pay for itself because when you adopt an animal there's a fee for that adoption that included the cost of the spay and neuter that was performed by an outside entity and so we paid their cost for that procedure now that we're doing the procedure in-house we believe we can do the procedure at a lower cost than that outside agency but we've kept the adoption fee the same And so as we net more money, that should feed back into the bottom line. But we're just starting a spay and neuter program, so we don't know exactly what that supply system is going to look like. So we budgeted supplies to be the same, and we're going to run fiscal 27 and see how we experience the cost and revenues with that program. We didn't feel comfortable forecasting something because we've Never done a spay and neuter program before.

So how do you previously, before we started the spay and neuter program, They would collect money up front, assuming that that person was going to take the animal to have it stay neutered. At that point, when they did take the animal, we turned around and paid pause for calls. Do we have any clue how many of those people paid that fee but never took that? So I see that. I see that we could actually come in lower because people that actually paid but were the animal to have it done. We never paid for it. So we're bringing in revenue, but we never had to.

Sure. I'll do some research. I don't have those numbers in front of me. We know there are instances where people don't get the procedure performed, but I don't have a frequency number in front of me.

It might be in the future as it comes. It's building because it's building every week. raise that fee a tad because of the convenience of we are now you know no one's having to go take an animal go back and get it i mean that's just a something to think about because it is a lot more convenient now it is and so we're watching uh those procedures as they go and the other thing that we're doing as animals come into our shelter there are certain breeds that we know are desirable

we'll go ahead and preemptively perform the spay and neuter operation. There are other breeds that come in that we don't know whether someone's going to adopt that animal. So we don't want to put the money into the animal unless we have high confidence that it will be adopted. So if we get one of these off-breed animals come in and someone adopts that animal, then we can perform the procedure as part of the adoption process. But there will be some breeds that we go ahead and preemptively perform because we know there's a high probability that either they will be adopted or acquired by a rescue organization there are other animals that come in we won't provide the service until they've got an adoption process started But at this point, we're budgeting supplies the same as last year simply because we don't know what this is going to look like as we get into operations. But we track it monthly, and if we start seeing cost trends change, we'll come back with the council with a potential budget amendment. Professional services, fiscal 25 was 24.8. We budgeted 26.18.2. We're projecting 19.4 as ending, and we're budgeting 18.2. Professional services are those contract employees that come in. building maintenance fiscal 25 was 4 000 actual budget 26 was 4.5 4 500 at this point we've spent about 5 300 we've had some unexpected maintenance mostly to ac units and then we're budgeting 4 500. You'll see a trend across all the departments. What we call the stuff budget, we kept the same. Because as we moved into fiscal 27, you, as a council, indicated a priority on compensation. And so most all of the work and change we put in our budget was looking at employee compensation. Their supply, their maintenance, their activity budget should be almost identical from 26 to 27. And so the directors have agreed to watch and maintain their costs in this new year to keep their operating costs within that budget. Equipment maintenance, actual 25 is $3,100. Budgeted 26 is $3,500. We're projecting 26 to be about $2,500, and we're budgeting the same $3,500. Other services for animal shelter, actual 25 was 16.9, budget 26 was 17. We're projecting 21 and 26, and we're budgeting 23.9. Some of that is going to be equipment. or in training. Because of the new staff, we sent them to some training to get them up to speed. So we've spent more on training in this current fiscal year. But overall, their budget is coming in underneath. Public utilities, actual 25 was 19.4. budget 26 was 19.5 we're projecting 23.5 and actual 26 and we budgeted 19.5 fiscal 27. uh there were no well there's some miscellaneous expenditure on this donation expense line we've now created a process in which the public gives a donation to the shelter there's a revenue line for that donation and there's an expense line for when that donation was spent And so the budget was zero because we don't know what donations are going to come in. But when we expand the funds through this donation line, there's an offsetting revenue somewhere to balance that out.

What's that a double telephone expense?

It's just a it's just a mistake in the projected. I've got a telephone.

It's got it's got two projected in the donation expense. If if The donor wants that to be your tag for something. I mean, how is that donation expense being expended?

If someone makes a $100 donation for pink necklaces for the cats, then we buy pink necklaces for the cats.

It's not rolling anywhere into the general? No.

And if they make a donation now and we don't expend it all at one time, it stays dedicated in a donation fund so that it can only be spent on the purpose. It's not distributed to other costs later.

We did this in other departments as well. so that they're all kind of following the same there was a much great move and then uh at the end of the year i'll let howdy know this is how much each department has left in a donation where he has the authority to commit the funds for a future year

Total department actual expenditures in fiscal 25 was $254,000. Budgeted for fiscal 26 was $301,000. We're projecting to close 26 at $291,000. And then we're budgeting 27 at $323,000 for this department. Do you all have any questions about animal services? Just one. On the supplies, gas and oil,

We, of course, projected $470. We budgeted $5,000. And in 26 and 27, we're budgeting $2,250. How is that going to work?

Okay, I can explain this.

Answer the question.

Oh, I'm sorry.

With the agreement that we're about to go into,

So we have calculated and I have proposed a flat rate for any time they make a call that we respond to. They pay us a flat rate that covers our cost of people, equipment and fuel. And so we're negotiating a rate they will pay so that any call we respond to for the county, they will compensate us for that call. Again, what we're talking about is the county doesn't have its own animal services program. And at one point, they asked us to become their animal services program countywide, and we gave them a budget proposal, and they didn't want to spend that much money. So we did not activate that program. They've now come back and said, what we're finding is that we have these – emergency calls where we need help and nobody's coming to help us and so right now those emergency calls fall into three categories if the sheriff's department makes an arrest on the side of the road and there's an animal in the vehicle they can't leave the animal in the vehicle and they don't have the ability to load the animal up with the suspect and transport them And so if they make an arrest on the side of the road and there's an animal involved, that would be an emergency call in which we would go respond, pick up that animal and bring it to our shelter. Second would be a dangerous dog or a bite incident. Their health department manages animal bites. And so if someone's bitten by an animal and it's an emergency situation, we would respond to that scene, but only for a bite scenario. And third would be a suspected rabies call. So if they've made an arrest and there's an animal there, if somebody's been bitten by an animal or there's a suspected rabies, those would be the three incidents in which we would respond. And so we're negotiating a flat fee that covers our people, our equipment and our fuel over the course of that call.

Only during the transit, not if it's a rabies suspect that's going to have to stay at the shelter 10 days. That would fall under the other contract. Yeah. So it's just the travel.

It's just actually to go with it. Our existing contract, and they pay us $100,000 a year for capacity in our shelter. This additional operation would be for us responding to calls on their behalf. And if there's an increase in fuel, there will be an offsetting increase in revenue to cover that. Councilman Henry.

And in 25 and 26, we were running two animal control vehicles. One of those we've owned for a very long time. It's no longer running. And so that's why the gas you see right now in the projected is so low. We are adding a new enterprise animal control vehicle in 27. But the upfit takes eight to nine to ten months. So I am not confident that we will have it in most of 2027. And so we will be running just one vehicle. Typically, the 5000, it's typically about 2500 per vehicle that I budget for gas.

Thank you so much. Back to the phone system. All right. There are they? enlighten me again are they on a different system than we have here in city hall we moved it so that it's so the office phone is on the same system isn't it but then they have a issued cell phone right as well okay so they've been answering their phones quite well um i'm not saying that but if there is an overload it goes comes over here or what

Do you know where they're from?

It goes to the voicemail.

Goes to voicemail.

We don't have it circulating our tree, our phone tree. Once somebody calls that number directly, the phone tree doesn't route it back to the main number here. It goes to their voicemail for them to return the phone calls.

Okay.

So we can make sure they're checking their voicemail.

And we also have their voicemails. When you leave a voicemail, it goes to an email address. So they get it through that way. So they hit it two different ways.

Any other questions on animal services?

Let's scroll back down so I can see the final projected. Thank you.

Next up will be governmental affairs. I still want to change the name of that. It's government services here. I like that better. This department doesn't have people. This is where all of our administrative overhead for the general fund lives. And so Total budget, I'll start at the bottom line. Actual expenditures in 25 was a million. Budgeted for 26 was 743,000. We're projecting to close 26 at 840,000, and then we're budgeting 744 into 27. So that's made up of supplies. Actual 25 was $177,000. Budgeted 26 was $211,000. Actual 26 we're projecting to be $183,000. And then budgeting 27 down to $30,000. The big drop there is the computer hardware that you see. Those expenditures were related to the software conversion for our primary enterprise system. And that process is wrapping up. Knock on wood. Professional services, actual 25 was $457,000. Budgeted 26 was $271,000. We're projecting to end 26 at $239,000 and we're budgeting 27 at $271,000. Building maintenance, actual 25 was 16.7. Budgeted 26 was 22. We're projecting to end 26 at basically 11,000. And we're budgeting fiscal 27 at 22,000. Equipment maintenance, actual 25 was 4,100. Budgeted 3,100 for 26. Looks like we're going to end 26 at 5,500, which is copier expenditures. And then we're budgeting equipment again at 3,100. Other services and charges, actual 25 was 200,000. Budgeted 26 at 158. Looks like we're going to end 26 at 310,000 and we're budgeting 27 at 340,000. Insurance claims are a big chunk of that.

And those have been offsetting insurance proceeds.

Revenue will come in to offset that.

That's something that we typically do a budget adjustment for in September.

Public utilities, actual 25 was 86,000, budgeted 26 at 76, actual projection is 83 for fiscal 26, and we're budgeting 27 at that same $76,000. And then miscellaneous expenditures, actual 25 is $65,000. We didn't budget anything for 26. Looks like actual 26 is going to be around $7,500, and that is a donation expenditure, so there will be an offsetting donation revenue connected to that. And so back to the bottom line, actual 25 is a million. Budgeted 26 was 743. We're projecting to end 26 at 840, and then we're budgeting 27 at 744. The majority of the difference is insurance claims and things that were expended. There should be an offsetting revenue for those in the revenue side of the fund. Any questions about government services?

The transfer out in 25 was we had some reserve, I guess, reserve fund balance for street maintenance. And what I did is I transferred out of the general fund into the actual street maintenance fund. So that's what that transfers. But it's not something that I would typically do every year. It's not recurring.

Next we need to talk about city council. Expenditures in this department are typically related to travel and training that the council members participate. There's an annual conference in which we make available to the mayor and the two most recently elected officials, which would be the TML 149. What's the telephone expense? The tablets. The tablets. Okay. All right. So actual 25 was $5,600. Budgeted 26 is $5,800. Looks like we're going to end 26 at $5,200. And then we've budgeted $5,800 for 27. It's mainly the tablets that are provided to you and then training to the TML conference. Any questions on that group? All right. Finance, you should find on page 100 of your book. Sorry, I have been calling out page numbers. Within the finance department, uh, lives, uh, accounting, budgeting, uh, cash management. Uh, then we also have utility billing, uh, municipal courts, a different department for this. So within this group is, uh, accounting, uh, budgeting, uh, accounts payables and payroll utility billing.

Uh, and so well, that's what I'm saying.

Structurally, it's there. Bottom line for this department, actual 25 was $356,000. Budgeted 26 at $399,000. Projecting to end 26 at about $408,000, $409,000. And then we're budgeting 27 down to $266,000. That significant drop within the utility billing, the two ladies that work that office functionally operate within the finance department, and the general fund was paying their salaries. We're making the adjustment 100% of their work is created and benefits the utility fund, so we're not having the utility fund cover their salary costs rather than the general fund. And so that reduction in cost doesn't mean we're losing people. We're just accounting for their salaries correctly so that the utility fund is paying their salaries instead of the general fund. So the cost is going down. The total people in the office is staying the same. So that's the big change that you're seeing there. Any questions about finance? All right. And then let's look at municipal court. Municipal court should be on page 134 within the book. So municipal court is where you go if you've received a citation or a summons of some kind for either a traffic incident or a violation of a city ordinance. And so the municipal judge that you all appoint lives within this, and then the court clerk lives within this. Total department, actual 25 was 79,920. We budgeted fiscal 26 at 78,000. We're projecting to end at 69,000. And then we're budgeting fiscal 27 at, excuse me, 83,900. Majority of that is going to be salaries for the court clerk. But then there are also some supplies, legal services for our prosecuting attorney and the judge, and then equipment and other services. We're not proposing any major changes to how this group operates in the new year. Any questions about municipal court? I will take this opportunity to say, again, you've probably heard this before, as a matter of professional view, we don't use our COPS as cash registers. And you will hear in other communities and you'll hear in other discussions that if the city needs more money, then go write more tickets. We do not believe it is an appropriate use of law enforcement as a revenue generation cash register. And so we do not put pressure on our cops to go write tickets so that we can make money. And we also do not put pressure on our judge to bank as much cash as you can. And so she is independent of our overview. She is appointed and directed by the city council. And so she has the full judicial freedom to look at every case every ticket every citation independently and use her judicial discretion on how to dispose of that case and so we don't put any pressure on the judge or the municipal court staff to become a cash register in which we're generating great amounts of revenue so you will see generally we have a revenue budget line for fines and fees Sometimes we hit it, sometimes we don't. And we don't put a ton of focus and pressure on revenue generation from our municipal court or from our law enforcement officers. We believe that they're here to promote public safety. Public safety is to encourage voluntary compliance. When necessary, we can do enforcement. There's no more effective enforcement than fines and hitting your pocketbook. But if you shift the focus of law enforcement away from public safety and into revenue generation, it changes their whole behavior and practices. We do not look at law enforcement or our municipal court as a cash register. If at some point in time the council decides they want to change that, you let us know and we can talk about it. But at this point, that is how we operate and it is reflected within our budget. Moving on, community development. Mayor, it's been about an hour. Do y'all need to take a break?

Go for it.

Keep rolling.

What page are we on?

Community Development should be page 108.

I believe John is off today, correct?

We encourage our staff to spend time with family when possible. And John and his family had had some time planned and they had reservations. And then we found out when the budget workshop would be. And I told him to keep his plans with his family and that we would assign him all the stuff that we didn't want to do since he's not here. So looking at the community development department within this department, that is going to be our planning and zoning operations, and it's going to be our permitting and licensing activities. basically if you're wanting to build within our community you go through the community development department from the beginning of your plans when you have to survey and plat a property that comes through this department once you've decided to build you submit building plans and those plans are reviewed and we issue a building permit Then we inspect the construction, all with the intent of making sure, one, that land use is consistent with the area around it, and two, that the construction is done in a safe manner that doesn't put the public at risk. And that's the primary functions of community development. Bottom line for this department, actual expenditure in 25 was $266,000. Budgeted for 26 at $253,000. Looks like expenditures is going to be $307,000, and we're budgeting fiscal 27 at $296,000. Looking more closely at that, actual 25 was $163,000. Budgeted 26 is $165,000. Looks like we're going to end actual 26 at about $219,000, and we're budgeting 27 at $207,000. The supplies, 1,800 and actual 25, budgeted 21 and 26. Looks like we're gonna end at 2,700 and we budgeted 2,300 for fiscal 27. Professional services are our building inspections. We usually have a revenue that comes in to offset this cost because we've passed the cost of these inspections on to the builders. But actual 25 was 72,000. Budgeted 26 at 55. We're projecting to end 26 at 61,000. And then we're budgeting fiscal 27 at 55. Building activity has slowed down. And so we're seeing a reduction in inspection costs from that regard. We've got equipment maintenance. Not a lot happening there. Other services and charges. Ended 25 at 26,000. Budgeted 26 at 28,000. Looks like we're going to end at 22,000. And so we've budgeted 28,000 for fiscal 27. Again, bottom line, budgeted 26 at 253. We're budgeting 27 at 296. Any questions about community development? Code enforcement should be on page 112. Code enforcement is where we staff the individuals that are licensed and trained to go do property inspections. We are either doing code enforcement for nuisance conditions that put the public health at risk, or we're doing what we call residential safety inspections and so because a significant amount of our community is renter occupied i believe 65 percent of our residential structures are renter occupied the state average is 35 percent so we're actually flipped 35 percent of our residential structures are owner-occupied, whereas 65 are renter-occupied. In that scenario, you have tenants that are living in a structure which they don't own. If there are public health issues within that structure, it's up to the landlord to make those improvements, not the tenant. Sometimes landlords are reluctant to spend money on those improvements, which puts the tenants at a health risk. We have a residential safety inspection or an RSI process in which landlords, we have an annual inspection where we go into every rental property within our community and do a life safety inspection. We're not inspecting to see if the paint's pilling on the wall. We're making sure that the primary life safety issues that are critical for those tenants are being maintained. And if we find a property that fails that RSI inspection, we put the landlord on notice. If the landlord fails to make those improvements, then the tenant then has their own bill of rights where they can go break that lease without having to pay penalties from the landlord. So it is to protect the renters that are living in properties in which the landlords are not taking appropriate action to provide health safety improvements. So all of those activities live within code enforcement. We recently added the vacant building inspection program, which would also live within the code enforcement department. When fully staffed, we have two full-time inspectors and a part-time inspector. We recently hit that full staffing, and then one of our code officers left to take another job. So we're back down to one and a half staff in our code enforcement division. And so at this point, we've not activated the vacant building program because we don't have staff capacity. Once we get our next, and we're in a hiring process now to identify the next code enforcement officer, most likely we have to bring them in, get them trained and certified. But that's what this department does. Actual expenditures in 25 were $170,000. Budgeted 26 for $250,000. That was adding that additional full-time person. Going to close fiscal 26 at about $223,000 because we haven't been fully staffed that entire time. And then we're budgeting fiscal 27 at $272,000. Do you have any questions about code enforcement or those programs?

Professional services.

Most of that's contract mowing. And so we have two types of mowing that happen in this division. One is enforcement mowing where Bob owns a property and he's allowed his high grass and weed to exceed, I think, nine inches. We take him through an enforcement process. If he doesn't mow his yard, we go mow for him and send him a bill. That's contract services. No, mowing services is the enforcement line. Contract services, there are lots within our city that are held in trust by either the city, the county, or the school district. And nobody mows those lots. There's a number of lots that have been foreclosed on taxes some number of years ago. They're unsold and vacant, but they've got the school's name on it. Well... We initially sent the school an enforcement letter and said, hey, you own this property. You haven't mowed it. We don't have the ability to mow it. And so what we've started doing is that the contract mowers that do our enforcement, they go mow those lots as well. And then we total up what those costs are. At this point, the other entities have not been willing to pay us for that. So I believe, are we filing liens on those?

Do you know?

I'm unclear, but the lots that are ours that are held in trust, we pay for the mowing. The lots that are owned by the county, we pay for the mowing. And the lots that are owned by the ISD, we pay for the mowing. At this point, we haven't got reimbursement for that, so we'll probably total that up and file that as a lien against the property. So if that property sells in the future, maybe we'll get our money back. But what we found is we're doing code enforcement on Bob. And Bob says, well, what about that lot? Well, if the school's name's on it, Then the school's not mowing and we're making Bob. So we started mowing all of those vacant lots that are held in trust by someone. And so that's the contract services line within professional services.

And the big reason why we keep it separate is so that when we get the revenue from people paying their mowing liens, we can kind of keep track and see if if.

number one if people are paying them and if it's covering the cost it just helps us track a little bit better which is why we don't lump them all into one so are we sending a bill to them to the you know like the isd and all that or are we just saying hey in the beginning we sent a bill to the isd and they said we can't pay that we we don't have that in our budget and so we haven't fought it aggressively but so how much does it cost it cost us to follow lean

$5 to file it. You have to pay to file it and you have to pay to release it. Yeah. So we pass those costs on to the lien holder.

Unless we.

Unless we're not.

Unless we're not. Yeah. And then we waive those fees anyway.

We've had title companies tell us we're not paying that. Right. We need you to release it, but we're not paying you back for that.

Yeah. If the lots go unmowed, it does create a public health risk to the people around them. And so we've just chosen to mow those lots. And as you can see right now, it's about $15,000 a year.

That's pretty significant.

The mowing is, we're looking at about $27,000.

They're working on their budget now, too. We might need to...

They're gonna be getting the bills from us.

We even spent time condensing the lien document template down to one page because it's like $26 a page and $4 for each additional page.

And it's also the wear and tear on our equipment.

Yeah.

Well, the contractors, it's also the public view of we're not doing anything for them, but you're coming after me because I didn't know my house.

So I think that needs to be a public. outcry to from the city to let people know that we're doing these things for these other groups and they need pony up i mean we're having to kind of feel stepped on If we're doing it and they're not paying for it, then we need to get the credit for it, and that needs to be put out there into the public life for people to know what the city's doing for them when it's not even in our peer review.

For the mowing liens, we're projecting to receive about $39,000 in revenue to offset those mowing liens. From individuals? Yes.

From the enforcement cases.

From the enforcement cases.

Councilman Henry, you had another question?

Has demo slowed down?

Yes. And so what we're doing is we will put a budget number in there for demolitions. But historically, the actual employees that did the demolition were the street maintenance crews. And we've got them focused on street maintenance right now. And so what we'll try to do is in the warm, hot months, code enforcement is focused on high grass weeds, rubbish, things like that. And streets are laying streets when the weather's warm. In the streets off-season, when it's cold and it's not a good time to put new asphalt down, then we'll refocus them and that's when we'll do a string of demolitions and so we're still working substandard structures and so we still do demolitions every year we've reduced the number so that we can stay within a budget and we only kind of have a short window in which to come in and do those demolitions with our crews We have seen a number of property owners that would do voluntary demolitions, and they take care of it themselves. But the enforcement demolitions, we kind of stack those up, and in the streets off-season, that's when we go tear them down.

You get a pretty high percentage of... of them paying for it or we having filed liens on those demolitions?

The voluntary ones, clearly they pay for themselves. I don't have the collection percentage in front of me. A number of the enforcement demolitions we file as liens and we just have to recover in the future.

I'm just wondering if we did collect, if we could not have contract labor that goes down during the season.

You could, but the companies that do that are very expensive. Uh, and so we'll typically tear down an average residential house for around six to $8,000 is the top end. If you hire a contractor, you're probably looking at 20. Um, and so is it easier for us? Yes. But then it puts a $20,000 burden on that property that may prevent that property from ever being sold in the future. Uh, and so we, we try to do it in house. Does that answer your question, Mr. Henry? Okay. Anything else before we move on from code enforcement? All right. Parks and Recreation, I believe, is on page 137. Now, our Parks and Recreation Department is separate from the new recreation program that we've created. And so I'll talk a little bit more about that. But the focus of Parks and Recreation Department is the facilities in which these activities happen. The actual activities themselves, the sports seasons, will live in the recreation fund. And so those are two different buckets of money. Parks and Recreation Department, we'll start at the bottom line. Actual expenditures in fiscal 25 was $561,000. We budgeted fiscal 26 at $569,000. We're projecting to end fiscal 26 at $572,000. And we're budgeting fiscal 27 at $616,000. Personnel services, actual 25 was 357,000. Budgeted 26 at 298,000. We're projecting to end 26 at 273,000. And then we're budgeting fiscal 27 at 256,000. Supplies, actual 25 was $22,000 and change. Budgeted 26 at $25,000. We're projecting to end fiscal 26 at $22,000. Lots of 20s. And we're budgeting fiscal 27 at $25,000, $26,000. Building maintenance. Actual 25 expenditures was $40,000. We budgeted fiscal 26 at $113,000. We're projecting to finish fiscal 26 at $152,000. It's actually 49.

It's duplicated. See 49 and 49 are on top of each other? Yeah. It's duplicated. My apologies.

So that 152 should be reduced by 54? Yes. So about $102,000. Okay. And then we're budgeting fiscal 27 at $113,000. And so equipment maintenance, actual 25 is $4,800. Budgeted 26 at $6,900. We're projecting to end at around $7,000. And we're budgeting 27 at $6,900. Other services and charges, actual 25 at 45,000, budgeted 26 at 45,000, projecting 48,000, and then budgeting fiscal 27 at 47,000. Public utilities. Actual 25 was $87,000, $88,000. Budgeted fiscal 26 at $76,000. We're projecting to end fiscal 26 at $66,000. And we're budgeting fiscal 27. at 76,000. And then miscellaneous, 2,500. And then the $90,000 transfer out is what we're proposing to support the recreation fund. And we'll talk about that more in a little bit. But with us assuming the responsibility of the recreation sports leagues, The expenditures that were previously owned by the Boys and Girls Club will now be owned by us. And so some of those expenditures are covered by the registration costs for the kids that are participating, but not all of the costs of those programs are supported by registration costs. And so we'll talk more about what the recreation fund looks like. But at this point, we're projecting some support from the general fund into the recreation fund. And we're looking at around $90,000 is what's projected. Once we operate for a year, we'll have a better sense of what that looks like. But that's what that $90,000 transfer is.

Go into detail of what the parks maintenance line, the 55. What does that cover?

Which one?

It's the under building maintenance and it has parks maintenance. Tell me what that actually is.

So that's if we have any faulty playground equipment like we had the incident where the bridge was vandalized at Centennial Park. So that's any maintenance that occurs within the park's equipment.

And so it also includes like we have to, you know, those banners that we have up there, not banners, but the kites, the shade kites. We have to replace those.

At the splash park?

Yeah, at the splash park.

If you're referring to the winter storm where the ice weighed down on those, that was an insurance expense. But if that was normal wear and tear, yes, that would be good.

So we're putting that in there kind of. looking at it from from a building maintenance you know that we're putting in that we've got to do certain things every year we know that certain things are going to happen and we're going to have you know violence out there no matter what vandalism we need to do that as part of the parks grant that we're doing right now we just implemented a new parks maintenance plan to try to proactively replace those things before they get to a complete state of disrepair okay And then where are we put? Is it anywhere in this budget where we're talking about getting the lights in there to the the existing parks? Because we had talked about that at one point.

And then I think that our cameras lighting maintenance is that.

Well, where is that? That's maintenance existing lights, new lights in the capital projects in the capital projects.

Okay.

And this is all you.

Well, capital projects extend over multiple fiscal years. And so when you fund a capital project, it may take a couple of fiscal years to do everything in that plan. But we'll cover that. So the funding for new lights is in an existing capital project.

Is it an existing capital project?

Yes.

Which one?

The Eddie Moore Sports Complex.

Well, but I'm talking about the other parks.

Right. And so improving the funding for new lights in our parks will come out of the project that focus on anymore.

The way that we worded it, it allowed us to use those funds for park improvements in general, not just anymore.

We had a million and a half for the field upgrades anymore, and we were able to do all the field upgrades for a million. So we've taken some of that extra funding and done additional improvements at and around anymore but then there's some other parking improvements that are needed and so we're using some of that funding to pay for the capital projects in those other locations so in a side conversation that was happening in the car we were talking about using part of that the roof here i think that's a prior co issuance yes

so we'll talk about that yes okay this is maybe kind of ocd but the um i'm noticing in the book um for all departments so far the proposed change percentage hasn't changed even though the budget amount has gone up which percentage is correct i want the book or we want to make it both the same anyway so like for instance right now the both the screen and the book say it's a 4.86% change.

So I have to go back in and look at what that change is actually pulling. So typically we don't, in our adopted book, following GFOA, we don't put a change column in it and we don't put the projections. We have that in there for the proposed budget because council has requested it in the past. And so what it does is it's pulling from one of these, from one or two of these, and so I have to go back and look and see exactly which ones.

Okay, perfect.

And I also just kind of want to preface, I know in your books, and I know we keep seeing it where we have that duplicate, the whole purpose of that is because I did a complete change in my chart of accounts, and that means I had to also change my chart of accounts in the budget book and I had to do it manually. So there are just a couple of them where I've maybe missed or duplicated. So I do apologize for that.

Thank you.

All right. The conversation that the mayor was referencing is during this past week, as we've got all of these final new numbers, we've made adjustments to the numbers in the book as compared to the numbers that are on the screen. So there's a lot of fluid conversations that are happening. we recall in one of the workshops we talked about capital projects that city hall roof is approximately 260 to 275 000 and needs to be replaced at the time we had that conversation we didn't have it in this fiscal 27 budget to replace the roof so the conversation was we would try to put the roof in fiscal 28. Well, now as all this has changed, we also didn't know for sure whether the school was going to sell us the gym or not at the time we had that conversation. And so now that we do know that we're buying the gym and we know that that is a $200,000 purchase, we've got money in an existing project. that was intended to purchase the GM and make improvements to the GM. And then we've got some money left over in the Eddie Moore project. And so we've got some park things that we need to finish up for that Eddie Moore, what we're calling the Eddie Moore project. And then we've got funding for the GM. And if we put those two together, then we have enough money to get the GM, make some improvements so that we can continue to use it. and we believe we also have enough money to do the roof at city hall we just haven't run all those numbers yet and so if we use some of that existing funding to do the city hall roof now then there may be some of these park ideas or things that we wanted to do that may get punted so that we can do the roof now we just haven't completely looked at all those numbers yet and so we're trying to determine if we can do the city hall roof in fiscal 27 we just haven't looked at all the numbers yet any other questions related to parks and rec all right i'm going to go to the library and that should be on page 141 There's one significant change with the library. So actual expenditures in fiscal 25 was $60,297. And so in that budget and in fiscal 26, we make a donation of $43,500 each year to the library. And that is primarily used to pay the director. But they use it to pay the director and they use it to supplement some other staff in the fort. But that donation or that contribution to the library is one of the ways they pay for their staffing. And then we pay for the copier and the utilities because we own the building. They operate as a separate entity, the activities within the library building. One of the services that they have historically provided, and it's been a fantastic service, is passports. And so actually in most of Hunt County, when people are finding out where to go to get a passport, the most popular recommendation is actually come to our library because it's easier and more convenient to get your passport at our library than anywhere else in Hunt County. And that has been a significant program for them, and it has been a revenue generator for the Friends of the Library. That's the organization that runs that facility. Earlier this year, we as a city received correspondence from the federal government because the State Department, The only entities that can do passport operations are local government entities. And so the State Department put us on notice that if we were going to continue to offer passports, it had to be offered as part of the city, not some independent entity. So we've taken on the responsibility of the passport program. So it still happens at the library. It's still the same staff doing it. Nothing has changed for the citizen that needs to get a passport. What has changed is the logistics. That revenue now comes to the city as passport revenue, and then we pay the contract workers that run the passport program. So from the citizen's point of view, nothing's changed. on the back side, how the money flows and how the responsibilities handle this change because of some direction from the State Department. And so that's the primary change you see in the budget difference. We budgeted fiscal 26 at 61,000. we're looking to end fiscal 26 at $93,470. Those additional expenditures have revenue that offset it because we took that program on during fiscal 26. And so we're budgeting fiscal 27 at $104,000. That does not mean we're increasing our contribution to the library. That reflects us assuming the responsibility for the passport program. And so that's the major change that you see in the library. Any questions about that or the library programs?

They still do the passports at the library?

Yes. And it continues to be a good program. All right. Then we're going to go to Public Works on page 144. For our purposes, Public Works is the street department. Public Works' department, actual expenditures in fiscal 25 were $741,000. We budgeted fiscal 26 at $696,000. We're projecting to end fiscal 26 at $627,000. And then we're budgeting fiscal 27 at $706,000. within that number personnel services actual 25 was 406 budget 26 at 325 we're projecting to end 26 at 237 and we're budgeting fiscal 27 at 334 000. There has been some structural staff changes in the street department, and we went a portion of this year with a reduction in staff, and we've restaffed that up. So most of those savings are from turnover and personnel for that team. Supplies. fiscal 25 actual expenditures was 80 000 we budgeted 26 86 000 we're projecting to come in at 84 000 and then we'll project we budget for 27 at 77 000. those supplies do not include asphalt materials Professional services, actual 25 expenditures was $20,000. Demolition services was a chunk of that. Starting in fiscal 26, we moved the accounting for that demolition over to code enforcement and took it out of street department. So you'll see it disappear in these lines. Budgeted 26 at 500. We're projecting to end at 500. And we're budgeting 500 for fiscal 27. Building maintenance, actual 25 expenditure was $79,000. We budgeted fiscal 26 at $101,000. We're projecting to end at $94,000, and we're budgeting $100,000. And so this is street maintenance activity that's funded by the general fund. Usually what that's going to be is patches. If the utility fund cuts the street open to do some utility work, the street department then has to go back and patch it and we build them for that patching activity. So there's usually a revenue that goes with this. Equipment maintenance, $56,000 in fiscal 25. We budgeted $47,000. We're going to project to end at $55,000. A lot of that was getting the old equipment, getting the dust knocked off and getting it maintained and up and running. And then we're budgeting fiscal 27 at $47,000. Other services, expenditures in fiscal 25 was 87.9. Budgeted fiscal 26 at 125,000. We're projecting to end fiscal 26 at 137,000. And we're budgeting 134,000 for fiscal 27. Bulk of that is equipment. And public utilities, actual expenditures in 25 was 10,000, budget 26 at 10,000, projecting 26 at 9,000, and we're budgeting 27 at 11,009. And then we did have a capital purchase of some equipment in fiscal 26. So back to the bottom line, actual expenditures from the general fund was $741,025. We budgeted 26 at 696. We're projecting to end fiscal 26 at 627. And we're budgeting fiscal 27 at 706.

Honey, would you go back where you said the asphalt? I wasn't quite clear. Did you say that there was nothing budgeted for asphalt?

Supplies budget does not include asphalt. Typically, asphalt is found in the street and alley maintenance. And so this line item is... materials and maintenance activity that's funded by the general fund there's also expenditures in the street maintenance fund which we'll see later on so when we increase the volume of street maintenance activity the the asphalt supplies will be paid for out of the street maintenance fund not out of the general fund what will probably happen is we'll probably write the check out the general fund and then transfer from the street maintenance fund in but the street maintenance fund is going to pay for all of that material especially because that's what the paper came in such a large amount yes yes so the new paper did come out of street maintenance fund and so that that's that was my thought it was like even with the paper we still came out under the project or under budget but if that's coming out of the treatment and so we've spent two or three years building a nest egg of cash so that we could acquire the equipment that we needed to do real effective work. You Could we have, again, this is a conversation for when we get the treatment fund, we could have bought that and financed it through a loan, but then of the annual revenues that come in, you've got to take a chunk of that and pay the loan, and then what's left you spend on supplies. Will that... reduces how much work we can do on the street. So we spent a couple of years just acquiring equipment so that now all the revenue coming in from the street maintenance fee is spent on activities, doing street maintenance, not paying, paying loans. And so any other questions on public works?

Supplies on diesel fuel, uh, 25, we were 13.

We budgeted 15, and we're at 18.7 now. We're budgeting 15 again, and we have new equipment. I'm pretty sure all that new equipment's all diesel. It is. Do we need to bump that up from 15 to...

that up to probably 20.

We're hoping that the Street Maintenance Fund will cover any of those activities. But we don't know what that number is yet. So we're hoping to operate in 27, get a really good feel of what all this looks like and what the costs are, and either make a budget adjustment once we have better numbers. But we're hoping the Street Maintenance Fund will cover some of that cost. Great question. Other questions on Public Works? All right, Mayor, I'm going to recommend that we take a brief 10, 15 minute break and then we'll come back and start with fire emergency management.

Are we closed to the rest of the staff?

I'm worried because there was some police going on here.

Small stuff, I think. So, we pulled them. And so, I don't know.

Whatever you want.

These are originally back from when you wrote them from when you were 21.

We have City Park, we have Ivorymoor, we have Anymoor, and Centennial. But we've got more.

Any more in Centennial?

It has not officially been dedicated, but it has been used that way for years.

Maybe that's what we were thinking. I'm going to leave it at four. Let's change it to five. Make this look better.

Do I hear a six? A little bit.

My mom was still trying to recover. We went to Six Flags with my daughter for her birthday. Oh, fun! I forgot I'm old. And my whole body hurts. Did you ride the rides? Did you get whiplash? We went on the new one, the Tormentor or whatever, like a 10-story draw. We took a ride at 2, 3, and 4. No! No.

It's an entire day full of numbers. It's my favorite day. I was thinking that this morning.

But at least he's good at it.

At least he's good at it. If it's me, I'm not good with words.

She's like, there should be two actors.

Are we, what are we doing?

I'm showing you after. I'm just gonna start. Yes. Bethany.

You don't know Robert?

Have you had any of the ground meals?

I have not yet. They're really good. Yeah, I think they're selling 60 or 70.

Yeah, but you know, do you go to their Greenville store or the Longmont store and you get that much corn? So encode version nine.

It's one database structure. And you have on your hardware encode 10. It will also change the entire database structure. So it wasn't an upgrade. It's still in code. I see it.

Let me get my phone. You have to see the wire. Go back to us.

We have the same order. I was thinking it's going to hit him in the back right here. It's for the Lord. So,

So I had to figure out. So when we were sitting over there, we were talking about, I was talking about howdy. All right. And you said, don't worry, you'll take care of it. But my thing is, is. If we get it in there, how soon, how fast can we put water in it? Well, that's the thing is that I'm trying to figure out because I don't want to have too much water in there for too long. because I don't want to have kids in and out of it.

You know what I mean?

Well, I'm going to have people stationed, but that was one of the things I was going to work with you on is how long does it take us to water in it?

Because we kind of thought that, this is your project, but it's just a spitball. Well, we kind of thought it needed to be more than a one and done. It needed to be kind of a build up.

Your water trough. It's a ring. Next office.

really funny yeah it wasn't us we didn't do it so if i didn't just don't want the six inch riser okay but then when you get ready to do the deal if you want because i know you're doing the plug we didn't know exactly how you wanted to so we built a So you can group 300 and set this deal all at home. It's churning when you get ready. They can swirl for as long as you want. okay okay they're just gonna ride the current and then there's a valve in the middle of it that might have to be in there but you can sit down in the middle and you can turn that valve to think about in your swimming pool when you back up one of those same principles same thing and then you can you can make it reach and we can knock those ducks to the bottom

fun however you do it we can throttle it up and throttle it down I like your jacuzzi yeah so what I said to make it where it's it's it's bringing people to it if we had the I'll get volunteers to stand around the book so that people aren't getting in so We could fill it up.

We're going to do the... Well, I thought you actually told me Friday night.

Well, we're going to put it in on Friday. We're going to set it up on Friday night.

Well, we were planning on... The problem is that we can actually pass by. I don't know where I'm at.

Oh, I know. Okay. So we can put it on Friday night. I'll get people to be there all day. And then once we do the... I don't know when we're going to do it.

Probably what we need to do is... five or six fence posts and some of that orange fencing, because if I pull that valve, you've got a mud slop.

Well, how can we get the water to go over to the drain? We can't. So we're going to have to wait until after the event. Can we not do this last weekend?

The water's still going somewhere.

Some pump with a hose.

Can we get the hose over? It'll travel down the curb line.

I'll just use a fire thread so I can't. I'm taking this to see where the gap is. Garden hose. If you've got a garden hose, then we can do that. Okay. And just stick a garden hose in it. I might even have a one-inch hose that would work, but it's still going to take a little time.

Okay. Well, once you figure, you know, right now I'm focused on trying to get the tickets and everything out there, and I'm letting you do this part. Let me know what I need to get. uh how do you them to help me with to get we're gonna we're gonna promise women's drugs and test it and we'll let you know okay well let me know i never know if you're serious He is serious on this. We're going to shoot the calendar at the same time. Did you share with them, Howdy, our flyer?

No. I showed my wife.

We have a flyer? A flyer for the CLI dust plug. I hit you back twice.

I'm the mascot.

And he is wearing that suit. We have a suit. I didn't even notice Howdy. I'm checking for typos.

Isn't that exactly what I said?

I missed Howdy on the... You know what, Stephanie? I did too.

Well, they digitally created the picture. I had not put this thing on yet.

Is it AI? Well, but he actually is going to have a suit.

I will be wearing that thing. I just haven't done it yet.

My God. We were at this PO training. I love it. And they were talking about who to send it to, to whatever. And I said, you know, for typos and all that.

And I vote that you wear that at the next.

In our group.

My favorite thing now is reading published books. And finding typos in them and like, do I write the editor or do I not? Take care.

This is the one I got. Get the one ahead.

It's working. Fruit tray. What? The fruit tray. Brooches, I think.

Haley.

Haley.

I think I sent you the email but I was riding in the car. You don't think, you don't know if anybody was up tonight or not, huh? Oh, they will be now. Probably three, four, we'll see. Well, I was beginning to wonder.

I mean, should have waited.

Oh, I know. Look what we're doing on the duck thing. How fast we can get it moving. She was talking to me about some things, and she said, one of the things, though, I'm the delegate. I said, I don't know what that means. I mean, I know what it means. Is it because I can't talk to people? Yeah, is that a good thing or a bad thing? But you can't do it all yourself. I don't think so. Okay, we're on.

All right. Welcome back, Mayor, Council. We are still within the general fund, but we're moving over to our public safety divisions. And so we're going to start talking about the fire department. And so. What page? Fire department should be on page 120. No, 116. Fire is 116, emergency management is 120. So page 116. Within this department, actual expenditures for fiscal 25 was $2,196,000. We budgeted fiscal 26 at $2,189,000. And it looks like we're going to close fiscal 26 at about $2,109,000. And we're budgeting fiscal 27 at $1,866,000 and change. The major difference is dispatch. The dispatch personnel lived within the fire and emergency management, emergency services department, and we've created their own department to live in. So shifting those employees and some of their supplies and support dollars shifted out of fire and some of their supplies and support dollars shifted out of PD. But the bulk of that cost lived in fire. And so that shift is the moving of dispatch. So you'll see most of that within personnel services. Actual 2025 was $1,721,000. Budgeted fiscal 26 at $1,730,000. We're projecting to close at $1,647,000. And then we're budgeting fiscal 27 at $1,410,000. Again, most of that is moving dispatch services. Supplies budget, actual expenditure in 25 was $89,000. Budgeted fiscal 26 at $72,000. We're projecting to end fiscal 26 at 79,000 and we're budgeting fiscal 27 at 59,000. It doesn't mean $20,000 worth of supplies is going to dispatch. Professional services are our volunteer firemen. This stays pretty consistent over time. Actual expenditures in 25 was $14,450. We budgeted fiscal 26 at $14,400. We're projecting $14,600, and we're budgeting $14,400 in fiscal 27. This is historically from when we had a volunteer department. It was a pension commitment that we made. It's like $100 a month. And so for the rest of their life, they get this $100 a month. And then when they pass, their spouse gets $50. And so it's an arrangement that we had from when there was a volunteer fire department that we continue to honor that commitment. Building maintenance in fiscal 25 was 12,000. Budgeted fiscal 26 at 15. Projecting fiscal 26 at 8,000. And we're budgeting fiscal 27 at $15,000. Equipment maintenance, actual fiscal 25 was 100,000. We budgeted fiscal 26 at $53,000. We're projecting to close fiscal 26 at $51,000. And we're budgeting fiscal 27 at $60,000. other services and charges actual 2025 was 230 000 we budgeted fiscal 26 at 279 000 we're projecting to close fiscal 26 at 288 000 and we've budgeted fiscal 27 at 280 000 And finally, utilities, actual expenditures in fiscal 25 was $28,000. We budgeted fiscal 26 at $25,000. We're projecting to come in at $19,000, and we carried that budget over to $27,000 at $25,000. And so those are the expense numbers for the fire department. We're not making any major operational changes to their programs other than just shifting the accounting for the dispatch services. Do you have any questions about fire?

I've got two questions. Texas Workforce Commission, we're almost double what we had budgeted for that. What was that for?

Workers' complaints. Isn't it? No.

So that's our worker's comp. And so I don't get the rate for it until March of the year. And so I try to estimate what it's going to be, but we have a certain amount that we pay per person. That's what that is.

Okay. And the second question I had was the purpose of the hospital district contribution.

We have a contract with the hospital district to provide medical services outside the city limits. It's supposed to be two miles, but then we have a mutual aid agreement past that, so anything in our immediate fire area. We're also a rescue district, so we have a rescue district that goes up into Greenville, Wolf City, Campbell, and all that. This helps offset the cost of that operation. You go straight back into the line item to pay for stuff like rescue tools, rescue boat supplies, that kind of also training that's specifically geared to what we have to do for the hospital, that helps offset that cost.

So the hospital gives us that money?

Yes, and then we spend it.

We're revenue. The item's directly tied to that rescue district. There's some overlap, of course, but it helps offset that cost. Thank you.

And Chris, did y'all use the... Buying power from the hospital to get a lot of your supplies and everything.

If you're talking about a lot of medical supplies, we have a contract. So AMR, I don't know if you'd really say the hospital. Okay, AMR.

Okay, I was just verifying that.

We have a contract that is a leg of their contract, so it would be a different pricing.

They had mentioned that, and I just wasn't sure on how that works.

So what other districts cover that? outside their area? I mean, the fire department's like for Greenville and other places, who does?

Greenville pretty well stays inside their city. We're a rescue district, so rescue district's kind of divided up different. So if it's water rescue, we're everything north of the interstate. Cass is everything south. Then you go into just normal rescue districts. So, like, let's say you have a wreck on the interstate right now. You're going to get Campbell because it's their fire district, but it's also our rescue district. So you're going to get Campbell and Commerce. We're going to send an engine rescue team to help cut people out of the cars, stabilize the vehicle, and do stuff like that. Then you've got, I believe, Celeste is a rescue district. Cash is a rescue district. There's about four of us that are specialized inside the county that are designated as that.

That really needs to be publicized a little bit more for the citizens of not just Commerce, but out there in the Hunt County community because that's

And does Hunt County give a little bit of money to the rescue districts?

So not directly to the rescue districts, but we have a contract that y'all approve every year with Hunt County for the fire side of that for leaving the city. It's not a line item. It goes into a different deal to help offset engines and stuff like that. The hospital has it in their contract that we're giving it to y'all to spend so that we know obviously we're not the only departments they want to know that our rescue tools are operational and serviced every year it's pretty expensive to get all those tools serviced and that you know hoses are tested that they don't know all that's going to work we're going to pay you so that that's why it's a line item okay and they're individual line items on the revenue side what's that total 20 uh 27 budget that you have again

1,866,743 for fiscal 27. Stay here, Chief. Emergency management is, so fire and emergency services, that's basically the staff that responds to those calls. Emergency management is the team that does planning for emergency events, and right now it's Molly and Chief are the two that make up that team. But the expenditures associated with that activity, actual expenditures in fiscal 25 was $45,000. We budgeted fiscal 26 at $50,000. We're projecting to end fiscal 26 at $50,000, and we're budgeting fiscal 27 at $50,000. The majority of this is going to be supplies and activities related to planning for events. When the events happen, there's typically some potential revenue from FEMA or the state. And so the actual cost of an event necessarily goes through here. But we didn't have any events to speak of this year. But emergency management is the planning and the preparation for those events. And then when it's happening, it's the team that runs that situation. So that's the emergency management department. That's why it's separate from everything else.

What's the equipment user fee?

So this is going to be the depreciation for all of the radios that we replaced in the last year or so.

We just redid our entire radio system.

Towers, weather sirens. They have some other equipment, too, that they pay for depreciation for.

And then let's take a look at dispatch services. Again, we've created a new department for dispatch so that we can better support them and their operations. And so you'll see no expenditures in fiscal 25 no budget or expenditures in fiscal 26 because they were embedded within the fire department and to be honest most of these line items in fiscal 27 we're taking our best educated guess Going back and Chris looked at what they actually spent on things and where those funds came from. And so some of that was pulled out of fire. Some of it was pulled out of PD so that we could try to build a true representative budget for that program. But that's why all these are first-time numbers on this screen. I do want to point out within this proposed budget, we are asking for one additional full-time dispatch position. Within the total budget overall, we're only looking at two new positions that didn't exist in fiscal 26. One of those is an additional dispatcher. We're currently staffed with four, that's supervisor and three dispatchers. They cover 24 hours a day, 365 days a year. This additional full-time staff begins to move us in a direction in which it is not as hard on the staff to keep that operation manned. If someone's sick or takes off, somebody else is working overtime and taking on more hours in an already stressful environment. So we're hoping to improve quality of life for those staff members in the work that they do. It's incredibly valuable, the service they provide to our citizens.

The amount of overtime. So this very likely will, the overtime set somewhat.

It's not going to probably alleviate it, but it's going to, it'll help reduce it. Jamie can probably tell you better on that. But that, yeah, so right now, if Nikki has to fill in and cover, so she's not doing her job, but if I have a dispatcher take off on a 12-hour shift, they either have to take that full 12 or split it up. And it's not uncommon. to see dispatchers work at 16 hour days.

I mean, it's not good, but also it's not going to be a full salary because some of that will be.

Well, and also I think we talked about this in a workshop. When we hire this new person, there's a high probability they're not going to walk in the door fully certified. And so there's going to be a training period where they go through the FTO field training process where they're going to be working with a dispatcher through that training process and so we don't anticipate a lot of savings on the overtime in the first year but again we're going to operate under this new model for a year get a better feel for what that looks like and be able to better budget in fiscal 28.

Will y'all start looking for that dispatcher in October?

We want to get everything ready to, when y'all approve it and October 1 goes live, we hit a button and post it.

Our plan right now, actually, is if we get through the workshop and you are all in favor of the proposed budget and haven't made any substantial changes, we'll probably start advertising before October so that we'll have some applicants to start interviewing in October. Because if we don't, if we advertise in interviewing until probably November or December, and then you're in the holidays and it gets crazy. So we'll probably advertise in anticipation of a move in October.

My and Nikki's goal may be, maybe it's to, we want to have somebody ready to start FTO by Thanksgiving. We can get that done.

What's the government number on this?

We're budgeting $452,516. That includes the new staff position. It does include it, okay.

That's what my question was.

All right, thank you, Chief. Thank you, Chief. We're going to shift and discuss the police department. This should be found on page 126. I'm sorry, dispatch was on 123, but I'm assuming you all figured that out because I didn't call it out. Page 126 for the police department.

Let's start with the bottom line. Actual expenditures in fiscal 25 was $1,929,000.

We budgeted fiscal 26 at $2,129,000. And we're projecting to end fiscal 26 at $2,013,000. And then we're budgeting fiscal 27 at $2,263,000. Rolling back up. Personnel services, actual expenditures in fiscal 25 was $1,397,000. Budgeted fiscal 26 was $1,578,000. We're projecting to close fiscal 26 at $1,435,000. And then we're budgeting fiscal 27 at $1,718,000. Now, I want to pause and talk some personnel moves that are in this proposed budget for 27 that's different than 25 and 26. We have in the five and a half years I've been here, i think our police department has been fully staffed for less than five or six weeks in the entire five and a half years that i've been here because we consistently had trouble hiring new staff and then once we hire them we have trouble keeping them And that directly goes to the level of compensation that we've provided in this community. We've had this conversation as a council every year that I've been here about how do we work on getting those salaries up to a more competitive level. At the time we started this budget, we had three vacancies in patrol and they had been vacant positions for a significant amount of time. When we did the independent compensation study, Partly it was encouraging because for most of the departments in our city, we weren't very far off of what the market was. For the majority of our employees, their wage range wasn't too far off of what the market was for our region. The glaring and obvious difference was within our police department. Every position in our police department the range of what was a competitive salary in our areas and it really wasn't even close and so we started having conversations about okay well how are we going to eat that elephant one bite at a time because we had a lot of ground to make up in order to offer competitive salaries so having conversations with chief and he with some of his leadership team One of the conversations we had is there are national staffing benchmarks that you use for law enforcement. So for every thousand people of population, you have this many police officers. And so if you look at commerce and everything says we're about 10,000, 9,000 population. The 2020 census says 9,000. The updated estimates assume that we're north of 10,000 now. Well, if you apply the national standard to a 9,000 population town, there's 22 officers that need to be sworn in protecting your community. But if you start digging into those population numbers, the state makes the assumption or the state makes the distinction that 7,000 of our residents are what we would consider permanent residents of commerce and 3,000 of our residents are related to the university and there's turnover year over year that there's 3,000 people, but it's not the same person every year over a year. There's students and people that live in our community associated with the university that's got some turnover to it. So resident population in the state says is about 7,000. 3,000 is itinerant. Well, if you look at that national average of benchmarks for a 7,000 population town, then you could actually reduce the patrol force by four people and still meet those standards and then assume that the University Police Department has a presence here covering that other 3,000. And so we started looking at what would happen if we took our staffing and used the 7,000 population benchmark instead of the 9,000 population benchmark. And it showed that we could reduce our force by four positions. what she recommended is reduced by three so that you've got a staff patrol and one floater that helps keep everything working and the savings from that three-person reallocation then is used to bump all of our wages in the police department up into that competitive right wage so we started running the math and i think Those three positions covered all the cost of moving the entire department into the new comp plan and maintaining some compression separation between your more experienced officers. Because one of the challenges across the board when you implement a new compensation plan is you move everybody up into the plan. Well, people that were already in the plan didn't move. And so it compresses those wages. And now someone that's been here five years is making virtually the same money as a rookie that just walked in the door. That compression is kind of hard to swallow, but it's a reality when you implement a new compensation plan. we were able to move everybody into the new plan and bump some of the existing staff to maintain some of that salary separation to recognize their experience and tenure. So all of the costs of the personnel shift for the police department was funded by the reorganization of those three positions. And so we believe that we are still appropriately staffed to cover a community of our size using those national benchmarks when you take into account that the University Police Department is also here. So between the two departments, we're actually more heavily policed with law enforcement than the national average would typically suggest. And so we're comfortable making or proposing this shift in staffing. Because that's the only way that we can afford to get everybody up into this competitive wage. Since we've made that change, we've actually seen an impact in the recruitments that we're doing. And we've seen some high quality recruits that we're currently interviewing and talking to right now. And so all of this shift in funding for police personnel is coming from this department reorganization. So that's going to be a little bit of a different approach than what we've seen over the years, but we feel confident that we can stay fully staffed, that we can pay competitively, and therefore compensate our staff for the risk and the work that they're doing to serve our community. Do you have any questions about that staffing conversation at this point?

so the loss of the three patrol officers is not going to put any extra stress on the officers we already have just like dispatch they're trapped right they are we never had them we're busy but the reality is we had these open positions that have been open for a period of time so the officers were doing the work without the compensation and we also had little to no applicants for those positions at the wages that we were offering And so the decision was we need to tackle this and get closer to that competitive pay.

Yeah. Okay. So operationally, not much is going to change for the patrol officers on the ground. They've been operating in this reality for a while. Okay. They're just going to be fairly compensated for the work that they're doing with this shift in structure. So technically we're not defunding the police department, but we're restructuring the police department and becoming more competitive in our wages.

Just on paper, because you've always been restructured because you all never had those people. So it's just on paper that we're restructuring.

The other reality that we've talked about through this is... kind of always in the back of your mind, you know, at least in the police department, you've budgeted $100. We know we're not gonna spend $100 because we're not gonna be fully staffed. And so there's some savings just kind of baked in because we just knew we were always gonna come in under salary. That goes away. If we execute this correctly, We budget $100. We're going to spend $100 because we're going to be fully staffed. And so that kind of safety thing that's always in the back of your mind is gone because we believe we'll stay fully staffed moving forward with this process. Wrapping up, looking at supplies, actual expenditures in fiscal 25 is 152,000. We budgeted 26 at 153. We're projecting to close the year at 148, and we're budgeting fiscal 27 at 151,000. building maintenance really kind of outside their control uh actual expenditures in 25 was nine for fiscal 26 we budgeted 11. actual expenditures has been 14. a lot of that has been some some hvac maintenance and then we're budgeting 11 going into the next year equipment maintenance actual 25 was 28 000 budgeted 26 at 30,000. Actual expenditure is probably going to be 35,000. I'm assuming a lot of that is the insurance claims for health insurance, just regular maintenance stuff. And then we're budgeting 27 at $30,000. Other services and charges, actual fiscal 25 was $311,000. We budgeted fiscal 26 at $328,000. We're projecting to close the year at $352,000. And we've budgeted fiscal 27 at $327,000. Public utilities, actual 25, $30,000. We budgeted 26 at 26,000. We're projecting to close the year at 27,000. And we budgeted 27 at $23,000. So again, back to the bottom line, actual expenditures in 25 was $1,929,000. We budgeted fiscal 26 at $2,129,000. We're projecting to close at $2,013,000. And then we're budgeting fiscal 27 at 2,263,000. Do y'all have any questions about the police department?

Some of the decreases that you see are us reallocating to dispatch.

General fund revenues. It's frozen.

Honey, on the police, on the building maintenance, is their roof in the same shape that this one is?

It was redone recently.

Redone how?

The flat roof was replaced.

Completely? Mm-hmm.

Part of the building is flat roof, and then part of it is angled. The flat roof was redone. It was leaking pretty bad, so it was replaced.

I knew in the lobby.

I think we spent a little less than $200,000 on it because it was just the flat part.

Oh, no. There we go. You're stressing me out. I'm stressing you out.

I know.

There we go. Now we're cooking the pineapple.

Let's go.

All right. So again, the bulk of the conversation when you talk general fund revenues is going to be about the taxes. And I'll take an opportunity to talk about the difference between taxes and fees. This is a conversation that comes up in the public, it comes up online, and there's a lot of misunderstanding about how governments get their revenue and the difference between taxes and fees. And if you look at, there's national institutes that are about tax policy, and all of these national organizations on the definition and the distinction between taxes and fees. And at its most basic level, a tax is created to generate revenue. And it's created to generate revenue from a broad group of people that benefit from a set of services, whether they directly use that service or not. And so the amount of the tax is not directly connected to the cost of the service or the utilization of the service. And so I'll use the fire department as an example. We know how much it costs to operate a fire department. We just looked at the budget and saw all the line items of what it takes to operate a fire department. And I believe you can accurately make the statement that everybody in our community benefits from having that fire department there. Hopefully you don't use them tomorrow. Hopefully you don't use them at all this year, because if you're using the fire department, that means you're having a pretty bad day. Sounds like my business. So the hope is that you don't use them, but we all benefit from them being there. And so the cost of having them there is spread across the entire community because the community benefits from that general service, whether they use that service or not. The second piece is, A fee. A fee is tied directly to the cost of the service. So if there's a fee that we charge you $100, Directly draw a line to how you use that service and what it costs to provide that service to you and that is a fee So a tax is a revenue that has nothing to do with the cost of the service you user didn't use a fee It's tied directly to the cost and whether you use that so let's go back to the fire department if we funded the fire department through a fee structure and then we would know how much it costs per hour for them to respond to Mr. Henry when he has an issue. And so when Mr. Henry has an issue and the fire department rolls and they shows up to serve him, we're going to track how many hours were there. And then we're going to send him a bill and he will never be able to afford that bill. So the user of that service will never be able to afford the cost of that service. So that means the service closes and goes away. So if the fire department was operated as a private business, it would cease to exist. And so there are public services, there are general services that we provide to the community that would not exist if it was done by the private sector. I don't believe I've ever seen a model for fire services that a private sector enterprise can do that and survive. because taking the cost of that service and billing it directly to the user is never going to be affordable. That means the service goes away and the entire community is at risk because that service isn't there. And so these general services that we provide to the community are public services that the community needs in order to protect the health and welfare of the community, but yet may not use every day. So police, fire, there's multiple services that we provide through the general fund that the community needs these services to be healthy, to have the public health and welfare protected. But there is not a mechanism in which to transfer that cost to the users of that service. That's the role of taxes in this budget and in this world. And so how do you generate those revenues across the community in a way that's equitable? In the state of Texas at this time, based on the Texas Constitution, there's property tax and sales tax. That's pretty much the only way that you can generate revenue from the community to cover the cost of the services that you provide to the community at large. And so the bulk of the revenue coming into our general fund is property tax and sales tax. We don't get to touch fuel taxes, so the cost of gasoline, the cost of fuel is completely owned and controlled by the state of Texas. There's other revenue generation systems within the state of Texas that is reserved exclusively to the state. At the municipal level, property taxes and sales taxes are the only mechanisms. There are some franchise taxes, but you'll see the numbers. They're very limited in the revenue that they generate, and we have no control over what revenue they generate. And so I want to talk briefly about property taxes, a little bit about self-tax, and then we'll touch on franchise tax briefly. But again, we're trying to cover the cost of these general services that we provide to the community at large to everybody in the community whether they use them or not. And so in the state of Texas, that's done based on how much land is within our geographic area. And so within our jurisdiction, the city limits, all of the land, the buildings, the improvements within that, the state assesses a value to that property. And then if it costs us $100 to provide a fire department, then we take that $100, and we need to generate $100 from the community at large. And so we divide it up amongst the property that's available within the community, and then you back out what our rate is so that you generate the revenue to cover the cost of the service. And so I recognize there's been talk for years, there's a growing amount of talk in the public discourse about property taxes and the moral good and bad of property taxes. And I'm not here to defend or speak to that issue other than to say there are critical essential services that we as a municipal government provide to the community that the community would suffer if those services were not there. And we have to cover the cost of those services in some way. And in the state of Texas, it's how much land and improvements are inside our jurisdiction. And we distribute the cost across that land uniformly through a tax rate that generates the revenue that covers the cost of these systems. And so through that property tax process, there are really three components. There's the appraised value of your property. There is a tax rate that is set, and then there's a tax bill that is paid. The appraised value of the property, the municipal government has no say or influence. We have no involvement in the process of appraising the property value, and we actually go to prison if we try to influence the appraised value. So we have no conversations with the appraisal district or the state about what is an assessed value. We just take the number they give us. And so the process of determining the value of a person's property is handled independently through an appraisal district. And we as a municipal government have no involvement in that process. The tax rate is 100% within our purview. And so we are given a number that says, here's the value of the property within your jurisdiction. We then determine a tax rate that will uniformly apply across every property in our community that generates the revenue necessary to cover the cost of these services, and that creates the tax bill. So there's appraised value, there's a tax rate, and there's a tax bill. We only have influence over the tax rate. And so when we look at a budget and we look at what is the cost to provide these critical services to the community, we need a tax rate that generates enough revenue to cover those costs, whether you use the service or not. And so I haven't used the fire department. I think one time in the five and a half years I've been here, I've used the services. That's because I busted my head at the mayor's house in her garage and I was bleeding down my forehead. And so once in five and a half years, I've used the fire department and they didn't send me a bill. i'm glad they were there and if you've had a heart attack in our community there's a very high probability that our fire department were the first ones on the scene and began the process of saving your life so when you need them we're incredibly grateful that they're there and they're there because there's revenue generated through a property tax system that covers the cost and in our community the total dollar amount that we bring in for property tax does not cover 100% of the cost of police and fire. And so when we look at the services that the property tax provides in our community, it covers police and fire. The first responders that are there on your very worst day they're there well and i'll add dispatch police firing dispatch are there to help you on your worst day because of the funding mechanism that is property taxes in commerce texas and so if that funding mechanism goes away it has to be replaced with some other funding mechanism that covers the cost of those services without sending a bill to the user of that service And so communities that use police department and law enforcement as a cash register figure we can write enough tickets to cover the costs of this service. But then you've completely shifted the focus of those law enforcement officials, and they're no longer focused on public safety. They're focused on revenue generation. And that changes their attitude. It changes their approach. It changes their behavior. And we do not want to serve our citizens in that manner. And so there is an enforcement part of a law enforcement activity, but its intent is to encourage voluntary compliance with the public safety laws. It's not going around trying to find a cash register so that we can generate revenue. And so property taxes for our community fund public safety. And there's not another way that we can communicate that. And so for our community in this upcoming budget year, so I want to go back to those two pages that you've got on the dais. And let me put it back on the screen. So every year the state of Texas does a fairly complex calculation, and they basically give us some tax rate parameters. Again, remember, there are three components. There's the appraised value, there's the tax rate, and then there's the tax bill. We only have influence over the tax rate in that equation. And so the state gives us some boundaries in which we can operate for that tax rate. And so that exists in primarily what is Let's see if I can do this. The no new revenue rate is calculated by the state of Texas and they effectively look back at last year, what was your tax rate and how much revenue should that have generated compared to the new valuations and hold that revenue constant so the appraised value is new the tax bill is the same, how does the tax rate change so that the revenue is the same? Does that make sense? So when they generate the no new revenue rate, the appraised value changed, the tax bill is held constant, how do we change the rate so that the bill is the same it was last year? That's the philosophy behind the no new revenue rate. The challenge is, They take last year's value, which was $660 million, so we built a budget off of $660 million of value. They go back and make some adjustments to the amount that was appealed, new exemptions that were applied, and they come up with what the number should have been last year, and then they come up with what your revenue should have been last year. That $5.6 million isn't the actual real revenue that we got last year, but according to the state, that's what it should have been. So they take that number and hold it constant. So that's the tax bill. Then they give you new values, so the appraised value changed, the tax bill is this new number, and they back into what is this no new revenue rate. So our no new revenue rate for the upcoming budget year is 0.852403. So our tax rate would go up from 83 cents to 85 cents, and the state would say you did not raise taxes. And so we have to use the calculations. We have to use the language that the state prescribes through all this process. And so in theory, we could raise the tax rate. Remember, that's the center part, appraised value, tax rate, and tax bill. We could raise the rate from 83 cents to 85 cents, and the state would say, you have not raised taxes. because it would generate the same $5.6 million in this year that we should have gotten in revenue last year. The reality is that if we raise our rate from 83 cents to 85 cents, there's going to be individual property owners that their tax bill is going to go up. Because if their appraised value goes up, which we have no control over, and we raise the tax rate, then their bills are going to go up. The state would still say, we tell everybody that we didn't raise taxes. And so that's part of the system within which we operate. What's happening for the proposed budget we've put in front of you is that we're proposing to keep the tax rate the same. So the appraised value changed. We're recommending the rate stay the same. The tax bill will change over the last year. And when you look at the entire city as a whole, we're revenue going to go from 5.6 million down to 4.7 million in total tax revenue. And so total tax revenue, we are cutting taxes. The tax rate's not changing, but the tax revenue is going down because the appraised value of our community went down. Does that make sense? And so when we look at the revenue generated for our general fund from property taxes, we are proposing a budget that lowers the total amount of property tax revenue for our community. We're not saying individual Bob is going to see a lower tax bill. Because we don't know what's happening to his appraised value. We're holding the rate constant. But if they appraised his property and the value went up, his tax bill is going to go up. And all we control is the tax rate. So we're proposing to you as a council, the elected officials who own the boat, we're proposing to keep the tax rate constant, knowing that the total revenue generated is gonna be less than last year, but we've put a budget together that's balanced that we believe continues to provide the core essential services that the community needs. And so what that looks like, again, our current tax rate in green Maintenance and operation, this is the money that goes to the general fund in terms of revenue. Currently, there's 59 cents in change per $100 of valuation. We're proposing that that go up to 64 cents in change, and so that will increase the revenue to the general fund because of that rate changed. The debt service goes to the interest and sinking fund, which is a different set of accounting books. The current tax rate is 23 cents and change. And because of the refinancing that Jamie and her team did, that's reducing to 18 cents and change. So the amount of revenue going into interest and sinking is going to go down because our annual debt service has gone down. And so we're reducing the amount of money that goes into interest in sinking. We're increasing the amount that goes to operations revenue. But when you put those two together, it is still a reduction in total property tax revenue to the organization. That's a huge mouthful. So do you have any questions about what we're proposing to do with the tax rate? Okay, last thing I'll say is the state of Texas allows municipalities to increase their tax rate by three and a half percent without going to the voters. And so this voter approval rate shows you, the state gives you a number and says, you can raise your tax rate to this amount without going to an election. But if you raise your tax rate more than that amount, then you have to have an election and let the voters choose. And so if we, for example, brought you a budget that required a tax rate of 88 cents, that rate would be higher than the voter approval rate. And if you chose to go with our recommended 88 cents, it automatically triggers an election. We are proposing to keep the tax rate the same, which is lower than the no new revenue rate and is lower than the voter approval rate. And so that's the recommendation that we are bringing to you in this budget for the upcoming fiscal year. Any questions on property taxes?

August 8th, I think is the council meeting where we'll bring this property tax rate to you and you'll vote on the maximum property tax rate. So then we have the authority to post it and put it in our tax hearings and those types of things. It's not where you're actually voting on the tax rate. It's just that you're going to be voting on the maximum.

So that notifies because we're bringing you the proposed budget. Then when you take that action, your tongue community, we're putting a budget and we will not have a rate higher than this amount. And you set the ceiling and then the community can give us feedback about things they like or don't like about the budget. You can change the budget to bring the rate down. You cannot change the budget to bring the rate up once you set that ceiling. We're recommending the ceiling stay at 8306.

Are we anticipating legislation changing the exemptions for industries and commercial for next fiscal year?

I am not wise enough to make a strong prediction on that. there are lots of conversations about that the financial advisors and the people that we talk to what they're telling us is they believe the last legislative session made an adjustment to how exemptions were done to reset the table and then the table will move forward from that reset If there are any changes in the upcoming legislative session, the anticipation is it will continue to be on school finance, not necessarily municipal finance, but all of that subject to change. The state legislature identified some of their major priorities going into the 2027 legislative session. Believe in the top three of their priorities is the elimination of property taxes. And so, as we just said, the core services that we provide, the revenue that covers those services are property tax and sales tax. And if property tax is eliminated, some other way of funding those core services has to be identified or you eliminate police and fire for our entire community. And I don't believe the public is asking to eliminate police and fire. And so unless the legislature can come up with a reliable way to replace that revenue, it's going to be hard to undo that revenue. I had a conversation. I wasn't speaking to an elected representative, but I was speaking to a prominent lobbyist that's in Austin actively working to eliminate property taxes. And I asked the question, all right, so assume you're successful in this next session and you completely eliminate property taxes. what happens to every municipality in Texas that the voters approved general obligation bonds to pay for improvements in their community that are backed by property tax revenue. Because if you eliminate property taxes, you forced every municipality in the state of Texas that voter approved this to violate those bond covenants. And his response was, we're not getting rid of that tax rate. So they're not really trying to eliminate property taxes. So I don't believe property tax is going away. I do think we'll see some continued evolution to what property taxes are in this upcoming legislative session. But it's easy to publicly talk about. It is almost impossible to practically do. And so I don't know that anyone's got a solution. Right now, we're building our budgets on the assumption that the rules in which we live in will continue to be the rules in which we live in. But the challenge that we have is that we have to manufacture success for our community regardless of what they do. And so we're prepared to adjust our operations however we have to adjust them to that new reality because tomorrow, when someone calls 911, we have to be there. whether the state changes the funding rules or not, someone has to be there to answer that 911 call. And when we talk to them on 911, we have to be able to send someone there to save their life. We have to do that tomorrow, no matter what the legislature does. And so we're prepared to figure out how to make that happen.

All right. Proposed budget as the, uh, All right. Sales tax, what you'll see on the screen, actual sales tax revenue for 2025 was $1,605,000.

We budgeted sales tax for 26 at $1,616,000. We're projecting to end this fiscal year at $1,686,000. So we believe we're going to come in a little bit higher. Revenues, page 92 in your book. we believe we'll finish fiscal 26 a little bit above what our budget was, but we're not confident to budget that increase in fiscal 27. So we're proposing to hold sales tax revenue constant. When we look at what's happening in the national economy, we're not in a recession, but the national economy is not booming right now. And so sales tax typically is an indication of the confidence of consumers and the amount of transactions they have on a monthly basis. And so we're saying that we believe that revenue will be constant into fiscal 27. We do show that we'll come in a little bit ahead, but we're not counting those chickens for the next fiscal year. We're holding sales tax revenue constant. A couple of things we believe will be influential. The university's opening of the Spur as a facility is going to be a benefit to our community. The weekend that they had their collegiate rodeo, Best data we have, there was between 4,000 and 6,000 people that came and participated in that rodeo, and local restaurants completely sold out of inventory. And most of those visitors were not residents of commerce. They were people that came to commerce for that event. And so we saw a sales tax spike. out of that event. As the university keeps that facility busy and continues to have events in there, concerts, rodeos, FFA events, that will improve the number of people coming to our community, which improves the economic activity. We believe there will be some increased sales tax from that. We don't know what that's going to look like. So we're not comfortable projecting additional revenues until we've got some historical data to see what that happens. That makes sense. Additionally, when they open the indoor sports facility, which they're projecting to be open in the spring, early summer, that they host there will also bring more people into our community. So we think over the next couple of years, we'll see more visitors coming to our community, which increases the economic transactions, which then captures more sales tax. We just have no reliable way to predict what that is. So for now, we're holding sales tax constant. And so the expense budget you have in front of you assumes a constant sales tax level. There has been some conversation about, well, if you're going to eliminate property tax in Texas, sales tax is the only other mechanism to generate revenue. So why not shift everything away from property tax to sales tax? and just increase the sales tax enough to generate that revenue. There's two problems with that approach. Sales tax is incredibly cyclical based on the national economy. And so at the national level, if you begin to see the signs that we're in a recession, or we're entering a recession, or you even hear talk about we're entering into a mild depression, people lose confidence and stop spending money, which they should. But that then causes revenue to drop. Well, if our cost to operate a fire department is $100, and it costs us $100 to have this service available for you, whether you're buying stuff or not, then we have to cover that $100. And if the revenue from property tax is stable, reliable, and dependable, then we can staff and we can equip and have that department ready to serve you. But if the revenue to cover that cost is cyclical in nature and is up and down and unreliable, then we actually have to reduce how we staff and manage our fire department so that we can pay the costs at the bottom of that business cycle. So in the middle of a recession, instead of $100 in sales tax, we only got $80. Then $80 is where we staff our fire department. The community needs a fire department that costs $100. We're only providing a department that costs $80 because that's the bottom of that recession cycle. And that's what we can count on having. So if you go to some kind of consumption based tax, the revenue reliability changes. And so you have to budget operations at the bottom of that business cycle. And so you reduce the quality or the quantity of service that you provide to your community. And so if we change from a consistent, reliable revenue program to a cyclical or not revenue program, we'll have to change the way we staff in a budget. We will still provide service, but it may be lower quantity or quality than what was previously performed. And so we look at sales tax as an essential part of our revenue, but we recognize that it's cyclical in nature and it's going to go up and down and it's not consistent and reliable. So we try to forecast and manage that accordingly. Does that make sense? Last tax that I want to talk about is franchise tax. Franchise tax for us is primarily electricity, phones, and cable. And so those are going to be public utilities that are managed by the Public Utility Commission of Texas that operate within our public right of way. So these are for-profit entities that provide utilities to our citizens, charge our citizens in a manner that they make a profit, but they're using public land to conduct that business. And so since they're using public land to conduct a for-profit business to our citizens, we tax them called the franchise tax because they operate within our jurisdiction on our land, providing services to our citizens for which they make a profit. And so 5%, 4% of that revenue comes back to us through a franchise tax. we don't get to set the the rate the state sets that four percent of what they generate it's a revenue so four percent of revenue within our jurisdiction comes back to us in the terms of franchise tax um and so we have a franchise agreement with encore for power we have a franchise agreement with atmos for gas the state took away the communications franchise And so when there is a question about Encore operating within our city, we can use our franchise agreement. We can call Encore. They're incredibly responsive because they have a contract with us to operate within our town. When we have a question about Atmos Gas, we can call them. They're incredibly responsive because they have a contract to operate within our town. Communications, we no longer have a franchise agreement. The franchise for communication that's phone and cable all goes to the state of Texas now. So every communications company, telephone and cable company, they have a franchise with the state of Texas. They no longer have a franchise with the city of commerce. And so the state sends us a portion of the franchise tax revenue that they get from the cable companies, but we no longer have a contract and we no longer have leverage. And so the way that impacts our citizens, as an example, if you see a telephone pole that's about to fall over and there's wires attached to it, those are probably communication wires, not power wires. If they were power wires, we'd call Encore, Encore would show up and they would fix that problem. Now, if it's just communication wire, we call the communication company, probably have to leave a message. And it may take a year before they show up and do anything about that poll because they no longer have a contract with us and they have no responsibility to report to us. So we have to complain to the state, to the Public Utilities Commission. And you know how efficient the state of Texas is. And so we can file a complaint with the PUC And we may or may not see any kind of result. And so franchise tax, we do get revenue from phone and cable companies, but we no longer have a franchise relationship with those entities. The state sends us a disbursement of what those numbers are decreased amount from what we previously had. Yes. And those companies have been decreasing for years because it's those communications that are on a physical wire wireless isn't franchised and so more and more people are moving to cell phones and wireless communication since there's not a physical wire anymore those companies their revenue is dropping and consumers are moving to the wireless entities and so the revenue we get from the wired companies continues to drop So that's what franchise taxes are. It's a small percentage, I think a little over 4%. Well, I've got it on the slide. It's some small percent of our tax revenue. But it's primarily for the fact that they're using our land to conduct their for-profit business. And so we use that to cover our cost of maintaining that land.

So when we put in a new subdivision and they have to put in underground utilities or even run cable –

So if they get an increase in revenue from those new customers, then our franchise will go up pro rata with whatever increase they see.

It's based on how many lines they have here, how many heat of lines, miles of lines, things like that. So when I get their monthly reports, it will usually tell me exactly on there how and what. the percentage and what the revenue was, that kind of thing. We also have a franchise tax agreement with the city.

They use the public right away to conduct their business. And so we get 4% 4% of their revenue comes back to us.

These new encore polls that are going up everywhere. and they leave that pile of dirt.

So we've reached out to Encore about that question. I've been out all week in training, so I haven't heard from them yet, but we've asked that question. Some of what you'll see is they'll put in a new pole because it's their pole, and they'll move their power lines. The communication lines are still on the old pole, and they can't move the line. If you call the cable company, you're probably not going to talk to a person. But if you move their line, their attorney is going to show up and sue you quickly. And so Encore won't move the physical wire. We won't move the physical wire because as soon as you touch it, their attorney shows up. But until they move their wire, Encore can't remove the old pole. And so usually when Encore puts new poles in, the other one stays there because the communication line is still attached, and only the cable company can move their wire, and they're in no hurry.

So that dirt just sits there.

And that's why Washington and Sycamore and Ash are just a mess at the moment.

Even cable-wise, it's just a mess. And we no longer have any influence over the cable companies because the state took the franchise agreement. And so... People call us all the time. Can you do something about this? I give you the phone number of the Public Utility Commission of Texas. That's all we can do.

There's a cable on Ash Street that's almost touching the ground that I assume is a communication cable.

And some good news, you may have noticed as you leave on 24 and head to Greenville, on the west side of the road, there were old cable lines that were drooped down on the ground. We filed a complaint with the Public Utility Commission and they finally cleaned all that up. But it took over a year of discussions to get that cleaned up. All right. Taxes. Moving on to fees and other revenues. So again, a tax is a general revenue used to produce enough money to cover the cost of general services and there's no direct connection between the tax and the cost of the service everything else should be a fee in which the cost is tied directly to how much the user used it and you should be able to give them a bill for their utilization of that And so for license and permits, actual revenue in 25 was 138,000. We budgeted 218 in fiscal 26. We're projected to come in at 187. And so we're budgeting 218 in fiscal 27. License and permits is just based on the volume of people and transactions that come in. And so we try to evaluate what is our predominantly staff costs. So when you come in and fill out an application for a fence or electrical permit or a plumbing permit, how much staff time have we consumed to support that? And is the fee associated with that transaction appropriate to cover the staff time? I'll tell you, in most cases, it's probably not because there is a tug-of-war do we want to be incentivizing development and so communities will take those fees and try to keep them low or competitive so that you're not hurting people that want to do development And so there are going to be some of our permits that the permit fee doesn't cover the staff time associated with it. There's going to be some that it does cover. But any case in which we have a third party involved in that permit, we pass the cost directly to the applicant. So we shouldn't be losing money on third party services. If they cost us $100, we pass it on to the applicant. But the idea behind licensing permits is The revenue generated should be tied to the cost of the time we use to review that application and that process. We also get a lot of comments and complaints, and so I'll use fencing permits as an example. Why do I have to pull a permit to redo my fence? Well, part of the role of community development and the work that we do for land use is you as a property owner have a right to use your property however you want to. We do have to make sure that the way you use your property doesn't adversely impact the neighbor next to you across the property line. And so we're involved in that conversation. So if you want to put up a fence, why are we involved? One, we just want to make sure you can demonstrate that you're putting the fence on a property line and you're not creating a conflict with your neighbor. Because if you create a conflict with your neighbor, then we're probably going to be providing law enforcement services at some point when y'all disagree. So we just need to make sure you can show to us that your fence is on an appropriate property line. And two, you can't create a fire hazard. You can't put a fence in a manner in which we can no longer safely respond to a fire or an emergency incident. So we just want to see what you're planning. And third, you can't create a traffic hazard. Some people want to take their fence all the way to the curb. Well, now you're obstructing the view for oncoming traffic. And so we want to make sure you do your fence in a way that's safe and that is respectful for your neighbor. And then we're done.

Do we charge for that now?

We do.

We used to want to charge for that.

It's not a large fee, but we do charge a fee. And people grunt.

Do we fine them if we find one that...

If we find somebody... doing some kind of activity that requires a permit without a permit we put a stop order on the work they have to come pull a permit and it doubles the cost of the permit and if they don't stop the work then we can get law enforcement involved and so it's not because we're trying to control what happens but we do have a responsibility to make sure that happens in a safe manner Another community in West Texas that I'm familiar with, they had an elderly couple that had some problems with the plumbing, the gas plumbing in their house. And their cousin knew somebody that knew Bob that can do this. So they had Bob come in. He did pull a permit. He redid all of the gas in their house. And three months later, their house exploded. And so they were injured. It burned the structure of neighbors on both sides and their house was gone because Bob came and did the plumbing, didn't pull a permit. There were no inspections and that's a public safety hazard. So there's a reason you have to pull electrical permits and plumbing permits so that we can confirm that the public safety is protected. Because if you don't do it right, you're going to burn something to the ground and it could be your neighbors and it could be you. And so there's a cost that we have for the people associated with protecting the public safety. We try to make sure that that cost is directly tied to the fee so that you use the service, you pay for the service. That's the nature of these fees. But we also don't know how many people are going to build fences. And so we just give you a ballpark guess based on what our trends are. We're going to budget on this historical trend. This is how much activity we think there's going to be. And that's what you see in the budget line.

Our roof revenue is going to look good. That's in building permits. That's what I was just thinking. Man, that's...

Roof permits and itinerant vendor permits where they can walk in door to door. There's a boost. But residential construction is down a little bit. So we went for a number of years. There was a lot of residential construction that slowed down, mostly because of national market conditions. But at some point, it will pick back up. Intergovernmental moves are going to be those reimbursements from other state entities. So fiscal 25, we had $164,000. Budgeted fiscal 26 at 165. We believe we're going to hit 185. And we're budgeting again at 165. State training, I believe, is fire department related. Hunt County fire reimbursement. State fire training grants. hunt county animal shelter they have increased their contribution to a hundred thousand they're asking for some additional emergency response so we're negotiating prices i haven't put it in the budget because we haven't finished it and i don't know what the call line is going to be and so we'll land on agreement get y'all to approve it and then we'll see what our experience is but that revenue should cover our cost and we increased it in 2026 correct it did yes and the hospital reader uh reimbursement that chief batson talked about is located there charges for service that are not related to development and so in fiscal 25 we had 81 000 we budgeted 35 7 and 26 looks like we're going to get 102 and so we're budgeting 79 in this budget year and that's mostly passports because that activity wasn't happening it was happening with the library department of state and it's a pass-through

so we take that revenue and pay the contract workers uh and the library uh group for hosting it yeah we pay the contract workers anything remaining i just pay it back to the library we have had one month where it didn't pay for itself but it caught back up the next month

rents and leases um primarily keystone cabinets everything else i think is like park rentals no that's the um the train guys in the back oh in the back of the gym okay park rentals is in recreation okay fines and forfeitures uh is mostly through municipal court actual revenue in 25 was 67 000. we budgeted in 26 for 100. We're projecting to get 62, and we're budgeting 100,000 in fiscal 27. Administrative fees. This is going to be the administrative overhead that the general fund provides to the utility fund and to the Economic Development Corporation. And so there are uh finance costs human resources costs administration costs that live in the general fund but those services are provided directly to those other funds and so they pay us in the general fund for those services everything there has a name associated with it a dollar it's not an arbitrary number where it's like we need a million dollars today it's everything is proven out there's an actual service there And then miscellaneous revenues, kind of a catch-all. Actual 25 was 644. Budgeted 26 at 694. We're projecting to come in at 471 at this point. And we're budgeting 762. Investment income. Actual 25 is $550,000. We're budgeting $535,000. Looks like we're going to bring in $462,000 this year. And we kept the $535,000 the same in the upcoming budget.

Mainly because we're about to issue another CO bond, which will increase our interest.

And then other financing sources. These are hard to predict, and so we typically don't budget them. And it is what it is. So overall revenue for the general fund in fiscal 25, we had 8.3 million. We budgeted in fiscal 26, 8.603. We're expecting 8,654,000. And then in fiscal 27, we're budgeting $9,024,000. Do you have any revenue questions? What time is launch going to be here? Noon?

Kaylee's got to get it. You'll smell it when she comes in. You'll what? I said you'll smell it when she comes in. You'll smell it. Smell the food, not smell her. We'll smell the food when she gets here.

I have public utilities here, so we want to just keep rolling and then break for launch when it gets here. Come on, TJ.

Another accounting change that we made.

Well, let me take another step back. When we started in the beginning, we talked about primary government or primary budgets, the general fund, utility fund, and the street maintenance fund. governmental accounting has some unique rules and regulations. And so for all of the activities that are in the general fund, that set of accounting books, there are accounting rules that we have to follow for that fund that are different than the accounting rules for the utility fund. As an example, in the general fund, the general fund is basically a checkbook. It's cash coming in and cash coming out. The general fund doesn't own any assets in that accounting set of books. So City Hall, the assets that the government owns are in a completely different fund. The general fund just tracks the cash coming in and the cash going out for those general services. There are no assets. There is no depreciation. The utility fund is called an enterprise fund and it is more like your traditional business accounting system. So there are assets, there are liabilities, there's depreciation. So all the assets owned in the utility live in that utility fund. So you'll see depreciation expenses in their budget that you won't see anywhere else because it's a different fund and it's a different accounting rules. And so the way we budget them is a little bit differently. than the way we do the general fund and so everything we're talking over the next little bit is activities within the utility fund and so one of the things that we did going into this upcoming year i believe it was part of the software conversion is that the utility fund used to be water production, distribution, wastewater treatment, and solid waste. And so all of the administrative overhead was buried in those various divisions. We created a utility administration division, and so we moved all of that overhead into administration, and we moved all of the debt service into administration. And so there's a new division in the utility fund now that is TJ and his administrative team. And so it looks odd because there's no personnel in 2025 and no personnel in 2026 because they were embedded in some of these other departments. And so it's going to look a little bit different. So the administrative department, if you will, didn't really exist, but if you look at some of these expenditures that we were tracking, mostly debt service, isn't it?

It's mostly debt service.

The multi-year comparison is hard to do here, so we're budgeting $2,641,000 total for this department within the utility fund. And so that will be a combination of personnel services for 456,000, supplies for about 38,000, Professional services, $16,000 is their audit fee, right? Yeah. Equipment, maintenance, other services and charges, which is predominantly software. And then the miscellaneous is mostly debt service. And so you'll see we're projecting actual debt service in fiscal 26 or miscellaneous expenses of $1.1 million. We're budgeting $2 million. And the majority of that increase is the new debt we're issuing for the wastewater treatment plant. So we've referenced that multiple times today so far. And so when you have $8 million worth of work that has to be funded, there's a debt service associated with that. And that debt has to be recovered through the rates and charges that we provide. When we issue debt, primarily through certificates of obligation, we have bond covenants that we make with the entities that purchase this debt. And one of the covenants that we make is that we will support this debt through the rates and fees that we charge for service in this utility system. And if we ever get to the point where the utility revenues can't cover the cost of this debt service, then we pledge the general fund will raise property taxes sufficient to cover that debt service. And so we have to make sure that we're charging rates and fees within the utility that are sufficient enough to cover the cost of this new debt. And so we'll get to it in a little bit, but you saw the rate adjustment that we're recommending is a $6 a month impact to our residential customers. And so we're taking on this development project at our wastewater plant. And if we do it correctly, our residential customers will see $6 a month as the impact that it gets to them. And that's pretty much all associated with this project at the wastewater treatment plant. If we weren't doing that project, we wouldn't have a rate adjustment at all in this going into this budget.

And one thing I just want to make note is when you see the administration reimbursement and it's got a large jump, that's because we used to split it out between all the departments. And now we just, you know, consolidate it all just under admin. So it all balances out. I'm sure.

So it's hard to really dig into this particular department because it's a brand new creation that came out of our software conversion and we wanted to take those costs. Because when we look at water production, we want to see what is our real cost of producing water without all this overhead stuff in it. And so that's some of the accounting changes that we've made.

any questions on this administrative side for the utility so then whenever at the when it's talking about miscellaneous and it has the interest on our cs 17 2017 and all that yeah okay so those are the annual payments that we make on interest principal is a balance sheet account in this fund so you don't see that it affects cash but it doesn't affect your pno okay

And how do you call that into account when he does the rate calculation?

All right, so then we're gonna move to water treatment, or what we call water production. So this is all the staff and the activities associated with bringing in raw water to the community and treating it to potable standards and then putting it into the distribution system.

So we've got, are we still setting up center water, roughly, coming from Tlalocan?

So surface water comes in right now from Lake Tawakoni to the water treatment plant south of town. And about 25% of our water comes from wells, groundwater wells in Delta County, and that comes into the community over by Ivorymoor Park on MLK Street. So we have two water production facilities. uh water treatment plant south of town that surface water and the ground water process which is a completely different treatment process and so raw water comes in so all the associated costs of bringing that water treating it to potable standards and putting it into the distribution system is found in this department and so bottom line first fiscal 25 we spent 1 million 635 000 Fiscal 26, we budgeted $1,511,000. We believe we're going to end at about $1,660,000. And a big chunk of that is the depreciation expense right above it. And then we're budgeting $1,158,000 for fiscal 27. And so how that shakes out, personnel in 25 was $564,000. Budgeted at $648,026. We're projecting to end at $576,000. And then we're budgeting 27, dropping that down to 407 because some of that personnel moved to the new administrative division. Supplies, actual expenditure for water production in 25 was $210,000. The bulk of that is chemicals. We budgeted 26 at 231,000. We believe we'll end the year at 223,000. And then we're budgeting 27 at 194. Again, some of those supplies, computer hardware, software stuff is moving to the administration side. Professional services, actual in 25 was 23,000. We budgeted 15 and 26. Looks like we're going to end up around 25. And so we're budgeting 15. That is predominantly through engineering services. And so we've got engineers that are on retainer. When something happens, we need them, but we can't really budget something happening until it happens. So we'll clean that up during the amended budget process. Correct.

So typically all of their engineering is for projects that he's already planned. This is for like some random thing that may happen and we need to call them for some reason.

Some cities will put in a block of, say, $100,000 for engineering services. Don't have a name on it, you just got money there. You may spend it, you may not. But when you put it in the budget, that then trickles down to the rates that you charge. And you have to charge utility rates that generate, cover that cost that you may not use. And so we don't budget engineering costs because it puts pressure on our rates. And so we just absorb those costs throughout the year and look at it at the end when we need to bend the budget. Building maintenance, which is specifically at the production facilities, actual 2025 was $120,000. Budgeted for 26 at $255,000. Believe we'll end the year at $143,000. And we're budgeting 27 at $190,000. Equipment maintenance, actual 25 is 47,000. We budgeted 45,000. Looks like we're gonna end around 41,000. And then we're budgeting 13,000 going into the year. Some of those have moved into that administrative division. other services and charges actual 25 was 145 000 budget 144 000 we're projecting 130 000 we're budgeting 166 000 for fiscal 27. public utilities Actual 25 was $183,000. Budgeted $170,000. Looks like we're going to end around $173,000, and we're budgeting $171,000 in fiscal 27. So back to the bottom line, actual expenditures for this department was $1,635,000. We budget $1,511,000. We're projecting $1,660,000. Again, we typically don't budget depreciation here because that puts pressure on our utility rates. And so we generally cover that during the operations of the year, but we don't put it in the budget so that it doesn't artificially put pressure on our rates. And so budget $1,158,000.

We do a budget amendment for depreciation at the end of the year.

So any questions on water production? I have a conversation, I think mid-August. And so we've been talking about long-term water supply and where our raw water's gonna come from long-term. The contract that we have with the Sabine River Authority expires in July of 2027, which is within this budgeted period. And so we are going to renew and extend that contract for the first 10-year term. We've got two 10-year terms within the existing contract. and so we're going to extend the first 10-year term of that contract so that'll take us from 2027 to 2037. at the time we do that contract extension they're going to change the cost and the rate we pay for that water we've been paying the same rate for water for the entire 50 years of this contract and that currently is three cents three and a half cents per thousand But all water supply contracts are what are called take or pay. And so you ask for 100 gallons of water. You pay for 100 gallons of water whether you use them or not. And so our contract. The unit of measure for large volumes of water is an acre feet. An acre feet of water is approximately 325,000 gallons. You literally take an acre of land and you flood it with a foot of water, and that's about 325,000 gallons of water. our contract with sabine river is approximately 8 000 acre feet of water a year and we pay for every gallon of that 8 000 acre feet we only use about 1500 acre feet a year So there's 5,500 acre feet of water that we're paying for that we never use, but we're only paying 3.5 cents per thousand. So our total annual cost for raw water with Sabine River is $96,000, $97,000 a year. when we renew that contract and extend for 10 years, our cost is going to go from 3.5 cents per thousand to I think the number is now 36 cents per thousand. So if we keep 8,000 acre feet tied up in that contract, our annual cost for water is going to go from $96,000 to $960,000 in one snap. we can't afford to pay 960 000 a year for water we're never going to use and never going to touch and so we're working with sabine river we haven't landed on what that number is going to be it's probably going to be 2 000 acre feet or 2 500 acre feet is probably the quantity that we'll put in that contract and then we'll pay for those gallons So assume we say 2,500 acre feet is what goes in the new contract. We'll pay the cost of 2,500 acre feet. That's going to be somewhere around $250,000, $300,000 a year. So we're going to go from $96,000 to $250,000 a year. So there's going to be a significant increase in the cost of raw water when that contact renews. However, that contract renewal is gonna be in July of 2027. So we probably won't see an impact till August and September of 2027. So we're not gonna see a full cost impact in the fiscal 27. But we've calculated water rates and revenue to be able to cover a portion of that cost in this 27 year and the rest of that cost in 28. And so if we were trying to generate a full $250,000 of revenue, our rate adjustment would be bigger than $6 a month. But I don't want to capture all of that cost because I'm only going to have a couple of months of costs in this upcoming fiscal year. So we're capturing a part of that rate adjustment now and another part of that rate adjustment next year so that it's easier for the consumer to swallow, if that makes sense. But in the middle of August, I start a conversation with the entities that control water coming out of Cooper Lake. We believe long term that we'll need to take water out of Lake Chapman or Cooper Lake and move away from Tawakoni. But there's some significant infrastructure that has to be installed to make that happen. And so we start conversations next month with the entities that will be involved in that infrastructure so that we can identify what all it's going to take. The plan is to put that project into the state water plan. Once a project is identified within the state water plan, then you get access to zero interest or low interest funding from the state of Texas for critical water infrastructure. So you're probably looking at $5 to $8 million worth of construction to shift over to that water system. We would like to get funding from the state of Texas for that. If we get funding from the state of Texas, it needs to be in the state water plan. So we've got some years to figure out what all that looks like. Once that project's done, then we'll most likely stop taking water from Tawakoni and shift to Chapman.

But we've got a lot of work to do before we figure out exactly what everyone's rate going up as far as is the price of the water. Is it going up to the same 30

Everybody else for Sabine River? Yes. No. Sabine River has a system rate that they charge all of their customers for raw water. It changes year to year, but I think it's approximately 13 or 14 cents per thousand. But we are in the Sulphur River Basin, and they manage the Sabine River Basin. So the state of Texas manages surface water in the river basin that that water lives in, if you will. And the theory is, not theory, legally the state of Texas owns every drop of water on top of the ground across the entire state of Texas. If the water's on top of the ground, the state owns it. You legally don't own any water sitting on top of the ground. You have permission from the state to use water on your own property, but you don't own it. The state owns all of it. And so they give cities permits to use their water. And the theory is if you pull water out of the Sabine River, when you're finished with it, you put it back into the Sabine River. Well, we take water out of the Sabine River When we're finished, we put it back into the Sulphur River. And so that's an interbasin transfer. And so what they do for water customers that pull out of Sabine River and put it back somewhere else, they charge an interbasin surcharge of approximately 23 cents. And so if you are in the Sabine River Basin, your rate's 13 cents. If you're in a different river basin, your rate will be 36 cents. So 13 and 23. There's a surcharge involved because we're in the wrong river basin.

So eventually when we move to Cooper Lake, that will go away.

That will go away. And so that's why we're...

They won't let us sell excess water, correct?

So the contract that we have currently is silent to that. So the contract we have right now doesn't tell us that we can't sell water to other entities. But it expires in July. And so no entity is going to contract with you to buy water for nine months. And when they renew the contract, that language will be put in there because Sabine River does not allow anybody else to sell water to other entities. But our contract from 50 years ago is unique and they will never do another contract like that again.

So does Greenville do the same thing, going from the Sabine and having to put it?

They're in the Sabine Basin.

So they put it in the same situation we're in? No.

They don't pay the surcharge. They pay the system rate. They don't pay the surcharge because they're technically in the Sabine River Basin. We're in the Sulphur River Basin. Where we get our raw water is going to change in the next five years. There's a lot of details that got to get worked out. Some of that will impact this water production. But so far, what we've been able to determine that when we swap from Tawakoni water to Chapman water, the water chemistry is different. But our treatment plant can handle it. And so we won't have to make major adjustments to our treatment plant when we change raw water source. The quality of water will be reduced. Chapman water is a lower quality water than Tawakoni water is. But I don't believe the citizens are going to want to pay the cost for water that we would have to endure if we stayed on Tawakoni long term.

I assume when we move to Cooper Lake, we're still probably going to have to have some sort of acre feet into walking in as like a redundancy.

So that's part of the ongoing negotiations. And so we've had conversations with Sabine River for a couple of years now of exactly what that looks like. I believe we need some kind of emergency supply. And so I don't think it's in our best interest to completely walk away because we've got the pumping infrastructure, we've got the piping. If there's an emergency and Chapman goes dry, everybody else that uses chapman kind of has other water we won't shut it down for maintenance yeah and so i think we'll need some kind of emergency backup arrangement but it would be completely different terms than the primary water supply terms so we'll just negotiate that when the time comes the other thing that i'm trying to do is we're giving some water back to the Sabine River when we renew this contract. We're going from 8,000 acre feet to 2,500 acre feet. The water we're giving back to them, I'm trying to make sure it stays in our county or stays in our region because from a regional water supply, we can demonstrate Hunt County has a need for water because of the population growth. We don't want Sabine River to take that and give it to Dallas. And so we're trying to negotiate that water stays in our area. So, all right, let's take a break for lunch and then we'll pick back up with distribution collection.

I am going to grab my contact. Yeah. Because you get what you get.

Gotcha

Did this come from the on-campus Chick-fil-A?

Huh?

Did this come from the on-campus Chick-fil-A?

Yes. Do we have another one?

No, I just, I know the on-campus Chick-fil-A is, sometimes Chick-fil-A is doing.

Hi Erin, this is Stephanie Muller. Listen, I have an appointment on Monday and on Wednesday, and I have the privilege of getting to pick up my granddaughter. So, yes, let's go ahead and do that. I saw that. I just didn't.

Okay. So the

Okay, great, great, great, great, great. So Monday and Wednesday at 9 o'clock, okay? That's the 10th and the 12th? All right. Thank you so much.

Bye-bye.

When did she come? I guess she dropped off with Rita. I didn't see her come in. dropped off with Rita.

Rita was like, uh, I was like, okay.

Yeah, that's our firm. That must have given us $1,000. And then $500. Yeah, I think they're all the same. Go wrong with Chick-fil-A. No, but what we want is not a feature. A hyper person. Yeah, absolutely. We haven't even gotten there. I haven't done that.

It's Stephanie's fault.

Stephanie hasn't retired yet.

Yeah, but it's okay.

Someone from her work, she had some time off. Someone from her work tried to call her and couldn't get her. So they called her sister. So her sister started calling, trying to find her, and couldn't get her. So the sister, I think, called Anne Real. Anne Real couldn't get her, so Denny called me and said, we don't know what's going on, but someone needs to check on Stephanie. So she's got a code. And so Molly and I went to her house, opened the garage. The garage door has the rail track and I was wearing my hat and the ceiling in her garage is very, very low. So the metal rail for her garage jammed into my forehead. I was trying to hurry up and figure out how to get to her. and it jammed and gashed my forehead and I got stitches in my forehead trying to make sure she was okay.

I think Molly had gone around to the other side and came back and Howdy was running.

fire department oh yeah it was nice to be in the neighborhood and so whenever i heard that somebody was ringing my doorbell i'm going what the heck and so all i can see is molly running around the side of my house and then i see the fire truck and i'm like oh crap they're trying to get me out of here and then i go i hear somebody at my back door

Why were you not answering the phone?

It was in another room.

I was sleeping off. And the young lady at the office, I do not, you know, my plan worked. I didn't answer, you know, but she just didn't check to make sure that I was taking it. after that i made a chart and gave it to her every time because i felt so bad you know i said but i was sitting there and i could see molly running around and i thought crap whenever you were running from my front door ran to the side when i busted my head open and i thought oh my word what's going on and then when i opened up that door because the fireman was he he goes and he goes are you miss moeller

My favorite part was us telling them, like, hey, you know, this could be, you know, whatever, life-threatening.

I could be dead.

And they start walking up with all their, like, CPR kits, and then they see Howdy with a head injury, and they turn around like, I guess we need to go get him. What are we here for?

Do you have a scar?

It's healed up now. So after they checked me out and said, you just need to go to the emergency room. So we still had an emergency room. So I got in the car and drove myself to the emergency room. And so I'm driving to the emergency room. And Molly's like, doesn't he have a concussion? And one of the fire guys is like, yeah. And I'm like, I'm driving myself to the emergency room.

Well, and Howdy's like, I'm OK. Because he's focused on Stephanie. And I'm like, uh, there's blood like running down all over your head.

You're not OK. Well, Molly and I had had an agreement. I always said, you know, I was worried that if I ever had to call because she had slipped in the back of the mirror and she goes, you call me and I'll get there, get a towel and get you dressed before the guys get there. And I said, thank you. So I didn't know what was good to have those friends. What? It's good to have those friends.

Molly's that friend for you, too. Molly, if any of you know her.

Stephanie calls them back and haunts us all if they go in and find her, like, in the bathroom and just bust in there.

Well, I had these threatening texts and voicemails from my sister. You don't answer this. And she and her husband had already packed and were heading this way. Oh, yeah. From Wichita Falls. Oh, my God. So I got a hold of her, and I answered the phone, and she goes, blah, blah, blah, and she didn't know y'all had already been there.

So Stephanie has rotary, CLI, she's got all kinds of stuff in her garage. I will not go in there to get any of it, because that's where I'm at.

After you popped your head, and very soon after that, my garage door opened up. I blamed it all on Howdy. It's not working now because of Howdy. It would make sounds. It just wouldn't raise up anything. But I know my plan works. And then my neighbor across the street, bless her heart, she always is looking out for me. She's going over to the fireman. There you go. He asked me later, he said, do you have a problem? And I said, no, I was testing a plan.

The plan kind of worked? No, it didn't.

I had, you know, . And it worked. Now I just got to come up with one. That was because I was working. So now I've got to have it adjusted now that I'm retired.

And raise your gargantuan.

My garage can't be raised. I'd have to raise my own house. Shrek Howdy.

Shurton Howdy. And I said, you probably will not go into my garage. I can just, when I was looking for a car to replace this one I bought, was looking at a pool and then I kept thinking about trying to get into it at the same time when I took this Hollander home because the whole floor of the of the uh well it's the ceiling of the garage that whole area is uh is my attic and it's all floored i mean it's got it's got bodark um everything in there i mean it just it will my garage will never fall in roof mine but it's all lowered and everything and then you gotta remember my house is 70 years old You just didn't have those. Shorter people. Shorter people and the shorter cars. You just didn't have those large cars. There's no way a pickup would ever get in there.

Not long enough, deep enough either.

And it was a two-car garage. One part made into a utility room.

It was never just a carport.

Chips are better than they usually are.

Long time ago.

Way before me.

You know what they taste like? Potato sticks. Yeah. Chips, that's what these taste like.

Jay, we're going to ask you a lot of questions later.

Becky stepped out.

She had to go home.

I'm taxed for killing her.

We generally keep going through lunch, but you want to wait for her to be back. We'll start back at distribution collection, but usually at this point, are there any general questions that y'all have got that you've come up with during the presentation so far?

No, but I'm making some notes of things that we maybe need to talk about.

Getting out to the public.

When you were talking about those residential inspections. We have such a high rate. Correct. Maybe someone like Nicole is going to be able to get that out.

Some people may not.

And that might help us in the future to be able to help with the landlords.

I had a question that got posed to me because we talked about the high concentration of rental properties as compared to owner-occupied, but yet we keep having development for duplexes and things like that that are clearly going to be rent-occupied. And the question was, well, why don't you stop that? I personally don't believe it's our role as local government to dictate the market. I think the market is going to do what the market needs to do. And the reason we have such high rental property is because that's what the market demands in this community. And I don't think we as local government should be influencing or dictating what the market could or couldn't do. We just created an environment in which the market stays healthy. And so the property owner feels the best, highest use of their land is this, I don't particularly think it's our job to influence or change the fact that we've got a lot of rental property.

Because they're meeting a demand. Right, and some people will claim or use the claim about that we have a high population of students. But you have a lot of people that can't afford in this economy to put a down payment on a home. And there's a lot of people that are the seniors cannot fix their home. So they really have a landlord having to fix it. But I think that would be one thing that we could do to help to our community by making sure that they understand that there is that inspection and they can request it you know the information they can request or ask for help with things does ryan texas have this same problem huge university yeah

The same problem is on a much greater scale, but it's the exact same problem.

It's the same way. Everything was, unless you were outside the loop.

Lubbock is the same way. Yeah.

Hanlon, Stephenville, and Kingsville are all home to an A&M campus as well. I've talked to all three managers. It's the same thing.

I grew up in Kenyon all my life, and I never, why would I know that as a kid? Being affected by it.

So we start, right?

Yeah.

I'll be right back. The streets weren't that bad.

Well, at the same time, if they have more than one student, They have a student that can't get on campus. There's so many campuses. Next year is my 50th anniversary from graduating from college. At the same time, even back then, we were like at 15 or 20,000 students, and the on-campus resident halls, or we called them dorms back then, but by the time you were a sophomore, when you finished your sophomore year, you had to move off campus, because they had to have freshmen and sophomores.

and turning them over so a lot of parents buying homes with their kids and then their kids stay there and then selling off becky did with her her two daughters in the house that's on the corner of aldridge and monroe the big two-story that's what that is

A mother bought it, and they have three other students in there.

Yeah.

Monroe and Aldridge. He had a two-story house. With all the land next to it. Behind it?

That's Taylor and all. The one when you're going down Monroe and you have to jig-jag around it? That one.

It's not that good.

She spent a lot of money on the landscape. She spent a lot of money on the landscape. All those rocks and everything. The Dallas look.

Doesn't match this house. Did you see your email? Is that probably less than five minutes?

So this is just a general question.

You made it a point to say that Jamie and her

It's the nice Jamie and the mean one. And the sarcastic one that's kind of in the middle.

I sent her a message and I said, what team do you get? Do you have a team?

Myself and I. I have a team. So it's all those personalities. It is. I have a lot.

I didn't want up here to take any credit for it, because it was very Hilltop, didn't it? We weren't giving you any.

We know. You guys, Hilltop is so great. They really are. They're on the wall.

If I can email them, boom. And that's... What's the young man that usually comes? Jorge. Jorge. When he talks... He's not talking down, but he's very, he puts it at a level where everybody can understand.

Like a teacher. I've learned a lot. I've learned a lot. My goal for myself a couple of years ago was just to have a better understanding of investment, public investments, and it's been great just training, teaching. Random questions.

He doesn't use acronyms either. I mean, he's very, very specific about not using acronyms. Great, but tell me what that meant. I'm not near one. And that's whenever, you know, you're in the job and you're not having, you're not thinking about who you're talking to. But I think he's, that's what I said, his presentations are, he's spot on when he presents.

I'm sure Jim would rather be here.

He did. Maggie's about to get it back, too. Huh?

I never flipped this over to actually look at it. I just saw the last thing on there, 245. Never thought I'd flip it.

Go on back. Now she's not winking at us.

Oh my gosh. You just can't get your mind off of it.

Makes me want to go and look at my toilets. They're in all of them.

He's going to frame one and put it in his office.

Well, it's like a little shadow box.

I have seen in other systems where there's a high concentration of cast iron pipes. that the iron will leach out of the inside of the cast iron over time and put a red ring around the bowl of your toilet. But I don't believe that's what's going on here.

I will check with the neighbor that's not going to make a big deal of it. And it would have to be probably somebody in the development. John. I got John.

Oh, yeah.

Oh, yeah, he did. Go check his toilet. Yeah.

David Wallace and his dad.

Gary said, go ahead and put that on Facebook. That was when all of this stuff was going on.

Can you say what you want on the annual shelter agenda? I just realized I have to post this.

Same as what we did last time.

She hasn't eaten yet. I'm just gonna take one of those.

I added something based on what it was. Oath probably for Ryan.

As soon as you started talking about the Animal Shelter Advisory Board, I started thinking of the Animal Shelter budget.

So, I'll have to see.

Oh, for real.

If they went over, we went over.

But I mean, if it was our interruption ourselves, then even if he's off today, they saved him anyway. Well, that worked out well. Oh, for real. Certainly. This is what you would do. That's really good for you.

That's it.

I will keep that on here. Just do that one? Okay.

They lose it. The House and the Senate will set the budget. The Governor says that he gives the budget. The Senate and the House are the ones that actually set the budget. And then the Comptroller's Office is the one that says, well, do we have revenue for it? And the Board will say no, so they have to figure out how they're going to change it. And then every quarter there's a revenue estimate, and if they're not meeting that, it has to .

Donations. And now it's, you can build. Correct. Correct.

Yeah. Uh-huh.

Okay, so how many of y'all have tried Simply Prep Meals?

Molly and I have always been eating. We've been eating them since like... Every day.

We're selling about 55 a day. They thought they would be restocking us every other day.

It's so great to have like a quick lunch. I can go pick them up on Monday. And then I can just... Well, you're just right here.

You don't have to wait just in case you have this.

These are my fancy coffee Fridays.

Have you tried the chicken, the Philly steak? I haven't yet. I haven't either. That was over there today in their chicken corn latte.

Not a latte. No.

Elote? Elote. Really good with coffee, so we only have about 20 out of 90. I like their Mary B.

Chicken pasta, but it's always out of stock when I look at it.

They had their shrimp fried rice and their chicken fried rice. Was that good? Oh, my God. The fried rice. 90 seconds. And they're big servings. They are. Really big servings.

Shane was having a diverticulitis flare-up. Uh-huh. And I went over there and got him some of, like, just like their chicken and rice and broccoli.

Hold this for your children, ma'am. Yeah. If we turn them...

I really like the way they cook their broccoli and their sweet potatoes they're still crispy they're still they have salmon and salmon and a veggie today i'm not a salmon eater but molly is molly makes salmon once a week if you read me anything what i do is what we see i mean kelly

And we had a lady yesterday come and order several from her car because she's disabled.

She can drive, but she can't get out if you pour ash.

um anyway i think he's serving they have sam they have salmon there were several there got it from lone oak because she passes it on the way do you want me to get rid of any of your trash i'm gonna eat mine i'm gonna eat mine um no if you're not it's like one trip

I'm not a trashy kind of guy.

I'm walking this out to the dumpsters. I said I'm doing it one time, not doing it again. I had to sign a meeting.

Jim's not coming back. We don't tell you.

I didn't do that. But I wasn't going to.

He knew it.

It wasn't during COVID or anything like that. I went ahead and filed that I had outside business because, you know, so some of those people are just doing it. How did you say? How would you? I mean, are we trying to find the code enforcer right now?

Is it listed? John told me to tell you.

He's reviewing resumes right now.

Me?

Anybody who asks.

They're at Jellystone. Howdy, I had someone ask me yesterday. Evidently, there has been a dresser that's been on the side in front of somebody's house for the point that the rain and everything is just falling apart. I would ask, I mean, I came up with it when we were just talking. If there is, let's say they picked up in our section this week, let's say it's going to be two weeks or, I mean, two months or three months before they pick up in the next section. Could you go by and pick that up on the day? I don't have any points. And then like bring it to section A or sections B?

We'll try not to set that precedent because then we're traveling all over town. And so if they're putting stuff out on the curb and it's not close to their bulk pickup day, usually code enforcement will say something to them to have them move it. we're not finding them anymore right i mean we're not attaching it to their water bill if if there's a well if there's a special hall a special hall isn't so so if you've got bulk items and you're not your quarterly time isn't for a couple months away you can request a special pickup and that's an extra charge but we're not doing a code enforcement violation on them and charging them no And so they'll, usually code enforcement will say something to them. If they don't move it, then they'll open an enforcement case. But usually code enforcement will say something and they'll move it, usually.

Or they can tell them that they can have, hopefully they're telling them that they can ask for a special pickup. Yeah.

People will put stuff on the curb assuming that it'll get picked up as part of the weekly collection and it doesn't get picked up and they just leave it out there.

I've known some to pick it up and take it to their friend's house in another location.

Completely okay. I take my trash to TJ's.

You do what?

We got a long drive.

I take it to TJ's on her plan.

The bowl stuff that I don't want, I dump it on

Shows up out there anyway.

We had a bit out in the country.

Did Tony say how fast he was coming back?

Did you see me back?

No, no, no.

Well, he held up for you.

Yeah, one of those from like, I guess, hundreds of years ago in Europe. We need to go explore in there. All these old amber bottles.

Prohibition era. With the bottles, that kind of cool stuff.

Oh, I could sell that all day.

Slides might help.

Four sixes, they had a couple of them. Four sixes.

I just asked for exactly the same question.

Yeah.

I need to sit down and get this one.

I see in the dark.

I'm just going to have a sponsor sign. I can see double and my head hurts all the time. Fire department on their city. I think I'm recording myself.