City Council - Regular Meeting

Is he in the front or back?

Call this workshop to uh order. Uh having haven't been convened today. Um this is a uh this is a workshop in regards to our budget process. We are duly assembled and I am going to ask since Mark Hopper's got a mouthful of water coram if you will to give us an invitation for our lunch and a blessing for the rest of the afternoon. Please sir. Just invitation. Yes. Okay.

Let us pray. Dear father God, we thank you for this time we get to share together um just to talk about city business. Lord, we ask you just to dwell amongst us. Lord, we ask you just to continue to cover everything that we we do in the city of Greer. Continue to be with all our citizens, all the ones that get to reap the benefits of of all the things that the city of Greer has to offer to to to this town. Father, Lord, we ask you um for the food that we we were able to partake in. Let it be a nourishment to our bodies and our bodies to your service, Father. And as Lord, it's in your name we do pray. Amen.

Thank you, sir. Um Andy is is at the podium and ready to go. But I am going to exercise some executive um privilege here in terms of starting this this workshop. And I I think that it is appropriate um possibly needed in some regard and um some information that I I hope that that you will find uh pertinent to this exercise that we are starting today and going to continue over the next uh three weeks. Um, you know, one of one of our our fellow council members, you know, said, "Well, this is this is different than we have um than we have done in in the past." And to some degree it is. And um I think we we need to acknowledge that. And that's part of the reason that I I wanted to spend a little bit of time with you uh prior to uh jumping into the deep end of the pool of budgeting. And so, um, just for reference, I I have got some, um, some comments that I want to make, some some points about, um, how this is all going to go down and, uh, give you an overview of where I hope that that we're going to wind up. Um, since this may be u maybe the first time that you have done this or uh, like two of us, the 25th time. Um Riley and I are alumni of the longest council meeting in Greer's history. It was a line by line exam of uh a proposed budget first reading that was balanced but built on a proposed draconian cut in spending, personnel programming, promotions, payraises,

insurance, building maintenance, facility maintenance, vehicle maintenance, you name it. And at some point well into the night, as best I recall, probably 1:30, 2:00, um we had hoped that we had made uh enough adjustments to move forward uh on on at least the first reading of the budget. As the meeting came to a close, Mr. Driggers, Ed Driggger, our city administrator at the time, stated, "Council, the only thing that you have not reviewed this evening is how many bullets we need to order for the police department." It was quickly dubbed the bullet budget. After several years of a stair budgeting, we found our feet on the ground and growth was providing a cushion for future planning. By the time Jay came along uh to serve on this board, we were discussing creating a reserve fund. Um we had definitely uh gotten our feet on the ground, so to speak. Now, as we consider my 26th budget, I feel qualified to say a thing or two about municipal taxation and budgeting. I realize that not everyone at the table will agree with me on some counts, but that's fine. I'm simply sharing lessons learned over the past 25 budgets. Municipal bud municipal budgeting and for-profit business budgeting at their very core have different objectives. Municipalities provide services to manage public resources for the citizens of the municipality while businesses budget to maximize profitability for owners and shareholders. Remember that about 60% of this budget goes to providing services i.e.

employees. Um, municipalities also use fund accounts where moving money is segregated into funds and can't be shifted around between funds like in a business. This restricts how money can be spent. Business can shift funds between departments and oftent times does that based on needs, strategic priorities, and to boost performance. Municipal budgeting is legally mandated, should be transparent and focus on spending within strict spending limits. Whereas business budgeting can be voluntary, private, focused on revenue growth and sometimes even cost controls. By state law, the administrator, manager, or strong mayor is responsible for presenting a budget to council. By legislative action, council then is tasked with passing a balanced budget. Between those two actions, there are a number of scenarios that can transpire. Workshops like we have today give councils an opportunity to hear how the budget was constructed, how departments crafted their budget, how they determined their needs, and possibly even share their wants. Council can question, request additional information, discuss needs versus wants, and discuss strategic initiatives. What we won't do in our workshops is to vote on anything that will come at the first reading. I hope that we will share our thoughts and ideas because an astute administrator manager should be able to read a council and make adjustments, changes, and updates to the budgets to be discussed at the first reading where council members can request a change through the legislative process. On a personal note, I want to share a couple of things just as housekeeping matters with you as well too. Our staff is very friendly and will be happy to

accommodate requests for information during this budget process as well as any other time. I would simply like to remind council that the deputy administrator and assistant administrators as well as department heads and all employees report directly to the city administrator and not to us. If you need information, please contact the administrator who will direct your request to the most appropriate and possibly the person who can satisfy the request quickest. If you go directly to someone other than the administrator, they will need to seek his approval before proceeding. Also requesting that the information be shared with the other members of the council for full full transparency. If you simply need a quick number, a figure or a stat, a date, feel free to call Andy or the department head if you're just looking for simple information. The administrator presents the budget he feels best suited for the city and staff. But one of the things that we've got to remember is that 1 plus 1 is not equal in a is not equal to two in a municipal budget. Given that that only 50% of our income comes from advoreium taxes, the rest is a combination of licenses fees, forfeiteurers, state fines, fines, programming fees, and etc. It includes accommodations fees, hospitality fees, public service fees, the garbage fee, storm water fees, impact fees, etc. Remember many of these fees cannot be co-mingled with general funds. So when we start looking at waiting wanting to make changes you you only truly have about 50% of the total budget to work from. It is all it is almost impossible to try and reduce a budget of our size by trimming multiple line items. If you

want to find 2 million in savings, pick one or possibly two items to cut drastically or to zero out altogether. It's much easier to rip the band-aid off than to bleed to death by a thousand nicks. Preparing a budget is one of the most excuse me. The administrator presents the budget he feels is best suited for the needs of the city and the staff. And this process generally takes several months of preparation, fact gathering, revenue projections, debt re reviews, equipment and facility needs, staffing needs, employee benefits, and much more. Preparing the budget is the most basic tenement of an administrator's duty, so it is never taken lightly. As you can imagine, there are over over there have been over 25 years that we have been budgeting and Andy has much more experience than that. We have to examine items and issues that we disagree about and maybe not support. But we can never question that the basis or the intent of a budget submitted to us was done so knowing that it was done in the best interest of the city. I I can't imagine anyone submitting a budget that wasn't in the best interest of the city as a whole. While we may philosophically feel different about the structure or funding of a budget, I don't know of any administrator that would intentionally risk his name, reputation, or career by submitting a budget that is balanced that is anything other than balanced intentionally or physically. it. They are typically physically conservative and is based on what is in the best interest of all of our citizens of the city. Nevertheless, I don't I also don't know an

administrator who doesn't know how to read the tea leaves of a council or is not flexible enough to make adjustments based on the w wishes of a majority of council. The last thing I want to share this evening is our uh view of how uh this this budget may go as we move through it. I know that there is some concern about millillage. One of the things that I think we need to be aware of is that if we are given the option of cutting our salary or cutting our house payment, which one would we take? we probably wouldn't cut our salary. That's equivalent to our taxes. The appraised value, uh, excuse me, a house appraised with a value of $200,000. If we reduce two mills will save them $16 a year. It's $32 a year for a $400,000 home. And at a 6% rate, a $300,000 home would be a $36 savings. If we are intent on uh making things more affordable for our community, it would be better to look at reducing a fee and or other um measures to make up this fee and to make it more equal across uh our community. District two, District One, possibly some of uh District Five um all uh probably share a minimal amount of taxation and getting a small amount back um would would always be welcomed, but there is an opportunity for us to look at other means of uh

providing relief to what our citizens pay other than the millillage. With that, I know we were getting ready to jump into a review of revenue for the coming year. I appreciate you making time uh for these next sessions and uh for the discussion that will uh take place as we move towards um move towards uh crafting uh a budget uh for our entire city. I think it is appropriate as well too that we uh thank uh not only the administrator but our entire staff and department heads that are going to participate in this process as well. Uh as I mentioned earlier this has been going an ongoing process for the last several months and um we appreciate the work that has gone into that. With that the floor is yours sir.

Mr. Mayor Council thank you very much. Um and uh yes, it is a different process than we've we've done in the past. And the intent of this process is almost from an educational standpoint to reset a little bit to uh refresh um some existing council members on our revenue and as we focus on today's meeting but also some new council members uh kind of do a finance um budgeting taxation debt 101 uh which is why I've got uh um some experts in house that I'll introduce uh in a little more detail. pay later. But today is uh to the mayor's point specifically focused on revenue. This is the this is the this is what the framework by which we built the budget. Um and so we're going to go through our budget line by line or at least account by account for y'all today. So you can see where our money comes from, where it where we've had growth um or how that money's um over the last five years. There's we're we're going to talk about all those things. Uh we're going to get into millillage, we're going to get into debt service requirements, and then we're going to talk about the projections. So, what you're going to see the the the beginning of this presentation is the last five years of revenue in those accounts. So, we're not going to talk about revenue projections until the end of the presentation. Okay. Uh again, this is an iterative process. So, if you have any questions throughout this, please jump in and let's just keep it conversational. Are you going to be sharing this presentation?

This presentation will be available to everyone in council. And just by another quick housekeeping uh point, the budget books are here. We will hand those out to council um after this presentation and we will make sure you have this presentation, but everything that you see in this presentation is in that in those books.

Okay. The presentation is not, but the information is. Um quick, let's talk about the budget timeline itself. February to March is the intra departmental um meetings and I want to talk briefly about what that means. Uh specifically in departments like public services and engineering you they rely heavily on uh cardograph software and it really tracks uh not only manh hours but equipment usage. So when we say that this is intradep departmental it's a it's a it's a groundup process. So, as and and you'll see through this as as Travis starts developing his pro uh his budget for public services, it doesn't just come from nowhere. It comes from data. Most of these budgets are truly data driven. What do we need? What do we need for the upcoming year? Are we adding a new facility? What will that require? Etc. So, between February and March, the departments really kind of huddle up with their leadership and figure out what it is that they're going to need to operate on an annual basis. It then goes and it's it's uploaded to into Chris's world and Chris starts doing all the magic with open gov and and and reconciling not only um what has been submitted but also starting looking at some of the the things that we know we we're going to be doing like you know paying people those salary things are are added and those known are put in there and then the team goes to work on the budget line by line by Um, so this is the budget team. Obviously, you know me, you know Mike, but uh in and Katrina Reno is uh this is his first real uh jump into the budget process as as an assistant administrator. Uh Chris of course is our uh uh finance department head and then Tamar Kirsy who really kind of works in the background uh from an accounting perspective to kind of make sure that

all this stuff is pulled together. So this team, me excluded from the detail work, they go through this and meet with every department and they go line by line by line by line asking those necessary questions. Why do you need this? What has it been used for? This is a little different than last year. What's going on here? All of those all departments that submitted all budgets, they went through line by line. Then we come together and I meet with them and I kind of reconcile everything with to the mayor's point what I know of as the tea leaves is what I think this council hopes to see in a budget what we know has happened in the past meeting council's priorities etc. This what you will get today is our balanced budget presented to council for your consideration. I also have with you with us today to talk a little bit uh about our debt and millage uh Michael Kleric. For those of you who don't know Michael, he's our bond attorney and has been uh with us for a number of years now. Uh he's with King Coseric Routt. Just a great great guy, but also a very talented and wellrespected bond attorney and municipal attorney throughout the state. And then of course Brent Robertson. you saw him last Tuesday night as the uh financial adviser for CPW, but he's been the city's FA for uh a little over three years now. And so they're they're here to kind of add some color commentary to how revenue is used specifically when we get into millillage. Brent will jump into discussions about debt, how we uh modeled that plan of finance for the for Greer initiative, but he's also going to talk some about the lease purchase process, too, which some of y'all uh are going to be it's going to be new to you. Uh, so

Brent, is Brent a um, is he related to Payton Manning? Look just like him in that picture. I did get out of a parking ticket once because the state highway patrolman said I looked like Manning. So autograph sessions will be later. First table out front. I was just getting ready to text you. You ought to use something other than your mug shot though.

Well, let's jump into the revenue sources. Okay. Um, and the way you're going to what the way we're going to approach this presentation is we're going to talk about our minor revenue sources. We're going to talk about restricted funds and what that means. Then we're going to get we're going to kind of segue a little bit into the growth of the city as we're as we've seen it uh over the past 5 to 10 years. And we're going to talk about our major funds and we're going to end uh go through each one of those. Again, ask any questions. Uh Mike, Katrina, Chris are here to provide any color commentary that are necessary or ask any or answer any clarifying questions. Fund 50 facility rentals. Again, these are minor funds, but they are they are sources of revenue that are coded specifically under those funds. Under facility rentals, you see again city hall, city park. So when this facility is rented out, that dumps into fund 50. when we do things that need more Trion, Center for the Arts, all of that gets dumped into Fund 50. Uh just to show you a little bit over the years of where we've come from a revenues perspective. Uh we are as and you're going to see some asterisks on the 2026. Obviously, we're not at the end of 26 yet, so those numbers could fluctuate, but where we're projecting them now, we are seeing revenue is is steadily increasing um from year-over-year. it. Some of it's a little more aggressive, some of it not, but um rental in rental income, security fees, interest payments, etc. That kind of gives you the last five years of of trajectory on our facility rentals. Again, these are minor funds.

Let me ask about the asterisk. This is anticipated rental income 2026 or is this current? This is actual. Yes, sir. Actual. This is to date. Okay. Actually, it would be what would it be? The April numbers, wouldn't it? No, this is pretty recent as of just as of last week. Okay, good. There you go. Which leaves two months left in the fiscal year.

Special funds. Again, uh and these these are the reason I'm pointing out these as minor funds. You're looking, okay, well, $70,000, what are we talking about? Well, they are still separate minor funds. In fund nine, which is recreation fund, you're going to see small grants that pop up for things like u advertising in a periodical that is a tourism journal or something along those lines. That's how we code those dollars. Uh, interesting enough, pay attention to fund 23. You're going to see a big jump in that as we talk about projections at the end of the year because of a of a of a grant. But again, just trying to paint a little bit of a picture on the difference in our funds. I'll have these funds outlined for you obviously in the budget book, but as we go farther into the presentation, you'll see more about the differences in our funds. Uh, fund 11, fund 11 is an important one to remember. That's the general fund. That is the general fund. So, when you, if we reference 11 and we do it, if Chris does it in some kind of knee-jerk uh, accounting vernacular, fund 11 is the general fund. Uh, but in that, we have grant revenue over the last five years that, and you can see it, bulletproof vest, for instance, come into that one. school district SRO grants. Those are the ones that the state provides us grant money to put SRO's in schools to offset that uh that mandate. Um we get annually we'll get state law enforcement grants for various reasons. All of that stuff can be outlined for you in greater detail as necessary, but again this is to talk about those specific types of of revenues that are coming in. This one's specific to fund 11. fund nine, athletic fund. So, when someone signs their kid up for basketball or football or whatever, this is where that money goes. You can see the list of things that we've offered um or will be offering in the year to come. Volleyball being a new one. Uh it would those those dollars go into the athletic fund. five-year look back on all of that

stuff kind of gives you an idea that over in 2026 we're projecting probably to meet our budget 465 470 I think we budget for 470 I think for this fiscal year um again this is this is how we account for those revenues now remember these are minor funds they're not restricted funds so we will get into those restricted funds here soon so those go although they're different funs funds. They're still part of the general fund. These are part of fund 09, the recreation fund right here.

They're not restricted in the sense of I have a storm water fee. It has to go to that. We keep them in those funds, but yes, it's not it doesn't have the legal restriction. Those are your effective restrictions. We golf fund 57. This is how we calculate everything that goes into fund 57. membership dues, green fees, everything that comes into the the the um uh golf course we reconcile and keep in the golf course. We're trying our best to run that like an enterprise fund. Run it like the business it is. This is um just example of the things that would go into that. This is over the last 5 years. It kind of shows how we've been doing uh from an income or revenue standpoint in the golf course with all of those pieces. And as you can see, um, and as you all know anecdotally for some of y'all that have been out there, we, unless you're a member, you can't give tea time anymore. It is, it is, we are gang busters out there. And the investment this council made in the previous years, not only in purchasing the course, but in the upkeep of the fairways, the investment we made in the clubhouse and the what was the old pool area is paying off dividends. And then of course, White Wine and Butter being um our uh restaurant out there is doing well as as our restaurant general fund minor revenues. Again, this is um other things that that that jump into fines and forfeertures. You know, there's the old adage of well, you know, they're writing me speeding tickets, so all that money can come into their coffers. Well, that's not that's not exactly the case. uh fire fees, grants, and other miscellaneous revenues that will come in all account for minor funds in the general fund.

Fire fees, that's the those are Yeah, the um Greenville County Fire District and the West uh Spartanber County that you what we what is it called, Chris? The greater the Greer Fire District and then the Sparter. Yeah, East Greer. Yeah. All those feet. Yep.

Paving. Um, if you'll recall a number of years ago, uh, we put, uh, we set aside a mill and a half, I believe, uh, to go directly to paving the infrastructure. Uh, we use that to maximize, uh, our road in our service on roads and sidewalks. But then, as you can see, this is the revenue we received from Greenville County road fees, Spartanberg County taxes, Greenville auto fees, etc. Um and we are um we you we budget those funds annually uh to u obviously address our infrastructure. Let's talk about restricted revenues. Uh like I mentioned before, these are specifically set aside for a purpose and they can't be rated. They can't be moved into the general fund. They are set aside to you to meet um certain criteria. storm water fund uh way back when as was part of the clean water act. Uh and I believe it was probably Mike may remember about 2006 2005 is when um it really became incumbent upon local governments to start managing their storm water and the quality of water. Um as a as a result um what's the acronym Mike?

MS4.

MS4. Yes. uh that's when those MS4 requirements came in and they were tiered by population and when you had to become compliant those MS uh and I think that started 0506 time frame. So this is to be a compliant with the clean water act. We charge a fee for every equivalent residential unit to uh that goes into our storm water account is you'll see it as part of our comprehensive fee schedule which you pass as part of the budget. Y'all can adjust it as necessary. Um, and all of that is outlined in ordinance and is has to be deposited in the storm water enterprise fund and only used for storm water purposes. This is just to kind of give you an idea of what the base fee uh for these plan reviews and how we do um how we identify them is from an equivalent residential unit. Uh that's what makes up uh the storm water fee. This is kind of give you the last five years of what we've done in the way of collections in storm water. Talk about a tax. So um we are governed by the state and we have a local ordinance on how we um collect and utilize accommodations tax. As you can see it's not to exceed 3% of the total. Uh we actually are the 2% rate um for a tax. But we do not charge the entire 3%. Um it's applied from rental of rooms, campground spaces, lodging, and sleeping accommodations. It's enacted by a local ordinance. Um and then those proceeds must be kept separate. Um so we are um we collect those those eight tax dollars. And y'all, we just had this exercise two weeks, two meetings ago where we uh this council considered the uh committee's recommendations and awarded those grants to um uh to the applicants that that that it warranted. Hospitality tax is a

tax on the sale of prepared meals and beverages sold in establishment or sales of prepared meals and beverages sold in establishments licensed for onremise consumption of alcoholic beverages, beer or wine. So that's the H tax fund and how that is collected. Um as you can see it's a cumulative rate not to exceed the 2% uh on on any given uh tax receipt or on any any prepared food or alcohol receipt. Um this is how we can use both of them. They're very similar in use. Tourism related buildings, tourism related cultural, recreational, historic facilities, beach access, highway, roads, streets, bridges, providing access to tourist destinations, um advertising, which is a separate component that y'all uh you approved in the last um two meetings ago, uh water and sewer infrastructure, development of workforce housing, uh oddly enough, that can go into workforce housing. And um so again, just kind of give you an idea of why that's a restricted use and what it's restricted for. To kind of give you an idea of that breakdown where we've combined the two of them, we've seen an average increase of 11% over the last 5 years in that revenue. And um we I project project short of some national calamity. Those numbers will continue to to increase. Um I believe it was Mr. Bettis or someone at some point a number of years ago, uh we talked about this and it was referenced. I think the analogy was apt is it's kind of like walking uphill with a yo-yo. You know, it's going to go up and down a little bit, but it's going to continue to go uphill. And I think in this particular case, we're going to continue to see that uh in both our accommodations and hospitality tax revenue, accommodations tax is there's a world of opportunity there uh for further collections. You know, we've talked about um with the onset of the sports and event center and the topping out ceremony we had yesterday. We are nine months away from this thing really taking off um and and

opening its doors for the first tournaments and we will see I believe accommodations taxes continue to increase over the years. I sorry can I point out uh FY26 on this one to your question earlier Mr. Lanner this is the only one where I did do a projection. We currently actuals right now are about 3.3. I did budget what we should be getting. We have two more months of collections. So that's what I anticipate we will be at the end of this fiscal year. That's the only year I did uh for FY26 where I did do a projection. Okay. Thank you. Impact fees October.

Quick question. Uh when we're talking about accommodations and hospitality tax, you know, we talk about accommodations a lot here at council. How can we lump the two together when we when we reference it? We we always say accommodations and hospitality, but when we actually allocate it here, we only look at the accommodations portion. Is there any reason why we kind of lump those two together? It's it's it's kind of inter they're not interchangeable, you know, and they're two separate numbers.

So that accommodation that we do in the form of a grant that we did uh that was actually those were accommodations from the state and so that is what what we have to give out in the form of a grant per our ordinance that we have been doing uh here specifically in fund 18 that includes both our local andos um our local accommodations not not what we received through the state. So when where are the local accommodations? I mean, do they go into the hospitality? They do.

So, when Chris was talking, so when we had that that meeting, you remember we get 40 the 40 the first 40,000 gets peeled off the top, dropped into the general fund, which which makes this a little bit squirly sometimes because yes, it's a it's a restricted fund, but the state law allows us to take 40,000 of that, drop it in a general fund, which then is not restricted, but in general, the accommodations tax is a restricted fund. But to that point is there that from a formula standpoint your question about it interchangeability comes because the the allowed uses are very similar in both but the grant program itself is specified under state code for accommodations tax and that's the exercise that you all go through. Most you you're going to see most of our hospitality tax when we look at um debt is tied up in debt service. So it's the a tax money that I don't want to call it mad money but that's the money that y'all get to grant. Another another observation here is

pretty steady trend. Um so looking at about a half a million increase from 21 to 22 half a million 22 23 200 grand next year 200 grand next year 100 grand this year. Is that a trend that's going to con like what what what what do you think the the reasons for that trend is? From a speculative standpoint on why it's flattened to the degree it's flattened. I would just go as far as to say that in that time period. We've just seen some inflationary pressures that have that have probably come to bear on people just going out. Okay. I see

that's speculative on my part and I imagine there's probably some science behind it but my immediate reaction is that's what it is. That's the flattening you're saying. That's the flattening is the inflationary pressures that increased themselves, right? It's a double. No, no, the flattening flattening. So the other thing that I'm I'm I guess I'm this is uh both of these are for lack of a better word burdens on our business community, right? It's No, it's a pass through tax at all.

No. So when when when I go to eat, it's on my bill that is I'm paying that percent that goes into hospitality tax. All that all that you know Zachbies is doing is taking my money and giving it to the So it's not a burden on them. Okay. So the business pass No, it does not. Yeah. Does not impact them. Paid by the consumer by whoever. Yeah. It's paid for by the consumer. But I guess the point I'm I guess I'm trying to get to is is is part of this flattening out some of the businesses have been closing that we've been seeing lately.

I think it's more like what Mr. Mayor was saying about it's an inflationary it acts as double-edged sword. Obviously, as prices increase for how much it costs to buy a meal uh drives down people going because the prices are higher, but because the price is higher, the 2% we collect is higher. Yeah. So, it's kind of that I think the leveling out or the flattening is just that double-edged part where thing prices go up, but the people purchasing at that price level goes down a little bit as well.

Yeah. And then that's when you have to figure in inflation and what's in that number. But I will say the um hospitality tax that's um something that was uh that was a ballot issue. Correct. That's the um many years ago for Yeah. Because recreation I mean that's where Yes. the recreation issue. Yeah.

Yeah. Because our recreation department I mean it was like all the others. It was just having a lot of but but it it was a um placed on the ballot by city council and the public voted for it and said, "Hey, we want we want this." And it was a it has been a complete game changer for recreation. Record council about killed us that time. I was on I was chair of the election commission. It had to be it had to be a paper ballot cuz y'all were late getting it out. Well, I year one of y'all that was pre y'all that's

to remember about this is and and this is part of the story I'm I'm trying to to tell on our revenues is some of them are absolutely restricted. Okay, that means we're so for instance a storm water fee. We're going to collect a storm water fee on an equivalent residential unit. This on the other hand makes up a substantial portion of our our budget and it's it a lot of the H tax goes to debt but it's all consumerdriven. Okay. So this this is this revenue stream is subject to greater market trends than we have any control over and yet it makes up a portion of we're reliant on it in a number of ways. So just kind of keep that in mind. But to Mr. to your point because it is flattening or has flattened over the past few years. I would speculate to Mike's point and and to the initial point that there's some inflationary pressures on this and while the value of your meal ticket has gone up, that 2% has gotten higher, but less people may be going out and availing themselves of that.

Yeah. And I think our total I mean our total revenue from commercial that um you know that Reno gives us every year has followed a very similar trend. And I haven't seen any, you know, any difference in that. And I know uh business licenses have been year after year increasing as well, too. So I would I would have to think that it is more related to actual spending than businesses going out of business and that sort of thing. I think it's it's just a sign of the times right now. With that Reno here, I don't want to speculate too much on it, but I know just from looking at what's comes through from a development perspective that um when it comes to restaurants and and dining options, um our addition, you know, what we're adding to what we have in the city for dining is far exceeds what we would what we're losing. Okay.

Now, it may be that it's you have restaurants go out of business for different reasons. Um, but I think that, you know, those that move into the market are probably coming in because they're responding to where their pricing is to meet what the current market will allow them to meet. you know, a pizza ria coming in rather than you you're losing I you haven't lost things like this, but a a sit down dining restaurant um a Chili's type restaurant. We're not losing those that much, but you know, we have others moving in that um that I think hits a certain price point and then that of course generates hospitality.

I think our gross retail sales have been over a billion dollars for the last two to three years. Continue to increase. Our gross retail sales continue to go up and you get to there's there's a trend. I mean, for heaven's sakes, the seven brew has got a line wrapped around it most of the time any hour, you know, and those are you get this kind of high turnover uh high price kind of coffee that that falls under this and it's just it's just a change in consumer demand. So, we're we're we're just seeing that

um as we're we talk about uh revenues that are restricted under the hospitality or or the accommodations. Can any of those dollars be used uh to incent uh hospitality development? for instance, with the property that the city owns and you know, we're trying to market and um out towards the my my my knee-jerk reaction is no from an incentive standpoint, but it does apply to advertising. So, what we can do is advertise

those tourism related things and then let the the market be the market. Gotcha. And good last question just so I'm clear. I know sometimes in my head I I lump downtown, but of course Greer is is huge. What all businesses or or type of businesses pay hospitality tax?

Any business within the city that um sells prepared meals. So grocery store that sells prepared meals would would fall under that. Um and then beverages sold in establishments licensed for on premise consumption of alcohol, beer or wine. So is the accommodation like if I'm a hotel tax, not the accommodation. The accommodation a tax is like hotels. H taxes everybody else. H taxes prepared food bids and bids. Short-term rentals. Mhm. Short-term rentals. Yes. Campgrounds.

Impact fees. So um in October 20 2024, this council uh passed the impact fee ordinance. Again, it's allowed under state code. um because we have a comp plan and uh the capital improvements plan really as much as anything applies to uh that comp plan but must must pass a local impact fee ordinance which y'all did. The amount of fees must be based on actual improvement costs and we must publish an annual report. I did that report for y'all in February I believe. Um but those this was this was a again a data driven exercise. We use Tesla Vice has been kind of the gold standard statewide in doing um a lot of these impact fees and so they were um instrumental in helping us craft that. The purpose of those impact fees is to enact um or to offset increasing demand on city facilities. Full stop. That's just what it is is is uh you most of the time taxes are paid tax not most time taxes are paid in rears. we need to get out ahead a lot of these uh uh public facilities and so the impact fee is instrumental in helping us bridge that gap. Um that establishes the rates and how we collect and it requires the annual review. Um as you can see again impact fees are and it's fresh for most of you how we do that. Uh but we do issue uh we collect those at the issuance of a building permit uh just by way of if you get any phone calls at some point you know there'll be folks that you know did an initial site plan review back in 2023 and they're going well you know now you're all of a sudden charged us an impact fee. Well we have applied we applied we interpreted our code is to apply the impact fee at the issuance of the building permit. Just as an aside, the four buckets that they go into is police, fire, public safety, parks, recreation. Uh thankfully uh as we did our analysis and we looked at uh the for

Greer initiative, uh the the public safety training facility facility warranted its own uh bucket to go into. So um that's that's it's a little unique, but uh for us that is uh it's it's a good account to have. Uh just to kind of give you an idea over the last two years where we are from a collections standpoint, recreation's number is typically lower because they're not paid by commercial industrial retail uses. Okay? So that that the the recreation is paid by uh residential developers. Sanitation fees again is about as clear as crystal. This is we collect it for garbage. we have to use it for garbage. And so, uh, we have those three, um, accounts, cart fee, Spartanber County, and Greenville County. You can see over the past five years where we are from a revenue perspective there. Again, this is a restricted fund. What we collect, we turn around, put right back into the program. It doesn't get moved anywhere else but into that that account.

Andy, the cart fees, that's for new new units coming online and then replacements as well. Is that That's correct. Yes, sir. Yes, sir. And if someone wants to buy an extra unit, say that again. If someone wants to buy an extra cart, Got it. an additional cart. Got it. We collect the permit too when we do a permit for um uh the house to be built. Got it. Do we subsidize this fund to in terms of the cost for out of the collection? Yeah, we we have not subsidized the fund. The fund's been operating

for at least on its own, but it's currently, and Chris can correct me if I'm wrong, it's as a deficit uh right now. Okay. um cart fees and those you say those are collected when permits are issued or or if you call and say I want another so why is there such a dramatic decrease this year for a res yeah there was less housing starts this year and then als um we still have two more months now it's not going to make up you know that difference there but just a drop in the housing starts drop in housing starts. Correct.

How how large of a drop have we we've had a large drop and we'll provide that permit data. There's one other thing to consider though in through all this is that while we've had a a drop in single family residential housing starts the commercial side of things don't get a cart. So as we do only applies to those that qualify for the garbage. That's right. So we we'll do an apartment complex but it's commercial garbage. All right. Or or multif family or or Yes sir. gated communities or Yeah. And you can be like a town home that doesn't get service that not a rental.

Um let's just I want to kind of do a little segue right here as we get into the major funds and talk a little bit about our growth. Um and I'm not going to tell you anything you don't know or haven't heard or haven't seen on the news right lately, but we are right around 29 square miles of population putting us just behind Greenville just in area alone. Uh matter of fact, the post and courier article that was out yesterday, we are the second largest city in the upstate of South Carolina. Uh our population estimates have us somewhere above north of 50,000. And I think those are good estimates. Um and as of the according to Census Bureau, between 24 and 25, South Carolina was the fastest inbound growing US state. I encourage you to Google it because it is uh it will jump right out there and say South Carolina's number one with a 1 and a half% annual growth rate. More to the point and I I I want to make sure that I continue to drive this point home because that's an in I wrote inbound on there because of the 46 counties in the state, half of them are depopulating. So we are seeing an intrastate migration as well as an interstate migration. Um so just kind of keep that in mind. The urbanized areas are going to continue to grow.

Based on the 2025 numbers, we're the 12th fastest growing city in South Carolina. Now you're showing some swagger again like you did.

So just again before we get into the major funds, I just want to again provide this this snapshot of our millage rates over the last 20 years. uh they've largely remained flat until uh the 2024 debt issuance and council um adjusting millage to cover that uh that portion of that 2024 uh that debt. But we we've we've relied heavily over the years on the growth of the mill. Um and then of course in 2025 you lowered millage uh by two mills. the value of the mill has continued to grow over these years too. Um and that has been um reflective of our growth and the increase in our assessed value. So again, all of this information I will provide and you will have is a little bit of a framework on um on that as we get into this a little more when Brent uh steps up here and kind of gives you a little bit of color on our debt. Uh this is an important piece of the financial pie that uh y'all are going to be cutting.

Andy, let me go back one slide, please, sir. Uh when you look at the just for folks who may be wondering, uh 2010, um how many meals do we go? Six or so. But u that four about four. How many about? Looks like about four.

Okay. Well, anyway, it it if you have questions about that, that that is um that was a unique time when the economy had tanked and we were trying to make up we did everything possible. Uh even beforehand, we kind of forecast this going on happening. the economy just fell off the cliff and um in order to just maintain what we were doing, that was the amount of revenue we had to increase in taxes. Um and then the the adjustment you see up from 21 to 22 was that 1.2 mil increase to bring us to 99 mills that has been set aside for paving and infrastructure. Yep, that's right. The

economy collapsed in 2008, right? Well, it was it was headed that way. I mean, when you talk about trend lines, you could watch it and it was we had already start we were following the trends, I believe, and cutting and cutting and we laid off folks and then it was just no balancing it without you would have to I believe we kind of went through the exercise of what if we even did away with entire departments. And of course that's not a practical thought.

2009 budget, the fiscal year of 2009 was the budget that was affected the greatest when we rolled into the fiscal year of 2010. That was the meeting where we set up and the comment was Ed went through his presentation at the end. He's like, you know, and that's when he said by this date we'll be out of money uh because of everything was affected. And that's when that action was taking place in that particular budget year. What was the mill worth at that time? Uh, let's see. Value of the mill right there. Well, I don't know. It goes back 2017. It wasn't near what it mathematically speaking, we just we can look at the assessed value.

No. Yeah, back in 2010. You know what it was? Chris will find it. Come on. I can probably if you can continue on. Let you know in a second. I can find it. Yeah,

jumping into the major revenue s uh sources again uh major minor is really as much as anything an accounting idea. Um but I think it's important to differentiate that we have some that are uh we've got the minors, we've got the restrictives, and we have the majors. And so let's kind of go through what these look like uh over the last five years. First of all, let's talk about the changes in fund balance over the last five. is this chart shows that we have always maintained a healthy fund balance. By way of reminder, our internal financial policies require us to maintain 35% of fund balance of our annual budget. Okay. This is the reserve fund you're saying. This is Yes sir. This is the reserve fund. Um

well, Mr. Before I before you jump into that, I want to say one other thing. Most of the accounts that you have seen so far carry their own fund balance. Yes. Okay. that is not. Yes, sir. Either they're restricted or they're a fund balance that's in for instance fund nine, but it's not a restricted fund balance, but it is a fund balance used in those funds. Right. So, this one is specific to 11. And we've seen a a big jump in this last year in the unreserved balance. Right. We did from last year to this year. Yes, sir. Yeah. And that was

we we had a large prepaid that we that we used before we closed on the for greer projects to where it kind of that that dollar amount decreased right at fiscal year end. We prepaid on 24 you mean? Yes sir. Okay. Okay. We prepaid some things. So 24 would have been was held up. Yep. So it was no longer unreserved at that point in time. Okay. Okay. ball 86,000 in 2010. 86,000 a little bit a little bit different than 370 or whatever 3236. Yes, sir. I'm sorry, Mr. Chairwood.

Well, no. Uh you mentioned that our policy about maintaining that 35% buffer. And I I believe that that we've asked this before, but um should that be instead of a policy, should that be an ordinance that mandates that that's done or

I got to be honest with you. Um you know, I think the council can turn it into an ordinance. I I think that it is it is such a bedrock financial principle of this city that so much of even our debt service and how we do plan and finance is predicated on having such a robust fund balance that dipping below that would have a substantial effect and Brent can probably argue with me or tell me I'm wrong but would have a substantial effect to some degree on future bond ratings etc. I mean, I think that's I think that policy was passed by ordinance, not by res. I think it was too. Okay, there you go. I think it was it was a two reading policy, not a single reading policy. Okay. All right.

The other thing to remember is it's it's almost twice what Gazsby standards are anyway. But but the auditors always say 30%. That's what they all that's how we wound up at the 30%. They have their own recommendation, right? That's where Yeah. And is there a Is there a positive I guess of sitting up at 52% or whatever that is?

I I got to be honest with you. I think in this particular case you're you're we're catching a lot of growth of the uh in into that fund balance. And what that does is provide council uh from a budgetary standpoint opportunity to do one-time projects that are nonrecurring to come out of that fund balance. and and it is it's almost just a pay go approach to to doing smaller or medium-sized projects. Part of the policy too that that we use it on nonrecurring,

right? And in the past we've done exactly what Mr. Mayorman said. Um past we've always kind of it runs in cycles. Uh we will build up above the the required amount uh a reserve so that we can go we last time we applied those dollars to the streetscape project. a good many of our reserved uh back in 2018,17, 2018, 2019, we had that reserve in there and we used instead of going out and borrowing every single dollar we had, we just we borrow we use some of that money to to apply to that project. Now, this might be a question, but um or uh Wow. Chris, but

Oh, um I mean these are unrestricted dollars, so they can you be used to pay off debt as well, right? They can.

Okay. No, but one one thing that that that really drove home the point with me, we were receiving the auditor's report and uh I don't know where we stood as far as uh how much of a balance we had in there, but he said, "You got to think of it like this. If things just went south as they did in ' 08, 09 and 10, if you're carrying a 30% uh reserve, you can rely on that 30% to operate for the next 3 months or whatever. Um,

and that's how it's restricted. I mean, it's restricted for operational needs, emergency situations that that it's only used for specific reasons. Yes. at the 30 the 30 below that 35% not what's above it but yes so I think that's um as one who saw it tank I mean and in the economies you know the economy it will tank again I mean that's not a that's not a will it it's when it so since we I got a question go ahead

since we've got the financial folks for CPW here and it doesn't necessarily have to be answered today but I'm curious is what's the pros and cons where we're stacking up the dollars? Um what's the pros versus cons of taking those extra and having like a millage stabilization trust, something similar what CPW may have? What would be the the decision to go from spending it on one-time projects versus having a fund that stabilizes your tax? because I I would respond to that immediately with that is what that will end up doing. It will it will create its own bubble that will have to pop at some point. So really it would be a matter is if we wanted to utilize that dollar amount over the 35% as some sort of millage stabilization the the growth will continue. we will still need to do do the things that we need to do to operate on a daily basis and we would just be kicking the can down the road on a number of that would hurt us operationally in the long run.

In my head that's what I would think but you know I just want to hear something I don't and again I think the mayor brought this up and I think he's absolutely right. It is it an apples to pickles comparison between what the charge of a city is from a municipal budgeting standpoint and what a utility provider does and what a private business does. you know those we're just fundamentally different and I don't think that utilizing that additional 15% or 12% or whatever it is on an annual basis uh as a millage stabilization slush fund for lack of a better term is viable long term.

Yes. I think also, and this is getting way out of my lane a little bit, but you know, with a a assessed value on property, that's a stable. I mean, you know, unless you're in a community where that fluctuates because it some going down, some going up. I know. And it's always squeezing the bubble. If your value of your house goes up during a reassessment, it's going down for somebody else usually or being held stable. But unlike where there's volatility in the market whether there's pressures for pricing of buying uh electricity or buying natural gas uh you know that go may go up and down on a regular basis there's a stability in the assessed value of property that to me I don't know if it lends itself to that particular idea in this case and

one of the things that I've saw happen over past years is thaturing during well I mean we're still in a a a growth period like it's never been experienced before but when we when it came time to pull the trigger on things that's going to cost money because we have to we have to u service the growth for instance the fire department in the monopolization of the firetruck industry we were able to pay for some trucks upfront And if we hadn't have had those reserves uh unrestricted then we couldn't have done that. Now now then you can't you know who could have forecast what was going to go on just in that industry that's going to affect us that much but we were able to do that. So and and there's been a lot of other things too big storm water projects that sink holes and stuff like that that it's

reser is good for Yes sir. Yes. Yes, it has served us well so far. Well, there's freedom of I guess my my question would be that there's the threshold that we've set

at 35% right and um we're far exceeding that right now to and to um Mr. Cell's U point we use those funds above them, above that 35% threshold for projects and stuff that we de deem necessary as a city, which we've deemed like the four GRE projects necessary for the city. Um could or is it the intent to use some of those reserve funds to pay off some of that debt?

Well, we will. Yes, sir. I think, you know, in in this particular case, we will end up utilizing some of that money to go directly towards some of these projects. Specifically, um the the Gross Meadows Fire Station will be case in point. You know, we from a from a funding standpoint, we are 12 million over from a cost perspective what we originally projected back in 2023 as we started the process through 2024 of the plan of finance. So we are going to use that some of that fund balance to pay c or to pay to pay these uh for some of these projects.

We is it is it just the time frame that the reason why we're 12 million? No, there was there was definitely some inflationary pressures on there and then of course we when as we put the sports and event center um project into motion. We engaged the community and we did all the things the project grew the scope of the project ex grew. Um and so we'll talk a little bit more about revenues as it pertains to the sports and event center towards the end of this discussion. But yeah, we I my intent is to use some of that to recommend council at some point to utilize that fund balance to go paying off um to pay to pay the for these projects. And I just want to add, and I don't want to get too far in front of Andy on this, but um our we it also gives us the ability to not um when we uh drew up uh the bond information, it actually had a cap of an additional I think $7 million that we could go up to $100 million. And this would utilizing some of these funds maybe give us the ability to not have to, you know, dip into that as much. But we're I don't know. Bren will go through I don't want to get too far. Yeah, Bren will go through the plan. You know, we'll talk about

there is a combination of things. We'll talk about that as we go along. Yes sir. The when we look at the over 35% of course that's a point in time like whatever day you compile 30th

but so th those numbers change um because I'm sure that there are projects that you know maybe they're not the the the number one priority and they're three four five down whatever And then so, okay, we've got this, it needs to be done, but instead of doing it this year, we'll I mean, next year, we'll do it this year. Pull it out of that above 35%. And then that that immediately starts dropping that down. So, we're not just make clear we're not at at 50 something% above. we are. I mean that that's just that point in this pile.

And one thing another thing I'd like to point out is a good example that came up the other night during discussion about City Stadium. One of the things that we have in the that it's ongoing right now is a review of what it's going to take to take care of City Stadium and um we'll have that information once that that's complete and it's going to give us a number and some of the numbers that we're hearing so far to do everything we need to do at City Stadium is fairly substantial. I mean, you know, in this $6 million range. Um, so that kind of having those kind of dollars available allows us to do a project that would eat up a capital projects budget in a given year without being able to have a reserve to rely on to do a project like that.

Okay, we're going to move on. permits and fees. As you can see here, um obviously we're we're looking to be down um in building permits, which subsequently means inspections are down, yada, you know, that's just again this industry driven. And while we have anticipated over the last 5 years upwards around $2 million worth of revenue coming in, um it's market driven. And so while we've got this outlined as a major fund, it is volatile and it's predicated on larger market trends. uh some intergovernmental revenue. That's another piece of this. As you can read, we've got a number of of um line items that come from various sources, but again, that ends up in in aggregate somewhere about two and a half to two and three/4 million dollars worth of uh of revenue that comes in through intergovernmental um sources, franchises, and licenses. This is a substantial piece of our budget. um somewhere in the neighborhood of about 24% Chris is that about right

um is where we get business licenses again market driven areas of of the budget uh big one to point out is uh MASC business license FY26 we pretty much get all that in June so our actuals is that this one is probably the toughest one to project going forward each year because we get it right budget's already been passed by the time we get these dollars. So that's why you see that low of an amount. Um but we will be, you know, in that 5.7 neighborhood. They tell us to per the MSC guidelines, they have us budget off the prior year collection. So that's why that dollar amount's so low. Okay. So we should be close.

We we've been strong there. And and I'll be honest with you, we've off we've often taken a very conservative approach to revenue projections in this particular line item. um because for a number of reasons, but a lot of times it's just we don't want to overly inflate the budget for the sake of it. Um and I think sometimes we'll see some of those funds rolling into this uh into our fund balance because that is a great source of I don't want to call it additional revenue, but I don't want I think we've taken a a conservative approach to doing that so we don't inflate the budget with those numbers. But the so cable TV I would assume is trending is going to keep on trending down. I think so. It'll go the way of the dodo.

I'm sure Jay looks up at the uh Sunday ABC licenses and loves that. That's trending pretty steadily or up. Mhm. Um that's for our hospitality um market that that sells this. No, no, sir. This is not hospitality dollars. This is a separate licensing for somebody. It's a permit fee. This is different from the 2%. It is. And the is the increase there. Have we changed the the licensing fee or is that is it just need additional people are selling Sunday alcohol? Okay. Yep.

Andy, I ask you about the fee that MASC charges. Yes, sir. Do we get when they give us that money back? Do we get any portion of that fee? That is that is a transaction fee that that goes directly to a third party. The entire amount that that percentage from from an account to an account. I know you you're I get you. Yeah, it's a huge amount. I would remind you had it not been for the municipal association that money was going through the state. I understand for them to scrape the top off of they're charging is a user receipt if you've seen it. It's way too it's almost like a credit card fee. It's Whoa. It's way beyond a credit card fee. It's not dissimilar. How's that?

Speaking of state and aid to subdivisions. Yes, sir. Uh, I know in the years past we've had issues with the state just ignoring formula. Um, I know right now everything is good, but any rumors about I got to be honest with you, that is the one, you know, as much time as I spend down in in Colombia, that is actually it's almost becoming sacrosanked. They're just not nobody's touching it. As much as we are seeing some aggressive u policy positions taken against cities, um this has not been discussed as an option.

I now you know as well as I do, they'll go and raid whatever fund they can when they can, but in this particular case, I've not heard anything. It'll be the first on chopping block when they re That's right.

Yeah. uh franchise license. We went through that property tax revenue actuals. Okay, it's an important thing as we again start talking about the importance of um millillage in particular as a major source of revenue as the bedrock piece of our revenue picture. Um it is it will you'll see that it makes up somewhere between 55 this year 55 and 58% of our revenue is going to be coming from advalorum taxes. That is just that is the the stable piece of revenue that we have. That's it. Um everything else you've seen is largely that's not restricted is largely market-based. General fund budget versus assessed values. Uh, a couple more things before I let I turn this over to uh to Mr. Kosark, but um, as you can see, our general fund budget versus assessed values has been um, actually, as you'll see, the percentage of assessed value to our budget as of 2026 has gone down compared to what it was in 2017. Um, but we are we are not growing our budget as quickly as our assessed value goes. And I think that just goes to show the conservative nature of this council. And while some of the decisions uh publicly that uh have come under scrutiny, I still think that that delta between our assessed value and what our annual budget is substantial and compared to what um that potential for budget growth could be. Millage compared to estimated population. Again, uh take this for what it's worth, but I do think that this is an important piece to uh just consider as our population grows. um we're not proportionately growing our millage rate uh to meet that demand. And again, um I had a a good friend of mine use the term we can stack rifles and and compare

facts and analysis and make figures be what they are. So I'm going to leave this up to whatever interpretation y'all want it to be. But to this in this particular case, I think it does have some bearing on our overall financial picture. Well, I think the top line is what has enabled us to have the bottom line so stable.

I mean, we've depended on growth for 25 years. Well, and and you know, not to editorialize, but I would be very interested and I could probably Chris could probably run this analysis fairly quickly between him and Brent, but if you stripped out the debt for the four greer initiative and we we we went back to 2024's 20 the 2024 fiscal year budget at 99 mills. You know, we were I think we would still have good growth in our budget and we would still be able to do what we're doing. The difference is that tax increase of of 14 mills in 2024 went specifically to service debt for these four greer projects. And that's where you're you saw that major jump is it was call it what you will it it ended up being operational millage but its functions as debt service. So if you stripped that debt obligation out and then you strip the corresponding millillage out, this population would continue to grow and that pink line would be flatter

than it is. So the the millage rate is is is not growing, but the the um what the millage rate represents I think is is income, right? is 60% 60% of our income. Yeah. Yes. The millage rate is that is the bedrock on which we operate. Yeah. So I've done this analysis a little bit different. I've shared it with some of the people here of population growth versus overall budget growth. And that line looks substantially different. Mhm.

And I think that's something that needs to be so the cost to serve um per individual has grown

substantially. I I I think the issue there is cost to serve is typically done on households as opposed to residents because if there are five residents in one one home, we don't visit that home five times during the week to pick up the garbages. It's once. So, it's most accurate to calculate cost to serve by household. I I'd love to do that analysis. Um, but that I would probably

say that number is very like well it's very consistent number. Well, as you one of the things I think you have to look at the graph

and and I don't you know uh I haven't done any kind of analysis on cost to serve. So um you know we could be way out of whack or we could be right on in line but you have to look at I guess you would call it um not outliers but the things that are different about Greer. And I'll give the example I'll I'll give you is um um and not it's not Greer, it's a city at the Myrtle Beach. Uh I if you did an analysis of just their their budget versus either the h rooftops or the number of citizens, their cost to serve is probably, you know, it could be 10 times what ours is. But their income is completely opposite of ours, right? There's entirely accommodations and

No, but if you No, there because I will say their their police force is so high. The numbers of the police and what it costs. But how is that funded? By hospitality accommodation taxes, which is well farm I mean I I don't know. I'm just saying that there's there's there's things that you have that are not standard across the board. H tax and a tax can't be used to fund personnel. They can be used to fund a station that serves a beach community. Uh I guess I can go back through my notes, but your unrestricted taxes that businesses bring in, right? For a city like Ple Beach is substantially different than us.

I mean, like way way more. Well, that's what I'm saying is is it it's it's you you've got to if you're going to do that, you truly have to figure out what what like the example I gave you. Um the the the the first high-rise in city of Greer is the uh hospital 10 stories down at at Pelum.

And we are a class one fire department. Uh so there are standards that you meet and part of the standards is that okay when you get to that kind of level instead of having what used to be just maybe a chief going out there with two uh two engines and a rescue truck now got to have two ladder trucks. We've got to have four engines all this other stuff. And so then what you do is you say, "Okay, um on an additional ladder truck besides that being well over a million bucks um that's 12 personnel that you add right there." But this just uh to cover that one truck. And so you've got to look at at at that kind of thing. And and you know, I'm I'm not questioning your analysis. So, I'm just saying you've got uh you there's a lot of factors you got to put in that I guess calculus to get to the right number. Now, I I one thing that I want us I'd like for us to look at um is look at the percentage of increase year-over-year of our um uh value of the meal.

Mhm. because you know you you can't continue to have rapid or or just growth growth growth growth growth without having start to have some really significant inflation and that I don't know if that's going to if if we want to watch that just like as we do with the hospitality funds is a leading indicator of what may be on the horizon. Well, I'm going to I'll tell you what, we'll jump into the millillage discussion right now. I'm going to invite Michael up here to to kind of give you a little bit of a just a historical background and a functional background of of how millage is calculated in South Carolina. The effect of Act 388 on Millage and our ability to generate revenue and and really he's done this more times than not. So, I'm going to let him tell the story. Well, he didn't give me a script. So, um it could be a dangerous few hours. While Oh, I'm sorry. I didn't realize that's

Will you go back a couple slides here? Right here. Oh, I'm sorry. Oh, right there. Got to go back. I thought you were driving. Okay.

Perfect. Uh, mayor, if I may, I am going to go way off script for just a second because as I heard the conversation about um the general fund, I I thought it was interesting in my view, and again, these are notes that I wrote while I was sitting here. There really are sort of three reasons that I think that a general fund exists. And I'm the lawyer, not the finance guy. So take that from the lawyer's perspective. The first one is general operations throughout the year. And this I think Mr. Erwood sort of touched on this because the bedrock of the city's finances are taxbased. Most of those taxes come in during about a two-month period of time, right? maybe three months, sometime between December and if they're not going to be late, the middle of January. And if they are going to be late, February or March. Well, you still have all of your operational expenses the other nine or 10 months out of the year. So when Ed Driggers got up all those years ago and says this is the date we're going to be out of money, your general fund fund balance keeps that from happening. Because as your expenses cause that bank account to go down month over month over month, every time you hit the payroll, that fund balance goes down. And when you get that slug of revenue go come in, that fund balance shoots back up, which is why the fund balance is measured as of a particular date. That's typically your audit date. So that's your first sort of reason to have a fund balance because if that fund balance ever gets to zero, you can't make payroll, which is what triggers was talking about. The second reason is it really does act like a savings account in the event you have more than just a normal operational event. you have a catastrophic event, whether that's a hurricane, a tornado, catastrophic fiscal, universal fiscal event, a COVID, whatever it is, that fund balance, just not for operational

purposes, normal operational purposes, gives you the savings accountability to say, well, we can still operate because of that sort of life-changing event. Um and then the third reason and and and again I'm I'm very practical uh nature of the upbringing. I don't know but I view uh fund balance almost like the difference between making your house payment and when you need to put a new roof on your house, right? You're making the house payment every month. You're not necessarily going to try to pay two or three or four months ahead knowing that at some point in the next five years, you're going to have to put in a new HVAC system. You're going to have to put a new roof on the house. There's going to be some other event that you know is coming that's not really a monthly expense. And yes, you could pay off the mortgage maybe a little bit earlier, maybe some of it, but then when the roof starts to leak, you don't have any money to pay for that. And so those are just again some thoughts that that hit me um while I was sitting there. Why Andy asked me to come and speak. Actually asked me to come and speak. That table uh and I'm always accused of if you ask me the time I will tell you how to build the watch. So I'm going to try not to do that. That table is the answer to what is millillage. If you look at the assessed value and you look directly below it at what the millage rate is, all you're doing is dropping the last three numbers from your assessed value. It is your assessed value divided by a,000. That's what a mill is.

Man knows how to make money. Short and sweet, but you deal from there.

Yeah, I know, right? Um, if only it were that simple. So, it really is that simple. When somebody says, "What's a mill?" The word literally just means per thousand. It is literally a per thousand of your assessed value. Why does that matter? Um, again, it I'm sure most of you know this. If you, you know, if you don't, you can pretend you do. If you do, please just play along for another 10 or 15 minutes. The reality is millage was a plug number. It is a mathematical necessity to get you from your property tax collections to your budget. So, this goes pre-Act 388, which has been around for it's hard to imagine. I was literally having this conversation with one of my colleagues this morning on the way over here. Act 388 has been around for over 20 years now. So, if you can imagine what budgeting was like before Act 38, and maybe only one or two of you would have been on council then, um, originally the city came up with a budget to provide services, divided that number by the total assessed value of the city, and that was the millage rate. It was the mathematical necessity of getting from a budget number from getting to a budget number from your total assessed value. Which is why when people talk about well how much do we collect per mill that's the inverse of that same ratio. It's the exact same thing. Why does that matter from somebody's taxes? Taxes in South Carolina fairly straightforward. A time B time C. It's the assessed value of property, whatever that is, times the assessment ratio, excuse me, it's the fair market value of

the property times the assessment ratio for that property. And again, 4% owner occupied, everybody likes to talk about that. Obviously, general commercial 6%, industrial 10 a.5% f of tax notwithstanding. Uh business personal property 10.5%. So you're taking your fair market value of those assets time the assessment ratio that's applicable to those assets times the millage rate. Again, it's it's fairly straightforward. When you try to do that for an entire jurisdiction, every single parcel is valued separately. Every single parcel has its own assessment ratio. And you're then taking all of those into an aggregate to get the current assessed value for the city and then using that number hopefully to get to your budget with the appropriate millage. What Act 388 did which made it more complicated is because you could not raise millage more than a certain amount. You no longer could effectively set your budget, divide it by the assessed value, and then put the millage on the bill because that was just a mathematical formula. You now effectively have to decide whether the jurisdiction is going to stay at the same millillage it was last year, go up population growth plus the CPI or go down by some amount. Remember Act 388 says if you don't capture the potential increase, you only have three years to look back. Otherwise, you lose that potential increase. So, and I'm very cautious about what I say in an open session, but I think an unintended consequence of act 388 was to encourage local governments to budget to the full amount of their

increase or potential increase every year because if they did not, initially there was no three-year look back. If they did not, they lost the opportunity to ever capture that millillage. And even now they still only have three years to look back to capture that millillage. Use it or lose it. Use it or lose it. It's the way a school district does it.

And and many local governments operate somewhere between we're going to stay flat and we're going to go up to the top of the millillage. Very few of them notwithstanding reassessment year. Very few of them in the other four years of their budget cycle actually reduce millillage because it's a death nail. They cannot recapture that millillage after three years. And every year, of course, it's it's exponential. Again, let's remember the math. One or 100 times 10% is 110. The following year times 10% is not 10%. It's 11%. So when you lose it for one year, you're actually hindering yourself mathematically more than just the one year's reduction. And truly that's it. I mean there's there's I'm happy to answer questions, but the important thing from my perspective is remembering that the mill was originally just intended to be a mathematical plug because you're not going to charge 100% of your assessed value as part of your budget. Right? You're not budgeting $323 million if I Yes. You're not budgeting $323 million to operate the city. You're operating at some portion of that assessed value as your budget number. And and the math just doesn't work without the millage rate. But then because of act 388, the millage rate wasn't a mathematical necessity. It almost became the target every year for budgeting purposes. And then you're working backwards. They're working all the magic of well if we're at 111 mills what does that mean that we can fund operationally because we think at 111 mills here's how much revenue we will generate. You're almost budgeting

kind of in reverse of the way it used to used to be 20 years ago. I know I'm I'm old enough to actually remember that. And that really is it. I um was asked by the municipal association to testify um at the act 388 hearings and uh they obviously helped me with setting that up but it it may have been an oversimplication but uh a lot of people still remember it. Um I went in the room with a balloon that was about this long and um walked through the fact that you can change any of these. You can interchange any of these. You can move them around any way you want to. And all you are doing is moving the air around in the balloon. So, you're just shifting the burden one way or the other around. You're using the same amount. It's just which way do you want to make it move and how you're going to manipulate it. Well, and mayor, um, newer members of council may not remember the chicken box story. That is a true story. They were literally in the anti- room to the chamber drawing up the math and therefore the language of the bill on the back of the lunchbox that they had just eaten. So, you know, whether that's a good thing or a bad thing or just the way the government works in Colombia, I don't know. Um, but 20 plus years later, it creates some of these unusual type situations where governments, local governments tend to be more focused on what's the mill rate and then let's budget back from that as opposed to the way it used to be, which

was what do we need to operate? what services are we going to provide and how much do those cost and that dictates the millage rate versus the other way around. Now the one thing I will say I do think that mill rates have become more stable over time simply because you have the number going into your budget cycle almost versus you look for what is it that you know what is it that the policy makers want to see and we budget to the policy and then figure out the cost and make more adjustment there versus we budget to how much can we generate from 111 mills and Well, policy makers, if you want us to do something different with that money, and I think mayor, you made this point at the beginning, what are we cutting? Because the budget's sort of almost set from the prior year based on your current millage rate. From a political standpoint, I think um I've been involved with the city for a very long time, not just on council, but when um Greer was always known as having the highest millage in, you know, in the upstate. Oh, it's just so darn expensive to live in Greer. But what people missed just just because you had the highest number of meals, we didn't win anything. That was just a factor in that equation. Now I don't you don't hear that quite as much now. But you know, we could uh thankfully the value of the meal is what you're is what you're looking at. But you know, you don't want to be known. you don't you try to avoid the you know the negative press but um that was something that even when I came on council we we I guess fought that perception

um and we even struggled with it during that that tax increase during that downturn that we we we needed to increase it that would have put us over a 100 meals. Is that correct? And but then we went to I think we went to 99.

Yeah. And then but but the way we did that is we said well let's implement a fee for garbage. I don't think we called it that whatever we did but we did it and it's it goes back to the balloon. I mean it's just where you want to squeeze it. And you know if you look at the other municipalities I mean there is no way to do some chart that's going to going to have a comparison. I mean, we we've we've talked about this odd, you know, a lot. Some of our our brethren around us have two, three, four, five, six, seven fees. Oh, yeah.

That are charged on on on on a on a taxable basis just so they're not manipulating uh their their you know, their their millillage, so to speak. So, it's it's hard to say apples to apples and that kind of thing. And we I think that's what we realized in that conversation was, you know, we needed to be responsible for for what we were doing and what we were providing to, you know, to to to to Charles's point because I would anticipate that if you know, we we we've got to recognize that cost of service is just basically a turkey shoot in some regards because if if you look at it, I suspect expect 50% maybe of our our community doesn't generate enough taxes for to to cover cost of serve. Would that be accurate or not?

We know we know we we to to uh Michael's point, we levy 111 mills. That's the confines of the guarantee. We know that we will at some point collect 111 mills of taxes from $323,000 million worth of assessed value. But beyond that, nothing else is guaranteed. And let's just also I'm gonna I'm gonna bring this up because I think it's important is the millillage is t taxes, municipal taxes, advalorum taxes are predicated on property values, right? So is a to some degree a progressive tax. Everything else we do to fill in the budget in some way, shape or form, be it a fee or something along those lines, end up being naturally regressive, which means for the folks that make less, it impacts them more. So the fairest tax, the fairest way to generate for local government for local government or any government quite frankly is going to have to be this because you don't have someone on the lowest end of the income level paying a disproportionately high portion of their income for similar services. And that's what that's that there in lies the the problem. And that's why I think that it's important to talk about taxation and millillage to the degree that it is the bedrock of what we're doing. And I wanted to be able to talk about this to segue into Brent's piece of this pie because the next piece of this is the entitlement piece. As we talk about what the expenditures are going to be and we hand you those budget books about the projected expenditures, the carve out of that is automatically coming from what our debt is. We know that we have debt to pay every year. So that's just not even part of the equation. And and the reason and Bren will talk a little bit about why we've we've focused on an IPRB as opposed to general obligation debt is precisely to allow us to use alternative sources of revenue to pay this debt, but it was conservatively estimated on our ability to le love levy millillage. All right. So unless you've

got anything else for Michael, I I wanted him to give that that millillage overview for you to see how absolutely vital it is to the sustainability of our ability to deliver services. Yeah, we didn't even mention all us old guys like me and my wife, we get homestead exemption. So I mean, you know, we're just we're just avoiding taxes. We're just avoiding all that's a different meaning. But yeah, I mean from a millage perspective and and I'll be here for obviously more or less however long y'all need me to be here if there are other questions or things come up. Thank you. Of course. Um take a break.

Let's let's uh yeah, let's take a let's take a a short bathroom break here.

Let me say one thing. This is just in general to all council. Um, I said this to Charles the other day, but uh, as you you'll find that people come to you and they'll say, "Why is Greer such a success?" Y'all must just everybody must agree on everything. Nope, that's not it. I mean, that's obvious. We value dissent with everybody sitting up here. Uh, I I think our biggest reason is one, we're nonpartisan. We don't we don't tow anybody's, you know, party line. Um, and I don't think that we will, but it I think some people want you to be beholden to them. We don't tow an individual's line. We we represent uh our districts and we represent our city uh the way we think is best uh not based on somebody that's not here in Greer. I read this council some time back and I it's still in your decision makingaking process. I think this is really good. It's called the three cost of leadership. And if you've been around me enough, you know that I I like to hear football coaches talk. They just come up with these crazy things. But um this is Kirby Smart um head coach at UG. He said uh the three costs. You will have to make decisions that will negatively impact people you care about. You will be disliked uh despite your best attempts to do the best for them and you will be misunderstood and not always have the chance to defend yourself. So that's what we're in for folks. So just just know no matter what we do, it's going to happen.

Um can you go back to the millillage slide, please? Sure. Uh the one Yeah, that one. So I think one thing that really stands out um to me there is cess value grows pretty steadily that's from housing starts and from reassessment last year. Um the value of the mill pretty steady growth. Uh and the so who pays that bottom line that's the the property tax revenue comes from adalorum taxes. Huh? Yeah. Adalorum taxes. Yeah.

Property owners be they 4% ratio 6% ratio or the 10% primary or secondary home or investment home vehicle all of that is in there. So from 2024 to now, we've gone up $10.5 million. And from last year to now, we've gone up another $4 million. So that's that's the burden we put on the citizens. That's Are you talking about the assessed value? No. Oh.

The amount the the property owners pay has gone up 10.5 million dollars in the last two years. predicated on the the value of the property

and housing starts and all that stuff. So when we have growth and we have growth of the mill that's but we also increase millillage it's I don't know I have a moral dilemma there if we wanted to unpack what homestead numbers are is that easy data for us to pull like if we want to know if we're looking at these numbers what portion of that is homestead. What portion of this is XYZ? So, let's say in theory we decide to go to more of a fee base where we would disproportionately uh hurt some of the the bottom rung. Um are those numbers easy for staff to pull together or not necessarily easily but it's fairly easy to uh calculate what those numbers would be.

We'd have to work with with the county and now obviously both both counties Sparburg and Greenville um talking with them. So it is it's more complicated than just we just we'd have to parse that out. We have to reach out and get that data from them. Mr. To your point this this $35 million represents $35 million of a 60 58 and this for 26 $58 million budget. So, in order to deliver services to everyone in this city, $35 million is being paid in property taxes. The rest of it is being the balance is being paid from the other funds that I had outlined earlier. Yeah. Yeah. I understood.

Now, the and and we have to realize that appraised value and assessed value are two different things. And then and and then the mill is something different all all together. while it's a a mathematical formula of that.

So, it's not only growth that changes that, but it also is changed by the the building that is taking place and the appraised and the assessed value of of what's being built as well too. And that's why you've got Hilton Head who has a value of a mill the value of mill in Hilton Head's probably 1.5 million something like that. Whereas in Lake City, it's going to be $100,000. I mean, it's it it it is what it is based on on on the growth of the city. I don't I'm not sure that but they could both be set at 90 mills, but they both have 90 mills. Yeah. Yeah. That's the odd thing about talking millage.

Well, the the Now, now you're talking about total assessed value, though. So very different um millage rate. So like if you take just set it all to 100, right? It's very easy to calculate the bottom line at 100, right? You just multiply the third line there by 100. Um or I guess yeah 100. The assessed value is what are houses worth, right?

Houses or whatever, vehicles, houses, whatever county, things that we're taxing. So, the fact that the assessed value of Hilton Head is exponentially higher is because the people in Hilton Head can afford substantially higher assessed values items not you know the I think those I I don't know that's a well that's not the reason it's not the reason it's higher it's higher because the property values are higher well because afford well that's not the reason it's higher it's because it's worth more because the people that pay the taxes can afford them right well they wouldn't be there that that but that's a true anywhere

yes that's why I'm saying that it's based on it's based on the demand which then sets the the value of anything. But but one of the one thing I would be interested just to see is that now our the assessed value is the assessed value of all property. So we we have done a great job uh Reno in here. Is he gone? I

was going to brag on him. A great job of recruiting industry, not not retail, but industry uh which is is very unusual for a municipality to have the industry the the the good industries that we do have. But they unless there's a fee in lie of They're paying what's how much? 10 and a half. 10 and a half%. Now, do we get a cut of the um uh the business personal property the that you pay the 10 and a half% on? Yes.

So, the I mean, it would be interesting to see who's carrying the freight. And I I I kind of suspect it's not It's always been They've always subsidized residential. Yes, that's right. Well, and they also don't get calculated in uh to use Mr. Lander's example, if you use per capita, you can use households, you can use a variety of different things when you talk start talking about cost to serve, but you don't factor in have, you know, you're using per capita, but we service that industry, we service those businesses. So, when you use a per capita number, it doesn't really capture the entire amount of service points that you have. Mhm.

And to mayor's point too as well, it, you know, we're not serving a house five times cuz five people live in it. Um, you know, we we're servicing it one time. And, you know, for a home, you know, our cost or our need to put out a fire at my house um probably isn't much different than it would cost to put out a fire in, you know, a house across the, you know, that's of lesser value. um you know that service um level is the same for each of those houses regardless of their value. Yeah. So it's kind of hard to capture. I've done cost to serve for almost 30 years now

and I will tell you I do not know what conclusion to draw from utilizing a cost to serve model.

There's another factor to that equation that's that continues that will drive the cost of service up. Um, and this has been going on for a long time is healthc care. Uh, used to be we had Greenville hospital systems independent doctor's offices which paid property tax, which paid business license fees, all the whole nine yards. With the the state of healthcare now where you have these uh well, let's just use Prisma that's bought up all these other properties and doctor's offices. It's under their non-t taxable. We don't we don't receive a dime off that. But all you have to do is is is pull the run reports for police and fire. And I guarantee you fire departments going out to a healthc care facility at least two or three times a day for alarms and stuff like that. And you know that's that's a free ride. they don't have that. They're not paying anything for the services that and as health care becomes a bigger and bigger component of our area and it doesn't seem that that's going to change just because of some of some of its competition with Spartanber and Greenville. Um that's that's something that that we we'll have to shoulder the burden on unless the those that that policyy's changed and uh I don't think we're able to do that.

Yeah. The thing about it is we got to realize that the difference between an appraised value and an excess assessed value. you know, there are there are a lot of community a lot of people in our community that have lived in a house for 50 years and not done substantial upgrades or whatever, you know, on it. Um, their their assessed value in today's current market is is is going to be a third of what it would would be. I mean, and you know, I I doubt there's any one of us sitting at this table that would sell their home for the assessed value right now. Yeah, I wouldn't I mean I you know I wouldn't give it to my kids for that. Don't lie to that much.

Yeah. No, I'm not kidding. And you know my broadcasting this you know my sister-in-law lived in her house for 50 plus years. I she could probably sell it for five times what the assessed value is. So I mean you know we got it's it's six of one and a half dozen another in that regard. All right we're taking a break. Um 5 10 minutes quick