City - Special Meeting

special session mayor and county and city council meeting 10 a.m wednesday may 20th 2026 city hall council chambers call this meeting to order please rise for the pledge of allegiance mr bennett We move to item three orders consideration possible action order 2026-05-022 an order of the mayor and council of the city of Nogales, Arizona adopting the tenant budget for the fiscal year 2026-2027, scheduling a public hearing on the budget and notice of hearing for two consecutive weeks as required by law. Any discussion? Any discussion on the budget? Comments. Go ahead. Right.

Mr. Park and are we going to discuss the water rate at this at this time during the tenant budget and and some some of the salary issues? You may.

Okay. Yes. Right now is the time to do it right.

Actually, you know, now. While the issue of water rates is kind of a separate item agenda wise, it will impact what we put in this budget. Um, because, uh, what Sergio has done is he has transferred 1.3Million dollars from the general fund reserve to the water fund.

Okay.

So that's been taken care of and so, um, and and of course. that makes the water fund balance, but it also creates a requirement for you to find a way to pay it back. Because you're not gonna be able to just give it, you have to lend it and then we have to pay it back.

So my next question is, this is the only time that we can make a change to the budget, right? To the turn of the budget after we approve it, We can't do any changes to the final?

Well, with final budget, you can lower expenses, but you can't increase expenses. So today locks in the expenditures. So they're not locked in right now?

Not yet. Okay, that was my question. Thank you.

So my question is, can we just- I'm sorry.

Go ahead. Your mic.

Can we just jump in like Mr. Hortkis was mentioning on a department or other salaries to discuss that right now?

If you still have questions, this is the time to do it. Okay. And Sergio's here to answer them.

Go ahead.

I kind of missed the last meeting when you guys were discussing this part, and I haven't seen the YouTube, but so the 2 dollar across the board was that for. All city employees, public safety, everyone included. Correct. So.

Make a motion about just better just asking. We'll discuss it. I'm not sure how that works.

Okay, Sanhiel, I do have a question. Is it possible, I'm proposing the $2 across the board, particularly for the police department. I don't agree with that figure. I'm hoping the minimum, the least minimum is $4 for officers, just the 43 or 45 officers, nothing else.

You're requesting to increase an extra $2 for police officers. Also, I just wanted to remind you that we also in the budget, we have the police department real quick.

Page 56.

Okay, on page 57. So both police and fire will have this line item, which is called the incentive pay. So that's the 2500 we give extra to police officers and, uh, corporal sergeants, obviously the officers from the department and also fire department has that, uh, it's 2500 dollars a year, which is split in half. Uh, part of it is in December and the other half will be done in May. No, take that back June. Um. Originally, the past year, it was suggested and making it instead of $2,500 a year, it becomes $5,000 a year, which is $2,500 in December and $2,500 in June as incentive. So that will be about approximately $2.40 extra that those officers already get. So, if you already give the 2 dollars, this is just explaining is up to you guys how you guys want to decide to do it. It's just if we make it that that will be an extra 2 dollars and 40 cents. For the personnel, the officers that they can be given as an incentive for staying with the city. So in 2 in 2 portions, so that's that can be also an option. If we, if we decide to go that route, instead of an extra 2 dollars for police officers, so I just wanted to suggest that and. And that's possible because that incentive we don't pay the city doesn't doesn't have to pay the pension portion. When it becomes an incentive, so it's a, it's a save for the city as well. And the officers also get that extra annual amount, but again, it's up to you, but it doesn't equal to the 4. it will be 2 right now and then. And with the incentive, if you decide to increase it to $5,000 a year, it becomes an extra $2, approximately $2.40 extra.

But even with the incentive, I don't think it's still enough to, it's still very low salary to be competitive with other departments, to be able to recruit better qualified people.

2 plus 2, 40 is 440. Go ahead, Mr. Parkett.

Thank you, Mr. Mayor. Before I say anything, I think that Chief Jimenez wants to make some comments. But I will have some comments after him. Depending on what he says.

Good morning, Mayor, Mayor, Mayor, Mayor and Council. Well, I appreciate that effort, Mrs. But I understand that that increase that is being considered only affects a percentage of my department. which is your department, which is the city's department. And I do have other employees that also have to be considered in my view. Last year, it was pretty difficult for me to explain to those employees that didn't receive the Senate pay that said he was talking about when it only included the working group officers. I had to explain to the other employees that are still in public safety that they weren't included in the process last year and was hoping to be able to include them this year. I agree that there's a need for an increase, but I want to just make my point that I would be more comfortable if it included the entire department, which includes our officers, our staff, our parking enforcement specialists, our records clerks, our evidence custodians and any other staff that's in the department. I consider them all to be public safety, and they're all in high demand in other areas of the state and the nation. So if we single out just the officers that are in the working group, I think it would be unfair to not include the rest of the department. Go ahead, Vice Mayor.

I think that one of the main problems we have in the police department is trying to recruit people, police officers coming into the entry level. I hear that there are some applicants that apply for that position, but then they find out that they know what they're going to be paid. So they just go ahead and Don't don't follow up with a with a process because they'd rather go somewhere else, you know, where they can have a better, decent paying job.

You are correct, sir. There is a process where they they get they get a misinformed because they Google or in those job searching. engines that are on the internet. They search Nogales Police Department salary and they get this range of salary from in the 40s to the 60s. So they get misinformed to begin with. So when they do become interested and start the process, they find out that the starting pay is at a certain level and that discourages them. But in my view, in my experience, retention is always better. If we can keep the ones we have, make them want to stay and give them the reasons to say because a lot of them don't understand that if they move on to other places fortunately the city has a really good compensation plan when it comes to medical insurance it's actually second to none in the state i think it's really the best and they find out the hard way when they leave to other other agencies but my my focal point has always been retaining the officers we have because it's very expensive to train them and then they go on somewhere But recruitment is also important. And that number that attracts them more to the department is higher. I think it's twofold. We can recruit them and more hopefully retain them.

Yeah, that would be my follow up question, you know, on the retention part, because I know that you have a lot of officers going to other agencies because of the pay. And, you know, we I know that Mr. Parkin, the last time that we met, mentioned that we have to consider public works as people that we deal on a daily basis. And, you know, I agree with that, too. But when it comes to public safety, it's a different issue. Our main responsibility, our priority here is for the citizens' safety. And I think the public safety officers are at the top of the list when we consider that, retaining people that want to serve the community. You know, we can't compare them to other employees, maybe a little bit to the fire department because they expose their lives for the people of Nogales. And I think when I look at other communities and the compensation they give to their police officers is a little bit different and discouraging for our officers here in Nogales.

Mr Marcus, I completely agree with you. I think that public safety is first and foremost for the community because if there is no safety, there's no community. And not downplaying the roles of other departments in the city. I agree with you in that aspect to the public safety that includes fire. It should be at the top of the list. I know you guys are faced with a difficult decision and I appreciate you know all the input and effort you guys are trying to do to improve our dilemma when it comes to recruitment and retention.

My last comment is, you know, I've been sitting on this tires almost 8 years and every year we come up with a salary increase and we deal with percentages. And, you know, that when you work with percentages, the top employees, the ones that are getting the most pay are the ones that gain the most and the bottom 2 employees, you know, they end up with a, maybe 50 cents 1 dollar raise. And the top employees that are getting the 80s, 100,000, are getting $10,000 to $15,000 raises, and I think it's not really fair. We tried to go across the board, I think it was last year, and they turned it down. So I don't know. It depends on the council what they think it's fair for the police officers and the fire departments.

And I agree with you, sir. Percentage points are difficult to manage when it comes to the salary numbers. And I agree with Mr. Parkin's approach that an amount is always better than a percentage. It makes it a lot easier. But once again, I appreciate your concern. And anything we can do to assist with your decision, I'm open to.

Mr. Parker. Okay, probably gonna be a little bit disagreeable here, but I'll try to do it nicely. Two things. The first thing is there are agreements between the city and police department employees and the city and the fire department employees. We are in the process of negotiating those agreements right now, okay? Last week, we spent very little time after we proposed $2 an hour increase across the board for every single city employee. This discussion did not come up. Subsequent to that time, I have met with both labor organizations. We're not done with either one, okay? Number two, last week, we did discuss the fact that we had A compensation study that had been done not quite two years ago that had not yet been acted on or even put in final. And those two things also impact how much employees are paid. It is not escaped my attention that the day after I met with both labor groups that you all were being prevailed upon. to do more than what we were talking about in those meetings. Why do you have a contract? Why do you designate the city manager to negotiate agreements with employee groups if you all are gonna negotiate with them individually and then bring it here? If this is what you're gonna do today, then we don't need to negotiate those contracts anymore and we should just stop. Now, that coupled with the new figure that we've got for you today that puts expenditures ahead of revenues for the current year by $14.7 million, okay? You're gonna use $14.7 million before you make this decision, if you make it, okay? You started out with $22 million in reserves, you're budgeting $14.7 million out of that reserve to balance your budget. And so if you do the math, then next year you're gonna have about over $14 million left to go into a hole with next year, okay? You have a structural deficit now, okay? You are already operating at, millions of dollars more than your revenues are producing for you on an annual basis. And I'm not even talking about the water fund, okay? Because 1.3 million of that 14.7 million is going to make the water fund solvent. So we keep finding ways to spend more money. I mean, hey kids, I'm out of here in four weeks. You guys gotta live with the consequences of your actions today. And I think when you get into this point, we shouldn't be talking about doubling raises for employee groups. We should be talking about cutting back expenses wherever we can. And that doesn't seem to be the order of the day here. And I'm just here to warn you, okay? I've had two months to examine the finances of this city and you're in trouble. And it's already been in the paper once that you're in trouble and it's not going to change. It's going to get worse. And, you know, some of you are happy that it's in the paper. I guess I am, too, because it sheds light on what's really happening here. So, you know, you can add two bucks an hour to 58 badges today if you want to. I can tell you that between, you know, the police and the fire departments, you've still got almost 200 employees that are going to be knocking on my door tomorrow wanting to know why they didn't get treated the same way. And I don't agree, Mr. Bohorquez, I don't agree that, Public safety is more important than public works. I don't agree. Your biggest problems right now are in public works. And another fact that's not going to make anybody happy, you are never going to achieve parity with the bigger police departments. It is never going to happen. And I can tell you that every police department loses a certain number of employees every single year. Every fire department loses a certain number of employees every single year, okay? That's never gonna change. And not everybody's gonna wanna go to a higher paying police or fire department. Not everybody's gonna wanna work for a bigger police or fire department. you're always gonna have a core group. You've got a lot of people working in both of those departments that have been here 10, 15 years. All we hear about are the ones that blitz after three years and go someplace else. What I've been talking about with the police and fire unions is finding ways after that third year to give them an incentive to stay. I think that's way more productive than just pooh because A couple of years from now, you're going to be dealing with the same issue over again, because those other departments will go up by similar or greater amounts. And I could go on, but I'm not going to, because I thought this meeting was only going to last 15 minutes.

I just want to go ahead.

I mean, we're just dealing with the realities of life people. I just want to clarify.

clarify something. I never said that public works wasn't important. I said they are an important Uh, the division of the city, I'm just saying there are responsibility. Our priority responsibility is for the safety of the people of this community. That's what I said. I didn't say public works wasn't was not an important department. I know they are. We, we see them there every day working on the streets on the picking up trash and. All kinds of things at the city, so they are an important. I'm just saying the. The part where they expose themselves, you know, for the safety of the community. The other comment I wanted to make, you know, when we, when we deal with the hiring higher top employees, like directors. you know, we never put any limits on, you know, we always want to go above what the one director is getting. And it doesn't seem to be a problem as far as the financial status of the city. So, Sergio, I just want to have, from last year's reserves, did we increase or decrease on the reserves?

Talking about the reserve or the carry forward. Yeah. I'll carry forward. Okay. from 24 to 25 or I mean for a 24-25 year to 25-26?

From last year to this year is the end of the budget of this year.

Yeah, I'm showing about maybe a $2 million decrease from fiscal year 26 to 27.

A decrease. Correct. Thank you. I have a question, sir. Mayor, I have a question. Those are my comments.

Uh, or Steve, what is the difference between, um, before we included the gap, how much did it increase? I think it was 11 before we included the 2 dollar raise. Now is it where we are 14 or 13. Million.

What increase?

As far as spending money. Are you talking about the $2 raise? Yes. About 1.6 million?

Yeah, approximately 1.6.

And it would be another 1.6? Add another two?

Uh-huh. Does it work that way? Yeah. No, if it's just for certain individuals, then it's going to be way less than that.

Go ahead, Mr. Doyle.

Yeah, when we say way less than that, is that what, like a quarter million, 300, 400,000?

Increasing $2 more?

For a certain...

I would have to calculate that. I don't have that in front of me. I have one more question.

Go ahead, Mr. Durk.

Having heard the chief, it seemed like His department was kind of in coordination already with our city manager as far as the incentives go? I mean, were they happy with those incentives that you felt?

We're not finished working on it yet with police or fire. Okay. But, you know, they... But you're heading in the right... And I think we're headed in the right direction. Obviously, they don't. because the president of their union has obviously met with some of you because he wasn't happy with the meeting with me, but we're not done.

I don't think probably the council was aware that you were- It happens every three years.

Okay. And okay, so Mr. Mayor, if one moment. Go ahead. Okay, when a union contract, gets close to expiring then labor and management sit down and start negotiating a new contract okay so we've met once and at the conclusion of that meeting we agreed that we're going to meet again next week okay and and and both sides have tentatively agreed that we should get this done before I'm done working here, okay? So we don't saddle a new city manager with this, with half done negotiations, if you will, okay? I also advised them that at that time that negotiations can only be fruitful if they are negotiated between the designees of both parties. And the designees of both parties for labor are the union officers, and the designee for the city is the city manager. And and normally the department had in this case, Chief Jimenez and I were at the table representing management. OK, and we met for a little bit over an hour the other day. and uh and i knew that they were not happy but we agreed when we when we left the table that we would sit back and and think of some other possibilities and i would get in touch with him by the end of the week to schedule another meeting probably monday or tuesday of next week At this point, depending on what you do today, I don't see any reason to continue doing that. I mean, the the method by which you negotiate should be somewhat contained. Because. To be honest with you, management just lost control. OK, I won't continue to meet if I have no ability to. to bring a contract to you for your discussion and approval. If you're going to do it, and I'll just say it plainly behind my back, around me, then go ahead. Go ahead. I got a lot to do in the next four weeks. This is one thing I can clear off my plate. But I can tell you that we were not close to giving another $2 an hour to anyone. But we were talking about incentives that may become equal to that based on whether or not, I mean, the incentive package is supposed to be geared towards keeping someone. Your starting pay for police and firefighters is middling. It's not the highest, it's not the lowest. Obviously people want to get jobs here as police and firefighters. How they see it three years from now is part of what we do with the labor agreement. And so what we were talking about in the labor agreement, and I don't usually talk about this stuff in public, but since you've brought it up, we agreed that the pivot point is the point at which they no longer have to pay back the city. And that's at the three-year mark. And so what we were discussing was what kind of an incentive we can give them at the three-year mark so that they have an incentive to stay longer and then periodically after that incentives to stay longer and longer maybe maybe on an interval of so many years or maybe every time they get a stripe on their shirt sleeve you know those are real incentives okay two dollars an hour now two years from now is going to be forgotten and they're going to leave anyway I mean, I've been watching this now for 42 years, okay? And the more things change, the more they stay the same. And I am personally highly disappointed in the negotiating team for the police department, for the police union, not only because they chose to leave the negotiating table and negotiate with you, but I'm disappointed because they didn't include everybody that works for the police department. Apparently there's graders and lessers of the police department too. Not to mention the other 200 people who work for us. I'm sorry, people maybe up on my soapbox right now, but I just think it's just plain wrong. Go ahead in all fairness.

That's fair.

No, no, Mr Doyle. What I just said is fair.

No, in all fairness to the departments, none of them have reached out to me personally. And, you know, we're finding out a lot of the things that we weren't aware of. And I believe that you're you're the voice piece for us, because if we go on an individual basis, it's very hard to reach an agreement. Yeah. And at this point, I've lost control. But I mostly what I saw was achieved that that apparently you guys are having a positive dialogue. I thought so. No, no. I mean, it's just that I don't think some of us were aware that this was happening. That's why this concern was brought up. But but, you know, we're learning. I think we're at least I am anyway. Well, and I thank you for.

Well, I appreciate that, Mr. Doyle.

I didn't mean I wasn't trying to. Again, the best place is the right thing.

I think you are the best place to ask these questions.

But I just want to know, I think some of us weren't weren't weren't they weren't reached out. You know, it was more our concern of making sure that, you know, everything's covered. And I didn't know that you were at the table. uh so so you know i'm glad to hear that and at least that kind of as long as the chief and and and the chiefs are are happy with what the direction they're going uh uh it takes uh well it takes pressure off at least me and i probably think that's some of the others here in the council so thank you for your efforts i mean I think this is the first time that we have a city manager in such a short time that does take the initiative to do something so quickly, because you've only been here a couple of months.

This is something that should have been going on every three years.

And the knowledge you bring to the table, because we're seeing something new that we hadn't seen in the past. Thank you.

Ms. Motir?

I just have a comment. I'll turn on my mic.

Give me a chance to go over here.

Yeah, may I direct my question to Mr. LaRiva? Mr. LaRiva, have you been also meeting with the city manager? Okay, great. Thank you.

Ms. Perrault?

Thank you, Mr pocket when you're since you're still in negotiations with them, please take into account. And I'm going to quote council member when she said. Bear in mind. Equity and equality. She was bashed for saying that one time, but it's 100% true. Please take into consideration because in this past year, I've seen consultant fees and numbers being thrown up without even consideration of our own employees here with the raises. So that spending a lot of money. That's what I'm getting at. So please take them into account. Yes, they're not paid very well, and we need to retain them here in Nogales. A lot of them want to stay because they live here, but they can't, you know, they're living paycheck to paycheck, and it's really hard. And I'd like to retain, like, the seniors that they have, there's not that many. For the experience to go down, it's important to me. So please, when you're in negotiations, do the best you can for them.

Vice Mayor?

Uh, I appreciate all the information you gave us today. You know, that's very. Uh, positive information, uh, and I know that you were planning on having a 10 minute, uh. Meeting, but, you know, in order for me to, to agree on something on a budget, which is going to affect the city for for 12 months, you know, uh. I do like to bring up some questions that I have in mind that might change the decision that I take. So it is good that we sit here and discuss some of the items on the budget so we can get some clarification and make the right decision.

just one more comment mr mayor uh ordinarily uh negotiations fall under the category of personnel matters um some of what we're talking about today we should be discussing an executive session um because one of the things when you're negotiating a contract is you need some security so that you know so that you don't give away your negotiating position in public Okay. Now, we haven't done that this morning because I've pretty much told you what we've been talking about. Any further contact with union members directly, I wish you could avoid by referring them to either their department head or the city manager's office. We will schedule negotiating sessions, probably another one next week. That's what I left with both of them when we got done with our meetings this week. And, you know. we will, at the appropriate time, we can update you with where we are on the status of negotiations, okay? But you don't negotiate in public, you don't negotiate in the newspaper. You don't gain anything by doing either one of those things. And quite frankly, I feel like that's already been blown.

Okay. Anybody else? Let me put pitch in. Mr. Puckett, you know, I thank you for your negotiations and all that. I think, you know, basically what I see is, you know, yes, I guess union contracted council members and stuff like that, you know, but it's, I'm not sure If you hear one thing and we hear another thing, and where we're at, but the one good thing is that now you know what they're asking for. Maybe they didn't throw out the same thing to you, but now you know what they're asking for. I think council has agreed on the $2, in general race. And if, you know, it's, yes. And now you could see that, you know, there's other needs for, or wants on the police empire to, it could either be through incentives or how we could, meet those now you know what what they're asking i'm not sure if you knew that uh so but you know and we're all concerned about it we're all concerned on on both fire and uh and police department uh you know i've said it before i said it you know the the losing of of of officers you know i hear it every day you know we got younger and younger officers every day because we we've been losing that up personnel And one thing that we're losing is hard to gain is experience. Experience on both fire and police has really dropped. So the new kids on the block are great. They're probably better physical and everything, but their experience is not there. And I think that that goes a long way. That goes a long way. And so, you know, I think council, if you guys agree, you know, with Mr. Puckett to continue his negotiations. And, you know, now, you know, I think, I believe council is strong on supporting them, you know, in whether it's incentives or if it's, you know, an extra, The way I heard it from Sergio, getting it as an incentive is better for the city and better for them because it doesn't take away from the retirement fund. So, you know, put that on your...

On the front end, a lot of people want to be police officers and firefighters. Okay. You know, and I'll just give you an example. Recently, we put five chief people in the police academy. This most recent academy was six. The academy is not over yet. We're down to one. Okay, that's a problem at that end too. And it has nothing to do with money. It has the ability to pass the testing. And along the way, they also have to learn that they finally get to figure out what it is to be a police officer or a firefighter. And sometimes it isn't what they thought it was. And so that's also a challenge for us. And so anyway, I think if we beat this horse to death enough, can we move on to something else?

Just one more comment, Mayor.

You know, the other thing that you probably don't know is how many have we lost either retirement or have gone away, you know, because of the pay, you know, and just in the last two years, I think, you know, my two hands don't have enough fingers. You know, we lost plenty of them.

I think we can slow that down. We can't stop it.

Well also on that subject of salaries which are very very important is morale and that that has a lot to do with it so I really really believe that we need to support the fire department police department where it comes to that. Thank you.

Do you have something to say? One last comment, just following up on Mr. Potkin's comment regarding that some of the applicants didn't pass or qualify. And that's another reason that we need to attract other people that are more prepared to apply for these positions.

Any other comments? Is there any other items you guys want to talk about?

I want to discuss a few items, Mayor, that I would like to- Go ahead, Mr. Buenos. Thank you. I would like to stop funding for the Chamber of Commerce on this budget. I really don't want to go into as to why, Um, I feel that at this moment, at this point, we should not continue funding the Chamber of Commerce.

That is a 1 item, right? Uh, in the 1 line.

It's under from agencies.

No, 17, 17, 17. So, at the bottom line, where it says category 75.

Category what 75 for the very 75.

As you can see also in this, you'll see an extra line that was added. Um. Yeah, the income because we don't have an income was eating whenever there was any type of income we were getting. It was either getting paid out of a special events or services from agencies. So, to track it better, I decided to create an extra line item for that expense. That way of counsel or anybody request 1 and all the income amount we have attracted within 1 single expense account. And before I forget is that we also have to add an extra amount to the fire capital. So we have to do a carry over. We were supposed to get ambulances by the end of June. It turns out that they might, uh, they were delayed. So we have to carry over the funding, which is 180,000 dollars. Also, they got added to the capital.

What line will that be?

That will be and pay page. 62. So it's on P62 on Capitol, the vehicle reserve account, we're carrying over the $580,000 for the ambulances that were also, they were budgeted about two years ago, right? Three years ago. So it's been carried over and they were supposed to be here by the end of June, but it was cut short that it might come until July. So we have to carry it over the expense of the next fiscal year.

Well, that's just because they're not going to be ready on time.

So when that happens, we have to pull it out of the reserve to put it in there.

That's the 57th?

Yeah, page 62. And category 91, it's vehicle reserve account, which is $580,000 for the two ambulances, right?

You already had it carried over.

Correct. It was a carryover this fiscal year, and now we have to carry it over. It's going to be about a week or so, right? Late.

Yes, Mr. Mayor, that one is basically the 580 that's in this year's budget will not be spent.

Yes.

And then we just basically, it's a wash, because we're taking it out of this year and we're putting it into next year.

Yeah.

Okay.

Okay. Go ahead, Ms. Perrault.

Mayor, I find it absolutely ludicrous to not give the funds to the Chamber of Commerce. They do a lot for the City of Nogales. We need a visitor center. We need the Chamber. They spend every penny on making sure that Nogales gets the attention it needs. They work very, very hard, and there's no need to even bring that up. It's absolutely ludicrous.

I think what's ludicrous is when our former president, city manager prioritize certain city projects to pay their parking lot. Also, I can understand your position, Councilwoman, but you are the treasurer, right, for the Chamber of Commerce, right?

Yes, I am, and a proud board member. Before you say that, Mr. Councilman Bonillas, please get your facts straight because like other councilmen, you just spew out inappropriate facts. You don't know what the facts are on that project.

Well, please inform us.

Oh, I definitely will.

Well, do it now. This is a moment.

I don't have the documentation.

Oh, I have it. I have it.

Okay.

I have it and can I accuse them of doing something illegal? No, I never said it. There was legal.

It was prioritized part of the budget.

Yeah. So I just, uh, mayor and council, I asked that the chamber of commerce not be, uh, continue to be funded. Thank you. Uh.

Go ahead, Vice Mayor.

Yes, I think that the two partners that we have, the Port Authority and the Chamber of Commerce, are very vital to this community. And they bring a lot of jobs and other community positives to Nogales. So, you know, partnering with them is very important for us. We don't have a department at the city that will... will recruit employment and new business to nogales so chambers been doing a lot of that hard work and running around trying to bring other entities to nogales so i think getting rid of that partnership is not a good idea go ahead mr

Yes, Mayor, and you don't want some of the things that I noticed. Some of the smaller things that are in their contract, but nonetheless, they're supposed to be inclusive, especially with with the console. I notice that they're not yet there. They get funding. From Santa Cruz County, which a lot of the work they do is for the county and not so much for the city, but at the same time. They break the rules of the contract and and they seem to going off in a different direction and leave some of our some of the Council members with a bad taste. I think that as far as tourism goes, there's more people that come to Nogales from the events that we've supported through like the Fiestas Patrias, the Fiestas de Mayo, Ceros Tres, Little League. That brings a lot of people, yet you don't get funded by that. And I think some of the funding that we have for tourism should be spread out a little a little more even with everybody that all the different agencies or events that are held that should be more supportive, that bring more tourism to it. And I think that we throw more money away with the Chamber than what they do. That's my opinion. Thank you.

Thank you. Go ahead, Ms. Montes.

Thank you. So Sergio, I know you're going to go back and forth here. On page 17, so we can have something to reference to, on the services from agencies, $150,000. So that's been going on for a couple of years So what you're saying is that you're giving and you're putting in this category on in kinds expenses of 50,000 I'm curious. How much of in-kind money have we spent in the last year compared to the following year? I know you don't have the data.

I should Yeah, that's fine.

Thank you and so what you've done is is The services from other agencies, 150 historically, it's 50 to the Chamber and 50 to the Port Authority. And we have $50,000 left, right? Excuse me, is that my math right? Okay. So those $50,000 were meant to be spent on in-kind, but you allocated another $50,000 in in-kind. And I wanted to be on record that, um, we haven't straightened out. Um, mistresses has sent. Various mammals regarding in kind, because I've asked him, I've asked him for an opinion from the attorney general on how we disperse public funds. And, um, for me, it giving public funds, as long as it's legal, um, especially with the gold water. Institute and so far, um, it is, you know, I'm fine with giving out public funds to community events. I have no problem with it. But. In the last administration, what I liked about having a structure in place, and it was certain amounts like events that were sponsored by the city. And, um, and if you recall, some of them are, you know. And so forth. And those were given because the response to the 4th of July and some of them. So we've increased them every year. Any you know, we sit here and every time somebody wants to do an event, we distribute in kind. Just a minute. I'm not done yet. So, and it's fine. That's that's great. Giving back. But I do notice that we're increasing it more. Does that mean because you put aside $50,000 that anybody that request and in kind comes to council, we put on the agenda and. If we are over $50,000, then the in-kind, well, actually it would be $100,000 of in-kind because remember 150? 50 and 50 is 100. So we have 50,000 left, and then you've allocated another 50,000. So it's $100,000 that would be going to in-kind. So I wanted to bring that up. It's not that I'm disagreeing with in-kind. I want to make sure that Mr. Estes, who is on... who's right now in the, yeah, that he's okay with it. I know Mr. Estes has kind of advocated and he said his own opinion, legal opinion, which all lawyers have. But the bottom line is, you know, that's why we have a court system, right? When somebody doesn't do what needs to be done, then we have to go and people start saying, well, you gave in kind to them and not in kind to me. And then that can be a little bit of a, issue later on. I don't want it to be an issue. That's why I'm making sure it's on record. And I also noticed that the city of Nogales is the only government entity here in Santa Cruz County that gives so much in kind. I checked it. Because if you go to open books, it's a public forum and you can platform and you can check how the government agencies are giving out money, public monies. So I just wanted to be on record that we are allocating $100,000 in kind. So it is what it is, but I don't agree that we should allocate $100,000 for in-kind. For me, it's a lot of public funds when we wanna give raises to our public safety officials, we wanna increase for all the, talk about equity, all the employees, but yet we're allocating $100,000 of in-kind. Well, we could use at least $50,000. I know most of our budget goes to personnel, but it's almost like we're saying we don't have money, but yet we've allocated $100,000 of in-kind monies. I know that everyone will have their opinion about it. I am not against giving in-kind monies. at all um these these cultural events are very important for the morale of the city and especially that's one thing that the public likes to attend and most of the stuff that we we do are very um you know i think it uplifts the morale of the city uh and of our public but i just wanted to be officially known that we're allocating a hundred thousand dollars when we just said We can't give it to public safety because, you know, there's no monies. And you've said it yourself that we are in debt. So just wanted to make that clarification. And I am not against in-kind. We need to make sure that we make priorities here.

And your point is well taken, uh, counselor, um, 1 of the reasons that we restructured it that way was because. Based on what we've been seeing and. For several months, not including my tenure here, but before that, uh, there, there seems to be more. Uh, um, people coming forward asking for in kind. And so that was the reason we did it, because what we didn't want to do, I mean, we're not proposing to spend that money so much as we're proposing to be ready if the requests for in-kind are going to continue to rise, that we have some place that you can see where it's being spent and how much is being spent. That was the purpose of it. It wasn't to spend more.

Go ahead. Yeah, and I understand, and I know you're an expert in budgeting, and I appreciate that. that it's allocated. That way it's transparent and people can see, the public can see where their monies are. I'm just trying to make a point. Yeah, I know. Well taken. Yeah, well taken. Thank you. But I just want to say our priorities here. So my suggestion is that the $50,000 that you allocated in kind of expenses, be taken away and the $50,000 from the 150 is placed in the in-kind. So in other words, we leave $100,000 for the port and the chamber and the $50,000 is in in-kind expenses and not add another $50,000. That's my suggestion.

Okay, comment.

So my understanding is when this line item was created a few years back for the services from agencies, it was not for any kind. It was for services from other nonprofit. So that is why I added that extra 50,000. But if the council decides to lower one line item to leave it. You know, it's more spending authority is given authorization to if we need to spend it or use it, we use it doesn't mean that we're going to spend it all. As I explained last week is that. We tend to budget it's more just spending authority, but we tend to spend. Approximately less than 60% of what actually we end up budgeting.

Go ahead so you've been here at the city for quite a while now. which is a good thing, you've hung on. But how, in your opinion, Bess, because you're an expert in budgets, so how is in-kind, like some of us have been here for way too long, but how is in-kind handled before? Because it seems like it's increased and increased and increased. And how was it, was there parameters? Were there a structure in place? How was that handled?

Based on the in-kind, I know it has been increasing lately. Yeah. Before, to be honest, I don't recall how much or how it was handled before because it would never go through my section of the finance area. But now that I'm looking at the numbers, the way that it has been increasing, but it's less monetary, it's more of borrowing equipment. than anything that has to do with cutting checks or anything like that. Because maybe even $50,000, you'll probably see by the end, this time next year, you probably won't even see close to how much we ended up budgeting to what was spent.

Okay, that's a good thing to know.

We can change the numbers for you if you guys discern.

It doesn't necessarily mean we have to spend the $50,000. And you'll get the last thing there. So just for clarification, you'll get, what would be nice in the future reports that we get, financial reports, if you can add, I'll put it on the agenda, if you can add an in-kind amount. Yeah, yeah, or you could do quarterly, you know, like quarterly so far you've spent this amount of in-kind, you know, which includes overtime and all that stuff. You know how that works. So yeah, just so that we can also be transparent and show how much in time we're spending, okay? That sounds good. Okay, go ahead, Saulo.

Thank you my understanding is that this is evolved as opposed to being. A matter of policy, and so perhaps since I see the city attorney back online, perhaps what we should do is attempt over the next few weeks or months to craft a policy. That way you've got a roadmap for which you will help you make those decisions. Because, yeah, things like that tend to morph. They, they, you know, we don't just 1 day say, we've got to have a policy.

It happens to us as opposed to what just so you'll know there is a policy. There's a policy already and while we're talking to look it up, there's a policy already. and in place but we don't seem to have changed it when the amount went up to to 1500 so we you might want to check with mr estes but there's a policy already with your permission we can ask mr ss to look into that

So do we, going back to the chamber issue, do we vote, Mr. Falken, or how do we go about doing this as far as continuing to fund the chamber?

That would be a question I think Mr. Estes, we have a motion and a second on the floor to adopt tentative budget.

If you want to make changes, Joe, what would be the...

What would be the appropriate procedure for making a change now within the context of the motion and second that are already on the floor?

Okay.

Okay, thank you.

I think I'd like to have some definite. I want to have, uh, I want to be able to make that change before the final budget becomes comes before council. And, uh, Sergio does too.

Mr, I did, I have 1 table already. I do have a comment before.

No, no, don't make any motions right now. There was a motion in the second to adopt the tentative budget. That's all that's on the floor right now.

We're just discussing.

I just have one more. We're in discussion on the tentative budget. That's it. There's no motion to change anything right now.

Okay, staff would like some direction. I don't have it right now from what I just heard. It's okay, we get it. That wasn't Mr. Bohorkas. Mr. Bonilla. Thank you, Joel.

Mr. Mayor.

Go ahead.

There's one last thing on the chamber that I forgot to mention. They're very important because we don't have an economic development department in the city, and that's where the chamber picks it up. And speaking of going, of budgets, of removing, of increasing, what do we do when a certain council member overspends his budget, like $12,000, Council Member Bonilla? What do we do with that? Can we lower the salary on that? Or how do we do it to cap it out?

Well, same procedure. Could I make a comment?

Go ahead, sir.

Mr. Mayor, thank you. Just a couple of things to keep in mind in the context of Mr. Bonilla's request. Along with that $50,000 allocation to the chamber goes responsibilities for doing certain things that are normally done by tourism operations in most cities. Not everyone does it the same way. You know, the model that you have here is you allocate money to another agency who then serves as the destination marketing organization for your community. Where I live, the city actually stands up its own visitor center and employs its own people and performs those DMO functions. While one way can be preferred over the other depending on where you go, I can tell you that $50,000 is a smoking deal to achieve the same end. And so I'm assuming that if we don't fund the chamber that those functions on behalf of the city would have to go somewhere else. For instance, you probably get about $50,000 in co-op advertising funds from the Arizona Office of Tourism. In exchange for your contribution or the Chamber's contribution of $50,000, it's a one-to-one ratio. So if you buy $50,000 worth of advertising that's in the AOT catalog, they will match it with another $50,000 worth of advertising. They take all the phone calls. They do all the referrals, all of that which would necessarily have to go someplace else. Because, well, quite frankly, I would doubt that the chamber, without having your blessing as the marketing organization for the city, would have to come back here and be done by someone else. So those are things we have to take into consideration. Like I say, I've seen it done both ways successfully in both ways. It's just a matter of how you want to do it and who you think should. I can tell you that if... If all of those functions come back to the city, that we're going to have to stand up some kind of organization to take care of it. And that's just going to cost you money anyway.

Mayor? Go ahead. Thank you. Thank you for that comment. Looking at the budget, also the bed tax, not to forget the bed tax. And so the bed tax, and I looked at the paperwork that is public, and the bed tax is intended to be used in that way, as you well know. I know you're very knowledgeable about that. So that brings in about, gosh, Well, almost half a million dollars if you look at page eight. So I just wanted to mention that, which is really, really important, which was meant, if you look at the documents, which was meant to increase tourism and increase visibility and do that type of thing. And so the bed tax is not going directly to the chamber. Just so the public can know, it's going directly to our general fund. Okay, another thing to mr. I know we're jumping here, but also on the salaries, going back, just so that, as you well know, I feel like you're an expert in this, but most of the revenue that comes in to City of Nogales, and you could see, goes to payroll. We know that, right? Over 30, almost $34 million that comes in out of the 78 million. But I wanted to bring up also, just to make sure that... The employees that were given addendums or extra pay for doing extra duties, that is once you get a person to do that position that's vacant, that person that got that incentive is going back to their salary, right? OK.

Yes.

I want to make sure because some of the employees did not get those incentives for extra duties. And so I want to make sure that when we do the two dollar increase across the board, that people that got these extra incentives go back to. It's not added to the extra addendum that it was given to them because that will definitely increase it.

Any, and I forget the term for it.

Yeah, it's incentive, extra pay, whatever.

Any extra pay that is included either in policy or in union agreements is not impacted by the $2 an hour. That all remains above the $2 an hour. So if they were getting 33 cents for something an hour, and there is actually those things in the union agreements, those are unaffected by that. They still continue in addition to any general increase that they receive. So we're not trying to do that to take something else away. Okay. It's totally above board. Yeah. Yeah. Totally above board.

Mr. Bakken. Go ahead. We discussed the DMO, you and I, at length. Just in case you forgot the conversation we had, we've gone, the City of Nogales has gone for without sometimes not having a DMO. So it's just one bit of information out there.

And I do recall that conversation, but you do have an obligation to spend those bed tax funds on tourism.

We, we, we understand that, but we'll, we'll, I think we can explore other avenues because you can actually, you know, you can pay employees with that money too. Exactly there. Go ahead.

Like, I mentioned before. Most of the tourism that comes into town is to these special events from yes, from set of studies and always. From literally. especially the regional. You're so aware of that. And do you get funded by the city? Does the league get funded? I mean, you guys are ambassadors for the city, bringing in all these tournaments and bringing all these people from all over the country, at least the western part of the country. We got people from Washington, Oregon, Southern California, Northern California, Alaska, Hawaii, they come with a big entourage. They bring families and usually they kind of have at least 80 people from the parents of the kids that come and not only the parents, the relatives, you see, well, you know better than us. Do you get funded by that?

We do not get monetary funded. We do get all the support from the city on the fields.

Yeah, but that's what I mean. Still, there's other costs that come into play. I remember the last city manager didn't even want to fund a parade for these regional teams that came from like 10 different states. Now, is that right? Shouldn't the city fund these type of programs where they can cover those costs, you know, in kind and maybe police for traffic control and whatnot, when they have a small parade to honor these guests that come from such a far away distance, you know? Think about it. Those are things that really mean something to Nogales. Regionals has put us on the map. We hold the regional tournament, Little League tournament, here in Nogales. Nogales. We don't do it anymore in Sacramento, California, or anywhere else. It's here. That's a very important event. So I think that Little League should put in and start getting some funding from the city from the bed tax and the good tourist ambassadors they are for the city. Thank you.

Thank you.

Mr. Doyle, are you okay? We're not taking in kind away. The in kind staying in that category.

And we need to do the right thing with that.

Oh, okay. We're not taking it away. We're just saying that we're actually said who added more in kind.

No.

Yeah, that's okay.

okay okay we're talking about tourism like you said right now the funding that we can either do either get pay pay for someone to to spearhead that and also support support the events that bring those people into our community that stay in the hotels that pay for that bed tag to support us thank you

Yeah, and Mr. Dole's right. You know, the Little League brings a lot of people to our community, a lot of tourism, and the special events that we have, like the Fiesta Patas. But these are events that take up the most, what the Little League takes one week. The Chamber does this 12 months a year. You know, they work and recruit tourism 12 months a year. They don't do it once in a year. in a while or once a month or one time only, they continue to work to bring more businesses, to bring more tourism. And I know, you know, those special events they do bring, you know, it's good for the community, for community morale and for the tourism. But the chamber does that every month for the whole year.

One more point. I'm also a board member with the Port Authority. Should we defund them too?

No, they're working.

I'll answer that. They actually have produced over the years. And if you want to, we'll bring the whole track record. We'll get it from it because they'll give it to us like that. And they really have brought in one of the biggest projects right now that has taken away from the danger of our school kids and Mariposa Road. was that bypass with those big semis that used to come down, some of them without break from Mexico and threatening our kids coming out of the high school. Now they go right over the bypass and there's no danger to the school. Also, there's no bottleneck traffic anymore on Mariposa Road that there used to be years back. Thanks to the Port Authority, that was one of their projects. Tambariposa Port of Entry, they're the ones that were behind that project. They're the ones that were out there lobbying in Washington, and they've always been there. They're unofficially lobbyists, but they're always lobbying for the City of Nogales. What has the Chamber done? Thank you.

My point was that a member, I just wanted to point out that that's not an issue or if it was an issue, that's all.

Thank you. Move on? I guess so. Any other items? Any other items you want to talk about in the budget?

I guess this is, I'm sorry.

Today is to cap things, right? It's not the tentative budget. That means once it gets approved, we can add anything else on, but we can cut. Because there's some trimming to be done. Thank you.

That's correct.

Ms. Montier?

Mr. Palkin, we talked the last time a lot about increases in the utility billings. So before we close the meeting, where in this whole notebook Where is the increase that so you talked at the last time you talked about it came out at Nogales International that we need to at least increase the utility rates by 25 percent. Is that all factored into this or is that another conversation at another time? Um, with a public hearing and so forth. Can you kind of clarify that process? Because I don't want the public.

Sure.

I mean, a public's already, you know, kind of from the article got that. We are possibly increasing it, but I don't see that. That amount factored into the utility.

We can't put revenue in this budget. That hasn't been approved by council.

Okay.

Okay. Uh, so, however. you can you know what what you have no limit on is how much revenue you can generate okay so um what we have to do and joe can probably explain the process better than i can but i don't know if we need to do that today okay there's a process that we have to go through in order to uh increase the water fund uh billing by three bucks a month And that process will probably, if we start at the next council meeting, we could probably put that rate adjustment into effect in July, maybe August, at the very latest. And I would suggest that we start that process as soon as possible. And Serge and I got to get with Joe to figure out what the exact procedure is for that process. So you would be allowed to collect more money and put it in the water fund It would just show at the end of the year that you would have generated more funds than you have budgeted here. In the meantime, the $1.3 million that is proposed in this budget to be transferred backfills the deficit so that the water fund is solvent. so and you're going to have to a year from now uh and and hopefully you will have a better uh handle on the exact needs uh in the water fund but there will be um debts to pay um there's already debts to pay in this one over a million dollars a year um and you will have to um as a as a process of increasing the water rates by three dollars a month $3 a month. Okay. 25% sounds bigger than $3 a month, but that's what it is, $3 a month. Now, it could be a little bigger or smaller depending on your water usage, but on the base amount, it's $3. And I'm rounding to the nearest dollar. So you will have to come up and adopt a plan to start repaying That loan essentially, and that so that's going to increase your costs and you're going to have to start looking seriously at implementing some of the water projects that you have already engineered, but haven't yet executed because, as you know, the water system is very slowly deteriorating. You know, I don't know, Eric might think it's deteriorating a little faster. But those are things that, you know, and I think they've already got a pretty good handle on what we're going to have to do in the next 10 years. That will need to be articulated to you so that you can plan to adjust those rates again the year after that, the year after that, the year after that. hopefully at smaller intervals than than this one i don't i don't know the answer to that question yet okay and i won't be here to uh to work that answer out for you um so uh this is a i mean this is the beginning of a long-term slog uh towards restoring your water system uh and paying for it uh in as a business, basically. It's a business. Your water treatment plant is a factory. Like all factories, equipment needs to be repaired and replaced periodically. Your distribution system, all those bundles of pipes you have underground, Uh, many of those have lived past their useful life and they are going to need to be replaced. Um, and we know already from the amount of maintenance. Uh, that's being done on the water system distribution system. Um, that there are good many pipes that, uh, that need to be replaced and part of that has been designed. Um, and we'll need to move forward on that over a period of time. Um, you know. Believe me, I get it. Nobody likes a rate increase. Okay. I don't like great increases. But you're making a decision as a board of directors for a 100Million dollar corporation that we call the city of no Dallas. And one point of view says that we don't want no rate increases and that's, you know, all that stuff and the pushback that goes with this. And the other point of view says, well, as stockholders, which we have about 19,000 of, stockholders or stakeholders, however you want to put it, okay, when those people can no longer draw tap water from their kitchen tap or flush their toilet, then we fail. And so, and right now you are on a collision course with failure. And if we don't do something, we will continue to fail. And at some point, failure will reach different proportions. Now, Mr. Vasquez is going to be here to meet with you next week on the 28th. We have that straight now. And he's also going to talk to you not just about what I've just said, but he's also going to talk to you about how that's going to affect your bond rating. And and your bond rating is going to affect your interest rate and your interest rate may and your bond rating may or may not allow you to borrow money, depending on which way it goes over a period of time. This is this is a very. complicated set of circumstances uh that's that's going to determine uh how how you operate your system basically at least in the next 10 years and uh and and mr mayor i still haven't found any evidence that we have any water rights and if you know if you know where that paperwork is i would love to see it

I'll get it for you. You know, one thing that we need to fix, I still get calls and calls on our billing, water billing.

We sent out a memo to you last week. Four pages of memo. That problem existed before I got here and I think we've started to get under control it's still going to take a little while to sort everybody's account out we're asking for your indulgence and your patience and i'm really asking for the people of nogales indulgence and patience please come and see the revenue department uh if you still have issues with your bill or don't understand what your bill says and uh we will be able to work it out for you and some people there might still be a mistake on their bills some people might just be delayed because we've got in the water fund we've got 600 and some odd thousand dollars over six hundred thousand dollars in delinquencies currently okay those delinquencies now We'll never get back to zero because there will always be delinquent accounts. But $600,000 is a little extreme. If we can get that back down to, you know, working amount would be about $100,000 in delinquencies at any given time. That half a million dollars is money we can use. And so... Sergio and the revenue department have started a systematic method of calling delinquent accounts and getting collections. And we're starting to see some real money coming in. A lot of people, all you gotta do is call them and let them know that they're delinquent and please come in and let's talk about it. And they can either come in and pay or they can come in and we'll work out a plan. for them to pay it over a period of time if it's, you know, if it's unaffordable for them to pay it all off at once. And we're probably going to still be getting those calls for the rest of the year, Mayor, but believe me, we're on the way to normalcy.

Yeah, but it's not much, you know, well, the cost of delinquency has been the cost of our, you know,

Not entirely. Not entirely.

Because they come here, they say, I was getting $90, now I got $200. And why is that coming in? Well, three months ago, four months ago, we didn't charge you. But there's no proof. We're not giving them any proof.

Readings or nothing, you know, just, you know, we've had that conversation many times and they've been working on a system. Almost all of the customers who come in and sit down with the revenue department people. leave satisfied with whatever the outcome is. So, you know, and I apologize that sometimes it requires a trip in here to talk with our people to straighten everything out, but I would rather ask them to straighten it out than to continue for the problem to persist at least at this level.

So we're working on it. There's people that, you know, elderly and stuff like that. I get it. Can somebody serve them on the phone?

Yes, the answer is yes, but a lot of times it takes sitting down with a piece of paper and looking at a spreadsheet to do that. And so sometimes that's a better option. Now, house calls, I mean, if someone's elderly and handicapped, it wouldn't be out of the question for us to visit them.

Okay. Okay. Go ahead, Ms. Perrault.

I think this is for said Hill. Or yeah, are the health insurance premiums affecting being affected with this tentative budget?

No, not at all. It's the same cost that it was last year. So there's no changes in the health insurance. The only thing that we might be considering changing is the way that we deduct. And that is, we normally tend to deduct every pay period. And we're looking into going into to pay periods per month. That way, instead of 26 deductions the whole year, you get 24 deductions, but that way we collect the full month of the insurance. Because when we're doing the 26-month pay period, we don't deduct from the employees the full amount until we get the three pay periods. Like for instance, this month we're going to get three paychecks. That kind of covers whatever wasn't collected prior. And by having that, it actually helps because when an employee leaves, at least that month when they left, the full month is already paid off from the previous month.

Going back to our water rate discussion. You know, that 25%, uh, mayor and council is only showing our commitment to pay back those 1.3Million. Next year, I imagine during this time, we're gonna have to make another decision as far as how much we're gonna raise the rate, but this 25%, we can't take this hit anymore. I mean, Mr. Bakken, what other projects did Eric ask for? Did he have additional few projects like the water tank, the one that scoured away in the bottom that needs to be fixed immediately? That itself right there is 9-1-1. If we lose that tank, that water tank, we're going to be in a hole 15 million. So we need money. We need to approve this rate increase to start getting funding for that study, the engineering study for that water tank and the other three projects you told us towards the end. Can you remind us what those were?

I think it would be appropriate, Mr. Stewart, to give like a 30-second explanation. I know that's hard because it's really not a budget item per se, but it is impacting the budget.

The one of the biggest items was the consulting fee for the redesign of the slope. Excuse me 1 of the large cups. 1 of the largest fees was the redesign of the slope and the other 1 was a. For 3 to 2 different wells that had a deficiency of, um. Um, they, they didn't, um, they exceeded the, um. arsenic requirements. We needed media for those two. So that was to meet.

And a question for Mr. that we have them up.

Go ahead. Is that like a sediment or whatever the arsenic?

It's arsenic. Yeah. So it's a media that, uh, it's very expensive that comes from out of state. And, um, it's specific for the method that we use to remove the arsenic from the water.

And, uh, is that is that customary that that happened?

It is customary. Well, so, uh, over time, has lowered the, the, uh, the maximum limits of arsenic. And so when they reduced it last, we had 3 wells that bumped up against that. Limit and so we've been systematically going through and. introducing this media so we can extract that arsenic.

When was the last time they did that?

I couldn't tell you.

I'm sorry. Well, thank you. Okay.

Thank you, sir. So any other changes? With that said, I wanted Ms. Montiel so she could be on the vote so we can continue.

steve

In general, Mr pocket, uh. On all departments, uh, do we have any questions or anything, uh. As far as us, the. Reducing them or increasing budgets or needs.

Uh, not not from staff's perspective. Um, we've pretty much beaten this thing to death over the last couple of months and, um. You know, within the constraints we have, we've done the best we can to bring a budget that serves the people.

Okay, we're just waiting to make the point about this.

Go ahead.

Curious about the treatment of the. For the next round when. Were we going to vote right now for the rate? Hi. Okay. Okay. Uh, so basically what I'd like to know for the final budget is, uh. On on that, uh, or when when the discussion comes about the right, like, actually. Uh, if we could get a little more information on on that, when was the last time and how often do we have to treat. And the expense, because if it comes into play that it's something that's needed on a yearly basis or something, you know, uh, well, we need to know because. because we got to consider the safety of our residents, you know, that there's no contamination of any kind in any of the wells. So I'd like to have a little more information on that in the near future.

Well, as time goes on, first of all, I think everyone understands that arsenic is naturally occurring in the earth. And when we pump water out of the earth, depending on the level of arsenic that's in that basin, some of that gets pumped out along with the water. Over time, the EPA and ADQ have determined at different times what a safe level of arsenic is in the water that the cities pump for distribution to their users. And what Mr. Stewart was explaining a moment ago was that what's happening right now is that the allowable level of arsenic in our water has been determined to need to be lower by ADEQ. And the filtration systems that we are now buying are in response to that new standard for arsenic levels in the water. Please keep in mind that over time you're going to start to see more ADEQ and EPA changes in levels of different types of chemicals that occur in the water either naturally or as byproducts. For instance, another big deal right now is a group of chemicals that's kind of generically known as PFAS, P-F-A-S. And I think you've heard about that already. Not all of those standards have been put in place yet. but it's likely that when those go into effect and they usually give the municipalities a period of time to react to their changes in their standards, we will have to react to those by changing our water filtration system to deal with those new standards. So this is a process that is gonna probably continue and probably more frequently rather than less frequently than what you've seen in the past because of the sensitivity to the types of chemicals that are getting into the water system by various means.

Maybe you should have that item on the next agenda.

Which one?

1, the water safety.

Um, okay now, uh, do you want you want to talk specifically about arsenic?

Oh, the next meeting? Yes.

Okay. Okay. Uh, we'll put that on the next agenda. Mr. Clark and Eric will be ready to present.

What did you have?

Just before we approve, I just have a couple of questions. Mr. first of all, thank you for for putting this tentative budget together along with your directors. I understand. I guess it's a question you met with your directors. They had an opportunity to to. Have input and share what their concerns are and so forth. Right? Okay. Then after you've had an opportunity to get to know the city, and it's especially its finances, which is the economic machine of the city. What's your opinion on. What we are about to approve the tentative budget. Do you think that it was wearing good standing or not in good standing aside from the utility account? Of course, you've recommended we increase it by 25%. But in terms of just the budget, the meat itself, give me your opinion on its state of the budget.

I think this is a cautionary tale. OK, quite frankly, I don't know that in the past year or two that you've been giving as much information as you could have been given and pointing the finger at absolutely no one and probably absolutely everyone, because it takes all of us to get to that point. You know, I think one of a very basic. part of any budget and the first thing you should be looking at and the first thing staff should be looking at when we cobble together is the term i like to use a budget an annual budget is How much are you planning? How much are you wanting to spend? How much are you needing to spend versus wanting to spend versus the amount of the available revenues that you have to spend on them? Okay. Now, as we've been discussing over the last couple of weeks, there's been a couple of fiscal years here where um you know we've actually approved spending in excess of our revenues and while there's always justification for that under certain circumstances it shouldn't become common it shouldn't become structural and my fear is that it has become structural and because of what you've approved this year, this actually sets your expectation for starting the next one and the one after that. So we're basically saying this is okay, but I want you to leave this process by thinking, well, this is okay, but... And that but is in capital letters, but we have to change what we're doing or eventually you're gonna find yourself without that general fund reserve money that you currently have. And now I don't think you're gonna spend all $14.7 million, okay? But I think you're gonna spend 10. and tends a lot and so uh you know uh and and you know and the last thing i want to do is recommend hiring any more employees okay you've got a lot of employees um but what i think you should do is i think you should start a process institute a process probably starts in the finance office of systematically looking over the next couple of years how you can restructure your financial house if you will so that when we sit down on days like today to approve a tentative budget the gap between revenues and and expenditures is minimal okay because i mean Technically, we can call this a balanced budget, but what are we balancing it with? We're balancing it with money that we already have. So that means we're not going to have it a year from now. And so, you know, and I've directed Sergio to, that's not, those two numbers aren't in this budget. And those two numbers are gonna be in next year's budget. You're gonna start out, staff is gonna start out once they get their budget requests into the finance office and we put them all in the spreadsheet, we're gonna know instantaneously how much we've got to change that budget to get close to balanced without the use of reserves. And I'm not advocating that you never use reserves. In fact, I've fought that a couple of times. in the course of my career. And then sometimes you have money in reserve specifically for a specific project. For instance, a couple of years ago, I had $2 million in my budget that were going to rebuilding the city hall that got burned down. So the reserve took a big hit that that that year, but it's because two million dollars from the insurance company were put in it six years before that. So that kind of thing is OK. And we need that flexibility. We also need to keep in mind that the auditors are always going to want. to see somewhere between three and six months of reserve in your general fund, just in case some form of catastrophe visits Nogales. And God help us if that does, but we want to be ready. And of course, that catch of money, if you will, is a policy matter that you need to determine how much that's going to be. and uh so so there's that consideration uh at the same time and but most of all um the health of your three uh utility funds uh you know one of course is dire uh the other two are are not healthy um but still Sewer and sanitation. Okay. I think we've made some recommendations on sanitation. Uh, 1 of which is to go out and see if you can do better with a contractor than what you're. Doing yourselves, um, and, uh, and that's something that, uh, public works should. Uh, undertake, uh, right away, uh, in the new fiscal year. And, uh, cause that if if it turns out that you can save. You can't save anything. You can spend less money by contracting the service out. And plus, if in public works opinion, that it can remain a viable way to do your sanitation work, which by that, I mean, have competition. You'll always want at least two waste haulers in town to fight for your business. because there are parts of the world, and I lived in one of them, where the giant in the industry basically put everybody else out of business in that area, and so you only had one contractor to bid for your garbage hauling, and that ended up, well, as you know, competition brings prices down, and no competition sends prices up. So those are things that Quite frankly, and I think after all this discussion now, I think we all understand that no budget is just one year. This is not so much adding up and subtracting numbers as it is a work plan. And your work plan needs to be well thought out and you need to look ahead. as much as possible.

I can also say, go ahead. Yeah, and I'm looking, Mr., someone sent me, which I was kind of shocked, you know, our expenses are increasing every year, but yet the population, you know, and that's all based on, go back to our budgets, it's increasing, our expenditures are increasing, but yet the population of Nogales is decreasing. by you know 1.4 so you know we're spending more but yet people are moving out of nogales so it's kind of concerning and and just so that you'll know it's um i'm kind of a little worried because you know for years and years it was always and it's all public record you know the the we some of us here on the dais would ask is is the is the budget healthy is the budget looking um you know sensible or whatever have you and of course like you say the revenue matches the expenses but it's it's not that easy there's more to it right right um but the same rhetoric would be as if you remember the budget's very healthy it looks very healthy it looks very healthy repeatedly um and of course we we should you know we should have been more um cognizant of it and looked into the the details and meat of it um so i appreciate the fact that you you know that you enlighten us with the fact that you know we need to make some serious decisions and less spending and be more frugal about about what expenditures we make and most of the expenditures are like i said personnel and you just alluded to you brought that up most of them the monies go to personnel a lot of you know 33 million So thank you. I appreciate what you said.

I appreciate that. And, you know, one thing that just a suggestion looking forward, the community development department has been over time. more focused on dealing with planning and zoning than they have on planning on the future of the community. And And quite frankly, one of the things that's the hardest to come to grips with is if your community is shrinking in terms of size, and while that shrinking may be occurring, how does that impact your sources of revenue? And at the same time, and, you know, we talk about you know, population, but we also talk about tourism. We talk about the normal migration that takes place primarily between here in Nogales, Sonora, or here in Rio Rico, because we still provide things that people need that can't be gotten in those other two places. And how can we, you know, get more out of that over a period of time? And so what you don't have in community development is you don't have a community planner. We can deal with new buildings and new businesses and that sort of thing. We've got that expertise. But what we don't have here is we don't have someone who spends all of their time answering those kind of questions, Ms. Montiel, that you're asking right now. And that can be enormously helpful over the long term. But unfortunately, most small communities resist doing that because they just look at it as another employee. But I think what could be very useful here, and it doesn't have to be a, quote, planner planner. OK, it just has to be someone who is experienced and adept. at seeing what we have and where we're going and how we're gonna get there. And usually that falls within the process of community development. So, I mean, that would be one specific recommendation I would make on that. And there's people out there. And I know a couple of people who do it for smaller communities, smaller than ours, and do it fairly successfully.

Thank you. With that said, any more questions? All in favor of passing the 10F budget as is? All in favor?

Aye.

All right. All opposed? Motion passes to pass the tender budget. Thank you. Thank you. Any other comments? Move to adjourn this meeting. All in favor? Aye. Opposed? Meeting adjourned. Thank you.