City Council - Special Meeting

Okay. So, we'll see if there's any public comment at this time. If there's public comment, please step forward and be u mindful the rules of the chamber is three minutes. Just state your name and jurisdiction of um residents. Any public comment here this evening? Seeing none, we'll move forward. The next item, please. The next item is under the special meeting agenda, budget ordinance review. Thank you. Uh manager Robinson, on the item we're here for tonight.

Yes, your honor. We're here for the uh budget ordinance review. And as all you council member knows is we do start the budget process after the first of the year. And usually how that process works is that all of the city directors put together their own department's budget and uh they submit those budgets with all their their requests. their request goes in and director cell looks through and adds those requests on a document on Excel sheet and compares it with what was projected from last year. And as we go through he he marks ones that he may not know what it is or we may not know what what the specifics are for the the particular ask. And then we take the time and we sit down, he and I sit down with every single director and go through line items through through their budget on what their requests are. And as we go through that those requests then um then after that uh director cell and I sit down and we look at the different items and as we're required by the state law we have to have a balance balanced budget and we decide what items of importance from our directors with the direction of the goals and objectives from from city council on what needs to be accomplished and we select those items to go forth into the budget. And then this that's what's in the proposed budget for you this evening. And I'd like to introduce Director Cell, who is really the the genius behind all the work that figures out all those numbers. And it's it's pretty amazing.

Well, thank you. And I guess just as a followup, Mr. Seller, manager, um obviously we have a um a time frame which we must adopt the budget, which is by the end of April. Is that correct? That is correct. Yes. Well, very good. Yes. I mean, really what the ordinance calls for or the charter calls for is that the city manager has to present a budget by April 1st, and that's what we're here doing tonight. We're presenting that budget and then um you, as you said, we have to adopt it by the end of April. Very good. All right, Mr. Cell.

All right. Well, this is kind of our agenda for tonight. And uh Dave just gave his introduction and I've got uh some of the main items uh from an overall budget standpoint. um focusing pretty heavily on the general fund, but I'll also cover some of the more uh interesting, I guess, non-general fund budgets. And then, uh we have Patrick Lewis here. Uh although I do understand he may be delegating this a little bit, but he's here for the water and wastewater budgets. And then we'll have some time for questions and discussion at the end. Okay. So, I gave you uh I emailed you all late this afternoon, but I gave you one of the documents that was in your email, and it has included in it has the budget ordinance, and when we get to the end of this whole process, we put through a big budget document that's around 200 pages long, and it has kind of the front end of that budget document in it that refers to the general fund reports that are in there. So, so there's some reports on different ways of looking at the revenue in the general fund and also the expenditures in the general fund. Um, the one thing I wanted to point out as far as the budget ordinance, um, if you looked at the one that was sent out with the original agenda packet, I did make one change this afternoon. Um, it's in section 15. In the very last sentence there, we were talking this afternoon and this this ordinance in the fee section does change the system development fees for the water system. Um and we were talking well that about the fact that those fees are also in another ordinance of the city. So this we added to the end of that section the water system development fee table in ordinance section 699-7D is approved to be amended to the figures listed in exhibit one of this ordinance. This being the budget ordinance. So other than that it's the same thing that was sent out originally if you had seen

that. The ordinance um is primarily the same as last year. Uh there is one section in there that approves uh the closure of the ARPA fund because we're now at the end of that and we'll talk a little bit more about that at the end. So that's really the only new section in the budget ordinance compared to last year. And then it's got two exhibit one dealing with fees. Um those are primarily the only fees that are really changing there are the water and wastewater fees. Everything else is pretty much the same. And then the last exhibit is the U wage schedule or salary schedule for non-UN employees that would be approved with the ordinance. Uh from there, you just have some general fund reports which are there for your review, but we're going to look a lot at the general fund as we go through here tonight. So, I'm not going to touch on those right now. Um but as Dave mentioned, we've been looking at this budget for a couple months now and we talked about the schedule for adoption. So, I think we've been through that. um you know we still have some uncertainties out there in terms of future taxable value. Um state revenue sharing this year at the last at this time last year we were projecting an increase in revenue sharing and it turned out at the end we didn't get that because of the way the state budget was passed. Um right now it's even looking worse this year for state revenue sharing. So but again that budget is probably a long ways from being done. So that's a little bit uncertain. Um, our medical and prescription costs seem to be rising somewhat. Um, we'll talk about that a little bit further on. And our pension contributions uh continue to see big increases. Talk about that a little bit more. And then we also have uh union agreements or collective bargaining agreements coming up for police and fire unions this this year. So those uh will affect the budget in the future as well. Um, this slide is actually one that I pulled from Plantaran's presentation uh that they do with the annual audit

report presentation each year. And just looking across the top line, you can see that revenues are kind of flat in the general fund from year to year. But if you look at the very bottom line, you see the property tax line, and you see that that that by far is the biggest portion of general fund revenues, and it's also very flat. So, I I point that out because it's it's it goes right along with budgeting and it's difficult to put in new things or budget for big increases when your primary revenue source is pretty much flat at this point. Although this year we did have a good year. So, um, but that's just something to keep in mind as you what your ultimate job is is to prioritize spending and, um, you know, we we go through capital budgets, we go through this budget and we never are able to approve everything that's requested. So, priorit prioritization is the key for sure. So, some highlights here, as I mentioned, taxable value, we had a pretty good year. Uh last year, as you know, we do a five-year budget projection. And as we were projecting this year, for last year, we were projecting a 2.7% increase because that's about where uh the consumer price index that's used for increasing taxable values was running at the time. Um it turns out that our actual increase this year was for ad valorum properties was 4.55% but in total 4.53%. So that was a it's pretty good increase for us. Um especially compared to where we were projected. Uh the total equivalent taxable value is 1.073 billion this year. Um DTE settlement was extended one year as you know um kind of talked about this last one. Currently the CPI at this point that's used for measuring taxable value from year to year is running at about 2.55%.

So while the um property tax value for this upcoming year is known, we have to estimate what it's going to be in the future years and it's usually based on that percentage. So future years are projected at 2.5%. But also because we're holding the DTE taxable value flat, which is about a third of our taxable value, that holds down pulls that 2.5% down even further, which ends up being about a 1.75% increase in taxable value each of those years. So, not much of an increase from year to year. Um, the property tax revenue though because of that 4.55% increase higher than we projected is about 322,000 higher than what was projected at this time last year. So, that's that's a good thing. Um, personal property tax reimbursement revenue is higher by 885,000. If you remember the story with personal property tax reimbursements, the state basically stopped taxing personal property and reimbures the city for it. And we get it in two chunks of payments. Our first payment in the fall is if is 100% reimbursement. They pay make us a payment to make us whole. But if there's additional pot money in the pot of of money, we get an additional payment in May of each year. And we've been using historically that extra amount of money to pay for capital projects. We haven't rolled it into operations in any way, shape or form. Uh but but because of some inflationary increases higher than what our revenue was going up, we are having now to start using that money for operating purposes. Um so while it's higher by 885,000, uh not as much of that is being used for capital uh projects that have been that's been able to been used in the past. um state revenue sharing was reduced by se 176,000 compared to prior year projection as I mentioned last year at

this time we were actually projecting an increase and uh we didn't get it and then um actually actually ended up see receiving sort of a decrease last year compared to where we were budgeted. So that's the amount that's at this time last year we would have been projecting is is the difference. Um, but it's also down from 61,000 in the current year. And that's based on the governor's budget projection. So, um, could be better than that. It could be worse than that by the time the state budget comes out. But that's where we're at right now. Uh, investment income is reduced by 25,000. That's really just based on interest rates. um you know with with the what's going on in the world these days and what might be happening with inflation uh rates could possibly go up but it's not likely in the short term I think they're expected to stay pretty flat for a while um so it's just we had been projecting at 4% uh return in the past and now we're down to about three and a half% and that's the difference there. Uh if you remember back in January when we amended the general fund budget, we implemented some administrative fees for through the the road funds. Um we did receive some additional road funding and in order to sort of balance out that reduction in revenue sharing funding. We were able to use some of that to charge the road funds for their administrative costs. We do that for we've been doing that for years for the water and wastewater funds and we do it for a few three four other funds as well. Um so that's the amount that uh it calculated to this year and we use the same methodology the same uh calculation method that we do for all the other funds as well. Um, so as Dave mentioned, we went through the budget process, all departments request, made their budget requests and um, and I do the revenue

estimate for the general fund and based on those initial requests, revenue was less than expenditures by that $328,000 number that you see there. U, basically meaning we needed to make some adjustments to get the budget in balance by that amount. Um, also as Dave mentioned, I do go through the budget at that point and I compare those initial requests to what we were projecting last year to kind of find out where the increases or the differences are. Um, but then we go through and just to see where we're at and is to take new things out or things that aren't explained and things like that. So based on doing all of those changes, we actually were um able to put about 250,000 back in the budget that had been taken out at that point to get to a balanced budget. Um on top of that, the the uh assessor did report taxable values that were better than what she had previously reported. So that helped as well. So that all those things together helped to get to the balanced budget. But we'll go through some of the new things that are in the budget here in a little bit. Uh there is a about a I guess the two things there. $157,000 increase in wages, $253,000 increase in personnel costs. Those are the wages are primarily based on the new wage skills that were put in place last summer. So that's the reason for those. Uh that's also part of the reason for the personnel costs, but increased pension costs are also the reason for that as well. a little bit higher than what we had previously or estimated last year. Uh but fund balances are doing well. Uh the pension systems funded at about 87%. You all know about the retirey health care system overfunding and but franchise fees do continue to decline. Um we used to be at over $250,000 that we received every year. Now we're I

think we're around 190,000. So um those have declined pretty drastically. Um, this is kind of like EDS. If we had a perfect budget world, these things wouldn't be in place right here. So, um, um, the budget is balanced. We do have future projections that we'll look at that don't look too bad, but um, the uncertainty of our future of our taxable value is something that's hard to deal with because it's hard to plan for the future if you don't know what your revenue is going to be. Um, we rely on investment income and the personal property t personal property tax reimbursement revenue for our operations budget more than I would prefer, but um, but I think it's a necessary thing we need to do at this point. Um, expenditure versus revenue growth is kind of the same thing. In place, you know, our costs are are in a lot of places are going up more than what our revenue is going up. So that's just something we have to constantly work look work look at. Um there's a slide later on in pension cost increase. So that those costs have the potential to go up drastically in future years. And then if we if we everything was perfect, we would have be able to fund a lot more capital projects. Um we fund what we can based on what our current budget is, but there's a lot more out there that could be funded if we had more funding for them. So, these are some of the um new things or changes to the budget compared to either the projection that was done last year or or just to last year's budget. But, uh there's $8,500 in there for the the semiquincentennial celebration funding that's primarily in the communications budget for some different uh things that they're planning to buy to celebrate that. uh celebrate that semi I'm going to say it many times here semiquincentennial. Uh the cons we do have 50,000 budgeted

in case we need a consultant for the property taxes uh issue that we may be dealing with with our largest taxpayer next year. Uh there's some additional money and in part-time wages for the HR department for uh for some uh uh managing their electronic records and basically getting them in shape more or less. Um, we do have, and this one is compared to last year's projection, we do have 37,000 in engineering for an intern or inspection project inspector. Um, that mostly is charged to the water fund because they're out in uh inspecting water projects, but it is something that was different than last year. And then in the public safety area, we do have uh the potential, it's budgeted. Uh the agreement isn't in place yet, but the budget is in place. If it does happen for the addition of a school resource officer at another school, it would be half-time funded. So it would be halftime paid by the school, halftime paid by the city. Um in the fire department, they're converting some of the vehicles that had been owned by the fire department to rent vehicles rented through the stores or the equipment motorpool fund here at the city. So that was just a a change in the way those are funded. Um, and then under the in looking at all the general contract services lining them across the city, there was some um large larger increases. So, I thought I'd point those out. There's money in there for a master plan update about $120,000. There's uh some money in there so that for a custodial service for the DPS building. And then there's some red funding again for red ball drills that have been done in the past. street light lighting is actually decreasing by about 24,000. Um, in the HDC budget, there's uh funding for a historic resource survey. Uh, we did put about 12,000 in the budget. It's kind of a one-time budget because of the uh expected construction that's going to go on at

St. Mary's Park this summer. So, there's 12,000 in there for uh Portage John's basically for the summer because the uh regular restroom is expected to be closed. Um, and then you've I don't know if you've seen these or not yet, but there's you're going to be presented with new leases related to the the Navar Library and ALCC, the new new building down there. Under those leases, the city would begin paying the uh uh utilities, gas, water, electric for those for the building. Um the way those are budgeted now uh there's some slides that show them in the future here is that we actually for ALCC just still pay the same total amount but but pay the utilities directly on our uh on our from the city now instead of through MCOP. uh the library there is a small increase there because we do get quarterly reports from the library now and what they're spending in those buildings and we have been paying less than what they've been spending uh for about a year now. And then this is not brand new but it's different than last year's projection. We do have 20,000 in the budget for building maintenance for the Battlefield Visitor Center. That uh was something new that was in the newer leases. So that that's that was amended into this year's budget, but it's it's different than last year's projection. From a personnel standpoint, we're pretty flat. The only real addition is the addition of that school resource officer and then there's some adjustment of part-time employees to kind of help uh fund that and other things in the public safety area. But as far as um wages, they're uh budgeted per the bargaining agreements that are in place and the public safety unions again are up for bargaining this year. Uh then there is the non-UN wage schedule that's in the uh at the back of the budget ordinance and that calls for a 2%

increase across the board in that schedule. Okay. Okay, so now we're into some of the numbers here. And uh this is general fund revenues. And the way this works is you've got the first column is this current year's amended budget. That's as the budget stands right now. And then the second column is what you're being asked to amend this year's budget to. And then the third column is what you're being requested to adopt as far as next year's budget. And then the last four columns are projections for the for four additional years for the general fund. So the first large area of revenue there is the property tax revenue and as that yellow highlighted area there shows you the percentage increases from year to year. Um those are as I talked about earlier when we were talking about the property tax increases. Uh the next highlighted area I wanted to point out is the state shared revenue. There's a lot of things in there. It's not just state revenue sharing. So like the DNR trust fund grant and some other smaller grants are in there and the city's um rightaway fees we receive from the state are in there. So there's a lot of small things, but if you look down at the bottom, the two big things that make up that are the PPT reimbursement, which is that first line that's broken out at the bottom, and then the state revenue sharing from the sales tax that's broken out at the bottom. And you can see that this year we're for for uh PPT we're at about 1.6 million and then next year about 1.69 million. I'll tell you last year we did receive about 1.7 million. It's I just know we never know until May exactly what we're going to get. So it's always a rough estimate. But in the future years it's gone down. The only reason it's gone down is because we haven't budgeted any of the money yet for capital purposes. We would

do that in those years when we know that what that capital amount would be. So it will absolutely be based on current based on current trends be more than that in the future years. We just haven't rolled in the capital yet. Uh but the bottom line is is uh state shared revenue sales tax and uh the amended budget and the projected budget are based on the consensus revenue sharing estimate that was done the most recent one. I don't recall when it was done now, as a matter of fact, but um next year's budget is based on the governor's recommendation. Um when we started out last year's budget, we were at 2.65 million and we would have increased that by 2% for this year's budget. So that's when I was talking about the reduction last year, it's based off that projection from last year down to 2.5 uh 27 million is how we got there. uh in the other revenue section. I just pointed that out because the administrative fees for the road funds are road and street funds are are are in there that line item and that's that's the reason you see a bit of an increase there. And then investment income you can see that is declining a bit although I haven't taken it down anymore in future years um but that is the decline that's estimated at this point. So total revenue for next year is 24.188136 million. This next slide is one we look at just to break out where the big revenue categories are. So that you know if you were thinking you wanted to increase the budget, these are the the big revenue sources that are out there and many of them are next to impossible to increase unfortunately. So, um, basically you've got property taxes, personal property tax reimbursement, and property tax

admin admin fee, and then state revenue sharing. Those are the uh big four that make up a large portion of the general fund revenue. That's probably about 80% or so of general fund revenue. Then you add in some of those other things like investment income and franchise fees and administrative fees and uh the DNR trust fund grant um gets you to about $22 million for this year. That's 95 about 95% of revenues and about again about 95% again next year. So it just shows you the categories that are out there and um how it would be difficult to increase revenues without some other source out there. Uh this is just showing you where the changes are in the millage rates for next year. Proposed millage rates. Everything's the same except for the economic development mill and the refu millillage. The economic development uh millillage is only allowed by law to generate $50,000. So that one always goes down as taxable value goes up. Um the refuse millillage is based on the funding in the fund. And we're going to have a slide here later. Um, I basically set that one so that revenues pretty much equal expenditures for next year in the refuge fund, but that is one based on the funded status of that fund that potentially could go down this year or next year. Um, so those two are the only changes for a reduction of 0.0548 mills. Uh, down at the bottom, it does say that LA wants to remain at the maximum amount of that can be levied. So they're at 0.9985 mills. So now we'll look at general fund expenditures a little bit. And this is a very summarized version of the of the general fund. This is basically the same the columns mean the same as the other slide. The projected is what this year's budget was being requested to be amended

to. Um I've got slides coming up that breaks out these uh big functions into departments. So we can look at that a little more detailed there. But the economic development community development budget, you can see a decline there. That's primarily because of that contract service for the master plan update. So it's a one-year thing and then the contract services reduces after that hopefully. But you know things come up from year to year. So um culture and recreation another plan there the master plan update for recreation is in the 2728 projection. Um you can see that in for interest on long-term debt, there's some uh installment purchase agreements that fall off in the last couple years here there. So that's why those are going down. And then other financing sources, those are just a starting point for what we fund for capital in the future from the general fund. But expenditures there again projected for next year is the same as what I said for revenues 24,18136. And this slide is just a FYI, but it breaks those numbers out graphically and you can see the the big gray one in the middle middle is public safety um and what the other colors there are. So this then I've got some slides that break that out by department. So if you were to look back at the the other slide and see what was in general government, all these departments are what make up general government. Um you've got communications and culture. That's where the $8,500 is for the semiquincentennial uh cost. Elections, you can see it goes up and down. That's based on the type of elections that are occurring in each of those years. Some some elections are more expensive than others. Um the attorney's office, that's where we budget the $50,000 for potential um property tax appeal consulting of some sort. And then the very lot bottom

line, one of the things we I do as I go out through this budget is is kind of look to make sure that not every department is building a lot of contingency into their budget because we budget contingency separate from all the other departments. So on top of all the other department budget, there's a $100,000 contingency budget that we can draw on for unknown things or things that come up throughout the year. So that's general government. This next section is the public safety function. Uh the biggest budgets there are police and fire of course uh but also where it says public safety division that's actually should probably say public safety administration. Uh those are the three three main budget there but you also have police train which is state funded. You have parking enforcement. You have liquor law enforcement which is also state funded. And then zoning and code code ordinance enforcement are also considered public safety activities funded out of the general fund. So they're in that section as well. Uh then you've got the public works area primarily primary budget there is the DPS general operations but you've also got parking maintenance, forestry, the cemetery and then the amount that we appropriate to the port of Monroe each year at $400,000 is also in that section. Uh I have two two uh this is kind of recreation and culture when it comes to talking about functions. So you've got community and economic development listed here and also parks and recreation listed here. The top section being uh community or economic and community development. Um again that top part is just related to the the top line that's highlighted there again is related to that contract services we talked about and the HDC is the the survey that I talked about previously. Uh down in the uh uh parks and recreation area. I guess they're more culture type things if in the accounting world, but the library is listed there.

You can see this year we had 65,000 there. That's what we've been funding for the library for quite a few years now. But as I mentioned, their um costs they report to us have been higher than that. So we're keep right now what's budgeted there is to keep paying them the 65,000 but also to pick up an estimate for the uh utilities at the library there. And the opportunity center at the ALCC is also still the same, although as I mentioned, split now where we're picking up the utilities and probably paying less to MCOP. Uh, okay. So, that's that section. Um, and then this slide talks about again does what we talked about earlier with revenue. It just kind of shows you what the biggest categories of expenditures are in the general fund. So that if you were thinking, oh, we need to reduce expenditures somewhere. These are the biggest areas out there that you'd want to look at to be able to do that. The very top line there shows you that personnel is about 60% of the general fund expenditure budget, but then you've got a lot of those other categories in there that are around 16%. Um, and it just kind of shows you, okay, what what is really being paid for and and if you really wanted to reduce cost somewhere, would you be able to do it in some of these categories is is the reason this slide exists and to be able to think about those type of things. So those those costs amount to about 90% of the general fund budget. Um, so this slide I just wanted to report on where we're at with pension contributions. The the pension system is has been um the contributions to this pension system been going up two to300,000 $300,000 each year for a little while

now. Um there was a some a large loss that uh happened I want to say 3 to four years ago that is being rolled into that system over a seven-year period. And so unless the system earns a significantly greater amount than 7% in its investments, our contributions uh are going to continue to go up there. Um this year it went up 11%. So that's that's a little bit better. Um and so that's the type of thing we would hope for in the future so that these numbers don't come true. But basically what's projected in this budget for the next uh couple years is about 10% increases. And and I get those numbers the the 26 27 budget are actually are the actual numbers that the that the actuary calculated but 27 28 through the end are just estimated numbers. Um and as you can see next year it's up 10%. Um, but I do get an estimate from the actuary each year of what those amounts look like into the future. And um, they're if things come out the way they're projecting, you know, actuaries do all their things based on assumptions. If all the if everything came out based on their assumptions, these numbers would easily be something that we would have to fund. So, uh, hoping for better, but um, the only one that we're really tied to right now is next year 26 27. in in the future. We'll have to see how those uh calculations come out from the actuary. But uh basically we're at about uh 2.355 million, excuse me, 2.388 million for next year with about 1.7 million of that being from the general fund and the rest coming from those other funds that are listed there. Mostly water and waste water. There we go.

All right. So, this kind of brings it all together. Uh the the top line there is the revenue slide we looked at. The second line are the expenditure slide we looked at and the third line is the difference between those two. So, you can see this year the 20 the first column is this year's budget and it shows that we're spending 446,000 more than uh our revenue is this year. Those are all things that were carried in from previous year's budget. If you're interested in what those were, I did I think I did report on them in January when we did the general fund budget amendment. Um, but if you're interested in a list of those, I can happily provide it. I don't have it with me here tonight. Uh, but next year's budget is is a zero flat. Uh, revenues equal expenditures. 2728 actually has a small surplus of about $33,000. And then the last three years are projected with uh small deficits of aroundund anywhere from a 164 to 211 million which um is not a problem at this point. It's something it's the reason we do the projection to kind of see how things would go based under c certain scenarios. So um so that's what it's there for is planning for the future basically. But the next line there prior year over under is is the amounts that we were projecting last year. So um what it means is for the 2627 projection that we did last year, we were projecting expenditures greater than revenue above of 182,000. So we did balance that budget and you see the amounts for future years there. Um so that that's kind of the process we go through and something we'd be looking at for future years as well. And then the fund balance in total is those next two lines. So just I'll just focus on 26 27 the second column there. It shows that we would estim we would be estimated to end the year with a total

fund balance of about $5.7 million. So that's 23.6% of expenditures which is a good number. But that second in that se section at the bottom where all the percentages are listed when you subtract out the non-spendable fund balance which is the the amount of money we've invested in in either land or buildings um if which is non-spendable. That's why it says non-spendable. It's not cash you can spend until you till you actually sell the property. Um our fund balance goes down to 19%. Also included in that fund balance is money that was closed from the cemetery fund when we had to close that fund, which is about a little over $400,000. If you take that out of that number, you get down to that next percentage, which is 17.28%. So, it's still a good number above our policy number of 15%. Um, but then the bottom line there, if you take that that number and add in the $2 million that we have in the city's budget stabilization fund, we're actually at 25.55% of expenditures. So, a very healthy number. Um, and you can see those percentages as they project out into the future. The last year does show that second line from the bottom getting under 15% but uh that's something to monitor and that's a five years out so nothing to really deal with at this point. So that's the general fund. I was going to get into some non-general fund budgets here before I turn it over to Patrick and his team. Any questions you had on the general fund before we before I move on?

Before we move on, is there any questions for Mr. sell uh regarding the general fund. I know it's a lot of information and a lot of numbers and we've been through these in the past. We've received it ahead of time as well. I think we're move on.

All right. At the end is fine, too. So, so the first I just want had a quick slide on the major, local, and municipal street fund. Um major and local are funded by state fund money act 51 revenue. uh but they're now getting into some other funding sources as well. And the municipal street fund is where our 2 mill uh streets and trails millillage goes for funding. So all of the CIP programs that were included in your CIP budget were are included in this funding. Uh the fund balance remains adequate in all the funds. uh that what was budgeted here MDOT put out a estimate in re in February of their of the act 51 revenues and there's a new funding fund source that was done with this new state budget called the neighborhood road fund. Um all of those are budgeted with the with MDOT's estimate that was done in February. The one caveat with that is neighborhood road fund could payments where there was a that was a big chunk of the increase could be delayed because uh that was partially based on a a marijuana wholesale tax where the state hasn't even collected a dime of that yet and there's a lawsuit against it. So uh there could be delays there because of that. Um it's also partially funded from corporate income tax and that that hasn't been paid in yet to the state either. So, um, we got a memo last week that they have to collect certain amount of money from those sources before even a dime goes into this fund. So, it's probably going to be the fall before we see any of that new money at the earliest, I would guess. Um, the underpass project with all the uh sources of funding that we've been able to generate for the match amount is fully funded within this projection. Uh it's the 2728 fiscal year that the bulk of the funding is in, but it is fully funded. And as I said, the fund balance

still looks good. The road millillage, just as an FYI, generates about $2.166 million right now. That does include a PE personal property tax PPT reimbursement of about $84,000. So the raff use fund as I mentioned is the millillage is recommended to go down to 1.932 mills next year. Uh I I did set that so that revenue would roughly be equal to expenditures next year. Um it the fund is building a goodsized fund balance though. It's it's estimated at this point to be at about $920,000 next year. It's not bad to have a good fund balance there. If there was ever a big tornado or some other kind of storm that went through that knocked down a lot of trees, we can use that funding to do cleanup of those things. But I I do think it may be getting a little bit high at this point. So, that's something to consider. Um there is a $50,000 contingency budgeted in that fund and but primarily the fund pays for garbage hauling and removal, street sweeping, storm sewer, catch bases, basin cleaning, and leaf bags. Uh some of the other funds that are out there, the DDA has an estimated fund balance at the end of this projection of about $241,000. They did purchase a building that's being improved and and so 55,000 of that is tied up of that 241,000 is tied up into that building. If that building were to sell for more than that, that would increase that fund balance. So, it's just a matter of how that works out in the end. Uh but there is a couple projects funded in fiscal year 27 for parking and also downtown kiosk. The Telegraph Road uh corridor improvement authority has estimated fund balance as of the end of the three-year

projection in 2029 of about $29,000. Um you may not remember this, but we we financed the purchase of the Duffy building through the corridor improvement authority with a loan from the general fund. And each year there's a payment due on that. But because that's a building that um is there for for either development or for sale, it sits on the corridor improvement authorities balance sheet. It it appears as though that building uh may need to be uh demolished. And if that were to happen, it whatever value that that building goes down to, which at this point I'm estimating about $150,000, that would reduce the fund balance in that fund immediately by by the reduction in the value of that building. So, um, that's something to keep an eye on. Uh there's a potential if the general fund may have to step in and help out with that funding if if that happens, but I'm my best estimate at this point is that it won't, but we'll see what happens when that happens. Just really depends on um market value estimates at that point. Uh the opioid settlement fund has again is is just gen paying for the agreements that you you've approved over the years, but the estimated fund balance at the end of this three-year projection is about $100,000. The ARPA fund was fully and the grant funds were fully spent in November of 26. Uh so that fund is done and there's about a little over $19,000 in investment income that uh needs to be moved somewhere. So I have that budgeted to just move it into the capital projects fund for funding future capital

projects. The airport fund uh as you know had a goodiz payment back to the state this year. So its fund balance is lower than it has been but at the end of the three-year projection it's about $29,000. Uh there's a state I mentioned the state payback helped reduce that. But uh there also uh is a budget there for replacing a number of the doors at the hangers out there. So that's a cost that uh I think that's was in there about 40 45,000 40 or 45,000. So that helps to reduce it as well. The motorpool fund had a a loader included in the CIP, but because of the cash flow status of the motorpool fund, it's in this budget to be financed. So, when we get to the point of purchasing that, we'll want to go through an installment purchase agreement process, probably finance it over 10 years through a bank. So, that's just something to look out when that does come up in the future. And then the employee benefits fund is is called what's called an internal service fund of the city. So each department that has employees pays an amount into that fund for medical insurance and life insurance and workers compensation insurance. All the basically benefit insuranceances go into that fund and then that fund pays the actual premiums to whoever the insurer is whether it be Blue Cross Blue Shield or another insurer. Um the claims the amount that we've been putting in that fund uh for many years now has been based on what the state allows us to fund for uh medical insurance and and the caps that are in place for those. In the most recent year, those payments weren't enough or or were less than what the actual cost was for those for the actual claims that were paid out. So that's something we're going to have to track over the years. that fund is still in a good position in terms of its

funded status, but if that continues into the future, that's it probably means we need to do some kind of adjustment to our medical benefits in the future. But uh but that's something to again track into the future. And then I put down refer to the budget ordinance. That budget or ordinance on pa on the I think it's the third page actually second page has a listing of all the non-general fund budgets on there. And if you had questions about any of them, I'd be happy to answer them or provide you any information you need. And lastly, I believe for me, this is the Port of Monroe's budget submitt. And essentially what you've got here is is a balanced budget with revenue equaling expenditures. That top section there is their operating revenue. They've got four different line items there uh for next year. Those amount to 925,000. And then the next section is their operating expenses which amounts to 1.355 million. Um so the operating revenue is less than operating expenses by about by $430,000. But the next section is the nonoperating revenue which uh shows the city's $400,000 and also um some other uh the estimated a capture from the bar for that that loan payment. So that $430,000 wipes out the the loss from the top section to basically make it a even budget. Uh the operating expenses does include $300,000 of depreciation which is a non-cash expense. So their cash flow is actually better than what's being shown here. And that cash is usually available then for capital projects. And then you've got two columns there projecting out for the next two years. So I'm done I believe unless you have

any questions. I'm ready to turn it over to Patrick for his introductions of his team for water and wastewater. Yeah. See if there's any questions from Mr. Cell at this time. All right. All right. Thank you, Ed. Mr. Lewis.

Well, that's a tough act to follow. He did so so well. And none of you have any questions. Uh, honorable mayor and council and uh, clerk treasurer Patrick Lewis, director of engineering and public services and interim director of water and wastewater utilities. Um, it's going to seem a little familiar to you because I'm uh gonna probably hand it over to my team here for most of the discussion here and that's uh mostly because we've got 20 years of familiarity here with the budget from Mr. Loy, our uh utilities consultant. So, um, while I certainly understand and have blessed and reviewed the content of tonight's presentation, I think it's appropriate, uh, that I did assign, uh, Mr. Loy and Mr. Leau, our assistant utility director, to do the lion share of the work here. I think it's fair that you should probably hear from hear from uh from them a bit. Um so we'll start with Mr. Loy who's going to give the bulk of the presentation, but I'll be available for other questions also. So uh with your permission, I will hand this off to our very capable team. So Mr. Loy, back to you.

All right. Good evening, Mayor and Council. Uh Barry Loy, utility consultant for the city of Monroe. Okay. Uh Jacob Leau and I worked really close together on this. Uh it's been a lot of training going on with this and um I'll refer to him for any questions or followup that I may miss. So we're going to hit wastewater first. Um wastewater was recently reorganized. We added the assistant director and the full-time equivalent for this budget is 27.1 full-time equivalent. Uh the wastewater system is regulated heavily by the NPDS permit and so that's kind of the line and share on how the whole system operates. Uh we're currently operating in a corrective action plan and we're coming off uh about nine miles of system rehab through a variety of uh projects and uh we're going in a phase now where we're going to be verifying we're hitting our targets for removal of clear water to see if we need to add more projects. And then we're also going to evaluate uh the different jurisdictions where there's capacity available because that's really how we're going to gain going forward uh capacity for future development within the system. Uh this budget is holistic. So it it includes all capital uh for our asset management plan uh debt um operating and maintenance um and working capital. Uh as I mentioned the increased capacity comes in a variety of ways. it's really popular is the footing drain disconnection program. Um, and we've also been removing uh prohibited connections and that's been through a lot of partnerships with our adjacent communities but also uh different departments and um we continue to educate customers that'll be uh ongoing for uh customers with sewer maintenance on their lines uh uh what to do with fats, oils and greases and things like that. Uh the

last bullet point is on this slide is talking about the different uh rate increases to the average customer. Uh the 5.3% is what uh is in this fiscal year budget and that's actually what we projected last year. So we're on target with that. And then it gives you a couple years look ahead on u because we use a rate model that looks 10 years ahead. Actually, this slide shows the uh last few years uh fiscal year of revenue and expenditures and the goal is always to keep the green line at or above the red line and um we are very close with this. The expense budget is about 14.5 million for wastewater this upcoming fiscal year and revenue is just under 14. That's based on a variety of factors that we'll share here in a second. Make sure I'm not missing anything here. This is the expenditure slide which shows the overall budget. Uh, and Ed is already discussed a lot of these different elements. Um, and the only thing to really add is that a lot of the reimbursement and meter fees are, uh, related to both the metropolitan system, uh, the water department, in this case, the city water department and Frenchtown water. Um, as well as reimbursement fees to the city for like it and things like that. Uh, we have some debt service increase in the budget, uh, tied in with the current state revolving fund project that's ongoing and should be done by the end of this year. uh he talked about labor and fringe benefits uh as well as we have some on and m uh issues. The expense area increases are kind of specific as I mentioned the footing drain disconnection program. Currently we have about 320 locations that are waiting to be done. Um so there's an increase in that budget that's recommended so we can get more work done

faster. Um there's labor increases in a variety of areas. There's the CBAs, but also with the reorganization. And then we have some part-time consultant assistance um as well as the the plant is operating uh under a consultant right now to uh until we can fill that full-time. Uh sludge disposal continues to be a problem. We're actually studying that right now for alternatives to reduce the overall cost. Um landfilling is becoming harder and harder to dispose of but also the hauling cost is increased. Uh our chemical cost budget has went up significantly uh primarily to meet our permit requirements. The NPDS permit um the big element that we have to remove is phosphorus from wastewater and um it it cost a lot more now to remove that and uh we're using a lot more product to knock that down. And then uh I believe Ed's touched on the pension increases. Uh the overtime increase is tied in with the CBA and uh uh the on call supervisors. Uh that increased cost is related to that. Uh the efficiencies listed are just what we utilize every day to try to keep the rates uh down as much as possible. This next slide shows the usage um going back to 2006207. Uh 2007 and 2008 fiscal year was the uh the last highest use year that we utilize as a baseline. Uh the the bump here around 2020 through 2022 is tied in with the COVID time frame and it only shows up on the wastewater one. I don't know why but um the water one is not that significant. Uh but reg regardless uh overall the system uh continues to be as like flat or slightly regressed. There are increased users. We do have uh new customers being

added but they they use less water which translates into less wastewater. Uh overall metropolitan is about twothirds of the system and is uh is down from that 2007208 banner year and then Frenchtown is down as well. they make up the difference. So with the expenses and the consumption which translates into revenue, these are the proposed rates for the next fiscal year. Uh the wastewater control board did review and uh approve these accept them. Uh we're proposing to maintain the overall reheating and bond recovery charge uh that are listed uh as well as the septic dumping rate. Um we are proposing to increase the commodity charge um as well as the uh treated effluent commodity charge and the only customer that utilizes that is the DTE fly ash facility in the port area and then the increase to these search charge rates are really for industrial customers. Um when they uh exceed our local limits uh we have to search charge them uh for those increases. So these are just keeping in line with what the plant is uh receiving so we can uh keep keep track with our our expenses. So with the proposed rate increase um how does that lie regionally? Uh we are still uh very affordable. Uh we did drop one uh one place uh we last year were number seven now we're number eight. Um, so about $482 a year for your wastewater cost, and that's based on what the average user uses, about 18 units uh a quarter. We compare that to the uh EPA uh medium household income, which is about 2.5%. Um, and we look through all the different customer bases in Monroe County. Um, so about $1,215 is what you

would normally spend uh utilizing that um means and method. We also utilize a lower income uh base as well and that's $721. Um that's a case study we we follow and uh it's still below that. Um but uh recently at the control board meeting there was a question about well how does this compare to the CPI going back well the question was 10 years but we actually went back to 1979 that time frame when CPI actually started getting tracked on a real-time basis. So we uh when I doing that research and then uh bringing it to the current cost what it would be it would be about $469. So we're about $13 off. So, we're very close to the CPI mark from where we are with our actual rates. Um, I just wanted to share that. That was kind of an interesting metric since the value of the system now is almost $60 million. I believe that is it for wastewater. Is there any questions before I jump into water?

Any questions so far for Mr. Loy this part? See none.

Okay. All right. So jumping over to portable water. Uh similar with the reorg uh we're proposing 32.1 full-time equivalent. Uh that's with adding the assistant director here recently. Uh we are regulated through Eagle as well and the water side and uh some of the bigger items on the regulatory side are dealing with the lead and galvanized lines. Uh the time frame that Eagle uh has changed it to uh to have these all removed and replaced is November 1st of 2037. Um and so we've had to increase the number per year we have to do to maintain or try to keep pace with that and then coordinating those with road projects, water main projects, things like that. So we're up to about almost uh 90 a year. Um so that's built into this budget and then also the uh PAS improvements which are coming up in 2029. Uh we currently uh there's a capital improvement to uh that uh council has already approved for uh doing some testing on our source water but also developing a project plan for a lowinterest loan. Uh we did uh we we're expecting about $4 million through the PAS settlement. So that'll help reduce that bond amount. But uh this will address the uh PAS in our water to uh make sure we're staying within compliance with the new regulations that'll be coming up uh and enforced. Also uh that technology will be able to knock down microcyin uh toxins uh microplastics and u we'll also be installing a backup river source treatment system that's UV treatment. Uh the micro system and microplastics we're expecting long term there'll be more regulations with that. So this technology should help with us staying pace with that. Uh some other items that the budget includes here for regulatory is lead and copper testing. We still have to perform that this year. Uh we're really trying

to get into the triannual testing which should knock down some of our operating cost. Also uh corrosion control. um that uh cost continues to increase, but we need to keep that uh in service to uh keep our pipes uh coated and no leeching of lead for our customers. Uh this is our last year for the upgrading of our meter reading system to the cellularbased system. Uh so we'll be starting that uh with this uh upcoming budget and again this is holistic a holistic budget uh with all expenses and revenue and about 5.2% 2% is the proposed increase uh for the average customer. Uh it's a little higher than last year due to the increases in costs in the reorg but uh and then the following two years are also shown here for reference. Uh moving on to the expenses and revenue trends, the operating budget for uh the water system is about 14.1 million. Uh on a revenue side, you know, we're still keeping pace with that and uh keeping the green line above the red, but uh overall the system is pretty pretty stable. This is a breakdown this slide of the expenses. Uh the fringes make up the increase overall biggest is the fringe fringe increase and that makes pension as well as defined contribution plan contributions, retirey healthcare, insuranceances, social security, etc. There's quite a few of them that are making up that amount in the percentage. Uh depreciation continues to increase because the value of the system continues to increase. So we uh have to keep uh keep pace with that non cash expense. Um labor and reimbursement fees. The reimbursement fees the water department pay primarily are for like it, police and fire, city hall rent, and then administrative reimbursement.

Uh the expense areas are kind of self-explanatory. Um the the chemical cost uh for water uh continue to increase. On average, they're between 5 and 10% is what our vendors are continue to tell us. So we have to plan for that accordingly uh in order to uh stay in compliance. And then uh there's some efficiencies listed there for reference on our daily operations. This uh slide shows our water consumption going back to 2005 2006. It's been a slow uh slow fade here so to speak regressive use. We do have built into the uh rate model the uh GTE plant um going to a half plant as well as a closure. Um overall about 78% of the system has reduced use. That's the three uh jurisdictions shown there. Uh, ironically, last fiscal year there was a slight increase in build usage, which is a bright spot, but um, you know, we want to make sure we're being realistic. So, we kind of plan for a a slight uh or a flat usage uh going going forward here. And then with the expenses and consumption uh as well as u all the capital cost included uh we are proposing this rate schedule here uh the uh proposing to maintain the fire charges fire line charges uh maintaining the administration and debt service read charges. Uh we're still recovering the percentages with above the minimum percentages on those. uh with the uh South Kuster booster station expansion project uh the depreciation cost is increased out there. Uh so the uh we're recommending increasing the pump search charge and that station uh primarily reduce the pressure and flow for the western communities.

Uh we are proposing to increase the system development fees. It's the first time since 2018 we've we're recommending doing that. uh the value of the system has increased and uh going through that methodology from 2005 uh we're recommending increasing it um and I'll show you the schedule here in a minute and it's primarily due to the value of the system continually increase and we're also recommending to increase the commodity charges as shown here by city residents non- city residents and then non-city residents with SER charges and then we have our wholesale customers as This slide shows the proposed uh recharges uh for where each location is located. This slide shows the proposed fire line charges and then the system development fees uh that I just mentioned a minute ago. Um, for example, the value of the system. Um, we've done a the city's done a fantastic job of investing and maintaining the system and continue to invest in it. Uh, in 2008 2009, the book value of the system was about $42 million overall and uh today as of June 30th of 2025, it was about $91 million. So um we are keeping continue to uh invest in the system and trying to keep pace with that. And now regionally uh is the water affordable? Uh we're a city resident still gets quite a quite a good uh discount so to speak on the water uh even with the rate increase. uh we are it's still affordable when you review it in accordance with the EPA method as

well as our lower income uh study and in evaluating uh from an E from the CPI looking back from 1979 till now uh water would should be around $2 $281 a year instead of 289. So we are definitely uh following the CPI pretty close but ultimately we're trying to make sure the expenses the revenues are paying for the expenses uh in the the customers are paying for their fair share. Okay, that is it for water if there's any questions. So questions for Barry whether it be wastewater or water. I appreciate the graphs. So, I think it helps show where we are and where we've been in the past and where we compare to uh uh just, you know, regionally as well as across other systems. I appreciate that.

Counciloman Felder.

Um thank you, Mr. Mayor. in both presentations that we've seen. Um I hesitated to comment after after uh Ed's presentation because he he finished it off with, you know, I know that we're looking at the numbers that we see, you know, five years out, but they're five years out. That leaves a lot of time for changes in decision-m and creativity on the part of the staff and administration to come up with ways to to fill that gap. But in in the same way in the in the water and wastewater reports that we see, we look at anticipated and forecast usage in the trend lines that continue to go in a in a particular direction and with what's happening to our fund balance over the next five years in the long term. That's with an anticipated revenue growth even a modest growth to be sure, but revenue growth. And I I think as uh director cell lays out, we're sort of in a position of uncertainty on whether or not that's going to continue. Um, so no need to, not trying to raise an alarm or anything, but in terms of some long-term planning, I think that we uh that we do need to take a serious look at um, you know, long-term stabilization um, on a variety of sides because if we're if we can't rely on additional customer base uh to support the water system, uh, that means that infrastructure is going to be need needed to be supported through other things or higher rates, which you know, so I think it the the reports still both reports still um display that we're in a fairly solid position and there may be concerns but they're half a decade out just so that we have our our eye on where that bowl is.

Thank you. That's a good comment. I think you know we do look forward and recognize that uh some challenges that lay ahead but how we do things now could impact and I'll say positively impact what that u change could be. And I think there's uh as we continue to as you're indicating, you know, keep track of it. I think we're um going to be in better condition than if we just think we're going to we're not raising it because we need to rates. We we're raising it because you know there's expenditures for the system and your point is well taken. That system um you know delivers water not only and wastewater uh returning uh not in the city but all the system users and how that has to be maintained. So yeah, I appreciate the comment. Other comments, questions. Very well. See none. So, uh, I guess go back to the agenda here, Mr. Robinson or Mr. Self, I'm sorry.

I just didn't know. We didn't we didn't really talk about the next step, but the next step after this is on your agenda for uh, April 6. This will be on there uh to for the first reading of the ordinance and to set the public hearing and then we would hope uh at the second meeting in April that it's uh up for its final reading and adoption. That's where we go from here.

I appreciate the additional because I mean we are uh taping this uh that can be watched by the residents later or those here just to know the timeline and the process after this. This is what as uh you started off we by the before April 1st we have to present the administration manager has to present a budget to the council which is what we're doing here today and I appreciate the information about the next two meetings which is also includes public additional public comment time. Thank you. Any other comments or questions from council? Mr. Robinson. Anything further this evening?

I have nothing further, your honor.

Okay, my sheet my sheet here. U over just about everything other than the agenda sheet. So, if I can find it here, I'll be good. Okay. So, we don't have any other business. Uh clerk Leavoy, you have any other additions? So, the public comment was at the beginning, but I see there's a couple additional people that came in during the um budget review and so I will entertain to see if there's any comments from the those that uh arrived here after we started. We always we in our regular meetings and our we we take public comment at the end our special meetings and work sessions we usually have it at the beginning excuse me because it's a specific item which is tonight about the budget but if there's public comment I will take it at this point. Oh, okay. Just

regular meeting. This is a special city council meeting. This is the fifth Monday of the month. Our regular meetings are on the first and third month. So, when we come back at the a week from a week, yeah, that'll be the regular meeting which will have our regular agenda items and actions and of course there'll be public comment at that meeting as well if that's what you're looking for. Pardon me.

If you would like to, uh, I said I would, it's at the beginning of the meeting, but I'll take another public comment period time because there's a couple additional people. As always, mindful of the rules of the chamber, uh, 3 minutes, and please state your name and jurisdiction of residents. Thank you.

My name is Katrina Calman Ramos. I live at 108 West Front Street here in Monroe. I have a list of questions I would like to read. Why are reports being issued for inspections after 5 days? Why is 5 days important? Wondering why 5day state regulations have not been regarded. wondering why this report has a 19day gap between inspection and the owners receiving it. I'm wondering why after so many years of the existence of this entity meaning a person or a business zoning was created in the past six months so many years of its existence. six months later recently wondering where the building officials report actually is wondering why the only one with authority to issue a certificate of occupancy or a denial for the certificate of occupancy is missing in this supposed report. wondering why zoning compliance

was denied during that whole time. It was just created. Wondering where the rest of this report is. Wondering where the photos are. Wondering where the extra documentation is. Why would this report not be considered complete? Why are questions like these not posted on social media when others are? Wondering how social media has anything to do with inspection reports. Wondering why six individuals would ever agree to submit a 19day old report. I've got mad respect for the fire department. No offense, but wondering how does critical life and safety concerns mean wait 19 days to deliver.

Christine, you're at your three minutes if you have a final comment. Pardon? You're at your three minutes if you have a final comment. Would anybody like to come up and read the rest of what I've written? No, you you can't share information. It's your information. So, you're at your 3 minutes and I appreciate you listening to my concerns today. I do wonder how the city manager put forth such a report without the building's official report included after 19 days, more than two weeks. Why was this? Thank you. I appreciate your time this evening.

Thank you. Other comments and those present here this evening that wish to make uh public comment. Seeing none, uh we need a motion to adjurnn. Motion to second. Motion from Councilwoman Germaine, supported by Councilman Felder to adjourn. Clerk, please call the role. Council Geriney, yes. Stringham, yes. Felder, yes. Yes. Still, yes. Mayor Clark, yes.