City Council - Special Meeting

the agenda as presented. And I just want to note that in number three, the 2027 budget discussion also includes the strategic financial plan. So it's all encompassed in there. It's not a separate item.

So the 2027?

Yeah. Well, 2027 budget.

The first thing we'll be talking about is the long-term financial plan.

And that's 26 through 31? 30. 30. Okay, so we'll move. All right, I got a motion to approve the agenda as presented. Any second? I will second it. So all in favor say aye. Aye. OK, that's 5-0. We're on to the next item. Josh, are you going to do the introduction, or how do you want to go?

Uh, yeah, I can, I can jump into a quick introduction here real quick. I mean, as you know, Brad was back here a month or two ago, um, to discuss kind of with us in general high level questions. And so I know that Abdo has been working on, um, kind of the longterm financial plan in the background. They have met with staff here a couple of times just to, ask about assumptions and to kind of compare notes and make sure that assumption-wise that they were tracking correctly and nothing seemed out of order. So I will kind of kick off to Brad kind of where they have landed at this point.

Okay, so as Josh said, we've been meeting with staff and going through the assumptions, looking at each fund, projecting those out through 2030. Some of our goals we talked about our first meeting was kind of managing the ups and downs of the levy, looking at the budget, kind of taking a look at the capital, those types of things, and how you're going to fund everything. So Taking all that into account, I think we'll just start going through the slides. I know this was all in your packet as well, so maybe some of you have already seen some of it or looked through it, but I'll just kind of run through it. And certainly we can, if you have any questions throughout, we can go through those. But I'll primarily go through what the assumptions were and then kind of how we made some changes with maybe policy-wise going forward. So kind of overview 26 to 20 to 2030 ending with 46.5 million dollars in cash in 2030 which is down about a half a million dollars from what you have today so not or at the end of 25 so we use 25 numbers as a starting point because those are less audited numbers so not a whole change in overall cash from 25 to 30. Your levy, 2030 levy ends at $7.34 million. So that's up about $2 million from where you were in 2025. And we'll go through how we get there. But in the last Yeah, there is $56.9 million of outstanding debt. So your peak debt is in 2026 with the issuance of the electric bond. But then from then, it start paying that debt off through 2030. So overall, general fund reserves remain strong throughout the plan. Part of the plan is we moved the capital expenditures out of the general fund and into a capital plan. and actually started levying into that capital fund and funding it with some other excess funds from other funds to pay for your capital. So the general fund ends up to be just your operating reoccurring type expenditures for the plan. So that's gonna keep your general fund somewhat steady over the life of going forward without those ups and downs with capital. Levy growth is phased at roughly 5 to 7% annually. Tax capacity and residential growth kind of mirror the tax levy increases there. Again, debt peaks at 26 and paying down declines to 2030. The one fund that kind of has the most pressure point would be the golf fund. It turns a negative in 2027. Didn't really have a that's going to be a fun. You're probably going to have to take a look at and figure out how you're going to fund it differently going forward, but. So then the next slide are core assumptions. We do have a 3% annual growth rate for revenues. Those would be like charges for services, license and permits, and other user-based type charges or revenues. Operating costs, 3% annually, except for personnel. Personnel, we're at 6% annually. That's just the current staffing levels with benefits and compensation structure. That's kind of where personnel ended up. Tax base, 3% growth in market value each year, plus we added 36 homes annually each year. Did not include any commercial growth in the plan. So somewhat conservative there. The local government aid, the numbers were out for 2027, so we took the 2027. LGA had just projected that flat through 2030. and then plan timing of the projects just based on your capital plans and what currently you're planning to purchase to get different capital needs as well as different projects out there. So those are the assumptions we used. Next slide. So here's, I mentioned this a little earlier. The general fund, we're focused on reoccurring city operations. So we, actually starting in the 27 budget, the 27 year, we moved the capital out of the general fund and into a capital fund. The capital levy plus LGA goes into those capital funds. So part of the LGA, each year of the plan, starting in 28, I believe, We're taking 5% out of LGA, out of the general fund, moving that 5% into a capital fund. So each year we take an additional 5%. So we took 5%, 28, 10%, 15% through 2030, and then reduced it in the general fund, increased it in the capital fund to start funding capital needs with it instead of the reoccurring funds. It's trying to be less reliant on that state funding in your general operating funds. The debt, you do have some debt funds that have excess cash in them. So as the debt gets paid off, there's excess cash that's in there. With those excess funds, we put up to $25,000. It was 50% into the capital fund, 50% into another debt fund, up to $25,000 into the capital fund. So if there was more than $25,000 left over in a debt fund at year end, we put $25,000 into the capital fund, and then the rest of it went to another debt fund to help pay off future debt and keep those future levies less than what they normally would be scheduling.

Can we talk about that for a little bit? Sure, I can. That's been an issue I think that we didn't have a clear understanding with for a while. Sure. This seems to But then also this other creation of maybe a different fund, this project fund kind of thing. And money could go into there also, apparently, from that. So can you just talk about what are the parameters and timing of it? I had the question with the 2011 one that I sent you earlier. And I'm really trying to understand, is that really available in February 2020? have a good grasp of what our abilities are and what we're doing is you're putting it all in here and it provides a lot of flexibility which is fantastic and it really is a good thing for us.

So when you're levying and when you're assessing for a bond, those monies are restricted for that bond until the bond is paid off. So once that bond is paid off, whatever you were levying or assessing for, those monies are unrestricted at that point. You can put them into another debt fund. A lot of communities say, we levied for debt, we're going to keep it in debt. But they really are unrestricted and really up to you to do with what you want after that bond is paid off.

So, okay, and I think in your situation, or this example, or in your projection, showing the

dollar one and you have part of it coming out one year and part of it coming out the majority of it coming out the next year so you can what's the rationale of peacemaking you need to have in reserves at year end you need to have 105 percent or you're collecting 105 percent of your next year's payments so if you have at year end if there's like the one we have one year left in that bond like like Yep, so at year end, you have over that 105% to pay the next year's bond payment. So we're able to pull part of that out, leave 105% in there to pay that remaining bond payment.

So that $978,000 that's getting pulled out the next year, that represents 105% of the payment?

That was the remaining. Which fund, do you remember what? I can take a look at it quick.

2028, it's the large one.

I'm not arguing it.

It's just the number just doesn't look right.

Some of this we tried to really move around to keep capital, keep your levies level so we don't have ups and downs. So everything, it all kind of went back to the levies in the end and funding your capital purchases. trying to keep that levy flat rather than a 10% here, a 3% the next year, those types of things. We try to keep that flat, move money around, move the available funds around accordingly. So going back to that one, though. Let me see if I can give you a good answer.

Yeah, if there's a restriction or whatever, but it just seems like why not put it in the equipment fund the same year as the other money goes in and make interest in that bucket instead of making interest in service buckets.

You earn the same amount of interest no matter what fund it's in. So it really makes no difference what fund it's in because you're making the same.

I seem to remember that from banking. But it's just where it's accounted for.

Yeah. It might make a difference. It ends up 2028. 2020.

So that freedom is pretty, no matter what kind of bond you have, you have the freedom.

Yeah, we transferred out $200,000 in 2028, and then the remaining was transferred out in 29. That 228 was used for... put in the general project funds, probably to keep that capital where it needed to be, and then, or just to fund the capital fund that year, and then move the rest of it out the following year when the bond was actually paid off. So it was more of a, you needed the project funds needed it that year, the equipment fund needed it that year, so we left the remaining in the debt until it was actually paid off.

So that could be done off?

Yeah, there's real no reason for it other than just to, yeah, no, there is no specific reason why it would have been done in one year and not the other, but other than just managing. Okay, thank you. Any others so far? Okay, so I think that was that one. The next slide then, citywide cash balances. So this shows where your cash balance is set by fund type. So a general fund is that orange color. You can see that if we just look across where that bar is, that stays pretty stable through the length of the plan. No real change there. Right now, I think it's like mid-70s for reserves based on your next year's expenditures. Your expenditures are rising throughout this plan due to a 3% increase in your reserves. General expenditures and 6% in your personnel, but that cash balance stays the same so you're that cash balance reserves is actually decreasing relative to your expenditures, but overall maintaining its balance that makes sense. The. Green or the yellow is your special revenue funds. The lighter green is your capital projects. You can see how that, it's at just over $10 million now. A lot of that money is the money that was left in there at the end of 25 for the police project, for the police department. So that gets spent down in 26 this year, currently, and it stays fairly stable through 2030. And again, that's intentional to try to keep funding those capital purchases so you have a reserve in there at the end of each year to fund the next year's capital. The black, the Majority of your cash is sitting in your enterprise funds and you can see that spike in 26 with the electric bond That wouldn't is not going to be spent at year-round. So and they'll stay stabilized to about 30 million dollars going forward Next slide is your general fund reserves So this is what I was just talking about your cash balance has just finished just under seven million dollars and 25 and 30 we stay just point $1 million less than that. 78.3% reserve ratio in 2030. So fairly similar to where you're at right now, but slightly down. Capital purchases are moved to the capital fund. LGA is gradually taken away. That's about it for that. Next slide. So this just shows cash balances by fund, similar to the chart we had earlier. Special revenue funds go from $1.2 million in total down to just $0.8 million. That was in 2027. There was a decline because that's 2017 Small Cities Project. Resources are going to be utilized that year. So those have been sitting there for quite a number of years now, and I believe you have an opportunity to use those funds. So those will be used in 2027. Debt. Maine's pretty stable, right around $5 million in debt reserves. Your capital, $12 million down to about $4 million. Again, finishing the police department as well as some other projects, completing our closeouts. And then enterprise funds goes from $21 to $30 million in cash. So building reserves there in the enterprise funds. Next slide. Again, looking at... Just the enterprise funds, your water, electric, sewer, storm, and golf. You can see the bottom line that the golf fund is a positive cash balance at the end of 25. At 26, it will be as well. At 27, right around that zero. And 28 is when you start to go below zero with the golf fund ending about, in 2030, about $636,000. Josh mentioned last week that the golf fund Board has said spending up to $150,000 of capital each year and no more in the golf fund. That holds true all the way through 2029. In 2030, in the plan, we had about $250,000, so about $100,000 more than what the board had said. We already had it in the plan. That's what was on the golf fund. a planned expenditure, so that's what's in there. But $100,000, you're still $530,000 But there's still an issue there with the golf fund, I guess is what I'm trying to say.

And I think I've noticed we discussed that a lot of this plan across the board is working off of exactly what the approved CIP says today. So it doesn't take into account that we may look at it and push this back or push that back. And so this is taking exactly what was approved and putting on a piece of paper how they came out. In any given year, we push back quite a bit of equipment that we can make work for another year.

Right, that's a good point. And are we using 3% for this?

The next slide, property tax levy. So these are the, I mean, I would say these are fairly important ones. So these are the levies here. So the general fund levy obviously is your largest levy in the city. You can see how that's increasing about $2 million over the, from 25 to 2030, which makes up 76% of your overall levy is going to the general fund. And then with those levies, total levies, your 5.5 to 7.2% increases on an annual basis.

So what's the impact of the reduction of LGA on that?

By the end of, in 2030, we're pulling... By 2030, we're pulling... $180,000. So in 28, we pull about $60,000 out. 29, 120, then 180. So over the three years, since we started pulling, pulling about $360,000 out and putting into account.

Are you wondering whether the LGA will either have that amount?

No, I'm just wondering, you know, just the effect of this plan of taking the LGA out at a certain percentage and moving it to capital, which is a different concept than we've done in the past. That's what I was just trying to learn.

From 20, and this is in this, Put a context to why we kept it level flat the rest of the time. In 25, you got $1.185 million in LGA. 26, $1.189, so a $4,000 increase. In 27, $1.93, another $4,000 increase. So you're not really getting much change in your LGH here. So we just kept it flat for the remaining.

But let me just clarify, I think, if you could define the new strategy here to move this, the capital equipment and general projects fund. What is the definition? They're two different funds. Okay. Capital equipment then is pretty self-expanded. I think it's just what we have in our CIP.

Yep.

What is the definition of what's eligible for qualifies for something that would be considered projects?

Those would be more like street projects, street type projects. Street projects. That's kind of maybe, let me see if I have the, I think we have a capital tab in there.

General projects.

So that's gonna include building improvements, some sidewalk repairs, picnic shelter, Building, yeah, park improvements, park building improvements.

These kind of sound like some of the things in our CIP plan. Yeah, yeah, definitely. That aren't equipment. Would be in the general projects. But equipment is a special project.

Would be general projects, yeah. General. Yeah, these would be non-recurrent. Well, I mean, you'd have to do building improvements over so many years probably, but. Probably not the same building. Right. Okay. Not every year, right.

Because that is a different way that the city would be looking.

Yeah, so eventually, if this continue on that policy, let's say, then you could use your LGA and you could fund your different projects around that instead of having to increase your levies. You're getting a million dollars to put in your capital fund each year from LGA And if you don't get it for whatever reason, if the state decides not to give you LG anymore, then you have to find a different way to fund your projects. It's not like you're out on the reoccurring type stuff that you would have to operate as a city.

I wonder, the devil's advocate here is that if you start doing it this way, so much aside into the two different funds, the general projects fund would seem to be the one that there may be, is there a risk that you don't have the same kind of discipline to manage the funds in this way because you might have unscrupulous city administrator Not known here, but someone that says, well, geez, we have $450,000 in this. I mean, how about the discipline? Is there other cities doing it this way? Do they have any issues with that?

I haven't seen any issues. I think it works best when you have a five-year capital plan out there, though. So if you spend all the project plan, whatever you want to call it, if you spend all the money in the first year, you're not going to have any money in the second year. to fund the rest of the project. And the council has to decide how to spend those dollars, not one city administrator or whoever can make those decisions. So everybody would have to agree on that. And potentially, sometimes you're building funds up in a capital fund for all these different things, and you need a fire truck. Well, you have to have a fire truck. So sometimes priorities change, too. So it does give you flexibility. But you can also fund, issue a debt, some type of debt to fund the fire truck too. But there's always that opportunity that, hey, we could put these things off, reallocate these funds to a different purpose. But here's our plan.

I definitely like being able to segment this stuff to the side. It is, for me anyway, to see. It's hard to match up operational how we're doing and budgeting. or a way of doing it?

I like doing it that way, getting the capital out of the general fund. I think it's clear, too. Then you know you can, if you want to levy this dollar amount for our capital, and we'll purchase our capital based on the funds we have and what we will out of the fund, rather than based on the last minute need type stuff. You can plan those things, I think, a little bit better. Thank you. But that doesn't, I think Josh mentioned earlier, it doesn't say that you're not committed to those things each year either. Sometimes you want to push off some of that capital. Maybe you have in your plan that you're going to buy five new pickups this year, whatever it is, but you only need one because the other three, four have been, are still really good, but maybe your plan is to replace pickups every five years, but maybe they're lasting a lot longer. You're not using one of them for whatever reason. You have flexibility to make those changes. Next slide. This is tax capacity and tax rates. So the one on the right is your tax rate. So at the end of 25, you're around 45%. At the end of the plan, 2030, you're at 51%, almost 51%, I believe. can see on the left slide then you're going from about a 12 million dollar tax this is the tax base 12 million dollar tax capacity to just over 14 million dollar in tax capacity so your tax capacity is rising but your levies are also rising in which then creates your tax rates to increase as well as from that 46% to So the next slide shows what that effect is on the property owner. So we use for median home value, and this was taken from the county. In 2026, the median home value is $340,500 in the city. So with your 2026 tax rates, they're paying, someone in that property value home is paying about $1,500 in taxes to the city. They pay other taxes to other jurisdictions as well. So their tax bill is more than $1,500. But by the end of the plan year, or this plan, they're paying for that. And that home value, we increased 3% each year in market value. they're spending just over $1,900, so about a $400 increase in property taxes in that five-year period with these tax levy increases. I think they're better outlined in the actual plan itself, but the levy increases were... 6%, 6%, 7%, 6%, I believe. That's what we have. I think they're in the regular plan, though, itself, in the back. And that's about a $400 increase in property taxes on that average $340,000 valued homes. What percentage of homes? We don't. I just know that half of the homes are higher, half of the homes are lower.

Way to go.

Don't be precise, LA.

I may be old. Well, Brad, that actually be the median home price, not the average. Yeah.

The next slide is that peaks again peaks in 2026 this year into this year and then declines your 2030 so we do also have some additional bond issues and. 28 nine and 30 with street projects, so we have about a $1.2 million bond issue projected bond issue, you may not do it, but we included in the plan about $1.2 million bond issue in those three years so. That's been built into, we tried to incorporate projects that maybe wouldn't be funded with our current reserves in the project funds yet, because we're still kind of building those up, but eventually those could be built up where you wouldn't have to issue a $1.2 million. Maybe you'd only need to issue a $600,000 bond or something other than a full, you could pay cash for some of those projects eventually, but not in the plan.

have right now.

So right now those are debts are included, and then the offsetting capital is included. So overall, they're not really affecting the cash, but they do affect your levies, because we included a levy for those two, those additional ones. Next slide, the capital investment intention. So 27, you have a jump in capital, or it's the electric. Facility in 27 spending note that bond down and then you can see The capital the projects do kind of fluctuate. Those are detailed out in the main plan themselves Outline in which projects you're spending with capital I'm out your spending so like for the electric also Objection put the revenue that we're getting them simple Okay, and then second to last slide here. Just put just a kind of a summary on the risks that we kind of saw going in here. Golf fund deficit, we talked about that. Personal growth at 6% annual assumption. Levy affordability, monitor the levy growth. Again, we tried to level that out through the plan so there's no, lights up or down. Capital execution revisit project timing. So this, I mean, that's a big variable in here is when those projects are gonna happen. So some of them may not happen. Again, what Josh said, we put in here what's in the approved capital plan. So that is something that you as a council approve on an annual basis on what that next year is gonna look like. And then debt and residual, confirm that. moving those funds around the way we have them to other debts and capital fund will work. And then the LGA allocation. Last slide, takeaways. Just assuming we're going to continue to separate the capital out of the general fund and how that's going to be funded with levy and moving the LGA there, use of annual budget and CIP updates to refresh the assumptions. So it is good to look at, update this annually or every other year just to see if we're on track. I, as an auditor, will be looking at this at the end of 26 and 27 for sure, just to make sure we're kind of on track and I'd like to know how we projected it and how the assumptions turned out and what changed. I'd like to report that back to you as well, but I guess the one negative thing probably is the golf fund. We'll take a look at that, but then just continue coordinating the levy, debt transfers, and reduce year-to-year volatility of the levy. But overall, I think definitely put a lot of time into it, I think, and tried to, again, really focus on keeping that levy flat and using your resources to the best use and keeping your levies as low as we could to fund capital and pay off those debts. If you wanted an update we could do we definitely could do it you could use it as a tool I don't know if we would I guess we'll see how 26 comes out or 27 progresses if you're going through 27 and it's coming out and you're kind of following all the assumptions that we Kind of had in the plan cash balances are turning out about what we had. I don't see any reason to update it Okay, just use it as a tool going into your 20 budget If for some reason you decide to not do a project or some other big project comes up that you're not sure how using funds that were dedicated for something else, how that's going to affect the future, I think that may be an opportunity to take a look at it again.

And some of it too, I think comes down to, especially some of these as we're like moving money into whether it's equipment fund or like capital projects fund as to, okay, this is why maybe we are talking about this because maybe by 29, we've been doing this for a few years. And so we're trying to continue down this course in case somebody is asking. of certainly what we're doing. But yeah, it seems to me this becomes a guide as to, OK, this is kind of what the council was thinking back in the fall of 2026 or whenever the last update was. And that is the reason why these decisions have been made to this point as to what we are attempting to achieve through this, not just a, why did we do this last year?

I think it's a good resource too for new council members coming in. I think some new council members come in with an idea of maybe they have better ideas than this and they don't know the background. I think this gives a good story on what the council was thinking, where the council was going and why. It maybe kind of changes some of their decisions when they come into council as a new council member too.

I just intend to be a draft.

We can make changes to it.

And then just myself, I'm assuming the sale of the old Cedars City Center property, the sale of this building is not included in this projection at all? And then is the grant money Figured in here the payment down.

Yes. So if you go into the document itself, the grant money is figured in there. We, we figured in the, what was it? The 500 for this year. Um, if you go into. Well, I remember it was on the sheet that you showed us as you were making those assumptions. But I don't know how many of those Excel sheets made it into this, if that was background.

I don't think we put it in as a chart. But we did utilize that. Again, utilize it. And what fund is that?

2025 A and B. Or is it C?

25C.

I know we talked about it, and you guys worked it into the amount that needs to be levied for 2025, that particular project.

Where would it normally be part of?

Was it meant to go into the debt service fund schedule then? Yeah, so the idea behind that, since it was given to us to help pay for the police station.

Oh, on your schedule, which one should I be looking for?

Don't worry, Rick. I'm dying.

I'll try to wrap it up quick.

I've only got four months. You know those chairs down by the police station, the old police station? We'll put a little plaque on one of those as the memorial. We don't have a schedule in there for it, but in 27 we're utilizing 550,000.

28, 300,000, 29, 250.

So it wouldn't show up in your transfers in transfer?

It's not showing up in transfers because, no, because it's sitting in, the money is sitting in that debt fund right now. Well, it will, in 27, it's sitting in the debt fund. Then it's basically, we're not levying 500,000, 550,000, we're reducing our levy 550,000, and it's basically spending down the reserves in there. in that fund.

So when the money comes in and gets coded directly to that fund.

It's put right into your debt fund. And then you'll see, once you look at your financial statements, you'll see that this debt fund spent $550,000 more than what you had levied because you're utilizing the reserves that are in the fund. And those reserves are from the grant.

to that grant.

Yep. 300 the next year. Yep. Yep. So that's just a spend down of the reserves that's in there. Because you were theoretically you were supposed to levy 620 almost 630,000. for that bond.

So you're utilizing that grant .. Yeah, I think a lot of things went behind the curtain here. And they were great when I looked at that. Wow, this looks pretty .. What do you think the big risk areas are for us in this? With the golf fund, for sure. I mean, it's more manageable.

We just don't spend the money. What happens if we don't build 39 houses?

Yeah. Then your tax rate would increase more than what is showing in here right now.

Right. But I mean, those assumptions are in this model.

Right.

three this year, and it's September.

So I think the idea in those years is we would, I mean, as we've said before, we would have to adjust things that we're doing on our side to reduce the spending to match that. I think that's what it is. On the years that gangbuster one year, because suddenly three developments pop, we build 120 homes, then you have the conversation, do you try to utilize that in the year you have it, or do you try to keep spending down and everyone kind of pared back that year because of the extra capacity that we weren't expecting. So I mean, it's like with anything, you have to build the assumption in somewhere. And I think that's just kind of where they landed based off of this. And some of that, I think, came from the conversations, if you remember, just with when JPB was here and they were talking about wanting to get going next year and kind of what they may be looking at potentially doing. And so that's kind of where that assumption came from, that assuming that actually does move forward as they seem to be, that is kind of the number they're shooting for building year in, year out.

And I'm all for that, and I hope it comes true. But I'm still in the back of my mind, because we've seen down years.

And as you said, there is zero commercial growth built into this. Assuming we have a little bit of commercial growth, that'll be stuff that isn't even accounted for in here. It would be revenue that would help pull those tax impacts down.

Just to go on that 35 house that's projected. I guess in my mind, that's not going to make a lot of difference. But I don't know how you put it into your plan. Even if you build 35 houses today, fully until 2028 maybe. I'm not sure if you added 35 houses in tax capacity all in 2007. You know what I mean?

Yeah. Yep. Is it all in the tax capacity if you get permit money for it? Don't we get a certain amount for permanent?

Yep, we do get permanent money.

But that's a different line item.

There's an 18-month wait. I don't know how you put it into your projection, so I didn't look that closely.

Yeah, we do. So when we said there was 36 houses going to be added, we added tax capacity for 36 houses. In 2027?

So that would be one thing to probably adjust in because we won't be adding 36 and 27.

But there's also an 18-month lag between that house and start paying those taxes. That's values. It's like 18 months.

Ken, how quick is that? Isn't it like if it has to happen before September or something like that to catch it on the next year?

Yeah, so 36 houses adds tax capacity of about $124,000. So it's not a huge impact that it's affecting it. So if you were off, if it's 20, it's not going to affect it at all.

But did you put the license and permit some of that stuff? We did not.

So that's going to help. We won't even get 120 in tax capacity in new houses. get $2,000 or $3,000 a crack on a house? I don't know.

What do you get per house usually? Not including like connection fees and everything? Probably $4,000. Just permit revenue.

Well, I mean, that's higher than what you get in tax capacity. Quick math.

So what this should be used for in the whole plan is just built into your budgets each year. And if Council if you're at whatever percentage that levy is, that there's some support behind it. Maybe a levy increase this year doesn't necessarily, maybe it's not needed this year, maybe it is, but it is also supporting future years as well. So that's what this plan is gonna, I think, beneficial for. You're not just thinking about one year at a time.

I was saying the other thing is going through this plan, you see things, you mentioned like the fire truck purchase far out, kind of see that and say, okay, how are we coming into that fire truck purchase? Can you do something this year, next year to help kind of pave the way for that so that as we talk, it doesn't spike and come back down? I guess, were there other questions for Brad? So I guess assuming not, or if you guys kind of look over this and have more questions or requested changes, certainly let me know. And I would assume come back here Sometime in September, if not the first meeting, probably the second meeting, and formally, I guess, adopt this plan or accept the plan is kind of what we've seen.

And by doing that, you're not committing to it.

Yeah, I mean, I'll compare it to a comprehensive plan. It's certainly a guide we're using, but that can be changed as, obviously, things change even week to week, it seems like, sometimes. Yeah, so this is attempting to adopt a philosophy.

Is this hard to set up our counting to separate it?

It'll just be a shift. It shouldn't be labor-intensive. It's just our history is going to stay other places. So it'll be, even recalling that for a little while, that a new fund, we'll have to look back at history. I mean, I think once it's organized, it is going to be really... Easy to read. It'll just be that beginning infancy stages of getting them off.

Yeah, first couple years of, okay, how did we do this last time and having to go back with different ways.

We're envisioning that within the fund, for example, in the line-by-line right now, how we have our different departments, within the fund, we'd have a different department to outline that. This was streets equipment. This was parks equipment. So we'll follow that.

Anything else? Well, I appreciate it. Thanks, Brad. Definitely open some eyes. All right. Good. Thank you. Thank you. And if anyone has any questions, we'll shoot them to Josh or Rob. That works. Yep. Get it, and then we can decide whether there needs to be any changes. We can get back and redo it and approve it. That sounds great. All right. Thank you very much. Thank you. Thank you. Thank you very much.

I don't think I'd get too close to him. I mean, if you have him.

Do you want me to go out in the hall?

Just lob him from here?

Yeah, I'll just roll this chair.

You want me to go up there and sit there and look down at you minions?

Can you go virtual? Can you go virtual? What's that? Can you go virtual? That's what Chief Kaplan thought.

Spend your bid all over. Yeah. the same thing you've been battling for?

No, I just think I got so run down with that statement. Two weekends in a row, like 14 hours a day, that's not enough.

A spring chicken.

Thanks for the comment. You're not telling me anything I don't know.

He knows. He says it all the time.

I think being mayor is a good R&R for you.

Yeah, you don't have to go do all that golf and all that

Yeah. The rounds are way down. Thanks, everyone.

Thanks, Brad.

See you, Brad. Next time, bring a cooler with beers and we'll meet you.

Rick, you can get a DUI in that thing. Be careful. So obviously now we're going to go over your 2027 proposed general fund budget overview. Yep. I assume we're going to start on what page is that? 70? Yeah.

Yeah, so just kind of going over the overview here kind of. what we're looking at as well as what has changed a little bit. Of note, I did put a new what-if comparison in front of each of you. We will be putting this on the website. On Friday, late Friday afternoon, I did get the LeSueur County properties and how they would lay out on this graph for them. So of note, as you look at that giant sheet, on the very, so the middle, middle Excel graph over there, on the very right hand side, it will lay out how the various, the 1,268 properties in Sewer County and the 1,507 properties in Scott County, how they changed in value. And a lot of that change in value is going to reflect how your property taxes will change in the coming year. Of note, as you look at it, there were only, 12 properties in on the sewer county side that will be lowering in value in 2027, um, compared to 703 properties, 703, I believe that that Matt, um, on the Scott county side. So, uh, generally the sewer county properties will probably be slightly more impacted and Scott county properties will be slightly less impacted on a whole just based on. So, And then the other sheet that I just passed out to you updated that average tax impact on there. And I know at the last meeting, I believe, Sean, you had asked, well, what was it in prior years? I went back as far as I could find it, able to get that average tax impact, which got me back to 2022. And so that is kind of how the average tax impact has changed over the last six years going forward with that. Yeah, just kind of going through the kind of proposed general fund stuff. We have, as we mentioned, the budget in front of us. I believe our last one when we started was around that 13% range, if I remember right. This one, we are down to 7.56, and that is mostly taking a change and using slightly more of that police station budget money upfront instead of stretching it out over about a seven or eight year periods, uh, kind of condensing it down to a four year ramp down of note. As we look at that, uh, that still may even be slightly high. I know I'd mentioned that we would have about $250,000 left. Um, I know that we are kind of at this point working down towards some of the final pay apps. And so of that two 50, I put 200 of it in there. Um, at this point, and kind of waiting on that final number. I didn't want to put 250 in there, and then it come out to be like 243 and have to back that off. So there is somewhere between 0 and 50,000 that debt service levy, there is the potential to decrease that here as we get those final payouts. Which is what, like 3 quarters of a percent-ish, yeah.

So the magic number is still 7.56?

7.56 is where the current numbers are sitting in front of us.

So none of this assumes the adoption of the plan?

That is correct. This was worked through separately from what they worked through. And this seven. But yes, if we were to take another 50 out of that, that drops us down to like a 6.8 something. So it actually drops us slightly below where they shot.

I mean, if we would say we want to match what the projection is, you'd be at seven, and then you said there's another 200,000.

No, he took the $200,000.

No.

In this projection?

Yes. That projection has the $500,000 built in. I've only built $450,000 into this because I want to make sure that I'd mentioned that we were going to have $253,000 left over from unspent construction contingency funds.

Right. And that's not in this number.

That is built into that number.

Oh, it is?

Yes. Yes, yeah, we built into that. And they built in the full number to that. I only put, because remember, we came, we had 250 in here last time. So I put, of the remaining estimated 253, I slid over 200 of it, knowing that I wanted to make sure we got to the end of the project and didn't spend money, then have to back it off down to like 235 or something. Yeah, so in the next month or so, we should be able to wrap that up and potentially take off another 50. up to $50,000 off of that debt service if we wanted to.

And you're looking at 6% then? No, 6.8.

6.8, something like that.

Is that about the only differences from the numbers in here?

So the other big change, I believe, came out of the Parks Board. And Ken can correct me if I'm wrong. They reduced their number down to, was that 30,000? project that was built into this?

I believe so. That wouldn't really affect this projection, because this scenario, we're using a debt capital fund. So that wouldn't affect that.

Correct, yes. And the thing they did with a lot of their projections is they took our 26 numbers And they just built in the assumptions. So everything went up 3% or everything went up 6% or that sort of thing. And so when we work through it, we're a little more nuanced with it. And so we maybe a slightly higher or slightly lower based on maybe supplies went up 3.4% or wages only went up 5.7%. So they had very flat based assumptions rolling through, whereas ours are getting more nuanced than what they've gotten into. I would see that make a big difference, but for 2027, I would think- 2027, we should be fairly tight, because I know they did ask us kind of where things were landing at this point. So yeah, I mean, if you calculate out that additional 50,000, if that's where that ends up, we would be very close to where they land on their overall increase. So I guess, as other things of note, we had mentioned I did include in there the historic market adjustments. I'm not sure which page this lands on for you guys, because I look at the HTML version of the packet versus the PDF version. But it kind of breaks down wage growth versus inflation measures, as we have done over the last few years. I guess of note, I know last time we talked, Social Security COLA was estimating at 3.7. Inflation pressures actually have come back quite a bit here in June and July. In fact, have gone slightly negative. And so I think the last sheet I had down, it was about a 3% CPI up through May. And it's down to a 2.7 just based off of June and July going back. I don't know where that's going to land. Social Security estimates I could find were sitting at about 3.6 now instead of 3.7. But that number becomes finalized in October. And so we should know more at that point. Anecdotally, more numbers have been coming in from surrounding communities. And a lot of people are ending up in that 3% to 5% range across the board, with a lot of them hitting right around that 4%. The budget in front of us does have 4% worked into it. And I guess at this point, certainly being a preliminary budget, I would recommend we leave it there as we wait to see how things are going to play out in the coming months. I know here in September we'll certainly set our preliminary not to exceed. So if this particular budget ends up getting this levy number set, that would basically mean that a 7.56% increase is the highest that we would be able to do as we continue to work on numbers such as health insurance and all the other stuff and rate equipment and see what we can figure. The other thing I did put, and I kind of put it as a narrative in the packet. We can certainly talk through it if you'd like. I know we kind of had a small discussion last time about how to handle potential wage salary scale adjustments. And I kind of put my thoughts into a couple of paragraphs in here. kind of evaluating organizations and how they weigh the trade-offs between percentage-based raises or flat dollar adjustments for scales. And I kind of talk about how, in my opinion, a lot of times as organizations do this, wage structures are designed to reflect various levels of responsibility, training, supervision, and ultimately accountability for various positions and a percentage raise keeps that relative distance between the various job levels the same. Basically ensuring that senior and specialized staff are rewarded for their added responsibility and accountability that they're required to do and keeps us competitive with the outside job market and those around us to try to retain those people because that experience is invaluable, ultimately, as staff turnover. And you lose a lot of experience in those upper levels as they leave. So by contrast, there are certainly benefits to doing a flat dollar raise, certainly to the lower wage positions and entry level staff. It certainly helps with immediate cost of living pressures, though it does create a problem with wage compression. I don't know if you remember when AutoSolve was going through their stuff. I know they spoke to it, I think just about every time they talked to us, and they spoke to it to the greater council as well, is constantly doing wage compression tests to ensure that there is still a maybe reward, or incentive is maybe the better word, for high quality staff to want to move up into a position with higher levels of accountability and responsibility. As those wages compress, you start looking at it and going, it's not even worth moving potentially up and being held to a higher standard and having to be more accountable for the, not only my own actions, but the actions of others. And so part of, by keeping it a percentage base, it helps keep that compression and reduced. So I feel like I talked around that and didn't really have a good auditory way of presenting that, but hopefully my writing made a little more sense on that. But we can certainly talk about that, because I know we did last time.

Just laughing at the city manager alone.

You wouldn't be the first one, Rick.

Well, I mentioned last time I'm, I think, 4% on the higher side, much higher side than what I would be comfortable with or at least think about. But then I've also expressed in the past my experience and knowledge of using COLA as a guidepost to increases in my past experience with businesses and things. But... projections, that kind of rings a little louder when I think about that we use 6% as an annual increase for personnel costs. I mentioned in the past that that trajectory is pretty high. And to think that that would go on, there's just not enough leverage to try to manage your costs. And I think through more about that. my mind getting me to think about it was that we're treating that increase as a kind of a COLA but we're trying to do two things with it and I think about better to think about it separately so if we want to do COLA or something that's to try to influence scale to be more competitive. But I do have a little, I do have trouble, a little trouble right now that we're looking at such a number like that that most of that would be used in a sense to address the competitive issue. And after we just did it, adopted this study last year, and so closely done, It just seems like a very high number. You look at the cost of inflation, It's not tied to your income. So if we wanted to look at coal and wanted to adopt it, then to me, that justifies possibly a flat number. I don't believe flat numbers are good at trying to address the competitive nature of trying to keep your salary schedule. But in that part of it, I even wonder adopting a flat number. I'm uncomfortable because I don't know that it really operates that way if we just use percentages to increase the schedule. Because the competitive nature of each position is different. Every position, they're not uniform. Their demand and supply of different types of positions are different. We really maybe should be addressing that within And so you might have a small increase, well, scheduled to go up, but say that we're looking at something that really represents almost 3% for salary adjustment for certain positions. It seems like we're not hitting the right mark. And I'm just concerned that the trajectory here is Too much of a 4% increase is adjusting this expansion from the lowest to the highest too much. Because it's addressing much more than the cost of living. We don't need to do math, but obviously the cost of living income is different. I don't know where we want to go with this, but .

One of the other items that kind of confuses me a little is that we're talking about potential cost of living. In your memo here, Josh, it says, for example, a 3% raise means an entry-level worker leaving an increase proportional to the Sorry, a word is blocked out. But it protects the fairness and ensures senior and specialized staff are rewarded for their added responsibility, et cetera. But isn't that what the steps are supposed to do? Is that you get increased to the next step because you've had added responsibility and you've met or exceeded your responsibilities? Whereas... is to address the cost of living. So to me, it's two different buckets.

Well, so this was commenting on how a percentage increase versus a flat dollar. And so the idea being that over time, relative to each other, that entry level, if you do a flat one over time relative to each other, they basically get closer and closer, whereas the percentage keeps them spaced apart. And so that's kind of what that was commenting on. I mean, you're not wrong that the step, as we have used it, is basically a reward for increased knowledge and increased value that somebody brings to the table, for sure. This is commenting less on a single person within a position and more of a position versus a position basis. And so instead of saying an accountant relative to a utility billing clerk. And instead of looking at the two people who are in those two roles, it is looking at those two roles themselves and is the spacing appropriate between them. That's what that means.

Right. I guess it was just maybe part of your wording that staff are rewarded for their added responsibility, but that's the step. That's not .

And yeah, maybe the better. the position is rewarded for the added responsibility versus a position otherwise that wouldn't have it.

I'm all for peer comparison. I appreciate it.

And I think those things should be considered when we're looking at other municipalities and what others might be doing. But it's qualify that information as much as you can. And so we don't know exactly from adopted a much longer schedule last year, which created an additional benefit to staff. So we don't know if other cities have that going on or didn't last year or do this year. But I think all of that has to be factored in. What's good information?

I'm not saying we should discount it, but No, no. And I mean, I think there's certainly, I will say of all, everything rolling in that I've seen, because a lot of times when it gets passed around, like the question isn't just how are things changing? It is what kind of structure are we looking at? And so you might look at a city structure who has eight steps. The one I'm staring at right now has eight steps in there, but they're looking at 3.8% between each step instead of 2.75. So, um, You're certainly right, everybody's kind of working off a slightly different scale. I will say our 15 is certainly high compared to a lot of people. 2.7 between step, which is where we are currently at, is probably on the lower end for a lot of people. A lot of people, at least around us, seem to have a larger step in between.

added to their step, plus the 2.75. You do a flat one, that hourly rate might be way higher.

Yeah, I'm not suggesting a flat one.

No, I'm just saying that's what I brought up the last time. Next comp study, you're going to go, well, half our people are way overpaid. And then you say, the council never said, well, we've got to cut your pay. But it's like, because we gave us, everyone got the same amount, it brings your, that step, instead of 1150, now it's 1350, where the 4% would have been.

Yeah, I was just trying to wrestle with, you know, our history, as I've said in the past, we've not necessarily fallen over our history. Sometimes we've been below, Sometimes when we're below, I would say lower income people are not getting the amount that would represent the cost of COLA . So I'm just trying to think about it. I'm not advocating for it. But if you did a flat COLA, if we want COLA to be part of the factor, then fairness for COLA is that part. It's the dollar number typically. That should be something that's tied to the position. You're talking about changing the scale. That could be taken out of that then. And then you somewhat avoid this. You're talking about you don't have such big increases on the upper end because you're paying much more than the cost of living.

I'd have to do a recount, a handful.

I would say, well, as of 26, I don't think we had anybody. 27 is where we would potentially start to hit people at the top again.

27, everyone's going to get a minimum of 2.75.

Correct.

I thought we just reset it last year with the, that we started at steps.

Yeah, well, that's what I'm saying. So, but I mean, we, similar to, so it was, utilities that basically is going to be jumping faster. Under their study, they were getting two steps basically, like twice a year. Whereas they're the ones that are going to be topping out. So the top outs aren't happening necessarily. Yes, it's happening with the city department, but not in these numbers that we're discussing now, the general fund. Because yes, it did kind of reset. Because we probably had a third of employees that were at the top of their wage scale. And so yes, all of those employees are now not at the top. So I would say, I know as we've certainly, we've talked into it, and I know we did just do a comp study, and so I'm certainly not saying we need to do another one. I think there is certainly some merit to exploring different, pay structures per se, and I know the county does a little bit different. I know I've mentioned to you and our staff, other states do it differently. This is kind of the system that the state of Minnesota, for better or for worse, has adapted amongst municipalities. You go into other states, it's a completely different pay structure and how things work in those states. So there are certainly a variety of ways that this happens.

But I think to Sean's point, you do a comp study and you're talking to other municipalities and you're feeding the money yourself. Someone may want to go to Prior Lake, and it has nothing to do with their comp. But, you know, you've always brought that up, is that every comp study is they go out to other cities, and if they just did a comp study, oh, we're behind their comp study, and it just becomes a snowball effect that each other is feeding each other to get these, as they say, competitive wages. I don't know how many, you know, they say they do a market I don't know what they did for a market in the last comp study. Did they go to businesses in New Prague and say, what do you pay for an accountant? Or what do you pay for a clerk? Or what do you pay for your maintenance guy? I don't know if they did that, per se. I think they just may have looked at information generally. You know what I mean? This is what Robert Haft has out there for... people in this industry and this and this. I don't think they did. To me, when I say, hey, I'd like that market deal, I'd rather have them go talk to some businesses in town besides other cities, because that's where you're competing. But that's the next conversation.

Well, I don't want to see anybody, you know. I like our employees, the ones that we have, and I know they care about this town a lot. But there's also built in those intangibles, like with the linemen. It's pretty nice getting up and driving five minutes to work. where XL might be paying two bucks more an hour, and if you want to go do it, go, that's okay, but I don't know why we always have to match that, because they might have to go to Richfield in a snowstorm and have to leave an hour, so I don't know what an extra hour and a half of sleep is worth to you. Maybe they want the, it's all about the bottom line and the dollar, but I'd much rather sleep in and then drive five minutes to work, you know, and then, Like, you know, when we compare those guys to XL, if there's an ice storm in Arkansas, give your wife and kids a kiss and you're going down there for three weeks to, you know, they send you down there. I don't care if it's the state baseball tournament or I don't care if it's you're coaching my seventh grade kids basketball. You're required to be down in Arkansas for the next three weeks. We need you down there. That doesn't happen with us. What's that worth, you know? I mean, there's a lot of those intangibles that are also worth something. I want to be fair and whatnot, but I also have to control costs too. And as we've seen, wages and benefits eats up the majority of everything that we do. But you say that number is 67%?

Or is that just wages? We're talking a big percentage of our total budget. I know. Yes, personnel.

And at Bruce's point, it's 6%.

We're not making widgets anywhere.

I think, too, when you provide a service, that's a very natural thing. It is the people providing the service that are what's going on. And I mean, school districts even more so, like the vast majority of their budgets. And so I'm not saying that. That's the one. I agree that wages and benefits are the one we have the most control over, but it's also the one that naturally in a service-type industry such as government is going to dominate your budget just very naturally.

Well, look what's going on in Minneapolis. I mean, they're going to let 100 people go. Oh, no. I don't want to be in that situation because we can't.

I would agree. I'm just saying. that unlike a manufacturing industry where you've got supplies all over the place, we are going to carry a slightly higher wage. And like I said, probably not as high as the school district. I think the school district is about 80% or something like that.

But 70% wages and benefits. 70.

But didn't you say a percentage is what? Wasn't a 1% on our levy, which is what, $63,000?

Right at $60,000.

Yeah, it isn't a big number, but we still need to address it.

No, no, I agree. I mean, this is my personal take on it. For September, I would have a problem publishing the 7.56. My goal... Probably six. Between five and six. How do you get there? We'd have to look at everything. That's the way I look at it. Without using any reserves or anything. Besides what we talked about. The sewer county's talking like 2.8%, but I think they've tapped a lot of the reserves. I think next year they might be in trouble That's pushed expenses down to the state, and the state pushes the expenses. I mean, that's talking to Scott County.

I mean, the problem with using reserves to try to balance out a budget year over year is eventually you run out of reserves. Well, right. And the piper comes calling.

Yeah, and I think that's what LeSueur County is doing. So they can say, hey, we only did about 2.8%. They have to be using some reserve. They have the same picture we have. They have a lot of labor staff. in their thing. They're no different than us. They're just the next level up. They've got to be doing something. Either they're that or they're not buying any new equipment, which I don't know. I don't see that.

A 1% change, sorry, Josh, is $23,000. That's all salary and benefits.

Oh, and benefits.

Well, the PERA, FICA, paid family medical leave, anything that's based on a percent of the wages. Oh, okay.

Not medical.

Well, correct medical wouldn't change, so it's just salary and associated.

But to your point, even equipment, though, is kind of, obviously you can patch it and make that truck one more year, but eventually that truck has to be replaced.

No, no, I doubt it. I think they're being foolish, but I hate to say it, but it's an election year, and a lot of those guys are running for their county seat again. So they're going to, get it out there that, you know, our preliminary first budget is 2.8%. So we're gone. You talk to Leslie Vermillion at Scott Millian's administrator, she's like, there ain't no way. No way they're not using reserves.

So. But.

Well. That's the way I would direct us for now is let's do the 7.56% as that's what we present in September.

Because that is certainly a not to exceed. Right. That basically sets the absolute cap for us.

And we've always been very conservative in our September thing. But we've always reduced it. I mean, I think, you know, if someone understands the dynamics that, you know, that police station, you know, if we would have kept that, it should have been 13%.

A police station by itself would be? Well, 10%. Like 11%, I guess, yeah. You know, so.

Yeah, but we did use reserves. So whether it's Seward County or Scott County.

No, we didn't use reserves. We used that grant money.

Well, no, to Sean's point, we did use some cash to buy down the debt. But in that case, I would argue that that is using reserves to buy down a one-time purchase versus, I think to Chuck's point, is LeSueur attempting to use reserves on an operating expense that's going to be back next year? And you're going to have to then find a way to fund that.

Yeah, they're going to have to.

Well, let's look at the EDA sitting at 1.2 million. Let's use 0.2. 200,000, we could lower it 3% right there.

Or even hold the 75 this year. But I think to that point, then, that just creates the situation where, depending on what you're using that money for, are you then just now your $200, 200 grand in the whole next year versus this year before you use that? Because a lot of those expenses would just come back again next year, and now you're having to find another way to fund them.

This is, we got this money and we need this. So we decide if we want it that bad and we spend it if we do. But I don't know why I sit in there and I don't know if they have a big long-term plan for it. I know they have some things that I've heard of. But as I told one of the members months ago at the putting up a new awning for them I said lower their taxes and then market that I mean put it up in a comparison anybody that's thinking about moving in the south metro show them our tax levy and where it's been for 10 years that it's and then show the other ones so they can plan and it's they're getting a good value from a

I mean, I think that's certainly something we could do. But I'll just be straight up honest with what we're talking about right now. Like, we are currently in a battle with a surrounding community who has double the tax rate of us. The business is still considering moving over to them. So yeah, I mean, taxes certainly matter. And I think that's something we can be proud of, because we have a lower tax rate than a lot of people until you get up into the larger, much, much larger communities who just have more industrial than us. And so they're able to pull their tax rate down. But it's not everything. But it's certainly something I agree. Every single increase here affects my tax rate just as much as everyone else's at this table. So yeah, I guess I'd- Come on, the city ministry doesn't pay. Oh, we don't need that rumor floating. I get enough people that think at times that the streets department plows my driveway for me. that I don't have to mow my grass, that sort of thing.

You have to mow your grass.

Well, it's been a dry year. You don't have to mow it as much. When do we have to publish the? Mid-September, end of September. So this is usually, historically, we'd always done it the second meeting in September. Last year, we said, hey, let's take it at the first meeting in September. That way, if we decide something's got to change, we still have a meeting without having to schedule a special. I guess to Chuck's point, my recommendation certainly would be coming in at this. Because as you said, this is just setting our max is basically all it's doing. This isn't deciding this is where the levy is at. This is basically setting a max. And should something happen, that's what we've talked in the past. We'll have four months left in the year. If something happens, we have a max. But that's not what we're shooting for at this point.

Well, are we going to have another budget meeting anyways? at the end of September. I'd like to see you guys work on how you wanna get down to that 6% and not publish it yet since we don't have to. Go through the entire month, let you guys have four weeks working on it, and then have another Monday night, doesn't have to be a long one, budget meeting and say, hey, this is where we found it and we got down to Chuck six. And if we're okay with that and we don't wanna use EDA money or whatever else, then we could vote at a budget meeting I mean, it is a published meeting that we're all together. We could technically, yes.

It's just not something we've historically done. And so trying to keep things transparent, this council has always voted during regular meetings.

Right. And it's not that we're trying to hide this. We're just publishing where we're not to exceed. Let's see what you come up with. That's what I would like to see.

Yeah, but I just don't want to get to a point at 6% and then something... Was missed or?

I was going to, like that's, and I know even in the past when we've gone into it, we've gone, okay, we think we're at 6%, but how about we come in at 7% or 7.5%. The idea being, what happens if we have an unexpected truck blow up on us? And so now, like, that becomes something that needs to get replaced that we weren't, because we tightened the screws so tight that now we don't have money in the budget to replace that truck. There's money in the budget. We could go to the EDA fund and take $60,000. There's a difference between money in the budget and going to a fund of existing cash. Those are two very different things.

Or we take out the $75,000 from the EDA this year because they are sitting on $1.2 million. I mean, there's a lot of different ways around it.

So I will say taking out the $75,000 is not going to save you as much as you think, only because portion of the EDA. It would buy a new truck if it blew up. But it's paying for a third of my salary. So are we also, I'll just say it, are we taking away just a third of my salary, or is that then getting funded by the general fund? So a lot of those EDA funds would then just move back into the general fund.

Well, I don't, you know, the coning shift that you want to do and how you want to portray it, I don't, you know, I don't, that doesn't bother me as much as... I mean, I guess I'll be honest.

I'll be honest. There's... $6,027,624 that we could potentially play with. But some of that comes down, too, to services. And I will say this council did a great job of keeping stuff low. And we certainly reduced the levy. I think it was up to 70% at one point, our tax rate. But there does come a point, too, when you continue to keep things really low and inflation has gone the other direction, that it becomes harder and harder to cut. And I know when we talk internally, it becomes a, well, we can get rid of that. But are we going to have to let the grass grow a little longer, let the streets get a little less plowed, that sort of thing? And at some point, too, we have trimmed up supplies enough to where we are running a very tight ship across most departments. To your point, Sean, we do start having to get into labor costs. And it becomes, OK, if we're going to find this money, we have to find it in labor. And now I'm saying all of this not to say that We couldn't find some, but if the council came and said, you know what? This is passing at 6%. I need you guys to make this happen. We would make it happen. I can't promise what kind of juice comes out the other end on it, but we can certainly make it happen.

Well, I guess my point was we don't necessarily have to do it tonight. We don't have to publish it tonight. So maybe at the next Tuesday, you've come already and you said, hey, I was able to skim another 0.46 off by this.

I still think we should publish what... But to Chuck's point, I'd rather publish a little high and then take it off than try to take it off and publish that lower number and then something comes up.

I mean, we don't have to make a decision tonight, but we're going to make a decision in September, either the first meeting or the second meeting. So we have to publish that to the Minnesota Department of Revenue. And... I just think just what Josh's memo in 7.56, that's something that has a backbone to it. Everyone has looked at their budget and said, hey, this is what we need next year. And so you could say, OK, we got this by using some of that grant money and whatever other things, which to me is We're very lucky that we got that million dollar grant. But again, I don't want to go and say, in September, we're going to have 6%. I think that's tightening it too much. I mean, that's just my goal. I don't know what your guys' goal was. I just told you what my goal was.

Well, I mean, do we have our insurance costs in yet?

It's going to be 19% for health insurance.

It was what?

It will be 19% for health insurance.

I would think that publishing these 7.56 would be a smarter idea because we can go less, which is never going to work, right? Right.

Well, that's... Yeah, all you're doing is basically publishing a cap for yourself.

Well, we could beat this in the head a little longer, but I would suggest that we...

Well, just revisiting the cash payments and the cash that we use for the debt service. not and if there is try to use that to reduce the station when we did the start thinking about the facility needs way before Ivan was a council member this is a long this is a multi-faceted project and so we bought a parks financing it, those are the long-term assets, and so we're paying with short-term cash, and that's great. But in the sense, if there's going to be a benefit to the taxpayer, it should be done sooner than later if we can do it, because this all came together. And overall, I stand by the fact that it's been a great success and a great accomplishment, and it added a lot of value. And I know a lot of people might not agree with that, but financially, I think there's reason to think about there's extra cash to apply to debt service to reduce that for next year. Yet the benefit as we went through this projection about the additional bond, another $300,000 available next year. The projection I think is very good and actually very happy with how the numbers are looking there. There's extra availability. We don't have the ambulance fund anymore. To pay it down, that's what I'd advocate for. And then secondly, about the EDA, I think there's arguments that can be made about considering things with the EDA. I would certainly consider that. sidewalk thing is ever done, that we have still that issue that we're going to have to fund that with our own cash, but we don't know yet. But we certainly have some life into it if we're not going to be developers. Today, at this point in time, I don't necessarily a big advocate of us buying a bunch of land to test our park. I know that's not, everyone doesn't feel the same way about that. But return on investment, I don't since we're not looking for job growth. I certainly would be open to that review and discussion and see if there's other things. I made the levy originally to the city council to start a levy for the regular staffing there. And I wouldn't be considering anything like that's going to be a cut down on anybody's salary. We did that a few years back. That can change. And that will change when the work involved is different. But obviously in the last five, there's a lot of work involved in selling and running. Maybe it's going to be different. It's a long-winded two point. Thanks.

Are we kind of all in agreement?

I guess, when would you guys like to come back, then, if we're ready?

Well, we'd like to do it after a council meeting or something, since we're here. Or if we're going, it's not going to be like we used to do, the old nuts and bolts and what-might-have-to-be-mine item type of thing.

So then I guess I would say you guys do not want me to bring this for preliminary approval, then, at the first meeting? Is that what I'm hearing, then? Yeah, I was going to say the not to exceed, the preliminary not to exceed, or I guess the max levy cap, however we want to word it.

First meeting in September. That was all we had on that.

Yeah, that's the way we've kind of done it the last couple of years, that first meeting in September. We've said, OK, this is where we're setting it. And then usually it's that first meeting in October is where we then are right back at the budget and have another budget meeting.

I would be OK with that, because it does give you a couple extra weeks.

Well, that's next Tuesday.

But I think when I'm here, we're kind of all in agreement that 7.56 is not a bad place not to exceed because we can validate that through Josh's budget.

Right, but it doesn't allow any flexibility if you're off. Well, we should be able to come in a lot smaller. What, do you want to go higher?

I think we've always gone higher. Traditionally, yes. I mean, well, that's fine if you want to go 8%. To me, that number is new, except it goes up people's.

Personally, as we continue to get insurance numbers in, I actually didn't even get a chance to tell Josh because it came in late on Thursday, like after hours. I would appreciate some flexibility as we get insurance numbers, not like it's going to change it $20,000 per se. But just to fine tune some of that in case some of our renewals that we have out there are going to be different. I mean, health insurance is the biggest one.

So you would be more comfortable if it was a higher number than 7.56?

Yeah, and not percents higher, but fractions of percents higher would be comforting while we all go back and review things while people are looking for savings just to make sure everything is where we want it to be.

If we do go eighth, does that mean that's going to be on all the tax bills or?

Tax statement. On the preliminary. Correct. Well, what I remember this is is the one that appears on the preliminary statement.

Which is the one that we got in trouble with and that guy come in and they'll take the.

So I will say. Usually, and I mean, every year, you never know. Historically, most comments that people seem to receive in the preliminary are people upset with their tax values. And so just getting the word out that the tax value meeting usually happens in March or April, not the point coming up. I would guess, personally, when most people have come to me and said, hey, why does mine have an 8% increase here or whatnot, well, And that's the thing, too, is that they don't necessarily even see, in this case, they wouldn't necessarily see 7.56 on their tax bill. If they're the average person, they would see a 5.62% increase. And so the number they're seeing isn't even the number we're talking about tonight. The number they're going to see is the number of how it affects them personally, which I think is what most people generally end up caring about. So there will be some that would come in, because it's higher, and some that come in and be like, hey, my taxes are going down. Thank you.

Well, then. Wait a minute. Does that happen?

Yeah. If you go back to that year. Thank you, Mark. If you go back to, was it 2024, the average impact was negative 0.8. I actually did have people saying, hey, our taxes never go down. This is awesome. So it has happened.

When you're talking about Robin, then you feel more comfortable at 8%? And does anybody have a problem with that? Well, we don't have to make that decision today.

If we're taking it on the 8th.

Yeah, if we're bringing it back for the Senate.

We want to talk about setting that levy amount at the September 8th meeting.

I would prefer later, but we don't have it at the end. And I would like to see maybe insurance.

22nd, I think. Oh, no.

21st. 21st. Maybe insurance rates would rather get some more numbers?

Well, that's fine. We can do it to 21st, but it has to be done by 2030.

Which means then we have to have a budget meeting in between now and then, the 21st, if there's discussions to have, right?

No, because we're just setting the preliminary.

Well, that's what I mean. If we're setting the preliminary, we could do it on the 8th, too. If we're not going to have another budget discussion per se, we could set it whenever the next meeting is. I guess if you look at the schedule, I think this meeting was kind of unplanned. It got pushed both forward and back at the same time. The next planned meeting, I guess, would be the first meeting in October.

Well, if it doesn't have to be until the 30th, I don't understand why we can't give you guys a month to take a look at it. But even if they come back with a 6%,

I don't want to tie our hands and do 6%.

No, but then we could at least come back and say, okay, that's 7%.

But then we need a budget meeting, I would assume, to do that and not just surprise you guys, example, on like September 21st and say, hey, we put in 7 or we put in 6 1⁄2. So we would just have to have a budget meeting in the next almost.

I would just do a budget meeting at the end of the month. That gives you guys more time. Maybe some insurance numbers come in.

But we'd still need to set the preliminary before.

By the end of September.

Yeah.

Yeah. So I would be prepared to do that on that night.

But I guess also, like we mentioned, like, yeah, like historically, we've always done that in an open meeting because those, like, those are the meetings that people expect us to make decisions. So as long as the council would have to be okay with making a decision at a special meeting when we don't normally make decisions. We're making a non-binding decision.

It's not that important. Or we can have it on the agenda. Right. It doesn't have to be a special budget meeting. It could be on the agenda that we're going to discuss.

No, no. I mean, it's not like we're doing it out of session. No, we wouldn't be doing it out of session. It's just happening. It would happen at anything that's not a regular meeting becomes a special meeting. And we've just historically never made decisions during special meetings. So I just want to make sure the council would be OK. We've made decisions. Okay, not since I've been here. Not since I've been here has anything formally been approved.

No, I mean, we're making decisions now.

Okay, nothing's been formally. There you go. So I just know that, too, I mean, there's a lot of people, especially in today's world, that are concerned with transparency. So I just want to make sure that everyone is aware that. You college kids. Is that how the council wants to go at this point, that we want to schedule a special meeting right now to talk about this?

And if you want to do it at the second meeting, then I suggest we do it before the 15th meeting.

I guess I will just say this about the budget in front of you. I kind of mentioned that there is a potential anywhere from $0 to $50,000 that I could certainly pull out of this. I'll say from our department head's perspective, they have sort of squeezed this thing. The first budget we looked at, when we said, OK, because a lot of times I tell them, numbers out of the question. I just want to know what you guys need. We were above 20%. And so we've gotten this thing squeezed down quite a bit. At this point, I think we may be squeezing on needs. And so I don't know how big of a change we're going to get until, unless you guys come back and say, no, this has to be the number. I think a lot of what you're seeing in this budget now is what is being recommended as needs for the various departments to operate in 27.

Well, we're still hanging on. We still have 4% in the COLA. Correct. That could be three. Maybe it isn't four.

But I don't know if that recommendation for me is not going to change in the next month. That recommendation may change in October or November as we get just more data on the year end. I would not recommend lowering that until we get closer and just have more data to work with. I mean, we could just lower it right now if that's what we're looking to do. But I'm trying to line that up a little bit, not only with inflation measures, but what other communities are doing and just trying to keep things competitive. So I just want to make sure that if we have another meeting, it's a productive meeting and we're not just coming together to ultimately approve something that is very wholly similar to what we're looking at tonight. That doesn't build a lot of confidence and I was hoping it would be less than that. I mean, if it would have been less than that, I think we would have brought less than that tonight.

So...

Like I said, if it comes out and you guys say, nope, it's got to be 6%, we will make that happen.

And again, the 6% is just .. No, I know.

But that was more of a comment on this is the budget at this point that's becoming recommended by each department of how to operate the department to maintain the level of service as it exists. So I'm not saying not to have another meeting. I just want to make sure the meeting's productive when we come back together, because I know not everyone likes to meet all the time, especially on nights that aren't already council nights. We certainly can.

Can we put on the second meeting then, middle of the month? Have a budget meeting before the meeting? Well, or just even put it on the agenda at the end of the meeting or whatever.

But then we still need a special meeting sometime after the 25th to approve, right?

Well, so I guess to Sean's point, if we do, we could make it an extended agenda item on the 2nd. So it just kind of gets folded into the regular meeting, basically. And then at the end of that discussion, we will have a resolution options and wherever that option falls out is we just approved the levy at that point. It just becomes a, and usually it becomes a word kind of know what we're going into it with. And so this will become kind of crafting the resolution during the discussion that.

So I feel like you've already asked this, but I will ask, let's say Josh says this, you know, zero to, did you say 50,000? Yeah. I'm at Chuck's 6%. Is that what you're going to go with?

No, we would give you wiggle room. Just in case the numbers came higher. That was how I envisioned it.

Yeah, you mean setting the preliminary?

Yeah.

No, I think we would come up with a number that either we state 7.5 or we say 8%.

So at 7.56, if you were willing to give wiggle room. is it reasonable to go 8%? And really for no other reason but Josh's point of having a purposeful additional meeting. What would that additional meeting flush out at that time to make somebody waiver off of? Now it's Rick's 8%.

The only thing I can think of would be like, yeah, we won't give $75,000 to the EDA this year. And so boom, you're at 6% right there. I mean, or... And then we say, OK, well, Robin, we'll set it at 7 and give you that extra in case insurance. Maybe you'll have the insurance numbers then, and you can fit that in. I mean, this is buying us a little bit more time instead of setting it. It's not that big of a deal, but I just think it makes more sense to do it. I mean, if we have till the 30th, let's use as much time to give you guys as much time as you possibly can.

And to be, I say this with all respect.

Yeah.

Unless there's guidance, like you bringing up EDA, or like, let's get our insurance numbers, which we know it's just usually weighed on insurance carriers. I wouldn't know what to be tasked with to be trying to work on to bring different numbers. Unless, like you mentioned, let's look at EDA, let's look at this. So I just wouldn't want to come to that meeting and have people be like, so, what new things do we have if there was no new things?

Well, there could be. I just thought, giving you guys more time, you know, why set it tonight when it doesn't have, we got 30 more days.

You're not a type A brain, Sean. I get it.

I am.

Meaning I'm like, you're right. I say this playfully that I'm like, we had it on the schedule. That's why. So it's just a joke. I appreciate the additional time in my typical brain, but thank you.

That, uh, I prefer 8%, and I have to dilly-dally around with it. I, myself, am not excited about doing another outside the next meeting. That would be difficult for me. But I do want to look at the personnel costs. I think last meeting or sometime previous, you said you thought you had the history, and you were going to get the history. Overall personal costs over the last few years, and then makes that up and that type of thing to understand. We're gonna have a discussion. It doesn't have to be done by the end of next month or anything like that, but I don't know if we have, I don't know where we stand as a council as far as this 4% salary or people are different, but I think we need to have that fleshed out. It doesn't have to be done in September, but certainly in October. And to understand our history of what our health insurance costs have been over the last few years, and all that includes that 6% as we look at

All right, so I'm going to be honest. As the person who has been hired by you to bring back what you want to see, I have one vote for a special meeting, and I have one vote for stick it at 8%. So just informally looking at everyone as to what you would like me to do. Keep it at 8%.

Oh, that's fine. You guys can make that motion. I'll just vote no. I asked four to one and I should go back to my special meeting thing. If we have a special meeting, that's that we're actually talking about the personnel issues and insurance and all that. And it's got some meat on the bone that we're going to chew on, but just to argue about seven and a half percent or 8%, I don't know that we need to know.

And I'll be honest to Sean's point. Like it does sound like we are basically at a, at the point where we're going to start pulling that together, the health insurance information. Um, We don't usually have a ton of time once we get that anyway. So even if we set up the preliminary at the beginning, we may be talking health insurance or whatnot anyway at that second meeting, meeting anyway.

Just put an agenda item that we're going to approve the preliminary levy. That would be just the general one. And if we say it's 8% or 7% by 6% or 9%, that's what we're going to do. We're not going to have a budget meeting.

But we'll have another budget meeting in October

to fine-tune some of those questions everyone has. Right. And also, somewhere in there, we have this financial projection. Are we asking it for it to be changed over? Are we going to adopt it as is? And then we need to do that. And then what does that mean if we adopt it?

We have to approve it. So if you have any questions regarding that.

I see questions, comments, changes, maybe a small change of, hey, if we tweak this, what does it look like? That's a good question, because that's one that I can certainly pass on to ABDO, and they can throw it in their model and spit it back out at us. There's some big changes as far as economy moving money around, if we adopt that.

No, I don't need another one. I'm sick of them.

OK, so as of right now, it sounds like you're putting it on the second meeting. As an agenda item, we may have a small discussion if we were able to find something, but otherwise we're going to float this range. And like I said, I think even by that point we'll have health insurance stuff that we want to talk to you about anyway. We can discuss that at the meeting too and improve that.

We will be bringing, we'll have some more organized information. Like I said, we just got it at the end of the week. But if we had any plan changes, which I'm not forecasting that we would, we have to have that approved by October 12th. I don't know, Sean, I feel like that was in the past, something that we all were like, including yourself, like that wasn't a lot of time. And that's where we're at again this year.

Okay.

Getting those rates.

This might be the April of East. Yeah.

But just so you guys aren't caught off guard in October or at the end of September when it's a quick turnaround for a couple weeks.

Oh, of note, just as a general housekeeping item, If you guys have availability, maybe 20 minutes, I think that's probably enough, before the eighth meeting on that Tuesday, just as kind of an update with union negotiations. We scheduled it special for 540, I guess, on that date, update on union negotiations. 540?

And then since I had the levy budget calendar up, we were anticipating, again, just reminders for everybody that's busy, we're planning on a budget approval at that first meeting in December, which would be December 7th, because there was the potential that you would look to not have a meeting that week of Christmas, December 21st. at the final levy and budget approval on December 7th.

But that could be discussed. It can change. Truth and taxation. Truth and taxation, yeah. Different communities do that differently. Some communities approve their budget on the night of the truth and taxation if there's no changes that they see making. Other communities come back at the next meeting and change it. I know this year the second meeting is landing about as close to Christmas as it can get. And so... Yes, we would love to cancel the 21st meeting potentially yeah, so I know I know when we've had Just do the proxy and I'm saying we would but I know other times when we've had meetings land very close to holidays Was it last year we had canceled a meeting that was like a day from like on July 3rd or something like that just because because it interfered with the fourth and so we didn't have any business necessarily that we needed to transact. So yeah, that wasn't a saying that we're going to, that is saying that we're, the schedule's built around the possibility if we say there's no business that needs to be transacted, do we need to have this meeting?

On the 7th, I might have, might be a meeting that I was gonna miss, because I have a wedding out of state for my niece, but we don't get back in until 5.49.

Tell her if she wants to move in state, we'll do it downstairs. No.

We're at the New York City Hall. It's a church. All right. Any other questions? We all have an understanding of what's going on.

Absolutely not, but we'll make it. Oh, yeah, 540. Does that work for you guys? Yeah. Yes.

Okay.

We all understand?

Yes. I'll make a motion to adjourn. Second.

Second by Sean.

All in favor, say aye.

Aye. Any opposition?

Thank you everyone.