Finance Committee - Regular Meeting

All right. Good afternoon. I'd like to call to order this meeting of the Finance Committee for Monday, 05/11/2026 at 05:30PM. Please rise and join me for the Pledge of Allegiance.

I pledge allegiance to the flag of The United States Of America and to the republic for which it stands, one nation under God, indivisible, with liberty and justice for all.

All right. Roll call of membership. Let the record show that all members are present. Our first order of business is approval of the minutes from our previous meeting, item 20 six-six 47.

Move to approve.

Second. All right. We have a motion and a second of Alder Croats and Alder Hartzheim second. And any corrections or updates to the minutes from our last meeting? All right. Hearing none, we'll go ahead and vote. All those in favor, please signify by saying aye. Aye. That passes five-zero. We have no public hearings or appearances, so we will move directly into our action items.

First is 20 six-six 54, Request for Recommendation to Common Council to Authorize Staff to Proceed with Development of a Final Implementation Plan for Modification of Central Equipment Agency Funding Structure. Brad Vigoot, financial advisor with Baird, is going to speak on the model modification. Can I get a motion? Mayor Woodford, what mic are you on? Okay, okay. You're just saying he's ready to speak now.

She is handling her.

I can have you removed. Okay, Mr. Vega, the floor is I did not get a motion because I was interrupted.

I will make a motion to approve the item. Chair.

Second.

Okay. We have a motion from Alder Van Zeeland and a second from Alder Ferk. Yes. Mayor Woodford, what mic are you on? Waiting patiently. Okay, Mayor Woodford.

Well, first of all, Chair, I apologize for the derailment. It was not my intention. But just I wanted to give some high level comments before we hand it off for for more detailed discussion just to ground this in some context for the committee and council and the broader community. So bringing this forward, we are responding to feedback that we've received in past years about significant potential changes to the budget. So one of the common themes we heard when we made the change with forestry, moving that into storm water, was that the council felt that it would have been beneficial to have the opportunity for more discussion upfront and to understand the full context of a change like that before incorporation into the budget.

And so responsive to that feedback, we are bringing this forward for discussion and consideration this evening. And what this is, is potential option for us to create additional capacity in the general fund to allow us to continue to provide the services that we currently provide because we are under significant pressure when it comes to the operating budget. And that's something I talked about with the introduction of the '26 executive budget and service plan back in October '25. So we have been working our way through analysis of a couple of concepts and I mentioned this also in transmittal memo but a couple of concepts. And one concept has risen to the level of more significant consideration on the part of staff and in consultation with Baird.

And that is the potential to adjust our financial model for the central equipment agency. We can dig a little deeper into the details as the committee likes but I trust this this is an experienced finance committee so you're familiar with the the funding model for CEA. The primary challenge we're trying to address is pressure on the operating budget. And CEA, hypothesized, holds a great deal of general fund money every single year which means we can't deploy that for use for the services that we provide, the general operating expenses of the organization. And while that was an excellent model in its time and the time that it was developed, things have changed significantly in terms of levy limits, for example.

So that means we are more constrained when it comes to setting aside funds. In the past, the council could elect to increase the levy to ensure that CEA could be funded at the level it needed to be. In essence, what happens now is we have to cut from other parts of the budget to make sure that CEA can be fully funded. We don't have the opportunity to increase levy to do that any longer. And so that's putting pressure on our operating budget.

This is one potential mechanism and and as as we bring this forward this evening, to be clear where we are in process, we have done initial analysis. So staff has conducted analysis, Finance Department, Department of Public Works, CEA administration And we've engaged an outside consultant who you'll hear from in a moment to do a deeper dive on the financial model with a great with understanding of where we are overall with respect to debt. Because the potential opportunity here to fund the central equipment agency leveraging our debt capacity is really the central aspect of this and that it hinges on the idea hinges on making that work. For context, where we are in the budget process, we are very early on in the budget process for developing the 2027 executive budget and service plan however we do need to get budget instructions issued to departments as a part of that process and the committee and council's direction on this particular item will have bearing on the instructions that we issue to departments. If the committee and council ultimately elect not to proceed with this concept, further develop the concept and have it incorporated in some form or fashion into the executive budget, it's likely that my executive budget and service plan instructions to departments will include cuts, requests for cuts from departments.

We've not established what that that amount would look like, what that target amount would look like. But given what we've seen in the last couple of budget cycles, and as I said to the council in the fall, we're at the point where further reductions to operating budgets will likely impact program, right? That is services we provide, potentially staffing levels in some areas of the organization. And so I say that to you just so you have a sense of where we are in the early stages of budget development. And we'll take the direction that the committee and council would like to go in.

But I think it's important for the committee to have a full picture of what we're dealing with here. We don't have another place that's apparent for this kind of financial maneuver, at least not at this stage of the game. So with that, I just wanted to give you the context and back to you, Chair. Thank you.

Apologies for making light of this is a very serious subject and we know it is. Not at all.

Not at all.

Thank you, Chair. I'm gonna put it to Mr. Vigut to give us a little bit more elaboration.

Okay, I will do that. Thank you. Brad Vigut with Baird. I served as a consultant to the city in evaluating the program that the mayor had just described. The mayor's outline of the program along with the memo that's included in your pack is really thorough in describing sort of what next steps would be for us to continue this evaluation.

But essentially, what we're requesting is permission or direction to consider issuing short term debt to fund equipment acquisition that in previous budgets had been funded with the CEA. So we're not going back and financing debt from prior financing equipment from prior budgets. This is forward looking. The key with the short term nature of the debt is we want to avoid having a compounding of costs. So in most cases, the recommendation would be that the debt is paid off within one year, probably closer to six months for most equipment acquisition.

Certain other equipment acquisition, higher dollar amount, for example, fire engines, for example, might be amortized over a slightly longer period. But it's not anticipated that we would recommend financing longer than two or three years at most for some of the most expensive equipment. And the point I'm making about not compounding, by paying this debt off very quickly, you're freeing up operating dollars for other budget needs. And then this would be a recurring or an annual process each year with your budget. So as the debt is falling off, because most debt would be repaid within one year, you have the opportunity to layer on debt in a subsequent year without, again, increasing, say, the debt metrics of the city.

And that becomes a key component, really, of this entire analysis. Citi has a AA1 bond rating for its general obligation debt. It's the second highest rating Moody's assigns, a very high credit quality rating. Part of the evaluation that staff and Baird considered is what impact might adding debt to the city's debt profile or portfolio have on that bond rating. And it's my opinion that would not negatively impact on rating.

So we certainly wouldn't want to do anything to jeopardize your GEO bond rating because it is such a high rating. And of course, the higher rating, the lower the overall interest costs to the city for any year of issuance. So if you direct us to proceed, there would be next steps is more detailed planning as part of the development of the 2027 budget to really model out exactly what this component of the debt would look like. There would also be some policy development and policy changes that would likely come back before this committee near the time that the budget would be considered. And those policy changes would include CEA and certain fund balance policies.

In no event would the city plan to capitalize equipment that doesn't meet its capitalization threshold. So for example, if you have a $2,000 lawn mower, that doesn't necessarily mean we're going to be issuing debt to pay for that. All of this would be done to ensure compliance with either existing or modified policies. So the recommendation that's being asked is that recommend to counsel to authorize staff to continue with the development of this plan leading into 2027 budget preparation.

Thank you. Before I bring it up here, I see Mayor Woodford has something else to say.

I think just additional helpful context for the council. While we're still early in the process of analysis, The floor, generally speaking, for what we believe could be relieved from the general fund is somewhere between $1,000,000 and $1.5 That number could be higher depending on the program development. But our aim, as Brad pointed out, would be to be scrupulous with our approach to make sure that we're maintaining our bond rating and not jeopardizing the position of the city. Also that we maintain the integrity of the CEA program. So this would this proposal would have no meaningful programmatic impact on the central equipment agency other than the funding source for the capital asset that is the vehicle.

Otherwise, the program would continue to run as it currently does with respect to service. So no impacts to CEA from that perspective. The other thing to note is that we have accrued significant balances in in the central equipment agency fund balance. So part of this plan development as we move forward would be a deeper analysis of a drawdown strategy for the funds that have been accrued. So in concept what this would mean is that we would have likely a multi year strategy where there's cash being deployed for capital purchases for a period of time while we draw down the reserve to a recommended amount.

So there would still be a reserve but would allow us to mitigate the immediate increase of even that short term debt on the budget, the full freight of which wouldn't come on until we've gone through that drawdown period. So in other words, sort of feathering in the debt over a period of a couple of years. But as I mentioned before, even the floor of this analysis could have a significant impact on a positive impact on general fund.

All right. Before I bring it

up

here, anybody I want to see if anyone else from staff has anything to add. Director Messerschmidt or anybody?

Do not. He did a very

good job. You. Start.

Grabbed it already?

All right. Director Young Moore. I just

wanted to reiterate the operational impacts. We would not anticipate anything from a CEA perspective. And I also want to reiterate that within CEA, we continue to look at ways to optimize our equipment, try to use it for multiple purposes. We are in no way, shape, or form trying to make any changes to that. We try to be as budget savvy as we can in the use of our equipment. There's things that we can transition and use in the summer and winter with some changes that our CEA shop does manage and operate. So I just wanted to point out that we will continue to do that and that our even our second use fleet, would continue to maintain and operate that as we have. Thank you. All right.

Thank you. Anyone else from staff? And then I see Alder Van Zeeland. All right.

Alder Van Zeeland. You, Chair. I have two questions. The first would be for Mr. Vygott. So when my household looks at taking on short term debt, one of the things we look at as well is, is the interest rate lower that we're making money elsewhere? It's better to take out that short term debt. It doesn't work that way for a municipality. So tell me why taking on short term debt and the interest of that is in the best interest of the city and the taxpayer?

Sure. There's really two responses to that. First, the city is working under very strict levy limits imposed by the state. And those levy limits are restricting the city's ability to appropriately fund operations. So this strategy is being recommended only because of levy limits.

If the state would not have those levy limits in place, the city could continue its operations as past practice. And then second, the interest paid, the interest cost on the short term debt of this nature would actually be less than what the city could invest those dollars until they're spent. So there is essentially an arbitrage opportunity. Now that's not the rationale for the recommendation, but the city may be paying 2% interest for that period of time that the debt is outstanding and earning in today's market 4%, 4.5%.

Okay. And then the second question would be for the mayor, for staff. In the current system, we don't have competing departments, you know, for for a pool of funds. In a way, have, as Alder Hartzheim said earlier when we discussed this, there is some skin in the game. You know, there's essentially some fairness built into the system that each budget needs to contribute a certain amount of money. How would we look at implementing that kind of fairness in a new system?

That is an excellent point, and that's something that we we would have to do through policy. So that that would have to be done through administrative policy. And I I believe there are ways to to manage that Because I think it's a great point. I think what you're getting at is, what's to stop a department from saying, well, there's no impact to my departmental budget to have a vehicle. I'm going to get one.

And that's where the oversight structure of the Central Equipment Agency will be essential. So again, Equipment Agency continues to operate as it has. And with the development of administrative policy to govern vehicle requests and vehicle use and the oversight of the Central Equipment Agency, those requests would have to be evaluated. And I would expect there would be times where the Central Equipment Agency denies a request to add a vehicle on the basis of the needs analysis that's conducted. But I think that's an excellent point and something to be on the lookout for if we were to head in this direction.

I see somebody over here before Alder Hartson. I see Alder Crook.

Thank you, chair. I have a number of questions, concerns, and comments. But I wanted to start with clarifying this action item in the vote tonight. The action item states authorizing staff to proceed with the development of a final implementation plan. I take that as another step forward towards another vote. Is that accurate?

My expectation is just based on the amount of time we have before the budget. There there may not be we we will need to start incorporating assumptions into the executive budget over the course of the summer. So by moving forward with development of a plan, while you're not approving a final arrangement, It's an indication of the committee's and council's support of the concept, which we would then incorporate into the executive budget and service plan. Still decisions that would need to be made on the part of the council. And I will say this, there will be opportunities for additional discussion over the course of the summer with the committee and council as the plan starts to have some clarity to it.

But we do need to get an indication. And unfortunately, that's just where we are in the cycle. But we do need an indication because if we're talking about a million dollar assumption or a $2,000,000 assumption in the executive budget, I don't think any of us want a situation where we get to October, you start reviewing it. Mid October, counsel's saying, This isn't going to work for us. And then we get to budget adoption time, and we're trying to figure out how to cut $1,000,000 $2,000,000 more from the executive budget because the council's not supportive of this funding mechanism. That's a scenario none of us want to see.

If I could continue. Yeah. I do appreciate you bringing this forward now versus waiting until later in the year or closer to budget time to have this discussion like we did with the other item. So just so I understand, what is the timeline for bringing forward a final implementation plan? I'm reluctant to support this, to be honest with you, for a number of reasons.

But I understand the city's very challenging position with levy limits and, being able to secure, call it, additional funding from taxpayers or the citizens to continue the current level of operations or services without cuts, but also look at different creative ways to support that.

Yeah. I think what I'm saying is based on what we see looking at the budget for fiscal 'twenty seven, there is not a scenario that I can see that would allow us to maintain everything the same. Right? That I do not see a scenario where that's possible. So your question about timeline, the development of this initial analysis took eight to ten weeks.

And that was to get us to a point of, okay, we have there is something to this concept. It will take months to flesh out a full plan. And I would say by the time we are just so you have a sense of where we are in cycle by the time we're at we have a plan, we're going to be probably at or past roll up for the budget for fiscal 'twenty seven. So at the best, we're going be late July into August when we're already at roll up. So the timeline gets very compressed.

So Alder Croats, I totally hear where you're coming from. I'm with you on this. But just I want to be realistic with you guys about what I see.

And I thank you for that. And I appreciate the transparency. But that tells me even more importantly that a vote on this tonight really is a vote in support of the plan that will be coming. Because if at some point, it's gonna be, well, it's too late. There is no other option. If we don't do this, we have to do cuts. And that was one of the notes I wrote down. Other than more borrowing, through this method or service cuts, what other options were considered? And I think I heard you say there really isn't any.

No. And I can tell you, we've been through my comments in the fall when presented the current fiscal year budget to the council, were reflective of the fact that I've done a number of budgets with our team now. And I will say this last one was the hardest cycle that we've had in terms of landing the budget. We got to roll up $2,000,000 in deficit pressures from a number of different directions. And in previous years, we either had options and other mechanisms that we could deploy, like the forestry move, but in other years, we were able to make reductions to departmental budgets in a way that generally held harmless the services we provided.

Now, there were changes to services, and one of them in the past, bulky item collection, which we've heard a lot about over the years. Discussions about the dumpsters at our yard waste sites and reducing those services that we provide, and the things that we've heard from our constituents about those. Those are small potatoes terms of changes and reductions when we look at the potential. But no, if I saw another way, I think that the CEA's funding model is excellent. It is fiscally responsible.

It is sound if we can fund it without pulling from the operating budget in a way that starts to threaten services. So we're in a place where we're left with a choice, really, between do we leverage debt funding for capital assets, or do we make reductions in other areas of the budget? But I'm telling you, there's really not fat to cut any longer.

And I totally understand what you're saying. And the challenge for me is and I see some aspects of this plan that are somewhat attractive, obviously freeing up the general fund dollars to continue services. Interest rates were talked about a little bit. That's not a direct positive impact, but an impact. But ultimately, the bottom line is asking more for citizens to maintain a level of service, which is a challenge.

I I would never advocate for service cuts unless they were, you know, carefully vetted and justified. I do have just one or two more questions, and then I'll turn my microphone off. And these are for the representative from Baird. Are you seeing with the current levy limits situation and municipalities getting creative with finding ways to work around that, let's call it a workaround, are other municipalities moving to models like this?

Yes. In fact, several municipalities have been using this type of a model for years. And one specifically, City Of Racine, for example, about six or seven years ago, they began funding all of their equipment purchases through short term debt. It's a similar approach that is laid out in the memo here. Several counties in Wisconsin are also employing this method where there's a short term financing at year end that provides additional levy to fund operations by shifting capital acquisitions to debt.

Okay. And then the last question is and I think I know the answer to this, but from a financial strength and you talked about our bond rating and the city's financial position being very, very strong, would something like this be considered a best practice?

I think given the circumstances, it could be because, again, the only reason to employ this approach is the levy limits that you're living under. So in that context, this is, I don't know if I'd say best practice, but it's an available option.

Yeah, realize the challenge with the term, but I just, you know, the city has done a lot of things over I've been here a long time. The city has done a lot of things over the years to maintain that credit rating and the strong financial position with low borrowing. Obviously, it crept up over some years, but I know that this mayor has been actively working to address borrowing. This kind of goes a little bit in the other direction. And mayor, feel free to comment on that. I'll turn my microphone off, Alder Fenton.

Chair, if I may. You may. This is painful. Is it's ridiculous. And I think that, you know, where we are is we're in a position where the state is saying, we're okay with either you cutting to nothing or doing things that are fiscally unsound.

And I don't like that dynamic any more than anybody else. I I I it brings me no joy to bring a recommendation like this because we have worked very hard to mitigate our our rate of increases when it comes to our debt, to mitigate the debt service levy increases that our property taxpayers feel in the city. We've worked we have worked really hard at that. And it it would be my preference, for us to continue in that direction. And unfortunately, we're in a situation where if if our goal is to is to cut debt, we have no other means of funding our services.

And that's just the unfortunate nature of where we sit. So brings me no joy. This is not I would say this is not as fiscally sound as the central equipment agency model. It's not. But shared revenue has not kept pace with inflation, nor have our levy increases.

And as a result, we're we're facing tremendous pressure on the general fund side, and that that's just the bottom line. So I I lament this as much as anybody else, but given the alternatives, I wanted to bring the alternatives to the committee and council before we start work in one direction or another.

And I know Alder Hartzheim has been patiently waiting.

As long as patience can last, I guess. My father used to say, Hate is a very strong emotion. I really hate this. I hate this. Maybe it is time for us to evaluate the cuts that will have to come if we don't do this.

That's the thing that I keep coming back to. Maybe it is time to do that. I don't like that, but maybe it's time to do that. I know that the state has imposed these levy limits and that we have to live by them but there is a reason for them. The state is trying to say we shouldn't punish taxpayers, we shouldn't keep raising taxes.

But it doesn't make it any easier for us. This council hates to put the mayor and staff in a position where they're uncomfortable trying to figure out where to make cuts. So I expect that this will probably move fairly quickly through council action. But I would much prefer to see more before saying I'm comfortable in doing this. I would prefer to see, is there a hybrid method that we can establish?

Is there an eightytwenty? So 20% of all of CEA purchases still have to come from departmental budgets. Is that enough to figure out a way to make it work for 2027? I would like to see more long term. What is what is the phase in that was discussed and how will that work? And I want to see all of those things that I know we're on this tight schedule. But I want to see those before I say, yes, let's do this. Because this puts us on a slippery slope where we will have to keep going down this path without doubt.

So

until I know more, I don't feel that I could say yes, unless this yes is with another vote in when more is determined. I would be willing to say yes, proceed with development, but only if that final option is then something that we, again, as a council, really review and establish that that's what we want to that's the direction we want to send the city.

So I hate this. Thank you. Alder Van Zeeland, and then I have a couple of questions and comments of my own.

Thank you, Chair. I think what everyone is hearing is how seriously this committee takes its job as the finance committee and as the people who report to our constituents. And I think in that regard, what I would prefer would be to and I understand that there's a time crunch. But I think what I would prefer is to hold this at the committee for another cycle. And what I would like to hear are examples of the types of things that would have to be cut if we don't go this direction, because I need to be able to explain that to my constituents in a way they understand it.

You know, that this is not this is very abstract for them at this period. You know, what is the cost of taking on the short term debt in comparison to, you know, this getting rid of bulk pickup altogether? You know, those are the types of things that I think we need to see and understand so that we can make an appropriate decision.

Okay, thank you. Thank you. So I had a couple of similar questions about so my first question would be either to Director Messersmith, sorry, or the mayor. What kind of time frame obviously, we're in a crunch what kind of time frame, if we held this just till our next meeting, would there be a way to get some sort I know we're saying a million, a million and a half for the next year. Would there be some sort of way to get our arms around an example of I mean, know you could just go through the budget book and say, Okay, well here's a million, we'll just cut this.

So I'm asking if that's enough of a time frame to give us some of that kind of information.

So I I I understand. I I think the I would like to come back to something that Elder Hartzheim said, which is that the council doesn't like to put the mayor and administration in a position of having to make hard decisions. I would say the administration tries to do the same for the council, which is that I try not to put things in front of the council that are gonna be unduly ugly and that that may be upsetting to constituents. And so maybe in that way, we we try to do that for each other, which I I appreciate. I think that's a a really healthy dynamic.

But I just want to note that every budget requires very difficult decisions and trade offs. And every budget I've brought to this council has included those kinds of things. We cut every year to make the budget work. So there's really not been a year that we brought a budget forward that we weren't making cuts and making hard decisions. It's just that we've made those decisions in the development of the budget to try and mitigate the impact that our residents feel in the form of services.

And in the couple of places where we've even nicked that, we've experienced significant feedback from our constituents. So in terms of a hypothetical exercise, which I understand, I would say that everything is going to have to be on the table. And there are areas of the budget where we are required to maintain effort. So there will be areas where we can't make reductions. And the areas where we can are going to feel it more acutely.

So we're going to talk about things like and I'm even apprehensive to engage in a hypothetical exercise because I don't want to unduly concern our residents or our employees. Because I've seen this in other municipalities where the discussion of cuts starts to impact employee retention, employee morale. So I'm concerned about even the hypothetical exercise. And I don't say that to dodge this, but I want us to be thoughtful about it because when we start engaging in hypotheticals, the people who are impacted by that, be that our residents or our employees, they will listen and it can cause significant concerns. I've heard about this from colleagues who've taken similar approaches, you know, where a community did a budget projection and they said, in year three, we're going to be $6,000,000 in deficits.

So we're going to need to cut 10 positions and reallocate and reorganize and blow up the entire org chart. And it has caused real problems for them in recruitment and retention. So the kinds of things that we would bring forward are going to be they're going to be programmatic in nature. It's going to involve headcount in the organization. You figure a million dollars, 10 positions, maybe 12.

I'm just really reluctant to unless we are serious about that kind of conversation, I'm reluctant to start bringing what ifs to the committee so that we can we can make the case. So if if we're if we're absolutely serious, you want me to engage in a in a headcount reduction exercise for the organization and tell you the programmatic cuts that we're going to make, the impacts to services that we provide currently that we can no longer provide. If the committee would like us to do that, we will do that. But just want us to be really clear about the implications, because they're significant.

Okay. I see everybody has their hand up. I'm going to recognize myself just for a second, because I a couple of things I've been writing down over this. And my question and I'm not asking for specifics, Mr. Viga, but since Baird works for many municipalities and counties, Have you seen a negative effect on bond ratings of cities and counties who started using this approach to do some short term debt financing? No, I have not. Okay. Okay. Alder Croats mentioned that he'd been around here for a while. I have not been around here as long as he.

But I remember being struck on my very first budget, which would have been the 2020 budget that we worked on in all of 2019. And I went home and I said to my husband, I said, can you believe a fire truck costs almost $1,000,000 And so now we're not even six years later, and we're looking at almost double, I think, of that cost. And thinking about the things that we are talking about using some debt financing for, when I think about that fire truck at $1,000,000 or what the last one was somewhere in that range, and then I think about the last street reconstruction projects that we looked at, you know, definitely in the CIP. They were a little bit small. They didn't add up to the cost of that fire truck.

And so we feel okay about using general obligation debt to finance those construction projects. But the cost of this equipment has become astounding. And then we look in we're also looking at an increase and I know in our we're going to have to really look at our fuel cost in this next budget because I don't see that coming down. The state they made announcements today that in the state that is essentially going to wipe out the surplus. So when the legislature goes in for 2027 and maybe our taxpayers are going to get a $600 check.

In the meantime, the state's going to have no surplus. They're possibly looking at a deficit going into the next budget cycle. And the cities come knocking at the door for shared revenue in spite of promises that were made, and we're going to get a big, yeah, who are you? You know, new phone, who's this? And we hear that that's going to have more school funding.

And that's not the city, but it's on the tax bill that we mail to our constituents and our citizens. They're seeing those school tax increases that they voted for in the referendum. And to the mayor's point, we either figure out a way to do some of this. Because at some point we can't we can cut positions, but maybe some of those positions are mechanics who keep the equipment we have running. Or maybe some of those positions are people doing things so that we require less equipment to do things.

So it's not fun. It hurts. But I think we have to at least see what kind of plan this is and go forward. I guess given the time constraints, I don't know that maybe we won't have a time an opportunity to say yay or nay, but we will have the budget that will reflect a plan like this that we will have an opportunity to have input on. Okay.

That's my say. I'm going to go to Alder Hartzheim, whom I saw first. Then I saw Alder Van Zeeland, and Alder Croats has gone back on his promise. Alder Hartzog. Thank you, chair.

Rather than a hypothetical list of cuts, rather than the game of threats, I much prefer a hypothetical what specifically will this policy look like. Where is the skin in the game? How will it be phased in? All of those sorts of things. I am willing to vote to accept this, but only with the caveat that the plan comes before us and then we absolutely then agree or disagree to moving it moving it past that.

I am only willing to do that at this point. So do I need to amend this motion or request an amendment to this motion to make sure that we have a subsequent vote to this in order to make it move forward and still have our eyes on it? Mayor Woodford.

No. No. I I we work together in good faith, and I I hear absolutely what the committee is saying. And so and and we have a we have a shared goal which is that we don't end up with a budget in front of the council in the fall that we're totally out of alignment on. So we have a common goal in that.

So no, I would say no amendment is needed. I would take that as direction from the committee about expectations. And we would bring forward a full plan for the committee's consideration. It's likely that that process will be happening in parallel with budget development, which will impact budget instructions, and that's Okay. What I'm envisioning is a process where we effectively have departments conduct an exercise in their budget development that would essentially prepare two budget concepts for their departments, or at least a reduction concept, which we then run-in in parallel.

I I will say at this point, I I I don't I don't want to ask departments to go through a personnel exercise. To me, that's if if we need to go down that route, that's an organizational initiative. That's something that is is not going to be departmentally directed, would have to be organized at the organizational level in my office with human resources and the finance department. So understanding where the committee's at, I think that's absolutely fair. And the policy development, we can make some headway on that, because I hear the concern about skin in the game.

I share it. It's something that I brought up with our team as we started to kick this idea around. In terms of additional context from Brad, just debt service levy impact for something like we're talking about now, I understand there's kind of a range and orders of magnitude, but generally speaking, have you conducted some analysis of debt service levy impact? And do we have any kind of per household or against the mill rate? Any kind of sense?

I just want to grab one other comment.

Yeah.

I just think that would be helpful too to understand. We're also not trying to goose the debt service levy because that's been a goal of our debt management strategy all along. So we're trying not to work against that. So I think the context would be helpful.

I know Alder Hartzheim has a follow-up, but

we're going to

let Mr. V get he has some information, I can tell.

And he puts his glasses on.

Absolutely. We know he's got the goods.

Okay. So there's a couple of different debt metrics that we've analyzed on a preliminary basis, and one being, as the mayor alluded to, the mill rate impact. Shifting the CEA equipment acquisition costs that were budgeted for 'twenty six. So had those been in 2026 budget then funded with debt, the impact to the debt service levy is $0.79 So 0.3879 per $1,000 of equalized value. And the median value for Appleton is $300,000 I thought it might be a little higher, but metrics I saw were $300,000 So at that median home value, it translates to $116.37 for the tax bill.

And then the other metric that we looked at or that I looked at was what the long term liabilities of the city, what kind of increase would we show as percent of revenue? And that metric went up 1.7%, which is a very small increase. What we would be very cognizant of and very careful if this plan develops into a long term plan is that that 1.7 is essentially a one time increase because this debt is paid off before the next budget So it's not 1.7 this year and then on top of that 1.7, it's just a one time increase of that 1.7%. And that's where my opinion is that that small of an increase would not have a negative impact on the rating. So those are two of the debt metrics that were evaluated.

As we proceed, there will be a much more detailed plan developed that looks at forward projected costs for equipment and how that's fit into this type of a model.

Thank you. And Alder Hartson?

Thank you, Chair. Just to piggyback on the mayor's response to my earlier statement saying that I can't, in good faith, say, yes, let's do this until we know more. I would be very interested in, again, this phase in process and where we keep that skin in the game, whether we do that every year, there's going to be 20% of your departmental budget still has to be this. And I'd also be very interested in whether this becomes administrative policy or actual municipal code policy. Like if there is specific like does the mayor have latitude on what how this policy operates or whether that's a common counsel latitude thing.

So those are the things that I'd be looking for to actually really affirm this. But again, I would be willing at this point, if we are operating on good faith, to vote in favor of this at this time.

You. Alder Van Zeeland. We're circling back so I can clarify my previous statement, which was not that I want a list of actual cuts that we won't have until October. But what I was trying to get at was I need to be able to explain to my constituents what this costs them versus what the what they could lose in lieu of, let's just say, the $16.37. Like, that's very helpful information.

For the average person who doesn't deal with a city budget, whatever number we talk about adding to their expenses sounds like a lot because it is it is to your everyday penny. But understanding the mill rate, understanding how that affects our constituent and what that means for trade offs, I think that kind of information was what I was looking for and is very helpful.

Got

it. Thank you.

All right.

Thank you. Alder Kerrot.

Thank you, chair. I was trying to pull up my calculator on my phone. I just want to make sure I heard you right on the increase. Is it an increase of $116 and some change on a $300,000 home?

That's yes. That's what it would have been if this policy were in place for '26.

Okay. Okay. So it's fair to say for '27, if the amount was greater, the increase would be slightly greater as Yeah. Okay. Just a couple of questions. And I really appreciate this conversation that we're having on a very difficult and tough issue. Obviously, as representatives of parts of Appleton, we take our jobs seriously. And to Alder Van Zeeland's comment, we need to be able to explain why we're doing certain things and why we vote for certain things. I was asked this past week why I voted for certain things. So it's having the information.

And I think the intent of the question of having some information about what would be cut was more service driven. And I understand this very sensitive nature of the personnel part of it. I would be more interested in what types of services would be cut if one take a couple takeaways that I had. If we were to hold this at committee, which I actually would recommend we do for a couple reasons, we've had really good dialogue, gives us all time to digest that, also gives our council president and former finance chair, Furcus, an opportunity to be part of a future conversation. But I would also like to learn more about this fund balance and the plan to draw down the fund balance and how we might be able to utilize that to minimize the borrowing.

I assume that's part of the plan. And then you already answered the question about the impact to taxpayers. That's what I want. That was one thing that I wanted. One question for the mayor, however. Since we are so early in the budget process for next year, I assume, and I assume these are assumptions that were made on certain important factors that go into the budget every year, like net new construction, health care costs, big drivers of budget impacts. I think we all know what the school district dealt with health care costs on their budget. I don't know where the city's at with that, but that's every year a topic of discussion. So there's obviously some assumptions built in to get to this $1 to $1,500,000 number.

If I may, Chair. Mayor Wilmer. I would just say that's a notional number, and that only relates to kind of the floor of what we believe can be offset with this model. So to be very clear, I'm not talking million, million and a half as the projected gap. That's not what I was saying. All I was saying is that is the right now, we have a high degree of confidence that that's at least what we can offset. So I think your question's relating to, as we're looking at 'twenty seven, why am I saying we got to do something as we look at 'twenty seven? Is that

Yeah, I get what you're saying. This frees up 1,000,000 to $1,500,000 to look at how the budget will ultimately be put together.

Yeah.

There may need to be some other things done.

If that turns out to be all we can do with this, which I would say that's very that's a conservative figure. But if that's all, no, there will still be other work that has to be done to close. It is difficult in municipal budgeting to develop an accurate budget projection. There are a number of unknowns that go into our budgeting process. Net new construction is one of them.

So we can project net new construction, but until we get a final number from DOR, we don't exactly know. So we can get in within a quarter to a half percent, but even that's enormous when we're talking about a range that runs from 1.2% to 1.8%. That's a huge swing. And we're only talking about a couple $100,000 either way. Health insurance projections are another one that's very difficult because you need the data from your current year to build a projection and set a number for a future year.

So that's relying not only on actual, but also on trend, so that our health insurance is affected by trend, not just our actual use. So we can be awesome consumers of health care as employees in the organization and still have increases to our health insurance costs just based on trend. So that's another one that's difficult. But the projections are not positive in the health insurance sector when it comes to their anticipation of increases. So we know that that's a factor.

The other is that in every budget I've brought forward, we've prioritized wage increases for our employees. And that's something that we try to front load in our budgeting process. We know that an increase of 3%, which we did last year, on our base is a significant increase against our new available revenue. Pretty much gets eaten up before we've done anything else in the budget between wages and health insurance. Then we have other factors that are difficult to project, like what's going to happen with our insurance.

So our our our risk management budget is we can project, but it but it's challenging. So this is all to say part of what we're looking at is historical trend and the last the last three years, really just about every year, we've we've faced some kind of deficit at roll up. But certainly in the last couple, we've rolled up, you know, 2 to $3,000,000 in deficit and had to close that. So when I bring a budget to counsel and say, here's the executive budget and service plan, and it is in balance, that is after going through a series of exercises to get us to balance. So all to say it's it's hard to make projections, but as as I look at '27, as we're as we're looking at it, and Alder Fenton mentioned another variable, which is, you know, variable costs of of goods that that we rely on.

So so fuel being one of them, energy costs. We we can reasonably assume that we're gonna face similar challenges in the '27 budget as previous budgets. So that's that's what's driving this now is to say, alright. If we wanna hold harmless the level of service that we provide to the community, what are other mechanisms that are available to us to close what we expect to be a gap?

So you, staff, you've heard from the committee what we're looking for in terms of fleshing out some of the details. Is two weeks reasonable to No. And at what point do we risk losing too much time?

My suggestion to the committee would be, first of all, what's in front of you is a recommendation to proceed with development of a plan. If you hold this until the next meeting, I can tell you we're not gonna have much new for you in two weeks. We will have lost two weeks of time in developing the plan you'd like to see. And so if I would hope that over time we've built a level of trust and understanding goodwill between us that when I tell you that I hear what what you are saying about wanting to see another plan or see a see a more fleshed out version of this plan and that you would like to see that and act on it prior to seeing an executive budget and service plan. That is what I'm hearing you say.

I hear you say that. I will honor that. We will if if the committee approves this, we're not taking this and running with it and then dumping it into an executive budget so that so that none of us have a choice. But that that would be my suggestion is we're gonna lose two weeks of of time that we could be working on developing the plan that you'd like to see. So I I that is what I'm hearing you say is is what I'll say.

Okay. Anybody have are we to the point where we can vote on this to and what we're being asked to do is to authorize staff to proceed with development of a final implementation plan for modification of the central equipment agency funding structure. And then it lists what the plan would include. And I'm reading that from

the memo as opposed. Alder Hartzheim. Thank you, Chair. The only thing that I disagree with in the memo is that final statement, further details, refinements of the structure could concurrently be presented with the 2027 budget development process. But based on what the mayor's office has made as a verbal promise here, I accept that as a part of approving this should we do so.

All right. Thank you. And perhaps it's hubris on my part, but I think the council will likely very heavily weigh the recommendation of this committee when they vote. So other elders present, anything before we vote? Alder Hartzheim.

Thank you, Chair. Could I just ask procedurally, where does this come from here? Now, if we as a committee approve this, it in theory goes to counsel. Right. So then this same discussion happens again at counsel. And then if the majority of the counsel agrees, the mayor's still sticking with his promise to make a presentation of what potential plan might be.

Yes. Thank you. Yes, absolutely. There are tapes. Yes.

We have video. All right. Anything from Alder Meltzer? Thank you. I really appreciate the additional comments that the mayor has offered. And I am comfortable with the committee moving this forward. Thank you. Are we ready to take a vote? Alder Croak.

One last comment. Thank you, chair. I'm going to reluctantly vote to move this ahead. I just my reluctance is in that we get further down the road that we have to take this or that. And I'd rather understand what that is before I go much further down this road. But I trust you, Mayor. I think you've built that trust, and trust that we're going to get more information before it's, quote unquote, too late. Thank you.

Anyone else? All right, we have a motion and a second. All those in favor please signify by saying aye. Aye. That passes four-zero. All right, moving to our next action item. And thank everyone for your patience we other departments while we wrestle with this. Item 20 six-six 48, request to approve contract amendment number two to McMahon for water treatment facility bulk hypochlorite tank replacement project for additional design and construction management services in the amount of $8,000 increasing the contract amount from $29,000 to 37

Let's thousand shoot

for it. Second.

All right. We have Hartzheim move. Croats second. Anything from staff on that? Any questions from up here? All right, seeing none, we'll go ahead and vote. All those in favor, please signify by saying aye.

Aye.

That passes four-zero. 2049, request to approve Change Order one as a contract amendment to contract 306, Unit A26, Contract Paving, with a Move D. To approve. Second. Thank you. Hartzheim motion. Croats second. We have a motion and a second. Do Alder Hartzheim probably has my question, so do please go ahead.

Thank you, Chair. I assume this is Deputy Director Neuberger or Director Youngworth. When are these extra sidewalks that we're not doing going to be done?

All

right. Deputy Director Neuberger.

Thank you, Chair. Staff hasn't determined that number yet. There's going to need to be some additional conversations with the utility owner and then potentially with some neighboring municipalities in terms of coming up with a game plan that all parties are good to go with.

Could you could I follow-up?

Yes, please.

Could you explain a bit further on what exactly is being changed here?

Sure. So on French Road, which is being converted from temporary asphalt to permanent concrete

JAMES By

the way, we love it.

JAMES Yep. So right now, the city is moving forward a 10 foot side path on the west side of that project. We are holding this represents holding off on installing that site same type of side path on the east side. So the street would still get the side path, but we've got to resolve some utility conflicts and some coordination with other municipalities before we can move forward on that other side.

Okay. Thank you. I appreciate that. I do appreciate that there is obviously, you know, we're spending less money here, but I know somewhere along the line this is going to come back through. So I just want to be clear on that. Thank you. Anyone

else? Alright, seeing none, we'll go ahead and vote. All those in favor, please signify by saying aye. That passes four-zero. Item 20 six-six 50, request to adopt a resolution in support of the Safe Streets for All Planning and Demonstration Grant application for development of County Highway AP Midway Road Corridor. Move to

approve. Second.

All right. Motion. Van Zeeland, second Hartzheim. Alder Van Zeeland, I know you had something on this one.

Yes. Thank you. A portion of this is in my district, and it's really well needed. So I'm glad to see it and hope my colleagues will support it. With all of the dense building in that area, a lot of my constituents have contacted me about safety for pedestrians, namely children walking to the elementary school. So this is very helpful. Thank you.

Alder Hartzog. Thank you, Chair. I'm not sure who to direct this to, but I'm looking at this item and the other two items. Where budgetarily are these matching funds coming from? Should we well, when we get these grants?

Yes. Thank you. So I'm glad you spoke to all three because really all three are potentially to align within the same time frame. Looking at all three combined, we're looking at approximately $85,000 in total for all three of those projects from the city of Appleton. The total is $1,200,000 for the planning for those three.

So this is really a significant savings to us if we are to be awarded the grants. And we are informed that this is potentially the last cycle of the Safe Streets for All grant. So we are trying to capture what we can within this. That is one reason for us to push forward on it. All three of these corridors are significant corridors across multiple municipalities, across multiple counties.

So we really see that the importance of getting multimodal facilities on these corridors if we can and to analyze that moving into it. That said, we are looking at an end of calendar year 2026, potentially start of 2027 notification of award. So we will plan for this within future budget cycles. And as we work through our MPOs and such, I think we'll get a better pulse moving into the budget cycle of where we're going to land, how we're going to score on these. So we'll have perspective then. But the $85,000 we can certainly build into a future budget process.

Thank you.

And all three of these corridors were also identified and have safety action plans, comprehensive safety action plans. All of them have them tied within. So there is definitely importance for all of them, especially with the changes on the JJ Corridor. Thank you.

Anything else? Alright, seeing none, we'll go ahead and vote. All those in favor, please signify by saying aye. Aye. That passes four-zero. 20 6-six51, request to adopt a resolution in support of the safety Move

to approve.

Second. Okay, thank you. Anything on this one? Alder Hartzheim. Thank you. I would just

like to echo what Alder Van Zielen said about the earlier one being in a part of her district. This is smack dab in the middle of District 13 and has been, because of the impetus of development there, so much being developed there, That corridor needs to be urbanized badly. And I've been kind of getting on DPW about that for quite a while. And I appreciate this and hope that we can earn this grant.

All right. Anything else? All right, seeing none, let's go ahead and vote. All those in favor, please signify by saying aye. Aye. That passes four-zero. 20 six-six 52, request to adopt a resolution in support of a Safe Streets for All Planning and Demonstration grant application. Move to

approve. Second.

All right. Alder Hartzheim motioned Croats second. Anything on this one? All right. Seeing none, we'll go ahead and vote. All those in favor, please signify by saying aye. Aye. That passes for zero. We have one information item. Any questions, comments on that? All right. If none, that Second. Takes you All right. Motion and a second. All in favor? Aye.