Finance Committee - Regular Meeting

Connect. Good. Good evening. Welcome to the April 22nd meeting of the Finance Committee at 6:00. Uh, and I'm I'm chairman Jeff Sassy, and we'll be calling this meeting to order. Uh, with me, I have my other finance committee members, Mark Burgdor, alderman, Ward One, vice chair. Mark Evans, Ward Six, secretary. And Tim Ringers, finance director. And who else do we have here? Terry Goodwin, alderman Ward 4. Yes, we got a full house. Um, I'd like motion to accept the agenda. So moved. Second. All those in favor? I I pass unanimously. Um, and the minutes uh for Jan January 28th. Uh, any changes to those minutes? No changes. Uh, so need a motion to approve those minutes. I will make a motion to approve. I'll second. All those in favor? I. Passes unanimously. Uh, any public comments? No. Nobody signed up. No one signed up or no ordinances or resolutions. So, we're moving on to other agenda items. We have the discussion direction on payment of Hendersonville library invoices. But I believe we need I know the mayor wanted to um have a conversation and get some direction on that. Um, well, we go ahead. Oh, go ahead. I was just going to say we can begin the conversation because uh we I know that I've shared the uh the agreement between the county and the city with uh this committee. So I'm sure there's questions already and you probably have some information. I have I do have some information. Yeah. I mean if you want me to give you the information that I do have on that. Yes. So thank you. Um, in the in your packet, you have the email from um the county requesting payment of a bunch of um old

invoices related to some um repair and maintenance items um at the Hendersonville Library. Um they're requesting the city to pay roughly $24,000 for these past invoices. These invoices actually date going back to 2017. We're still live that we we see that they don't see. No, they see they see they see us. Okay. Um so the invoices that the library is requesting that we reimburse them for are going back to November of 2017. Um there are a few that are from the current fiscal year. Um on page 11 of your of the packet for this committee, you'll see the breakdown of the invoices that they're requesting payment on. The first grouping of them are for prior fiscal years. The bottom section um about a third of the way, half the way down the page, those are invoices that were from the current fiscal year. And so um my understanding is the mayor was asking for you all to give some direction on whether or not um these invoices should in part or totality be um reimbursed at 50% to the county. So, when did they send us these invoices? Um, very recently. So, even those invoices back in 2017, they sent those over to us recently. Yes. Let me Was there any explanation as to why they were sending them so late? I mean, we're talking about eight years away. Mhm. I I don't know why they waited so long. Um, the email was sent over to the mayor on April 1st. Oh, no. March 20. March 20th was when um an email was sent. March 17th. So, last I mean within the last month or so, they they were all sent to him. And if I remember correctly, all you want to grab them? Remember correctly, all this started

with an elevator fix. And so now they're coming at us for everything else. It sounds like Yeah. I don't I don't know. That is not my recollection. This has been an ongoing issue between the county and the city. Um and the interpretation of the ordinance that uh uh Alderman Evans has there is vague at best regarding maintenance um responsibilities split between the the city and the county. And at one point last year, a couple years ago, we had um a couple of representatives from the county mayors here uh to address this. And so the mayor was there and I'm sure we would love to hear what his take on this was. I'm sure he's lots of things. Yeah. U this is not the most important on your on your agenda, but absolutely. Um uh we received a bill from uh the county for some expenses go all the way back to 2017. I can't spend money in this current year's budget for activities that were done in 2017. Um, also the amount of documentation that came along with it was not uh was not enough. Um, but I I wanted I felt like I need to get the board's input on this u before I do anything. Um, so I'm happy to have that. Oh, and in conversations with um Sarah, especially the one larger item that was done in the current fiscal year, we actually don't have money budgeted for um the HVAC replacement. I have a thought about that as well. Well, you want to kick us off? Well, here's Mayor, here's what I have and and I think we kind of have the same issue is at what point in time are we liable and responsible for expenses that go back seven, eight years? I mean my my 42 years as an accountant is that you know

it's I'll say so you know if uh accounting term yes it's sure they've said that it's it's on my sheet of acronyms. Um is at what point in time do we have a say about okay well we're not going to pay those because you didn't present them. Was there any explanation as to why these invoices are coming to us so late? So the explanation I've received is that uh there is a change in interpretation of that resolution there. That resolution to me always meant that the city of Hendersonville was responsible for everyday maintenance. Uh and the county was responsible for uh replacement and uh really assets. That was my understanding. That was the previous mayor's understanding. That was the board's understanding. Uh about a year or so ago uh um we were told that we were incorrect. We were told that um I was sent one bill on a on a on something I disagreed with, but I went ahead and paid it. It was like, do you remember how much it was? It wasn't less than $1,500. And I paid that sort of under protest. I said, I don't want the the library being shut down because of this. I'm going to pay our half even though I don't think we should. And I'm going to keep that in mind next time we have the elevator. I think Yeah, I think that's the elevator. So, I think their new interpretation is what's causing him to go back to 2017. And who's making that interpretation? The county commission is the general committee. Well, I I think it's I think it's the the county attorney and some and and the operations committee is agreeing. Okay. And I I guess it just goes without saying. So, you have another group that comes in and they have a different opinion. And is it going to change? So I I I can see where you're saying in my my view provide routine maintenance. Maintenance is going to

would the way I look at this and maybe I'm not quite sure, but some of these things are maintenance. You know, mechanical kind of things. They're ongoing uh things that you have to do. I would think that we would be my and so it's not my issue of these routine maintenance expenses. It's just the fact that they're coming to us. Yeah. So late. So late. Uh and then if you're just looking at this fiscal year, I'm okay with all of them except I don't agree with the heating and air because installation of a heat pump is not routine maintenance. It's a capital. That's a capital asset. I would agree. And we shouldn't pay that. Yep. So when when this came through, I I brought up the what you sent to sent to us previously and that was the original agreement and on it it says the city will continue to provide routine maintenance, landscaping and other support services. So I did some research on what those meant and so if you want to pass that down. Um and I was just going to read some of the things for the record here. So, routine maintenance, uh, there's a number of items on there, but the main point is it's regular recurring tasks and the routine maint maintenance typically does not cover major capital improvements. Then, landscaping is landscaping. I think we all know what that is. Then for other support services on the back, it says that it's includes utilities, security, administrative support, and technology support. The phrase other support services is somewhat vague. So the uh the exact scope would depend on additional contract details, past practices or negotiations between the city and county which would lead me and plus the last phrase where it says we'll continue to provide would lead me to believe that we maintain the same level of services we've provided the whole time. Yes. So changing the scope would actually be altering the scope of this agreement

because we've been providing a certain level of service. Now they're changing how this the level of service they that they want us to provide and that is in direct contrast to our agreement with the county. Um so looking over the expenses uh on here my initial thought is well those three items over uh on this year's where you have the leak detection uh irrigation irrigation those are landscape affiliate in involved in the landscape so I would be remiss to say we shouldn't pay those right so I think We should except for one thing. We should have been called to do those. True. Now, I'm not going to split hairs on that. Okay. Yeah. But we should make that point. So, that's that's a very good point. We should. Now, um question for you. Who ms that propert? Is there grass on that property? The lawn. Yeah. Public works. I think I think it's our guys. Our guys mow it. We do. Yeah. Now, don't get confused with the park next door, right? Okay. But yeah, I mean, right there we do. And the city doesn't own that park, right? We do not own the park. Okay. I met with public works folks last just to to meet them and they did say that they do they do mow the the library. Okay. Gotcha. So yeah, I would agree with you that we should have had the opportunity to make those repairs to the landscape to irrigation systems. Yeah. Go ahead. I'll just thought that maybe I could provide a a recent history. Um I'm sure Jamie remembers and I think you two may have been in the meeting. We had a visit from um the county was um Commissioner Jones and Commissioner Mansfield and we left I'm not going to talk about what happened in that meeting, but we left that meeting with the decision and an agreement between

both parties that um attorney Sitler would draft new language that was less ambiguous than what it is today and had some more specifics in and that we would then begin talks from that point on. We have that has not happened. Mayor, have you received anything like that? And I want to just give you my opinion as an alderman or as a citizen. I feel like asking us to pay for items back from 2017, even I don't care if it was two years ago, that's double taxation on the people, the citizens of Hendersonville in my opinion, because those bills are paid. It's not outstanding. They've been paid. It's double taxation. That is my opinion. Thank you. Thank you for these. Yeah. Yeah. Good. Uh very good um information there. Thank you. Um so what are your what are your feelings? So uh the ones for this year we have those three irrigation ones. Then we have a rooftop. Then we have a ur or a toilet and then a heat pump. And I have a question. I'm I'm fine with the the um the toilet because I did look at that and saw because it was on the same bill as like Millersville or what another one. And so I I did see that the math behind where it's our part. But I have a question about the Richard Jones piece of it that it's a library rooftop. It's an engineering services which leads me to believe I'm sorry that they are looking to that there's they're doing something else to the roof or putting some equipment on the roof. And so it's just kind of the start of additional expenses for something they're doing there. And you why are they why what are they doing as far as engineering services for the roof for 700 bucks?

What's up there? I don't I wouldn't want to pay that and kind of back ourselves and having to pay whatever else is going on the roof. Do you know what that's for? I don't know the answer to that. Good point. Well, it's it the invoice states it's related to a rooftop um heating and air unit replacement. Okay. So, it's part of the heat pump piece probably. Yeah. When I see replacement, that's a red flag to me. Yeah. Yeah. Absolutely. Absolutely. So, especially for an asset and I'm assuming that the county probably follows the same as far as an asset to them would be they could capitalize anything over 10,000. I don't know what their limit is, but all of the assets for the library are on the county's books there. Nothing none of the assets are on the city of Hendersonville's books. Yeah. So, what I would suggest, and feel free to jump in here at any time, that we go back to them and say once a new agreement is signed, we'd be happy to pay for these irrigation pieces, which it totals $1,81.28, 28, but it's got to have clear language on who's responsible for what and who initiates the uh the invoice basically because like you're spot on that we should have had the opportunity to uh perform those and if we then reverted back to them then they could go off and take care of it. But that initially we should have had that opportunity. We may have had staff who could have taken care of that. a little bit cheaper. No, I I would suggest that um I know I agree with you on that, but I think we need to get the ball rolling. I would suggest we would go ahead and pay the irrigation pieces uh and the Ferguson Enterprise for the commode, but at this

point say, okay, we're not we're not covering anything else until we get the other language or are we putting ourselves in a bad position? I agree. And I'm because that that is operating goodwill. Sure. Okay. I I get that. But um the other hand on the other hand, if we're the way I would perceive that is that oh well, hey, they're going to help us out with the rest of these invoices if um if we sign a new agreement. So there's nothing that we're there's nothing that's stopping them or there's nothing that's urging them to progress with that new agreement. What are your thoughts on that? You've had the most interactions with them. Do we have do we have enough money in the budget to pay the irrigation items? Yeah, we could cover the $1,800 for those items. Yeah. And these expenses that is what comes out of that that 20,000 in the library. Yeah. It's it's in public works budget. Okay. For and it's for building maintenance and it's not just the library. It's for all of these kind of random um routine maintenance items. Oh, okay. And we're willing to pay the entire thing on the It's not 50%, right? Because 1801 is the full amount. I'm saying let's go ahead and pay the entire amount of those three items. Um why would you do that? Why would not just do 50% of those? Because we're responsible for landscape as it said in there. But the remainder of the item what are they asking? They're asking for 50% of all of these. I I would I would say at this point just 50% of what they're asking for, not all of them. And because they have requested 50%, we'll honor their request of 50%. I'm going by I'm going by what the agreement says. Yeah, the agreement says we're responsible for for 100%. What's that? For 100%. For 100%. Okay. Okay. What's the reason for doing the

50%. Oh, you know what? I didn't even think about that. I just thought, oh, we pay 50%, they pay 50%. That's what that's what and I never it never I don't offer to give them anything more than they've asked for. So if it were if it were if it were fixing a leak, I would think that'd be 100% us. Okay. If it's replacing a pipe, you mean as far as the irrigation system? Yeah. Well, unless it was caused by our lawnmowers. I get it. But there's no explanation. Right. There's no Right. Right. What do you guys think? You see why I came to you? Well, all right. I'm gonna say this is kind of a multi-pronged. I'm going to say I I'm agreeing with you as far as paying th those invoice those four invoices in full being done with those. That's just that's just my opinion. But I think at the same time, we go back and we say we don't have an agreement. We've talked to you guys about this and we're not until we have an agreement. We are not gonna pay. Well, not even discuss. We're not gonna we're not discussing these old invoices. It's passed. It's gone. You had your opportunity and we're they shouldn't come back up again. Now, if they wanted, you know, I don't know what our recourse would be or what their recourse would be, but as far as these other expenses, um, you know, our opinion is that the 700 and the 17,000 that those are capital type expenses and that we don't have responsibility for those. Correct. I agree. Under the current under under the resolution. Correct. with that. I I will go with the uh the wisdom of the body. Well, what would you what would you do? Like I said, I would only offer them 50%. That's what they asked for. Okay. Well, um and then if they want to get come back and get more from us, then we can have negotiations.

I know we're kind of tired of negotiations, but we need to go ahead and get this. My problem with that is it's not following the terms because D it says the city will continue to provide routine maintenance, landscaping and other support services to library and will continue to partially fund the library with annual appropriated funds which is the how much do we do we appropriate for that 50,000 50,000 a year um as has been done for the past several years. So that's the it doesn't say anything about 50% on the landscape which is why I No, it doesn't I offer that. So I don't want I right, but I don't want I I want us to my my thinking is we should be taking it back to the contract instead of saying, "Hey, we're appease you." I understand. I do. Okay. I do understand, but go ahead. So, I do need if I need I do need a motion from y'all. Now, what I need the motion to say is that you recommend that the mayor does this. If you want a resolution, let's go to the board, all that kind of stuff. You can't tell me what to do. You can't tell the board what to do. You can just make recommendations. Um, but I just came to y'all because I need some direction on this because I don't want to be out there on an island saying this is what I'm going to do if y'all never even heard of this. Right. So, this would then go to Bulma to vote on Not unless you wanted to. Just to you. Yeah. I'm I'm just looking for recommendation. Pretty straightforward to me. So, um I'll I mean I'll make that motion that we pay for those four invoices like the toilet. You recommend the mayor. Yes. We recommend the mayor uh pay for those four invoices and to continue to pursue a new agreement that um explicitly details uh what the um what the city's expectations are and what responsibilities are and the county's responsibilities. Do you know which four items you start with? Yes. Okay, we're good then. A second. All those in favor? All right.

Hi. Okay, there we go. Appreciate it. And then mayor, just kind of just to talk through it. So, I'm assuming that we'll hear back from the county about these other invoices. They'll But our recourse there is we're just going to say until we have an agreement, we're not and Okay. And you could you can say that that your feeling is that or we're we don't have an agreement and these old invoices were not. I don't know how they'll respond to that. Okay, that's a very vague answer. I know. Vague answer for a vague uh description. It's vague, but it's honest. Kind of keeps keeps the traction with what we're and I think I think I like what you what you said about the fact that it u we're we're staying with the contract with the agreement. That's what we're following. So, and I think the key word there is will continue to provide. This is the way it's been. This is the way they continue. Okay. Okay. All right. Uh, next is the budget discussion. Yeah. Yeah. Okay. Take it away, J. Take it away. So, this will be the same presentation um that we did at general committee um last week. It's an overview of the operating budget. The ordinance isn't put together yet. It does not have projects included in it. It's just the operating budget um just so you all see the same information that the other committee saw last week um that Jesse's giving hopefully to public works committee right now. Um so I'll run through ask whatever questions um but I know we'll have our special call meeting for the actual ordinance and everything which will get into all of the weeds too. So, I'm probably going to run through pretty quick because we don't have a ton of time before Bulma actually starts, but stop me at any moment if you have whatever questions you all

have. Um, so there's been just a couple of minor changes since the um information on that you all saw at the first budget workshop related to the revenues. Um, based on recommendations that came up, we did increase the parks and recck fees um revenue by 25,000. Um we also reduced the beer and liquor tax revenue by about 25,000. Um and then um those were both recommendations that came from the first budget from Bulma. And then we have the last two items um we increase the state revenues um for police and fire supplemental pay so that they equal what ended up being budgeted on the expenditure side. They're a one for one. If we receive less revenue, we have less expenditures. So we made those match. And then there's another fines and fee category that has an offsetting expenditure in um the police department. So we um increased that amount to make sure that what they budgeted on the side matched what we had on the revenue side. So those are the only differences on the revenue um from when you all saw this um at the budget workshop. This here is our summary of the revenues. You can see they look very similar to what you saw um at the at the budget workshop. Do these include the additions that you just mentioned? Yes. Yep. This includes the updates with that I just mentioned. Um they're going to be very very similar to what you saw. Um I I do not have March's um sales tax data yet. Um I should be getting it this week. Um but we do have um February's calculated in there. the projections are still the same on the sales tax revenues. Um hopefully maybe we'll have a little bit of a change um when we when you refer in the budget changes up here. The state revenues, what part of state revenues is that? Is that the state

shared sales tax you're increasing? Um on it actually is in um the state shared revenue. It's it's it's under it's line nine. Line nine. Yeah. Okay. There it is. It's built. It's It's um into line. And then the um $1,500 one that um fines and fees is line 11. That those are the ones we're expecting increased revenues. Yep. Yes, sir. Um as you can see, but it's already in those numbers. Yes. Yeah. Yeah. It's built in there already. Um so overall if we compare the original budget for the current u fiscal year 25 compared to what's in there for fiscal year 26 we have about just over 2% 2 and a/4% um increase in our um operating revenues. Okay. And that does not include pip that this is not this is just general fund. Yeah this is just our general fund. Um this is just a pictorial of the um operating budget revenue. So you can see our property tax and our um sales tax really compromise a very strong majority of our overall operating budgeted revenues. Um the next biggest category um you know our licenses and permits is only 5%. All of our other revenues which has a whole bunch of little pots of money in there. Um really our sales tax and our property tax are the two um big revenues. looking at licenses and permits. You you've estimated them down from previous years, correct? Yes, sir. Okay. Yeah, the permit revenue seems to be it's it's it's slowing and it's it's it's scaling back a little bit. We've had a few um relatively larger projects last year and this year um with Costco, with the hospital expansion that's happening this year. Um so, we're not anticipating those to continue into next year with those. We've had a few pretty large projects. Um this is a look of our general fund

operating expenditures by departments. Um now if you remember on the last slide or two slides ago the revenues for operating revenues increased about 4%. Um the budget that is currently um in here based on the the mayor's recommendations is increasing by about 3 and 3/4%. So, our expenditures are outpacing our revenues by just a little bit um in the um information that's presented in in this document here. Um couple of things to point out for you. You will see here that the executive budget, if you look at um the original from um fiscal year 25 to our recommended budget has dropped. There's two positions that have we've done some reorganization. So, there's two positions that have transferred out of that department into administrative services. So you'll see that this is increased. You have the same relationship. Um you'll see codes um the codes department's budget has dropped a little bit. Um they are reducing one position and that position is being re repurposed into the parks department. So you'll see the parks budget go up a little bit because of that. So there's um you know little bit overall you know budget it's recommendation of on this budget is up about 2.3 um million dollars. And then this is just a pictorial of what the budgeted expenditures look like. Um, you know, a little over half of our budget is for public safety, between police and fire. Um, the next biggest one is a tie between public works and trash. That's only going to increase. So, um you know, we have you know, it's it's obvious where you know, the priorities are on our our roads and our um public safety, which is where it should be. Yep. Um and then this is just a look at um

the salary and benefits and where those fall. If you look um our overall our salary and benefits, you know, police is 41%, firehead about 33%. And all of the other departments are significantly um smaller percentage- wise. Um when you're looking at the amount of um salary and benefits that are allocated to our departments, total operating budget by type, I think it's important, you know, you saw public safety is the biggest piece of our budget. the salary and benefits that go to public safety. But if you look at our total budget, um salary and benefits definitely are the biggest piece of the pie that we spend and the majority of that does go for police and fire and then our operations that includes our you know the paving that's done out of the general fund plus all of the other things that it um takes to keep keep the lights on basically. How much paving we doing this year out of general fund? Do you recall in this fiscal year? In this fiscal year. Oh, not PIP pay the current year or the budget year uh budget year. Budget year. It's like 4.3 or something. No, it's it's that's what's in the It's 2.3 or 2.7. I I can It's not I was just If you knew it off hand, that was Yeah, it's either 2.3 or 2.7. 2.7. 2.7 is what's in the fiscal year 27, but and street aid is 1 million and PIP is 3.7. Yeah, it's actually on Yep. on this page. Oh, there it is. to it. I'm sorry I jumped the gun. It's okay. I would have had it memorized last week, but this week I've looked at I've looked at too many other things yesterday and today. Um so budget priorities. Um and these are the same priorities that were laid out during the budget workshop. Um but just so um you know to reiterate low property taxes um the proposed budget does not have any change to our property tax rate. It is um proposed at this point um to remain at

0.5883% which is um really a low property tax rate. Um other priority is a balanced operating budget. Um you know your budgets is balanced when your operating revenues are enough to cover your operating expenditures. Those are your ongoing day-to-day expenses to be able to operate um the city. Can I ask go back who determined the budget priorities? The mayor does. Okay. Okay. Yeah. Because I was going to say that those you said that we when it came out of the workshop, I think I heard other things that were priorities, but these were the mayor's. Yeah, these are the may these were the mayor's um priorities for the budget that he said. Okay. Yeah, that's one one of the things that um in the charter is actually um a responsibility of the mayor is to present the budget. Yeah, sure. I just I just want to be clear about whose priorities are there. They were they were the priorities set forth by the mayor. Okay. Um Oh, did I I must have bumped this because I changed on me. Um and then debt reduction. So the fiscal year 26 proposed budget, there's about 2.1 million and less in outstanding debt than there was in the um fiscal year 25 budget. That down. Um and then you can see the pictorial here of the debt reduction um from the current fiscal year to the new fiscal year. It's dropping quite a bit which is very lovely to see. Absolutely. Um and then the next priority that was established um is the priority for paving and as you can see you know general fund currently proposed 2.7 million in paving state street a million dollar. You almost think you've saw this before. And then the the PIP um budgeting 3.7 for a total of 7.5 million budgeted for um paving. I know this is probably a public works question, but do you know how many miles of road that's going to pave? I do not know. Uh I asked that

question. I know it's less than it was this year. Yeah, it is. Uh it's like what 300,000 less. So I think 78 total. So, one, yeah, the dollar amount was less and then the miles is weight is quite a bit less because the cost is I asked Jesse that. I know. And I don't remember what the total mileage was. I'll find it. I'll let you. Yeah. But this is still I mean, keep in mind that like six years ago, we were spending $400,000 a year on paving and we're at 70 7.5 million. Million. We're getting caught up. So, yeah, absolutely. Um there's going to be a point where we can actually bring we can cut back on this a little bit because now we're in sustain mode. Mhm. Yeah. And then the the next priority is public safety vehicles and apparatus replacement. So um the proposed budget has um a replacement fire engine um as well as the replacement of all of their hose and hose racks. Um and but those are in the general are all these the public safety vehicle and apparatus replace that that will be that will be in the PIP fund though. Okay. Can we get a dollar amount for what those are? You you put the paving in there. Yes, we'll we'll we'll talk we will get to that because I have a summary on the PIP fund. Okay. So, you'll Thank you. Um and then the police vehicles, there's a total of three of 13 proposed vehicles in um the budget. Of those, I believe three are going to be are recommended to be paid for out of the drug fund and 10 of them out of the PIP fund. Okay. And that's a that's a decrease from the original. We had somewhere in there about 18, did we not? Yes. Proposal. Yes. in talking to um Chief Jones had originally requested um I want I believe 15 was it 15? I believe he originally requested 15. That's right. And then um with in discussions with him because there's they've had so many vacancies um he he said they could reduce that to 13 and then they have giving them staff to drive plenty of vehicles. Yeah. If they don't have the staff to be able to drive the vehicles it's fine. So it's fine just fine to reduce that.

Does does Chief and this this is obviously a question for Chief Jones, but maybe you have this answer. Does he track each vehicle's usage and mileage or how many hours usage? Okay. Yeah, they track. That would probably be good to get our hands on. Yeah. And they and they I don't know exactly how he tracks, but I do know that they also keep track of like um maintenance and if there's vehicles that go in routinely for maintenance, then um they will re you know, retire them. He's also said he's got a few vehicles that are over the 5year mark, but they have had zero maintenance issues. So, he's comfortable keeping if if there's not a problem with them, keep them going. You know, keep them in service. So, yeah, G. Jones, if you're watching, send us money. No, he and I did have that conversation. So, some staffing considerations that are built into this budget. Um, there is a 2% cost of living adjustment for all staff built into that um proposed budget. And then um you know like I already mentioned there's a reduction of one code's position that's being repurposed and transitioned over to parks to increase um give them an increase for parks maintenance staff. Um and then as a note when the budget ordinance and everything comes forward to the committee and to Bulma there will be the the organizational charts will be included in there with the number of authorized positions along with all of the updated salary schedules based on what's in the proposed budget. So, you will see all of that uh when the budget comes forward with the ordinance. That will all be included. And this is it right here. This is the staffing considerations. Does that include Maybe I'm jumping the gun again. I know we get to things. That's okay. Uh does that include any inc any uh additional pay for police or fire as a increase? No, it's a it's a straight across the board two and a half 2% for all employees. like nothing. Police, fire, city hall, everybody. It's a it's a

straight across the board 2% include executive. It includes all employees. Yes. And but it does not include Bulma, right? It does not include Bulma. Okay. Yeah. Um currently as we sit um with this draft, we have do have a deficit in our operating budget of just over $800,000. um you know staffer along with the mayor um we're we're looking at different um options and um ways to reduce that because we do ultimately have to come up with a balanced budget. So um you know hopefully by the time budget workshop number two comes around you all will see a um better picture than this. Okay. Um but the bud but that can be balanced with with our unused uh fund right you have to have revenues to support because this is operating budget you can't have it would be considered unbalanced if we were using fund balance to fund our operations our day-to-day operations. Okay. Yeah. To be a structurally balanced budget your operating revenues have to be enough to support your operating expenditures. So not your you know that like onetime expenditures can be funded with um fund balance and that's absolutely um appropriate and reasonable to do so but not for your day-to-day operations. Okay. Yeah. Um couple of factors that um definitely played into this that were not anticipated at the level that they came in. Um the ECC, that's the emergency communication center, basically the the 911 dispatch center. Um they had a 12% increase from last year to this year, roughly $200,000. Um we're estimating that our property and liability insurance is going to go up about $100,000. Um initial discussions um with um related to health benefits looks like that is likely to go up about $600,000. And then we had an increase on

the um TCRS. That's the um Tennessee retirement the retirement um pension that um the city pays into. Our rate went up um for that. And that's about $80,000. So those are some of the um non-discretionary things that we have, you know, we have to pay um out for for these items. And those are some pretty significant, excuse me, increases there. So we when when I talked to you and Jesse, you you guys had kind of said about the health benefits and possibly there could be some there that we could find. Um when will we know will we know that better what that figure needs to be and what's going to be included in the budget and then also you guys were going to talk to departments about finding discretionary funds and how do we get to the 830,000? Well, that's still being worked on. I will um let Jesse give an update um at some point on the health benefits. I know that he and Jason have been working on um options related to the health benefits. I spoke to him yesterday on that and what it's looking like right now is we would have to wait 6 months because the uh the deductible would reset and so all these all the staff who have paid into their deductible for the last 6 months they would lose that. So we may have to Oh, you mean as far as changing changing to who the state plan would have because it's an annual plan January to January, right? While our current plan is fiscal year uh so we would probably wait 6 months. So there may be a savings but we don't know what that's going to look like. So as it stands right now this 15% increases is with our current provider. Okay? So there's not any opportunity for savings with the current it's 15% increase best case scenario. Yeah. Yeah. Yeah. That's right. I mean we use 130% of our what what do you call it? The utilization rate was 130%. So there I mean there may be some opportunities there and we're

still evaluating. Hopefully we'll have some some better numbers and some updates um put together by the end of next week which will be presented at the second budget workshop um for everybody to see. you know, that's that's the goal. And so, we're working through all of those things. Um the next few slides um um the next the next few slides that we have here um are going over our special revenue funds. And this is just an initial look. I will say for the PIP fund um the infrastructure project um information as far as what's projected to be done spent this year, I do not have those numbers updated. I just got information at the end of the day on Thursday from um departments on their projects and what they think will be rolling forward from this year to next year. Um but we're presenting the same information to all of the committees. I haven't updated these forms yet, but your process for this is is or the thought is at the end of 2026, your fund balance would be zero in this. So, whatever you're carrying over from 25 would show spend or revenue in 26 and still zero. Okay. Yeah, that's the intention. And that may that may change a little bit between now and when when everything is finalized depending on what we you know what if there's any other recommendations for things to go in or out of this um fund. Um now was there any more thought on the LPRF uh about because isn't that 6 million as revenue and so we've just got the 2 million in there is the the the our cost, right? Yeah. So that will end up um sorry I'm trying to or four million and whatever. we contributing 2 million in. Yeah. So, this particular one for for parks um this was based on a number that was um provided to me as a as an

estimate. So, and I wasn't in I wasn't in the middle of the conversations on how all of that was going. So, that will be updated before it's finalized to show the total 6.6 million expenditure and then it'll show the $4.6 6 million revenue offsetting. It will be a $2 million impact to the fund, but overall it'll bottom line. It's still the same. It's just how it's presented. Yeah. It's how it's presented. Exactly. And the reduction in local option sales tax because we removed the half penny from groceries. Yes. Yes. That's exactly um you can see here we have the police motorcycles, some other um equipment. the there's uh 10 of the police replacement vehicles. The there's dry suits for the dive team for fire that's recommended in here. The replacement of all of the hose and the equipment and the hose racks, one fire engine. Um and then continuation of several projects. Um some additional um the LPRF project for parks in here. Um and then the paving um is recommended to be at 3.7 million. And just a clarification because we talked about like car vehicles, especially the fire engine that that takes multiple years, but we have to have those funds set aside. In other words, when you write a purchase order, you're encumbering Yep. that and you're putting it that in the numbers. And once you send that out, you've committed to that. Okay. Yeah. Yeah. We have to have in order to issue a purchase order, we have to have the money budgeted. So if if a fire engine costs a million dollars, we have to have that budgeted to issue a purchase order. That purchase order will roll forward along with its associated budget year to year until that item is received and we actually pay for it. Okay.

Um the next um thing here is our hotel motel fund. Um this particular um fund the revenues have been coming in a little bit low. um year-over-year for um you know last year and then um this year as well. So we're we're budgeting um those revenues down just a little bit for next year compared to what they were budgeted for the current year. Um just to be conservative and make sure that we're not, you know, overcommitting ourselves on the revenue side there. Um this is a very status quo um budget from the expenditure side. Uh there's a couple of items on there on line 20. Um you'll see that there's no money budgeted there. Um that that particular um the the high school cross country state championship will not be held in Hendersonville this next year. Um the TS TSSAA has changed their mind on where they're doing it. They're going to be alternating between West East and Middle Tennessee for those championships. So that $10,000 expenditure is not there. Um other than that, this is very very clean and status quo. You'll see the rock castle is in there. That was one that the um nonprofit committee recommended be funded again out of the hotel motel. And then the debt services payment on line 36. You'll see that that's going down just a few thousand. That's the debt services payment for the inline hockey rink that we host a lot of the tournaments and um such. So that's paid out of the hotel motel fund because it does draw a whole lot of people from all over the place here for the hockey tournaments. Um bottom line, we're looking at um ending fund balance of a little over $100,000. Um and barring anything changing there as far as expenses and revenues that transfer to other for the debt will go

down next year's budget. Yeah. So that fund balance will continue to grow if nothing else changes. Okay. Yeah. And then the next um special revenue fund that we have on here is the State Street Aid Fund. Um revenues on this, as you can see, year over year over year are right about $2.2 million. They do not fluctuate very much. They're they're very steady. Um they're trying to now this was also this is the one where we overstated the budget understated public works right? Yeah. On for the current year for fiscal year 25 um there was when this was budgeted the incorrect number of staff got assigned to state street aid for budgetary purposes in the current year. That's been corrected in for fiscal year 26. There should be 14 employees in there and now there there really are. Um other than that, the budget is relatively um stable. There's not a lot of changes on this um special revenue fund. Um there's also a million dollars. This line right here, number 22, um has a million dollars in there for paving. And this is utilizing a good majority of the available um fund balance assuming full full expenditures on here. Um are we fully staffed there? Yes. All 14. Yes, we are right now. Um public works is 100% fully staffed as of last week. Um this is one because these funds are restricted for very specific use. They can only be used basically for roads. That's all it can be used used for. um we do our very best to utilize those to the maximum um and save our

general fund. So, anything that can that fits into like one of the special revenue funds, we really assign those items to those special revenue funds um when it's appropriate to do so. So, that way we're our general fund um can be utilized a little more flexibly. And I had a concern about this when I voted I voiced it to you guys. If you look at how the fund balance has been going down, we're going down roughly 400 450,000 every year, right? We basically have nothing left at the end of 26. Yeah. So, in other words, that means we're going to have to fund $400,000 out of the general fund to take care of this for next year. Yeah. Jeez, it's not a rosy picture. Um, same thing here, too. The the drug fund is the next next one that we have on here. This this one um is it's kind of unique. Um the revenues don't change a whole lot year-over-year. Um sometimes you get a little more, sometimes a little bit less, but the last couple years have been um like last year and then what we're projecting for next year, they're relatively uh stable. Um, generally speaking, lines on the expenditure side here, like lines six through 11, yeah, 6 through 11 are the um expenditures that happen year-over-year in this fund. Um, and then one of the allowable uses for um and those are those are primarily the um expenses related to the police kines. That's 99% of those expenditures has to do it's the um vet bills, it's the housing, the lodging, it's the care, the food, all the supplies for the K9's come out of this out of the drug fund. And then one of the other

allowable uses is for one-time purchases such as police vehicles. So, you'll see that we had um one vehicle that was purchased back in 2024. Nothing was budgeted in 25. What was spent here in fiscal year 25 for vehicles on lines 12 and 13, those were actually purchase orders that were issued at the end of fiscal year 23 where the vehicle just came in in the current year. Okay. So adding in, we have three vehicles that are being purchased or um that are budgeted in here for fiscal year 26, which does bring that fund balance down, but we let that fund balance build for a couple of years and then we can purchase a couple of vehicles out of here. We do receive more revenue than what we need in there for the ongoing um daytoday operations for the um upkeep of those um kines. So with those three, does that bring us up to the 13 or is that adding addition? No, that that that there's 10 out of the pit fund and then three out of here. I'd like to get What's that? I'd like to get ready for both if we can. I know where Yeah. I think this is Yeah. So, storm storm water fund. Um the the projects on here. I know. Three minutes. It'll be really really quick. Um this the projects here. So, the revenues I get the lines three and four. Um line four here is our storm water fee that's attached with our property tax bill. Um that revenue is um you know very similar to the prior year. It's got a 2% uptick which is which is in line with how we with how our property taxes are as well. The project um revenues on lines one and two are associated with lines six and nine um down here. Those are estimates at this point. I'll have more refined numbers before we get to the budget workshop. And then the remainder of these um expenses are the staffing and then the costs associated

with like the drainage materials and um all of that. And then you know we do have a little bit of a fund balance that's in here. Um we're utilizing a chunk of that fund balance for budgetary purposes um for next year but I think overall this you know we're utilizing this fund to the best of our ability to make sure that we're funding those big projects. It is it's absolutely funding those storm water projects. budget workshop number two May 5th here at city hall. Um the focus on that will be the new and the continuing projects and the special revenue fund. We will also talk about um the operating expenses. Um just a summary of where we're at with the operating budgets as well at the at the budget workshop. Um and if you all have questions or things that you've you know have some specifics on, let us know ahead of time so we can prepare and address questions. I'm I know you all have um been asking a lot of questions which I appreciate the questions up front. So with that that's the last one. Any questions before you have one more minute? No motion to well don't you information and we'll review that uh on our own time. So the the I do not have updated sales tax reports. I do not have all of the reports in for last month. Send those email. I can send those all out via email because the only one that I would have ready would be the investment. None of the other ones are are updated through March. Perfect. May release. I will send them out via email um later in the week. Motion to second. All those in favor. Thank you. Have a good night. Thank you. Next.