Planning Commission - Regular Meeting

For those I haven't had the pleasure of meeting yet, my name is Mark Mandell and I am proud to serve as your city manager here in Tallery. We called this community meeting because we believe deeply in transparency and we know that a strong city is an informed city. Our focus this evening is the city budget. We want to give you a clear, straightforward picture of the city's finances, where our revenue is coming from, how it is being allocated, and the financial goals we've set to keep Tallery safe, vi vibrant, and growing. We also want to answer any questions you have. My team and I are here to listen and to answer your questions as thoroughly as possible. Your voice is absolutely critical to this process. So, please don't hesitate to speak up when we get to the question and answer session. Thank you again for being here and for your continued dedication to the city of Toary. Before we get started, I'd like to introduce you to our staff members who will be presenting and answering questions today. With us tonight are Assistant City Manager Thomas Gaffrey and budget finance manager Jacob Dulsid. A friendly reminder, we are recording today's conversation so we can share it with those who are unable to join us this evening. Additionally, only panel members will be on camera and have audio access during this meeting. We are using Zoom's question and answer feature, so you will need to submit your questions through that form. We will conclude promptly at 7 p.m. If we are unable to answer your question, we invite you to email us and we will plan to follow up. Please note that some questions may be similar, so we may answer a version of your question that also addresses other related concerns.

We will be recording this meeting and we'll post it on the city's website and YouTube. Here's an overview of what today's meeting will entail. We'll start with a budget cycle overview, hear about Tiller's current operating budget, discuss sales tax revenue, move to public safety, review key completed projects over the last three years, and finish up with some CIP projects and upcoming challenges. After this, we'll move to the question and answer session. Jacob.

Thanks, Mark. Let's dive in. We'll begin with an overview of the budget cycle. The city of Tallar's fiscal year runs from July 1st to June 30th. Budget preparation starts several months early with departments working together to project revenues, assess needs, and align spending with community priorities. City staff provides quarterly financial updates to review performance and policy goals with the city council and the city manager reports on the city's overall fiscal position and upcoming priorities in late fall. The city council conducts a mid-year budget review in February and provides further guidance. The proposed budget from the upcoming year is officially presented to the city council in the spring and public hearings are held following the presentation and residents are strongly encouraged to participate and share feedback. The cycle concludes in June when the city council adopts the final annual operating budget which goes into effect on July 1st. Now we'll move on to the current operating budget. This slide looks at exactly where the city gets its money, showing a total general fund revenue of just over $73 million. Our largest single source of income is sales tax at roughly 31%. Which means every time you or a visitor shops and dines at a local business, a portion of that money comes back to fund our city services. Property taxes make up the next largest chunk at 24%. representing a share of the annual taxes paid by residential and commercial property owners in our community. About 22% is grouped into a broad other category which collects various smaller funding streams like state or federal grants, building permits, fines, and fees for specific city services.

Utility taxes account for 18% of our revenue coming from small percentages applied to bills like electricity, gas, and tele communications. We also collect 3% from the transient occupancy tax, which is simply a hotel tax paid by out of town visitors staying in Teriy, allowing tourism to help offset our local costs. The final 2% comes from franchise taxes, which act like rental fees paid by utility, trash, and cable companies for the right to use city streets and public spaces to run their pipes and lines. Next, we'll go over general fund expenditures. This graph breaks down our general fund, which is the city's main checking account used to pay for everyday essential services like public safety, parks, and street maintenance. Taller's expenditures total about $69.7 million. Our primary focus remains on community safety. Combined, public safety makes up about 55% of our budget. 38% of that being the police department and 17% being the fire department. Investing in our neighborhoods is the next largest priority. 17% goes to community development and services to keep local programs and civic spaces thriving. 8% is allocated to engineering and public works which directly funds the maintenance of our roads, water systems, and public infrastructure. The remaining 20% covers essential city operations. For example, 7% goes to general services, 5% goes to admin and h and human resources, 3% finance, etc. We keep these administrative costs lean to maximize funding for community-f facing services. Next, we'll go over our sales tax revenue

for fiscal year 26. Sales tax revenue is projected at $22.3 million. which is a 3.5% decrease compared to the 23.1 million collected in fiscal year 25. And these fiscical year 25 numbers are unaudited actuals. This money is crucial because it directly funds essential local services like public safety, street repairs, parks, and community programs. The total tax total tax rate in Taller is 8.25% 25% applied to an estimated $86 million in local taxable sales. While over $66 million in sales tax are collected here overall, the city only keeps a portion of that, which breaks down to be about 223 20 $223 per resident. The biggest driver of this revenue is the transportation sector, which includes vehicle purchases, gas stations, and auto related services. General retailers are second largest contributor, fueled by everyday shopping for clothing, electronics, and home goods. Businessto business transactions round out our top three, reflecting the local economy of companies buying supplies and equipment from one another.

Thank you, Jacob. Thomas Gaffrey, assistant city manager here. Um, let's talk about public safety. Over 38 million of our general fund is dedicated to public safety, making up a massive 55% of our total budget. This chart highlights our ongoing commitment to keeping the community safe, showing a steady increase in total funding from 32 million in 2023 to 38.6 million planned for this year. For the upcoming year, the police department makes up the largest portion of these costs with a budget of 26.5 million. The fire department accounts for the remaining portion with an allocation of 12.1 million. This growing investment ensures our police officers and firefighters have the personnel, equipment, and resources necessary to respond quickly and effectively to emergencies across our neighborhoods. The city has made significant strides in advancing growth, innovation, and community opportunities. Here are several of our key completed projects over the past few years. We recently completed a major renovation of Zoomwalt Park, creating a beautiful regional destination that we will we expect will draw up to 50,000 visitors to downtown Taller each year. To support local entrepreneurs, we launched the Taller Business Innovation Zone or TBIZIZ, offering over 15,000 square feet of space along with mentorship to help up to two dozen startup businesses get off the ground. The city took significant steps to address homelessness by opening a designated encampment area and breaking ground on a new shelter that will provide living quarters and a path to self-sufficiency. We also proudly open the city's very

first dog park, honoring our fallen police canine, Bane. This park has fresh landscaping, water features, and a beautiful memorial wall recognizing Bane's service to the community. Finally, our downtown master plan received an award of excellence from the American Planning Association, validating all of the hard work and vision staff have for the future of our city center. Looking ahead over the next five years, we are moving forward with a range of capital improvement projects designed to stren strengthen our public facilities and support city growth. This program serves as a flexible planning guide based on current cost estimates, meaning the exact funding is subject to change as future budgets are officially approved. The pie chart shown here outlines a total planned investment of $255.9 million in our city between now and 2030. The chart breaks down where those funds will go by category, highlighting that some of our biggest investments will be dedicated to crucial water and wastewater projects. These major infrastructure updates are essential to ensure the long-term sustainability of the services that both our residents and local businesses rely on every day. Here are some of the current capital improvements we're seeing throughout our city with these capital improvement projects. We're actively investing in smoother, safer streets to improve the daily commute and overall traffic flow throughout Toi. Upgrades are being made to ensure all our city facilities are fully accessible to everyone in the community. We are focused on clearing and repurposing unused public spaces to make our neighborhoods cleaner and more inviting.

Significant improvements are planned for our parks and play areas so families have great outdoor spaces to enjoy. We are working on expanding parking access, particularly in hightra areas to support local businesses and make visiting downtown easier. We are modernizing our city operations facilities to ensure our staff can serve the public as efficiently as possible. A portion of our budget is dedicated to acquiring reliable new public safety vehicles to keep our police and fire departments fully equipped. Finally, we are continuing to support vibrant arts and cultural programs to enrich the community and bring residents together. Our primary challenge moving forward is ensuring that we can maintain a balanced general fund budget over the long term. As mentioned earlier, we are currently facing falling revenues, specifically with our sales tax, which is the city's main source of income and has been trending downward. As a reminder, fiscal year 2026 sales tax revenue is projected at 22.3 million, a 3.5% decrease from the 23.1 million collected in fiscal year 25, as shown by our unawit unodudited actual data. At the same time, we're dealing with rising costs across the board that continue to drive up our day-to-day expenses. These increasing expenses are largely driven by unavoidable factors like inflation, rising pension obligations, and the cost of addressing homelessness, as well as catching up on deferred maintenance for city facilities. Balancing these declining revenues with our rising costs will require careful

planning and strategic decisions to protect the services our community relies on. To address our ongoing structural deficit and balance the budget, we have to choose between two main paths. Generating new revenue through a local sales tax measure or making significant cuts to city services. Let's dive into the details of what each of these options would actually look like for our community. To ensure long-term fiscal sustain sustainability, the city is proactively evaluating additional revenue sources through a ballot measure for the November 2026 election. Costs for public safety, homelessness response, street maintenance, and general services continue to rise faster than revenue growth. This measure is about protecting Taller's quality of life. It would provide the revenue needed to keep our city safe. maintain our roads and support community priorities. The city remains committed to transparency. We consistently receive clean, independent financial audits, ensuring that any new funds would be managed responsibly and with strong local oversight. On the other hand, if we cannot secure additional revenue through the sales tax measure, financial projections show we will face a structural deficit in the future. We have already taken significant cost-saving measures, including delaying capital projects and maintenance. But that's not enough. Without new revenue, we'll be forced to reduce services. The impacts would be felt across the community. we risk longer emergency response times or reduce community programming. Finally, our roads continue to deteriorate. Decades of underfunding

have created a massive backlog with local street reconstruction now costing $1.1 million per mile. Currently, current funding simply cannot cover the needs. And with that, um, we finished the prepared portion of our presentation. And as Mark had stated earlier, we have some time for Q&A. And so if you'd like to submit those through the Zoom webinar Q&A feature, staff are available to answer any questions you have. Okay. So let's see. We have a question here. This question asks, "Why are we expecting a decrease in sales tax revenue?" That's a great question. And by the way, let me state this upfront. There are no bad questions. We really want you to ask any question that's on your mind. We'll do our best to answer them. But this question is particularly targeted to our presentation this evening. So, thank you for that question. It's not really one thing. Uh there's several factors. It is true that we have more development occurring in the city. We have more house uh rooftops that are coming in, new residents. Uh we have new businesses moving in. All of those things are great, but at the same time, there's a few different competing interests occurring. For example, online sales across this nation continue to increase. And so when people are not going to storefronts as much and they're buying more things online at Amazon or other vendors, uh that has an impact to us. Um, you may be aware there was a sales tax measure for on for online sales that there was a a legal dispute that occurred a few years ago, the Wayfair ruling that addressed this issue in part, right? Because many cities were

being impacted by online sales. Many businesses were being impacted by online sales and there was a discussion and decision about how is that revenue that's collected shared locally, right? Does that revenue go to where the distribution center is located at or does that revenue go to where the per to the city where the purchase was made at? That issue is still not resolved. That's still uh in the court systems and dealing with our California legislature is dealing with that issue. So that has not been completely resolved yet. But based on where we're seeing things trending, we're seeing it being trended not in our favor. That's one thing. The second thing that's related to that is um there's just in Tallery County alone and I won't get into too many specifics but there is one community where they had a very large um fulfillment distribution type center where they were they had a deal made where they were collecting all the revenue in that community and the state of California sued them and that particular case is going through the court system and based on everything we're seeing today, we're anticipating that that will not be ruled in the favor of the community and that money will get distributed out across the state of California and so that means less money that will be coming back into our jurisdictions or into county into the county pool. So this issue is a little bit complex. I'm just giving you a highle overview of it. But that is that is a big factor into why we see declining sales tax revenue. Let's see what other questions do we have here.

Looks like we've got one here, Mark, that I can answer. Um, are there any plans to put some handicap parking spots downtown or redesate others downtown? So, uh, as a part of the Zoom Walt Park project, additional on street accessible parking was, um, added with that project. Um, the city-owned downtown parking lot um, on J Street has accessible parking there, and I know that parking was addressed in the downtown master plan. And so that would also include when any lots are expanded or rehabilitated. Those would include um facilities there also.

Thank you Thomas. I see a question here. One of the things we mentioned in the presentation was the ter the term deferred maintenance. And so a question is what does deferred maintenance mean? Well, you know, deferred maintenance occurs when routine upkeep or repairs are postponed because of funding or staffing limitations or other resource limitations. And so over time, deferred delaying maintenance, it causes facilities or infrastructure to wear out faster, become more costly to fix or replace. A good example would be when we construct a road. So when you build a new road, it's typically designed to last about 30 to 50 years. if it's properly maintained and regularly maintained, you can get the full 30 to 50 years out of it. But over the past decades, including during the Great Recession, the city didn't always have sufficient funding to perform to perform all the road routine maintenance that was necessary. And as a result, some of those roads have deteriorated faster than expected, reducing their useful life and requiring replacement sooner. And so you can't always see that when you're driving on the surface, but you know, you start getting cracks in road. They're not p properly patched and replaced. Then water gets into the cracks and it gets into the subbase below the roads and it starts eroding the base of the road more quickly. And then and then you start seeing some of the problems that we have. And unfortunately, this is a problem that we see throughout the city of Tallery. Not not uncommon in a lot of jurisdictions. And one of the things we're seeing is some juris I'll give you another factor that affects the road cost is um you when you do a road project and you're completely replacing the road you have to provide all the ADA upgrades which can be very costly including because sometimes you have to go out and acquire land from people to be able to make you know to be able to put all the improvements in that are necessary and so that can you know very easily dramatically increase the cost of the

road project. And so you see some jurisdictions, especially in Southern California, who have stopped doing road replacement altogether. They are only doing patch and repair. And we're not in that position yet. We want to continue to do full road replacement, including all the ADA improvements, but we need the additional revenue to do that to avoid just doing a patch and repair project.

And then Mark, I'll add to that in terms of things that we're doing. Um the city's planned significant investments in this infrastructure over the next 5 years as a part of the CIP. So from 2026 to 2030, the CIP currently forecasts approximately 17.7 million um towards transportation and road projects.

Thank you, Thomas. Thomas, um, we see I see a question here that I think maybe you'd be better to answer. It says, "What city services are supported by the sales tax revenue?" Sure. Um, so sales tax revenue supports a number of city services from public safety, street maintenance, parks, community programs. Uh these funds help maintain these core services in invest in the quality of life amenities that help keep our neighborhoods safe, clean, inviting, and well served for the residents of Toary.

Thank you, Thomas. Um I see a question here I'll take. It says, "How does the city monitor the budget process throughout the year?" So um you know, that's done in a few different ways. Um we do it on a quarterly basis. We provide financial updates uh on an ongoing basis to our city council and we do those also at the city council meetings every Tuesday, the first Tuesday and third Tuesday of the month. We have council meetings starting at 5:30 p.m. And so on a quarterly basis, we provide those financial updates. They're part of the record. And I think that really helps us to ensure that we keep our spending aligned and with adopted council priorities and also provides that transparency to the public and then allows the public to respond if there's questions or concerns. We can do it on a on a Tuesday evening. That's one of the ways. And then I think you know obviously we do it in a variety of different ways. We have a strategic planning session early in the year every year. We have our budget meetings coming up. Our first budget meeting will be uh tomorrow night uh for the fiscal year 27 budget and we'll have several more hearings between now and the end of June when the budget's adopted. We every year do an annual audit. So the auditor will come at the end of the year and present. They'll independently review all our financial documents and let council know how we did and where we're on track and you know what things are missing or what we need to improve. So there's a lot of different work that goes into the budget and we really appreciate our citizens sort of looking over our shoulder and participating in the process. So thank you. See what else we have here. Okay. So, one question was um can you explain well here's actually an point

that I want to I think this is a very important point that I want to talk about for a minute. The question is essentially what does the operating budget pay for? And I'm going to expand my response a little bit. And so the first to answer that question the operating budget pays for the city's day-to-day operations right across all the departments and services. So, it includes everything from staffing, equipment, supplies, uh ongoing costs required to keep programs running and deliver services to residents on time. That's the basic response to the operating budget. But one of the things that's really important is there's a difference between sort of our ongoing everyday operating budget and sort of um our long-term capital uh savings and capital projects, right? So, think about it this way. As a citizen, you know, you have a checking account and you have a savings account. And the checking account ba pays basically for your day-to-day operations and services, right? So, you're paying for your mortgage and, you know, your car payments and your gas payments, right? Everything that you're bringing in your regular paycheck largely covers your day-to-day expenses. And then you have the savings account and that's your rainy day fund, right? and you use that for if you have to replace your roof or if you want to take a big trip or you have to send a child to college, you know, what whatever those things are, whatever those purposes are, the city has the same thing. So all of our funds um to a certain extent are restricted except for our general fund, right? So when we bring in gas tax revenue, for example, we can only use gas tax revenue for gas tax eligible purposes, which is largely road projects, right? you can't use gas tax revenue to pay for more police officers or firefighters, for example. And so sometimes citizens will say to me, they look at an account and they'll say, "Well, there's all this money sitting in that one account and I'll say, "Yes, but that money can only be used for restricted purposes." Another thing I want to mention about that is citizens will say, "Well, how much money do we have in savings?" And

I'll say we're required under our policy to maintain in our general fund a and all most all of our not all of them but many of our funds have reserve policies associated with the most important one is the general fund because that is our most flexible fund and so we're required to have between 16 to 32% of the general fund in reserves for a rainy day. We actually have 25% in reserves today. And on top of that, we have several million additional dollars sitting there on top of those uh of that general fund, which we use for other one-time expenditures. That's very important. You want to use your operating funds, your everyday funds to run government. And then when you have special one-time expenses, then you use those special savings dollars uh for those onetime expenses. Cuz if you use one-time dollars for ongoing expenses, you can pay for it one year, but then next year you'd be out of the money. So hopefully that answers that question.

Thomas, are you seeing other questions? Uh yeah, I was going to grab one here, um which was uh when can residents provide input on the budget? And so we have upcoming public hearings that'll be held various times um during the spring. And those have an opportunity for residents to share priorities, ask questions, and help inform um any of specific questions that residents may have um about the budget or things that they'd like to share with city council.

Thank you, Thomas. And you mentioned city council. Well, you know, I'm remiss by not mentioning this earlier, but I want to share with our citizens that none of what we do as staff is possible with without city council. We are very fortunate to have an amazing city council that are your elected representatives here doing and managing your day-to-day business for the city. Um, and so I'm certainly grateful. We are all grateful to our council members. uh they love to have your input and your insights and your thoughts on about the things we should be doing to make Tallery better. Um but let me move into a question I see. It says, "What external factors affect the city's finances?" Well, I would say essentially the same external factors that affect your finances, right? So, you know, inflation has a big impact to our budget just like it does to your budget. uh rising pension costs, um homeless related service demands. I already mentioned deferred maintenance for example, right? That has a big impact. You know, if we if we properly m if we're able to we have the funds to properly maintain something, we extend the life. If we don't, then it it shortens the life and we have to come up with bigger dollars sooner than later. All of those kind of pressures, you know, increases our cost over time and makes careful planning especially important to preserve the service level that our citizens enjoy and address infrastructure and community needs. Then I've got one here, Mark, that I'm going to answer. Um, how else is the city spreading the word about these meetings and projects other than social media? How can community members be notified and stayed informed and engaged? um and if these meetings conflict with work, kids practice schedules and so on. Um so a couple things, this meeting as well as all the council meetings are recorded and then um available on the city's website or YouTube so that you can um capture those

um after the fact. Um in addition to our social media channels and city website, um for example, this meeting was also advertised in the utility bill. Um, and if you get an electronic utility bill, that's still delivered with a link so that you can um, see all of those flyers that are sent with the utility bill. Um, when the council agendas are posted the Thursday or Friday before a council meeting, that also has information on how you can participate remotely, as well as how you can submit comments via um, email. And everyone else, if there's something that I miss, please chime in.

Okay. Thank you, Thomas. I see a question here. where it says and hopefully I understand this question. It says since parks and wreck have benefit benefited from e elop funding over the past few years which covers best club fees and salaries. Where has the previously budgeted money been reallocated? Um that is a very good question. I I hope I understand that question and I'm not sure I'm going to be able to answer it properly for you. I may have to do a little bit of research on that one. And so whoever submitted that question, if you can make sure you also submit your email, I'm going to make sure I get with staff. But I'm going to give it a shot and then Thomas or Jacob or anyone else, if you have more information on this one, let me know. But, you know, I've I've been with the city about four and a half years now, and I really didn't have that much familiar with the city. I'm not from the Central Valley, so I I was not that familiar with the city before I came here. We are we have a great uh we benefit greatly from a pro program called the BEST program. It's funded in part obviously largely through our schools districts, provides services to our youth. Um it's it's a great program for us. And the question is, you know, as I understand it is, look, we've had these dollars coming in to cover club fees and salaries for employees, etc. What did the city do with the previously budgeted money? I I don't know that answer to be honest with you because I'm not sure how much we previously allocated towards those those employees. I I think the answer is and Mark or Jacob if you're on correct me. I think the answer is we didn't budget necessarily all of those dollars for those programs uh in the previously. Um I I I'm not certain, but I really want to do some research on that because I want to give you the right answer. So, what we'll do is if you can give us your email, uh, whoever submitted that question, I'll make sure that tomorrow we have staff do some research and within the next day or two, we give you a better answer.

I think there's one more. Thomas, do you see that one? One second here. Mark, if I may, I I can perhaps address give at least a partial answer to that question, please.

Okay. So, uh, when when you look at a budget really for any fund, but particularly the the general fund, and I'm sorry, this is Mark Roberts, chief financial officer, uh, for the city, uh, when when you look at a budget, particularly the general fund, which is the primary operating fund of the city, you have to look at the revenues the city's receives as a pool of money that is that is allocated. We don't necessarily when when something isn't funded at at at the same level or for whether it be uh just because there is aren't sufficient funds or we have other revenues that replace it and or those revenues go away. Uh we don't necessarily dollar for dollar allocate those funds elsewhere. We look at the city's needs as a whole. Uh do we need more staff to provide better services to the community? Do we need additional police officers or firefighters for for additional public safety? Do we need to allocate money to the streets uh to the streets program to to repair our streets and do things of that nature? So often it's not a dollar in and I've worked for several cities and it's the same everywhere. Uh you you rarely see something uh you know dollar for dollar reallocated from one place to another. So there there may be there may be priorities that have changed or maybe something was allocated somewhere else, but generally again you're going to see just a uh spreading of that money to various places and to the cities and the and therefore the community's benefit as a whole.

Yeah, thank thank you Mark. And that's kind of my intuition of what has occurred here. I I I'll add to that just a little bit, but we'll still make sure we get you an email response. Um I'll give you another example. Well, every year we budgeted X dollars towards, you know, out of any other general fund expenditures, X dollars or Y dollars towards whatever it is, but we might have a cost savings in one area, right? So, we might have, let's say, um, you know, we lost three employees to retirement and we didn't refill those positions in that current year. So, we have those saved dollars from those positions. It it's not necessary that those same dollars next year get allocated to those those three positions. Again, as Mark mentioned, um it may get reallocated to a different priority. So, for example, we may have had a savings in one department because of three positions, but we may have had an increase in fuel costs, in equipment repair costs in another department. And so, we shift those dollars from one to another. As long as they're general fund dollars, and they're not restricted funds, like I mentioned before, like gas tax revenue, for example. as long as they're general fund dollars, the council has the ability to move those dollars back and forth among the different funds as priority shift or as needs arise as Mr. Roberts mentioned. And I suspect that's what it is, but we'll still do a little bit more research and try to get you guys an answer on that one. Um Thomas, do you see anything else?

Um last thing, if we can just go to the next slide because that has um some more information. Um, whoever is driving. There we go. Um, so we have another one of these meetings that will actually be in person. Um, the occurring next week on Thursday from 6:00 to 7:00 in council chambers. And then we also have a link there to our budget website.gov/budget. um that has an abundance of information for both the current year and prior years.

Yeah. And I'll just add to that um you know, so folks, if you join us this evening, thank you so much. We want to welcome you to join us next week or tell your friends. Um we are advertising through social media. We're putting this in our utility uh bills to let people know about it. We're putting it on the city's website. The this meeting was, as mentioned in the beginning, is recorded. And so once, you know, probably tomorrow or within a day or two, we'll post this session on the city's website. And so we encourage you to help us get the word out uh to our citizens so they're made aware of it and they can join us. If there are any questions that we didn't answer, I'd encourage you to forward those in an email to us or to me personally at my work email. I'm happy to answer them. Uh or bring it to the next meeting, please. We want to make sure we answer everyone's questions. We really thank everyone for their time this evening. Um, we're really grateful to to all of our citizens, not just for, you know, the great work you do to make Tallery great, but also for your support of our staff and our council, and you're joining us this evening. We hope you have a we're done just a little bit early tonight, but we're we're hopeful that you can enjoy the rest of your evening, and we look forward to seeing and talking with you in the future. Thank you so much. Bye-bye.