City Council - workshop

Welcome to budget workshop session number 2 here. We got a few schedules we're juggling so we're going to go ahead and push till 10 and then we'll take a. Recess we'll try to do lunch sometime between 12 and 1, maybe kind of a working lunch. We might actually have a few people that are leaving this afternoon. So. we will get through everything and we'll push hard we're going to call ourselves into session and to order here uh recognizing a quorum um i don't have any other business i need to tend to correct yep exactly okay uh councilman would you mind opening us in prayer and then we'll get going yes sir if you'll bow your heads dear heavenly father just thank you so much for the opportunity to gather

the opportunity to share wisdom, share knowledge, share ideas, and look at data. Let us make the best decisions that we can, just guide our minds, guide our thoughts, to make the biggest impact we can for this city that you've blessed. Bless everyone in this room. Bless everyone that has given so much time and energy to create this budget. Let it be pleasing to you. And let our actions be pleasing to you. In your name we pray. Just a second. I'm sorry. And please, Lord, be with Don today in his procedure. Let the doctors be skillful. And... Be healing to him. In your name we pray. Amen.

Amen. Thank you, sir. Hand it over to you, Mr. City Manager.

Absolutely. Glad to do that. Thank you, Mayor, members of council, for being here today. This is day two of the workshop. As the mayor said, our tentative agenda today, at least for timing-wise, is given some of your scheduling conflicts. Yeah, we're going to try to power through to 10 o'clock, and then we're going to give a chance for Councilmember Prescott to join us via Zoom as he travels for a job today. THEN WE WILL GET TO LUNCH AND THEN I THINK MY RECOMMENDATION TODAY IS I KNOW WE'RE GOING TO END UP LOSING COUNSELOR TIPS AND COUNSELOR PRESCOTT TODAY SO I RECOMMEND WE GO TO ABOUT TWO-ISH OR SO AND MAYBE WE CAN CALL IT GOOD AT THAT POINT AND THAT WILL GIVE US A STAFF A CHANCE TO KIND OF WORK THROUGH WHATEVER WE DISCUSSED TODAY IN PREPARATION FOR TOMORROW. BY THAT POINT THERE WILL JUST BE THREE REMAINING COUNCILMEMBERS AVAILABLE FOR THE MEETING. So with this, I'm going to get started. Again, our overall goal today, we started on Tuesday. We didn't get quite as far as we wanted to. So our ultimate goal today is to discuss supplemental and CIPs and the direction that the council would like us to go on some of those based off our limited available funds towards those items. But to get there, we need to begin with available funds and to know the starting point before we can discuss the CIPs and supplementals. After observing and reflecting on Tuesday, we as staff decided that it might be helpful to take a step back and walk you through how we derive your available fund figures. Whether it is leftover operating, existing reserve, or closed out CIPs, it all gets rolled up into your available fund calculation that feeds into your budget consideration for today. And all this starts with your ACFER. That is an audited point in time that we start with. Therefore, I'm going to ask that our ACFER expert, Katrina Owens, she's going to come forward today and provide a presentation that ultimately gets you from the ACFER to available funds and how we develop those numbers. That then gets us to our ultimate goal of discussing supplemental and CIP requests. We will start with Katrina, and then we're going to roll into something on CIPs with Andrew at that point. So with this, I'm going to turn it over to Katrina. We have a presentation for you now.

Good morning, Mayor and Council. On Tuesday, we had numerous questions on the cash flows, the available sales, CIP. So this is a presentation to help answer those, to help bridge the gap between budget, available sales, cash flow, and ACFER, and help you to see how they all fit together. Now we have multiple purposes that go into a budget. It asks what services can we provide? What are they going to cost and how will we pay for them? We have the city council role, which is going to set priorities, policy, make, set the tax rate, hold the public hearings and adopt the budget, we have this management and staff role where we are bringing you the data of what the needs are. We're going to build the forecast, identify the needs and risk, recommend a balanced budget, and manage it after it's adopted. And then we have the public role, the Texas law that provides for a proposed budget, public inspection, public hearing, and council adoption. So we're gonna talk about the life cycle of all of it. We start with the budget, the plan. We are actively forecasting 26, 27. Once that gets adopted, we're going to start monitoring it. We'll put it in place after you have gone through your needs, set your priorities, and then at the end of the year, we will audit it. That audit is the first step of the plan for the next year. So it's just a cycle. Budget, put it in place, look at budget to actuals, and then audit it and then start the process again. Now, we have three financial views. Now, they are not going to tie because this is government accounting, and they show different purposes. We have the audited net position. This is your ACFR. This is the front of your ACFR. This is your government-wide accounting. This is a required statement from GASB, or your government accounting board, your accounting standards board, and it's the beginning of your ACFR. This translates to a financial statement of any business. Your enterprises, your internal service will be more in this bucket. Your second bucket is going to be your fund accounting. This is going to be all of your departments of the city that roll into the general fund. This does not include fixed assets, does not include depreciation, does not include debt. Now your budget to actual is going to be more in this bucket, because it's a fund-based perspective. Your third bucket is going to be your budgetary bucket. You're going to have your available funds, which you look at your 90-day reserve. What else do you have? Access reserves. And then you start looking at your priorities. Then we look at the cash flow. Cash flow tells you when you're balanced, and you need to stop finding priorities assess money to. Now your cash flow is going to have a foot in the second bucket of your fund accounting because of the revenues and expenses. That is fund accounting when we present that cash flow to you. That middle part of the cash flow is fund accounting. This is not a required government statement. You're not going to ever find it in the ACFER. The available cash flows, the cash flow statement, those we pick and choose lines from the ACFER to build this solely to present what you have available to spend. Now the ACFER is the year end for prior year, but it's the beginning of the next year budget. It's going to tell you how it actually played out. It's going to help you with your monitoring. But what it's not going to do is not going to tell you what your active CIP, how it's going in the year. It's not going to tell you the changes in the current year. That's a monitoring active in the middle of the year. Then we have staff coming in and presenting budget presentation. What gets added during the year? We present the forecast, the CIP commitments, the reserve needs. We take the ACFER and then we build on it to provide you a plan. At mid-year, we cannot take the ACFER, enroll it, and give you an available funds calculation because we need numbers to stop moving. It's a snapshot in time for the ACFER. That's why we use that as the beginning point of the budgeting. Now what a mid-year can show you, it can show you what happens to your CIP. It can show you all of the monitoring that's happening, budget to actual. It can show you how your excess reserves are being spent. It can show you the changes that are happening during the year. Your capital project tracking, this affects your available funds. Your active projects will affect your committed number, which in those couple slides, we'll start showing you the actual calculations on available funds. Closeouts are going to increase your available funds because you're going to have less committed. And then the available funds test is not going to be a dollar for dollar because we closed 43 million but you have to factor in cash and investments and liabilities so the calculation is not going to be dollar for dollar on these closed projects conservative mid-year closeouts um we're going to include the closed projects we're not going to include the ones that are in the closeout process. They still have invoices to pay. They still have signatures to obtain. And then we are going to exclude everything that's still active. Now this is just the formula. We'll start seeing the actual numbers from, I believe it's the fleet department in a few slides. We're gonna take your cash, your investments, your receivables. We're gonna take out your commitments of your CIP. verified any closed projects are part of that calculation. And that's going to give you what your reserves are, what you can spend. And it helps you set your priorities for this next year. Now let's take a moment to talk about depreciation. Depreciation being non-cash. When we budget, we're on a cash basis on the budget. So we do not include depreciation, even in the enterprises that typically would have depreciation. We do not include them in the budgetary perspective. Now, from your ACFR, page 200, this is the fleet. Now, this is the calculation which we will break this down in the next few slides. Your cash and investments, your receivables, liabilities and encumbrances, and your CIP. So this comes straight from your ACFRA page 200. We had some cash and investments and some restricted cash of $13.3 million. Now your appreciation depreciation, that's just marking investments to markets and it's rolled up into the investment line. So we're not representing that in the equation because it's already in there. Your next is assets to be converted to cash. That's your receivables. You had some accounts receivable, you had accrued interest to be received, and then you had some due from other funds that would be received. That total was 3.3. Then we're taking out liabilities and encumbrances. So your total liabilities for fleet was 4.2 million. Now we have leases and we have software in there, but we're going to budget for leases and software. So we don't need to, excuse me, double account for it. So we're going to take these out of the equation because otherwise we'd have them on two sides of the equation. So we're going to take out that leases and subitas. That leaves you, we need encumbrances. Now encumbrances is a PO. It is the very first step of liability purchase. So we haven't received an invoice, but we know that we have a liability to pay. So that is 4.4. So the total liabilities and encumbrances is going to be 5.9 for fleet. Now we get into the construction and process. This is the Note 12. That top box is from the ACFA for Note 12. This is the item that is being restated by CLA. That last column is what is being restated. That is the commitment footnote. Now we took, basically we took a gross line versus a net line. And so it was a new report for the staff. We just chose the wrong line. And so when we look at the commitment, it was originally at 15.5. We're going to now present you an updated note 12, what that would look like. or in a few slides, excuse me. So this is still the original Note 12 in the ACFER. So we have a negative 4.7. That was presented to you on Tuesday on that cash flow. Now if we update Note 12, and that's really hard to see. So if it changes the available funds, that first number, you're now not in the negative. It changes the capital line in the middle of the page. You're now not in the negative. And it changes the adjusted available. You're now not in the negative. Your proposed budget's the exact same data that was presented. So when we update Node 12, you're gonna have all positive data. But we didn't have Note 12 updated, so it's a timing issue of can we present something to you that we haven't actually got updated just yet. And then water sewers, the exact same. They start in a negative balance. Once we update Note 12, they're in a positive balance. And that, once again, that proposed budget's the same data that was presented to you on Tuesday. Drainage is going to be the exact same. Once we update Note 12, you know, well, this one does have a, starts with a negative 4.6. But once we update the commitment part of the available funds, you now are going to end the year at a positive 84,000. And your proposed budget is still the exact same data that you were presented on Tuesday. Airport is the same way. We took out, updated the Note 12 and it will present positive data. And proposed budget is still the same as prior year. There was also a question on the one-time expenditures on general funds at $6.7 million. So we have a calculation of how that breaks down. Annual leave buyback was about $530,000 of that. We have DRP, which is going to be longevity checks, $275,000. Holiday vouchers, about $50,000. Parks, E&I, we're having to back that out because there's some loan in that, there's two million E&I. So we back out 922,000 and then compensated absences of 1.2 million and general construction of 5.5 million. And that leads, Grayson, that slides.

Yes, and so the goal here today was to give the council kind of behind the scenes as to how we come up with available funds and also try to explain the Note 12 matter as well. So in the examples you saw there are once Note 12 is updated with CLA, that's what it would look like. Obviously, as a budget here, we want to make sure that our budget matches the ACFER. So until that note is updated, you do see the Tuesday figures in your cash flows. I mean, we did approach CLA Tuesday, say, hey, we would like to expedite the Note 12 update. They're working on that. I don't have a timeline for them just yet, so I don't know if we will have that done in time to finalize the budget. But, again, we wanted to give you the examples of what it will look like so that you can see that at the end of the day, the bottom figure on that central column there doesn't change. And so, ultimately, your right column, your 26-27 budget doesn't change, whether it's a starting point with existing Note 12 of a negative 4.7 fleet or the final point of a positive 10, it still gets you to the same point for available funds for fiscal year 26-27. So at the end of the day, this slide here shows you how much funds we had to work with for reoccurring and available one-time CIPs in these funds here. So we've done the work for you the last several months, staff working with financial advisors, working with consultants, working as a team. have worked through the budget we've added everything up subtracted we can and this is ultimately where we have available for you to work with today when it comes to left column c submentals and right column there cip so again general fund we have about 6.2 million available now we will note that as of yesterday we have our new august sales tax figures And we are doing very well right now. So there is an option to, if the council wishes, to increase our proposed budgeted sales tax even more because the forecast has improved with new data. Again, as budgets progress, as we do budget workshops over time, more data is available, more data is available, so we can get finer and finer tuned. So if the council wished, I think we could add... We can add potentially $1 million in sales tax to the proposed 26-27 budget. That's a good thing. So right now we show you 6.2 because that's what we gave you on Tuesday. It could be 7.2 if you wish to work with that. Again, it depends on your comfort level for risk when it comes to sales tax. Sales tax is volatile. Unlike a property tax, you can set it and you're going to basically get it. Sales tax you have to just hope that we're all still shopping this time next year. So there's that Water and Sewer Fund 2.5 and ongoing reoccurring available funds. Airport 620,000, Drainage Fund 200,000, An IT fund, $135,000. This is the reoccurring, this is the things that you can put towards ongoing like colas or supplemental things that we want, more services we're trying to provide for our community. Things that are going to stay with the budget year after year after year. Right column is your one-time CIP type things. General fund, $11.9 million. Water and sewer, 3.1 million. Airport, 5.7 million. Drainage, 800,000. Solid waste, 3.1 million. And civic center fund, 1.9. That is, again, after we've done all the math, we've done all the work, all starting from the ACTFR, This isn't made up, so this is often, we showed you how we got from ACFER to here. This is where we end up today. This is the roll up of all your closed out CIPs, all your end of year operating that's left over, all your existing reserves, minus all your liabilities and everything. This is what you end up with to work with today. So this is where I'd like to take us now to go towards Andrew with supplementals and CIPs and start talking about that conversation on how to start allocating this towards the list of things we have.

Quick question. So you are saying it includes reserves and CIPs, but I want to make a distinction. You're saying that existing commitments from previous years are included in those amounts or not included?

This is the net after all that's been taken into consideration. After you've looked at your cash flow sheets, after you've considered Existing CIPs, closed out CIPs, proposed expenditures for salaries, for electricity, those kind of things. After you consider all that, when it's all netted out, this is what you have to work with when you look at your available funds over expenses. Am I saying that right, Andrew Lola?

Yes, and meeting reserves.

And meeting reserves, yes. And so this figure here is after you look at our three-month calculation for reserves. This is what you have to work with today and tomorrow to tell us, you know, I want to give staff a 3% COLA, or I want to add an AMW officer, or I want to – this is what you have to work with.

So new CIPs separate from existing CIPs. Correct. So existing CIP money, borrowed monies, debt, you know, things like that, not reflected in this current budget.

It is reflected in budget. It's not in these numbers here. And these numbers here is the net after all that's been taken into consideration. One of the earlier slides talked about how, again, closeout revenue gets rolled into this. Existing CIPs, things that we're under contract for, those are still budgeted to be done. So we still have to get those things done. But this is your final net to work with for new CIPs.

To make sure, though, at previous budgets, like current budget for 26, right, those CIPs, over $100 million, was it $108 million maybe that we had, something like that, This proposed budget, $27 million, how many? $43 million or $47 million?

It's just going to depend on debt versus cash.

Let's just say there's $40 million. The existing $100 million that you know, as in current 26, was voted on already. The 40 million of proposed would be voted on in this budget. And you're saying the existing 100 million is considered, but not considered in the amounts that we're looking at here. So like fleet services, as an example, we don't have a budget line item for those previously approved CIPs in this budget.

It comes out of your available funds calculation.

How would that work? So if you go to CIP, or I'm sorry, if you go to fleet services, show us on what you're proposing. Show us that line item that pays for those previously approved CIPs. And what I'm really driving at is, do we have a comprehensive budget that we're looking at? That reflects all balances and how much we have left to pay versus so I want to say note 12 was it y'all help me was it 280. was the total that we pushed in the ACFER. So in the ACFER, we capitalized closed out projects. And we did 100 plus million, 109 million. That's probably the wrong number. But then that means those are closed out and they're capitalized. But then we tell the audit company how many millions we still have left sitting in that CIP of previously appropriated monies. And it might have been 280 plus, right? NOTE 12, NOW YOU GUYS ARE RECOMMENDING THAT IT BE REDUCED DOWN TO 207. AND SO IF WE'RE GOING TO REDUCE THAT DOWN IN COMMITMENTS, BECAUSE I HEARD STEPHANIE SPEAK TO THERE WAS AN ERROR IN WORKDAY SOFTWARE THAT WE REPORTED OUR COMMITMENTS HIGHER. SO IF WE'RE SAYING ALL THE COMMITMENTS ARE IN CURRENT BUDGET, Where's that line item? And in 27 budget, do we have that line item?

So the commitments are in the available funds calculation for projects through the end of fiscal year 2024, 2025. So you see that in the construction in progress balances, for fleet we have $15.5 million in construction in progress.

Okay, so out of the $280 million worth of commitments at the end of FY25 going into 26, we had $15.5 million in that fleet fund that was going towards $15.5 million worth of commitments Is that correct for fleets? Yes, just for that fleet service. Yes. And that's part of the 280Million dollars that we are adjusting and you back that 15, 5 out and then you show me the remaining balance. Of available funds in that that fund. Yes.

Okay. Yeah, again, ultimately, get back to that one slide. This here is the final you have to work with for new. We've taken into account, as staff, we've worked through the numbers, all your existing commitments. Again, back to what Mr. Reid and I were talking about earlier today, is the budget is a pool of funds. There's pluses and minuses. When you add up all the pluses and minuses, This here is what you have to work with today to commit to new things. The budget takes into account what you've already committed to, whether it was an approved contract or a planned contract, the budget takes into account all of that. This is the new to be committed going forward. That's the goal of the budget process, is to work on these items here. And as we close out other CIPs, we will bring those back to you the next fiscal year. And so as the next 12 months play out, we will continue to close out more CIPs and either bring them to an end, either contract completed or no longer feasible. And then a year from now, that council will be able to then plan those funds for the next budget. And so it's an ongoing process.

Yeah, so if we can go back to page 49, for example, because we're talking fleet, it's just good to stay there. You guys revised this projected year end with that negative 4.7 up at the top, and then you had this capital reduction under expenditures of 14.7. Is that what you were trying to do? prior to the Note 12 correction. And then this doesn't change Note 12. Note 12 would still be 288 in commitments. And in my conversation with Kerschnack yesterday, he was telling me he thought it was being reduced by 80 million, 81. So it was like 207 is what that number would become.

Yes, so the numbers represented are from the ACFAR as it currently stands with Note 12. When the revisions are made, we'll have an updated cash flow. And we did give a few examples of how the updates would look like once Note 12 is updated.

Okay. So the updated fleet proposal, what page is that? There it is. If we look at this, what you're proposing is that we would start the year at $10 million in existing fund balance or net position on this fund, right? This one's a net position.

That would have been the 25-26 starting point this current fiscal year. So that would have been the audited figures for that. Again, what we're starting with for the budget is $4.7 million on the right column.

It's not net position. It's available funds. Available funds, yeah. It doesn't start, because net position is government-wide. We're dealing with funds. So it's the calculation.

So if I look at the ACFER.

You're not going to see it.

No number correlates.

You have to take cash investments minus liabilities encumbrances.

That was the calculation we did in the slideshows earlier. The staff walked you through the process of getting to that ultimate number there.

Yeah, and looking at the ACFER, though, if you go down to, you know, on page 200, if you go down to the bottom, Unrestricted, and it is categorized as net position according to our audit firm.

That is correct.

Unrestricted is 12.7 million.

But that's not an available funds calculation.

What do you mean it's not an available funds calculation?

That's not going to be the exact same number that's sitting up at the top of that line. on the screen.

So you're doing your adjustments and then you're giving us the available funds calculation.

Right. That's what you have to spend. This tells you when your budget is balanced and when you need to stop finding priorities.

So fleet services at the end of 25, according to the ACFER, net position of 48.8 million. You calculate that down through commitments in CIP that are remaining, less encumbrances and a few other things, and you start the year at 10 million.

Right. It's a cash basis versus that's a modified accrual basis. Right. So we've got to put apples to apples.

Yeah, so unrestricted of 12.7 means what?

It is not tagged for purpose. You can spend it any way you want to on those reserves. But it's still not in that position.

No, but unrestricted is unrestricted, right?

It's unrestricted for any purpose.

So it's not committed to the CIP balance. True. Okay. So we start the year with $12.7 million in unrestricted funds according to the ACFER before you go through and do your calculation. Right.

In a modified accrual form, yes.

But unrestricted is unrestricted?

It's unrestricted in the sense that you can use it for anything within that fund. So if it's a fleet item, you can use it for a fleet item.

So help me here.

It's not cash you can dedicate toward. You don't have $12 million to dedicate towards whatever. If there's calculation, you have to go through. No, you do. No, you don't.

According to the Act. So in unrestricted funds, how is the 12.7 million in unrestricted funds at the end of that year not able to go towards whatever we would determine?

So in our available fund calculations, we look at the cash aspects of the current assets. That's what we put together to calculate how much resources we have available in terms of our actual cash. So we add our cash and cash equivalents, we add our restricted cash as well, and reduce the CIPs as well as liabilities and encumbrances. The view we show is focused on cash, what we have in terms of available cash resources to commit to future resources, future expenditures for the city.

Correct. Then we have our net position from there.

The net position is a different view on an accrual basis.

Is the net position important?

It is important because it provides the position of the enterprise or the fund at a particular point in time.

But the point in time would be the close of business at the year end?

At year end. So what we're doing is projecting forward for the current budget year to determine resources for the year to support various expenditures.

And that's where you get the 4.768 there, and that's where, through the calculations, you start with, in this proposed budget we're giving you today, $4,078,938. And ultimately, when you go through that calculation there with new revenues, expenses, you end up in the reserve, you end up with a balance there. So, again, getting back to our final slide, these numbers here are what you have to work with today for budgeting purposes.

So the ACFER totally lines up with what you have current on these pages.

As we showed today, yes. We walked you through the calculations, yes.

So we're no longer bringing in an expenditure line item adjustment like we had proposed on Tuesday.

Again, right now the ACFER has the current note 12. We're getting that corrected. We've given you examples of what it will look like when the note is corrected. And so that way you can see what it looks like. Because I know it's hard when you see negative 4.7. This is what it actually looks like. It's positive 10 for that starting point. So we wanted to walk you through what that looks like there. So that's being worked out with CLA. I wish we could have it done before today, but there's a process we have to go through.

So in the conversations with Kirchnack yesterday on discussing all this, I understand Note 12 to be a commitment of remaining CIPs. Is that understood? And that is $288 million, according to your slide as well. Right. In remaining funds.

Everything.

And so there's 288 million inside of different fund balances, net position or, you know, even even in our portfolio. Right. You've identified those monies. And we're planning on spending all $288 million this next year, or we're going to communicate how much of that is to be paid out during the 27 budget. So if we have $288 million to spend, and it's going to take us three years to spend it, my question would be how much of that is incorporated into the proposed budget?

And the available funds, all of it is taken out of the cash and investments.

Well, you're not going to spend all of it in this next year.

You're obligated for it.

Yeah, our goal is to spend it all. So whatever is left over gets moved into the next year. And then what's left will be moved into the next year.

So if you remove all of it out prior to your starting position, right, you're kind of on your cash flow, then you're reserving that total amount. So it doesn't ever show up in the actual budget for what we would expect to spend on that fund for that year.

When you move all of it out, you end up with this final slide of 6.2 general, 2.5 water, 11.9 for general, that's where you end up at. Again, that's for budgeting purposes for today. So that's when you move all that, that's what you've got left over.

So I think I understand better. So we are not getting a complete picture of seeing the $288 million reflected On the budget, because it's been calculated as an extracted amount total during end of year and proposed budget. So even if you ended the year with 40 million or 48 million in one fund, you guys go in and you pull out different things to give us our new starting position. So you set aside all of the commitments that the city still has to make. So those appropriations are still there. Right. Yes. Okay. And then as we bring those projects back, we identify savings like we didn't do the project, right? Yes. So those monies are still there as well. Yes. And then when we get to the bottom of the proposed new budget, we only vote for the new CIPs if we elect to.

Correct.

So in the new budget that we're going to recognize, it's only going to list that million dollar fleet fund CIP project. All the other fleet fund CIP projects don't get re-voted on in that budget. They're accounted for previously. and a calculation that you're doing that lines up with the act.

Yes, because you or previous councils have already act on those. And so my goal as a manager is with my staff is we're going to be getting those done sooner and sooner and sooner and faster. So yes, you as the August 2026 city council, your goal is to dedicate these funds here. And so we've already acted on the previous ones. And so we as staff have our marching orders on those. We're trying to get those done as fast as we can. And then when we close them out, we bring those funds back to the next one. Or even mid-year, like we've been doing even last Tuesday night, if we have needs, we bring them to you, and then you vote on where to put those monies.

And we should have a great level of comfort. You know, a forensic audit, right, going to go through the CIP program. I'm going to go pull supporting documents, see exactly what they are. So, like, in the $43 million of recognized remaining monies that are unspent in closed-out projects, but only back to 23, you know, we're going to go all the way back to 2012. But in those, that $43 million is still there, but it doesn't somehow get pulled into this budget and account. It does.

Again, this here is your net taking all into account because you have to do the calculation for reserves, for liabilities, for expenses.

Well, how would we wash that $43 million off if it's not something that – so the appropriated balance for those projects is included in the $288 million, right? And if you've overstated that commitment, you're asking the auditor to recognize 207. But either way, when you've closed out those projects at year end of 25, you're only talking about what you're pushing to 26. It's only 207 moving forward. Whatever you've closed out up until that would still acknowledge the $43 million in savings.

No, because as we said with the utilities, about $25 million of that $27 million was a reserve issue that had to be fixed first before you could spend it again.

And again, your ACFER takes into account all these funds. Your ACFER takes into account the CIP, the closed-off CFPs, your leftover operating, your leftover reserve. It takes all that into account and gets baked into the calculation for your available funds. So it has been taken into consideration to give you these numbers here today.

So even if you go through a forensic audit and they pull all of those projects and they say, yeah, we can identify every project number, where the money went, it all went to public use. Here's all your savings. You're saying that those savings now are being addressed in this proposed budget. Yes. And that after everything's said and done, what's the total here at the end of the day?

How much is it? 11.9 general fund, 3.1 water and sewer, 5.7 airport, on and on, yes. A little over 20 million.

26 million. Is that what it adds up to? Yeah, 26.3. 26.485. Yeah. 26.485.

Across several funds. And again, you don't have 26 to all go towards general. You have 26 divided across the funds.

So you've located $26 million in the total monies anywhere in the organization.

When it all nets out. Yeah, all nets out.

And when you're saying nets out, you're just saying, like, once all of the projects are calculated.

All your cash flow for the columns there, from available funds to new revenues to expenses to liabilities to your three-month reserve.

And that would assume zero savings on any of the current projects that hadn't been closed out. Right, because they're still pending income. So that would mean you've got 207 in commitments and you spent all 207. But in the other $200 million worth of closeouts in previous years, two things would happen there. One, we wouldn't identify any additional savings past 23 because we've only identified savings back to 23. So that would mean that none of the money is previous from there. would have had any savings.

I don't know the age of each project we've closed out.

It varies going back five plus years, ten plus years. Yes, yes.

But as our CIP committee and our staff continue to do their work every day, we're going to continue to close out more. Jerry's busy on doing that and getting projects closed out, so we'll be able to bring more back to you and more back to you and more back to you.

But what this council wanted was we wanted those Cips that are old right closed out and then that total amount of money of monies remaining in previously appropriated councils. We wanted those brought back to us separately so that we could vote on those items. What you've done is you've brought all those back in this budget proposal.

which you now can vote on now. And so, again, there's a process, there's a point in time when you do a budget, that's when it's all put here. And so, yes, we can, we have been bringing back, we have been bringing back to you some, like we did municipal court here on Tuesday. We did a utility one. So we bring some back to you all then. But otherwise, again, given, in point in time, August 2026, this is your budget time. We wrapped all that's remaining into this process so you can now commit to new CIPs.

So that's a great example. So the million dollars that was saved in municipal courts projects that's now going to go towards future municipal courts projects, that wasn't considered in anything that you've done here.

So it's taken into consideration, yes. So as we close out. It's committed.

I'm sorry, say again? Yeah, that wasn't closed out yet. Good point. We're just now closing that. But it was already allocated.

It's already allocated, so it's not going to affect the numbers because we just allocated it to a different project. It's allocated to allocated is what it is. Good point. Thank you.

So as we, because I really do like the new process that Mr. Hooper's got in place, as we complete projects, identify savings, bringing those back, And UNIL's going through and verifying all of those. We see supporting documents now, and we know that's a realized million-dollar savings. That's very easy for us to manage moving forward, but it's the going backward part that I think that we have concerns in. So how do we know that the $288 million was overstated?

Because it was a gross line versus a net line. So it was a new report, and from workday, she just picked the wrong column. Staff picked the wrong column comparison-wise to prior year.

So I understand y'all reached out to Kerschnack like July 21st, right? Yes. And you sent it to him. saying you've realized that you've overstated your commitments. Right. And so you caught it and you sent it to him and you said, hey, we overstated our commitments. Let us know if we need to make a change. And he took about a week and got back to you and said, yes, this is material. You need to send me the new data.

And we did.

Okay. And then like on the week after, it's 27th, 28th, whatever, he says, get me this. And so you guys got it to him last week. And he's now, is that right? When did you get it to him?

No, I mean, it was days after we acknowledged. It turned around the same day that he asked for it.

So end of July, you guys turned around the revised commitments with the note, with the request to the auditor to amend his audit. Right. And then he's asked you, or has he not asked you, you know, how do we know that these were overstated commitments?

We've presented all of the data to him.

What does that look like? How many projects?

I haven't looked at the data to know.

So somebody presented all of the data?

Which, you know, actually looked at all of it as well.

And when you present the data to him, he's going to go back through all of that and he's going to verify and maybe sample and look at those to see, okay, you actually did overstate your commitment here.

You know, you're going to have to help come answer this question.

I just don't want to take 200.

There's not a whole lot of work to be done. It's just a different column that's being pulled.

Well, let me say it as a citizen and as a representative of a citizen, right? So those people seated behind you and watching online, Their concern and my concern would be that we have $288 million worth of commitments that we've told them we will take their money and go and appropriate into their town. We can't arbitrarily come back and just hit a delete button and say, ah, we're going to change that number to 207. We would never do that. What we could have done is we could have said, you know, we didn't factor the 288 correctly. It's actually 207, and here's all the supporting documents. Now, how we, citizens, get comfortable with that is it goes to CLA, who did a great job on the audit, and they look at all that data. They give their stamp of approval. Then we move forward with the 207. So how does he know that? What does his process look like? You, Neil, you probably tell us that.

Okay. So what we did is we gave him that report. the updated report and the supporting line items that were affected. So we listed the projects that was changed that need to be changed and showed him the support as to, okay, how did we get that number? So he was comfortable with that and he's getting it QA reviewed as we speak, so.

Okay, so we'll get all that amended in the act for and then it'll reflect that in note 12 moving forward. We should assume we still have $207 million sitting in the accounts to go and do all the projects that are already underway and that we haven't removed any projects. That doesn't take any of the projects.

No money is missing. No money disappeared. I mean, the numbers are the numbers at the end of the day. And so what we have is what we have. And so there's no missing money somewhere.

But having to know that was 930.25, so any since then that we have closed out and brought to you like the ones from Tuesday are part of that 207.

That is just the 930 end of year, FY25. Okay, so to make sure every number that I'm looking at at the top of this center column here where you're giving me my project year end, projected year end, is from a calculation that you've done as staff not to be tied to my ACFER.

It is tied to the ACFER, and that's the process we showed today. And so there's a calculation that goes from the ACFER to the cash flow.

But you have to back out those commitments in order to get to that number at the beginning of the year.

It's a calculation.

Yes, you have to back out the commitments.

Okay. And so we are not going to have any line item deductions in the middle of the expenditures like we represented on Tuesday, if you do that?

If we update Note 12, that's correct.

And if it's ready by September, otherwise it will still show how we presented it.

But again, at the end of the day, what we're doing is fiscal year 26-27.

Okay. Go to that general fund calculation, if you would. You explain the 6.7 million on that front page and where that breaks down. Can you give us that breakdown again?

It's in the middle of the screen. There we go.

So if you look at your general fund summary, There's 5.5 million in general construction, right? There we go. That's the one. Right above that, you see the general construction line item for 5.57? Why would you deduct that twice?

You're not. You're actually backing it out.

You're backing it out. You're listing 5.5 as general construction as an expenditure. And the, so I'm on page 11.

And we're just backing it out so you don't overextend your reserve. You don't need to reserve more because those are one-time expenditures.

Yeah, but I'm just looking at page 11. I understand the breakdown. So you're telling me the $6.7 million at the bottom, the breakdown of that is it includes $5.5 million of general construction. Ms. Katrina?

That is correct. It's also up in the middle area in your expenditure, so you're taking it out of your...

It's listed as an expenditure.

It is.

Are any of these other items listed as expenditures up in the expenditure column?

Well, they would all be payments out, so other than the parks E&I.

So everything that is included in the 6.7 is already considered in all of your expenditures that add up to the $287 million. Okay, then we take our reserve out of the 287 for the 55 million. I'm sorry, say again. It's out of the 281. So we deduct that so you can calculate your reserve off the 281. Well, and so I'm just trying to be very simplistic. We're going to take our total revenues over our total expenditures, and then we're going to have a balance. Then the only math problem that we, the simpletons, need to figure is we should have a 90-day operating reserve. That's 55 million roughly. Okay. So total revenues, as you've got them, right, over total expenditures, With the back out of the 55,000,000 available funds that are needed. Then we have an additional 1 time expenditure item it list. It says less 1 time expenditures. Am I misinterpreting the word less? Does it mean minus.

It means minus.

So it's a deduction. So we're going to take that down another 6.7, even though we've already calculated that 6.7 in all of our expenditures. It's the difference between calculating your expenditures versus calculating your reserves.

Yeah, you're doing two different things on this page here. Up there, total expenditures showing how much you have to spend. The bottom third down there is your calculation of reserve. That's a separate thing from above there. So that is just showing you what we need for reserves right there.

So we take the 287 that includes all of the expenditures. Then we deduct another $6.7 million off of that to pull that out to show that those are one-time expenditures.

Yeah, because you don't include that as part of your reserve calculation.

Then it wouldn't factor at all if we didn't list it separately.

You're just getting to the 90-day reserves to see if you're over budget or under budget or if you're...

Balance so it's very, it's very confusing if you're reading this list, right? So, if you're reading the list, you see your total resources, right? 343Million dollars. Total started the year was 62Million. Bring in 271. we're going to move that number up a little. in our projections, then you've got grant income, then you've got transfers coming in, and we know where some of those are coming from now. Then you back out, or that's your total revenues plus your starting position, 343, right? Then you go down and you list all your general operating, and then you break down everything, including the breakdown of construction for 5.5. So we back all that out and we end up with transfers, which we can talk about later, but that's gonna cost us 287, which nets us the balance there, available funds of 55 million.

fifty-five three is that then we compare that number to watch a three-month reserve is needed so we do the calculations and below the fifty-five three to the calculations the okay to any simple out six months and is one-time expenditure to see what are what are what are uh... to get to anyone in your three-month reserve fifty-five a so then we show you that fifty-five eight is what you need for reserves that we are five hundred twenty three thousand dollars Under our reserve. But for us, we're comfortable with that. Okay. Because that's close enough.

Okay. Thank you for walking that all the way the long way around. Like, I know that is very difficult in explaining to the public who sees it listed this way. All they see is a one-time expenditure over here with no discussion next to it. And so like we get those questions. Y'all probably don't. Like why did you take another $6 million off? Here you go again. You're this or that. So like.

Yeah, it could be in the future. Is there a reason that you do that? We could put like a big black bar across there to almost say like this is this, this is this, this is this. And we can put it on a separate page if we needed to. We just, it's all just here because that's how cash flows work. But, yeah, it is two different things here. It's comparing your three-month reserve to your available funds in the end of year. And that's what we as staff, when we see that available cash flow over, under, when it's way, way off, that's when we go backwards before coming to you, okay, if it said, like, negative $30 million, I'm really in trouble for reserves. And so that's when we go back to, okay, we've got to go back up here and figure out, okay, what do I cut so I make sure I have enough reserve at the end of the year? So, again, what we're saying is $523,000. over is comfortable for us. Given $55 million is a number, $523,000 is a small number compared to that.

Okay. And I do want to add, that is total ongoing expenditures, so your ongoing reserves. So you need to back out your one time to get your ongoing reserves.

Ongoing reserves, yes.

Okay.

Because we don't need to reserve a one-time because it's a one-time.

So here's my last question, and then we'll move forward. General fund, new one-time cash funds available, $11.9 million. But I'm tying it back to now I see general construction costs of $5.5. So I don't understand where we come up with the $11.9 here versus we're listing it at $5.5. So if I'm just looking at page 11... I'm going to expect to have CIP money of 5.5, but then when I go back to what you're showing me here, you've identified 11, almost 12 million there. How do we identify that? Because this page 11 is now comprehensive. It's got all the numbers calculated in it.

Okay.

I think we need to bring up the 4,000 tab on the CIP piece, because I think there's some realized available funds that was, that 5.5 is basically new CIP. And then we also do this calculation in our general construction fund as well. So we're getting an available funds calculation there. So there is some savings that were realized there. So where we're bringing it back to you. So there's that 5.5 plus the, or less, unless the 11.9 million, so you got 6.4 that we've realized that are available to you on top of that. That 5.5 would be new plus the available funds calculation that showed us we had some realized savings that's being brought back to you that's available.

That's capturing those general fund closed out projects and savings. And why that's so difficult is we only now are looking at the 207 as closed out by 25. You identified in those closed out projects $43 million. But then what you're doing is you're running your projects through 26 and you're finding at the end of 26, we've built in enough money for the next year's budget in our new revenues. Plus, you've got an additional $6 million that you've captured during current year.

Yeah, some of it will be current year that rolls over. And it's a little different than our utility funds because they're all within their one fund. General construction does have its own bucket that once a project's closed out, it goes to that, and it has to be carried over to be re-spent.

I just want to make sure that as we walk this out, when we're bringing projects back, we didn't consider some monies here that, you know, like municipal court's a good example. We felt good voting for that because we've identified that money. So you spend it within the current year, but somehow in here we're adding another $6 million. But you only have closed out projects and ongoing projects. And we're really trying to change over to the new format. And it's getting even more confusing in this, especially with the Note 12 change. I understand.

Yep. So with this council, with our available time remaining, I recommend that we proceed with the sub-medal and CIP conversations so we can get some started. Because we do need to get some direction from council on how to dedicate these funds.

Well, I would like to, if I wouldn't mind, just a direction from council. On the very last page, can I just ask a couple of questions? Yeah, last page of what? The presentation that we just did.

OK, yeah.

So what you're saying in the general fund, we have $6.2, potentially $7.2 million that is available for recurring expenses that is not currently identified in the budget.

Correct.

And then so we have a list. I'm sure you have a list of things. We would have a list of things to consider. Yeah, $19 million worth, yes. And then the same with the water and the sewer and the rest of it. Yes. And then the one-time cash funds available for new CIPs, this is the result of after going through, closing out the projects, and then looking at the cash flow analysis and doing the compliance for the reserves, this is the amount of money that was freed up in these particular areas to do that. to do capital projects.

On top of excess revenue over expenditures that all comes together for that calculation.

Yes. Okay. Well, I would like to, and I brought this up at the end of the very meeting because I think it's part of the direction that you would need from council in addition to not only how we're going to spend it, but I do want to go back to the property tax rate and maybe where we would stand. My position would be I'd like to see us do a no new tax revenue rate, about $700,000, I guess. And then I guess my other question was to further help on mitigating the tax increase for the citizens. Those one-time expenses that are in the general fund, are those some things that we can identify to use part of this $11.9 million for?

Yeah, and I apologize. We didn't get a chance yesterday to work through those numbers, yes.

Well, I don't need to know the specifics of it, but I mean, there is some potential for that in there. We don't know how much it could be.

Yeah, and so we did have a brief conversation. There's not, I mean, in your... In ongoing, there's not a lot of true one time. Because, again, a lot of our purchases are ongoing purchases we do every year. So we dedicate those to your CIPs. So I think my recommendation would ultimately be, not to cut to the end, but my recommendation would ultimately be that if we're looking at the property tax relief, we just look at the no new revenue rate as being, or even if the council wished to even subtract, even go back further on the tax rate, we focus on the ongoing recurring side of things.

Well, I would just like to be able to look at as much as we possibly can. I mean, as I work at other taxing entities, they are all appearing to go up. We have some flexibility. We have some money that the taxpayers entrusted with us over the years, and it was inoperational at one time. And I understand, you know, kind of the part of not wanting to do that. But I would just push for as much property tax relief as we can get on the M&O side.

Yeah. So I think it would be good now because it's a good point. We should talk as a council the VATR, the voter approval tax rate versus NNRA. If that's what the council wishes to do, that's a good conversation to have right now because that does change a lot of what we've got to do the rest of the day. But if the council decides to continue with it, then I think that's the direction we need as well. Okay.

Well, the other thing, just to keep in mind, and again, when I'm looking at the property taxes, I look at wholly what our taxpayers are paying. So that's on the INS side, and it's on the M&O side. And we've already set the INS side. We can't provide any relief on that side. But on the M&O side, we still have the availability to do that. And the other thing to keep in mind, again, When we get into next year, we're going to have a lot of INS debt running off, correct? I say a lot. It's going to be significant. Yes. And depending on what we do with that subsequent debt, we could decide to issue debt. Or next year, we could reclaim what we did not claim this year on M&O. tax rate if we wanted to come back and get it yes that's correct so i mean it's a flexibility so if we if we if we look at what we can do i'm just looking away i think we have a couple years here where we can at least try to mitigate the property tax increases as much as possible without costing i think hopefully the city a lot and just being able to to do that so that's that's what i would like to consider but i don't know what everybody

What Councillor Simpson is saying, just to make sure the whole council, in the truth of taxation forms, you do have the ability, if you choose this 26-27 to not raise your tax rate, you do have the ability a year from now to go back and capture that then. Now, you have a three-year window. So if you wait four years, you've lost it forever. And so you do have the ability to go back. the council a year from now will be looking at three and a half plus more. So they'll be faced with that question on do we want to be the council that raises three and a half plus more at that point. So this is an ongoing forecasting effort for budgets.

And what I would add to that, is if we run those calculations like what Councilman Simpson is asking, is what does that save? Like if we take some of these monies, like you said, and apply it to some things in the budget so that we can remove that cost, What does that equate to savings? I would hope that that would be part of the discussion, because I think that's exactly what he's getting at, is if we take this and pay for some of the things that are in here, what does that alleviate to the taxpayer? That's what you're looking at, right?

Exactly, because I think, again, because we have this opportunity to be able to look at it, I guess when it comes to the official rate that we had to vote on, Because at some point, we have to vote on what rate, even before we complete the budget. Is that not correct? Yes. So at that point, we would have to decide, are we going to vote on no new tax? Are we going to vote on the voter-approved, which I guess is what is in here right now? or we may already be past the deadline to vote for a voter approve. I can't remember what that is. Oh, yes, we are. But we'll have to vote on one of those two tax rates at that point.

Yes, either the voter approval tax rate, the no derivative rate, or some rate in between those two numbers. And again, as your manager, I always advise you, you could always drop the rate even further. I don't recommend that because we have services to provide, but you could always go below the no derivative rate.

I understand that. Again, I just think as cognizant as we can be of financial pressures that are on many families in the community whatever we can do to help them out and it looks like i mean when i look at you know what was in here you know even if we lower the rate not all voter not all citizens may get a tax reduction because their appraised value has gone up and i understand that but just looking at randall county it looks like most people when you look at that median you know, it's a good chance of even at that rate that some people are going to be able to maintain or maybe even get a little bit of a tax break. I don't want to I don't I don't want to do anything to harm the city. But, you know, citizens have had to tighten their belts because of a lot of things going on. And I just like for us to be cognizant of that as well as we're kind of figuring out what we're going to do and what we're going to need.

Absolutely.

Can I step in with a quick clarification just on the process part? Because you're right, Councilmember Simpson, we will bring an item to discuss and approve the maximum not to exceed tax rate before you actually approve your tax rate. So if you do set that at a higher rate, council can still come in when you actually adopt your tax rate and adopt lower. So on August 25th is when we're planning to discuss and consider the not to exceed tax rate. And so if you do go higher on that date, you can still decide to adopt a lower tax rate.

I did want to go back to the CIP just for a second. We had a typo. Solid waste funds amount was listed twice as $3 million. Water and sewer is actually $13 million. So the overall, when you add all those up, is $36.4 million. So it's $13. I was going to ask you that question.

It's to the dollar amount, the exact same. I'm like, there's no way. Yeah, it's not right. It's $13 million. So water and sewer is actually $13? $13. Okay.

Which matches the other documents I sent you from Friday?

Okay We do need to understand are we looking at a tax rate increase You know potential that revenues 700k After we've understood that each penny would represent 1.6 million in Additional revenues. So how do we arrive at that 700 and

Yeah, so the truth in taxation form, let me get it over here. And again, I don't know if you guys have that, but it's a 10-page calculation. So just to summarize the whole thing, because I don't recommend we go line by line. We won't get that accomplished. So just to begin with, Randall County first does the calculation and then our staff double checks the calculation. So you have to understand that I know citizens think that it's simple. It's revenue times 1.035. It's not that. The no new revenue rates and the voter approval tax rates, they go through dozens of sequential adjustments before the 3.5% is even taken into consideration. The legislation put into account that Before we even get to the 3.5, it looks at tax ceilings. It looks at court ordered and ARB appeal justice. It looks at new exemptions granted this year. It looks at agricultural timber special appraisal changes. It looks at tax increment finance changes. It looks at properties under protest or not yet certified. It looks at annexed territories and new improvements. It looks at unused increment rate, and it looks at debt rate. All those things go into the calculation. So when you look at your – so when you – all those ten pages of calculations, at the end of the day, that's what gets you your $700,000. And so it's not a simple 1.6 to 1.6. You have to take into account all these exemptions and exceptions that legislation requires us to go through. And we just had a relatively flat year when it came to values. And you mix in different protests, you mix in different court orders, you mix in different exemptions, all of that nets out to get you your final number. So that's how it works in a summary. I know the council wanted to have a summarized version. IT'S A VERY COMPLICATED CALCULATION. BUT AGAIN, RANDALL COUNTY DID IT. OUR STAFF REVIEWED IT. SO THE NUMBERS APPEAR TO BE WHAT THE NUMBERS ARE.

GRACIAN, IF YOU'LL BOTTOM LINE IT FOR US, YOUR PROPOSED BUDGET OVER HERE HAS A TOTAL REVENUE, RIGHT, OPERATING INCOME OF 271,379. YES. THAT CALCULATION IS AT 44 CENTS PER 100.

Yeah, it includes that, yes.

Okay. Reduce that down to $0.42 per hundred, which would be the no new revenue rate. And bottom line, tell me what that number will be. Is it $700,000 less than the $271,000?

Basically, you just eliminate $700,000 in property tax. Is that right, Lola? Yes.

Right. Yeah. So we have other components of the property tax accounts. We have the current year levy. We have the prior year tax levy as well as penalties and interest payments. So that all gets factored into finding the difference between last year's collections for MNO and current year levy.

But bottom line, Councilman Simpson is saying that the council could provide property tax relief to its citizens and hold the no new revenue rate at 42 cents, whatever that number actually is. And it will only change my revenues $700,000 in your budget. And then I think it'll impact the tiers around 200,000.

So it's more like 900,000.

We'll run the numbers for you.

Okay.

that's for the two cents it's only seven it's nine hundred thousand dollars for the two pennies after you calculate everything out and you get the extra revenue based on all this calculation yeah it's just that yeah it doesn't seem right i know that that's that's why it's it's a it's it's a it's a very complicated i get it i don't want to know the complicated i wish i wish i could tell you one equals one plus two i don't need that i just need the simple two cents means

$900,000. $700,000. $700,000.

The drop into the no new revenue rate gets you down to that $700,000.

Let's drive here real quick, council. Are you guys good to consider moving forward as you entertain requests? Let's intend to hold to the no new revenue rate. So taxes will stay flat, not going to increase taxes at all. That'll cost us in the general fund $700,000. And we are comfortable with considering an additional million dollars projected in sales tax, which was super conservative to hold it flat to what the current year will be.

Well, it's flat plus 3%.

Oh, well, yeah, it's estimated actuals plus 3%. So it's 26 projections, right, that are still coming in strong. Which we have one more month of estimation. And then you added 3% for next year. On top of that, yes. Okay, so... a million dollar additional revenue projection would offset that on sales tax.

So if you drop the property tax down to, you'll have 5.5, add back the million, brings your number to 6.5 million available.

Okay, so council? We keep saying, hey, all of our services provide services for far more people and businesses than pay taxes here. So just our property tax payers, like they gotta pay for all of it? No, let's figure out a way to increase sales tax. Let's figure out a way to increase economic stimulus, bring business to town. Let's have different methods. These are working, right? So all we're doing is what we intended to do. If we push that sales tax number over and rely on that just a little bit, and we, we relief. Some of the burden to pay for police, fire services, core, all your amenities. Can we go that direction for the rest of the conversation?

Council, I just like to ask a question of staff. If we do this no new taxes, what is that going to do to the potential increase in salaries and in wages for city employees?

Well, obviously, you're working with less money. And so as, again, if the city council in today's conversations prior, because you have about $20 million worth of supplemental pay. And part of that is general employees placing fire. And so I believe the total number of that, and we're kind of jumping ahead here, I think we need about four some million for the COLA for all employees. Is that right, Andrew? One more time. For the COLA for all employees, 3%, is that about four to five million?

In general fund? In general fund. Oh, much less than that. Oh, much less than that. That's less than $2 million.

Okay, so you should be able to do COLAs for all employees with what you've got working with.

3% civilian, $2.1 million. But what about with police and fire as well?

4.6. 4.6, yes. So you would still have the ability to do all that. You would then just be cutting into your ability to pay for, if you want to add, like, again, example, another AMW officer or tasers for police or those kind of things. Again, it just comes down to you have less revenue to work with for the pool of subminimals you have in front of you.

but if we don't budget but but we just found a million dollars i'm not found which i actually think i don't have a problem um budgeting sales tax conservative i i think there are just too many factors that can come into play that you cannot predict on a dime that could protect but just say for example instead of saying a million We got 700,000. Well, we just switched that from our taxpayers to the sales taxpayers. I mean, that would be, that would net out the same. There would be no difference if we added that back in there. Again, I'd just like to see what else we can do without causing havoc or problems to again, you know, look at, you know, the 11.9 million, how much of that, A, can we use? And then how much of it, are there somewhere where we could use part of that so we don't have to issue debt on some type of project? I mean, if we've got the cash sitting there, I mean, we look at our goal is to invest X number of dollars in streets every year. You know, that was about $12 million and $14 million a year. I mean, again, looking at somewhere that can save us money on issuing debt. Again, that's something that can save taxpayers money in the future.

So what I'll say real quick, I've got a whole room of department heads here. I'd like to ask everyone in the room here to be— Today, I need answers by this afternoon. Look at your budgets and let me know if you have any ongoing, any one-time expenses in your operating that could be funded by one time. So you guys know your budgets better than I do. So be thinking about your budgets, and I need answers by this afternoon. If you guys have any things that's in your operating that is a one-time, to Counselor Simpson's point, that we can then apply one-time money towards. And we can bring the information back to you tomorrow.

Thanks for doing that. I really appreciate it. Counsel may not want to go along those lines. I don't know. But I think just knowing what the option is for this.

Yes, and I think what I've got, I think Councilor Tipson even talked about that. I think you guys want to know what is available to do that. So that's why I need their help to help me because thousands of lines, we're going to divide and conquer to figure it out so we can bring information back to you tomorrow. But I think for right now's purposes, I think step one is no new revenue versus voter approval tax rate. I think I'm hearing, potentially, Mayor, maybe no new revenue rate. And then to Councilor Prescott's question, what does that do? It just means you have less money to work with. That's what it comes down to. So when you have the whole pool of 20 million, roughly, supplementals, you have $70,000 less to work with towards that list. That's all it really means. And then what it ultimately means is if future councils do not elect to capture that again, That's lost forever. So we have three years to capture that back. So a future council would have to take the 3.5% plus what we left over this year to bring that back. Because once it's gone, it's gone for good after three years.

With the caveat that's based on current law and they have a new session coming up.

Yes, and it may still go away. I mean, property taxes is a hot topic for legislation. I know Governor Abbott, I know the mayor has been approached by Congressman Fairley about what's their thoughts on Governor Abbott's property tax ideas. They are troubling for us, and so, but right now, this is what we have to work with today.

You know, I just heard before, and I've heard people in the community, you know, wow, our taxes are not high enough. That's the problem. And then we look at other rates. Of course, I appreciated the other day when we looked at where our property tax is relative to others. But we are fortunate. If you put the sales tax up on some of those same cities, we are fortunate to be able to have that. And our taxpayers are fortunate too. to be able to, you know, to be able to do that. But I just think just being cognizant of being able to provide the services we're able to provide, because then the property tax may go, you know, away, you know.

Yeah, and I just want to add this piece as something to be thinking of. In our financial policy, we have a section that talks about whenever sales tax is in danger each year. So we have a If we are doing forecasts for mid-year, if we're seeing sales tax coming under projections, I then have instructions of the policy to start saying, staff, cut this, cut that, step two, cut this, cut that. So the reason that exists is because sales tax is volatile. Unlike property tax, which is known, sales tax is the one that We are forecasting, but we have no idea what will actually happen next year. So if we put too many eggs in one basket, I may have to take some eggs out next year if sales tax comes in under. That's just the risk we play when it comes to sales tax. That's why property tax is so reliable for cities, because it's set. I know it's unpopular, but because it's required. Sales tax isn't required. People can turn, they can just not shop. property tax, you don't have that choice. But as a city, I have fixed base costs to provide services. So again, I just make that as an illustration, and that's why sales tax, it's exciting, it's attractive, we like it, we hope that it grows, but there's always the potential that it could go the other direction as well.

The other thing I was going to say about the taxes being low, I mean, we have raised taxes, I think, for good reason. But it's not been on the M&O side. It's been to issue debt on things that we've looked at. So we have raised taxes to be able to invest on that. So I think we're looking at being able to be wise on that investment. But in the future, I just think it's, you know, I think we need to be as cognizant if we can from the taxpayer's standpoint. Absolutely.

How much are we going to save if we keep it flat? $700,000? Yeah. That's the number we're going to save.

Yeah, and total for the city, yes, yes.

And what does that mean per citizen is what I'm asking for the, because that's what Les is drawing at.

It depends on the citizen, but I think the example we had yesterday or Tuesday was like $5 to $10 a month.

It's minimal.

Like I said, it depends on the system because the median house and all the things, but you're looking at about $10, $5 to $10 a month.

The ones that would see the savings. Some may not make a difference based on their values.

If you looked at the value, again, Potter County, some people may see a tax benefit out of this where their taxes could be lower. It looks in Randall County with the median, that could be, but it's all based on property value. Some still may pay more, but they would not pay as much. You know, $5 or $10, I mean, for some people, that could be something that's helpful. And so I just think as much as we can look at that without hurting our services in a way that we don't want to do, I think would be beneficial.

So we do have one other line item here. So just in going back on the potential of keeping the no new revenue rate, if you look at your property taxes of 60.5 million, your total budget of 271, your property taxes equate to roughly 22% of your total revenues.

That sounds about right.

I know everybody thinks that we run the city on property taxes. We don't. We run maybe a couple of our real significant departments on property taxes. Everything else is volatile. It's all subject to market, and it's all subject to spend. So if you look at most of your projections, you know you've got intergovernmental revenue, which is still an item I want to go back for. So in 2025, we weren't able to realize that 6.6 in that it had to come into this 26 budget. So we should finish the year 6.6 million higher. And I know you're factoring that into your costs. I'm not trying to argue about it, but you know, we've projected in our 2027 budget to have 6 million in intergovernmental revenue. If you change that one line item to pull forward the amount, if we don't spend it in this current year, then we could see a bump of 6.6. But then if you flip the page and you go over to your non-business license and permits, I mean, we're at 6.1 million in 26. And you've lowered that down to 5.2 in the budget. So there's a million dollar deduct right there from a flat. And so we don't see business slowing down. So we have another million there. You've taken operating transfers in down from 11.4 to 5.4. We don't understand what operating transfers in is.

That's those one-time dollars that we got from interest earnings or departments being above their reserves and had some excess. We're not seeing as much of that this year.

Yeah, so interest earnings, are they broken out separate or are they included in that?

Well, they're broken out separate, but when you see the benefit of it, it's the transfer back to the general fund so the general fund can spend it.

Well, we've got $207 million in existing CIPs. We've added $100 million in 26. A lot of that's debt funded and restricted on what we can use interest for. Okay, so that interest isn't calculated. It wouldn't be for general fund purposes. It'd have to be restricted to those CIP projects. So in this, not to mention our solid waste for the additional fees that you guys are recommending, it's easy to look through there and find you know several million dollars uh... in the way we run the city so like i just find it difficult to continue to advocate for a property tax increase when you're talking about seven hundred thousand dollars and and we just arbitrarily lowered our projections a million dollars on business licenses and fees.

Staff go through the month trends, they go through the last years, the revised estimates. I go through, in fact, I know Justin can attest to this, I sent him numerous, numerous questions on many of these line items. Because you're seeing the summarized version. You have to go into here to find all the things that add up to that number there. And so when we go line by line, working with individual departments here, this is the number we came up with. And there were a lot that I questioned in that they provided a justification. But as a council, I mean, I mean, these are budgeted numbers, and so if you wish to just make 5.2 a 6.2, you can do that. That would be arbitrary because you don't have the data in front of you. And so we did. We brought it to you. This is our recommendation if we're to put it in that budget line there. We scrubbed as far as we feel we can scrub.

Well, I appreciate the information on that. Let me retract my statement and apologize to staff for their well-spent time of thoroughly investigating that number. So I apologize for the word arbitrary. I think on paper here it looks attainable to consider business overall in the city to be on the uptrend, and this is a downtrend. So for whatever reason you guys have arrived at that, we – We as council just need to give direction. Are we comfortable considering this at no new revenue rate?

I think a consideration is valid, but not an affirmation until we look at the entire budget and see what we need to do. We need to continue to move forward. It is my opinion that we do need to provide relief. But while sales tax is up, And we're entering a season of growth in this city that we need to move forward. And for so many years, we've been behind the curve on getting infrastructure projects taken care of. For example, the wastewater treatment plant. There are a lot of things that we need to do in this city. And while we have the higher sales taxes, we need to invest in our city for the next 30 to 40 years.

Yeah, I think the discussion is important, and to look at those things before we make a decision. I don't feel comfortable just saying, yeah, we're going to adopt that right now until we see all of the information that's there. And, I mean, there's actually three numbers that you can play with when you look at this, right? It's the tax rate that's proposed. There's a no tax rate. No new revenue in the current year, because you could stay at the current year. So there's a couple of options that we have. Isn't that correct?

A middle ground option, yes. Yes. It is not just all our 3.5%. You can do somewhere in between all that, too.

Yeah, I mean, I would agree. I mean, I think, you know, Councilman Simpson, you made this comment, I don't know, a few meetings ago that the citizens want all these nice things, but they don't want to pay for them, right? So I think the goal of the budget... I don't know if I said that.

Oh, I thought you did.

Well, if that wasn't you, the statement was made. All I'm saying is... I think that's the benefit of going through the budget is we've got to see where we are. And I think being creative and trying to find the sources that we have to be good stewards and to use them to offset whatever we can offset. I think we owe that to the citizens. But I think committing to a tax rate right now I think is a little bit premature.

And I think what you're saying, what comes to read, I think what I'm saying is very valid. And I want to retract what I said earlier. It's good to discuss it right now, but you don't decide right now. I think what we can do now is move into the supplemental CIPs, see what's in front of you. And then if you guys decide, you know, I need that $700,000 because I want X, Y, and Z, then you do. But if you think, you know what? I've got what I need here. We can work with that $700,000. Then you can decide that.

So you want direction on how to proceed based on what we're feeling now, but we can always change that later. You can, yes. We don't have to.

Yes, and so I think Andrew's got a long presentation today to go over sudden mills and CIPs. And you guys can see what are your priorities. And then from there, if the math works out, you don't have to use the $700,000, then it works out. But if you decide I've got to have these 30 things, and that requires the $700,000, then you can decide at that point. Does that make it?

Yeah. No, I agree. And I think it does come down to priority. I mean, of like what... If it comes down to services offered, quality of life, whatever, we have to make that decision.

I would just say I don't think tightening the belt a little bit is going to set us back decades on infrastructure. All I'm saying is, you know, unfortunately our citizens don't have a chance to say, you know what, we need more money. I'm just going to tell my boss I need more money. You know, this is kind of where we are. I mean, we determine the rate. It's in our determination to do that. And I just hope at this one time that we could look and provide as much of that as we can. I don't think it's at a budget as large as we are. I mean, we've already figured revenue. But while it may not be a whole lot of money for us in the grand scheme of things, being able to save people money where we can still provide the services I think is very valuable. Thank you.

So what we can bring back to you all tomorrow is my staff right now are thinking through, is there anything in the ongoing budget that's one-time that we can talk about the one-time money? We can bring it back to you all tomorrow. But otherwise, for the time being, you can... Consider you have about 7.2 to work with because you have the million dollars in sales tax. But I think that right now is just we put that aside because we're going to decide that maybe tomorrow and we move into sub-minimals and CIPs to start working through those things and then getting some guidance on where that lands. I think that's going to ultimately drive that answer of 700,000 voter approval tax rate or no new revenue rate.

Okay. And just for my brain, I just want to make sure, the recurring funds available for allocation, if we go with the 7.2, which is the extra million there, we're at about 10.6. That column added up. Between all funds? Between all funds. 10.6. I added it up, so don't tell you. So if we're looking at COLA and the police and fire requests, 4.6 of that would be eaten up immediately. 6.2. Yeah. 7.2.

What did you say? 6.2 or 4.2? It would be 7.2 if you...

Yeah, let's say seven so what he's saying is that if you consider that and that's one thing we're jumping a little bit But if we were to do the cola for police firing civilian in the general fund if you need about four and some change To do that right seven point to subtract the four and some that's your difference If you're capturing property tax and the new 1 million in sales tax estimated, so it's seven point two with property tax and sales tax Because we've adjusted it today based on yesterday's data and I think we're going to be hit a little bit.

Well, I just need my brain. I need to keep it simple to look at and go, okay, what do we have to work with?

Until you all change the rate and say don't raise it 3.5%, it's 7.2%. Oh, this change goes from 10.6% to 7.2%.

yeah 6.2 to 7.2 now oh wait that's just just general funds the extra million it goes into that number yes 7.2 but if we add all these up we're at 10.6 10.65 for all the funds all funds all which we've got calculations for each one of those funds for three percent of raises okay so we can only pull up what you're saying is yes we have that for the on the recurring but for general fund the raises have got to come out of the 7.2 correct correct yes okay thanks

And what we can be doing is we can, like we did in the prior years, we can have a little Excel sheet on the side that we can do, again, assuming 7.2, and then if you say, council says, we want to do a COLA, subtract out this, now you've got this balance, and then now we want to add this, and let's subtract that. Same thing for water and sewer, same thing for airport, we can do those kind of things. So with this, are we good to move into sub-minimals and CIP conversations? So it's 9.47, do we want to get started? I know Councilor Prescott has to leave and so do we have enough we can start with for the next 13 minutes?

Lola's got the kind of introductory slides before we get into the details.

I'll be starting off with a budget summary for 2026-2027.

Do we have those?

Yes, sir. Should be original slides.

Starting slide 38.

So over here we have shown our various funds budgets for 2026 and 2027. So the general fund operating budget for FY 2026, 2027 is $287.9 million, which represents a 4.6 increase from the FY 2025, 2026 general fund operating budget of $275.2 million. The water and sewer operating budget for FY2026-27 comes up at $85.3 million, which is 15% more than the FY25-26 budget of $74.1 million. Next, we have our capital improvement projects. For 26-27, we're requesting $165.8 million in capital improvement projects, which is 52.3% higher than the CIP budget for FY25-26, which rounded up at $108.9 million. Our special revenue operating budgets, it's similar between the two years for FY26-27. We're requesting $36.8 million, which is 2.7% lower than the level for FY25-26, which was $37.9 million. For our fleet services operating budget, our proposed budget for FY26-27 is $21.3 million, which is 23.1% lower than the FY25-26 budget of $27.7 million. Our other budgets include, in terms of our major budgets, the airport budgets. For FY26-27, we are proposing $17.5 million, which is 7.4% lower than the FY25-26 budget of $16.3 million. Drainage budget is $6.3 million for FY26-27. IT's budget is $11.3 million for FY26-27. And our inter-fund transfers for FY26-27 comes up at $149.9 million compared to the FY25-26 transfers of $118.7 million. Our total budget for FY26-27 is $616.2 million, which is 10.6% higher than the FY25-26 budget level of $557 million. We have some proposed fee changes for FY20-26-27. Our staff went through our various departments and put in consideration service costs, fee increases to deliver our services to our residents. We also considered our cost recovery exercise from the pre-budget workshop to come up with the proposed fee increases for FY26-27. We are proposing a 3% increase for our solid waste residential and commercial rates, and we propose that we'll generate about a million dollars in revenues for the two residential and commercial sectors in our solid waste division. We are also proposing a 24.08% in solid waste in general to derive $1.2 million in additional revenue for our solid waste efforts. Other divisions have some cost recovery proposed fee increases. We have the city marshal, animal management, planning, environmental health, golf, as well as our athletics division. And there are various increases that have been proposed for cost recovery, and we have cost recovery revenues ranging from $9,000 all the way to $357,343 for a Gulf division.

So can I ask a question here? When you have cost recovery listed, that's the reason for the increase? It's just pushing towards cost recovery? It's just new revenue coming in. Just new revenue because of our direction to say, hey, we want to work towards cost recovery. Right.

OK. Now on the flip side, when we get to supplementals, a lot of those with cost recovery also said we could use that money on new things in our department. So is it really cost recovery? Is it just new services? Right. Okay, so we'll talk through that as well.

Well, I think the other way to look at it is it's subsidizing property tax. So, because a lot of these departments are heavily subsidized for property tax, it just subsidizes that amount going there. So, again, it's one pool of funds. So, while I may not be able to track it dollar to dollar, it does impact the department by bringing it into it.

I have a question going back to the previous one with the solid waste. So we're looking at the residential and commercial 3% increase. But what's the 24% increase? Oh, that's tipping?

Yeah, for tipping fees, the landfill.

OK. Tell me a little bit more about the reason for the increase. It's a pretty large amount. It is.

We have not had a significant rate increase over the past few years for tipping fees of the landfill. That's generally a pretty small number. It's about a $10 increase per ton in the tipping fee. I don't have the exact numbers in front of me.

If you look at page 24 of your budget book, you'll get the breakdown of the various line items.

Yeah, and that's for ongoing construction projects, improvements, things like that out there. But we also did rate checks around the area, existing landfills, what that was, not only here but elsewhere, and we're about $10 lower than everybody else is too.

And when was the last time we did an increase on the tipping fee?

I would have to go back and look. We've done some minimal increases over the past few years, but they've been very small, you know, $1 here, $1.50 there. But we've really fallen behind. There's others that have raised it $5, $6 per ton each year. And reasons for doing that is really just the cost of doing business, for one, and then we do have some improvements we need to make as well.

Okay, thank you.

OTHER PROPOSED FEE INCREASES, WE HAVE A FIRE, AS WELL AS A FIRE MARSHAL, PROPOSED INCREASES FOR COST RECOVERY, $90,000 BETWEEN THE TWO DIVISIONS. We also propose 8% for water operating to derive about $6 million in additional revenue. And we're proposing a 3% increase for debt service for the new TWDB loan we obtained, which would generate about $2.6 million to service the loan. We're also proposing the same rates for sewer, 8% for operating and 3% for debt for sewer. and will generate $2.6 million for operating in additional revenue and $1.1 million in additional debt service fees to service the TWDB debt for sewer. We are proposing 3% in drainage. for operating costs, which will yield about $333,000 in revenue. And we are proposing 5% for debt service for drainage to yield just under $500,000. Here we show our budgeted revenues for FY26-27. And as we discussed earlier, our sales tax constitutes the highest portion of our general fund revenues at 33.3%. Next is the property tax as the second highest revenue generator for the city at 22.7%. We also have All the possible revenues such as the gross receipts for business taxes, solid waste, city fees, hotel taxes, miscellaneous and administrative charges, etc. Here we show our general fund revenue changes between the adopted budget for 25-26 and the proposed budget for 20-26, 20-27. The adopted budget for 25, we had $272.2 million in our revenues. We are proposing a change of $8.6 million to arrive at $280.6 million. $8 million for FY26-27. We show the significant changes that constitute the $8.6 million difference, which range from property taxes, sales taxes, solid waste fees, hotel occupancy taxes, and other changes to the budget.

And no, this does not include that additional $1 million sales tax just yet.

Can we identify the deduction there? It said miscellaneous government revenues, deduction of $7.4 million.

Yes, we can provide the breakdown, just all the general accounts.

Do you know what that is?

Justin really I'd be looking for the reason that we're not like what changed a good chunk was lowering our estimated state participation for the fire department safer grant was 800 000 of lost revenue that was the multi-year grant we received for firefighters so those are some examples it looks like we also lost additional transit operation revenue less than we have in previous years about 187 000 The participation revenue, we dropped $500,000. That's the firefighter state assignments. The $823,000 revenue from other agencies, that's a safer grant. And then I'll see if Justin has more to add.

So these are all grant revenues?

Yeah, it's either other government agencies paying it or grants. Yes.

Yeah, we'll get a list and get it to you.

And also the fleet transfer that we're not proposing for 26, 27, about $5 million.

So we had to deduct what we had previous year, so we don't have as much to transfer in this year. So it's also departmental transfers into the general fund.

Thank you.

Here we show our general fund expenditures. by our various divisions and departments within the general fund. The highest expenditure for the general fund departments is for our public safety division, which constitutes 50% of the general fund expenditures. And then we have other departments at 10% for leisure services. We have transportation at 9%. So we have distribution across the other general fund departments, including our general fund transfers at 9%. Here we show the general fund expenditure changes between 2025-2026 approved budget and the FY2026-2027 proposed budget. As of the 2025-2026 approved budget, our total expenditures summed up to $275.2 million, and we show a change of $12.7 million to arrive at the $287.9 million in the proposed FY2026-2027 budget. Significant changes include a police fire step Request of $1.1 million raise and cost of living options at 4.5 million. We have the fleet at 1.7 million and other sources, including IT, insurance, leases, et cetera, summing up to $5.4 million. And that gives us the $12.7 million difference between the FY25-26 budget and the FY26-27 proposed budget.

quick question so fleet is its own fund right yes but it's included but it's paid by charges to other departments so we have to build the other departments to fund fleet basically rental rates rental charges those sorts of things it doesn't create any of its own revenue it brings in from other the other departments sir example your trash trucks that are in general fund they pay rent to your fleet department right

But that expenditure is picked up in that department. So are we picking it up again in fleet when we're looking at the additional cost to run the city?

This is additional charges that are being paid to fleet. And so this is a total of all the departments across the general fund that are paying those fees. Is that correct?

Yes, that's correct. Fleet collects the revenue, so the general fund through the departments get charged the expenditures, and then it comes into Fleet as revenue.

That's exactly my question. That's a revenue, but it's being listed here as an expenditure. So I'm curious, if we are charging for those services, we're moving our revenues up, which is good. but then those expenditures wouldn't come in on that line item because they're already calculated in the other department expense. It's an expense for the general funds or revenue for the fleet.

Right.

Yeah. Okay.

So you're just listing out those additional expenditures broken down as 1.7 total that goes to fleet all across any general fund department?

Yes. Yes. Okay. And a lot of it was a course correction of things we've already committed to and we've run revised estimates of what we owe on the lease payments. So this dollar amount doesn't mean we're adding new fleet in the tune of $1.7 million. It's making sure we're paying our bills with what we've purchased so far for the most part.

Yeah, that's correct.

Hey, just a simple question. When we look at general fund revenue changes, we're looking at an increase of a total of $280.8 million. Looking at fund expenses, we're looking at $287.9 million. We're $7 million more on expenses than we are revenue.

What do we mean?

Let's just keep it simple. That's a problem, right?

That goes back to your available cash, those resources there to help make up that difference for those kind of expenses.

Particularly one-time capital. You won't have to have an equal amount. An ongoing revenue for that.

Yeah, this is just your ongoing revenue expenses there. Right.

Okay. But we're $7 million short, but that's where you're saying this when we come back to that other to come make that up.

The cash flow sheet, available cash, those resources, yes. Okay. Thank you.

Thank you.

So here we show our total debt by funding source. Our highest level of debt is for water and sewer revenue debt at 44.8% of our total debt, and that's $234.6 million in water and sewer debt. The next highest source of debt is our property tax supported debt, and that sits at $179.6 million, or 27.8% of our total debt. debt sources. So we have other debts illustrated. We have our drainage revenue, fleet services, special assessments, hot tax, supported debts, and other debt sources. Over here, we show our property tax supported debts. Again, this number is $179.6 million, and we show this across the different general obligations CEO series through the years, as well as our PPFCOs. We see the breakdown by year and type of debt that is property tax supported. Here we show our annual debt service and for between fiscal year 25 and fiscal year 26-27, our debt service went up from 10.7% as a percentage of the budget to 10.8% in 26-27.

Okay, so we're going to transition now that you have what your current available to allocate is. This is where we move into what the requests are. At a very high level, this is what was provided to you Tuesday in printouts, emailed to you on Friday to start doing some homework, seeing what you want your priorities to be. We have approximately 157 requests and 19.8 million just for the general fund. so this this time around compared to previous budget years especially for those that have been here a few cycles we're trying to show it all this time usually we would come forward with a much smaller list because we know there's not 19 million to go around so we've already kind of gone through some thought process of how we'd reduce this down to immediate needs some are The easy ones, we know, like, for example, General Fund needs to start paying for their share of workday software. That's about $600,000. We don't really have a choice for that. It needs to be paid for. It's our financial software. We just have the ongoing expense. We now have to build in on the General Fund side. But a lot of these requests are going to be summer capital outlay. It's a new piece of equipment for the police department, drones for the fire marshal's office, just some of those examples. But this is just the General Fund piece.

And this is outside the budget. It's not included in any of this.

It is not baked in yet. This has to come out of the 7.2 million. So this currently says 6.2, add a million to it because of the increased sales tax. That's before considering raises. Exactly. Yeah, that 7.2 has to go toward 19 million here and 4 plus million on the raise side. As far as the other departments, we've got six requests for hotel occupancy tax projects for the Civic Center, around $140,000. Municipal Court, Court Technology Fund, $100,000. Court Security, $15,000. Public Health, $8,000. And then Airport, $433,000 worth of ongoing recurring supplemental type requests. They have $620,000, so they're actually I THINK WE CAN TAKE CARE OF MOST OF THOSE. WHAT WE'LL SHOW YOU, WE'VE GOT THE BREAKDOWN OUT OF THAT $620,000. WE HAVE TO BE ABLE TO PAY FOR ANY RAISE THAT MIGHT BE APPROVED ACROSS THE BOARD BECAUSE WE KNOW WHAT GENERAL FUND IS. WE HAVE TO DIBBY IT UP AGAINST ALL THE OTHER FUNDS BECAUSE IT'S NOT GENERAL FUND PAYING FOR THEIRS. IT FUND, $668,000. RIGHT NOW WE'VE ONLY GOT THE $135,000, WHICH THAT IS THEIR EXACT NEED FOR A 3% RAISE. SO FOR IT IN PARTICULAR, We do have a lot of needs. They serve everybody, public safety. If you're going to increase that, you're basically going to have to use your general fund allocation, transfer it over to IT to cover those needs. So keep that in mind when you look through their requests. Water and sewer, about 4.3 million. They have 2.5 million available to go toward 92 different requests in those departments. Drainage, just one request.

Can I ask a quick question?

Yes, sir.

So in considering all this, These additional requests for water and sewer, right? So that's an easy one to pick on. We've got our budget, which is an enterprise, total revenues, total expenditures. You would increase those expenditures by 4.3 million if you fulfilled all these requests. Which we don't have capacity for. We've got capacity for 2.5. And we don't have capacity for that 4.3 million. because we do work from the depreciation of the $17 million that is on that net starting position, right? So we do take that $17 million cash away before we calculate this request. So I want to make sure you're not comparing that $4.3 million to... Like, no, no, that's after we've plugged the depreciation in.

You've already removed that depreciation. It's already removed out. Non-cash is removed out. This is just cash needed to continue operating. And a lot of their requests are little line item supplies here, different purchases here that they've just seen increased costs across the board to run those plants.

So in a disagreement of how we finish the year, like what's cash and what's not, we We've never said what we do with that $17 million worth of depreciation, right?

We take it off the page. We do nothing with it. We just track it. It just sits in the account, right? It's not in an account. It's just a number we have to track as a value. It's not real money.

It's not a cash value.

OK. So there is no deduction then? No. We spend cash in one year. You spent $10 million. That's your value. And then you just pencil it out the rest of the time.

All that cash flow she is saying, we write these terms as less depreciation. All that it's doing is telling people that depreciation is not included in this. This is just your expenses. Depreciation is not a number we calculate in this process. So for an accountant looking at that cash flow, they're going to, OK, good. This number does not include depreciation. That's a whole different thing.

Yeah. So can we go back? Not right now. We'll continue through this. But when we get to like water and sewer and being able to fulfill these requests, can we go back and do a cash flow statement so that the public can see that again? Because all they've heard me say is, well, the cash flow doesn't agree to the ACFER. And so the ACFER shows that there's more money sitting in that account. And so I want to bring greater clarity to that. So can we run an actual cash statement for last year, the FY25, since we have it in the ACFER? and we don't have to project this one, or can we run an actual cash statement this year to a point in time and then show, like, these are the balances, because that's still something that's not clear.

Yeah, let us regroup on that and talk about what that looks like, so we can talk about that.

No modified accrual, none of that stuff, just an actual cash. If we run $100 million cash through that enterprise, how much was the total labor, total material contractor, you know, whatever's the net amount left at the end of that year so that we can take care of these employees? That is the cash flow statement.

Yeah, I'm thinking that's already been done, but we can circle back to make sure we get you a good answer.

Great, thank you. And I will go back to the general fund topic. That $7.2 million we're talking about, that is that cost recovery. When you look through your spreadsheet, you're going to see requests and some departments are putting in offsetting revenue. If those are approved, it's taking out of that money as well. And they basically have created plans of if golf brings in new revenue, well, we want to spend it on XYZ. So that's part of the consideration. So there are some things in here that it might make sense to just It's a net wash because the golf operating budget is paying for this, so the expense should stay there as part of the conversation. But the way we package it is everybody's supporting the general fund, and if you want to spend it all on raises, we basically have to find a way to do that. So just to keep that in mind as you're going through that spreadsheet.

So will these be broken down in any way?

I mean, it's easier to say, you know, for the – That's from my handout on Tuesday. Okay. It's very –

So that we, so hopefully they prioritized or this, okay.

So really probably just based on timing and knowing we're not going to have all of y'all today, probably homework is to read this tonight, come back and tell us what your priorities are. But we also, we'll get to it in a second, is once you tell us what your priority on personnel, the pie gets smaller, less to prioritize. Once you focus in, you can only spread it around so much. Okay.

Yep. One, one thing we might throw in there too. I know there was a lot of meetings that we had last year or during, or during this year where, where council has told us, we need to know what the departments need to operate. What do you need? And parks was a good example for that in conversations we had. Well, we don't know if we don't know. So a lot of those requests that are in supplementals are based on those conversations.

Yeah, we want to make sure we weren't holding back this year as far as this is their true need of requests, knowing you can't fund all these. But in the past, we would not show this to you.

Let me pause here real quick and just check with city secretary. Did you get councilman logged in and uploaded?

We will need to take a break to get him connected to make sure that we've got him on the screen and everything.

Okay. You're doing an overview, right? Yeah, this is high-low overview. And then I saw you go back to kind of general funds. So is that a good stopping point, or do you have a few things you need to cover before we do that? Yeah. Okay. If we could, I'd like to take a 10-minute recess, come back. That way we can get Prescott back in. Thank you.

Are we getting a lot of feedback?

Freeman, are you up again? Okay.

Oh, yeah. We did.

I'll just pretend we can read it. Thanks, Stephanie.

I think we're good.

So just to kind of recap where we left off, we're going over the summaries of the departmental supplemental requests. This was the general fund, 157 total requests, 19 million.

Are any of these for personnel as far as requests? Yes, some could be for personnel. Okay.

Yeah, they could be supplemental requests for software, supplies, new additions to staff.

Is there a breakdown of what these are?

That's in your other handout from Tuesday. So they tally up to this one. It's about...

So to get us started on the right foot, do these supplemental requests acknowledge budget amendments? Or do these supplemental requests go back to their previous budget?

You go back to your previous budget.

Yeah, so some of these have been, so like if I'm looking at a large one here, you know, say APD, uh five million we've we've done a budget amendment um that that covered that cost in one year not moving forward right understood understood but like in in that they're going back that's not this is not a request of five million over the amended budget it's the it's a previously based budget okay yes that's correct that's correct thank you uh so we had the went through the hot tax admissible court i.t

ON THIS ONE, JUST A QUICK CORRECTION. THE DRAINAGE ONE, THE $1,059,000, THAT'S ACTUALLY FLEET RELATED TO THAT LANDFILL TIPPING FEE IS WHAT WE BELIEVE THAT NUMBER IS FOR. WE HAD A TYPO ON THAT ONE. AND THAT'S NOT CURRENTLY, THIS IS THE FEE INCREASE TIPPING THAT WE WOULD LIKE TO RECOMMEND THAT WILL BRING IN A LITTLE OVER $1 MILLION DEDICATED TO SOLID WASTE LANDFILL PURCHASES. SO THAT COMPLETED THE RECURRING SUPPLEMENTAL OVERVIEW. THESE NEXT FEW SLIDES GO OVER THE DEPARTMENT CIP REQUEST. SO THIS IS BASED ON THE 11.9 MILLION AVAILABLE FOR GENERAL FUND. WE HAVE APPROXIMATELY 51 REQUESTS TOTALING A CASH AMOUNT OF 73 MILLION. AND THEN ON THE RIGHT COLUMN, WHEREVER WE ARE PROPOSING DEBT-FUNDED PURCHASES, THOSE ARE SHOWING UP IN THAT COLUMN THERE, So we're showing $48 million in debt service for the general fund. The 6.2 is a continuation of the fire truck rotating purchases over a 13-year cycle, so continuing that plan. The 42.5 is related to streets. One of the discussion items will need feedback when the time comes for that discussion. We have annual arterial reconstruction at 30 million and various street resurface at 12.5. So where you're seeing the increases on the annual arterial side, we have Osage and Coulter reaching the point in design that basically both are ready at this point. So you have the opportunity, you could go ahead and debt fund those knowing the payment's going to be when we're trying to absorb debt rolling off. So you might have the capacity to increase tax rate just for what you're usually raising and then the extra could cover that new arterial that was not previously in the rolling cycle of annual debt funding. And then you move on down to solid waste. There are four requests for 3,055,000. They basically have enough to fund all their requests under that category. Utilities, water and sewer fund, approximately 13 million. We were hoping we'd have a little bit more from that. We've been growing our rates and using it for one-time capital until we need it for either debt service for the wastewater plant or other operational needs. Well, based on your discussion with Crim Law entering into the MOU, we have started funding more toward Crim Law, which eats some of that capacity of the rate increases that we have seen. I think the new annual impact is about $5 million. Around $5 million. Correct. That we now have to pay Crim Law for their future planning for Crim Law 2. And then we do have the $60 million debt amount. That is a TWDB loan that's been approved. Now we have to issue the debt and start making payments on that piece. Drainage has three requests. They have 800,000, basically setting that one up as an E&I account and then come back with projects. That is also what we're proposing in the water and sewer with the 13 million, similar to how we structured it this year. It was water and wastewater. What we're proposing is to just make it a utilities E&I, and we bring forward the projects with the latest thing that either needs to be replaced or improved as they continue to try and operate the plants while we're fixing those.

Andrew, if I can, I believe Councilmember Prescott has a question.

Yes, sir.

David, did you have a question or comment? Can you hear me? Yes.

Yes.

Can you hear me?

Yes, we can.

I think you just muted yourself again.

Muted yourself again.

He appears to have frozen up.

mayor i think we'll if i recommend we just keep going and we can try to get him back and um but he looks like we've he must hit a dead spot or something so

So that brings us to fleet services. Basically, it's just the one request, $8.5 million debt, but this is funded by operation and maintenance to cover. That's our capacity of what all the departments are paying into fleet. We have the ability to spend $8.5 million of debt for it, which Donnie does have a list of those projects if you want to hear which vehicles we'd be replacing, but we can provide that later.

Yeah, you all have asked that on Tuesday, so we do have it at least ready for you.

We can bring a printout for tomorrow. Okay. As far as Civic Center, on the next slide there, we've got six requests totaling 1.3. They actually have some capacity up to 1.9, so we're going to work with Christopher, see what else we could do with those funds to make improvements to the Civic Center. And then the airport, we actually have an older number on here. Their new request, we'll get you copies of this. We're totaling up to 5.2 million in requests under review for airport, and they've got 5.7 capacity. So we're still fine tuning those numbers as well. And then just a snapshot I had on this slide, just so you'd have a handy. These are the debt that is rolling off. We'll have our last payment in this budget and capacity available the following budget. If y'all were to approve projects in 2627, because we wouldn't pay it till the following year. So you have that. Geo series 2017 tax note series 2020 and tax note series 2022. And then on the tax note 2022, that was actually City Hall. So half the payment was coming from utility rate. So we're going to have 2.5M in capacity on the utility rate side for future future debt needs. So that portion could go to fund a portion of the TWDB DWDB loan payment. And then here is the raise cost of living general fund only scenarios. So we've got 3%, 2%, and 1% calculations. That 3% we've touched on already, it'd be 4.6 million impact to the general fund. The 2% would be 3.1 million and 1% would be 1.5 million. Again, this has to come out of the 7.2 million that's available. And at the bottom, I've got some new numbers for you. What you're seeing there is 3.4 million for the compensation study. That's across the board, all funds. What the general fund impact would be would be 1.9 million. And then the next phase approach for the general fund would be 445,000. So keep that in mind as well. I lost my clicker, Stephanie. Thank you. And then I just wanted to remind everybody what the original meet and confer requests are. We had police raises 3% across all ranks and then fire raises were 10 to 22% depending on the rank for a total of 7.4 million. They also requested some reclasses or step adjustments. Police were requesting the officer rank instead of being five steps, it would go up to 10 steps. THAT WOULD BE APPROXIMATELY $630,000 A YEAR FOR FIRST YEAR IMPACT. FIRING CLASS WILL BE SIX DRIVERS AND SIX LIEUTENANTS. BASICALLY WE'VE BEEN HAVING A HISTORICAL PATTERN OF OUT OF CLASS BUMP UP PAY AND THEY BELIEVE THIS NUMBER WOULD KIND OF RIGHT SIZE THE RANKS TO LIMIT SOME OF THAT OUT OF CLASS PAY SITUATION. So a total of 1,000,000, keeping in mind, once you add more steps, that's an ongoing annual that we have to build in. Just like this year, we have 1.1 million we've already had to build in for required police and fire steps moving into that next classification. And then we add certificate type pay. This is your certification pay. This is if you've got a bachelor's or master's degree. So adjustments to those between the two departments will be $605,000. The combined total requests between police and fire for meet and confer is $9.1 million. So the last slide I'll cover and then we can circle back to getting your feedback on personnel. So that'll be our starting point before we know what we could still bring back as far as focus areas for remaining supplementals. Talking through future budget priorities, just forecasting what comes next after this year. Still dealing with aging city infrastructure, streets, water, sewer, drainage. and other city facilities. It's still going to be front of mind. Plan for expansion of city services to address growth. As we move forward, we continue to annex new areas. Is that going to require a new fire station? Multiple fire stations because we also have gaps in our coverage now. before even adding additional acreage, adding new police staff. I think our current numbers say over the next five years we need to add somewhere in the 40 officer range to really have acceptable coverage across the city and time for them to do their jobs proactively. Addressing staffing recruitment and retention, public safety, and across the board in all departments citywide as we continue to grow and trying to remain competitive. And then that last one, don't need to discuss it now, but part of why we brought our full list of requests of supplemental CIPs, you can kind of see where things are heading, is continue that discussion of when do we get to the point of having to go to the voters to request above three and a half percent knowing if we have to add 15 officers in an upcoming budget there's not going to be a way to absorb that with new revenue so eventually we'll come to the point we're going to need direction of how we build that out and plan for that knowing if we're going to go that route You have to bump up your budget cycle because you have to be able to call an election in early August. So that's something we can get feedback from you today or tomorrow or in the future. So with that said, that really wraps up the slideshow. And then we can kind of go back to the general fund cost of living scenario and discuss what y'all's thoughts are on personnel.

So with this, yeah, Council, we would, our recommendation is that, again, having talked to you all the last several months, the pre-budget workshop and everything, I think given your largest expense as a city is personnel, I think that should be where we start first and decide, are we looking at COLAs, civilian, please fire, one, two, three. So we've got several scenarios there on that slide, 53 there to look at. So I'd recommend we start there. And then that will then impact your remaining available balances and all the funds. I mean, again, if you were to give, let's say, a COLA to the civilian employees, that would also impact utility fund. It would impact airport fund. It would impact the other funds because they have employees in those funds. That's where I recommend we start today. So is there any, what's the council's desire when it comes to COLAs for the employees?

I think that we've been making good progress over the last couple of years, especially on the law enforcement and fire side. non sworn civilian personnel. I think we really need to look at that. Um, not only police and fire at this time. I think that's an important thing. Um, you know, that's that's the heartbeat of our city is our employees. I think that's a very important area and the better we can do for them, the better it is for the city.

Yes, I agree.

Yeah, I would agree. I would second that as well. But we keep talking about COLA, but we're to a merit-based system, correct?

We can do either, so we can do either.

Well, I mean, I would say that we just continue down that path. I think we did that last year. We set the evals up and everything's done. I think that... Again, just to reiterate, I just don't think a COLA across the board is great. I think it disenfranchises your harder-working individuals that should probably see a greater raise, and then those that are not maybe meeting expectations maybe don't see a raise.

I think my recommendation would be 3% COLA and do another bucket for high performers. Why? If you still want to do merit, just because 3% is really not high performer.

Well, I get it, but if we have employees that are not, we're just, to me, you're just accepting mediocrity. You're accepting, maybe not even mediocrity, you're accepting, I mean, and I hate to say this, but I mean, because everybody out there is great, but I mean, you know, we all hear the things of like a government employee and that type of deal. And again, I'm so open to everybody up here, what their opinion is. I just feel like when you can reward those higher-performing individuals, it makes sense and it insulates them from being picked from the public sector. If they're like, well, I can leave the city and go make more money. And then they're really good employees, so they leave. So I think those people need to be rewarded more, but I think those that probably need improvement, I mean, I don't know because I'm not in the daily operations. So I'm coming from a... much higher level view, so I may be wrong, but those that are not maybe meeting expectations, I would like that they get a message of like, we don't, you're not getting a raise.

And I can tell you, we've, the work that Mr. Norman has been doing in HR, we've got a process now. We do annual evaluations and employees are rated Excellent. Okay. Whatever. But also those who are underperforming, they go through a, through a process. It's a pit process. And so, and they are, they're given a chance to improve and if they don't do it, they are let go.

So, so why would we, why would we, obviously we have very limited resources and I agree with Councilman Reed. We've got to get our staff paid. I mean, we, we, and we've got, they've got to see raises. I agree a hundred percent, but why would we I don't know what the right term is. I don't want to say waste, but why would we reward those low-performing individuals with even a 3% raise?

Well, you're still trying to keep up with the market for that position. So when they do not perform anymore and we're replacing them, we can hire someone back at a competitive wage. So you're saying that we want to keep that...

It's the role. That pay, but don't we have a...

uh for each each position for each stage whatever we have a a pay scale on a grade yes and that's part of the the compensation study piece of it so you're saying you could potentially do it that way put more into the compensation study and not as much into cola so there's a couple different ways you could go and i think the only people that don't want to hear this conversation are the ones that just are low performing the ones that are low performing we're not keeping in the organization

Well, I would hope not. I mean, okay. I mean, I'm going to just say you guys know better because you're running the organization. But from a higher level view, I don't want to reward those that are not performing well. And if you're saying, hey, we're getting rid of those. We're culling those already. Well, that's great. I mean, that's what needs to happen. And then you have your average employee.

They're not high performing. They're not low performing. That's kind of the cola. And then another bucket would be your high performers. Maybe here's another 2%. something like that. It could go many different ways.

And some of the feedback we got from some of the directors too is that it's really difficult in some of these jobs that are just, you have one job to do all day long and there's really not a way that you can grade what they do. And I'm not going to get into specifics of what they are, but your job is to go from point A to point B every day and that's what you do. It's really difficult. to figure out whether they're performing high or they're performing low because it's the same job across the board. But we are, as Andrew said, I think if you find someone that's not doing their job, then we're taking care of those. And those are not in the organization anymore.

I just don't love everybody gets the same raise. I do not like that at all.

You have the other challenge of police and fire get that. Yeah, so you're saying police and fire, it's okay for you, but it's not okay for your, right?

I get that, and I mean, and I hear that, but I think that those are sworn, you know, it's a little bit different. And I think that, I mean, it's just, they're just different, different jobs, in my opinion. But I do feel like that, I just, anyway, that's just my opinion. I don't know how everybody else feels. I just don't. I don't love giving everybody the same race because it doesn't reward those guys. Because even the guys that are going from point A to point B every day, their attitude, some of them's attitude can be different. I mean, where you're like, hey, this person's going to move out of here. Like, they're good. Like, their attitude's good. They come, they're positive. They do a little extra. They, hey, while I was on route, I saw this. Can we fix this? You're like, well, that person's really paying attention.

He's an asset. And I think we'd probably be supportive if it was merit if we were talking 5% or 6%. Yeah, something that was bigger than 3%.

I agree. I mean, I would love to give everybody a lot more, but when we're looking at limited resources, I just... when I hear cola, I just don't love it. I don't love everybody getting the same race. And no matter how I perform, I know I'm going to get that race or if even if I'm mediocre, I know that I'm getting the same raises as the person that's showing up early and staying late and doing the extra. And I don't I don't love that. I just don't like that. I don't think it really sets another person apart. The higher performing individual and set them apart. Just my opinion. And again, I don't know how these guys feel, but I just I would like to see that if possible, but I'll leave it to y'all.

I know, Grayson, when you first came on, we did a study to see and we made some changes there because we were not competitive for some areas. And again, really, you know, obviously there's two purposes for any kind of salary adjustment. One is to reward good behavior. I mean, not good behavior, but good performance. And the other is to remain competitive. Are there any areas, I mean, because I can't remember, are there other areas that we still need to study? Yes.

We have 3.4 million of our current study that are still.

Because we were not able to implement the full study last year. Budget was limited, and so we did like a phase one approach. We were able to target some very low positions, but we were not able to implement the entire study last year. So we do have a phase two option in this next, as a supplemental opportunity, I think, is that right?

Once general fund is 445,000, the whole study would be 1.9 million. Okay.

So I'm hearing you say that we can save a large study fee if we went with a COLA. Because you wouldn't calculate the study if you're just saying, well, as an organization, the entire organization matters. The approach this year is we're going to try to build in the COLA.

Yes, that is one option, yes. And so we have the funds. We could do a COLA and still do part of the pay study. That's an option.

And we've also in the past, and we've done like last year or current year is 2%. You have to budget 2% for everybody. Not everybody gets it, so we have an excess, and that's what we did to up to 5% for high performers. Agreed. So you like that approach a little bit more?

I do. I mean, I like that, and I agree with... Huh? Oh, I agree with allocating that much money for all the staff.

Because you don't know how they'll rate until they rate out.

That's exactly right. I'm all for allocating that and just putting more on the merit side of it than just everybody gets the same. So yeah, a budget across the board for every single employee, the 2%, the 3%, whatever percent we can do. But then how it's allocated could be different.

Yes, can you hear me?

Yes.

Yes. I'd just like to weigh in on this topic of the raises across the board. We're not ever going to be able to know exactly how all of the staff members are performing in the organization, so we have to rely on management for that. We know that we're going to have employees or available workforce with the with the astronomical we're seeing in the region if we do not keep up with that we're we're going to fall woefully behind and it's ultimately going to become down to a decision are we going to have the positions are we going to have to subcontract out the services so we have to trust management to get the best teams that they have and we have to pay the individuals and if we don't we we're going to have to look at subcontracting out the services And that's just the reality. We have higher sales taxes. Things are increasing. But also we're seeing an increase in wages almost quarterly right now in industry. And so we have to stay ahead of that. But once we fall behind on that and we get the discontent, then it's going to be a really hard task to catch up on.

What's the overall of the department heads, directors, when you look at a general COLA versus a MERIT? Can we put a percentage on it? Do we find it 50-50 across the departments that some of those directors liked that option? Is it far less than that, more of an 80-20?

I would say that it probably 80 that did not like that approach.

Okay. So the majority, majority of directors didn't find the merit to be helpful.

Correct.

And we didn't do merit for our, three largest departments, I guess, two really largest departments in all of public safety.

The biggest struggle in my departments at least has been keeping up with, which is like Mr. Prescott said, keeping up with the going wages. You know, we lose people to fast food. They're performing services for us because it pays much better than ours do. So keeping employees, retaining them is a big focus that we've had in our departments. That comes along with training, making them better at what they do, giving them better opportunities to promote through the organization. And I think that's the approach that our directors like better, working with those employees, making them better at what they do, and giving them opportunities.

And sometimes that today the mediocre employee, in time with training and guidance, they become a stellar employee. But it takes time. And so a lot of our concern is we lose them before we have that time with them. We lose them before because we can't keep up with the costs of the private sector. And so before we can make them into a stellar employee, they're gone because our rates aren't keeping up. So that's the thought that I've been hearing from departments. Now, again, if Council prefers, maybe we can do that. I just wanted to relay to you what we're hearing from department heads.

Do we have a program of bonuses and incentives?

We're not allowed to do bonuses in public government. Now we have the ability to do incentive pay, like if a person is, let's say they're in the finance department and they achieve their accounting degree. Okay. You know what? Excellent. I'm going to pay you a little more because you achieved a degree that benefits the taxpayers in that role. So we do have those opportunities. If you get a significant certification that took years of preparation, we do that. I don't do it if you went to one training and get one little paper. You don't get paid for that. But when you achieve a higher education, a higher training, we do those options. Licenses. Licenses, yes. Yeah, we do that opportunity. So that's available. But again, not every position has that option.

Yeah, the only thing closed is our discretionary retention pay, which is for years of service. That's that one annual payment that's built into your cash flows.

Our CDL program is a good example of that as well. Putting them through a CDL program, they earn their CDL, they become a driver, they get more pay for having that CDL.

And for our really achieving employees, I mean, there are times when we reclassify them. So because you know what, you are now doing twice the workload, you shouldn't be paid for the same pay you're making before. And so in those positions, we do reclassify them and give more money because they're now doing more work because they're stellar employees. So yeah, we do make those changes. We recognize those employees that way as well.

The positions that we dealt with in the first study, the salary study, I guess we're maybe in year two of implementing this. But, I mean, have we seen less turnover in those positions? Or do we know kind of how that investment in doing that study maybe has turned out for us to do what we want to?

I'm going to turn over to my specialist here.

Council, I can't speak with empirical data as to whether or not we have seen a slowdown in turnover in those positions, but to some of the credit what Donnie, Mr. Hooper, and Mr. Freeman have stated, it's helped put us in a position to be more competitive with positions. I do recognize that, but I'd have to do some deeper studies to see if we've seen any benefit from it.

Yeah. Well, I would want to consider if we thought we got value out of that first study that can help us complete looking at the organization to do that. I think at the end of the day, council can decide on how much we want to give For increases as we should, but I'd really trust staff to figure out. Okay. And what I'm a person that kind of supports the merit raise as well. But you guys know your organization better. I mean, I think I would be comfortable with us saying, okay, here's here's. at the end of the day here's how much money we have if it's three percent across the board if if you guys can figure out between salary adjustments or remaining competitive if we do a study to be able to use that pot of money whichever way you think is best in order to achieve it and it could be a mix of merit it could be a mix of uh wait a minute we're not we're not paying enough in those areas that we need to raise those. So, you know, again, I think looking at the total that we would be comfortable with putting in the budget and then you guys figuring out the best way to execute that.

I think we have Councilor Prescott who wants to say something.

Did you hear me, Stephanie? Yes. Yeah, I'd just like to add, just for comparison, The entire market at mechanics, welders, the entire market in the top 26 counties is severely strained right now, and we're going to see a lot of continued erosion if we do not keep up.

In comparison to that, our CDL drivers start at 19.

You can try it again.

In comparison to that, our CDL drivers start at $19. In the other range, we were talking about laborers, $13, $14 an hour.

I noticed when we were looking at the requests, that were coming from police and fire. I mean, fire was about four times as much. Kind of walk me through, what were the differences between those two?

So theirs is based on, they took the five largest communities and five smaller communities and averaged them out. And it's trying to meet that average of those communities. By raising the wages. So that's the comparison that they made. Doesn't factor in cost of labor, cost of living. It's just what someone can make doing the same job in those cities.

And so that totaled up to a $9 million request?

Stephanie, can you click it for me? I think it was around six was fire's portion. Six million. Oh, total six. Yeah, six million to get that request.

6.8 versus 2.3. Yeah.

And the 6.8 includes the reclass of a few positions and certification pay adjustments.

So those two numbers represent what percentage police's percentage? So police only ask for the 3%. So police meet and confer is the steps and the 3%, and that is what you have built into your budget.

nothing is built in this would all have to come out of the 7.2 million of the step well these these are new steps so police currently has a five-year step they want to add another five to the officer level so we'd have to figure out if someone's already got 10 years experience they move to step 10 so they'd see a significant increase that we don't have factored in currently in our budget Right now, we've estimated the $1.1 million to cover that current pay bumping up next year to their next step. We've got that built in.

So the consideration, you've got $7.2 million sitting off to the side and kind of on a general overview so far. And you don't have any of the increases built into the base budget that is less than that 7.2.

Correct. Everything on this list in the previous slide is not built in.

What about additional positions requested and built in or not built in?

No, that would be on your supplemental at 19 million. Some of those are new positions. Not really. And I think fire had some. Police didn't have any new positions in theirs. But you could go to AMW. They've got, I believe, two new officers, facilities, six more custodians. There's a wide range of requests throughout.

What's the what's the average on the fire side if you take there because I mean, I guess if you're looking at other cities, what does that calculate to here is a percentage pay increase.

Oh, it's that 10 to 22% depending on rank. Some of the ranks will get a 22% increase. Some will get 10% and fall in between. Okay.

Total pay increase for police and fire. And we also did some other departments that were badged officers over the last, what, four years, five years? Is it 25% total? Current?

Between the last two years, increases?

I think the one year of the $10,000 equated to 16%. Yeah, it was kind of average 16%.

And then this current year, PD, I think, got four and fire got three. Yeah. PD got 4%, fire got 3%, and then civilians got 2%. Merit.

Okay. Council, any other comments, remarks on? Yeah, we got one for Prescott.

I just want to make sure that I know we talked about civilian and badge, but when we start talking about civilian, what are we doing for, like, professional engineers? critical for our city? What are we doing for the IT guys? All those other spots that are critical for the internal infrastructure. We have to be looking at that as well.

All would have to come out of the same bucket and that would that would kind of get tour towards your comparable pay study option as well. So again, I don't. I don't know which of those positions are still need to be impacted, but that your pay study would go towards.

I would say minimal on the professional side. I think most of it was in the lower level type positions. Okay.

All right. So otherwise, I guess, Congressman Prescott, it would go back to what you would authorize, whether a COLA or a merit for the civilian employees, because the civilian employees include your professional employees.

It's almost impossible to get engineers right now. We can't lose any of them. Mm-hmm.

Is the average salary for our employees minus our executive end? Do we have a number on that?

No, I don't think we have that. We could work on something, but it's kind of a hard number to... Because we have 2,500 employees, wide range of the duties and responsibilities. And so we could come with a number, but yeah, we come with a number. Right.

You know, because somebody's making $100,000, that's a $3,000 raise, which comes to $250 a month. So it's really not that... large an increase for individuals.

And that's kind of why we're talking COLA versus merit. It's not much.

And that's where some of the department heads were like, for some of our lower-paid positions, having a 2% merit was not well accepted by a lot of our employees. And so, because they knew that, well, it all depends on the supervisor and how they grade the person. And we try to have some consistency across the board, but there's not any way to, when it comes to performance evaluations, not really a way to have every department head evaluate a person on the same mindset. Because they're all different positions as well. You would grade a street worker differently than you would grade a librarian.

Or if you take someone that's repairing a water leak, it would be a good example. I mean, they're out there for 12 hours in the middle of the cold, in the middle of the winter. They're going to have a bad attitude. But they're not dealing with the public at that time. They're just dealing with a problem. And that is different than dealing with someone that's public-facing. And if you take his numbers that he said, $15 an hour employees getting a $0.30 an hour raise at 2%. Right.

And these increases, it's everybody, all city employees from upper management to our lowest employee?

It would be all ranges, yes. I mean, yes, yes.

So, Councilman, keep going on that one. We have director level and above. Then we have kind of director level below. in some other conversations where we address different things. You know, in the past, I think we've had buy-in from executive staff that's, you know, like we are compensated pretty well compared to other municipalities. But your $52,000 new hire is $20,000 below. So, you know, 3% raise on $200,000 is significant. But when we added all those up, I don't know if it even totaled. half million dollars it may have been more towards morale but then are you proposing uh to look at levels that is one way that that you could do it in in trying to target at several years ago we were trying to target a lot of our entry level positions as the lowest paid more underpaid harder to fill we didn't see quite as much on the higher end and so Do you have an interest in looking at that as a direction to staff?

Well, I think everything has to, at this point, before we make decisions on where we go with the budget, everything has to be on the table. And, you know, when you say somebody who's making $15 an hour, that's not a large increase, 3%, where somebody who is salaried, not the hourly rate that might be making 200, 250, 300,000. That's a substantial increase. And I kind of get it, but I think it's a conversation we have to have as we talk about raises and where we are with salaries.

All I can offer there is that all your positions are at risk of being lost. The one thing about your executives, they're being headhunted all the time. I hear about it all the time. They're the ones that you as a council depend on the most. They're the hardest to fill. They're the ones that have the most responsibility, accountability. They're the ones that are scrutinized the most. There is a burden placed on them that comes with the pay they get. All positions are important. But each one is important for different reasons. And when you step into a higher role as department head or executive, you take on a mantle that sometimes the money's not even worth it, honestly. So it's not even enough to keep up with what you have to take on.

It's kind of like being on city council.

Yes, yes. We need to give some level of direction for what we'd like to see coming back. We have a couple opportunities to help differentiate priorities. We're not really speaking to those right now. We're just kind of overall trying to figure out what we would like to do on personnel. The balance in this budget probably comes down to, before I say this, I guess I would say, I greatly appreciate the attempt and the improvement to make it more about public service than just the financial piece. So pay raises matter, right? And you've gotta be able to take home a paycheck to your family and provide. But what we've also seen is the morale increase across the board, I would say. And that is a lot due to the executive level and director level of appreciation and building teams and making people have value and understand their value to the organization and the community at large. So I really appreciate how much better you guys have done at that. Now, that said, I think our role as council is probably to help identify a priority for a direction. We can prioritize production and the product for whatever department that is for you over personnel, and we can push monies that direction. Or we can prioritize personnel over the product, and that looks a little different. And that would be a directive to you guys in, you know, where this money comes from and finding that $10 million, $12 million, whatever that is, in order to prioritize personnel in the form of pay increase or additional positions or shoring up the organization. If you can't find it in additional revenues, and you can't find it in monies that are coming forward, or identifying existing funds that haven't been utilized, then you're left to find it in efficiencies, or you're left to find it in some of the other budgets that you carry forward that have to do with facilities, maintenance, and things like that. So council, in splitting those apart, Where do you want to? I hear Councilman Prescott. He seems to be really heavy on the personnel side. Like I'm hearing a lot of value on paying personnel over new tires on trucks, so to speak. Would ask for a little feedback from Council on helping to balance that budget, which is the most important need of the city that you're seeing.

It's the people that we have. That's what runs our programs and does the work. So I think that's where the concentration has to be.

If we don't have humans, we don't have anybody to drive the truck. So it doesn't matter what kind of tires we've got on it.

Well, I would say, what are our goals? I mean, when we look at the compensation part, what goals are we trying to achieve out of this?

A lot of it is obviously retention and attraction. And so that's ultimately the goal when it comes to a pay study or your pay range is to be able to attract a talented employee and then keep that talented employee. And then obviously on the flip side, obviously whenever it's part of the evaluation process, if we have an underperformed employee, either get them up to speed or assist them on exiting the entity. But ultimately the goal for a good pay range is to attract and keep.

And that's what I would agree with that too. But again, I just think it goes back to, I mean, I look around and I think there's a lot of areas that we are attracting good employees. I mean, I'm just trying to figure out where the weakness is that we need to supplement this because we do have employees that have been here for a while. Our salaries may not be as competitive, but we have other benefits that city employees may get that you can't get elsewhere. But I'm just wondering, Where are our weaknesses? Is it an overall weakness? Or where are our weaknesses on the attracting and retaining?

What I can probably give you is maybe a little anecdotal. Every two weeks, I'm part of the new hire orientation process. And so every two weeks, we go through a process where we're onboarding employees. And so I get to shake everyone's hand. And that's one thing I've done since I've been here. I try to shake every new employee's hand physically when they walk in. I want them to have that from the city manager. Then I give them an orientation, just a welcome little piece. And then either Andrew or Donnie or the other AC in position, they then do a piece. What I'll say with this is that every two weeks, I'm seeing 20 to 40 new faces. I got 2,500 employees. You add it up, and this is every two weeks. You add it up, we have a lot of turnover happening throughout the entity. So I'm losing people all the time. Now, some is retirement, but I know a lot of it's not. A lot of it is I'm losing. And this is not just a street issue or a park. I get the opportunity every two weeks to look at the list on every department. And I see every consistently... most departments are represented every two weeks. So we've got issues throughout the entity about trying to retain. Now obviously our bigger departments, I see more of them because they're bigger. But I've seen WIC, I've seen Vital Statistics, I've seen CP and DE, so we see them coming through. So just anecdotally what I tell you is I see a need across entity almost relatively equal for all the departments.

And to add to that, some of those employees that are coming to the orientation that we see are the result of job fairs that the departments themselves have said, hey, we want to have a job fair, and they work with HR and they put those together. I've attended a few of those recently, and they had a really, really good turnout at those because they're desperate to continue to keep employees. And once we get them, we want to retain them, and that's the hardest part of it. And that's all the way across the board, really.

And I've seen instances where employees have left and gone somewhere else and come back. Yes. So, I mean, yeah, well, yeah. So, anyway, but, I mean, if we're going to use the, and I understand the income, but I want to make sure that we're strategic in being able to do this so that we look at, because I think, I don't know if we look more than anecdotally. I just wonder if there would be a trend or some area. I mean, because we've already identified some of those areas.

And that's part of the PACE study process. And so when we did phase one of the PACE study, the task I gave HR, given we only had so much funds to work with, was look at the ones that are truly struggling. And so that's what Mitch and the team did, is they looked at those. If we were to do a phase two, we would then go to the next tier, the ones we didn't get the first time. There are certainly departments' positions that struggle more than others. The pay study helps with that. The COLA or MERIT, whichever way you go, helps me citywide try to keep up. While I'm hopefully doing both COLA, MERIT, whatever I want to do, and pay study at the same time, the COLA keeps us going while the pay study allows us to target those specific ones. So my recommendation is to do both. My recommendation is to do a COLA and part of the pay study.

Well, I don't know. I guess when we put this budget together, there will be X amount of dollars there, and that's what we have to figure out. Again, I would go, I mean, maybe we don't get, I mean, I guess it would then be up to you to how to best allocate that, or your organization to best allocate that money. I don't know if we've got enough, or if at the end of the day we'll stay enough to do the 3% and the... you know, the study, but if the study is important, you know, again, I think our job is going to be to figure out how much money do we have, do we want to be able to implement to you using that in whatever way you want to to help meet the challenges of retracting and retaining.

Absolutely. And so, yeah, we could, so the council could just give me a a budget a five million dollar personnel item kind of thing then you leave it to me decide cola merit pay study mixture kind of you can do that and when it comes to pay study i mean we i mean we we will as management try to target those rough positions that are still struggling we can do that so we could do that or you can tell me you know we want a three percent cola or merit plus we're gonna give you seven hundred thousand dollars for the next alternative phase approach for uh that so

Well, and not all turnover is bad. I mean, sometimes turnover is good. And then other times there are going to be people that advance their careers that they want to do something else or they want compensation elsewhere. So, I mean, I wouldn't want to say we want to hold those people back either. But I agree with looking at where we are to be competitive in the marketplace to be able to do that.

Yeah, absolutely. Not all turnover is bad. Some turnover is actually healthy for the entity. But then that goes back to the attraction part. So make sure that I can attract the next person.

But I do think it would be if there's a way that we can kind of quantify when we're making this type of investment to make sure that it's achieving what we're achieving, that we're making gains on turnover. Because that's what we're saying we're wanting to do is to attract good people, which I think we, we already do that. I think we have a lot of people that they come here are really good at what they do, but retaining them as part of it and to make sure, you know, to measure how are we retaining the people that like council member Prescott says that we want to be able to attract and keep.

Yep. So just speaking general fund, uh, and I know it will impact others, but I think if you kind of implement a protocol or, or, um, you know, the template for general fund, I think maybe it could flow through the others, and it would be practical. If we're saying, as an organization, and from leadership and execs, you know, we find that the entire health of the organization is important. We've built a team. We're all in a team here. We don't really like being departmented, so to speak, and each thing evaluated separate than others. I find it to be healthy if you say, okay, our goal is to give a 3% increase in pay across the board. I FIND IT HELPFUL TO PUT EVERYTHING INTO THAT SAME BUCKET OF CONTRIBUTION. AND SO WHAT WE'VE SEEN IN THE PAST IS WE KEEP THE FUND BALANCES SEPARATE. WE DON'T NECESSARILY VOLUNTEER THOSE UNTIL RECENTLY. SO WE MAY HAVE SOME SAVINGS THAT ARE REALIZED IN DIFFERENT AREAS. THEY'RE NOT COMING BACK TO THE ENTIRETY OF THE TEAM. when we speak to a pay adjustment increase we want to address the team as a whole so in being able to do this if three percent is ten million dollars then what we saw with uh Katrina's previous presentation several months ago was overall we're under budget, you know, so many millions in the general fund. And then here's the itemized areas where we need to do budget amendments for where we've had cost overruns, right? So can we set a goal of what we would like to do for all of the employees in the entire organization, right? But then also take the compartmentalization away and put it all into the way the general fund operates and look at that as what does that net out? Because we would still have in these budgets that are represented some EFFICIENCIES THAT ARE NOT BEING RECOGNIZED. WE DIDN'T GO THROUGH THE BUDGET AND LOWER ANY DEPARTMENT THAT I'M AWARE OF BASED ON EVEN IF THAT DEPARTMENT DID HAVE AN EXISTING FUND BALANCE AT THE END OF THE YEAR. SO DO YOU FOLLOW WHAT I'M SAYING IN TRYING TO LOOK AT JUST EFFICIENCIES OR OVERALL? GO AHEAD.

WELL, I THINK SOMETIMES A LOT OF OUR, GIVEN WE ARE SO HEAVY PERSONNEL IN THE BUDGET, A LOT OF YOUR a lot of your opportunity to amend the budget is because we've had turnover. We've lost position. We have vacant positions. So that's a natural thing to do to size. And so I think when you see a lot of your potential efficiencies, well, it's not really an efficiency. It's just we just had turnover. My goal would be to keep 100% of my employees 100% of the year. It doesn't happen. And so we have inevitably an amount left over. Now my goal, saying to Councillor Simpson's point, is to keep working on strategies to stop losing employees. Now, obviously, if people retire, good for them. Someday I hope to do that myself. And if people, they know a better opportunity or they're moving because their spouse got a job in Houston, we get that. But I want to stop the bleed on, I got a better job at Fermi or I got a better job at Walmart. I got a better job at something like that. That's why I'm trying to stop. And so you're not going to stop at 100%. And sometimes people just, you know what, this isn't my speed. I don't like... I don't like filling potholes every day or I don't like catching dogs every day. So some of that happens too. But I want to do what I can as an organization through our environment, through our culture, through our pay structure, through our communication strategy, through our all these things play into a good atmosphere pays one of those. And so I want to build that to where they want to stay.

So in the ACFER that we've got in 25, we made some budget amendments. What we saw in 25 was overall we're under budget $18 million. Then departmentally we have cost overruns for a number of reasons. Some of it, I think, was even like wild land or doing things, you know, fighting fires on behalf of other people. But then, you know, we had $8 million in cost overruns. We netted a $10 million efficiency at the end of that year just as a very simple look back, right? Then we look at revenues and we go, okay, we projected revenues at 270, we revenued 275, so we bring that 5 million in. And so you put those two together, and we walked into 2026, let's say, with a $15 million net positive position. Now we're working through 2026. We're trying to create a budget for 2027. What this council, I think, would be greatly benefited by would be if we could see what do you feel like those budget amendments could be at the end of this year? Are we going to see the same level I mean, we're projecting revenues. We can see that those are over. But at the same time, we're not projecting our net position with these departments are over, these departments are under. So overall, I just would like to see if you guys could bring us back a number that represents that efficiency. That would then help us set a goal, because everything we're seeing so far all has to do with increase, increase in revenues. We're not necessarily looking at anything that shows, okay, we're expecting to have spent 5 or 10 million less in the general fund.

That is part of your revised estimates, your actuals. And I know they did and I did. We went line by line by line. And I even, Justin can attest to this, I sent him many questions about looking at those trends, looking at the last three-year actuals, looking at the revised estimate. Again, not focusing on the budget number, looking at the trends. You're going to see plenty of examples of pluses and minuses. Last year we were here, now we're going here, or now we're going here. This whole budget is built around that principle of capturing the efficiencies using trends.

I do want to and let's just take fire for example, because it's the one that I can remember in my head. I want to say that when we did the budget amendment, it was 52Million and then now they're budgeting say 49Million right? So so can fire operations perform everything that they needed to at the 49 or do we need to anticipate like, well, we ended up moving that up in a budget amendment last year. You should anticipate that again.

That's always a challenge because we could take this. 7.2 million available and put it all towards police and overtime to fix your budget but then you can't afford your other needs or you'd just go ahead and count on those efficiencies turnover and excess revenue hopefully above the three percent above actuals and sales tax to come in next year to pay for the overtime and software and other costs

i'm hearing what you're saying and i'm also factoring in the 18 million worth of cost savings that we saw so in the anticipation of these budgets are built on previous 26 originals not not the amended right of 25. but then we throw in the expected new revenue so you're capturing that revenue but where you allocate it do you put it in that place and fire do you do it toward raises

And your cash flow sheet shows our adjusted, where we think we're going to end this current year. So that does that for you, I believe. And so it doesn't go by department. But again, as a fund, we've done the work to say, OK, we believe when you add it all up, the library, the vital, the street, all of them added up, this is where we're going to end up at. And so then that gives you your new available balance for this year. So yeah, we're trying to find those efficiencies.

So in trying to stay in our lane, if we were to give a directive, of, you know, we believe there could be 10 million in efficiencies overall that we're looking for. You know, we would like to set a goal of 3% across the board. Go and look at those actuals coming in in 26 versus the revenues. that we're having in 26, not anticipating additional revenues in 27, but capture both of those and bring us back a number to tell us how far away from that 3% we are. Is that a good directive?

We've already done that. That's what you have in front of you. So we've done the work to go through. And I know I personally went through it. I went line by line and looked at those things. And so trying to find, OK, the trend shows me here versus here. So we've done that work. Okay. So I think we would need from the council, we want you to specifically look here or here or cut this service back. I think I would need that, guys, because I don't really have something I can give to you myself. I would need you to tell me we want to cut X department.

Okay. So just looking at page 11 again, you know, we have our total expenditures here. you know, just the round number of 275 is where we thought we would end in 26, and we're saying we're going to end at 281 is the revised projection. So we're spending more than what we budgeted. If we go to our ACFER, was it page 32 maybe? If we go to our ACFER, General fund. Katrina, you'll have to help me in finding the correlation. All I'm trying to do is see what is our trend. Did we go up in 25 from our projections?

Well, you have to go back and towards the back that has the budget in that general fund. 159. Thank you.

Yeah, 159. Okay. So, expenditures after transfers, 247 and the actuals were 263. Am I seeing that right? Revenues were 260, projected at 247. But then expenditures were projected at 247 and actualized at 263 on this, which that was because we had several budget amendments we had projected again at 252. So should we assume that we finished the year in the general fund at 263 in actuals? We should, right?

For 24-25?

25, yes. Yes. So now we would be looking at our actuals in 26. We're going to say that our total actual spend in 26 is now looking like 275.

That's the budget for 26, 25-26. And we're estimating that we'll spend 281 million in 25-26.

So what I'm seeing here is the budget was 268 and we think we're going to spend 274. So actuals to actuals is very helpful here. So in 26 we're saying we think we're going to spend 274 and in 25 we know we spent 263. So $11 million increase in current year from last year. That's all I'm trying to get to. Yeah, best guess.

No, we're saying we're going to spend 281 in 25-26.

Where's the 281? That's the middle column. Oh, my fault. Yeah, you're correct. Yeah, I was down below that on the – I don't even know what line I was on. So, yeah, we're saying 281 is our actual. So let's do that again because I confused myself. 263 is our actuals from 25 in the general fund. Yes. 281 is our actuals. in current years, best guess? Estimated, yes. Okay, seven, eight, 18 million over budget?

Estimated, yes. Budget of 275, and we're estimating 281.

Yeah, so just above the 275, you're comparing it to how we ended last year, so it's year, budget to budget, not, we're only projecting to be over by six million from,

In the general fund? In the general fund. From the estimated amount, right?

Estimated, the plan, the budgeted plan, 275.

Yeah, so is it a bad question to ask for those efficiencies that we saw? Because in 25, we saw efficiencies in lots of departments, and then we saw large cost overruns in a few areas, so we want to true up and write up those budgets, right, and get them higher, but then...

The only way you could do that is if you cut positions in those departments that just had turnover. That's the efficiency Grayson's talking about.

I'm just saying the difference in running the organization is roughly 18 million from 25 to 26. Cost increase. 281 from 263. So additional $18 million in costs to the general fund to run the... You should really be looking at the 263.

That's more the operation. Everything else is transferred out for other funds. So if you're looking personnel, it's really the operating budget request 263.

Let's go to what was the operating budget request then?