Council - Regular Meeting

At this time, I'd like to call the budget work session to order on this May 13th. Um, would you please stand for the pledge? I pledge allegiance to the flag of the United States of America and to the republic for which it stands, one nation under God, indivisible, with liberty and justice for all. Let us pray. Heavenly Father, we invite you into this room today as we work on uh our budget and just ask that you lead us and guide us and give us your wisdom and um coming up with a budget that will benefit all the citizens in Nashville. Amen.

Uh report the water sewer rate study. Well, just before we get to that, so you guys don't get overwhelmed with what's before you as far as paperwork, I just want to uh the the agenda that we have here, there are a number of policy attachments here that we're required to adopt uh for CDBG neighborhood revitalization project. Yeah. So, we just got through the

Yes. Um and then after that, um we we'll we'll have we'll we'll have our our guests here this morning go through the rate study and then I had passed out and you you'll find the uh the draft budget thus far is this. It's stapled. The uh front six pages are revenue. The remaining pages are expenses. the the back page is a a a sheet showing what our tax rate has been and what it's brought in for taxable or revenue um for the last several years. Lillly, what did you hand out?

I handed out the last salary comparison I did for Nightdale, Roseville, Wake Forest, and Jun and also what our current salary schedule is. This Yes. Correct. Okay. And Treston, you handed something out. I handed out a statement of revenue versus expenditures and it it looks like this. It's smaller printed stuff. Not that we're going to go over uh this is just again for reference information. So, all right. If you're ready, we'll turn it over to and she can explain what you will not first. Say that again.

Governor said go ahead and knock mine out first. CDBG stuff then. Do you want to do the CDBG policies first? So it don't take me too [clears throat] fine.

Thank you mayor and council. Thank you school government for allowing me to come for you. Mayor and council Ben Jones our consultant that is doing everything from the consultant for our grant that we were awarded $950,000 needs us to sign all these documents. Two of them are resolution. One is ordinance for everything that goes on file. It's your equal employment procurement plan, defer housing plan, section 63 plan, section 504 grievance procedure, language access plan, signatory forms and certification, your signatory resolution, anti-displacement relocation plan, the citizen part participation plan, excessive force policy, the program policy, code of conduct grant program ordinance and optional coverage relocation plan. All this stuff must be submitted by March 23rd. May 23rd, excuse me, May 23rd. Ben said we can get all this done today. He get all submitted to Raleigh to keep everything on track with the grant. And all this paperwork is pretty much paperwork you would sign if you are a new hire or if you're going to work in the program far as all the stuff we'll have to do. So, we just need a motion and a second to the mayor and the council authorization to sign it and then we'll get the mayor offline to get things signed.

Do I hear a motion that we approve and adopt these 14 documents required for the grant uh and the signatures? Is there a second? I second seen it before ago. Well, we did. So, do you second all those in favor? Let me know by saying I

Every time we do this CDBG project, those are the same. Yeah. I don't know why we have to redo them. We just did them two years ago with our last project, right? They just got to keep going on up. Okay. So, Randy, you've obviously gone through all these things in order on those because we haven't had time to go through them. It is. It's in order to get right in in order to get the federal money, you have to assure and attest that you're going to follow all those all those federal policies. You're not going to discriminate against contractors. Uh we're going to follow fair housing standards. You know, the whole gauntlet. Can we do these for the fire station, too? Also,

some of them there's a couple extra ones in here. everything. Our consultant did everything for us. We just had to bring to council. Okay. Okay. Then with that all done. Are you ready for hope? Are you ready? I'm ready. Okay. Let's go.

Well, um, hi everyone. Thanks so much for having us. And I just have to say right off the bat, thank you for your flexibility. You can see I was supposed to be here with my colleague Amanda last week and I got whatever spring cold is kind of running around. So, I just thought I would not make it through a a late night driving out to Nashville. So, thanks again for your flexibility and allowing us to be here today instead. Um, my name's Hope Thompson. I work as a senior project director at the School of Government and I'm going to talk a little bit about your water and wastewater funds and what we've been working with staff on for the past couple months. Uh, we have not done what we call a true rate study and I'm happy to talk through why. That's something that we're going to keep working on, but we have wanted to prepare some analyses to assist you all in your budget season because we know that this is the time to make some decisions. So, um, we'll just kind of jump in. Uh, if you're not familiar with the school of government, we are based at UNCC Chapel Hill. I am a double tar heel, so go heels. And, uh, we work across the state with all 100 counties and the many, many municipalities and other forms of local government to help them in decision-m. We have these core values of nonpartisanship, policy neutrality, and responsiveness, which basically means we leave the decisions at the local level, but we're here to support you, give you information, and we work with a lot of attorneys. So, people can interpret the general statutes and case law to tell you what local governments are and aren't allowed to do. Amanda and I are not attorneys, but we work very closely with them. And so we kind of take what their interpretations are and we can help, you know, interpret those further or guide local governments to those. Specifically, we work at the Environmental Finance Center and so we specialize in water and wastewater services dabbling a bit in storm water as well, but there's, you know, so many things that local governments do and this is just the one piece that we specialize in. So if you have other questions about housing or planning or things of that nature, we can point you to someone else at the school. But if

it's water and wastewater finance focus, then that is our focus. And we have a couple of different areas that we work in. Again, water wastewater finance, storm water finance, and then we also talk about affordability and partnerships or regionalization efforts. We do this by developing free database tools that other folks can use on their own. We can also assist you in using those tools. So doing community assistance. We have applied research. So we do surveys and um you know put out reports about what the trends are in North Carolina and then we also do trainings and workshops at the school which I believe is how we got connected with Tresa Tres to one of our workshops a couple years ago. Um and that's me in my former life as a a museum educator. If you've ever been to Morehead Planetarium and Science Center, that's where I used to work. And so I just like to put this up to tell you a little bit about my background. I'm not an engineer. Um, I'm not a finance officer, but I have this kind of varied background in chemistry, risk management, public health. Um, and I used to work with 5-year-olds and I had robot as a co-orker. So, there's no bad questions. I've heard it all before. Um, that's what we're here for is to take your questions and I'll do my best to answer them. So, the first thing I want to do um is some level setting for utility management. Just make sure that we have the same language and we're coming with the same set of assumptions. Um, then we're going to walk through some of the analyses that we did for Nashville. We're happy to provide these tools to your staff if you want to dig into them. I know some people want to see the numbers and they want to play around themselves. So, that's definitely something we offer. And we did do a bill comparison of potential rate strategies that you all could consider. And I say potential because again, we are policy neutral. So, if none of those strategies are to your liking, we're not going to recommend one of this is what we think is the best fit or this is going to um certainly do these things, but we can kind of walk through what the bill impacts would be on customers and if you

want to talk about pros and cons, then we can try to do that as well. And then that obviously we'll stay as long as you'd like for our questions, discussion, etc. Any questions before we jump in? Okay, so utility management. Um, I'll kind of go quickly through this part, but we like to include this as it's the the bread and butter of what we teach to all utilities across the state, whether we're working one or two on many one-on-one or in front of a huge classroom of people, right? And so, water and wastewater utilities provide these core services. They're protecting public health, environmental health. Um, it's a service that everybody in the community needs. So it's not the same as any other business enterprise where you can kind of opt in or opt out if that's not a product that you're interested in. But at the same time, you are expected to be a public enterprise and to run as a business. And so often as decision makers, you're challenged because you have to kind of take off that, we call it a hat, general fund hat, and put on that business enterprise hat of how are you going to run this this enterprise sufficiently and financially effectively into the future. And so what does that mean to be a public enterprise? It just basically means that you're self-sufficient. So your revenues in or covering your expenditures out and that you're avoiding or minimizing transfers unless those transfers are justified. So [laughter] for example, if you're making a transfer to cover staff time um to the general fund because that's where salaries were paid out of and they support the utility fund, that would be a justifiable transfer. There are some restrictions on transfers. mostly transfers. Um I believe it's out of the enterprise fund and we can follow up on those if you if you need guidance there. But that is that's the basics is revenues coming in, cover expenses going out and you're kind of keeping the enterprise fund as insulated as possible. What do we mean when we say cost and expenses? Again, this is just level setting. So we have all the same

language. There's three types of costs essentially. There's your daily operations and maintenance. Um, there's your capital costs. What do you need to rehab and replace infrastructure? And then if you're using debt as a tool to pay for infrastructure, you also have debt service. So likely related to capital costs as well, but just kind of a different flavor of that. And then in terms of revenues, you have two main kinds of revenues. You have income that's coming from charges and fees for service from your users. There's kind of a slate of of things you can charge for, but the main one is what are they paying on their water and wastewater bill. Um, and then you can also have debt money from loans or bonds that are coming in to provide that upfront capital and that's a source of revenue as well. The kind of third category that we often dabble in um are reserve funds. So money that you're setting aside, right? Right? And that's kind of whatever is remaining between those revenues and expenses and things that you want to do to plan for the future, reduce risk. We get a question a lot of the time, which is what's the appropriate amount to have in reserves. It's really up to you all depending on what you think um and with your staff and with your, you know, experts here. What do you think is most appropriate for for what you want to do? So that could be an amount to rehab your most critical piece of equipment or it could be um an amount to plan for a larger capital improvement in the future. There are some restrictions from the state or some things that the state looks at which we'll talk about a little bit later about cash that they want you to have on hand as well. But in terms of deeper reserve planning that's ultimately a a personal decision or personal to each unit. And if you feel like, [clears throat] well, that's simple on paper, harder in practice, you're not alone. So, this is where a little bit of our applied research comes in. And what this graph is showing, this was prepared by our research director. Basically, um, that

brown line that's kind of going across the bottom there or right in the middle, that's the consumer price index. So inflation for kind of the basket of goods and services that we're all paying for um kind of averaged. But the orange and the pink lines are representing utility costs. So construction costs in orange and operations and management costs in pink. And this is year-over-year change. And so we can see that maybe right before 2020, we started to see a little bit of an increase in those utility focused costs that their year-over-year change was higher than the year-over-year change for those general consumer goods. And then we see this kind of tremendous spiking in utility focused costs immediately following the pandemic. I'm sorry. What what what does this grab us or is this the state or is this

this is using um so it's it's derived from these indices that are are nationwide. So this is not you um this is just kind of showing if if you're feeling if you felt this pinch or if you're wondering why are things getting more expensive, it's it's a systemic problem. Um, and so since we see that kind of spike without, especially with the orange line, without like a characteristic, you know, dip that's of the same magnitude, costs have gone up and they've stayed high. They haven't come back down. At the same time, funds are not guaranteed to continue to cover the cost of operations, but mostly of capital, right? Mostly of those construction projects. And so what this is showing, this graph is from Brookings Metro. It's showing from the 70s through 2023, the state and local share of total US public infrastructure spending. And basically, we're seeing that the state and local share is growing over time, right? So that means less money from the federal government for these infrastructure projects. There has certainly been an influx of federal funds in the past couple of years. So, if you all got ARPA funds, um, or if you were able to access any of the infrastructure investment and jobs act funding, there's kind of been this flood, pardon the water pun, of funding from the federal government, but a lot of that is ending. And so, we're anticipating that we're going to start feeling a lot more pinched in what's [clears throat] available um, from the state and and that will be from the state that comes from the federal government. So, if it's more on the local share, then people ask, well, that means it's coming from our rate payers. And so, what's the right rate to set? And again, this is just so that you don't feel alone. Um, this is a tricky question to answer. And so, what this graph is showing, this is from data that we've collected from North Carolina Utilities. Basically, everyone above the purple line has revenues over their expenses. So, they're bringing in more money than

they're sending out. Everyone below the line has revenues less than expenses. And along the axis on the bottom is the residential water bill at 6,000 gallons. So there's no real trend here, right? There's no magic bill amount that is always going to give you revenues more than expenses. Every utility is really different. Every utility has their own kind of operations, maintenance costs, capital improvements that they need to make. And that's what makes this rate setting really difficult is because there's no one right way to do it. It's really specific to you all. Okay. So when we're talking about rate setting, we're talking about achieving full cost recovery. And that is this idea that we're going to cover all of the costs today and into the future. So that means operating technical management software planning all of the costs not just what does it take to run the system today but what are all of the activities that we need to do to so that we can run it in a year 5 years and 10 years. So now and into the future. And then this is the kicker with no or minimal reliance on grants. And one of the reasons that provision is in there and this is what we're hearing from the state. We work really closely with the state um division of water infrastructure. There's just not as much grant money as there is need for grant money in this state. And so when we have utilities that are planning purely on we'll do all of our capital projects on grants. It's just a plan that is set up to not be successful in the long term. That does not mean don't apply for grants, don't use grants. They are a great tool if you can access them. Um but in terms of planning we want no to minimal reliance on grants. So basically what are we doing? You all are in that kind of yellow bubble decision-m to reach your utility goals and that bubble is always moving along. You're kind of always in that bubble where you're looking back to see how

you've been financially performing and then you're trying to look forward and to set your rates accordingly to meet those goals. Another challenge that you might be facing are all of these kind of unpredictable, unmanageable things that can happen. So staff turnover, equipment that fails, your population changing, whether it's declining or increasing, uh new regulations that you might have to meet, whether from the state or federal level, cost of inflation, or changes in the weather that can affect people's water use. So all of this is just to say if you feel like it's frustrating or hard, you're not alone. It is. It's very challenging task. Any questions kind of about that level setting? Okay. So let's talk about what we've done for Nashville so far. Where we always start is let's understand where you your utility is today and where you've been so that we can see the progress. And so we call this a financial health checkup. It's just like if you go to the doctor and you have your regular health checkup with the doctor, your annual physical. They're going to check the same things and they're comparing those readings on your body to some standards of, you know, this is a range that we would expect for someone of your age. This is, you know, something that maybe is a point of concern. These are some things you could do. It's very similar. We're just looking at your utility fund, right? So, we use 5 years of audited financial data and we're looking at key performance indicators. So, we're using standard calculations to to calculate a number that is specific to Nashville and then we're comparing that to some benchmarks that are set either by kind of industry standards or that we're just kind of suggesting as a starting place. There are very similar benchmarks that are set by the local government commission. Um, and we can speak a little bit about

those. So far, nothing is jumping out to me as something that the LGC would be concerned about often because our benchmarks are are higher than theirs. So, the LGC sets benchmarks to catch people who they're really worried that their proprietary fund is not performing. Um, and so they want to be set it appropriately so that they're they're catching kind of the the units with most concern. So, I'm going to show a summary. I'm happy to walk through these, but basically we calculate six indicators. And what I've done is kind of put the the nonutility nerd speak of what these mean on the right hand side of the slide. And you can see if you're blue, you're above our indicator, which again is often quite conservative, especially compared to the LGC. And if you're red, you're you're below our indicator. So looking at this holistically, you all are performing above the recommended our just recommended starting points in five of the six indicators. And the only one that you're not is percent of capital assets depreciated.

Sorry, this is this is you. Yeah. Now everything is you. [laughter]

So the only one where you're below our recommendation um is percent of capital assets depreciated. And that's not uncommon is a lot of folks have aging systems where they need more capital investment and you're always going to have depreciation on your system. um [clears throat] if you have, you know, a capital improvement plan, you're working with your utility folks to make those investments, then this is less of a concern. For me, it's more of a flag when people aren't considering any capital investments at all. Um this is a flag to say that it's time to to start doing that. In terms of your other things that we have here though, so operating ratio, that's a measure of self-sufficiency and cost recovery. Um you all are above the target there. debt service coverage ratio. Did you generate enough revenues to cover costs of operating as well as your debt? And that's really important if you are hoping to leverage debt in the future. Lenders want to see do you have a cushion to be able to make those debt payments even if revenues fluctuate. Quick ratio is a measure of your liquidity. So, do you have enough cash on hand to be able to pay your bills at the end of the year? And then days cash on hand. That's the one that I mentioned um that LGC also looks at. That's basically a measure of resiliency. So if all the payments stop coming in, are you able to keep the lights on and for how long? How much money do you have to kind of fill gaps and deal with unintended events?

How many days do we have?

That's a great question. So let's look at what it looks like because we can see some of your progress that you've made. Um we set art at six months. that is editable because some utilities want more. LGC flags at two months. A lot of folks I talked to say only 60 days. That doesn't really feel like enough. But that's what LGC sets as as that target for when they'll start to flag something's wrong. One of the reasons I like our tool a lot is it doesn't just give a snapshot, it shows you your progress over time. And so I know those lines are kind of faint, but basically those dotted lines are showing where we have set the initial targets. Again, those are editable if you want something um more conservative or more protective. Um but you can see that Nashville has made some improvements, especially from 21 to 22. You can see that operating ratio, you went from not recovering cost to recovering cost, and you've maintained that over time. um quick ratio has stayed healthy above the target of two basically $2 of cash for every dollar of um liabilities that you have. days cash on hand has risen from 2021 it looks like you had less than 50 to now you have I think that's around 280 290 so what's that in months I don't know but many months of cash on hand um and same thing with debt service coverage ratio that could be due to not having as much debt as you did before but also increasing revenues is going going to help with that risk coverage ratio. And then percent of capital assets depreciated, that's also improved a little bit. If you made some capital improvements from 21 to 22,

[clears throat] um that number has improved a bit as well. But we're below the bar on that one. You are. Yeah, you are. So the bar for that is um percent of capital assets depreciated at 35%, basically a third of your system has lost its useful life is how we interpret that. You all are at about 50%. So about half of your system has lost its useful life. Depreciation is really tricky. It's an accounting term for a physical problem, but is not some it is also like a real fact like things get old, things wear out, things become obsolete. Yeah. And your utility staff can speak better to that like physical condition because their assessment is going to be

[snorts]

um more precise than than an auditor's assessment of depreciation. Any questions here? And this is something I think we're um we did update it with the most recent year of audit. Anytime [clears throat] there's an another year, it's it's easy to update it. Whether you all want to do it yourself, we're happy to help staff um navigate the tool or, you know, you can call us again and we'll help you update it as well. Okay. So the next thing that we did um so we have been working on a rates analysis with your staff. They've been incredibly helpful. Um like I said, every utility is really unique. So even though Amanda and I have worked with many sets of billing data at this point, there's always unique little wrinkles. And so the issue that we're having is that what we want to do is look really discreetly at the data and be able to project your revenues from your customer usage. If we can't project in a way that is reflective of what you've observed in the past, there's a problem and that's no longer an effective decision-making tool. So that is what happened is we're overproing what you all have observed and so we need to spend more time understanding what is happening in the data so that we can basically make a model that's going to work for decision-m. So, we're not really presenting a true rates analysis today where we're going to say if you set this rate, this is what we would anticipate in terms of revenues, but we are going to talk about your cost versus revenues and some of the trends that we've seen. And then I'm going to show you the options for if you take on certain um rates, what the impact would be on customer bills. So, the piece that's going to be missing is if you take on this rate, what would a projected revenue be? So, I just want to lay that out before we even go further.

So, is that coming in the future? That's something we're going to continue to work on with the staff. Yeah,

it's unfortunately very time inensive. And so, we when we were seeing that the issue was not going to be resolved, we kind of wanted to pivot a bit and be able to produce something that you'd be able to use in this budget cycle still. Okay. So, this is we're calling it for now a cost versus revenues tool. Um, I reserve the right to change that name at some point for something that's maybe a bit more descriptive. Um, but basically, we're using your historic data on expenses and revenues to calculate trend lines and then project some possible scenarios. Remember, I showed that graphic of all those like splatters of how things can change. We're trying to read the tea leaves, which is basically impossible in this industry. And that's why we encourage people to, you know, revisit this year after year and see what has changed, what new things are coming down the line that you need to respond to. Um, but we can we can try we can try to look forward and say if things stay the same, if we continue on this path, what would we expect to see? And so we're including your current debt schedule. Um, we can include a capital improvement plan and we were given some capital improvement numbers from staff. Um, we calculated a really moderate expense um, projection for you all, year-over-year expense changes of only8%. That's incredibly low, especially compared to general inflation numbers, that spiky graph that I showed you. So, in these examples, I'm using a 3% increase instead of the 08. I think that's more realistic. Um, we're also comparing two revenue projections. So, one that is based on the year-over-year changes in revenue that you've seen, that's about 1.83% 83%. And then one that models no change in revenue. And that's because revenue changes only come if you bring on more customers or you do a rate increase. And

a rate increase that's not responsive to a corresponding expense increase. Right? So um those are my two notes there. We're going to use 3% of expenses and we're going to also show you the difference with no changes in revenues. Just for your knowledge, these are the capital improvement numbers that we're using. Um, so there's the kind of lump sum there by year and then there's also, you know, some quick explanations of what staff provided to us in terms of what would need to be replaced. Um, you can see some of those numbers are quite large. It's going to kind of cause some spikiness. Um, I'm not the person who knows the most about the system and what is the most important to replace when. Um, so I'm going to look at Jason really quickly. Some of those things might be able to be smoothed over time. Um, that's a possibility, but the lump sums likely wouldn't change. Like it's it's unlikely that those overall numbers would go down just because of the price of construction and materials right now.

Correct. and they they could be spread out over over time, right? But these things have been identified as five-year capital improvement projects that that really we need to look at doing, right? Um you see in 2028 a new word to power. We we might could do land acquisition one year, engineering fees one year, and then construction the following year, right? But we need to look at that now and plan for.

Thank you, Jason. That was a better way than I was explaining. and and another way to kind of smooth right like you can you can kind of plan yourself. The reason that debt is a tool in this industry is it smooths the cost over many years. So you could also consider do you want to kind of package some of these things almost together and have a debt package and then you're paying off the construction over many years. So that's something we're happy to help with modeling what that would look like as well. For now we're just going to use the CIP as it's set up um so that you all can see [clears throat] So, first we have a summary of our expenses. This is basically just what are all the types of expenses that you have and what do they look like? Um, so capital needs, again, it's going to kind of have that spikiness because of the current way that the CIP is laid out. And then you can that's in the yellow line. And then those green bars are representing those operating expenses with that 3% um amount. You can see it says growth capped. Usually, we're seeing people with average expense increases of that are wildly high. And so, we're actually capping their year-over-year growth on their expense line items to be a slightly more moderate um projection. But this is just kind of showing you what is making up your expenses currently.

Question. So, you're saying after 2031 that line straight because nothing is planned? Yeah. Okay. Yeah, that's right. Yeah, really great point. So 2031 is just what you've planned to so far. Um that that doesn't mean that that it completely goes goes. By the time we get there, there will be more. Yeah, that that's just that it's planning suggested. That's a great question. So the state um like if you want to qualif So so if you're applying for like fundings from DWI they have a point category where you get extra points if you plan 10 years in advance. So suggested some people that's going towards what

like if you're if you're applying for state funding they have a point system like points matrix where you're awarded points for like each all these different categories. Um that's something that we we've worked on quite closely and um a big a big like make or break can be do you have a 10-year CIP versus a fiveyear um and a 10-year CIP that you didn't adopt 5 years ago. They want to see that people are kind of keeping up with it and moving it along. Um but some larger utilities, you know, they do kind of more master planning of 20 30 years um depending on the the project and and what they have going on. Yeah. if you have to rebuild a $40 million treatment plant. That's right.

Great questions. Um, okay. So, first we'll compare, you know, with these capital expenditures. Um, and actually, let me check something really quickly if I have it in my there we go. So, there's that's what I thought. There's it from 2031 with the knowledge of you will likely have capital expenditures. We did put in a placeholder of 500,000 annually. So, it's not actually zero. If we look at this, see how it's staying straight, but it's not down at the bottom. So, thank you for drawing my attention to that. Um, so we do kind of have a placeholder because capital improvements never stop. It's just something that always has to be done in this industry. So, first we'll compare revenues and expenses with those capital improvements and that low growth scenario of the 1.83% increase in revenues over time. And we can see pretty quickly that those revenue, those expenses in the purple are crossing those low growth and then they kind of never recover, right? So they're exceeding. You're no longer having cost recovery and then um that kind of gap just like widens over time largely due to inflation. If we look at no growth revenues, so our revenues are going to stay constant. It's just a more exaggerated relationship of how much expenses are exceeding revenues. Now, the good and the bad news is that you do have some cash on hand. So, that is what people often use to kind of plug that gap between if there's changes between or a gap between expenses and revenues where you don't have enough revenues in one given year. And that's what that unrestricted cash can be very helpful for. What this graph is showing is it can't last forever, right? And so what you kind of see it doing first is crossing the what I'm calling the cash floor and that's 180 that 180 days

target that we start with. Um so it crosses the cash floor quickly in 2027 and then you can see by 2028 it's crossing to negative territory which is not not actually something that you would do but we kind of show it over time. um just to to show like does it rebound after some time which it it could do depending on how you change rates. Okay. And then I like to show this even though this is in no way a recommendation to not make capital improvements in your system. Sometimes folks, you know, it's easy to see those big capital improvement numbers and go, well, can we wait on some of them or something? ultimately like even with no capital improvements, this is still going to happen due to just inflation. Um, then your expenses will continue to rise. Also, what we've seen because of that spiky graph that I showed you is that waiting on capital improvements often just makes them more expensive down the road. So, you all are nodding and looking at me like, "Yeah, we know this already." So, that's a good sign.

The spikes on the graph is not good. Right. Yeah. Right. So, any questions before I move into some of the rate options that we had discussed with staff that they wanted to see the impact on the bill? Can we just go back for one second? Um, you had a slide that was up. You were talking about like 08. What What is this growth right here? Yes. So, so when you say the slow growth, no growth, what is that based on? Is it based on users coming on board? Is it based on rates? It's just based on actually your past three years of revenues. Right?

So, we didn't look at the the rate changes that happened. We just looked at the lump revenues and we said, "What is the year-over-year change?" And we did what did year one to year two, year two to year three, and we averaged them. And so, over the past three years, you've had like 1.83% 83% on average of growth in revenues each year. Gotcha.

Yeah. Expenses have been lower, like I said, 8%. Um, but I I just think that's that's lower than I would expect to see. So, I didn't jack it up to like 7%. I just thought 3% was maybe a more useful um projection rate. But yes, this is based on your data. Other questions? [laughter]

Okay. So, like I said, we'll keep working on the rates analysis where we can talk about um you know, and again, it's trying to read the tea leaves and make um projections about what you could expect to see. A lot of things can impact that. And we kind of have when we do a rates analysis, we have a lot of assumptions spaced into our model to make it the most conservative estimate possible. So we have a provision in there that says if you raise rates, some customers will respond and will reduce their discretionary water usage and so they will actually use less and their bills will go down. We also have a provision that says over time, you know, over many years, it's a small percent like 1%. But appliances get better and people use less water for those reasons. So that's kind of some of the things that are baked into our analysis and again we'll keep working with staff to try to prepare that tool for you all. But what we did in the interim was can we look at your current rate options and if knowing that you all are a bulk water purchaser and that those rates are likely to change, what are some that you could consider for your retail rates or Nashville customers and how to impact their bill? And so again, these are just um some options. we can share the spreadsheet with your staff and there's it's easy to kind of manipulate look at some other options as well. So it can get really overwhelming. So I think we just did three to start and you all can kind of see how you feel about that and what else you might want to see.

Three what three options for for rates. Yeah.

So what we did is um we looked at the inside 5/8 meter rate and this is your current structure and we looked at it at um four different consumption points. So, no usage at all. Basically, what's the fixed fee, 1,000, 4,000, and 7,000 gallons. And then what I'm showing is the summed bill for water and sewer. And hopefully this looks at least somewhat familiar because it's likely what a lot of customers are paying. Um, this is probably a lot of your customers, your residential customers. Okay. The first option that we looked at is a 15% increase across the board because I've heard that's what your bulk water supplier that's the change that they're making. So that's just mirroring that change. And you can see the current rates are reflected in that green table. And then the 15% increase is basically that's what would be on your rate sheet. So instead of $19 as your base for water, it would be $21.85. You can also see what the bill would be at those different consumption points with the 15% increase. And then what I've highlighted in purple is what's the change in the monthly bill. So what are what is actually going to be the impact on the customer depending on what they use

and that includes base fee plus the rate.

Yes, that is just the 15% increase column minus the current bill. So it's the total impact that they will see. And again, there might be um you know, especially for people using more. So, a thousand gallons is not really discretionary water usage, but depending on who you are um and what what your habits are, who's using water in the household, you know, some folks might respond and they might use a little less water. I often use the example of a pool party I had at my house last year and my baby pool was more like a teenage pool and so it was just really big and I was like I'm filling it up once and I'm not doing it again. Right? So people start to respond to their bill that's just kind of an observed behavior. So this is one option um knowing that Oh do you have a question? Now, those are our figures as as we have it right now, right?

Yes. This is your bill. And then just a 15

15% across the board. Everybody gets a 15% increase. Um, so knowing that you all have some other things that you might want to fund like your capital improvements. The other option we looked at was 15 plus a little bit so that you have that wiggle room of extra revenues on top of what you would be paying to your bulk water supplier. And so we looked at a 17% increase. Um and the same you know kind of structure applies to this slide. You can see the 17% rates up in the green column in the green table the increases in the blue table and then again the change in the monthly bill is shown in purple. I will have a comparison chart where you can look at all the changes, but as we would expect since it's 17% instead of 15, the change in monthly bills is a little bit higher than the 15% scenario.

Can you go back to So 1938? So it's basically less than $2 on the third one. Okay. Yeah. Yeah.

Okay. And then the last option um is is just another way to think about it. And so what we've modeled is a 10% increase but over like additive over 3 years. So 10% in year 1, 10% in year two, 10% in year three with the idea that it's less sticker shock immediately and it's something that is more adjustable to over time. And so this time in the purple numbers, you're seeing what the increase would be each year. So the first year it would be an increase for for at the base fee it would be an increase of $4.80. Then the next year an additional $528 and then the third year $581.

With that, would we still be able to cover our expense yearly? So that's what we haven't been able to do is project the revenue. cover. But the idea here and and this was this was a you know in conversation with staff is just another option is it's less of an immediate impact on customers. You do have some unrestricted cash if in the first year that 10% does not make up for the 15% that you're being charged by your water supplier, the 15% bump. But then you continue making the adjustments. How much is working increase in hours? 15. 15. Okay. When did we go up last year? June 1st. Yeah.

We did. We didn't. Was it two years ago? We went up. We went up one time. We haven't been up here three years. Three years, but we did have a garbage increase. Garbage. I think we went up something. Yeah. and and we've received increases from Rocky Mount each the last three years cover it between 7% and 8% each year and now we're 15 right so the so the 10% is is right a strategy to start putting more and more of that not just covering it with unrestricted cash or or however you all have been doing that

well it's been at the expense of reinvesting in our system, right? [laughter] Right. Well, 30% over three years. If they raise us again, we didn't raise last few years, we're still going to be in the hole. We're not in the hole, but no no no growth.

No growth. I mean, if Trust has got it uh calculated, we're going to begin this fiscal year with a fund balance and modern sewer of about 1.3 million. And um with that we can do some of the capital improvements that Jason has uh shown in what hope has shown here to get started. But you know it won't take too many million dollar projects and that's gone

without having something in the rate that you know is above and beyond our operating cost to replenish it. And that and that unrestricted cash flow fund balance is you know required to be at least 60 days. So it's also not you know that graph I showed of it being exhaustible like you can't use all of it is there intended to be like worst case scenario at least at least 60 days from the LGC. You all might want it to be more. if there's um you know a pump station that's really essential, you need to be able to fix it tomorrow and if it goes down and not wait for other funding like that that's what that is really there for as well. Um,

we just, you know, you said we have 50% of our infrastructure is no good, right? Well, it's it's it's not no good. I mean, it's usable, but it's beyond it's what do you call that? Service line. It's beyond the service line. So, your your AC is, you know, it's in the rest. So

what should be able to I mean if you take [clears throat] $10 average times start to users we should be able to figure what we're all right just take an average right I know you can't you want to do it right that's why I was thinking a while so what you were explaining that there was like some sort of anomaly like you had tried to do this but you were realizing it wasn't matching so what exactly was that

yeah I didn't understand Sure. So, so what we do is we um and this is a this is a little different than than some ways that people do rates analysis. So, you know, we're at an academic institution and we we did a whole like values exercise as a team and and one of our values is like data rigor and so this is part of this is the drawback to that to that value is that when we're seeing you know when we're not able to validate is it a useful tool and so basically what we've done is we've taken every customer's billing data for every month because I want to see what are they actually using like what are what's their actual volutric usage instead of thinking about okay Jason has like the lump numbers over the year of how much water you all have sold um what are people actually using so that we can see what's the average usage going to be for different customers of different meter sizes and actually project that volumetric revenue. This is especially important if you have something called an increasing block structure where people are charged differently as they increase in um usage. But since you have a volutric rate in general, it will be impacted especially as you start changing rates. Um, so what we did is we we kind of put [laughter] that all into our model and we project a revenue and we do it for a year where you have an observed revenue that we can compare it to and we try to get within 5% of what you observed, preferably an under projection instead of an over projection. And that tells us that the model is working sufficiently well to where if you want to start making tweaks and changes, it'll give you a reasonable estimate of what your revenue is going to be. So, if we're seeing the I think we were more like se 12 or 17% off, it's just not a super useful decision- making tool.

What would cause being off by that much?

It's a great question. Um, that's what we're trying to figure out. And it it is kind of different for every utility. So we were working with a different utility other side of the state far out west and we said hey we have this big difference in your revenues of of what we would expect to see and it was you know they were um or it wasn't their revenues but it was their usage totals and we kind of checked that as well as another data check and it was that a customer in that class was actually the wastewater treatment plant their water usage which was not being buil and we were telling Well, well, you can't build for that, but you can kind of bill yourself for that. But that that was an the explanation.

So that's why we're trying to figure out what all of our systems are using, all of our buildings and things like that. Yeah. So So currently we we don't really track what the police department uses, what the fire department, what the library, what parks reps use. So it kind of throws into some unknowns. What are they actually using? What if if Chris goes and flows a fire hydrant, that's water loss. But essentially, if if the fire department takes showers, that's considered water loss because we don't have any way to quantify how much.

So Tres and I are looking at next year being able to quantify how much each department uses. to to better help the the algorithm, I guess. But to that point, would regular water loss like that huge water main break that we had, would that account for something like that? Some huge discrepancy or like a a big water user coming off like at line of natural foods, but like would those things affect this or no?

The water user coming off with because we're looking at meter data. So we're comparing like meter data and then what was build and trying to project revenues. But but you know that that's kind of it really depends on and every utility sets this up a little bit differently. So it depends on like how you all have set it up and us trying to understand the system and connect that with how our model works. But you're totally right in terms of projecting fixed revenues. It is pretty simple. It's you take that base rate and you [clears throat] multiply it by the number of customers. It's the volutric piece that's tough. So, our public owned building, our national own buildings don't have meters. They have meters.

We just don't read. So, they're they're just not um accounted, right? So, now um June 1st, well, yeah, June 1st, [clears throat] every um every building facility will have W99, which is the internal code where we can track how much water is being built, but it's just not going to be built. However, in the future, we need to look at building every one of the departments for their water usage to treat the enterprise as a business. But we are on the right track to get to that point because then we'll be able to budget how much water every facility is really using. So, but we're not going but we won't build.

Well, we should build. We should, but [clears throat] I internally we can bill them. It's not like they're going to get a water bill, but internally we could transfer funds from one from general fund to the enterprise fund to cover their water uses just like Duke Energy does with their lights. Something that should be coming from general fund. Yeah. The way we kind of explain it is everyone's a customer to the enterprise fund. Even the town even the town is a customer to the enterprise fund. any water that is used is built for is a cost is a cost because there are other ways like you said water main breaks um hydrants

hydrants just there's other ways that you can have water loss and so-called non-revenue water it's unavoidable um so if there are things you can control then that's that's where to start things to measure and things to build

last year we only had like a 4% water loss so we're we're doing we're running a pretty tight a chip even but the the main break that you had spoke of earlier the 1.4 4 million gallons. That was not We don't know those figures yet. That was for 2025. So next year we could have a 6% war loss because of such a main large main break. So this is just the um comparison across those three strategies. Um, like I said, now that we have this kind of set up, if there's other strategies that you all are interested in, we're happy to provide that spreadsheet to staff um and assist with with some other strategies and we can certainly um calculate, you know, the number of the fixed revenues um that that is more straightforward to calculate. It's just the overall revenues are are challenging. I think it'd be important to know if we do the 10 1010. It'd be important to know how much our funds go down first year because they will go down.

But weren't we like in the blue on that chart? Like we were only in the red on that one and we were in the blue pretty significantly I think where like the fact we were able to absorb the last three rate increases. I don't know that we would be in the red by doing the 10 10. Um, Nama, well, I would say that once she start um Jason starts implementing projects, we get a water tower, we're going to go down, right? So, we're not building any reserve, but then think about next year City Rock passes on 12% increase.

I'm just I'm just putting it out there then. We we only get 10 and so we we wouldn't that um that borrower everything is just going up up up if we don't I wish we had have just been putting in a little bit every single year versus skipping years

because it just puts us behind. I don't know if yall remember that $45 bill or $75 bill that was that was rough on us at the front counter because we had we took the hit every day. It was mad. They pay their bills because they need water. Yeah. And and I'll say Tresa, you know, in in as a war prevent, I don't think Rocky Mountain's going to go up next year, but we we don't know. So, if if we do defer and do the 10 10, you know, we're in the same situation we are in this year. What are they going to do? Because they are both wholesale for water and sew. So, and let's just say they they don't do nothing next year, but year three they do,

then we really haven't gained a whole lot at all. Now, when it comes to capital improvements, you like a water tower, that's something that's going to be benefiting for the next however many years, you know, 30 years. So, do we really want our current customers to feel that full impact or is that something that we should be doing like you're saying a debt service package so that it's paid off for years to come so that everybody is paying their equal share instead of our customers today?

Yeah, that's a that's a great question and and that's one of the um I think I guess points in the debt column. It's it's called the pay strategy. the people who are using the infrastructure and benefiting from the infrastructure are the ones who are paying for it. Um, with kind of a paid go strategy where you're saving up over time, you the it doesn't it doesn't keep the burden from the rateayers. The rate pairs are always going to be paid. It just depends on if you're saving up over time, customers in year one through whatever, let's say it takes 10 years to save for that capital improvement. they're they're paying into something that they don't see the benefit for either for 10 years or potentially never, right? If people are coming into the system, they're paying and then they're leaving and going to another water provider, going to another community. So, so that is one of the that's what why they call the pay you strategy of using debt services. You you get the upfront capital, you make the improvements, and then you pay it off over time. Now, the the caveat there is depending on the terms of your loan, some terms extend past that useful life. And so, you want to pay close attention to those terms so that you're not then paying for something that is no longer in service.

Underground utilities, it's very hard to find financing for that. water towers lift station something that can be an asset is easy but when you start talking about replacing 2 inch main replacing AC pipe it's very hard impossible to get financing for those projects

we charge new user fee we did it there's a connection it's $45 more is that your taxe No, that's what it's $3,400 is the connection fee. Say 45 is lower than what I've seen, but 3,400 is more in line. [laughter] So 3,400 for a new structure

for for a new connection. Yes. If our water man goes past your house and has for years and you decide you want first you got to annex and then you got to pay the connection fee unless you know you you do something like you did for Red Oak Road to entice people to connect to that new water man we're extending there you offer to with annexation wave the connection fee if they connect at this time and that's new construction also like works

well in in that case uh the developers inst installing the infrastructure and they're so they're installing the taps as they're laying out the lots. So the only thing the customer would have um would be their application fee now along Birwood where where Jason and Robbie Davis are, they're paying the connection fee. So each time the guys go out and and run a new service line to one of those lots they're going to build on, they come in and they pay for that connection. But if the the the the in the internal part of that subdivision when they get building it, they're going to be installing the water and sewer systems in that 180 lot subdivision and they will stub each lot. So the future homeowners won't have a connection fee because the developer will already have provided it.

Well, a negative thing, Randy, is like we're going to be land lot. We we aren't have any more of these big developments where we'll have new users coming on the weekend. Well, we will if the owner of the property annex uses and again that's that's all though if they agree to annexation. Sure. And and call what you want. It's a trump card. I mean um you don't allow somebody to have the town's water and sewer without annexation. And then with the water and sewer obviously they can develop at a at a much higher density than they can without. Chester you were saying that application fee could be higher. What's the normal application fee?

I haven't actually looked at the other towns, but I can go back to that and look at other towns and see what they're charging to go out and set it up. Is that just like their deposit that they know service fee is not refundable? Deposit is refundable. Okay. So, well, we only charge $45 for the gas to go out there connect. Okay. Right. I I misstated on the connection fee. For a 3/4 inch water line, it's $2,400. For one inch, it's 28. For an inch and a half, it's 5,50. For a 2 inch, it's 5,800.

Do those numbers. Wait, what was the first what were the first two numbers at the top there? By meter size, 2400 plus the meter cost. Yes. And the meter cost for what? It's like 330. Yeah, that that sounds roughly in line.

There was actually just a some chatter about this on the NC water list or people saying what are your and I was working with another town that said we're getting some heat for our connection fees and and they're in the couple of thousand dollar range. any ideas that it should cover the cost of getting your folks out there, putting the line in, putting the meter in, those materials, that time.

Um, there's a different type of fee that you used to be able to charge something called an impact fee, which was like what is the impact on the overall infrastructure, and you can't do that. So now you're required to to set up something called a system development fee. And it's it's very um prescriptive in what you have to do. Um and so for most utilities, unless you're anticipating many large developments coming in where that developer is going to pay you that system development fee, it's it's likely the juice isn't worth the squeeze. But it's certainly something we can provide.

Putting in 200 houses would not be worth it. It it depends. I This is a recreation advice.

It's it's kind of like a new a newer area. We get a lot of questions about it. Um I'm happy to to send some resources if that's something you all want to consider. You do have to keep it updated. Um and you have to like calculate the fee in a very specific way. But the idea is instead of covering that cost for Jason and his team to go out and connect them, it's like if you need to make improvements on the rest of the system. So you need to upsize a water line or you need to make put a EQ basin at the wastewater treatment plant so that you can take on more flow for those customers. It's intended to help cover those. You also have to treat the revenues a certain way and keep them reserved for those capital projects. So it it can just be more complex. Um, and that happened over like the past 10 years. So, some people still have these kind of legacy impact fees that they're not legally allowed to charge.

Other questions, thoughts, comments for us? I I had one at the beginning of the presentation. You talk about regionalization and regionalization has its pros and its cons. It does. I I know why NCBEQ uh pushes it because, you know, overall there's efficiencies there,

but it also leads to the problem we're experiencing right now. You know, we're locked into a regionalization agreement with the city of Rocky Mount and we're completely we have no say whatsoever in what the wholesale water and sewer rates are despite them telling us that we're one of their wholesale partners. We don't feel like a partner very often,

right? So, I don't know if you have any insight to any of that uh as far as other options somebody in our situation could possibly pursue. I just don't see NCTEQ uh permitting us to put our own water treatment plant, sewer treatment plant back in place. And it probably cost us about $33 million to do it,

right? if we did um it's it's impractical uh well probably impossible for us to cover our own water usage with wellwater uh and I don't know if Stony Creek has a great enough water volume that we could pull from it like Rocky Mountain pulls from the Tar River and even if we could do that again it'd probably be difficult to get NCDQ permitting to do so when they like the regionalization approach Yeah, I don't have great advice other than this is something that we are looking at a lot more frequently. I think partially because of some of the issues that you raised about um regionalization has benefits but when there's these drawbacks kind of how can they be dealt with if they can be dealt with. So it's I guess an active area of kind of research and resource development for our team. We have like an interlocal agreement database that we're putting together and will hopefully be live soon so that people can see how are other folks agreeing to work together and kind of what are some provisions that you might want in there. So um what's like we have no teeth like what what would even be our negotiation they can draft whatever they want to draft and we have to sign it because whatever we what is our alternative

right and I I don't I don't have a great answer for you. I will say that bulk rates I'm currently surving bulk rates across the state. I think the state knows that there's kind of these vast many ways to charge for bulk customers. And I have no idea what they'll do with that information. You know, I heard someone earlier this week say if anyone predicts what is going to happen in the legislature, they they don't don't listen to them. And that's kind of how I feel. But I know DEEQ is looking at it. Um, I don't know if the legislature is looking at it, but we did a regionalization study that was legislatively directed. So, I don't know, but yeah, it's something that we're looking at as well as what are people being charged for both rates and when we can, how can we compare that to the supplers's inside rate to see how it compares. Are are you aware of any place in the state that where um a city has had a water treatment and a sewer treatment plant and the users the wholesale users of that approached them and that city in essence sold those facilities to a regional authority and then that a regional authority was in charge of operating those facilities and determining what the rates are for all including the incumbent municipality that originally owned it. And would that take maybe a local bill in order to get done? It

doesn't take a local act. It takes like a It doesn't take an act like from the general assembly if you want to form an authority. It takes everyone in the authority agreement to do so, including [laughter] Absolutely. Yeah. Absolutely. So that's where we're going to have Right. Um, in terms of like how these things happen,

every every single instance is is different and it depends on the dynamics. What else is happening? You know, are there permit restrictions? Are there new businesses coming to town that need to be served? I mean, it it's it's very challenging. Um, I'm I wish I had a better answer. I'm happy to provide you all with like the information that we do have. Um, but there's no straight and narrow answer, like no silver bullet.

Randy, I know I know you were not here, but why did we why did we abandon our treatment? Do you know Chris what the problem is? I heard that there was some endangered snail or something like that. Snail means it's hard. It's like a muscle.

Yeah. There reason why they can't dig out part of the reservoir to make it deep because of the muscle. We can go back maybe in the minutes alone, but my my guess would be it needed substantial upgrades and improvements and it was less expensive to run align the rock.

It was a money issue. [snorts] Okay. Um I have a couple of questions. Um what is your experience with a 28 day billing cycle where you have one extra bill per year? say that's something that we see often, but there's really broad authority for how you can set and collect bills in the state. So, I would say it is allowed. Um, it's uncommon. Have you seen that? So, we we were getting

we were on a different cycle. So really we done took three weeks from right now because they increase in July. January they changed their bill cycle which produced a extra bill. Now they're every 28 days and now they increase in June. So in each bill there's obviously fees that only get 12. Okay. Call it a monthly fee, but it's they just try to build up. Interesting. Yeah. I haven't I haven't heard of that strategy. Um,

I would say like something that we observe with bulk suppliers is like in your interlocal agreement this this could be something to review um and and I hear you about not having teeth but um kind of how are you all reviewing what flows through the master meter? Who is in charge of like calibrating the master meter and how do you work with Rocky Mount on that? Sorry, Jason. I'm looking at you. But but that's but that's a good way to to kind of confirm because we've worked with utilities that say, "Well, we just get the bill and that's what we pay." Um and and um you know, obviously what happened what's read on that meter is really important.

Um so that's that's kind of a lower a lower stakes thing to pursue perhaps that could could have a big impact. We're in control of that leader, you know, that we had questions about. We are now. Okay. Um, so that's a great step. I had another question. So, you talked about um inter fund transfers and how there's restrictions. So, how you can only take a certain amount from general funds to be paying back, you know, expenses and things in the enterprise plan that needs to be justifiable. What is like the actual rule? Is it just best practices or is there like a hard and fast rule that says you can only do so much of a percentage of transfer?

Um, I heard you quote a number earlier, Randy, so I don't want to. What I'm more familiar with, and I apologize, I can never remember if it's in or out, but basically the state looks at if you want to get state funding, the state looks at what are your transfers and you have to do a fund transfer certification form. And I believe what they're looking at are transfers in from enterprise to general from general but we can follow up um I think Kate's question is the other way around from enterprise function I want to know what's being transferred from enterprise to general so we just had some are you do you have Christy's analysis

I do I'm not connected to the internet so we just did an analysis on this because this is something that we've gotten some questions about um because I know with electric like they had something where it was like no more than 3%. They have more hard and fast rules about this. That's my understanding as well. I will can we follow up via email? Yeah, because we were just looking at this as well because the the guidance has been a little wishy-washy. Um and I think the best practice is to mirror that electric the statute with regard to electric utility apply that

I wish it was statute. I mean ultimately you want to tie it to you know what what we what we kind of rely on a lot of times is like what's the justification so if it's a justification like staff time or these other things where it's you know it's being paid out of the general fund but it's supporting the utility that's justifiable

supporting your general fund and your expenditures and your salaries for the sake of supporting your general fund that's not justifiable I would say it's it's you know I'm not the I'm not a regulator. Um so I don't know but I think what what they want to see is that the the public enterprise is supporting itself. And so I could see the argument being well if you have enough if you if you're and I'm not saying this is something you all are doing at all but let's say someone was just you know funneling money in you know 25% of their revenues over to the general fund. Then if you go to the state and you say hey we need a grant. Hey, we need a subsidized loan. They're saying, well, what what are you using?

What? Why is this money not supporting yourself? So, so that's kind of the thinking behind it. So, anytime that you would go to the state, you need to get that funds transfer certificate certification. Okay. So, realistically, if anyone had gone to the state, that should be available, right? That's on uh division of water infrastructure website and the fund transfer certification form and you can see the details there and it does it show other towns like does it show data or is it just like no that is the form you would fill out to to submit the filled out forms where can one access those

so the LGC does track transfers I will tell you it is hard to find its database where they Like I always [clears throat] say like if it's hard for us, why is it so hard? Because we like do it all the time. Um but they do track transfers. It's one of their financial performance indicators of concern. And so we can also see if we can find that link where it kind of shows everyone what people are doing.

Yeah. And I can't speak to a statute, but DWI's viable utilities program um does mark points if you transfer out of the proprietary into the general. And if you get enough points, you can end up on the viable utilities list and then there are statutory obligations. Yeah. So, it is something that people are looking at. It's just not necessarily like if you do this. Okay. you know, there's often these like audit though or is it like they keep track of every single town.

Um, so it'll be reflected in your audit, I believe, the transfer status and then the viable utilities program calculates a score for every single utility in the state. So like you all got a score um at some you get you get one every year. Melanie um Brian she works with LC so she's our advisor yeah so she was the one that says in most municipalities they're mirroring the how they use the um transfer she would no more% um of the enterprise if needed you don't need it right

and LGC is the one who's going to ultimately so like the point system would be LGC ultimately says yes they should be distressed LG LGC is going to approve any debt. So LGC is the per is the best person to advise I would say on that because they're the ones who are going to make decisions based off of it. Often we're trying to trying to be like what is LGC going to say so that we can then but if you are working closely with your LGC coach then that's great.

We just want to make sure we're not doing anything wrong. So I've already know make sure that we're doing the right thing. So because you don't have that other portion of the data and we can't really see like those graphs and how things interact if we were to adopt one of these things. Yeah. Well, we can project them in our spreadsheet. I mean that's that's what Tres and I have done on revenues. We we've looked at our year-to- date um revenues and figured out nine months in we're on track for this for the year. If we put 15% of that 10% this is how much revenue it should likely bring in,

right? It's it's a very simple way way to project it. And I would say that's a lot of great studies do that. That's kind of again the the downside of our of our processes. It's digging a little closer in case you all want to implement other things. So there's there's kind of rate structure changes that you could consider in the future. What are some of those? Maybe you could give us an example of those.

Sure. So like um a common example is something known as a consumption allowance. It's um the idea that within the base fee you have a certain amount of usage that's included and that can be set at whatever you would like. So it doesn't have to be equal to your volumetric rate. You could say in that base fee of $48, we're going to give you 2,000 gallons per month. Um, and it's often seen as an affordability measure. So, if folks can control their water usage, then it makes a part of their bill more predictable. Um, they know that even if you know, if they can stay under that 2,000, it's going to be included in the base bill. Um, what we would want to look at is if you're going to do that and you don't change the rates, how's that going to affect your revenues? is effectively the first 2,000 gallons of everyone's usage, you're you're no longer getting that volumetric revenue for but you can sometimes make adjustments to then the volumetric rate so that you know if people are exceeding that then they they would see a higher bill. So so that's a strategy that folks use sometimes. Um similarly you can have something called a block structure. So basically for each block of usage you're charging a different volumetric rate. Um they don't have a block structure. No, I just Yeah, it's just a volume flat volume. So, one one of those is called an increasing block structure. The more water you use, the higher like each increasing block, you are charged more for that higher water usage.

So, ours is block, but it's not the fee is the same per Yours is just a Yeah. one volumetric rate.

Yeah. Total volume. And so with an increasing block structure, what we might see is that um you know from zero to 4,000 it's one charge per thousand gallons. From four to 10 it's another charge. And the idea is that you're disincentivizing that high use. So that can be helpful for something like a paid water bill where you're paying a bulk supplier, you know, [clears throat] their rate and so you don't want to um pay for more than than people are using. People also use something called a decreasing block structure where it's actually cheaper the more that folks use and and there's various kind of um justifications for that if you have you know industry or commercial users who are using enough that um you know there's benefits they're bringing to the system without corresponding costs. And so it's everything is supposed to be tied back to the cost for service and and those large users can actually represent lower costs sometimes than

that. You take what they used to pay and you they use less water you pay charge less. Well, it's just per volume. So like if they they use the $7,000 their rate would be $10 per gallon or whatever instead of $5 or instead of $15 per gallon for 4,000. So you would charge a higher per gallon rate, I guess. And it can be quite it can be quite big blocks, right? So a decreasing block rate could look like um over 20,000 gallons of usage, you get the cheaper rate. It it really depends. What's the difference between the up and down? I'm confused.

So the increasing block is if you're the higher blocks of usage, you're paying more as the per gallon as you go up. So that could look like um yeah, 0 to 5,000 gallons is $5 per thousand. Five to 15 is $6 per thousand and 15 and above is seven or something of that nature. The decreasing block structure is just the opposite. The more you use cheaper kits.

The more you use, the cheaper it gets. And then people also do both. They do an increasing and then a decreasing, right? So they want to discouraged use in that kind of middle realm, but then for really high water users, it's it's a cheaper rate. So there's lots of different strategies. Sometimes we have this picture of all these crazy roads because there's many different ways that you can do it. Um this residential is that this is um inside 58. So I believe that's your residential customers. Yeah.

Our our water rate, you know, per thousand gallons is the same for everybody. Okay. We we have a different base rate base depending upon what size meter you get. And the theory there is you an inch and a half meter when it does need maintenance cost more to replace and maintain than a resident [clears throat] 3/4 inch residential. So you and trust are looking at what these would look like revenues versus expenditures. What have you seen so far as your preference on the 10, 15 or 17? Well, obviously a 15% increase is it's a tough pill to swallow.

Um so is less than $10. Yeah. But you know pe people when they see their bill it it includes water, sewer, garbage, recycling and they see that and they all call that their water bill. They don't they don't break down by water and sewer. Citizens know that Rocky Mountain has increased our fees a lot also. So

we we we have in what we're going to present to you a 15% increase. We also calculated at 10 uh well 12 which we can make work and 10 which we can make work which is getting a little tight. We we won't have money to squirrel away for capital improvements uh at 10 as much as we do at 15 as a rate increase. So let me ask you a question. So, if we did an equal amount for three years and potentially the board could change in a year and a half, how does that affect it? Well, yeah, we're going to be in the same seat whether we agree [clears throat] or not.

We if we agree and then the board changes, can it change again or is that is that set? That's my question. No, we we only set them for one year. See? Yeah. But the the intent could be at this time we put in a 10% increase and we're planning to do that for the next two years after this one and then you know elections come council changes and new council chooses something different not to be used as we want to. I'd almost prefer to do the 15 to match what Rocky Mountain is doing and then plan to do the small incremental increases unless they have a massive increase again year after year

and then that's where you guys could really help us get it set for this fiscal year and you can tell us what subsequent years needs to get more into the weeds. Well, we almost need to do a set amount every year plus whatever goes up, right? To make it realistic, we would need to go up if they want up eight, we need to go up 11, right? Because that'd be 8 plus three. I mean, I'm just Those are your numbers.

Yeah. I mean, I mean, we encourage folks to revisit it every year and consider the impacts of inflation and other changes. and you are a bulk water purchaser. So thinking about that's that's how your expenses are going to be changing is is what their rates are changing. So if we did 15, would you be able to borrow away money for the infrastructure improvements? some I think it's like 200 it's in the budget and um it'll be the transfer to um capital reserve is $263 $263,568.

Where are you looking at? It's on page five of the revenue. That's the that's the profit for the enterprise every year. That that's above operating that that we can put away. And that's also including a contingency. We have a small contingency left in the uh fund 30 for something unexpected. It's not real large or real great, but it's something and this is above and beyond that. So, we're talking about spending millions of dollars in the next five years and it only making 263,000. But we got we got 1.3 million. It isn't. It isn't.

I don't like ra. But we got we got to laugh. Yeah. It's a balancing act here. It is. It is. And this is probably one of the most critical years we we've had looking at everything. Okay. You say you're leaning toward 15, [clears throat] [snorts] but come back next year. They're not going to increase 3%. They don't go seven or above or even if they go the next year. So we still do. But that's not our fault and the citizens will know. It's just instead of going as low as three to increase at say five or 10 or something, right? That way we know we're not not going to come back with a

Well, they they've gone years without actual increases from what I was told. Not the last five years. No, not in the last five. [laughter] Well, that's Yeah, that's why they're probably making such large ones if they haven't made increases for what, five, 10 years. Well, there's other reasons to All right. [laughter] We won't go.

I mean, I do think you're making a great point of communicating as much as you can with the citizens, not just about what is happening at Rocky Mount, but about the service improvements. You know, a manager said to me, "The worst thing we ever did was put those water lines in the ground. It's something that we all use and need every day." I went camping this weekend. I was like, "Man, I miss running water." Like, you miss it the minute you lose it, right? So, um, there's ways that you can do that. You can put information on the bill. That's your biggest communication point.

Um, and information about like what you all are doing and the and the work you've already done. Here are the improvements that we're making. here's all the work that we've been doing. Here are things that are here are things that are out of our control. And here's how we're being proactive so that we're avoid, you know, making sure that you all have safe, reliable service into the future. Um, I don't think anyone expects that they have to run like a PR campaign for their water system, but that's essentially what y'all are doing. Yeah. And making it clear like how much work is going in, you know, to this. A large percent, right? say that a large percentage of our people don't even get a bill.

They get a everybody gets a bill. They get it to their email or they get it to their post office, but we are not responsible for them reading them. Most people don't. But we we do our part to put the information out there. They don't read it when they call up. No, thank you.

This is both. Okay, thanks both. Sanitation, everything stays the same. So really, if you did the 15% or 17, you still under a $10 increase. And we haven't increased the award in two in three years. I don't live in Nashville. However, I'm just looking at it. Talk about the user make it do more, right? You know, I'm just looking at it like we didn't increase for three years and our infrastructure taking a hit at some point. We don't I mean, we don't want to be the infrastructure is not going to get any better if we don't work on it, you know.

So, Randy, you gave us the number if we did the 15. Where I still can't even figure out what I'm looking at. Where is the number for the 17 if we put that anywhere? Oh, I you don't have it. I'd have to calculate it quick. And did you say it was the It's like $2 times.

Well, it's it's um so right now on on page fund 30 revenues are on page four of the revenues. And with that 15% increase in there, we're we're looking at a total revenue of $6 million414,114.

Okay, that's with 15.

That's with the 15. If I change that to 17 um formula here quick. Okay. So, that's where the [laughter] that brings in. If you go to 17, it would bring in another $99,211. It takes it from 6.4 to 6.5 by going from 15% to 17% increase.

And then where do you have the number that shows the difference between our revenues and expenditures? Well, if if you're looking for what we can squirrel away in the capital reserve, it's on page five. It's highlighted in yellow. [cough and clears throat] But that 15% that's how much we can put away to capital,000. And we aren't really scoring it. We're just saving it so we can have something to get things we need. So the 263 plus the 99,000 what we're looking at for the 17, right? Yes.

Were you giving us something to think about? I always I always leave feeling like u maybe we stirred up more than you all came in with. But we needed this information [laughter] and we knew there would have to be some type [clears throat] of increase because we just knew that and and we haven't in three years. So that was our mistake probably but we didn't do it a little bit you know but we can't correct that

right. Well yeah you all are doing it sounds like you're doing what you need to do now and [laughter] One of the reason we show those, you know, all those charts at the beginning, the level setting stuff is you're not alone. A lot of people, this is our, you know, fourth town, I think, just this budget season because a lot of people are having these conversations of what to do. Um, and and if you're having the conversation, you're making the plans, then then you're doing what you need to do and you're on the right path. So, um, please let us know. Um Nixon and Randy have been great. So please let us know if we can do other things. Um we'll keep working on that rates analysis, but if there's other questions you have um or other things about trends, we have a lot of information about North Carolina utilities specifically. So

do you do help with um like projected out capital improvement plans like we want to do the 10 plus years? So we're not engineers um so we can't you know make you a CIP. We do have a tool. It's called plan to pay where if you have, you know, Jason has the cost estimates, we can compare kind of what if you were going to save with cash versus and when do you need the cash buy versus if you're going to use debt service. Um, so it can kind of spin that up for you. So we we can help with that side. Okay. But we couldn't we can't make you a CIP. Yeah. Um, have you all remind me I'm so sorry. Are you doing an AIA? We have we associates. Okay. And are they preparing a CIP for you? They have a 10 year.

They have. Okay. Jason's only pulled out of there the first five years. Okay. We we do, but when we start focusing 10 years out, inflation is three, five, 7%. So those numbers get skewed when you start going more than five years because no one can predict what a word is going to be in a year.

But we do have something in place so that when we're applying for those grants, we get that extra. And what they want to see is that you've adopted the CIP within the past two years. You don't have to look. We can double check, but it's it's quite specific. They want a 10-year CIP adopted, I believe, within the past two years. So that they're ensuring it's not a 10ear CIP you adopted nine years ago. That's really notable. We have in the past too and we haven't in a couple years. But you know, Mike Tolson helping us with our DWI grant applications. He knows all this stuff and he he keeps us so that we can get the maximum points

and when it comes to that transfer certification, yeah, he's the one telling us we got to be aware of that,

right? And and we can help with some of that too, especially if we know more details. We've we have helped with a lot of applications. So, we could do that for you all if you want to look at the projects together and kind of go through the points matrix of are you going to even get enough points to to make it worth trying. It's it's tricky because it's you're always compared to the pool. Um so, it really depends on who applies and when. Uh but the next deadline is September 30th likely. And so, if you were interested in applying, we could kind of do that analysis and see. It's usually you can get a lot of points if your stuff is old enough. Um, [snorts] but it depends on how old it is. [clears throat]

Okay. Yeah. And what documentation you have to prove that, right? So, um, like that's one of the primary project purposes is if your stuff is old enough and but you know sometimes people are like, well, it's 17 years old. That's not quite old enough even if it's reaching the end of its useful life. But that's something I'm happy to work with Jason on um if it's an interest that u she showed about the different increases

I snapshot them so I'll attach them to you and we can also provide I'll PDF it and send it to you and hopefully it will be that would be better. Yeah, I'll do that. It doesn't Sometimes it doesn't the slide decks are too big for me. I'll do a PDF and it's usually smaller. [clears throat] And I know we talk about the general fun.

Yes. Thank you all. It was great to spend time with you this morning. Maybe we'll come back sometime. Maybe we'll make the next fun event that you all have. [laughter] Heard we missed out this weekend. A good one. It was fun. Yeah. Well, do you guys want to take a break? Quick restroom break. I think we can go to Mary. You got to leave at 11:30. Yeah, but I can just run off and come right back. Well, Kate's got to leave it there. [laughter] Not yet.

Y

if anybody needs to use rest. Well, what the council sets for water and sewer rates has an implication on the general fund because we, you know, we are following best practices and statute as best we can and transferring 3% of our water and sewer revenues to the general fund which certainly helps certainly helps um some of the pressures that this budget has had that we haven't had in past years. The big one is um the the fact that ledgers for us that's that's the state retirement fund because we are in the state uh health insurance program [clears throat] which we can't get out of we haven't figured a way out. Not that we would if we could um added 2.4% for our elders. So across the board, that that's another $233,000 of expense that this budget has that ones in the past haven't. Larry, what do you

what? Well, uh I'm I'm going to start on page four. The revenues. Yeah, that one there. Yeah. Well, TR had handed one out that looks very similar. One out. The one the one I handed out should have highlighted. Okay. So, this says budget. Yeah. The opposite direction. I found it.

So, that that that was one of the pressures on this budget. It it it was it was a difficult one for Tres and I to to get put well all the department has really. Again, it it's just budget it every department for what what they need plus looking [cough] forward to what what they're going to need in order to be able to do their job. There there's there's no fluff in any of this. So, the term is used in budgeting from time to time. There there just isn't. Um and again, we are a public service provider. So, our greatest expense throughout all the budgets is personnel. I mean, that's how we deliver services. So last year we were able to do a cost a colum cost of living increase for all employees. It was public safety's turn to have the salary study. Uh we weren't able to give them anything above cola last year. So you know this year they're [clears throat] if you look at it that way they're kind of two years behind. We we did take a look at public safety and uh as far as in our salary study and public safety is increasing faster than any other department we have and that's not unique for Nashville. That's pretty much the standard for all municipalities. you know, on the the budget that I I heard last night on that the state has come to agreement on, I think it includes 28% for some of the state police.

Wasn't that right? The uh most other state employees only got 3% which was just cola. I I point that out to to emphasize that wages for law enforcement especially are going up faster than than all other departments.

Well, we've got to look at more than just law enforcement. We need to war law enforcement and fire because I heard over the weekend that the town manager in the town of uh Nightdale says he's got the highest pay scale for the fire department and he has made it a percent. Nobody else is going to out out camp. So if anybody raises their salary, he's going to stay above [laughter] that. And whether we agree to it or not, uh

well, I don't think he needs to worry about competition from us. We're not [laughter] about we don't have to go about competition from us, but we do have to keep in mind that because we got keep in mind we keep people we got because people are leaving going right down the road 20 miles and we are behind behind in in salaries and we're losing people and everybody knows that once you lose a person to bring a new person in it's going to cost you twice as much to bring them back up scale

to match pay twice as much. You can't match them, but you we've got to keep it competitive as far as large forms of antifunely for us despite what the larger departments pay. Not every fireman wants to work there and not every police officer wants to work. Um I I think with what we have proposed, we can find a happy medium. you know, with Chief Shockley at the ring, we've been we we've been very blessed to have very very little turnover in our PD and uh Chief Joiner's always kept it a tight ship with personnel in fire. Unfortunately, comes and it goes. You know, we had many years where we had very very low turnover in in firefighting. Last few months we had [laughter] five.

We paid four. Yeah. and and four of those, you know, are probably as a result of wages. One was just an opportunity that nobody probably couldn't do it away. Exactly. Good enough.

So, but um with all that said, um I'd like to jump into the water and sewer revenues which begin on page four. And what what you have seen in there for water revenue and sewer revenue includes a 15% increase over what our current rates are bringing in. And then uh you know just just the rest of the uh uh income revenues there. Now, we we do have at the bottom there that uh we we have are are going to be bringing in um $491,370 in onetime expenses uh when we get to the water expenses that are going to be covered from fund balance. But, uh right right now with a 5% increase, we're looking at 6,441,000 in total revenue. And I had calculated a little

15% 15% I'm sorry 15%. If we if we take that to 17 that that would bring in another 99,000 um $222 right there. I I didn't change it here but I changed it [laughter] changed [cough and clears throat] that so you can see that. Yeah,

there's the 17 rate revenue and that that's what we bring in with and the difference between the two is is 99. Now, if we go to the expense side of things, 130 begins on page. It begins on page 15. Now, within the water and sewer fund, there are about five different departments. And uh to to help you guys keep track of that, I had passed around a little a little sheet that showed all the departments by their department number. No, that that's not anything. Must have given mine away because I don't see it.

The funders. Yeah, the fund numbers.

And they are fun. So um for um starting with fund 30 which is water and sewer non-EP departmental uh we're looking at the different expenses we have in there our website uh some some retirement of of employees that we had in the past so we don't do that anymore but total expense there of 561,000 let me get it there on the uh the sheet on my as compared to the the current budget we appropriated 192,300. So, it's an increase of uh 300 378,000 or I'm sorry, 371,000. And mo most of that is a result of this figure here, this transfer uh to to cover capital reserve. That that's the money we're going to squirrel away for for future expenses. [clears throat]

Okay. So, it's a 65% increase, but in reality, it's really not transferring over. Yeah. Okay. Yeah. Last year we didn't do that. We didn't do that. So 263 we're gonna transfer over for the future. Is that what we're looking at? Yes. That's only if you do 15, if you do 17, that number is going to be greater. Yeah, it'd be greater. And the other 36278. The other expense in there is instead of us having um VC3 in every department, we took the total budget for VC3 for this year and put it in it so that it's all in one place so we can kind of manage it better. Yeah.

So it's it's in non departmental it we didn't have that expense in this particular budget last year. So the expenses are still coming out, right? So we took it out of every department and we placed it non departmental because [cough] it's easier for us to be able to see it as a whole versus it's all over the budget and we can't it just needs to be centralized. So and we got that contingency in there of 30,000. So if I take that out

and it's it's only those three expenses, it's only about a 20% increase over the current. Um then if you flip the page to page 16, that's uh water and sewer admin, the the administration. So, in there we we have Jason and Chad's uh uh wages and benefits. We have Samantha and I bet who are 100% paid out of water and sewer funds. We have 50% of my salary, 30% of lose, 50% of Lily's because she's the HR director and that's about well I won't say half but fairly close to a number of employees water and sewer wise. Tres at 50% and Rebecca at 50%. So you'll notice when we get back from the general fund we with this cost allocation plan for wages and benefit we changed it up a little. we we shifted a little more to enterprise uh after we thought about you know who does what for for which department and it it it makes sense because that's where the people are that's where our employees are spending their time doing those things. Um, and we got some overtime in there. And then the the insurance again with that ledgers, which is the state health insurance retirement, you know, that went from 58,000 uh to 88,000. But jump down to the bottom. O overall, you know, current budget year was 641,000 where we're projecting 815,000. So it's a 21% increase or $173,000. Now, is there anything sticks out in

that group, Tresa, that is above other than the um state retirement and this cost allocation plan, but a little more cost here than it has in the years past, which accounts for that increase. So, it was less than 50% last year. Randy and Lou was 7030 and me and Rebecca was still 50/50, but this year me, Randy, well, and HR was 5050, too. Yeah. So the only thing that changed was um Randy really allowed to do that and budget for points. [clears throat]

We're just budgeting it versus I don't know if you remember I well you wasn't here but years ago that transfer was so big. That's because all the salaries was in there. So now the salary piece of it we're doing it on the front end versus lumping it all together and our system can handle it. So, I mean, yeah, our software system, which is nice. You know, when we do payroll, those percentages are already pre-programmed in there. It just disperses it. So, it's budgeted the same way. It it disperses it the same way we budgeted.

So, then we we go to water operations and and there we have our [laughter] employees. We have Austin, Joe, Keith, and Wilbur. They're all at 100%. Kevin, um he's our he's our MacGyver. He keeps our stuff going. and we're grateful to have him. And in the water fund, uh he is 25% and Walter is 20 is 50% in the water and that's what makes up that $274,000 there. Now, that's down a little bit from the current budget because again, we we reappropriated. Uh, I don't think we had one or two of those in there for the current year that were put or we took one out. I can't remember exactly what, but we got the overtime wages in there and of course, you know, the FICA and the state retirement, all all that stuff. We get down to the bottom, the the difference. Uh, now we got some onetime uh capital expenses in here. We got $200,000 here. Anything in red is onetime money that we we think it makes sense to use fun for because it's not a reoccurring expense. So Jason wants to do valve replacement at about $150,000. Um you know we we had budgeted to get a valve turning machine and that machine we had ordered and it had problems. So when they finally got the kinks worked out of it we told them we didn't want it anymore. We didn't have any confidence in it. But J Jason, we have a different public works director now and Jason is of the opinion we get better value if we just contract some of that stuff out because chances are when we turn it out that hasn't been turned in a long long time.

It's going to break. We have [clears throat] a crew on on site that can help us repair it. I don't know if we're any further ahead, but we're no further behind by doing it that way. So, we got $200,000 in there for that. Um, we have also one time money in here at the bottom, vehicles. Jason's looking at replacing truck 101, um, which is a 2010 Ford F-150 and put in a full size four-wheel drive. And you can't see all the notes there that I have, but that's what he's got in there. That's true. 10,000. That's true. Okay. [laughter]

And then 105,000 for a hydro excavating machine. What is it? Uh hydro excavation machine is um everything is going underground now. Um so right now we have a that machine that we're we use to hydro excavate. This is a tool that will let us go and dig around fiber lines, cable lines, and so on and so forth and and be safe and not damage those underground utilities um while we repair water and sewer infrastructure. You know, fiber, you you can sever that with a spade. So, if you know what's in the area, you got to really find it very gingerly

and and they're putting more and more in the ground as we speak. So to total for water operations that we have budgeted proposed here 1,992,000 uh compared to 1.6 million for the current year. That's a $372,000 increase [laughter] or an 18 just shy of a 19% increase for operations. Then then we go down to sewer operations. And in in here for full-time wages, we have we have Jacob, Braxton, and Allen at 100%. We got uh Lamont at 40%. We got Kevin at 25%. And that what that's what makes up that 216,000 in in there. We got some money in here for and of course all the things that as a are the payroll taxes basically as a result of gross wages and they're all based on a percent of calculation. And we have some one-time money in here that we want to spend. Jason has identified uh 159,370 there in the red. And that's for lift station repairs, replacement of 20 guide rails and brackets. Um pump station hatch, two 4-in emergency bypass connections at Cottonwood Cook Road. Anything else in there, Jason, that stands out?

Basically, it's taking our lift stations and getting it up to some some operating standards that that I feel like we need. Uh we have some some stuff that needs to be improved. I went and got some quotes from some contractors and that will get us to where we're com if we go pull a pump, we're not going to break a rail and cause more issues. And it'll get us some spare pumps. So, we got one on the shelf and one crapped out. 12 lift stations and I think um with this we can get about uh four or five pumps. Now, one pump can fit multiple lift stations, but we'll have one on the shelf. So, if we have a double pump failure at Regency again, we go get it off the shelf, we put it in, and we don't incur the bypassing charges that we did last year.

We don't scramble. I have a quick question on if you go back. So, the cost associated with sending wastewater 21%. That's rock, right? Yeah, that's right. Okay. That's what we're projecting based on the increases that we're seeing. So, what's the actual increase of that? Well, that's really 15%. All of these numbers are 15, weren't we? Yeah, we we figured in 15% on that increase. You want to know the difference between those, Kate?

No, I just It looked like a greater than 15% increase. Oh, for that line item? It may be um let me calculate it here quick. 1.95

these year to date numbers are from they're one month behind us that we're tracking to do better this year on that. You you had actual numbers in the packet that I gave. We did statement of revenues and expenses. If you go to that line, you'll see where we at. I can master the top. Well, I mean, I'm sure that's because we seal coded our call lines. Yeah. It's about a 25% increase, Kate. But some of that has to do with volume.

Yeah. We're tracking to do better this year than last. And even with an increase, that numbers does seem kind of high. I mean, I guess I was just expecting to see a 15% projected increase, but I'm sure there's a reason behind a 25% projected increase. So, we're going to look at the revenues that we collected year to date and project them out to the end of the year and then we added the 15% to it. Right?

Well, yeah. And we're not we took what's on that line? uh 582 and in and the column for year-to date divided that by um I think it was uh 8 and a half is when we did this was 8 and a half months multiplied that by 12 and then added the 15% to it and that's how we got the 22. So we're not going to do any better this year than we did last year as far as our expenses for any less expense. No, but the expenses are going to be more.

No, I mean for 2026. So, Bill was saying how it looked like because of the year-to- date number that's there that we were going to do better than we did in 2025. It looks like it we may 1.9 25 and and this 1.2 is 8 and a half months. That's 150,000* 12.

We're pretty much right at the same. Yeah. 1.8 is really where [clears throat] we're likely going to come in for this year at the rate you if that 1.2 two is 8 and a half months and we we project that out will be about 1.8 for the year. I got 1.9 was 270,000 15%. I got 1 1915489 was my number eight. How we will finish the current fiscal year?

Yes. Yeah, it's pretty close. and then plus 15% right to that number. Okay. So, um comparing uh FY26 budget for sewer operating expenses at 2.3, we're looking at 3 million this year. So, it's about a $700,000 increase or 23% increase. And and again, there's some onetime money in there. you know, if we zero those out with one time money plus would change the way that we're paying employees to it

a a little bit. Yeah, this this has more more wages in it than it has in years past because we got some others uh appropriated to it. When Jason looked at our cost allocation plan, um he suggested some changes from the way he's dispatching the guys to to do sewer. So if if you take the onetime money out, it's only a 16% increase from current year you proposed. With that money back in, it's a 23% increase. So bottom line then, uh, for for water and sewer on expenses, you have to go to the top of page 18. No, I'm sorry. top of page in the middle of page 19. Get it right. So, we're we're looking at 6.4 million in water and sewer expenses. And of that, uh there's 419,000 and some odd change for one-time expenses. the com compared to FY26 which was uh 9.8 8 uh but current year we had budgeted uh a large dollar amount for a project didn't we dress up

yes there was transfers there was the um a lot of projects there was the val exercise machine there was a lot of things in there and again when you when we're budgeting we're predicting that we're going to do this doesn't mean it's going to happen which means at the end of the year the actuals falls down into a fund balance, but we don't spend them. So, so it's actually a decrease over the current budget, but you know, again, we had more expenses,

capital expenses in the current fiscal year, some of which we didn't do, but anyway, um water revenue at 6.5 um sewer expenses. Now, I changed uh this did math before I messed with the numbers. We we added the I think we calculate left that calculation in there. 17% for revenue increase revenue. Let me go back and double check that. [snorts] Yeah, let me change that quick back to 15. [clears throat] I think you did.

I think you did 115. Well, it's easier to write the the you do 115% That way you don't have to add them up. Right. So this includes pay raises for those employees on that list. It

it does according to the salary study cost of living of 3% and then pay pay increases pretty much match what Lily found in the salary study and that's what that comes out to. So, I don't know after reviewing this if if you guys are set on what you want to do for water and sewer increases on our rates. We know what they're going to be for our wholesale purchase and our wholesale sewer disposal. Um, you know, we don't purchase 100% of our water. With our two wells we're running, we're covering how much, Jason?

16% on average. But we might be able to get well five back online. Correct. We're just waiting for P5 samples to come back. If [clears throat] they come back under levels, we can put it back online which will help. And then um but the 16% is three wheels or four wheels. Two two. So you're only talking about still be in the low 20s. Correct. Yes sir. Yeah.

But you know Mark Sheran with the Harvest Creek subdivision when he platted that out. There's a 1acre lot out there that uh he's going to convey to the town for a future well site. Um he's in the process of having that done and then we have our well company going to do a geo geo geological assessment of it and see Jason's got some concerns with that lot. So July that uh that subdivision is without sewers. Everybody's got a septic system and they're in the back which is close to where the slot is. So, does it make sense to put a well close to each other?

Well, we'll we'll see, you know, if our well is at a depth that's sufficient. Yes. CJ from a R um says he thinks it it might can work, but we're going to be close to the state regulations, I guess. So that was that was part of the reason that we like did that whole thing and weighed the sidewalk requirements knowing that we were going to annex in and have like have a well site. We didn't know like said it it it meets the guidelines. Well, if they're running this way and the water a different way, we got to be 100 foot from any kind of leak field.

Yeah. Yeah. CJ seems confident that there's a site on that lot that's going to be 100 foot away from everything. Okay. But it all depends if the geology is right now. We're not going to put a test well down. If it does,

we will have to budget some money in a project fund for a new well, which will include a test drill. You know, you drill a new well, you want to make sure it produces water. If it doesn't, like the one we found at the at at the West Water tower, That one's 800 some 15. Nobody knew it was there. Nobody currently on staff. And uh when I got a hold of Jamie Baines, he said, "Well, I was told when I got here, they just walked away from it because it didn't produce enough water." Crazy. So So is it? It didn't. Um I I didn't say We haven't stuck the pump down. We just go We just

Well, we haven't done anything yet. Got a company coming. Lake Valley Lake Valley well company's coming to abandon it to abandon it. Yes, sir. Do we want to test it first before abandoning it or is it just too much money? It wouldn't be useful now with the retention pond where it is. Okay. So, we're too late to the game. Okay. Do you have to go there? Realistically, it would stay, right? To get enough whales online to be self-sufficient.

It it would it would I think 13 to 16 whales to to get us where we need to be. um that's acquiring the land, engineering, digging the well. You're going to need more personnel. There's going to be more electricity. There's going to be more chemical cost. Um so, you have two or three people that just did that full time just check wells every day. So there there's I think a couple more whales, three to five more probably in the next 10 years is definitely going to help us out, but I don't think we'll ever get totally self-sufficient. Okay. But as far as putting more wells on the board for the next 10 or so years,

correct? I would I would be in favor of that along with the water tower for water storage. And with our little operating well, I don't see us ever getting ready rid of our connection with Rocky Mountain. It just Well, we've already signed the contract with them goes out how many years? 20 years. Well, it's another 10 with three renewals after that. So, it's 40. We had the we had the well Cook Road that we built that was not useful, right? So, I mean, you're at the mercy. We need to hold down the stick.

Well, if you guys want to page [clears throat] one of revenue, we can start with the general fund revenue. That's the um fun 30 page one. Well, well, before we go there, which way are y'all leaning so the numbers? Are you good on the 15%. I think we have to do at least 15%. do at least 15. I mean, I don't like raising fees at all, but I I sure thinking 17% beyond because I mean, we've been eating it for the last couple years. So, 17 is what we It's a wash. 17 against the follow [clears throat] 17.

No, next year we might have to do like she said, we do 10 if if we see if we see that we're going in the right direction. But if he does that water tower, all that money is is gone. But like Kate said, if we do a water tower, maybe you want to look at a loan. I would finance that 157 is like $2 a month for that's not the end of the world. That's what I say. It's it's not over $10. So

you three 3% the following years. I would say a low percentage like the the 10 10 and 10 puts us in the hole the first year, maybe gets us back the second year and then potentially gets us really far out the third year. The 15 covers us completely or if we do 17, it covers us completely and throw a little bit away. But then I would whether or not we have an increase from Rocky Mountain in years to come, I think we need to do at least a small increment of what you're talking about just to so that there's not so much sticker shop another three years from now, right? Um but just tiny increments whatever it is that we need to be able to tear up for that.

If we do if we do the 15 we can just we can justify that and the public will understand that too because everybody knows what rock mine is doing to us. So we do 15% we really don't have it. We don't have to justify it to the public because they they already know it. So we take the 15% and then I would like to go a little bit for the following three years. whether we go 10 or whether we go five or or three. Uh that would hopefully keep us ahead of the game and have a little bit not squirrel or rain but prepared for the following years. I'm I'm willing to go 15 and five every year. 55. Yeah, I I concur with u Larry because it's already going to be a sticker shock even though they know you know some things you already know but it's still a sticker shock um because it's a nuance. So I would prefer to do the 15% and maybe small increases after that. Teresa, I think I heard you say that would be a $10

the 17 for residential customer. Even the 17 is less than $10. Okay. Okay. I'm just thinking about when when we keep our ratio was under u 50 50% which is that um depreciation ratio they were talking about we're not putting any money into our infrastructure but how can we put it in there if all we're doing is just stay afloat it's not there so unless you just they're going to get it's not going to be easy either way but 15% uh with a little bit of education I mean they they know it You still put it out there. Oh, definitely.

Yeah. But then if you But then if you go 15 and 10, then you got to justify that 10. Everybody gonna be, "Well, damn. You just hit me with 15. Now you going to give me 10 right behind it." So that's why I'd almost rather do 17 and then do a lower. Well, if we do 17 up front, they wait a bit. We didn't get hit with Rocket Rap 15. Why you sticking another 15 would justify itself, right? The public is already aware of that. Let's do the 15 and then do the increments of five. But to Bill's point, we didn't go up in the last three years. And so we were going to have an increase anyway. And now Rocky not has taken all away our ability to do that increase.

But the public don't care what we didn't do. We didn't increase in the last couple years. They don't give a about that. Yeah. [snorts] And then the other thing that I I mean Jason and we were speaking with Hope from the School of Government [laughter] is the level of services that we offer. Um, we're running our trucks, you know, [laughter] we're running our trucks, our equipment like every single week offering these extra services and, you know, stuff got to be replaced. Otherwise, we cannot provide the service. We get a lot of calls about trash truck or the leash truck broke down. I mean,

I just don't want to have another Brooklyn Boulevard happen again where we got to shut the whole town down because we we've not made infrastructure improvements. And that that's fresh. It's on everybody's mind. We had to shut the entire town down to make to make a repair. It shouldn't have done that. Well, subsequent years after this one, if you do 15% and we're going to have some assistance from the school of government with with Hope and her crew to advise us what our rates probably need to be. And again, the the the the unknown is what our wholesale rates are going to be. And we we're not going to know that about 60 days before they change them. Your fiveyear plan is how much how many leads? I don't know remember right off top, but it was several

five plus, right? um like eight or nine million. It was like four million just for the water power. Well, yeah. Likely we're going to have to borrow and you know there's justification for that again. You know, you you want you want your current customers to be paying their fair of the share of the improvements and that's the way you do it is with borrowing. Now, that doesn't make sense to everybody. Some some people some folks saying you got in the bank, why are you borrowing it? But to your point, we can borrow from the water tower. We can't borrow for fixing our correct you can borrow for a structure of a war tower but replace an AC or two borrow.

So that's money that we do need to have in the bank. You said it's 200 some thousand we're putting into it at 15%. 15% 236. My my suggestion is 17. I I think we should do 17 but again that's y'all's decision. Trust us at the front desk. She she she's I have actually talked to citizens. They know what's going on in Rocky Mountain obviously because it's all over the news, but we can't just blame it on Rocky Mountain [cough] because we have our own infrastructure issues as well. So, at the end of the day,

I just think that that would be I just know that we I've worked with them up at the front and I've talked to the customer so I have mentioned it to a couple where we might have an increase and I explained it. So, it's really just education. [clears throat] You're not going to make everybody happy. So, just I think taking a hit. Might as well take might take a hit. I mean, it's it's still a lesson in I'm a citizen. I don't want to take more either, but it's realistic. Well, you guys let us know what you want to do and then we can probably stop here for this morning and pick the rest up the next week. And next week is next week is it?

The 20th. Yeah. And my concern stress, I hear exactly what you're saying, but I'm concerned with those who barely can make the payment, right? And so when you even though they they know that what Rocky Mountain's doing, when you add a 15%, you know, that that's a huge jump on top of everything else that's going on in our society far as gas and food and inflation and medication. I'm talking about things that really are kitchen table issues for folks, right? And um yeah. Yeah. That that Yeah. All that that that's a big hit. So I think our job is try to to try to minimize

uh as much as we can and find somewhere that's a safe place to um to land even if we got to kind of reduce some stuff the next year, you know. And then education of course of marketing, however we uh describe it in municipalities. Uh that's got to be a big part of it as well because yes they know what rocks done but you know when we do it we can't just say well you know what you know we got to do the education marketing piece. Understand that the uh you said the increase would be an average of $10 is less than $10 less than $10 or 17 $10.

It's less than $10. We all everybody in this room can absorb that $10, but like what he just said, there's a lot of people in there that cannot touch that that $10. Yeah. Well, I mean, I don't want to keep about um you know, like every year. I mean, I know a couple I have some family members that get social security or disability, but they have gotten an increase every year just like we there's cost of living in our um races. So, yeah. It doesn't keep it it doesn't keep up with with the kitchen table items, insurance, food, gas, uh grocery, medication, uh those things that you got to have. Well, I mean, we just want to know so that we can go back and start trying to make,

right? We make the projections because we just need to know from this. That's why we started with the warden school first because that's going to dictate what what our general fund look like. So, so is it 15? I think split. I think here we're going to have to have to come down to discuss because right now you are both you are split. Well, we'll leave the 15 in for now. We're not split with the we're not split with the 15, I don't believe. Well, 15 or 15. Exactly. Um and I don't disagree with anything that anybody at this table has said. Sorry.

Um I just I don't want it to be a a greater hit every year, I guess. Um but I also think we we need to prepare and we need to have things in place so that we don't have to shut the down so that we can fix things that need to be fixed. Um we can come back to it, but I think we're all at least 15.

Okay. Well, maybe that's a good stopping point for today. Got through presentation on our water and sewer, right? Um utilities and the budget for those. It's up to you guys if you want to keep going. We're more than happy to do so. We got what else within the next 30 minutes? I can you guys Keep going. Let's Let's keep going.

I'm okay with that. Keep us 12 hour meeting. Well, I don't think it'll be uh then like I said, go back to page one. We'll Okay, go ahead.

We'll review the uh revenues quick for the general fund. So the the total a line item to point out, you know, our our largest uh source of revenue in um the general fund property taxes. So what what I have prepared here to talk about includes a two cent tax increase. We're currently at 59 cents and it would take it to 61. And on the back of your the back of your budget sheet, the very last page shows where we have been at with our tax rate uh from 2022 to present and how much our taxable value actual tax taxable value has been for five years and what we're projecting it to be for FY27. And you know the the year in the middle there FY25 you see we had a 25% that was with re-evaluation. So that that was the year we went from 61 cents down to 59 cents and tried to keep it revenue neutral as best we could. So um last year we did have some some good increase in taxable value about 4.8%. And uh

back I just had to take him there therapy. We're on the very back page. Okay. And and this year Tres and I are proposing are anticipating we will have about 8.4% increase. We we've had between Harvest Creek and and um um Cardinal Woods, we've had almost 100 new houses in the last year and a half. And and that that's why our taxable value has gone up. And of course, you know, we we got the the Shell building out there is taxable now and just just other improvements.

And we do have a couple of new houses that division subdivision behind Walmart, right? That's full. Bradford Place is full. It is full. Yeah, it's full now. And there have been a few miscellaneous houses around town, right, John? There has. There has Yeah. Birchwood next door, right? Yeah. We got one going on here.

We got one going up on Body Street. [laughter] So you know at at our collection rate um which has gone down a little bit you know if you remember seen that one page in the audit our collection rates down from 9.8 to what is 9.7535. So that that's that's the calculation rate we used was was that and um that's going to bring in uh at that collection rate 3,622,364. So, if you go back to the first page, that's the dollar amount

we have right there. What is that amount at 59? The 59 tax rate. What's that amount? Just change it on your on your tax page and it'll it'll adjust it on on the back sheet if you go there. So at at the bottom I've calculated um you know most houses in town are around the 185 not all there's some lower some higher but $185,500 is the tax I'm total now he he asking if you were to all right to take the 61 down back to 59. Oh yeah. So that 3.6 million

would be what? Right. Right there. The 61 and M and M. Yep. Yeah. Change it 3.5 and then go to the go back to the budget page and go down to the bottom of general fund. And then you'll see where we have to come up with the difference. down to the totals.

It would put us under expenses by about 116,000 without a tax increase. All things stay the same with the exception.

What would what would what would 60 be? So each each penny on the tax is about 60,000. So we we'd be we we'd be 57,000. Do you see there, Bill? 57,380. And that's at at 60 cents. We were we were at 61 in FY FY 24.

Yes. And then we went down which we shouldn't have and we gave we gave some some relief to then I don't have a problem I don't have any problem taking it back to 61. And you know, citizens talking to me have said they wouldn't mind paying it as long as it keeps Nashville safe. That was [clears throat] their main concern in talking to me.

But but on that last page, there's a calculation showing for each each increase by 1 cent how much more uh it would cost the homeowner. like from going going from 59 to 60 uh for $163,000 valued house that'd be $16 for the year more. If you go to 61 cents that's $32 more. And I had a calculation there for 62.

So you're okay with it here, but you're not okay with it on the on the water. I'm just curious. I don't understand what you're saying. You're okay with it on the increase? We all talked about water and sewer and everybody's on board with 15% increase or more. Um, but there was a split as to whether you go 15 to 17 because there's many expenditures in life that have gone up and we're concerned about those that can't afford the increase of the 17. So, Bill's question is I guess well I just

I mean it's just more money out of pocket household. So I'm just curious why something's okay.

Well, I think we're going to be doing

that maker. [cough] It's kind of unavoidable. Exactly. Because because one thing is one line, but now you're on another line. It's kind of unavoidable. Exactly. My gas went up, but I still got to have gas. But my medications went up and I still got to have that medications. So, I'm still juggling it and I still don't want it to go up. But if you can give me a small incremental increase, I [clears throat] I'll try to work with it. Do the very best that I can and and cut something else out, you know, because that's what people are judging. That's exactly what people are just waiting. But I hear your question. It's a viable question. I'm saying where you're coming from, but but there's a need.

Yeah. The $16 on line seven on the last page. That's per month or per year. That'd be per year. Per year. full taxes are like on that first line 995 and then you go up uh to 61 cents. So the average house is going to be 28 20 $30 a [clears throat] give or take. Yeah. To go from 59 to 61 on the average value house would be $3710 a year. Per year. Per year. Per year. And I and I think everybody knows, you know,

we're only half of the property tax equation in Nash County, right? Nash County is the other half. And then we don't know how long we'll be back. Any speculation on the county changed? I asked Stacy yesterday and she didn't say we we did talk about some other things. You know, there there's legislation being proposed that's going to cap municipalities ability to increase their tax rate.

Now, there there I'm I'm certain that that'll come with a, you know, an emergency. You know, you can if and that if would probably be a referendum vote, but it wouldn't correspond to setting your your budget in November. It would almost put small municipalities out of business really. with that and if they do away with this tax on food and then in the the Congress they're talking about maybe not taxing anybody property tax if they're over 65 that's rumored so you know again some of those pressures that are upon this budget you know I see before sound to your trash [cough] to your what

to your trash [laughter] I mean it sounds great that you're going to get less money but there's no services. Please don't go. You know, ultimately that's where things come down to level of service. That's right. So, um, going back to the general fund revenue on H1. [clears throat]

So that that 3 million that 3,622,000 that that is with a 2 cent tax increase that takes our tax rate from 59 cents to 61. And then our other big source of revenue and the general fund is down on is sales tax which is about 3/4 of the way down 2,167. Is that the one is that the one on food? What's the word? It includes sales tax. So we lose some of that if they say no tax on food,

right? But by how much? I don't know. There are there seven categories of sales tax in North Carolina. And food is one of them. And for Nash County, it's the third largest of the seven. So, but not everything in that food category are qualifying groceries. the the bill that was introduced would reduce the qualifying t sales tax on qualifying groceries. It would remove that 2%. That would go away. But I don't know how much of that is. And the state hadn't even gotten a budget yet, have they? But when they were when were they supposed to happen? They got one last night.

Are we ever going to know that number of how much we're going to lose until we do the audit? like is it is does anybody have that information as far as like what we actually receive for that food portion? Right. Well, Stacy Shhatzu told me yesterday the county's league I forget what it is the county the county association the association of North Carolina counties which is similar to the league of municipalities. They're doing a calculation and I saw something I got an email yesterday that the league is calculating that So, we will know that shortly maybe. Well, sooner than later, I hope. Well, online you can find out how much each county gets from food cuz I found that.

Yeah, you did. But it doesn't break it up into each municipality, which I think is raised up based on population or partially not not from what you sell, but on your population. Okay. So, kind of. So we we didn't we didn't project any increase in in sales tax which may seem contrary to all the inflation we're okay. So so assuming we passed what what this is just assuming and then that they they pass that change then we have to adjust our budget by by potentially $200,000. Correct. Correct.

It could be it could be I mean it's really a wild card. We won't we don't know now. We won't know by the time we adopt our budget if that legislation is going to get approved. Um Raz told me, he's been hearing this for 35 years, that they were going to do with the do away with the two cent sales tax on [laughter] qualifying groceries. And Stacy Shatzer told me that she had heard uh from the county association that this this bill isn't likely to pass this session. That would be nice.

But again, you know, it depending upon how much of that uh food category is qualifying groceries, you know, if it's only five, six%. It's got to be more than that, though. It would easily, I think, be at least. Well, yeah, it sounds great with the less grocery fees, but then we got to run somewhere. Yeah. The revenue has to be made up somewhere. and with zero suggestions as to where that revenue would come from. It's kind of irritating. It is. It's I think it's kind of like last year with City of Rocky Mount. We we did our budget without even knowing what they were increasing because they didn't do their budget until late June and we had already adopted ours. So, it's kind of just have to deal with it once it once it get here.

And legislative services have done an analysis on that bill to do away with the two cent sales tax and qualifying groceries. But it's a local sales tax. and only affects counties and cities which transfers us to be the bad guys where we have to increase our taxes to increase that revenue. So the general assembly pass that and it has no impact on

state. [clears throat] So, scrolling through all the U general fund revenues, you get to about 3/4 of the way through page three and and we have the total. Um there there's one line highlighted in yellow that's with transferring in from the enterprise fund 3% of revenue. And right now that's that's based on 15%. So, it allows us to bring $192,000 into the general fund, which is really nice. And then, you know, we we got $416,000 in uh bringing from fund balance to help cover some of those one-time expenses that we'll get to when we get to the general fund uh expenses. How much did our fund balance

for general fund? We're going to trust this calculation. We'll start the year with about $5.3 million in unrestricted fund balance for the general fund. And I I have these for you if you want them. Um next time around we'll have them in a different form makes a little more sense. But uh what we're looking at general fund revenue at 10,144,000. It's about a 6% increase over the current year budget or $66,000 more. But but again, that's that's with um 15% increase in water and sewer rates and bringing 3% of water and sewer revenues over to the general fund and a 2% increase in property tax

and is this estimating any growth in new houses? Yeah, we we got we got if if you go back to your last page, Bill, um it shows what we're looking at for taxable. We're we're looking at an 8.4% increase in taxable value. Wait, what page was that? Oh, it's the last page. Oh, last page. The last page. Where's that number here? It's built into uh on the very front page sales. It's it's built into that 3.6 million. Yeah. Yeah. 5021. Yeah.

So then continuing on with revenues, is that a conservative number? We we estimated it because honestly the number get from Nash County is There's no way. No way. What was the percentage of new houses we got this year? Well, on that back page, we believe we had a four 4% increase and that that was actual. So, what we're trying to do, we think it's going to be double. Well, you know, that included only probably 15% of nearly 100 new houses that are going to be on this

this year. And I think our collection rate is going to go up next year, which is going to change that percentage because we are doing really good with We've always consistently been at 98. It's it's triggering down because we're not collecting all of our property taxes, which with us um partnering with we're getting we're getting payments. Oh yeah, we're getting results. That's going to increase where this one individual I don't know who it is had uh three different properties where they hadn't paid the tax and Z [clears throat] got it and all of a sudden they went and paid all paid every one of them

to show you have to do that. Yeah, it is. But it cost him so stupid. But that percentage should go up which would then you know we'll see collection, but we we put it for what our current collection rate is, which is 975%. And I think it was at 97.4746, and it's just it's just going the wrong way. So,

um bottom of the page three, we have our MSD revenues for our municipal service district. There isn't a whole lot of change in there. Um that tax brings in about $44,000. You got some interest. Uh Sean's got some banner sales in there and then we're going to use some fund balance. Uh and when we get to the project side for the G for for the uh MSD, you're going to see the downtown strong advisory board we got right now is really excited about doing a bunch of small things. That's great for for beautifification, for enhancement of our downtown and and for some marketing, which which is very nice.

You may have mentioned this already, but based on what we're looking at now, what what's going to be the bottom line hit to the fund balance for general fund 2016 is going to bring us down to 4 almost 9 million, right? Right. in unrestricted fun balance. Yes, we're at 5.3 now. And what does that do as far as our percentages of operating costs? Well, we we always want to be at about 50% of the fund balance on hand. We we may be just a little lower than that. Well above the LGC, which is all what only 20%. [clears throat]

Yeah, it's 20% lower than that. Whatever it was, it was crazy low. just got to keep I don't this is my I'm telling y'all from I'm working at the front counter and just the services that we're providing that we're really like if we don't replace our stuff that I don't know it's just stuff is breaking down we had a lot of repairs this year that we didn't expect so I mean we can't just go outside and get it out the tree so we got to pay for it or they can't get services one primarily we've been talking about is yard waste because our taxes, right? Tax revenue pays for sanitation. Well, not sanitation. Well, it's sanitation paid for sanitation,

but that's not including yard waste or bulk pickup. And we have to dispose of those things to City Rocky Mount, which their rates went up. So, that's another expense. So, should we keep picking up every week? Jason's got some ideas when we get into the expense on the on the sanitation budget. Maybe instead of rolling the leaf truck and the brush truck through every neighborhood every week, we we back that up. Maybe we do it every other week when same day your recycling is. That's when your curbside uh collection is or maybe we go once a month. We we do it once a month.

Well, people can't cut down trees and put them in front of their house for us to pick up. We just shouldn't have to do that. Yeah. And we've turned people away for that. If a contractor does it, it's in our ordinances that we don't pick it up. But if if Mr. Taylor was to cut down a tree and he puts it in the proper lengths, then essentially we would pick it up. I think if it's like branches and things like that or maybe like a tree this bush out there may [laughter] have a bush yesterday, not a tree. As far as mulch pickup, we don't charge. Apparently we don't. Well, we need to I just I just had to pay in Greenville to pick up Southern Boy School.

And I we don't mind dropping off, but we there's no place like we have a bulk pickup that's sitting on the side of our house. There's no place where we can go to drop off any sort of like we used to be able to to use the the drop off center on they will not let you in there unless you're counting. You pay a fee, right? Well, they wouldn't let us in no matter what. No, they have I think per year, right? Right. But it's good for the home year, right? But I couldn't go now and say, "I want to go buy it." It's like a specific time of the year that you had to go. Yes. Cuz it ends because they changed the color at the beginning of the year. So you're kind of you I I wouldn't mind paying whatever it costs to do that um for the convenience of not having to go and buy a tag. Go get one now.

You can get one now, but it's only good. It's not good for the whole year. The issue that we just me and Randy just run into with Nash County is is TVs. disposing of TVs. A citizen in Nashville cannot go to the Nash County Disposal Center and dispose of a TV or electronic. Right. So, what we're going to probably propose is a small incremental fee because we will have to pick those up storm and have an outside company come in and dispose of them properly. So, those are the little caveats that we're running into now uh with with our disposal of TVs, bulk waste, and so on so forth. Yeah. I think

and we looked up other towns like some towns does spring clean, fall clean. Like they do it twice a year and you have to just have the stuff out there and we just do one one time. It's two expenses a year. Um and then the other was maybe once a month and then if you wanted something picked up you had to pay for it. So we can still offer them something for it. Yeah, I think it is. I mean, but Jason, you your guys, you know, they could be doing other things, but literally from 7 to 4, they're just trash, you know, and it's every Friday. Yeah, we need to look at that.

And it's about this about this thick of people calling, can you pick up uh one item? You know, so that's gas, that's a employee. You know, when you think about how much it costs, it's and the wear and tear and the diesel fuel on the vehicles going around the entire town every Friday. Yeah. What did you say, Jason? The the garbage truck going around every Friday around the entire town. Like Trist said, there's a stack of bulk item pickups. And it it could be something small as a little rug or a little vanity or it could be a whole truck truckloads full of stuff where someone moved out of a house. I don't think we should pick those up either.

I think it should be a fee associated if somebody um cleans out their whole house and puts it on the side of the road like just You mean a landlord, right? Like a landlord. I think that's a lot for them to dispose of. I have I had a couple of people that did that midnight moving and didn't know they were going. [laughter] Yeah. They moved at night and took two two bedroom two rooms of furniture and stuck it out on the street. And we get in I've got to pay somebody to go pay for I can't I didn't get the rent. So what make you think they're going to pay for pickup? It's just some ideas. But Jason, I mean your guys are the ones out there working. But

we can probably lease machine only from um say September to April to cut down on the wear and tear on that going through the summertime. There's a lot of alternatives that we can look at to try and make our equipment last longer so we're not replacing it so often. That grass too, sir. Grass clipping fix too. Correct. But not maybe do it over the winter. You suspend. We'll suspend it during the summertime. That's what I do. That's when the grass picked up. Yeah. All right. mainly the leaf machines for you know vacuuming up all the leaves that get raked out to the but also does the grass

it does yes sir all things to keep in mind um we had gone through water revenues which are fund 30 already that's on page four the bottom of page four are our storm water um we're anticipating a little increase there because we have more homes [clears throat]

And uh so we're we're going from 145 to 155 about about $10,000 more in projected revenue from that. And then we have uh some fund balance money from our our storm water fund coming into this budget. And that would be for the Body Street storm sewer intake project that council approved the engineering agreement for last time. So about a $110,000 increase in revenue, but that's from that transfer in and about $10,000 more and storm sewer fees for 246,480. Where you at?

Right here on 40 at the bottom of page four on revenues. That might make you thumb most likely. That's what I thought we were, but you're saying numbers I didn't see. Yeah, me too. You said 110. I don't see. And you said 144. Well, you won't see the 110. I It goes from 145 to 155. Okay.

There's about $10,000 increase there. And we're bringing in this 91,000 uh from reserves. So, we can do that Body Street Storm sewer project. So, the difference between current year and proposed is about 101,000. Any questions on that? Jumping down quickly to PAL. Um, we're projecting a little more about $5,000 more in our PAL allocation from 210,000 to 215. And we're going to bring in some fund balance so that uh when we get to the expense side, we would we had planned to overlay Cross Street and part of Birchwood this fiscal year. Uh we didn't get some other projects underneath done in time. So we're going to reappropriate and rebudget those for next year. And

so so the 400,000 that we were bringing up earlier from fund balance is an addition to the 300. We're at more. Yeah. It's a different fund though. Those are general funds. These are power funds. A different bucket of money. Okay. So just shine some light on that. We budget $400,000 in power bill funds for this fiscal year. The job is not going to get done. All that money then falls back in the fund balance. we just re reappropriate back because I guess the time I don't know it's something about the time of the year when they're able to do sidewalks and things of that nature. So it just it's just probably not going to happen this fiscal year. So we're going to try to finish some

we're just reappropriating the same really the same money. The other street project we want to do is is when Essex Road gets finished with it new sewer system overlay that. So those would be the three streets. Did they get started on all the materials later is there?

Yes sir. That's really it for revenues. Um we we did have a a transfer, you know, that that's at 263,000 from water sewer into general or fund balance. So total revenues, we're we're looking at a little less than the current year, but that's because we're not spending as much fund balance on projects. $17,73. And I I have an error in my spreadsheet of that I can't find that trust is going to help me of $2,3.

But the total budget is that amount. That's the correct amount. My my spreadsheet is right. Ren just has a formula that's we got to work. We'll fix it. Total budget 17 million. 17 million. Okay. So, it's down a little bit from from but you know the the current year you see here of 19 million that includes our our our budget amendments. I think what we adopted was like 16, right? Yeah.

We've had some budget amendments and most of that was at Nash County $1.5 million for sewer manual lining. It's not any higher than that. infrastructure. Yeah. So, we are at noon. Um, well, at least you've given us some information. It's going to be a tough year, but I just pray we can get it done and treat our people fairly and our citizens fairly, too. But we really do have to look at the services we provide and and just be prep.

So, we we'll get into general fund expenses and the other funds uh next week. And in the meantime, if anybody's got questions, please feel free to reach out. And if y'all want, since y'all have a package, y'all can kind of review through the expenditures. If you have questions, maybe just write it and we can, you know, I mean, we'll save us some time instead of going line by line. If y'all have anything that y'all want to think, the water presentation today was very helpful. I think so, too. And I love our new leaf sidewalks. Thank you very much. We're not finished, but look good.

Well, when is when is when is and I guess it's I don't know if it's our contract or what is DOT's contract. When they go when they going to fix the turn coming up from from Hardest and then making a right turn on Barn Street. When they going to fix that for only thing I've heard is after the Blooming Festival when they do the Millan overlay. Yeah, when they do the Millan overlay. 64 bridges. We did. Uh Randy was successful in getting them to come out. uh during the Blooming Festival and put some coal patch around all the the handicap walks. We had to touch it up a little bit. We put some paint just Yeah, we touched it up and made it a little bit better. So, well, it was supposed to be in the fall and then we supposed to be in the spring and now it's going to be summer.

Well, remember we we busted our tail to get the water lines on that section done before Oh, it's almost two years ago we did that. Yeah, that's what I remember. appreciate it. Oh, I'm sure it has to time out. I know. Well, any other questions? If not, do I hear a motion to adjourn? Second favor.