City Council - Special Meeting

Good evening. Welcome to this Norfolk City Council special meeting, September 14, 2026. I'd like to call this meeting to order and inform the public of the location of the Opens Meeting Act, posted in the council chamber and accessible by members of the public. At this time, we'll have a moment of silence, followed by the Pledge of Allegiance.

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

Roll call, please.

Granquist? Here. Arns?

Here.

Webb? Here. McCarthy? Here. Beckman? Here. Jensen? Here. Lange? Here. Hildebrand?

Here.

Mayer?

Here. With that said, I need approval of consent agenda.

Second.

Motion to second. Any discussion? Please vote.

All council members voting in the affirmative. Motion carries.

All right. Now we need a motion to approve the full agenda. So moved.

Second.

And a motion and two seconds. What do you got?

We have got Lange for a second.

Okay. Any discussion? Okay, please vote.

Just missing one. Missing one. Missing one. All council members voting in the affirmative. Motion carries.

All right. Moves to sign number eight on your packet. We're going to open the hearing, budget hearing, to review the City of Norfolk's fiscal year 2026-2027 municipal budget. Okay, we're going to actually open, do you want to read all three at the same time? And then we'll open up item number nine, a public hearing to review the City of Norfolk's fiscal year 2026-2027 budget for water, sewer, solid waste, and stormwater. And then we will also have a public hearing and receive comments regarding changing the tax request for the 2026-2027 fiscal year from the amounts for the 2025-2026 fiscal year. These will all be in discussion simultaneously.

Mayor and Council, tonight represents the sixth opportunity to have discussion in a public setting Regarding this municipal budget first the CIP with those those items over a hundred thousand dollars that we met with first and then five Meetings resulting in the culmination of that all that hard work that lands us here tonight a significant amount of work put in by staff by the elected officials input from the community to resulting in the document that's be presented for you tonight, so I just want to extend the sincere thank you to everyone that had a hand in that and A lot of difficult conversations, a lot of input, a lot of suggestions, a lot of hard work trying to figure out the best way to navigate through the budget and do it as efficiently and as appropriately as possible. So I extend that sincere thank you to each of you for your patience and perseverance dealing with what is not always an easy task when you're crunching numbers and trying to pay the bills and doing all the things that we want to do and do it responsibly as we possibly can. I think what you've noticed here in recent weeks since John's arrival is is he's a master at putting together illustrations and data and figures in a format that's very readable, very understandable, and very transparent for all of us and for the community to look at. And John and Sheila and the folks that have worked on that have prepared a document for us tonight to go through those to satisfy our statutory reporting requirements, to illustrate exactly where we're at in our financial condition and where we are going forward with this fiscal year budget. So I want to thank John and Sheila and the staff that worked hard on preparing that and look forward to them going through the slide presentation tonight to help you see exactly what we've been working on that brought us here tonight. So thank you with that backdrop. And John, appreciate your work in leading us with the PowerPoint presentation tonight. Thank you, sir.

Okay, thanks for that, and I'm going to try not to lean on Sheila too much, but I imagine at some point I probably will have to. The first few slides, actually the first slide, it's kind of a tradition over the last couple decades to have a picture on the front of the printed book, and this year we got a good shot recently of the new archway over Norfolk Avenue, so that's kind of a cool cover shot that we got. There's another... picture for our supplementary book, and that one, I think Nick or somebody got a good shot at the 9-11, wasn't the stair climb at Memorial Field, so that's another great picture that is on our alternate book for this project. So we'll go in, and the first few slides, we're gonna talk just very high level and talk about total appropriations and specifically the levy. And then we'll get into a little bit more detail in the further slides after these first couple or two or three here. So as you can see, very little change when the August 20th certified amounts came out from the county. I think we had to make a very minor change downward. It was, what, $20,000 net, I think, downward to stay under the initial cap. which we'll talk about more in just a minute, but we did make a very minor change to that over the last couple weeks after that certification came out. So you can see the general fund goes up about $267,000. Debt service, we're proposing no change. And the VPD, Vehicle Parking District, they were here, I think, in July, and they had a discussion of increasing their... allocation by about $4,200. So those three net to about 3.77%, and then when you add on the 1% collection fee for the county treasurer, it accumulates to that bottom row of 3.78% increase, or about $275,000. And I'm just going to keep flipping. As long as nobody's looking at me, I'm going to keep going. So if you have a question, make sure you shout it out. OK, so then something that Sheila and I were talking about was something we thought would be important to discuss regarding the levy and the state formula around budget that all subdivisions have to adhere to. And I just want to make sure we're all kind of clarified around how that previous slide came to be. So our prior year request, you can see on the left, was $7.25 million. There's two factors that come from the county that dictate what or if and what we can increase our property tax request by while staying under this statutory limit. The first is a growth factor, and that's that first gold bar just to the right of last year's preliminary assessment. So that is about 1.78%. And that results from growth in our district, our subdivision's tax base, through new taxable parcels, what's the word, annexation, or additions to properties that were already existing but have been increased through economic growth of some kind, not just the same house being incrementally increased year over year. The second is 5.26%, and that is a state-mandated inflationary growth factor. It's not CPI. It's a different function that the state gives us to utilize on our budget forms. I believe that's not the county, it's the state. It's the state, correct. So those two combined to just over 7% was the allowable maximum growth that we could have, could go to. But there are limitations underneath that, and that is we are limited to that first growth of 1.78% plus 2% of the other number, right? So we are limited this year to 3.78% growth unless we wanted to go through the pink card process and have to go through that additional step for the additional increment over that 3.78% up to that 7.04%. Does that make sense? Okay, good. So that gives us where we are in the middle there, $7.8 million. is what we could have gone to at 7%. But you can see there the 237,000 that we are not going after, which is above the 3.78%. So that's what we're gonna, is accumulating in our carry forward for next year's potential. So that's where we land at the 7.55 million gold bar on the far right, okay? So this next page will discuss more about the carry forward pool. So in previous years, you've also not utilized the entire cap. You've had monies unused by not going to the process of going to a pink card and things like that. So we carried forward just about 600,000 on that top left gray bar. from prior years and we're adding that gold bar on the right, the 237 from the previous page. So we had about $832,000 of carry forward that we could go for if we needed to or if we felt the desire to go that far. We'd have to notify, we would have had to, I guess, notify and go to the pink card process with another hearing. So you can see on the bottom, though, because we're not doing that, we're statutorily limited by what we can carry forward now going into the next year. So of that $32,000 of carry-forward dollars that we have allocated, we can only carry forward 5% of our last year's $7-ish million authority that I showed you on that previous slide. Okay. So we can only now carry forward on the bottom left 376,000. We're essentially forfeiting 455,000 of authority that we will never be able to reclaim. That's going to be gone after this year. I'm not seeing any questions or hands. Is there any?

That's 5% of the authority or 5% of the amount that we actually agreed to take?

Authority. Right.

5% of your property tax from last year.

Yeah.

So whatever you can, whatever you levied. Yeah.

Not, not what was actually, uh, not what we have the authority to keep.

Right. And, and also next year, everyone is going to go to the joint public hearing. So it will be a different process next year.

Any questions on these first three slides that covers the tax authority? Okay. So we'll go into an overview at a high level of our revenues that are inside of our budget. You can see across the columns, you can see the 25-26 fiscal year is the first column. Then in the shaded column, that's kind of a yellow cream color, is this current year. And then what we're calling the change in both dollars nominally and percentage-wise of change year over year. And let's see. We wanted to go over a few of those because some of those are larger. You can kind of see some decent increases or decreases across some of them. So we'll cover them quickly. So for debt, proceeds of debt, 33% drop, and that's due to some changes in the current year's bonding. So last year we had quite a bit of debt issued for WPC projects, the water plant improvements, and... GRIT project at WPC and then obviously this next year we're not going to be having those occur again so that is the rationale there for why that is such a large drop off. Other changes, you know, we've got sewer and water rate increase proposals and solid waste as well. We've got a 2% increase in group health premiums. Intergovernmental increases about 20% for federal grants for the WPC plant upgrades and industrial separated sewer mains in the new year. Transfers increase about 8.5% due to about a half million dollars of transfer from capital projects fund to general fund for operations. And all other services increases 25%. Anticipate about $1.6 million in contributions from two industrial sewer connections customers. Sales tax, obviously, is one of our largest non-tax revenue lines. Or not, sorry. is one of our largest revenue lines. And we budget that based on the July to June, so June 2026 ending total receipts that we, so we don't anticipate or don't budget a presumed increase for next year. We base it on the last 12 months of actuals. Okay. Any questions on this slide? Then we talk about expenditures. Year over year, and these are the large categorizations of expenditures, and as with most organizations, personnel is one of your largest changes annually. You can see in the green box in the middle is our proposed 2026-27. Personnel is about 5.1%, and that mirrors what essentially happened in the previous year over the 24-25 year. Operations and maintenance is up. Mostly, I believe, was inflation and some other just general increases that go on around operational maintenance expenditures. Let's see. Help me out with capital expenditures. Why are we going down there?

Yeah, that's related to the debt proceeds from last year for the water project.

There you go. We had $8 million budgeted there last year to improve Finish the improvements at the water plant. Yep.

Okay.

Any questions on this slide? I don't know. I think they're studying or they're just not. Okay, I'm going to move on. I don't want to move too fast. Hopefully, if you guys have questions, be sure to shout them out. All right, the next slide is kind of a rear-view mirror looking at the three biggest, I guess, two largest, and then kind of lumping all the other funds into one third bucket. The bottom of this chart, the gold, is the 20-year history of the general fund. And you can kind of see a natural slow incline from 2008 to today. Enterprise in the middle brown has also increased generally, but it's been more up and down, mostly related generally to projects that go on from time to time in water and sewer and solid waste. AREAS THAT WILL HAVE LARGE CAPITAL EXPENDITURES IN ONE YEAR OR TWO AND THEN DROP OFF FOR A FEW YEARS, BUT HAS A NATURAL INCREASE TENDENCIES THERE AS WELL. AND THEN ACROSS THE BOTTOM, SOME SPARK LINES KIND OF SHOWING THE GENERAL TREND OF THOSE THREE POOLS PLUS THE FUND BALANCE. SO YOU CAN SEE GENERAL FUND, AND THESE ARE ALL, THESE percentages underneath those SPARC lines are meant to represent the compound annual growth rate of those specific funds. So general fund has grown about 4.7% over this 20 year window. Okay, all good? The next two slides, we're gonna talk about MPPD revenue. the lease that we utilize with them. The first one is looking back over the eight full years, the first eight gold bars, and then two cream bars, which represent this year's proposed ending for the current year, plus next year's on the far right, the budget that we have booked. And I want you to make sure that you're noticing the flatness of this chart. That's going to be important for the next slide, so make sure that you're being attentive to the flatness of the nominal change in this lease revenue. On the next chart, we go into adjusting the MPPD over the last 20, actually about a little over 20 years, maybe 25 years. You can see that in 2013 and 2014, the lease hit a peak. I don't have the number on me, what that nominal dollar was that year. But you can see a natural growth from the mid-90s up until 2014. And then you can see a flagging off from then. And that is directly related to the prior slide. In nominal dollars, NPPD's lease revenue over the last 12 or so years has been flat, which nominally is I guess fine, but in inflationary impacted dollars, it's about a 26% chop in buying power from those revenue dollars, which means that today the lease is producing about $1.6 million less than it would on an inflationary adjusted trajectory from 2013, 2014. Does that make sense?

John, why would that be the case?

because the MPPD to their own publicity has not increased their rates, they went 11 straight years correlating with this chart of no increases on residential and for the most part wholesale as well. And either through energy savings citywide offsetting any growth that may have happened over the past decade, THE RELEASE REVENUE HAS BEEN BASICALLY FLAT.

CHEAPER UTILITIES PUTS MORE MONEY IN OUR SISTER'S POCKET LEADING TO BETTER SALES TAX NUMBERS.

SURE. Sorry?

I'm just saying.

Yeah. Yes, you're right. Sales taxes is also a factor in the MPPD lease that we get back. You know, the 12% lease is also adjusted again by the city sales taxes and the state sales taxes. So the fact that the bills are down is impacting both city and state sales taxes on that lease.

No, I'm just saying that giving citizens more discretionary income and not higher utility bills gives them – the income to go spend on the economy, to go buy the extra pair of shoes, to go do the things.

Sure.

I mean, you have to factor it.

Sure.

We haven't heard from NPPD as to why, though, for sure, right? It's just, have we asked that question?

I don't have that information, no. Okay. Next is valuation base. So you can see over the last 10 or so years what the valuation base of the city has done. I believe, I don't have a slide on it, I don't have a note on it, but per capita, Norfolk ends up somewhere in the upper quartile of taxable basis per resident. I think we're seventh or eighth. When you divide the taxable almost $3 billion divided by our populace of 26,000 or whatever it is, we're just about $108,000 per person, which in the state of Nebraska is in, I think it was eighth place. I have a slide that didn't make this deck, but it's about eighth position of the first class cities, of the 30 first class cities. Next slide talks about the levy rate. comparing ourselves against the other first-class cities. The two bars on the left are the previous year, which is the only year I can compare to because all the cities are certifying their rates right now. So I'll have the new, for 2026, I'll have those coming up in the next month or two. But you can see we were fifth in rank order of levy of the 2025 first class cities. If you include our airport allocated authority, we jump to six because Fremont slips right underneath us if we include our airport authority. The median actually doesn't move, that gray box, if you include allocated authorities. There's about 11 other cities that include airport authority allocations. And magically, half of them are below the median and about half of them are above the median. I think Hastings is the median, if not right at it. They don't allocate airport authority, so the median doesn't move either way. And you can see in the new year, we're going to be lower than last year. And I don't anticipate the median moving much, maybe a very small move down, depending on what other first class cities do. Okay, and then when you look citywide for a taxpayer, this shows the breakdown of what your tax bill looks like per $100,000 of property value. So the city is about $255 of that $1,528 per $100,000 tax bill. This chart doesn't move, I mean, the dollars will change occasionally, but rank order probably won't change often, if at all. The only recent real large change would have been Northeast Community College a few years ago when their levy authority was modified by the state quite a bit. If there was ever any statutorily mandated levy impacts to a subdivision type or school districts or things like that, that could monkey with this ranking, but I would say that's probably going to be the same general ordering for the foreseeable future. Okay. Then we look at budgets by the 10 general fund departments that we've spent several work sessions covering in great detail. So we're still at about 2.7% increase overall. Just about a million dollars of nominal change year over year. One thing to note on this slide is that this is inclusive of the 600 and some thousand dollars of those six positions salaries amounts that are not in here. So this already is taking into account a pretty healthy 30% decline from where it could have been year over year. So that will be something we want to be mindful of. Any questions on this slide? Might not hurt to stop here and cover some of the larger change ones. Police is only about a percent, a quarter, and you might have imagined that would be a little bit more, but as you can see on street maintenance, a few lines down, they are way up, 17%, and that is due to the mid-year, towards the end of the year, but mid-year change between where that half-cent sales tax will go. So we're backing off police's budget line and increasing street maintenance because those dollars will switch gears of where they're going next year. So that's the reason for those two looking different than the rest of the group for the most part. And I forget, fleet services, you told me earlier, but you... Oh, it was a specific capital item?

Yep, an overhead door. Overhead door, that's right.

So a quick question then. Yep. If you're considering the influx of half-cent sales tax dollars into street maintenance with this, that's still that 2.69% growth for the overall. When you factor that out, what's the overall growth if you take that? Because that's not a traditional budget. It's a one-time deal with the...

But you're talking about general fund?

Yeah, the reason I'm asking is you just mentioned that we've got $608,000 that got cut out of this off the get-go with the positions. And then you've got a cost of living adjustment of 2.5%, I'm assuming, included in on this particular slide. So what is your... So that would be a... If we wouldn't have done anything, or we would have been... You know, you'd have been at 1.6 million, and that would adjust that 2.69. What I'm asking is if you factor in street maintenance at a traditional growth rate, let's just say 2.5 and not 17.31. Yeah. What is that actually? Because I feel like it gives you kind of a, doesn't quite be in a clear picture.

I think what you have to realize, you have to look back at last year's column, the left column. The police budget last year would have had a full year of collections in it. Right. And so this year's budget is about the same amount of money, but it's just being allocated away from police down to street maintenance a little bit. So it's not a change in overall dollars. It's just where those dollars are getting allocated to. That's fair enough. Okay. Yeah.

Okay. So then you would attribute the total general fund growth

Primarily to the cola adjustment then There wasn't a lot of positions added no actually that we actually retract we had a note at Sheila wrote me a note FTE total goes down Under one under one full FTE that was because last year you guys had budgeted for a senior center director Because of last year's conversations with the senior center, so we removed that one and but we added something. In solid waste. Solid waste was like an eighth of a person. Okay. So it's actually an FTE reduction in total. All right. Thank you. Are we good on this one?

Okay.

The next one talks about enterprise funds. Just kind of giving you a snapshot of how that fund utilizes the money that it's got allocated inside of it. And the lion's share of it is capital expenditures, 62%. And then you can see below operations and maintenance, about 20 personnel, 13% of that fund, and so on. And then below that first gray band, you can see how the four divisions of the enterprise fund utilize the enterprise funds in total so about a little over half of it goes to sewer and about a third goes to water this is capital projects and you can see on the top two we've got those are the two largest expenditure lines for this year The police station expansion completion of about $5 million. WPC upgrade continuing there of about $5 million. The third line is about $4 million for street and sewer assessment districts. And then you can see we've got a plan about $1.5 million for flood control. a million for land acquisition, a million for adult softball field, and just under a million for street maintenance, annual street maintenance contract.

Have you got a, sorry, this is really good, by the way. This has been great. I'm really liking the way how you're breaking this down. It's very important. So as we're looking at this, is there a way, just a quick, you know, you've got, okay, police building expansion renovation. Half cent sales tax funding that. Water pollution control upgrades. Revenue bond. You know what I'm saying? Could you just kind of state for clarification what you're anticipating funding sources for?

Okay, so obviously you know the first one, right? Police station is the half cent. WPC, are we, do you have?

Most likely revenue bonds. Revenue bonds.

Yep. Sorry. So the assessment districts will be, you know, but new districts that we'll assess during the fiscal year. Flood control would be general obligation bonds sometime in the next year.

Just hold on. Frank, will you step in for me for just a second?

So I think, does that cover, does everybody think that covered what Shane was asking? Kind of the funding sources of those? Okay. Is there any other questions about any of those specific lines? No? Okay. All right. And then we've got two more slides, and they are going to cover the fund balance. And I want to make sure we settle on these two well over the next two slides. So this covers, from left to right, the four previous full fiscal years, and then 25-26 proposed estimated ending, and then next year's budgeted. The gray columns are revenue, and the orange or the gold lines are expenses. And then just below, you can see where we budgeted the net difference between revenue and expenses to be and where they actually ended up. So, you can see that in 2022 fiscal year, we budgeted a $3.7 million deficit spend and we actually ended up just under 900,000. The next two years, we budgeted 3.4 roughly on each year deficit spending and we actually were positive in both of those years. And then 24-25, we would have been deficit again on both budget and spent on actual. But I did want to call out that that was the year that we had some settlements that were occurring that year. And so I put a little colored earmark there. We would have just been under the budgeted expenses that year had those not occurred. But we still would have been just a little bit more than revenue that year. And you can see that for this current year, we're anticipating operating just about a million dollars behind. Okay. Any questions on this one? All right. The last slide talks about... Sorry.

Yeah. Traditionally... That underspending is what we were using to utilize to grow that beginning balance. Yes.

So that's been the assumption or the basis of modeling has been under budgeting revenue. Like I mentioned earlier, we don't typically budget for any incremental increase in sales taxes, which hopefully we anticipate 3% to 4% growth each year. So that kind of leads to a major reason why we always budget low on revenue and then anticipate has normally been underspent on budget allocation. It's gotten precipitously tighter over the last three to four years. We've been spending much closer to our actual expenditure budget and not having as much wiggle room within that over the last couple years. And that all leads into the final slide, which probably Sheila and I worry about the most, is where our fund balance ends or we plan for. Is that fair to say? I don't want to put you on the line with me, but this last one is kind of where we try to make sure that we're keeping everybody focused on is having a relatively healthy fund balance, the GFOA, I'm sure Randy's talked about it in the past, recommendation of 16% of your budgeted expenditures being held in fund balance reserve. The bottom, I'm sorry, yeah, the bottom, the gold line across the bottom, that 16% dashed line is kind of the goal. The bottom is where we've budgeted, over the last 15 years. And the brown line, the top, has been where we've actually ended up each year, year by year. And you can see the budget one is what we're mostly speaking to today with our budgeted plan. We've actually budgeted or accomplished budgeting to a 16% fund balance three of the past 15 years In 2020, 22, and 25, we actually budgeted there. We've been as low as 8.6 all the way back at the first year of the 15-year window in 11-12. But this year, we're anticipating this budget as showing about a 10% goal or budgeted goal. You can see on the top where we've actually ended up. has been averaging above 20, around 25% year over year for the past 15 years. And this 25, 26, we're anticipating ending just under 20. So the squeeze will definitely be in effect this year and next year as we look at an extremely tight expenditure budget with the work of trying to accomplish $600,000 of salary attrition with positions that are currently filled with people is going to be extremely tenuous this year to accomplish that 10%. So we felt like this was a good representation to show you where we have been and where we're kind of heading here as we get tighter and tighter. So that's all I've got. I didn't hear any, I mean, we went over a few questions during.

Yeah, I think, though, to be fair, from 11 to probably 17, if you look, that's pretty stable right there. Yep. Between, from 17 till 2023, 2024, though, we were experienced, you know, we had, we were severely understaffed in our police department, and those funds were then transferred to the gaming balance, so That significant growth you see there between 17 and 2024 is significantly kicked in from the police department's fact that they were understaffed. Just want to put that out there because it looks like that was intentionally done that way, and it really wasn't. It just grew that way. Maybe it was. Chief's right there. Chief's done a tremendous job filling those positions. Could be part of it. So that's why I'm making the statement. is from 11 to about 16, it's pretty even. And then you see this happen from 17, 18 till obviously Chief filled all those positions. And thanks for doing that and all the hard work our police department has done.

Yeah, we were sticking about like 600,000, I think, every year. Six to eight. Yes.

Six to 800,000. So just want to, you need to make that statement because you could put a line across there and have some lines like, graphing out how that actually grew from the fact that those positions were not being filled. And I think we have also, even if you look back at 2011 and 2012, I think you've tightened up the amount of positions that are being called out within each particular department that's not being filled. Sometimes we would have a department come in and they would have 22 employees budgeted, but maybe only fill in have 18 employees at this particular time and that I feel like is significantly tightened throughout staff's budgets over the years where when I first got on council there was a bigger gap there than there is today and those dollars and cents were put back into that beginning balance at the end of the year so I think we've tightened things up quite a bit and that has significantly shows the difference in how we budget and how we budget our beginning balance because it's changed I'm looking at you guys because I'm just looking like, am I right? I think, yes, I am. Yeah. It's just significantly changed on how our budget looks. So we're doing it back to you. We're just looking at you.

Shane, I think I'd add. That's the point. I just want to put that out there.

Some of that might have been around that same time. Of course, we had COVID in 19 and 20, and there was a lot of federal money subjected into cities and cities. civilian population, but also we had the incorporation of online sales tax was included right around that. I'm not sure when it is.

That happened in 15, or 13, 14, I'm sorry. That's when that happened.

Which obviously kind of helped raise that.

I might be wrong with that. I think it was 18. But wasn't it passed by, but it took a couple years to implement? What? What? Yeah, because you see that 15-16, we were nervous then.

Hey, John, have you modeled this, what it would look like for, say, two or three more fiscal years if we keep going down? Have you looked at that model to see what happens to that number?

The long-term financial plan would probably be the answer to that.

Yeah, and that shows, you know, increasing property tax to fund everything that we need. We haven't really modeled, like, if we're just stay on this trajectory, what would happen.

To be fair, though, I've never really seen a model that ever has looked very positive with the city's growth and expenditures. I've never seen one that's ever looked really positive. even back to when Randy was projecting those out back in early 2020, 2011, and 2012. But what's always saved Norfolk, basically, is sales tax has always come in a little bit higher than what you guys are budgeting, made up the difference. We haven't really seen that the last few years. So that is a problem that we'll have to continue to work towards a solution. So that's the presentation that you had for us?

That's what we've got for you tonight, yeah.

Is that the entire presentation for this hearing?

Yes.

Okay. That's what we brought. That was really nice, John. Sheila, you did a very nice job with that. Do we have any questions during the open hearing portion of this meeting for John and Sheila? All right. having none from Council on Mass Public, come forward with your questions.

Let me cover.

Jim McKenzie. My first question has to do with we are balancing our budget last year and this year especially when I look at the capital projects fund in 23-24 we had inter fund operating transfers into the capital projects fund of 539,000 in Keno 681,000 for CIP items 180,000 for council priority 24-25 it was $530,000 for Keno, $624,000 for CIP items, and $150,000 for council priority dollars. 25-26, the Keno dropped to $191,000, zero for CIP items, and $132,000 for council priority. In the upcoming fiscal year, Keno is at $356,000, zero again for CIP items, and zero for council priority. It looks like we are drastically reducing the transfers into the capital projects fund. I assume, and you can correct me if I'm wrong, we're still spending on capital projects, but we're not putting funds in. Is that correct?

Right. The capital improvement projects is kind of like a savings account for those larger items. And so you're right. The last couple of years, we've not been putting as much in there. So any capital expenses that may come up during the year have to come out of the general fund?

So we've been kind of balancing our budget on transfers that we're no longer putting in the capital projects fund to cover our capital project expenditures. Consequently, we're going to get to a point where that's not possible anymore. You're kind of spending down that capital projects fund to the point where You're not going to be able to do that too much longer. And not only that, this year it looks like we're not only not putting money in, but we're taking almost $512,000 out. Is that correct?

I believe that's the amount, yeah.

Okay. So zero going in, money coming out. I don't know that we've ever done that before. No.

And we're spending all council priority dollars are being utilized this fiscal too. Not all, but $502,000.

I just want to say that because that's the reality of where our budget's at, and I'm not sure that that's clear until you really discover what we're doing in terms of balancing the budget. The other thing I wanted to mention was the long-term financial plan. It was mentioned briefly. Next year, again, we talked about the long-term financial plan last year, and I brought that up, and it said we're $2.8 million that we were going to be in the hole this coming fiscal year. And I brought that up last year at this time, and lo and behold, in July, we were $2.8 million in the hole. And so this year's long-term financial plan shows the 27-28 that we're going to have to raise, we're going to have to increase property taxes by almost $2.5 million, just under $2.5 million, to balance the budget. So it's not going away. It's right here next year, too. And if you look three years from now, That's not the only increase. There's multiple increases of three years. So the 29-30 fiscal year, by the time we get there, we've got just under a $4 million property tax increase to balance the budget. So we're at a 62% property increase three years out. And if you look seven years out, we're at a $6.3 million property tax increase or 99% increase from where we're at today. So that's the reality of the budget and where it's at, and so I just want to bring that up. One other quick note, and we'll probably, I'm sure you'll talk about this down the road, but we've got a large water pollution control project that's on the budget. There really hasn't been any detailed discussion on what exactly is driving that. I think we all kind of know what's driving it, and how we're going to pay for it, and how the citizens are going to pay for it, and if the citizens should be paying for it. Um, and that's partially in the budget. You've got an 8% increase in sewer rates for residential sewer rates. And yet we've got a, we've got a water pollution control plant that quite frankly is, is very large for a community our size, but it's being consumed by a specific, um, commercial industrial customer. And I think to have the citizens pay for what is a very large increase, um, Basically, we're looking at a 40% increase over the next five years, including sales tax, pursuer rate increases from what Steve had sent me earlier. I think we need to have a real public discussion on that and how that's going to be paid for and why we're doing it and where that benefit is going. We just had somebody talk to us not too recently that said whoever gets the benefit should be the one paying the bill. So I just want to bring that up. Thanks.

I think that's why we're sitting here addressing the fact that the budget is not in the greatest place. That's why we've had six meetings now. That's why we're trying to do this. It's a big reason why the $608,000 reduction with positions, which is very content, I mean, was not the, I wouldn't say was a very positive experience for anybody sitting here. We're trying. We're trying to get this thing figured out. You have situations with any sort of budget where you get, it's just, you've had tough times. We're in one of those times. I think we're trying to work through it. I appreciate the comments, but I mean, we're all, I would hope everybody's fairly aware of the exact situation that was just presented in front of us. There is true, we did take down this budget, $2.7 million, and a lot of that is smoke and mirrors because... You know, you look at the attrition reduction, the fact that we're kicking over $502,000 out of council priority dollars, and the fact that we didn't transfer out $511,000 to make up some of that. So, yeah, it's not exactly where you want to be as far as the budget looks. But it is a budget that took a lot of time to put together. I mean, I thank staff for doing that. It was difficult. But at the end of the day... When you figure the 2.5 cost of living adjustment, that started out at 3.3. Make it clear. So there was a reduction there. It's workable. And that's kind of what we have this year. I couldn't say it's a great budget. I can't say it's a – but it's workable right now. And we're going to have to work on a lot of things in which we're going in this upcoming fiscal to address the issues that we do have. and how that's going to look moving forward. Things may look different. I don't know. You can't predict anything. Hopefully our sales tax moves forward. I think that's a lot of the talk about the solid waste plant, why we need the expansion, because we want to grow our community. And when you grow your community, hopefully your sales tax expands. And with that expansion, this budget needs that. Norfolk's budget traditionally was built on sales tax. One hundred percent.

And this infrastructure, you know, those are needed. We're going to expand, try to get that that opportunity, economic development going. You know, right. And I also talk about, you know, seven years, five years, seven years down the road and how that property tax needs to be increased. But you got to remember that those TIF projects are going to start coming off to you start talking that long. And there's going to be an awful lot of added property tax put into the system too. So it'll help offset that.

I would, I would task to anybody sitting here. We've got a number of people that are running and we got people are running up here in this next couple of years. I would really ask you guys to really put in, even as you're out talking with people and meeting with people and, your campaigns the need and the importance of what sales tax looks like for our community because we're struggling in that area and it needs to be a very strong for the people coming in on how we can help repair that and make sure we have a robust community community moving forward because that is what pays the bills and if we if that's not so paying the bills then you got to go to other sources and that are a lot tougher, I guess a tougher pill to swallow, I would say. So that being said, I would encourage anybody who has any other questions or wants to make any other statements.

At the end of the day, we need to increase revenue or cut recurring costs. At the end of the day, it's that simple, and that's what we have to do. So I pray to God that revenue comes in, but if not, we have to cut recurring costs. It's the only way to see our way to the growth, just like a business. Right, Jim?

There we go.

To a point, you're correct there, but you have to remember that businesses are finite, whereas the city's finite, but it's a hell of a lot more infinite than a business that way. The big thing, as Councilman Arns noted, we've had these TIF things that are out there that are gonna terminate. They're gonna come online. We're gonna get that. We also have these economic development things that are gonna happen because of building infrastructure. You know, there's the suggestion that the infrastructure that's going to occur at the sewage plant is driven by just a particular business, which is inaccurate because I think the studies, as Steve would be able to attest to, or if you go look back at the other studies, we were going to run out of safe capacity and we're going to end up

doing a ticket item all on our own where we, right now we have the potential of a $38 million influx of funds coming in to help offset that. And along with that then comes the potential for other future, you know, businesses don't come if you don't have the infrastructure, whether it's sewer, whether it's water, or whether it's gas. We found that out many years ago when we looked at the gas situation. We can't put our head in the ground like an ostrich.

No, I was intentional when I said reoccurring costs. When it comes to building infrastructure or investing the citizens' money in growth, I believe those are costs that we have to be available to invest in. It's a recurring cost that's going to hurt us.

All right. That being said, anybody else? Well, I want to thank everybody for the hard work putting this together and presenting that in front of the council. I thank the council for your patience in dealing with all the meetings that we called for you to look through this budget. Thank you for the staff that showed up today and the citizens that are here today that have sat through all these meetings also. So that being said, I'll close this hearing. And I'm sorry, close the hearing and we will adjourn at 628.