City Council - Regular Meeting

plenty of we set aside plenty of time for Q&A. So that is on purpose. uh we we this to be a a good discussion workshopping this this subject and uh of course um LRB does have a bunch of you know slides and data to to present and go over but they also have the spreadsheets that back up this data and they and uh they can take us through a an interactive process too if if you want to dive deeper on to any particular item that they share with us.

Right. Thank you. I do need to um mention we need to excuse council member Kilpac. He will not be here today, but everyone else is here. All right. Lauren Fred, are you ready? I am ready. Uh will you welcome. Will you be able to see my screen if I share it? Well, that's a good question. We will find out. Share. It's in progress.

Then request. Okay. Multiple presenters can share. All right. Can you see my screen now? Yes. Yes. Oh, that's not the that's not the It should say city of Oram property tax discussion. Oh yes, yes. Yes.

Excellent. Okay. So, um, no budget or finance discussion would be complete without a discussion of property taxes, right? I'm sure you were all thinking that. Um, first of all, thank you for allowing Fred and I to uh, you know, continue to work with the city in this capacity. Um, ORM has been a client of mine since I was as green as grass in this industry, even before I started LRB. So, a part of my heart and soul is in Orum. And um my kids can tell you as I as we drive through the city and come to events, I'm like, "Oh, we financed that. I financed that." That was every time I meet someone new, I'm like, "What city are you from?" And I tell, "Oh, we finance the the rec center." And people were raving about it, by the way. So, um uh we love working with you and appreciate the opportunity. So, um one of the and I want to thank you for allowing me I think in Bren's ideal world, I would, you know, not be coming first with a, you know, hit him out of the the shoot with uh a property tax discussion, but I have a doctor's appointment this afternoon that I really really did not want to cancel. And so, we've um reorganized things a little bit differently. So, um this is probably the least fun um uh part of the discussion, and that is about property taxes. We've had some of this discussion before at your retreat. I have paired it down. Uh but just want to remind everyone uh you know some of the things that you need to be cognizant of as well as the very unfortunate fact that the legislature uh decided in their infinite wisdom to make some changes to um you know what you have to do if you are going to uh seek to raise your property taxes. Um, I could pontificate for hours about how angry and frustrated I am about what they've dreamt up, but uh, nonetheless, we all have to comply with it. But I'll

I'll talk about it here a little while later. So again, by way of reminder, property tax uh process in Utah is designed so that you have substantially the same dollar revenue from year to year, regardless of whether or not property value of existing structures is going up or down. It's designed on a collective basis. So, um you know, if a uh you know, a neighbor does a big remodel and the other one's house partly falls down, um it really is on a on a global basis of the taxable value in the city and the tax rate will generally adjust downward unless the local government um you know takes action as I would you know implore you again to uh strongly consider even under the new uh rules. rules that are that are being imposed. Um because the property tax rate as shown here uh does not account for inflationary increases that you get on the expense side. It's like saying, "Okay, your allowance in, you know, let's see, when was I 10 and buying candy? Your allowance in the 1970s is, you know, $5." And your allowance today is $5. Now, go and buy the same fill-in-theblank candy bar, comic book, whatever it was. I I couldn't do that with $5 today. But that is what our property tax structure is um is set up to do. I have heard people say that when the legislation was initially put in place to hold um the revenues level that they wanted, you know, they did it so that governments would be transparent and people would know that you're raising the rate. And what has

happened um with many many cities is what ORM has done. they just let the rate fall fall fall um and uh you know except for new construction you don't really get to capture um um any additional revenues. So this graph this is ORM city's tax rate from 2016 to today. What I want you to really think about, we'll I'll talk about some of the reasons why, is um you know, seeking to maintain um you know the the rate uh so that you can capture some of what you need to uh in in terms of inflationary costs. So here we go. This graph. So again going to go back here. This is the property tax rate goes down, down, down, down because your taxable value is going up as new uh new construction occurs. This graph shows property tax revenues increasing. And so you might say, well, Lara, rates gone down, but look, we're we, you know, we were collecting 10 million back in 2015 and we're now maybe at 11 and change, whatever that is. But you've got to remember that you're capturing that because of this growth in um the growth in revenues is tied to new construction. So you do get to capture oh you know XYZ business built a new office building. You do get to capture that when that that tax rate's being set because it comes with a need to provide additional services. You build a new you know someone built a new Walmart. Yay. get the the value, but you also get, oh, we're going to have to police that for shoplifting or whatever calls you have to go out there.

So, as a city is nearing or at buildout, I know you probably, you know, starting to see some um vertical, you know, stacked construction, but as you are nearing buildout, relying on property tax revenue from new growth, it's just not sustainable. Again, Fred's going to talk to you about sustainability planning. And if you're trying to rely on um you know new growth, new Woodbury developments, new carve lots, whatever, it's just not sustainable when you a have added expenses when new businesses come in and new homes come in and you have um um added uh reduced um you know total revenues. So I'm going to jump back to this one here. My beat the horse dead here. Goal is to maintain my opinion the goal of cities should seek to at least maintain increase if and where necessary above your you know current certified rate but to at least maintain your um current certified rate. So um again I showed this at your treat. I'll do it very quickly here so that you can see cities that have gone through uh the process to increase their rate. So, anything where it's green, a a city has gone through a process to increase their rate above the the previous year's certified rate because unless they've had no growth um um and no increase in property values, which that hasn't happened in a long time, these rates just naturally fall. like um you know yours down here in bold and Salem's just they just keep naturally falling. Um this shows a

three-year average of these um selected cities in Utah County. And um of those that we've selected um and granted I will say you know Vineyard is the the high tax rate in in Utah County because uh something like 75% of their property is in an RDA. So they're really only capturing their real full property tax off of, you know, 25% of of the city and then the share they get from the RDA. But, you know, your tax rate is is very very low. I know that if you seek to raise tax rates, people generally come with their pitchforks and all the anger that they can muster. And you know, if you choose to go ahead with that, um, I'm happy to participate in education of citizens because I don't think your average citizen understands this. I think your average citizen would say, "Well, my taxes go up every year." And that may be, but they haven't gone up every year because of Orum, right? If their house used to be worth 300 and it's now worth500 and you used to collect $300 and their house is now worth 500,000, you're still collecting the same old $300 from them. Um, school district may have increased. County may have increased, water district may have increased. So, their total tax bill may have increased, but ORM's not getting any of that. So, had you held So, let's go back here. 2019, the tax rate 001260. Stick with me here. That was clear back here 9 2019. Had you maintained that tax rate just every year readopt um you know to bring it up to that flat a flat tax rate the city would be um collecting5 million more dollars a year than it is today. So

this is my opinion is like your lost buying power because things are still more and more expensive. Something else you need to think about in terms of you know your revenue mix um as you're thinking about you know property tax increases is your property tax revenues as a portion of the whole of ORM's revenues has continued to dwindle. It used to be, you know, rounded, we'll call it 49%, rounded here, um, oh no, sorry, reading sales tax. Rounded here, 21% rounded here. Property taxes now make up about 17%. And that decline um in how much property tax revenues are making up of your total revenue mix is um important from a stability perspective. So you think about you as a government. What can you control and what can't you control? You can't control prices of you know goods. You can't control um you know you can't make people shop. You can't make them buy expensive steaks if they want to buy hot dogs. Um so this um property tax is kind of the only thing that you can rely on. It's what's you know consistent that you can to a very large degree control because you can control the rate. So as this the property tax has declined as a percentage of your um total it should be frankly of a concern to you in in terms of being able to maintain the level of service that you have provided in the past. So I will tell you it is a concern rating agencies and investors because their first question when you're this reliant on sales tax you know 48 49% is

what's going to happen in a recession I mean they all stress it back to the 0809 you know whatever they call that wasn't a recession the almost recession um um uh they all you know put that in as as their stress case scenario when we go to get a rating and they know that sales tax revenues will decline in in a recession. Um, again, we've talked about, you know, the city needing to be mindful of what you can and can't control and you can control the the property tax rate. So, I know because I've, you know, been in many city council meetings when they've, you know, wanted to raise taxes and what do citizens say? Well, cut expenses, cut expenses. And then we start saying, "Okay, well, what services don't you want? Do you want less police? Do you want less fire?" "No, no, no. We I'll pick some mow the parks less often or something like that, right?" So there is a practical limit to how you can control expenses and most everybody kind of conveniently forgets that most local governments so this this is true of you of South Jordan of Ogden whoever most local governments budgets their general fund budgets about 65 to 75% generally is made up of salaries ies, wages and benefits. So you know these idea of cutting you know of non-s salary items like oh we will you know not put new light bulbs in the library or whatever right so it's not a salary we'll really find ways to save on whatever you know is a non salary thing chances are they're not those things are not going to move the

needle much I believe because ORM has seen that um you know um not very large increase in your property tax revenues um an added um you know citizens and businesses that you need to serve. Um, I think Gorm's squeezed about as much blood out of the turnup historically as it can without cutting salaries and wages which will have a direct impact on your service levels whether that's again police, fire, crossing guards and I don't know what it would be but it's when you start talking about that to citizens of okay are you okay with you know 10 less officers a year because great there's a there's a good cut for us right so you need to be mindful of if if the push is going to be, oh, we got to tighten our belt some more. We got to get more efficient. Um, that what it's really going to come down to is what services do you want to cut staff from? Um, from March of 25 to March of 26, um, CPI has gone up by 3.3%. Uh, the next release won't occur until almost the middle of May. Um the index for energy has risen as you can all imagine because you go to the the gas station and buy gas by uh 10.9% which was largely driven by this 21.2% increase in the index for gasoline. And when you think about that from a city's perspective, think about every vehicle that's a city vehicle that is rolling on your streets. police, fire, roads maintenance, sweepers, I can, you know, whatever. Those trucks that vacuum out the sewers, they all use gas. And this year, that's going to go up a lot, right? So, back to, okay, what can we and can't we control? Can you cut those costs? Not without cutting services,

right? um from December of last year to uh December 24, December 25, wages increased by 3.4% which is uh slightly higher than even um CPI. I'm going to get on my soap box just a little bit related to the state. One of my huge frustrations um when big brother state comes in and says, "Oh, you city have to do your property tax increase this way because you know we get complaints from citizens they don't like property taxes." Well, the state doesn't have to deal with what you deal with related to that falling revenue source. So, two of the largest revenues to the state are sales tax, which you benefit from. Think about poor school districts that don't get that, right? You at least benefit from when prices go up, people pay more and you collect more sales tax until prices go up too high and they quit shopping. The state benefits from income taxes, which should be top of mind for all of us since they're due tomorrow. So as inflation goes along, so those you know 3.4% a year and five and nine when it was really bad, right? What that does is it drives salary increases.

I earn more money. I pay more income tax. So their revenue streams are a little bit more directly tied to capture the benefits, you know, of inflation where your property tax is not. It ignores inflation entirely. It's why I really really hate when they come down with the you have to do it this way because they don't do anything like that. Okay. Off my soap box. Okay. Um now we'll look at the ability and willingness to raise revenues um when necessary except for property tax rates. All other rates, sales, franchise fees, everything else that you can um uh you can control is at the maximum rate. Your sales tax is at the maximum rate. Your franchise fee rates at the maximum rate. So again, you don't have any ability to say, "Oh, we're just going to put on a new sales tax. I do some work in Arizona." And they do have that ability. And it's sometimes a very wackadoo tax structure. I mean, they there's like 30 different items and each of them have a different sales tax. It's really wild. I don't know how they control it, but in Utah, you don't have that. So, the only element that you can really control is that property tax rate.

Okay. So, the recent legislation um uh is are these two uh House bill and Senate bills. And um I've I've put in here again it's not anything you as um you know city council will need to go oh we've got to do this on you know June 22nd. I mean it's something um your uh you know great staff and recorder will will take care of. But if you're going to seek to um raise a property taxes there um are are certain deadlines that you have to give notice to the county auditor and tax commission. you have to um you know receive whatever the certified tax rate is going to be. You know, if you don't do anything, we don't have that yet. Um then if you're going to seek to adopt a new rate, you have to um um put a notice of hearing out. They put some new requirements in in that regard. Has to be at least 10 days after this notice evaluation. uh at least 14 days before the hearing, you have to hold the tax increase hearing and no other general business meetings of the city can be held the same day. So, you can't say, "Oh, we need to take action on, you know, fixing whatever at the park." Nope. You will hold a hearing on taxes. It has to be at 6:00 p.m. or later. you have to allow for reasonable um um time for people to stand up and respond without limiting them too much because then they feel like that's unfair. And you have to do all of that before September 1st and then within 7 days after you do adopt a new rate, you have to notify the the state and the county. So these requirements down here are some of the things that I'm really dialed up about. I won't quantificate anymore. But you have to state that you're considering a tax rate. That doesn't

give me any concern. The approximate dollar amount of the revenue increase doesn't give me any, you know, great concern. Um, percentage public hearing, and this is the one that I just want to go berserk over. For each department of the city whose budget would be affected by this um you have to outline the budget increase or decrease to the department and um articulate the operational impact to the department if the city approves or does not approve the increase. So in the olden days in 2025 you could have said we are going to increase our tax rate by 5% that'll generate whatever you know dollars are making up a number half million dollars and that just you know you hold the hearings people come complain but you now have that money um you know if it gets approved that money will then come into your general fund without having to effectively I mean line iteming is a little bit of an overstretch but it's almost I mean Brandon's is going to have to um you know put forth what you're going to do with this money. And the state has made it amply clear that they intend to um follow up and make sure that that's reflected in um your budgets and your your actual um audits at the end of the year. I think it's crazy and unfair, but nonetheless, that's what they're doing. Um uh you have certain advertising uh requirements um similar to what we talked about before. It has to be on your website, has to be published in utileleals.com. And I did note that the geo bond rate will not be will still not be included in the percentage increase. That seems to be one one little nice small bone that they they threw to you. So, uh, the recent legislation does require the that you identify the need and use of those revenues. And um you

know just to bring it home I think the best practice with the city is to seek to maintain your current tax rate and identify how you're going to do that. Uh they don't really limit it. I I think you could say no we're going to do is we're going to identify this to help us cover for in costes costs of of inflation on health insurance or gasoline whatever. The challenge is then, you know, um, Brandon and your finance staff have to be able to figure out how to document that. Um, so there you go. Any questions related to taxes specifically? I'll be turning it over to Fred to really get into the meat of the financial sustainability plan. Again, the model is such that um, you know, he can um, you know, uh, adjust it. You can do the the whatifs. what if we, you know, lose 10 police officers? What if we add 10 police officers? Um, you know, within some limits, uh, he can show you, uh, how what what those impacts will be.

Thank you, council. You have any questions for Laura about what she's presented? Just are we going to have access to these documents sometime soon? So that presentation I already have. So I can send that out today. That would be good. Thank you, Laura. boarding.

Can I ask a question? Yes. Hey, Laura. Yes. Can you hear me? Yep. seen that legislation as it was going through the different revisions and we were attending LPC and and they were viewing those with us. Um there was conversation about remodeling being counted as new growth. Did that end up in the final version? Do you know anything about that? I

I don't know, but I could certainly find out. In my opinion, it should have already been being counted that way. Um, but I will I will find out. As as someone who has remodeled my home now twice, um, you know, time will tell because I don't have this year's tax notice yet, but um um, when I remodeled my house the first time, I mean, I go through the proper channels, I hire contractor, we get building permits with the city, and um, when I did my first remodel, they didn't pick up any of it. I mean, they didn't know whether I had spent $100,000 or 10.

So, in our finance conference the other day, my understanding from that was if the uh any remodel expands the square footage of the home, that would count. If it is remodeling within the existing square footage of the structure, it would not. So where we're at a position where we will we're seeing revitalization. I mean quite frankly my whole neighborhood got new roofs and new sighting from that hell storm.

So is this something that would be beneficial for us to then approach our legislators in order to help our budgeting our piece of the pie? certainly would as my understanding of what would count towards an improvement to the home and and obviously change its its value which again it's all just a change in value and so that would count as new if we can get that to count as new growth I think that is their their logic is that's not new growth right that's simply keeping what is already there there so I think that's their argument and and that would probably end up being a tough uphill battle. Um, so I'll be honest, I do sort of understand what they were saying as far as obviously if you're adding square footage to the structure, if you're you're adding growth to that particular value. So value in and of itself value owned above what that base is, right? because just changing the value doesn't really that only matters to that one taxpayer. It doesn't affect us in the total.

So if we I mean to me we should join with other legacy communities and get credit as we're built out. You know maybe we don't want to go up. Maybe we're where we are and we're happy here and we will pay for what we have. But as people improve and keep our community vibrant, I would think we would should be rewarded by that. Um, here's my question though. When did they change this? Remind me that the year that we could have the stable budget that it's been that long. Has it been a really long time?

Yeah. Long, long time. They where they set they fixed so that you had the same dollar amount of revenue coming in. That's why your tax rate declines as total property values increase. So again, my home goes from, you know, 500,000 to 600,000 just because the market's gotten better. you, the city, school district, county, none of you will get any benefit from me off of that $100,000 in increased value because what will happen is the tax rate adjusts down so that in total you collect the same dollar amount that you did the previous year based on the budget we submit. Correct. Or based we don't submit they they tell us

they dictate to you. Yes. The school does the school district submit a budget? uh school district goes in and sets the county tells them this is what your certified tax rate is do you want to go through TNT and change that certified tax rate okay up or down obviously very rarely goes down so it's a good time to have that conversation as the environment in our cities especially us on the in the foot of the mountains has changed

now we're hell do we have those kind of conversations with our legislators. This would be I I get it. It's an uphill thing, but maybe those convers we should start those conversations if we want to be seen as being different right now. We're not the high growth anymore. We're we're just not going to get there because we're built out. And maybe our state needs to respond come up with ways to respond to communities on the um foothills of the mountains that are the legacy communities here. I disagree. Thank you. Okay. Thank you. Comments or questions, council? All right. Turn it over to you.

Thank you.

Um, one other element to consider as you're talking about discussions with legislators, policy makers is uh the perspective of those policies. So um the certified tax rate calculation truth and taxation process is a is a way to do that to address um fluctuations and valuations and uh revenue generation. But I would argue from the perspective of the legislature, it's a it's a proactive or tax protective approach, meaning you as a legislative body have to take action versus what you're describing, which is an automatic adjustment potentially based on appreciation of property. So depending on your perspective, those could be, you know, those perspectives could be good or bad, right, on what tool you use here. But as Lara was describing, uh there is protection for you as an NC that you don't lose revenue. you just don't gain revenue other than new growth. So you're not going to uh see the the benefit of appreciation but you don't suffer appreciation and

well in a way we do because of inflation that was her point

that she well I I have some slides that will uh highlight that a little bit more and then we'll talk about um our purpose relative to this model. We'll go through the modeling assumptions that I've baked into this um and it's a large spreadsheet um that we bring everything together relative to revenues and expenses and I can show you that then we'll talk about the baseline scenario and um this is where you know graphs are a little scary and um this is typically the outcome when we look at these factors and the and inflationary pressures and level of service changes. Then we'll talk about what tools we have to use in the context of this model. Uh and we can play around with those scenarios if we if you'd like to or if you want to just talk highle scenarios that you'd like me to go work through with staff, we can we can do that as well. All righty. Um our our purpose again is addressing sustainability and how we evaluate sustainability is from these three metrics here. We look uh well sustainability is is um a reflection of efficiency or uh cost reduction and or revenue generation. Our model focuses on this last element which is revenue generation. But we look to staff department heads to help us understand the first two buckets which is efficiency. how how have we been efficient in uh the levels of service and resources that we manage and is there been any cost reduction or future cost reduction that we can program into the model. So uh for instance is we may receive um input for a specific budget line item that says we think that cost could go down over time because of x y and z and we can program that into the model and in this exercise we're always uh balancing um specificity with uh ease of administration right so these models can

get very complex and so we have to balance that and determine what are the primary drivers in this exercise what can be assumed away, what do we need to focus on? Um, so while we have assumptions and we've programmed a model that can be manipulated, we could say, well, we think we need to adjust something here and we can build that into the model. So, there's a lot of flexibility on how we we build this and what areas we focus on. But again, I want to highlight that our model when we look at sustainability, uh the efficiency and cost reduction often come to us as inputs or feedback from staff and then we're manipulating the model to determine how much revenue do we need to to uh mitigate any shortfalls or do we go back to efficiency and cost reduction and change the assumptions to get us to where we need to be. So, uh this is the process that we go through. We look at historic budget data and information that we receive uh from staff. That is the uh foundation for the model. We then meet with department heads to discuss um unfunded needs, level of service issues, um changes in those expenditure line items, trends that may exist and how we might want to interpret those trends. That allows us to create a baseline model that we then go back and review those assumptions with staff. Say, "Okay, here's what we thought you said. is that what you actually said and help us review all the spreadsheets here in this in this model. We then recalibrate the model based on that input and then we work towards adoption. uh we can also have a circular equation in this and that we get to the reccalibration of the model and we have to go back to staff say hey this isn't looking like what it should look like and we get your input and uh legislative uh directive may say hey go back to the drawing board you need to fix all this I don't you know however you need to do that just fix it kind of thing so there can be a circular equation in this it's not um perfectly linear that once we get to finalization

that it's done um in addition entities will review this uh on an annual basis or every couple of years to to make sure that they're accounting for changes and assumptions. All righty. So again, we look at historic uh we're focused on the general fund here. This is an exercise that is similar to when you've evaluated your utility rates. essentially determining what our historic uh general fund revenues and expenditures look like, what's our taxable value trends, uh what are our property tax revenues look like and other revenues. And then we make projections with that inflationary component and say, okay, let's program inflation rather than looking at a singular year as it relates to budgeting. What happens if we push that out several years and um what does a trend line look like? As I mentioned, we also then collect uh new or unfunded mandates from a department head perspective. So this is essentially saying tell us what you need that's over and above the existing budget line item expense. Uh so that may be an addition to an an existing expenditure line item or it may be a allgether new expense that doesn't exist in the budget. We get all of that from department heads and there's a lot of again information that goes in the spreadsheet that we summarize and then add it to this model. So that's layered on top of that inflationary variable. So uh that's another metric that we need to think about when we talk about sustainability. Laura really stressed on uh inflationary pressure, but these unfunded mandates, level of service changes are also a pressure point that is applied uh when you talk about the general fund and how do we manage that. Uh so our model pulls that in. We isolate that as a separate expense line item so that we can see what that's doing and we can also turn it off in

total if we need to or want to. Uh so then we look at uh deficits in the model saying okay what happens uh when we apply all of this data the projections on on revenue and expenses and our other elements within the budget and then we go through the decision-m process. What do we do about it? Go again going back to the elements of sustainability. Do we become more efficient, reduce costs or do we raise revenue or do we do something a little bit of all of that? Right? And that's typically what needs to happen. All righty. So, uh, we've highlighted this, um, again, changes in revenue. We've talked about your issues that as you become a a builtout community, your revenue trends might change as you look to the future. So, the idea of sales tax revenue continuing to grow at a at a certain percentage may not be realistic or may not want to count on that that revenue line item. So, the the fluctuations in revenue are an item that we need to think about. Laura touched on inflation. Right now we're uh we well we experienced some high inflation in previous years that cooled off and then we're now seeing some inflationary pressure as a result of uh national um issues that are affecting some key metrics of inflation. So that could pick back up. You can see inflation becoming more pronounced. Uh the onetime expenses and then those level of service use issues are all these elements that we're feeding into the model. And we talk about level of service issues. This can be a positive or a or a debit or a credit into this model, right? We could say, hey, we're going to pull back on a level of service, meaning we don't want to we don't want to provide a that high of a level of service, which would result in an expenditure decrease. Or we may say we actually want to do more than what we're providing, in which case we're adding to that that cost. or we they may say when we visited with

staff said if we want to just keep what we have this is what we think we need with regards to new or additional expense. So that's that's that bucket. All righty. Uh any questions on that? I I don't want to keep chugging along without opportunities to speak to have dialogue. Any any feedback there? A lot of it's stuff we've discussed, but thank you.

Um, all righty. So, let's start talking about some of the specifics of this model. Um, we've used 2019 through 2024 actuals that we've pulled from your budget documents. So, every year when Brand is working through the budget documents, uh, there's information relative to historic actuals that are provided as part of that. So, we look back and get all that information and bring it into the model. Um in that process there's obviously changes uh over time relative to reporting how you budget the software you use for budgeting and that creates some challenges as we aggregate data and put it into this model. We've done our best to account for that uh with Brandon's help say what what should be in this model as we focus on the general fund alone. There's there are transfers that go out of the general fund enterprise funds that are all providing services. We're focused on the general fund and what it provides and pushing everything else away from the model. Uh we're bringing in 2025 projected actuals and our 2026 budget numbers. Um we then project that to through 2041, but we focus on uh a 5-year planning horizon when it comes to actual policy discussion. And that's really based on the fact that, you know, as you go uh farther and farther along in time relative to our understanding of assumptions, that gets murkier and murkier, right? Our crystal ball is just going to get really foggy um as you get too far out there. So we don't want to necessarily make policy decisions based on those out years. But it does help us understand trends and say okay for example if we had a huge capital investment that was coming into the tenant we could program that in the model and see if we want to make any um uh policy decisions now to help mitigate that that issue. I'm working with several uh solid waste utility or solid waste districts and they have some of this issue where their closure uh they're uh the closure of those facilities are happening in in 2039

2040. So I want to start thinking about how they plan for that now making incremental changes rather than huge changes when we get to 2035 example. So uh the other thing I wanted to highlight here is the model is based off budgeted figures. So in any uh budgeting process uh across the state of Utah there is a an exercise to ensure that your um to to be conservative uh we may underp project revenues a little bit and overp project expenses a little bit right so that when we get to reality we don't get into trouble. Well, that this model perpetuates that, right? We're taking your budgeted figures and applying assumptions to those figures and then adding all those other uh elements that we discussed relative to level of service uh inflation um and unfunded mandates on top of that. So, that's something to think about as we talk about uh impacts and uh the trends within the general fund. In addition, uh we we start with a $25 million fund balance of this is unrestricted funds that we're saying, "Hey, this is available to do with what what we will relative to dedicate. You could dedicate it to operations, which we don't typically recommend. You can fund capital improvements, whatever. It's unrestricted." So, that's our starting point. That's what we're going to measure against our yard stick when we when we look at um the trend of our cash at the you know at the end of each fiscal year. We've also assumed uh that there would be a tough administrative contribution. Uh we know that's not finalized uh but we did make some assumptions relative to some revenue that might come into the mall relative to that. starting off at about 250,000 and then getting up to 500,000 in year five as that becomes uh

more refined than then we can make assumptions or you can make assumptions. It's tough. Oh, sorry. Transportation utility fee. Okay. Thank you.

So, you've probably noticed uh with the legislature that there's been a a concentration on this element relative to what you can and cannot do. And in this legislative session, they they clearly articulated what you can do with the transportation utility fee and put some very detailed uh guardrails on that which I think is very beneficial. Um uh so so it uh can be used as a resource within those parameters. Uh so many entities are going through the transportation utility fee exercise and wanting to establish that fee. We're also continuing the transfer assumptions relative to um what goes out of the general fund. For example, uh debt service. We're we're perpetuating those transfers and saying, "Hey, yeah, the general fund's going to keep doing that." Um but we did not uh do an analysis of those other funds. So, uh, we're perpetuating, uh, existing trends and with Brandon's input and and, uh, Brandon's input on what we want to assume relative to those transfers just to make sure that we're accounting for that. But you could have, for example, an analysis of, uh, sub funds um, that say, hey, we need to transfer more out of the general fund if we want to keep that sustainable. That has not been done here. So, we're isolating it to the general fund and the services that are covered in the general fund. And then our target relative to our uh fund balances, we're trying to see to um achieve 25% of our revenues as our target. Whatever we collect in general fund revenues, take 25% of that and that's what we'd carry over as a fund balance which has been reduced. Uh previously it was 35% that was paired back to say hey no maybe that's a little too much. So let's let's look at 25% as a as a target there.

Fred, just to clarify, fund unrestricted fund balance is part of our rainy day funds essentially. Yep.

Yeah. So again, that's something you keep uh to um some entities will use it for um budgeting stabilization. For example, if if we had an event like COVID where uh there's substantial challenges relative to revenues and expenses, you call you you draw on that fund balance to get you through that without taking dramatic action in in a period of crisis or we could have a a substantial capital investment that's the general fund needs to contribute to and pull from that. But we reserve it for those unknowns that rainy day fund and and to keep that uh keep that in place. Another benefit is um that also provides you some uh benefit when you go to issue debt and you uh speak with rating agencies and um those types of entities. They'll look at what you have relative to your general fund balance say is that a positive or a negative? Do you have enough there uh relative to what you need? And that would influence your your borrowing cost if you were to uh utilize um the general fund. Now, that's a little different because uh you have multiple revenue resources within your general fund like sales tax revenues versus property tax. So, there's a lot of nuance there, but that that's also a benefit to that that rainy day fund.

And Fred, if I can just clarify for the benefit of the council, uh we'll be talking a little bit more about transportation utility fund and process and study. Chris will be talking about that a little bit later. That being said, um wanted to make sure that you were aware that it was included in this study essentially to show that we we tried to think about this as comprehensively as possible. We talked about impact fees earlier. Is that included in that as well or is that

the impact fees be addressed here? So what we're isolating in this analysis is the general fund portion of those projects. So, if we had a onetime investment that's required, we'd account for impact fees. If that was covering 50% or 80% of the project, let's shave off that cost, exclude it, and only include the remaining percentage in the general fund analysis. So, that's an example of something that's isolated. So, as an example, Jeff expansion of the police station here and the and the remodel here. We take whatever we can from police impact fees to contribute towards it, but obviously the bulk of it is covered from our general fund revenues. So that's the portion that was uh taken into account in this study. All righty. So here's a lot of numbers. Um what this is highlighting is the assumptions and how we pull that into our model. So um this is showing in our model the specific line items that we have identified relative to the revenues that come into the model and the expenses. So the expenses we've highlighted down at the bottom here. But for the majority of the revenues we're assuming uh no growth. We're saying okay they're they're not really going to grow. Uh we are going to assume some growth for example in sales tax revenue. If you recall back to Lara's slides and I'll show you another slide, that is a big chunk of the revenue you receive. And so changes in that line item have a huge impact and um your your sustainabilities. What we saw with regards to sales tax revenues is historically you've had a higher growth here than 3%. But when you look at the last two years of actuals, you're seeing we're seeing a plateau of that where um you could have an instance

where sales tax revenues are not growing. Um even the 3% may be aggressive, right? That you get to essentially your um your limit the the public's limit relative to to buying uh spending and you're not going to see as much growth there unless there's redevelopment, economic development changes, those types of things. ask a stupid question. So, food places, food joints, restaurants, everything. Do we get sales tax or do we get the um tourism whatever tax? You do get sales tax and on some businesses you get both. You'd have a a tourism tax on top of that. Um but yes, all of all of your eating establishments

that goes in our I guess that I mean that goes in our general fund. That's we do not receive that else. Okay. You don't receive the the one extra 1% restaurant tax. We don't get that. Okay. We don't we do get 1% sales tax, right? Yes. There's a sales tax portion that component. We get 1% in our general fund and 1% in the I believe it goes to the county. Yes. To the county. And that's the one that we don't typically get back when we begin. Correct. Yes. Can you tell us what that you talked about that plateau for uh sales tax revenue over the last couple of years. What does that actually look like? What does that mean for us? It means we didn't get 7% that means we got 3%. It means we got 1%.

So yeah, let me see what our I don't need specifics. Just like general trend. One was negative. You say one. I don't remember if that was 24 or five. Um I want to say it was 24. I mean five last year. I want to say it was negative last year.

December to December. 24. So 23 actuals you were at 32 million and then 24 actuals you were 300,000 less than. So you went from from 2022 23 and 24 you hovered around 31.7 to $32 million. So actually 3 years of flat um really no growth in sales tax revenues. Now, prior to that, so when you look at 2019 actuals, you were at $22.7 million taxable sales. And so you you did grow when you when you went from 2019 to 2021 and then to 2022, yes, we were growing. Then 2022 hits and you did not see really any growth in taxable sales. uh through 24 actuals and then we budgeted to be consistent at about $32 million in sales tax revenues and and the same with uh 26. We just did a slight increase in sales tax but really no growth. So we're programming 3% to the model which could be aggressive. It could be that you again plateau and have no growth in taxable sales or as 1% you know that we see this this grow. Um, so what what that highlights again when I do these types of studies because there's so many moving parts in a general fund, so many services that you're providing, the key to me is identifying where does our risk lie? What what factors are we relying on? And is there a risk and is it substantial? Is it minimal? Do we want to do anything about that? Because I'm going to show you slides that are really scary, right, relative to these benchmarks. But that's really intended to help us say what are the risks we're trying to mitigate here? What are the factors influencing sustainability and how do we tackle those problems? We're not going to

tackle everything all at once, but there there's action that we can take to help create sustainability and reduce risk in our model. And that's that's what I how I view it. Again, like any investment port portfolio, our objective is to say, how do we reduce risk and and are what are those risk factors and do we want to take action? So, all righty. Um, okay. So, here we've uh again our primary assumption has to do with sales tax revenues. The other revenues we're keeping pretty constant. Um again there are fluctuations that we've seen um and we can play around with those but franchise tax is in a similar boat here where um you're likely hitting a plateau and we're accounting for that in this in this instance. Um and then on the property tax that that top line item where we see where we show new property tax revenues that that's not a reflection of new growth that's going to happen naturally. Right? So our model accounts for an assumption within the valuation calculation that that assumes some new growth. Every year you get a little bit of new growth in your uh taxable value. What this is saying is over and above that are we going to assume any increase to our revenue generation? Meaning we're going to change our certified tax rate to generate more revenue than what uh the mod or the truth and taxation and certified tax rate process would allow. That's that line item. So, we're saying no, we're the baseline is do nothing with property tax except let let it grow naturally. Let's uh add some revenue with regards to sales tax. Um and then now let's start looking at our expenses. So down here at the bottom uh we've isolated some specific uh variables that we wanted to manipulate.

So for personnel, for example, we're applying a 5% inflationary assumption, which is higher than the CPI that Laura referred to, that hovers around 3 to 3 and 1.5%. You look at other cost indices like a municipal cost index or uh uh um construction cost index, those are similar. We see about a 3 to three and a half. Maybe the construction cost index is a little bit higher. Those are national trends. uh when you look locally your construction cost index can be higher than that. Um but here what we're saying is we assume that this specific specific line item is going to grow at a higher rate than general inflation which is typical. Uh usually personnel um there is higher pressure and that's driven by not only salary cost but the cost of benefits over time that that just gets more costly. There's just a lot of pressure there. Um then we have assumptions relative to uh public safety, our sworn officers. Um this is information provided by staff to say hey that's going to in order to keep up with the market and pressure to retain um officers and keep the level of service. Uh there's a a need to um have a higher growth on that side. This is also fairly common. Um I've been in many um meetings with entities where one of their primary fears is just losing officers um and firefighters to other locations essentially training them and then letting them go somewhere else where they get more money. There's just a lot of pressure there relative to that uh service operation. We also had input relative to legal to have a little bit higher growth on that side. Um uh so you can see here based on input uh we're able to isolate specific line items and apply an inflationary

pressure and then generally speaking uh outside of those specifics we apply again that 3% operational expenditure growth. So any line item that wasn't specifically identified we apply just that general inflationary number and grow that. Uh so those are the assumptions there uh as it relates to this. Yeah. Just before we move on too far from uh revenue assumptions, could you or Brandon speak to the utopia rebate uh figure uh which is 7% there? Yes. Uh I mean I

Yeah. So that uh basically Utopia has has grown and captured more of the market and their infrastructure is going past um essentially all the addresses within its member cities now. And so that percentage that we assumed in there has been based off of conversations with Utopia and and really kind of looking at the last handful of years they've increased what they pay back to the city. So the city still pays um more towards the UT utopia debt than we receive. I think that net negative is about roughly around two and a half million dollars a year. Um, but every indication we get from Utopia and Roger Timberman, the director there, is that that things are looking like they will continue to narrow that gap every year um until well, right now they're saying that they think that they'll be able to fully cover that uh debt impact by about the time that their debt falls off. But they're also keeping on their books that liability. So they'll continue to pay us back uh into the future.

The current falls off 2039, right? And so 2040. Okay. 2040 or fiscal 20. Yes. Fiscal. There's a moment in time where the amount we pay and the amount we get back break even. break even and then we start receiving more money. And about what year do we think that's going to be break even?

They say no later than 2040. Um, but I've heard I've heard of projections as as aggressive as in about seven years. So it just depends if their if their projections are aggressive or not and or if they just stay on the trend that they have been for the last handful of years. So with the 7% that we're just putting that assumption in the model, but that 7% is off of two and a half million. Is that what you said? The growth it's growth what we receive which I think we're at about 1 million or 1.1. I do have a slide on that in my presentation.

I just wanted to get the scale. We're talking about less than $100,000. Yes. Yeah. I show your your um rebate is 1.1 and then it grows to one and a half within the 5year based on that 7% increase. Whereas if I look at the um see our transfer is that would that be the offsetting cost utopia pledge transfer 3.3 yeah it goes up that's

yes yep so we have it at 3.6 in the 26 and that grows only by 2% so within the five years there's a small number in the Yes, percentage looks big, number is not as small and it's nothing but I mean it can it's only going to get better hopefully. Yes. So

yeah, every again because because they're going in front of every address now where before they weren't, their market is bigger and they've been even with that increasing their market capture from year and they're right at about 40% of of ORUM residents uh use the Utopia 5 network. Sorry to back you up. If there was anything else on I did a question. Yes. Go just on the senior citizens operational expenditure. That's a why is it 10%. Can you just help class understand that a little bit? My notes. Um,

so usually this is just again input from staff on um if they felt we needed to have more increase than just inflationary increase to maintain the level of service that is provided. So essentially saying we're already too skinny and we need more than just 3% in our expense growth rate. Uh so that's where we would would have applied that say hey okay let's program that 10%. So our questions to staff would centered on um really those buckets of of impact saying okay is inflationary pressure sufficient for what you're providing? And if they said yes then we'd apply the 3%. if they said no. In this case, senior citizens saying saying no, we need we need more. We're already too skinny and and we think our expenses need to grow at a higher rate and that's what this represents.

That looks like a big number, but in terms of the overall impact on the budget, it could be very very small. Yes. Same same thing. The scale is small. Is that Oh, well, and I'll but I'll also say that uh our senior citizen center is also it's a it's a regional draw. So because it's so successful, because we have so much programming, we get more people that come in. And then we also have um internalized the the food preparation and most most other senior centers don't do that. Now, that's a higher level of service. Residents get better food. Um but, you know, there's there's a cost to that operationally.

It might also be reasonable to assume that over time we will have more seniors. bunch of baby boomers coming. We're all getting up there. It also might be a factor too of in the '9s we built that building. We've done pretty good job of maintaining it, but we suspect that that'll be one of our older buildings that may need some more attention relative to other buildings moving forward. And I guess that was going to be my question. Is there a syncing fund that we're using for um anticipated capital expenses through that? Is that part of it or not? Is that purely operations? Yes, that that 10% is operations.

So no syncing fund. It's not the syncing. Okay. So it's not capital replacement for there's just our fund balance which you you've seen us come with some budget amendments killers porings. Okay. That's right. So that's not you that are using some of that. So and I don't think in our onetime expense we have anything related to the center. So no I mean this ne the next slide it'll talk about that but yeah there's no we have done some significant improvements. We have two years.

Any other questions on this slide? So the capital expenditure, average annual growth, that's really to capture the difference between those indices relative to operational cost versus capital cost. Typically your construction cost index is higher. This wouldn't reflect um again probably from 20 uh 19 to 2023 24 there was huge inflationary pressure relative to um construction costs within Utah. So this is more of an average. So if we saw if if there was a substantial inflationary pressure this I'd say hey that's something you can think about right that up but right now the model is intended to cover at least average inflationary assumptions and see what happens in the model when we again lay off each other

and I'm sorry to be that person. You got about 20 minutes. Okay. Well, stop asking question.

No, no, no. We need to ask questions. And uh yeah due to the complexity of this again the idea here is to get feedback and we can iterate on this exercise. You know this this model is supposed to be lineage. All righty. Uh let's let's talk about some of the um new or unfunded one-time expenses and the operational expenses. Here shows you the totals that we're bringing into the model. So dollar-wise, you know, for my budget, these are huge numbers, right? I would love to have this in my bank account before a capital project list. I mean, we see projects and hundreds of millions of dollars, right? So, um but but we are including uh one-time expenses that the general fund uh is is intended to cover in this model. And notable projects include uh park uh construction, renovations, the fire station, as Bren mentioned, there's some other uh one-time expenses from other departments. public safety that we're bringing into the analysis. Um these again in the model are programmed as a singular occurrence. So we're not um we need to try to cover these expenses, but we're also using the the idea is to potentially use the fund balance to help smooth that out. Right? the the bigger issue as it relates to property taxes and your revenue generation is ongoing expenses and trying to say what is the new trend relative to cost and do we need to change our revenue projections to to cover that but we do have onetime expenses here's an illustration of the ongoing expense and this is cumulative so what happens with ongoing is once we layer it in the model it stays in the model and we inflate that while adding future years ongoing expense on top of that. So that dollar can increase pretty quickly which is what you see here when we asked from the departments tell us

everything you know um this is the outcome of that we said what FTEES new uh full-time equivalent positions would you need new uh operational elements supplies uh anything relative to your budget infusion of additional uh operating costs uh into a budget line item tell us everything. And so that exercise we we spent several weeks back and forth uh evaluating that and by 2032 the cumulative impact of those uh requests, level of service uh issues, unfunded mandates come to about $6.5 million. So that's on top of again inflation to your base expense that we reviewed on that previous slide. those those assumptions relative to inflation. We're also adding uh up to $6 million in 2032 and that will continue to grow. So the same inflationary pre pressure that is applied to your base is applied to any new expense that we bring into the model. Um so while um you know your return on investment is is a positive that compounding effect is very positive the reverse applies as it relates to expense and inflation. is compounding and it can hurt over time because that continues to grow. That further stresses that that need to evaluate revenue resources. How do we mitigate inflationary pressure? Because the compounding effect can be very detrimental if left unchecked. We get to a point where entities say we need a 50% tax increase because of all this pressure that we've let fester essentially. We we haven't looked at. So we we try to avoid that. All righty. Laura showed a slide like this. We've isolated to just the general fund uh relative to budgetary figures. This shows less of a decrease on your property tax, right? So, um going from

11% down to 10%. It shows uh an increase in reliance on sales tax. So, the similar concept here that we're using the uh growth in a specific revenue line item to support uh expenditure growth. So we have to watch that. The the other issue here that I just kind of screamed to me as I looked at these uh charts is again proportionality. I do a lot of work in impact fees, cost of service studies and proportionality is a big component of that. So understanding proportionality and this these charts is also critical. So here you're relying on one stream of revenue or or heavily reliant on one stream of revenue that sales tax bucket. So again that that could cause some concern especially if that uh changes over time. We also wanted to highlight uh the expenditure growth within the general fund from 2019 to 2026 showing your expenses um plateauing out here. This to me is is really focusing on efficiency but the other metrics that we've talked about that are a little difficult more difficult for us to quantify but showing that the city is is really trying to keep uh those expenses matched to that revenue stream and you can see that plateauing effect happening on the expense side depending on your perspective that's it can be a positive and negative. um as a taxpayer I'd look at that as positive right our expenses are are um are being controlled from a level of service perspective that can be uh concerning right um understanding inflation what I know I'm I consider myself an informed taxpayer I would look at that and say well what's happening to our level of service right if expense doesn't grow is our level of service being compromised over time and am I okay with that right feel about that Uh this is uh to bring this home again what Laura spoke to. It's just a

different way to show this which is your buying power. This shows the percentage of ORM's uh your tax rate as a percentage of the total. So adding up every all the other tax levies uh school district uh the county uh other districts in uh 2005. So going back you know further in time you uh accounted for 17% of the total tax levy. uh and fast forward to 2025, you're at 9%. So what that suggests is other entities are increasing their tax levy uh proportionally speaking, whereas you are not. So your your buying power is another expression of how your buy buying power is decreasing relative to the property tax. Now that's not saying that you're not generating new revenue, right? Your sales tax revenues have grown, other revenues are growing, but it does illustrate what you're relying on. you're keeping this constant or or reducing buying power and letting other areas pick up the slack. All righty. Um so here's the scary part. We're going to show what happens when we bring it all together and track the $25 million fund balance over time and see what happens to that. Um this is no new property tax. Let's keep everything on, you know, all of our new expense, uh onetime expense, operating expense. No other tools are being used like bonding other than we do have an assumed bond payment relative to the uh cremation memorial bond payment that's already kind of we're assuming it is an existing assumption. So we're not adding new bonding resources here uh to mitigate any funding shortfalls as it relates to onetime expenses. Um I won't go into this. This is just reiterating the assumptions that we're pulling into the model relative to the revenues and expenses. Uh I'll provide this slide deck so you can see these uh what it's showing is what the 2019 to 2024 actual change in those categories

were compared to what we're assuming. So it'll help you see um what those assumptions were making relative to revenue growth. So that question of sales tax 2019 to 2024 you had almost a 7% growth. we're assuming 3% but if you isolate just the last three years of actual that's really 0% historic growth. So that that's what we have to be careful of is it it really depends on the window we're looking at relative to historic trends. Yes.

And without getting off on too much of a tangent, do we have anything to account for that drop in those last two years of the plateau? Um my thought I can just make um a guess but you might have been going through a rebound relative to um the impacts of COVID to say okay people start purchasing more as you've got out of that that time and then once that new norm is established then you'll say okay this this is where I'm comfortable spending right how many times I go out to eat and yeah

well and I'd be curious too I don't know if we can comment on this but vehicle sales They're they were highly inflated and are just now starting to be realistic. So how many postpone buying a car? Yes. Yeah.

So some of those trends and actual cost of of a product would influence this. So um in inflation can benefit you on this side of your revenue stream, right? Because it's a percentage of total expense when we look at sales tax revenue. 1% of the dollars that go out the door. If I have to spend more on the basket of good goods and services that I'm accustomed to buying, municipalities and other taxing entities will get more tax revenue. As that inflation cools down, then that revenue is going to plateau because we're not spending as much on the same basket of services that we buy. don't uh it can benefit you but in this case I would guess it's those factors are causing a slowdown other factors your economic development if you've had growth redevelopment and then that stops then you're going to see that uh plateau as well where you've reached a new norm essentially all righty uh again a lot of data here uh what this is showing is the culmination of those assumptions as it relates to your revenues and expenses. So, we've summarized the revenues up top here. This is taking those assumptions and making projections relative to your budget and saying what do we think revenues will grow to and then what do we think our expenses will grow to uh based on um all of those assumptions. Uh here you can see that the disparity um

what was that this meeting is being recorded that I don't know that's kind of stuck with you're stuck with it. Okay. Yes. It's gonna be smaller, but uh Oh, no, no, no, no, no. That that little thing has the number. I'll show you in the next slide that I'll illustrate. This was covering some numbers and so

yes. So again what what I look for is what's happening in the model and what are the factors leading to that because there are assumptions in this model and assumptions by nature are guesses relative to the future and we can change those assumptions. It just introduces risk into the model. If our assumption is conservative and we're not comfortable with that be aggressive which increases the risk scale right it it creates more risk in the model. So here because we've made assumptions relative to revenue, the growth is a lot slower. Whereas our expenses, we've included everything and grown those at a at what things a little more maybe realistic or aggressive growth rate to capture uh changes in expenses. So you can see the deficit just grows over time. we we do not have enough uh buying power or revenue growth to handle that inflationary pressure and unfunded mandates within our proforma and that causes this. So if you can go back to the last one.

So it's interesting to know so if we got to that point you could completely get rid of the city manager but you'd still be in that debt. That's an important on the dollar.

Consider that. Um it does highlight though, you know, that uh comment does highlight what Laura stressed, which is when you start talking about issues and the magnitude, then you determine okay, if we go back to our metrics relative to sustainability, efficiency, cost reduction and revenue generation. There's a lot of service provided here. uh you know when you look at the general fund and it becomes very challenging to say what are we willing to remove from this equation or what are we willing to um control relative to this equation so it's removal of cost the control of that cost and then the revenue generation on top of that all of that has to be considered when we talk sustainability but the magnitude is what I focus on right is the magnitude of impact is pretty substantial um And when I compare what you generate from property tax, it becomes even more substantial. We're generating $7 million in property tax revenue relative to a deficit of 25 million by 2030. That that's a big nut to crack there. So, um I'm not saying essentially what I what I'm saying is this is a a challenging dilemma to be in. And so, um understanding it is the first step and then determining what do we do about it. Um this graph highlights two things. Uh what I wanted to show was again our fund balance. That blue line is is calculated based on those numbers above. We essentially eat up all of our $25 million fund balance then go negative. We cannot sustain the assumptions that we have programmed into the model. But then I also included a pink line which is I turned off all of our uh one-time expense and um new operational needs. So

this highlights the inflationary pressure. The pink line is essentially saying if we have slow revenue growth and just the inflationary pressure in our base expense, we still have a problem. So, it helps me understand that it's not just level of service issues or or trying to quest a Cadillac when all we can afford is a Ford, right? There's this inflationary pressure that will affect you regardless. And so, it's controlling that and balancing that. So, that gives you an idea of of those two scenarios. I wanted to bring home I've I've highlighted this throughout the presentation. We focused on we're talking about revenue generation. in this model, what we do with your property tax rate. How do we make assumptions relative to sales tax and other revenues? These elements are still very important, but it's that's a little bit more on your side, right? As legislators, how do we manage our level of service? What are we willing to fund? What are we willing to remove from the equation? Those are definitely hard uh discussions, but something that happens outside of this model. Um, see, we've got three minutes. Uh let's go to this slide. This was um really a a comparative slide that showed um some comp communities. Sorry, you can't see the ones over there. Logan is the last comp here, so there's nothing over there. This is our 24, 25, and 26 budget. Showing where orange stands relative to expenses per capita. And this is purely a total expense uh divided uh by the the population. It does not address level of service issues between communities. So um comparative data can be very challenging because every city is different on what is provided within the general fund, how uh services are funded with other other sub funds. But it does give an idea going back to the um total expense growth

within the general fund that I showed in the previous slide that ORM over the last several years is focusing on those other metrics which is cost containment and efficiency, right? Because our cost per capita here is on the lower end and staying pretty constant, right? Relative to our population changes. Um so that that's an important consideration as we look at those other metrics within this um sustainability model. All righty. Um as we talk about what to do next, we look at what levers we can push and pull in the model. We can obviously address assumptions. If we want to again change those assumptions, we can do that. We can turn on and off expenses relative to those new or unfunded expenses. property tax is um one of the levers that you can actually specifically manipulate in the form of the truth and taxation process. So you can change that. You can also change um the bonding tool that you utilize. So you can use that to help mitigate one-time expenses. The one-time expenses that the general fund is covering is not a a huge component of this uh relative to a bonding perspective, especially relative to your total general fund expenses. Um and then the other item that you can evaluate which the city has done over the years which is strategic revenue evaluation. It's looking at your charges for services for example and saying are those where they need to be. Make sure that's maximized. You've addressed impact fees. That's not directly related to general fund but maximizing those ensures that there's less pressure on the general fund. So that strategic evaluation is very beneficial and should not be overlooked. It's just not a specific lever that we pull in the general fund as it relates to revenue. And then alternative revenues, we've t touched upon that with the transportation utility fee. If those come up, they can be utilized again to

help uh alleviate pressure on that property tax. Uh so using those strategically is very beneficial. Ultimately, um you know, we need to look at what scenarios you're comfortable with. Um you know, are we willing to manipulate the property tax and if so, to what magnitude and how does that influence this um this model? And then discussing implementation. So, uh again, I'm in the envious position of just presenting data. You're in the challenging position of implementation. and you're where the rubber hits the road and and taking action. But hopefully this gives you an idea of of the the issue and then what we can do about it. I think it's everything and I didn't give you a lot of time for questions. Uh so

are you looking for uh are you looking for an answer from us today or can you go? Yeah. Yeah, absolutely. Um not for long. I know I know you need time is of the essence. I get that. But I'm not prepared after getting booking and all that to say let's work that into that because we also need the presentation. Yes. And we'll also provide um some additional information relative to the onetime expense. Very informative and the uh ongoing expense so you can see exactly what is included in the model and so it's not just a a total number can show details relative to that.

This is very very interesting. Thank you. So, we'll send out the presentations. Um, also, you can, uh, you don't have to wait till the next, you know, work session to provide follow-up questions or requests that we could then make back to to Fred. We can still, Fred, we can still keep you busy. Yes. Using this model, right? And could we even potentially have you come back? Yes, for sure. Yeah. What is your expectation on a timeline or hope for a timeline on this? I mean once we talk about it, review it, what what is that point?

I would say let's uh let's review what how Brandon is proposing that we we do a null implementation of of some of these the next presentation which is our next item. Oh, so you've got some ideas for them. It's it's our budget. is just got it ready. I mean, again, you notice that Fred had a little bit of he he gave you a very very 50,000 foot level uh preview of some of what we might propose in the budget. Okay.

And again, it's long-term. Ultimately, we deal with the budget on a year-by-year basis. So guess I mean we could receive feedback from you on an ongoing basis with this but ideally we at least get more feedback on how we apply some of this information or or some of this uh feedback or or advice from LRV for a budget year. We would hope for that over the next month.

Yeah. And I I think based on our analysis, what we believe our objective is and conclusion relative to that 50 foot is uh there is a need and um utilizing your property tax and uh that process of truth and taxation and adjustments of the certified tax rate should be considered. Right? If if we want to address inflation, recognizing the limitations of your revenue stream, that is where we're seeing a a need. Magnitude of that is is really right up to you on how aggressive you want to address that. But that would be our conclusion is we're seeing a need to take action. And Fred, even though Lara needs to go, are you still staying with us here at this meeting in case there's something that a connection made between Brandon's presentation and and what you shared with us, or do you have to uh I have about 30 minutes? That's okay.

All right. Thank you. All right, council. How are we doing? Do we need a five like a literal five minute break? Three minute break. Three minute break. Three minute break. food, whatever.

Well, I'm glad you didn't see my eyes closed. the actual president. They still be on.

Okay. So, maybe I'll reach. You don't have until 5. I hope I only have till like 4 10 or till five. What? Oh, Janica's still got a piece. Be really quick. Okay. We did cut 10 minutes from your time. A piece. We have we have to have five between the three of us.

Okay. So we begin uh our first meeting among several that we'll be having in relation to our fiscal 27 26 27 uh budget. Uh we we first start with um our the revenue expectations projections that currently um employing in our into our budget. Uh that's usually the place that we start from and then we try to mirror our expenses with those revenues obviously because we try to have a a balanced budget. Um I believe these next few slides I'm not going to necessarily go over them in depth but I believe um shared them with each of you in regarding to one of the big things that we are doing this year is um separating our public safety from our general fund and we are creating a what's what's called a special revenue fund and the the expectation would be that all revenues that are direct directly associated with public safety would also follow that and that we would then go through a process of dedicating our entire property currently our entire property tax through that fund as well. So that all property tax dollars are assigned and dedicated to the public sa this new public safety special revenue fund. That's what these discussions here are talking about as far as creating that special revenue fund. And then we would later come to you during that meeting in May when we would bring you the tenative budget. There would also be a resolution that you would then uh pass. I would

then deliver that resolution to the county who would go through the process then of changing that property tax name. So it would no longer say city of ORM, it would say city of Oram public safety. Um and they would do that magic within their system as far as property tax goes. Um just mayor council I think I've shared this with most of you but I still have a couple left that I need to share the details on.

Thank you for clarifying. Um you can see here the implementation timeline that I just mentioned in relation to the tenative budget and the resolution related to that. Um and then later on in the uh June meeting where we normally adopt the budget and we would adopt the um that property tax change as well as that change in the fund um that would now exist. So, and and here's a just a general look as to where that sits in relation to those revenue sources that would be applied um directly to that new special revenue fund. Um, I'm giving you an idea of what our 26 adopted budget, those ob those numbers obviously are currently in our general fund, but for comparison's sake, I wanted to make sure that you were aware of what they were within our general fund and what they would look like um inside that new special revenue fund. Um besides property taxes, we also have fire fire um sources from both Lyndon and um Lynon and Vineyard. Um we receive ambulance for any ambulance service that we've uh those customers who are using ambulance service. Um and then the various other um energy sources that I mentioned that are directly related to the work that they do.

Liquor aotment. So we have liquor control officers. Okay. Um and they do work and then we're paid through UHP. Yeah. Yes. PBS like they they do an a lotment every year based on Yeah. Okay.

Um this is one of the the important screens that I want to focus on during the meetings. Um, as you see, uh, we talked about and Fred gave an idea of So, first, Bob, I want to make sure everybody understands the disconnection between the rate and the revenue. You'll notice over time the certified tax rate change. This column right here, you'll notice all of those changes are negative percentages. you go to the right as far as revenue goes, those are all positive percentages. So, one does not equate to the other in that regard. So, if you'll recall in both Lauria and Phil what they were Fred, what they were talking about, revenue stays the same. We are we're in essence guaranteed the same amount of revenue each year. What I have then done is said here's what our fiscal 26 was and that's actual and then I said well let's just make an assumption here in 27. Let's assume property tax values are stable or maybe even continue to increase a little bit. If they increase a little bit and our revenue stayed the same or in this case I increased it by a whopping 32 grand which is a half% increase. So that's even higher. That would be even a higher revenue number than the year before which was.3% increase. You would produce a another negative certified tax rate meaning it would go down again. We have talked about a property tax increase and and in this model I've put in just for an example I've added

$450,000. See the difference between the 32,071 and the 482071 over here on the right. That equates to about a 7% increase. Right? We add the what was already there. So that's a 7% increase by adding that $450,000. And you can see what then that would mean over there on this side. What that would mean to our certified tax rate. To be honest, that's a total guess. All I did is say if it went up 7% over on the revenue side, I'm going to make an assumption that it the certified tax rate would go up 7%. That's not going to be true. But I just for so you can just see it should cause that certified tax rate to have a positive increase. It may or may not be 7%. because I have no idea at this point until June 8th what our certified tax rate is and will be. But hopefully this gives you some idea of how those two things interplay with each other. And then as uh both Laura and Fred mentioned, new tax law would require if we were to do a property tax increase requires us to provide a property tax uh impact statement. If we're going to increase, what would we be spending it on? And then that's what this bottom section down across the bottom is trying to relay. We would then in that impact statement, we would outline all the things that it requires as far as that goes and then say here is what we would be spending those additional tax dollars on. And you can see kind of that breakdown of h how those two additional officers that we would be adding how that would play.

Now, I want to point out, you'll notice that the little asterisk down at the stars at the bottom on this slide, it does not include that 450,000 because I don't want to make an assumption that that's going to happen. So, this slide is just trying to be representative of if that was to happen, what would that kind of look like? Brandon, would you would you educate the council on the difference between 6.9 million versus 8.1 million in terms of the property tax total revenue?

Okay. So, yeah. So, this so is you may or may not know our our certified tax rate consists of two elements. City operations and our debt general obligation debt. General obligation debt is always covered 100%. So no matter what it is, I provide that information to the county. The county then sets whatever the rate needs to be to produce that amount of income in order to cover the general obligation debt. They then do another calculation based on all of the assessments that they do in order to produce same property tax amount. Well, it's new growth, but for lack of a better uh we'll just take new growth out of the picture, but to produce the same amount, what does that new assessed value equate to as far as a certified tax rate? And in most cases, as you can see, that means it's going to go down. So, the 6.89 million that I have there is not inclusive of all property tax we receive, but it is that city operational piece. I've excluded the geo bond debt because it's irrelevant to be honest to this situation and and that's in the case not only the revenue piece but also on those rates those certified tax rates they are only the city operational Brandon that's also what we would need to share and notice out to the public is the percent increase just the operational side not operational and

and under even the new legislative law. Um, their focus, just so everybody's aware, their focus is no longer on the rate. Their focus is what dollars are you asking for and what are you going to spend them on? They also understand the rate is really somewhat irrelevant. It will just be what it is. They want you as a body and us as staff to focus on what is it that you have a need for additional property taxes. So that's what this kind of stresses. But before I move on, there any questions about this new fund andor property tax element?

Uh one question is is this a new fund a vehicle that is newly available to us or has it always been available to us?

No. So the special revenue funds are we we have several already that exist within the city. Um the the difference here is that dedication of the property tax to that specific fund. And so if you dedicate it to that specific fund, obviously we have to account for it as such. And so in order to account for it has to have its own fund so that it's transparent and readily visible that those all of those dollars are being spent on what you said you were dedicating those dollars for. Ren, isn't a dedicating property tax andor public safety dedicated fund isn't that relatively recent state legislation over the last handful of years or am I

uh yeah, that that may that part the dedication of the property tax. I don't know that part as far as when that went into effect. cities I know of that have done it have been within the past couple years but

so it at least in implementation uh cities have only been doing it within the last few years but Jica I'll have Jennica do some research on when this became a possibility just to give you a b hopefully a brief timeline idea there's two timelines one with a property tax increase and one without we'll just no property tax increase one slide meet on May 12th pass a tenative budget meet on June 9th pass an adopted budget it's all we do all the proper noticing that we're required to do I give some presentations you have in between those two dates you when I give you that tenative budget you have the opportunity to ask questions review whatever make whatever changes you want to see in it. Um, and we would then come forth with those changes in that June 9th meeting and you would pass um and adopt that budget at that time. Relatively straightforward. You want to do a property tax increase. However, um, under the new guidelines that May 12th meeting would have various conditions related to it. uh have to notice on the agenda for that meeting has to be a separate agenda item. I have to indicate that there's a property tax increase included in the tenative budget. I have to also state that there is a impact statement in that budget document as well. And then that's in the agenda. And then I actually when we're at the meeting, I actually have to say that again. Um and yeah,

out loud.

Out loud. Uh and so Yeah. So then everybody's then put on notice that, hey, our budget includes a property, a potential proposed property tax increase. We then would go to June 9th and in that June 9th meeting, assuming we want to continue with that uh proposed property tax increase, then same thing, I have to include those same things on the agenda. We also have to produce um that that do that impact statement which has to stay there. And then we have to in that meeting have to indicate those four bullet point items that are there that we are intending to exceed the certified tax rate as given to us by the county. We intend to the those approximations of what the impact of that will be and when we would be holding uh the public hearing in relation to that property tax increase which would be sometime in August as determined between us negotiated if you will between us and the county.

How does that work if your budget is when when do we pass the budget? June 9th. So, if we were going to do a property tax increase, what you would actually then be um what you would actually be passing is what they then call an interim budget. And in that interim budget, it would exclude you would pass everything potentially pass everything else except for except for the property tax component which has to be separated. That's what Laura was talking about. everything else and you then have to obviously not spend any of those dollars that that increase is linked to. So basically public safety would just be on hold in those

those two officers those two officers or whatever I was talking. Okay. Correct. Thank you. And so the then you identify that then when you go to the property tax increase all you're then really if you were to pass go ahead and pass everything else then all you're doing at that that is passing it saying this is what we want to do going forward and then once it's passed it's then included within our adopted budget at that

if it doesn't pass you have to amend your budget. If we if you don't pass it, then the interim budget in that meeting would then have an ordinance that would say the interim budget that we passed back in June is now our final budget. These are genuinely these are good questions and these really are part uh essentially not only truth in taxation historically but the additional constraints added in this last legislative session in action.

I'll share from my experience being on the council when we did do we had a truth in taxation we we didn't have this where it gets pulled out. We had to approve a tenative budget and the tenative budget that we had included the tax increase. And so even though we and then we proceeded as though the tax increase were in the budget and then at the and in August when we had our truth and taxation hearing, we the council voted to change the percent budget. There was a property tax increase, but it wasn't as much as what was in the budget. And so you had to go back and and fix that. Correct. You would that in your document

reflect that rather than say pull that out. So just it's yeah that was just our experience from before.

One other fun little item is this special note down at the bottom in the state legislature. They also now would require us in that August public hearing to be able to allow people to participate in that meeting. while not being here. So they have to have either audio, video or both capabilities to participate in the meeting as well as be able to write written commentary um through whatever means we can provide before the meeting and during the meeting. So that's a Pete has assured me that he can make it happen, but it might be a little bit tough on certain elements of it. But if that we were going to go that route, we would certainly uh get on the horse to make sure that that was uh going to be meeting that requirement.

Okay. Okay. Moving on. That then leaves uh the remainder of our major general fund revenues, which to be honest at this point, once you pull out all of that other stuff, basically is sales and franchise taxes in the general fund. Those are the two biggest elements um in there. You saw in Fred's um discussion, he he used 3%. I'll be honest, we did not correlate that. Um, I just put 3% in because I went down to our conference and the state economist said that what the state is using is 4.1 for the current year and 3.5 for fiscal 27. And I said, well, we're not quite usually around what the state gets because they're much more diversified obviously. So I am using 3 12% for the current year for 26 within a 3% increase for 27. I will say I it's probably slightly more on the aggressive side than I might normally have done. Um but the set is where it is.

But there's nothing that mandates what number you use. We can use whatever number we want. essentially you can't whatever we more aggressive than more conservative to match the last couple of years. Yes. You know he mentioned the last three years were a 1% growth a negative 1% growth and last year was a 3% growth. So take your pick which year is this going to be say what 3% would be on the aggressive sighting would be this. And what do you think a more middle of the road number would be? Two. Thank you.

Um, and as you can see, most of the other revenues um are pretty and Fred even pointed out there's not a lot of growth in those. They're not very big dollars, even the ones that do have high percentages. Um, so those kind of things are and you might notice interest earnings are going down. We spent a lot of money on a particular building. I won't know which won't say which one but uh that re really reduces the amount of interest earnings that uh the general fund receives. Any questions before I move on? All right.

Talked about utopia here. Just a slide to give you an idea of what the last uh five years have been and what we maybe we are expecting for fiscal 27. Um fiscal 23 was really the year where they really started to bump things up uh and start producing really a bigger um not just matching that 2% that Fred mentioned the 2% growth in our payment. That was the year they really bumped it well beyond that that just covering that 2%. Uh cemetery fees are also general fund related. Um and so and people have a general interest in cemetery fees. So this gives you an idea of what we're looking for in relation to uh an increase in those fees.

When did we look at those last couple years? We look at Yeah, we adjust them every year. And um so now I'm going to talk about all of the other fund, not all of them, but all of the other major funds. And before we get there, I wanted to before we start talking about rates and different things in relation to those funds, I just want to kind of get and I realize, okay, that's pretty tall. It's much smaller on here. I'm good.

So I wanted to give you an idea. what is being included in these rates that you're going to see for each fund and what they look like in total. You'll see that all of our rates, which we didn't I didn't put it on there, but those are all the fiscal 27 proposed rates. what that would mean comparatively to all the other cities current rates for fiscal 26. And then out here on this far right side, we make an estimate of based on some historical past what those rates that they might Ours you'll notice is the same 140 either way because those are our fiscal 27 proposed rates. But what would those other cities rates look like if they do that normal historical average kind of increase to their rates? So that we're in essence kind of comparing apples to apples as best we can. That's just related to utilities. Um then I just want this includes the property tax and this number right here does include a property tax increase. It would be about a dollar and a4 dollar30 less if you were to not do a property tax increase.

Still just above Springville. Correct. So you would be just right around where they're at. Yeah. Just barely above normal. The proposed number is where is compared against their existing number. Okay. So that's proposed. A little better.

Yeah. These numbers are all where they currently exist. There is no estimation included in here if they were to do any kind of property tax increase. That one we definitely don't know at this point which one of those are doing anything. But Brandon, I'd like to highlight something you said. Uh the proposed if we were to do what you're proposing, so a $450,000 a year increase in total property tax revenue. The average impact for sort of an average home, we guesstimate about a dollar and a quarter per month.

That's really close to what what we experienced back um what was it 2012 the $3 million? Yeah, it was 2012. It was about I remember people saying it was like getting a a hamburger, a combo. Yeah. A happy meal. So it was like five bucks for for three million. So $1 is going to be around 600,000 or so, 500,000. So it's very similar to what we experienced back then. So about $15 a year. Yeah. We have to see that's So But what average? So yeah, what average house prices have been using? What what's the house average? 513. 513.

That has been there for years, right? Well, we actually well we increased that based on what the county tells us the average rate is. So the county tells us what our average 7800 we're going to be paying more than a happy meal. Yeah. Just full disclosure. I just don't want to tell per year. Not that it's going to be bad. It's probably super sized happy. Super stuck on that one. Right. And that's interesting to know that it came from the county. It's never been changed. Yeah. It will not do you remember? Yeah. So I get I get those updated values from them every year. So that's from June 2025. So we would have updated so countywide average.

This is for ORUM. That's the average ORUM um home value. Yeah. Tax at the 15. That's their home value. So you should keep that in mind. As we all know the county value is significantly lower than what your probably real value is, right? county assessed values. What's that? Average. Okay. Average. So, with that setting in mind, as far as the rates go,

so here's a breakdown just of revenue comparative for each of our major other uh funds that we have um for both what we put for our 26 budget as compared to what our proposed 27 budget um looks like currently. Uh these are subject to change. I will tell you that. But this is where they're at currently. Um we as you saw with uh various care taxs, I'm slightly being even slightly more aggressive um in relation to how much uh we get and and I should say that 4.8 that's a little misleading because the 3.2 is going to be low.

So same concept. I'm taking that 3.2 and I'm saying well it's really not going to end up at 3.2. two, it's going to be 3.3 or 3.25. So the 4.8 is slightly misleading in that regard because we're comparing budget to budget and not what my estimated actual is going to be. Um so you can see most of those have um relatively healthy increases and then we'll touch on each one of these as we go. here. Well, we don't What's the yellow point? Pull water. We have a proposed You can see the tier rates and the associated percentages related to each of those tiers and the increases. Um the bigger bigger change is down in the bottom section under the proposed base rate changes. Um as those are proposed to be 5 a.5%. Um you if you touch back there, you can see that total revenue-wise has about a 5.8% an 8% total increase when uh compared to the prior year budget. Um also within that water fund, we have last year we had a new water source fee related to Jordan and Deer Creek. And that fee would then be also raised from 377 to 406. And this year we have a a new regulatory fee that we're that we're being required to and we are recovering. Um and that's at 802 per thousand gallons. And you can see the proposed revenue that would be associated with that regulatory fee for sewer. The water reclamation fund. uh the current proposal for the base rate see while still while a healthy increase certainly not to the same level as the prior two years um trying to again follow along with our current

master plan um and then a volume charge change um also I believe associated with that master plan the master plan includes phases of debt to then do projects associated with the master plan. So, it is it helps us qualify for the debt needed to make the improvements uh primarily at our wastewater treatment plan.

That was $260 million that was adopted by the council a couple of years ago in 2023. So, everything's going to increase as you all know. Um so, we are just going to be anticipating those increases, but we're funding it right now. We've coordinated with Lewis Roberts and Birmingham, Fred Philpot directly to incorporate uh the debt portion of that payment for that. That's why these increases are in place to pay for the debt. We anticip anticipate bonding probably the end of this year for about $65 million for the water reclamation facility storm water. Uh you can see the in proposed increase there. You can see that change is pretty big. But you'll recall hopefully you recall we are in the midst of trying to deal with abandonment of the certain of existing canals. Um trying to get this fund to a point where we can uh deal with those uh conditions as well. solid waste. Uh we are basically had went through a lot of negotiations with waste management and we increase here is basically in response to what we've been able to negotiate uh with waste management and recovering those additional costs that that we worked out with them. street lighting fund. Again, another um increase in relation to the street lighting uh system and the maintenance thereof. Um on the recreation side, uh you'll notice there were over the last three fiscal years, there were zero changes to any of the funds shown here. And uh to be honest, it's just come time to be able to to start uh increasing those fees um as necessary. You'll notice we still didn't uh increase the general annual admissions. So kind of potentially trying to get

those get get people paid by those passes uh better deal for you. And finally, in in our budget, and soon as we're set, we will be delivering to you the remaining the a fees and charges schedule, which is one of the exhibits within our tenative budget, but we will hopefully be getting that to you prior to um that date. Um I think we're we're so we'll work on trying to be able to get that to you as soon as possible that has a listing of the 20 pages of fees and charges that we have within our budget. So, are there any question? I know we kind of rushed, kind of pushed through, but that's to give you just kind of a heads up as to what you know where we're headed and what you're we're intending to kind of show you uh come to tenative budget.

Will we get these slides also? Yes. And I Teresa has this this presentation.

Thanks for the detail you provided. appreciate that. Given that you presented right after Phil and Phil showed us some scary charts, he did.

Uh to what extent does this proposal help put us on a more sustainable fiscal pathway? I can't quite tell from the numbers you presented how much of Phil's concerns this resolves and how much of it remains unresolved. uh it really probably does not resolve very many if any ongoing issues. It is um our best attempt and to be honest as I mentioned with sales taxes being significantly more aggressive with various elements particularly within that general fund elements to try to make that come as balanced of a budget as we possibly can. You'll recall that pink line that he had. It would be potentially extending that pink line further out than he showed it. So that would be what the this budget would in reality end up doing.

Doesn't solve anything. It just uh buffers a little bit. Correct. And I say more specifically for the general fund though. Yeah, that's enterprise funds. We are progressively moving forward. Yes. And I just want to clarify, our budget has to be balanced every year, which is why we're talking about potentially modifying the property taxes for this year. But you're saying that whatever we modify this year, according to your proposal, won't necessarily solve our long-term issues. Correct.

And Jennica's up next. Other questions?

Chris or Jennica? might as well is being up there. I also just want to say I really appreciate the council's willingness and encouragement to engage in that long-term general fund sustainment shows that you do care about um state of the city's finances not just in the short term but over the long term. Um, and like with everything, I think, you know, it's another tool we have to use to make sure that we're still leading with being efficient and effective. Um, and and also going after all different kinds of revenues. So, we'll we'll still do the same things that we've done in the past, too, to to cover the gap in terms of going after grants and making sure that we're uh provide services to our neighboring cities that residents on subsidizing those that service delivery. Um, so anyway, just want to make want to make sure that know that we as staff appreciate your willingness to to look at difficult things and and uh I appreciate the encouragement to do. You

want to talk about getting some tough toughness? It's not tough. There's there were concerns when this when the when Provo City adopted the TU fee back in 2013 and they they thought about changing it to UTF. That'd be utility transportation fee because they thought tough sounded maybe aggressive or something. In any case, here's what it is. So, the transportation utility fee, I'm going to give you some historical background a little bit. How much time do I have? Is it about 10 minutes? You think? You have a half hour you do like 10 minutes you said right?

You all's got to be done at 5. You want Carrie. We we only need a few minutes but we still have the care tax to talk from 5 to 5:30. I think you stop at 5 to 10 minutes. I did but I got it fixed or changed. So stop at 5:30. 5:30. Yeah. So, this this item agenda item has till five.

Okay. Well, I'm excited to present to you on the tough. So, transportation utility fee. Basically, this is a funding mechanism that creates so long-term sustainability. We're talking a lot about sustainability for general fund. Historically, uh the streets have been maintained through excise tax revenues and sales tax revenues. most recently Utah Utah County uh sales tax transportation portion of that. Um so it's it's creating another lever to fall if if need be and we feel like we do have a need we have a gap funding gap to to provide quality roads and surfaces for drivers in the revenue generated proportionately amongst all users of the road. That was one of the concerns that was expressed uh years ago when Libertas um objected to Pleasant Groves utility fee. So some history here. Probably implemented the the first uh TUF in 2013 in the state of Utah. Other cities followed a few followed over time including Island um and others I'll show you on here. Island now Vineyard most recently we're proposing it now this year. Pleasant Grove American Forks considering it this year and so forth. In 2020, uh there was an objection to Pleasant Grove's tough analysis and fee that was implemented and that was objected by Libertas. They suspended their uh um applying their fees in 2020. It went to the Utah Supreme Court and then Utah Supreme Court ruled in favor of Pleasant Grove in 203 and deemed that this is a legal fee to charge. Libertas' perspective was that this is a an unfounded uh tax of sorts. So and indeed they they they determined that there was a nexus between the fee and the services provided. And so that's uh that's since

been covered by the Utah Supreme Court. Since then, the Utah legislature has sought to formalize an acceptable plan for transportation utility fee guidelines. Um in 2024, 25 and 26, they went before the legislature. 24 and 25, House Bill 367, and then in 25, House Bill 34, Senate Bill 310, they all got um tabled and they didn't uh get accepted in large part because of some opposition by the church to uh oppose that because primarily for BYU impacts and so forth. The impact to them was going to be a very large impact like this was a tax on them. Um, however, there need to be a fee. In 2026, uh, the legislation went through and it was very successful. And this gives you kind of an update of what that is. So, House Bill 425, the tough authorization authorized a municipality or county to impose a transportation utility fee. Similar framework uh to 2024 and 2025. Um, and some of those concerns back then that I I shared with you were regarding taxing, not taxing, but applying a fee on um, ecclesia or church properties. Um, the bill defines a tough as a fee imposed to generate revenue to pay for costs associated with developing, constructing, maintaining, operating, repairing, upgrading, or replacing a transportation facility. It's extremely broad. what what Provo uh adopted in 2013 was just to address the needs to uh maintain what is existing, not to actually build something new. And so this is a a broadening of what we we're expecting it to be. Um there's no language explicitly related to exemption of religious or tax

exempt facilities. However, how they got around that they said that um you would exclude uh the the least busy transportation day of the week. Not for a facility, but citywide. So citywide, what would you say is the least amount of traffic that you would experience? Sunday. Sunday. On a Sunday. Therefore, any data collected regarding a Sunday is eliminated from the study. Church like that. So that's how it went forth. That's how Chris, if you could just go back real quick. Sure.

In this in my state of the city address, you heard me talk about wrestling and wrestling even friends and neighbors. I may or may not have had to wrestle with Senator Brady Grammar over transportation utility fund. I'm sure you ribs broken. No ribs were broken, but some of us were humbled. Some of us, one of them at least.

Um, the key highlights from this bill, I'm going to go ahead and read these through. Um, it requires a reasonable relationship or an access between the fee and the service being provided. So, the benefit are created by those who pay the fee. Um, it requires a study to show that there is a maintenance need and a funding gap. Currently, in developing the fee, it needs to use methodologies based on trip generations, vehicle types, traffic counts, and it could exclude the day of the week which has the lowest traffic count is what I just mentioned. It also imposes different tough rates, shall impose different tough rates for different classifications of users, including commercial and residential. Right. Um, it requires a public hearing before imposing the TU. City shall establish a transportation fund for all TUF revenue. Tough may be imposed only by ordinance and it must have an appeals process. Um, so the city shall conduct an annual review and then TUS expire automatically after 10 years. That could be updated every year if you choose to. It's just uh you have to spend some extra money to do something like that. So you might ask, well, where are we in this process? Everything in yellow shows what we've done to date. Everything in green is showing um things that are coming forward, coming soon based on your input and feedback. So there's an industry standard for trip generation rates that are applied to um to all all of the trips that are generating throughout the city. That's using what's a document that's called the IT trip generation manual. Institute of Transportation Engineers has developed a trip generation nationwide uh um um product that's out there that helps us as as communities as traffic engineers, as civil engineers and so forth in determining how much traffic is actually being generated typically on average over the course of a day and then you can apply that throughout the course of the year. We

needed to also uh perform a study and show that there's a maintenance need and a funding gap. We have and I'll get into details on this uh in just a m moment, but we have a funding gap we feel as as about $4 million for our streets. Um we have the excise tax funds that are coming in through gas tax, gas sales, and then we also have a sales tax for Utah County. Those both generate around $4 million each. And so we feel like we need to be putting or investing about 12 million in today to be able to uh maintain our roads in a in an acceptable um surface manner. So again I'll get into the details on that. You I'm sure you'll question all that.

Is this just for local roads not do owned roads? We're talking like state street right? No no not state just you uh warm city roads. So Geneva Road, State Street, University Parkway and 8th North and west of State Street on 16th North are all owned, operated, maintained, referred, replaced by UD do. Thank you.

Um, in developing these methodologies, we we we already commented on that. So we use weekday it trip generation rates. Um, and we we hired a metrics. They were the first firm to perform a transportation utility fee study back in 2013. And so, uh, what they've adopted in Provo City has been kind of the model, I say, for the entire state. And the legislators that were involved in in creating this legislation, uh, specifically have referred to that, referenced that because they feel it is very solid. Um, so imposing tough rates, we have two residential rates that we'll be imposing. That's what we're suggesting now. And four non-residential rates. That's what Parametric has recommended. Um, and then it says to require a public hearing. That would be coming soon. Pending your approval and recommendation to move forward with this. We need to create a transportation fund. We haven't created that yet. That'll come soon. Then we need to uh bring forward an ordinance that will adopt this. That's coming soon. If you choose to move forward and then conducting an annual review. So, at the end of each year, we need to look at um what were we able to do? we have to look back a year in review and see were we able to um have enough money to to meet the needs of the study that we've performed and that shows that and identified the funding gaps. Um we have a document called the state of the streets document. It's it's uh prepared and modified and updated by our streets division um in part in conjunction with the engineering uh division. Uh the last time we've updated this is 2021 and we do this about every 5 years. So we're we're due for another one right now. This street is an ideal looking street. It looks pretty brand new. It's black. I mean, cracking and so forth. It has vibrant uh disparity color for the lines and so forth. It looks really good. We want to try to maintain our streets to that level as best as we can. What this graphic shows is if we uh

don't perform any maintenance on our streets, how a local street would decline. So what you see in red is a local street in green is a collector street. Purple here is an arterial street. You might ask, well why would a local street last longer? Well, you don't have um you know WB63 uh trucks going down that street with with heavy loads whereas you have a lot of freight and other um goods and products that are being transported on our arterials. So um the actual amount of damage uh that'll occur over the same uh it's accelerated about six or seven years here from from uh the local to the arterial. So they get damaged a lot more frequently require more repair and replacement and and attention over time. So this is what it looks like. Critical zone one, we have what's called a pavement condition index on the on the left. Goes from 0 to 100. 100 means it's brand new. It's freshly laid. Um and then you come out over here in this line for a critical uh right here. Then critical zone one. You get to fair poor and then failing in this zone right here. Um we're looking at perhaps having to do an overlay. And then down here you've lost your road alto together. You you have to do a reconstruct of that road. So many you've probably seen a road that looks like it's been cracked severely that and you have you can almost pick a piece of asphalt off the road. That's called alligator in a stat to that status. So right now linen city is working on a road uh 20 or 2000 north that we have a shared agreement on west of state to 1000 west when they're traveling. You can go out there and you can physically pick out chunks of asphalt. The road has failed. Can't overlay it. You can't put any more lipstick on that. It's not going to make it look nice. Might make it look a little nice but not not very good. It's not going to last. So what we need to do is we need to aggressively look at having a uh a pavement life cycle maintenance plan. And so what we do is

we do crack sealing, we do slurry seals, overlays, and so forth over an extended period of time. Every about 7 years or so when we do that, it rebounds a little bit. We might do some surface treatment on it. So we can extend the life out farther. This is all referencing a local street. This is failure if you don't do uh do any of that. But purple represents consistent for consistent regular life cycle maintenance and in green it represents something maybe less consistent maybe a little more periodic. So our local streets what we've determined are most of the our local streets are probably 25 to 30 years old right now. We have tried to do what you show in purple but some of the roads are in green. So 25 years you're we're starting to approach this area right here. We want to keep it up in this zone and prevent it from coming down here because the the cost to repair or to replace a road and reconstruct it is five to six, seven, eight times as as much as it would be to do your preventative maintenance over that same period of time. So like with most things, you have to spend money perhaps or to make money or you have to spend money to delay the cost into the future as well. And that's what we're proposing. In our analysis, we're looking at about a $4 million gap. Our roads right now are at about age 25 to 30 in that range. Once you get out from 25 to 30, we're looking at potentially falling below that line. We don't want to do that.

Chris, yeah. Would you argue that other consideration might be that that road being out of commission that falls a year significantly longer significantly longer than just having to do that those maintenance elements to it? So, so that inconvenience to the Sure. Absolutely. Reconstructing, you're going to take you're going to take the road down for an more of an extended period of time whereas regular maintenance that occurs periodically. Your's not going to be done. I'm sure there's convenience factor in there as well. There's a social cost or a soft cost, a quality of life cost,

quality of life cost, so forth. Um, so we were asked by this legislation to look at different land use classifications. Well, you can just break it out into two right away. You can residential, you got your non-residential. And we've done an analysis in our city. Um, all of our principles generate over a million trips a day. 35% of those trips are associated with residential and 65% are associated with non-residential. If you carve that out a little bit more for residential of the residential% is single family 30 multi-standing and as you carve out the non non-residential by ADT that means annual daily trips average daily trips I I should say not annual average daily trips you're looking at 660,000 total but 74% of those are produced by those um businesses and so forth that have over 600 trips a day. Um, and then a much smaller percentage by those that maybe have 100 ADT or 200 ADT or three or 400 ADT. You might ask, well, what are those facilities? What do they look like? Those that are under 180 or small office, maybe an insurance agency, dental office, small re retail, hair salon, and so forth. And then they gradually escalate um based on this criteria here for trips generated. So churches might have something around 1 to 200, a tire store, a self-s served car wash. 2 to 600, you're looking at a small restaurant, maybe assisted living, a drive-through car wash, and then over 600, you're looking at hospitals, schools, big box retail, grocery stores, gas stations, convenience, convenience stores, um large restaurants, and so forth. Again, looking back on this, 74% falls into this category right here. That's where the majority of our damage

on our streets is coming from from that right there. The the axle loads um are are they escalate as Tyler knows we've done this recently. Um when you have a semi, it's one vehicle, but it might have the same impact as maybe 500 cars would. So it's an equivalent load of about 500 cars traveling over that same same stretch. So what is fair? What's the right thing to do? And we break these out. This is a total summary of everything al together for residential non-residential trips generated. They add up to just over 1 million. What we're proposing or suggesting is this graphic right here is for $1 million of revenue. The impact for a resident would be about 90 cents a month. 31 cents on average for non-residential. As you break those down out further, look at a single family versus multifamily, you're looking at a$18 to 68 for a multifamily unit. And then those down here for non-residential, they would range anywhere from $2 to $142 a month. Again, the $142 a month would be for a Walmart or a Costco or uh

Maverick. Large facilities that have a lot of traffic generate the most negative impact and our roads more dramatically than residentials. So, this is this is a good reference for us to consider moving forward. We're not entirely dialed in on our recommendation yet. We are in the process of evaluating uh Utah Valley University in great detail. We're spending some some resources there and spending a lot of time and money on dialing in what what is going on at UVU more dramatically, more more specifically, I would say I should say. We've hired a firm, I think it's Forox that is doing that study right now. They're looking at every single exit entrance coming in and out of campus and they're going to be collecting data. So, it's an extensive data collection effort that's going to take place there to more specifically identify what is their impact on the city as well. We knew that that was going to be uh challenging of sorts because BYU campus was also very challenging for Provo. We're sensitive to that. We're taking some extra time and energy and resources to do that. So, in a nutshell, $1 million of revenue on average for residential um property is about 90 cents a month. For non-residential is around 31. You might ask then I'm going to conclude with the next slide. What are other cities doing? What have they done? Orange proposing if we were to do 4 million for example, that's just something I'm going to throw it out there. The 4 million would be 432 a month for a single family dwelling in Provo. They're going to go from 420 to 479. Highlands at 1850 and has been for years and it's independent. In fact, their study, well, they didn't do a study. What they did is they applied uh the number of parcels that they had in their city and they bonded. So, they divided that bond amount of x million divided by the number of parcels and

came up with $1,850. That is totally um unacceptable in terms of how this legislation was adopted. So, they're going to have to kick that away and then start over with a new official study that really looks at more of the science of the trips that are being generated to make it more equitable and fair for everybody in that community. Pleasant Grove is at 676 right now. They're going to go to 1386. That's what they're proposing tonight in their council meeting. Mapleton 8, Vineyard 475 and so forth down.

Ours is the second lowest on this compared to Farmington which may be going up. We don't know. And that's if we were to propose a $4 million um increase to our revenues. If we do 2 million, then it's going to be half that. It would be 216. 3 million is going to be, you know, 25% of that. So for you any questions, comments, thoughts? I have a question. So we don't currently have any road bonds, right? But those are No. So, is this in is this something we that we would do instead of road bonding or generate revenue? I know in the past when we've had robots, we generate revenue to do some of these same things. Not contemplated road bonding,

but no, what I'm saying is is this something that's done instead of bonding, right? And it's just an ongoing do we do you just approve it once? When do you when you want to increase it? You can you can you can um you can approve it for one year, you can approve it for up to 10. The study is good for up to 10 years

and you can change it, modify it any time in between. And after 10 years, you could say we're not doing it anymore. After four years, you could say that or whatever you wanted to do. It's very flexible. to go back to something that Chris said early on, you have to spend money to save money. Or in other words, in order to keep up with preventative maintenance and extending the life of the road and prevent five to six times more cost in complete reconstruction,

uh our our I guess special opinion that we're trying to share with you based off of this study with parametrics is that it's good to uh uh take a long-term approach and and spend, you know, a little bit each year And and our our thought would be to treat this like we do other revenue sources and other master plans and studies and update it regularly and bring it back to you and essentially return and report not only on the revenue side but on the expense side and show you and the public that we're doing what we've promised said we're going to do. And annually we do have to review that and ensure that we are we are spending the money for those things that are it's been designated to spend it on and our focus will be local streets. John the Provo example of a 14% every three years we'll talk about that.

Sure. Me or you? No you you talked to Ver he told you exactly I didn't just recently had council approve a 14% increase every year for three years. So you your question about is it annual is it you can write in how you want it right now say we're going to do this for five years or three years and have a set rate increase with a an annual review. Yeah. So in August they they're going they're going to jump to 479 and then another 14% next August and then the next one is their plan as well. So they'll probably be around 550 in in three years.

So was the three-year based on their financial.

So, is this going to be part of the budget like any of the other fee schedules? I mean, maybe not this initially. It has to be adopted by ordinance, it sounds like, but going forward, is it just is it part of the fee schedules and budgets? It would end up being whether or not we can get it in before July 1st uh to meet that. It's questionable, but we may be able to. Yeah. So, if if we're not able to put it in the fiscal 27 budget as part of the actual budget, we would just come forth with a a budget amendment with an ordinance and had it at whatever time was felt that it was ready

and then in the following depending on the timing then it would be included as part of the 28. But but the process for this is different than the truth and taxation that we're talking about. That's right. It's entirely different. Yes. Really simpler. It sounds says that we need to have a public hearing.

Um yeah. So with with for example impact fees, you need to have a 90-day period. This doesn't say that you have to have a 90-day period, but you do have a a public hearing and adoption. and we will do some positive outreach to the community and and uh making them a aware and involved in in that process throughout. In Fred's presentation, he suggested that there was going to be a tough u revenue source. Well, I think generally it's around let's say it's 10% of this would go to the general fund. So, if it were $4 million that would be uh carved away and put into the general fund, well, be used for general fund purposes potentially and that could do some offsetting of your adjustments on a time. Um maybe just an additional highlight here with with this comparison, right? It's obviously never fun to propose new fees or increasing fees. That being said, um you know, it's it's not like we have doctorred these numbers. This this really is has turned out to be you know an interesting comparison that the city really has done a really good job of you know upkeeping and doing as much upkeep as much maintenance much preventative uh maintenance efforts on our roads as possible. Um and and you know in order to keep that up um we've got to charge something but we're still doing better than pretty much everyone else especially compared to the total volume of local streets that we have within the

city. Please uh is it a fair assumption to to say that the non-residential rates uh are similar ratios there with other cities? Have you looked into that?

So we have looked into this. Not everyone has adopted the same uh schedule, you could say. In fact, we were having a discussion regarding this earlier. It seems too finite. It seems too tight. we feel like maybe maybe those could be, you know, farther apart. Other communities, uh, they don't some of them don't do this at all. They have a range and an application based on, for example, in vineyard, they have a cost per square foot. And as we looked at our cost comparisons to theirs, something that might cost us or a property owner about five $500 for $4 million note, theirs would be like $7,800 a month, something like that. So they've been in the newspaper most recently regarding how they did theirs or uh and approached theirs. Some some have done it more finite like this with ADTS, but I'd say there's a good portion that have not done that and they're going to be required to create that nexus for ADTS and what the services that's being offered. Um not everyone does it like this. So this is just Provo actually which is a tried and trueue I would say methodology that the state legislators have looked at specifically in creating this legislation. So we kind of modeled ours and hired that same uh team team that did theirs back 10 13 years ago. They're they're similar but they're not exactly the same. What I think I'm hearing is that some other municipalities don't do this at all. Some of them used a very different methodology and have wildly diverse numbers compared to what you presented.

Correct. So if I could I I'll just mention Highland. They have no they have they have no they've disregarded the the amount of trips that are going to be generated by the individual properties altogether. They took a number divided it by the number of parcels and said everyone's in for the same thing regardless. That's not going to pass the muster with the state legislature. There have to we'll have to redo that. I think uh American Fork's doing it. Pleasant Grove is going to re there's there are several that are out there that have something in place that doesn't follow the requirements of this bill. It sounds like the methodology used here was um to most closely uh reflect what the legislators and what the legislature was intending

100% this bill. It's true. This is not related to your purpose today, but at some point in the future, uh uh I would love to see the age of all of our roads. Yeah. Because what I inferred from your previous comment is that we have a lot of roads that are pretty old and pretty old at the same age. Uh and we want to try to avoid mass failures. Right.

Right. I mean, I think mayor asked if we were considered bonding. If you had if 80 if 70% of our street surfaces were failing all at once, we'd have to really seriously look at doing a bond and then probably multiple bonds. But that's where replace bonds. That was my question was to replace bonding. This may help us avoid that situation. Yes. I would say this would hopefully prevent the need for a vote. That that's Yeah. Yes. That's that's a better that's better to describe. So I think

so we're kind of at a point right now tipping point I would say is most of our locals are over 25 20 25 years old. That's 75% of our asphalt surface in the city. And the life there's only a finite life on a road surface. We can extend it as long as we can with with some tack oil and some surface treatments and a slurry seal and so forth, but eventually we're going to spend more money to do an overlay or eventually a reconstruct both to prevent it from getting to that point. But it is the nature of degrading infrastructure. Chris, also in terms of council me member Mikum's request, I think we I think we can readily provide the grades that we we go through quite regularly and grade all of our streets throughout the city. Right. So, and based off of that, we can estimate what its life is.

Yes. Or when it'll need to be or in the next uh level of maintenance. We're updating our state of the streets document right now and then that'll have the most current information in there that I share that with you that's available. The 2021 is online right now too. If you go to orgov go to public works state of the streets that's out there as well and I'll share that link with you. Thank you Chris. Anything else?

Okay. Thank you. eggs crisp. I'm just going to zoom from here. So, while Jennica's setting up, we're going to talk about employee compensation. And as you heard from Fred's presentation, about 65 to 75% of the budget issues in personnel cost. And so we're going to talk about our compensation plan for the what we've done in the past and what we're planning on doing in the future and some of the metrics that we've found from sister cities. Um but one thing I wanted to mention to you all is how much we appreciate as employees as a whole of how much you uh appreciate the staff and what we do for the city and and helping us to pay a fair fair wage. so that um we can provide the best services that we can to the community. So we appreciate you making that one of your areas of focus is a skilled and talented workforce. Um and as always we try and make our current and existing employees our number one priority when we're compensation before we look at any expenditure like that. Some of the drivers in the increase to compensation uhly has been driven by police and fire wages. Um nationwide those wages have been increasing skyrocketing paces seeing it temper just a little bit but they are still outpacing all other employee. And then also medical insurance. We've seen double digit increases insurance last few years which most entities and public sectors have seen the same. So with that I just want you guys to know

how much time Janica puts into these compensation researches. she um does such a thorough job in looking at this uh at least twice a year and um was very thoughtful in uh being fiscally responsible in the recommendations that we get. So with that, Jim Kev,

thank you. So I'm just going to explain a little bit of our process and how we determine compensation increases for our employees. So, um, like Krie mentioned, for the past few years, we've really tried to make it a focus that we're doing these regular market surveys that we're not just waiting for every 5 years to see how are we doing compared to cities. We're looking at it twice a year, every position in the city. So, we look at every single position in the city and then look at a core group of comparable cities and it's really the 10 largest cities in Utah plus uh Salt Lake Utah County, the state, and then for public safety, we also have a few additional entities we look at. And then for positions that may be more unique, we can look outside of this group as well. But we kind of focus it on this because that's really the market that we compete in within the state and locally. So um we utilize what's called Techna and it's a database where all entities input their positions as job descriptions, uh salary ranges, actual pay information. We verify that with their budget documents, with their human resources departments. Um, make sure that they're comparable positions, look at their benefits as well. That's part of the database. Uh, and then we want to make sure each of our positions is within market. So, we're really looking at it individually. Kind of in the past, what was done is kind of just across the board. Everyone's getting a certain percentage market or a lot of entities would be considered a cola increase. Um, and then there's a set merit, but we really look at individual positions because we want to allocate those budget dollars to the positions that need them most. For example, recent years it's been police and fire have had those really competitive within the cities and statewide, nationwide. So, um, we look at that to make sure we're within the market and then when there's a position that's lagging or we're seeing trends that that's increasing, we will recommend or consider budget market adjustments for that position. Um, so this is probably small for you,

but this is kind of an overview of what other cities do. And some of them are kind of that traditional. They just give everyone kind of the same set increase. Some are very variable. I would say most of them, even in these percentage numbers that may not reflect what they did. They may have given more to public safety, but this is kind of generally what they did this last fiscal year for employees. So, we're kind of seeing anywhere from 1 to 11% total increases among cities. Obviously, that doesn't reflect everything because we don't know exactly where they were to start with, what their strategy is, where they want to be in the market, but we're kind of seeing that. I mean, wages continue to increase significantly. And as we do those market studies, we're really able to see where that is. So, um, for us, again, we kind of were across the board based on the market study. So, every position in the city is eligible for a 3% typically uh merit or step increase depending on if they're in the STEP program or just a regular merit employee. And then in addition to that, targeted market adjustments were given to certain positions. So, for kind of our traditional employees, uh certain positions had an increase at one point or another during the year, other positions have not. Uh but in last July there was a average for those positions outside of sworn police and fire. Um and then in March we also made an additional adjustment based on an additional market study for certain positions. And then our sworn police uh we looked at that uh kind of after last fiscal year started just to see where we're at. And based on that there was a larger increase for our the majority of our police officers last um October. And again, all these positions are also eligible for their 3% annual merit or step increase. So that's where the 10% comes from. And then for our fire, there was certain positions

that received adjustments last July. And then again in March, there was an additional kind of across the board, but targeted by position increase for our sworn fire. So ours is kind of convoluted as you'll see, but yeah. So, this is going to just sound probably not too intelligent, but so I'm just looking at this and I'm just breaking it down super easy, simple, probably shouldn't be, but so I'm looking at market. Several are cola and and then there's a few that are market. So, if we're always going out to market, are we just making adjustments based on other cities cola adjustments? Do you see what I'm saying? We're taking into they're they're they're doing cola,

right? And then we're using their merit cola combo for our market and then we're doing merit on top of that in addition to that. Correct. But it's really just ranges we're looking at and and they also do merit increases on top of their market increases. And then do they decide their cola every year or is it based on CPI? How do they do their cola? Um I don't think any city does actually CPI because I don't think any city would actually afford that. Okay. Um they they call it cost of living whatever they decide. So these are not based on any metric or index.

I mean they consider that a lot of them say yeah we're we're looking at CPI but a lot of times it's just what budget availability and some of them are just like this is traditionally what we do. So thanks. I would also say another nuance that is included though by going and looking at market is every city has turnover andor promotions too. And so when when someone's promoted or when someone's hired uh they may negotiate a different salary than the person that was in their spot beforehand. So so looking at uh targeted market increases takes that into account as well.

Okay. Plus, we're not playing the game we were playing with police back in 2020 where it was just everybody just trying to top everybody else. It just got out of control. I do think there's some of that still, but I and Chief, you could probably speak to that. I do feel like it's plateauing a little bit. It's still increasing, but I still kind of plateau. I think that both cities are filling that pinch that we are now. I do think we're stabilizing. I think the issue that we have more than that is the pool of applicants that are interested in going into police work that that's really limiting the the pool. Yeah. And I would say that's also put pressures on the wages too to attract

not just the competition with other cities but the pool size of the pool of applicants in your specific fields. It's not a there's not one single solution. Um I would say pay is part of it. I'd say the job is part of it. Um, so there's a lot of factors that are can get difficult and that was part of what we had tried to fight that in 2021 or to push against that was our culture, our department culture. Want to come through outstanding that it's still a challenge.

Still very challenging. Okay, good to know. I would say one advantage that we do have too is our hybrid step program where um every three years they have an opportunity to get a super bump but we also get a higher skilled workforce too with that super bump. So we benefit from pushing people through the range a little bit quicker but we also have higher higher trained higher certified uh police and fire personnel in the which is the ideology we decided. All right. And then for this upcoming fiscal year, what what we're budgeting and planning for um is to conduct an additional market study this fall. So with just wrapping up recent adjustments, we feel that that will be a good time that we're going to be able to know exactly what other cities do because right now as we talk to other cities, it's still a guessing game. They're like, "Oh, this is what we're hoping for, but we don't know what we're going to have." So that's going to enable us to be able to know exactly what they do and allocate those funds where they need to be spent uh for those positions that need it most. And so we plan to kind of do this a similar thing where we're implementing targeted market adjustments later this calendar year or early next calendar year. Uh this will also align market increases to positions with our health insurance premium increases. So if employees are experiencing an increase as Krie talked about we've seen really large increases to our health and dental and some of that is shouldered by employees that this will align making sure that that's part of you know if they have a market adjustment that helps soften the blow. Um and then funding merit and step increases we are able to work within our budget to fund those and our career ladder increases uh to make sure that employees can progress quickly throughout their career. So, um, it's, yeah, really kind of a similar process and it's I think it's a lot more responsive than we've been in the past and aggressive to make sure that we're

able to recruit and retain employees. So, I just wanted to really quickly touch on a few other things that we do that we consider as part of compensation or the employee experience. So, one big thing we've tried to emphasize with this focus on doing market studies is being really transparent with employees and departments. So going around to departments, sharing with them, you know, this is exactly why we're making the changes we're making. They can see exactly the cities that we're comparing to, what their pay ranges are, what ours are, so they know that, you know, we're being fair and transparent and can understand why we make the changes we do. Uh we've really also tried to focus on career development for employees. So this includes uh trainings for our employees and supervisors, the crew ladders again, certifications and opportunities offered through that and then providing tuition reimbursement and babble scholarships. Uh making a greater effort to solicit and address employee feedback through our anonymous Babel box and employee surveys. Uh enhancing our benefits where we can. So this last year there we made improvements to our hybrid PTO program and also paid leave benefits that were really well received by employees. And then one thing we're really excited about this upcoming few months is the employee health center for our employees and their families. So that will huge for employees and it's not part of you know their take-home pay but it's a really significant aspect of compensation on well-being as well. So um I know that was kind of rapid fire and it's a lot of information there is it is a very big expense. So any questions about the process or what we're planning to do? You are taking care of our people so well.

Yeah, I'm excited about the well. Yeah, it's great. A great awesome job.

Right. Is that everybody on this on the next? Did we cover? Let's see. Brand in chat. Carrie J. Okay. anything else, right? On 1.2 probably just need to say real quick concerning Carrie and Jennica as you can as you've been able to experience even today, it it's hard to take a lot of financial data and detail and articulate it and share it and um and do it in a transparent way where everyone can kind of understand and digest it. um how Carrie and Jennica uh relay our compensation to our employees is second to none. And so just want to highlight that that really has been a big deal in helping us improve our employees confidence that that you council do make us critical to what we eat. in you. Yes, that's sometimes all of that can get mysterious when you're a new employee. You have all this the steps and the this and the that and made that very clear. Thank you. All right. Holy arts and here.

Wow. All right. Have to go big. So what you gave us? We h we have this and we will touch on that in a minute. Oh, is that different? So this part if you look at the front page yes document yes front page

front document that will be this. They're different. I will explain why. So what you see here are our many and mid- major grants along with our major grants. So it's the art side, not all of the art side, but the part where we um ask for applications from our different uh organizations throughout uh in county. What we use this for is when we have our meetings with uh each of the applicants uh all of the mid and mid- major applicants then we we use this as a barometer for helping us determine um what they've received in the past who has applied in the past and what they have been awarded in the past. This year we also developed uh with the help of our council members here that are on leaison to the commission uh a matrix which we a were able to use in helping us determine um based on the commission members where they felt like they felt like those dollars should go. Um you'll notice down at the bottom there on the far right side under the proposed award that 143,000 right here and comparing that to where we had we went I went back over the past five years and identify you'll find this hard to believe I'm sure sometimes we award people money and they don't actually submit to use it. So we had an accumulation of unawward or awarded money that was never used. So we decided that this would be a great year to use those funds because they are still

related to our uh arts side component. So we've so that's why you see an increase in that particular element. Um, also to note on this particular, uh, for uh, summary, um, the commission, uh, and I just want to point it out because, uh, this thousand better together item that was not part of the commission's original uh, proposal sub submission. Um, council member Mikum here received some additional information. So, I'll I'll let him maybe talk about that particular element as and as to why we included it on this spreadsheet.

So, in other words, they didn't fill out an application, but No, they did. They applied. They were not able to come to and do a presentation during our meetings for presentations. They provided their information offline. Okay. So, our we had a full proposal, but our commission wasn't able to hear them real fun. I I we just reached out to the commission. Uh I just want to acknowledge Dawson Richmond who's here. He's one of the members of our care advisory commission who who helped us with this list. Yeah. Come on up. Thank you.

Back to Dawson. It would be great if if maybe Brandon if this is a good time for him to just talk a little bit about the process of how the commission works to come up with these numbers under address. Uh the commission what we did is we uh thanks to Trevor Bell um and his uh Excel skills we came up with this matrix that helped us with um with the decisions. What we did is we all had our own spreadsheet. Um, everybody had the same had the same copy. Um, we all but our copies were all our own individual copies. What we would do as we were listening to the presentations is we would go in and we would uh input the amount that we thought that they deserved and then um all of our spreadsheets at the end collected into one spreadsheet that showed all the averages um what we had all submitted. Um, and with that, then we were able to kind of get a gauge for how everybody else was feeling. And then we would discuss if there was if there was a big variance, we could see that somebody had submitted maybe 1,000, someone had submitted 8,000 for one grant, for example. Uh, then we would discuss why as why we felt that way, and then we would come to a decision as a as a as a commission. So, I thought the process went pretty well, and it was was good. We all we all felt good about all the all the numbers

and so it it keep in mind is not a requirement to present at to the commission. Obviously we highly suggest it. Uh it helps the commission members uh determine those things when they're like especially this year with a matrix. Um and so um one of the um ways that they're able to then make those judgment calls is by having that ability with presenter there to be able to ask questions or get clarity on on that organization. So, um I think that particular process was was went really well and we really appreciated the commentary that um everybody had with each other while we were in in those ne if we'll call negotiations, those discussions. Um because you can see, you know, we had $333,000 in ask and and we were only able to award aboutund well award $143,000 based on the amount of money available. Um I mentioned better together. They were one of the groups that were not able to be at to come present. Um the individual who is in does that runs the honeybaked ham store. and he was preparing for their new grand reopening.

That's right. So, he was not able to come and uh he then um I don't remember if he said did he send the stuff to you, council member?

So, he sent some information to show when they put it on that you see the thousands in the prior year. Um he sent some information around that. And so then um it was we had a discussion and then you know council member Gail and and council member Mikum have said you know I think I think for $1,000 we can we can go ahead and add them. Um and then I don't know were you able to get a hold of any of the council members besides Dawson responded.

Yeah. So, so that's why you see them on. I just wanted to make sure you knew that that was the one uh if you will exception to the proposal that came out of the the advisory commission. Um after those we don't and and we've had some discussions about some changes that we will look at in next year. Um but then we also uh have our major award group uh entities that are down there at the at the bottom. Um the application for SIRA that million71 is based on their application and based on a maximum of 35% in relation to their operational um expenditures um and the Utah Metropolan Ballet and uh to be honest they received $25,000 for a long period of time. I haven't had a chance to go back and verify how long but it's been a long time. I mean, I was one of the first um citizens on the care commission and that's about where it was. I was on the Yeah, they did get a

How did we determine as 143 for the small I'm sorry. Did you want I I interrupted. Okay. On the mini and mid- major grants, how did we come up with a maximum um 443? So, um, we usually try to target in the 120ish neighborhood in the past. And so, based on just the volume that we've been re particularly, you can see the last couple years in particular,

we felt like what can we do to to push that dollar a little bit higher? Um, is there a way that we can potentially do that? Um, it's usually almost reverse engineering. So, if we um kind of go to that spreadsheet that was handed out to you, you can see all of the um awards that were on there. Then you come down and then I have to back into what do I think is my estimate of the care dollars that we are going to receive.

Then we kind of do a reverse engineering. we kind of go, okay, we we have SIRA and we've generally always awarded them the amount that they have applied for. I'm back out the Metropolitan Ballet and then these other items that come from various requests from uh our recreation andor uh in this case, you know, Bryce and his team. Um and then that kind of gives us an idea of how much if you will is available, okay,

for those if we were to adjust that we would that heart of downtown item. You're going gosh 463 437 that's a pretty weird number. It's a plug. So basically we've said here's where we feel comfortable. What do we have left? We'll put that towards heart of downtown. I'm offended at plug. I just wouldn't that's his plug. But yeah, that's

the goal is to try to get in around 500,000 as close, you know, best as we can. But that's um you will notice, so you might ask, so you'll notice, and yes, I I do know how to do math and and arts and wreck are supposed to be 50/50. You'll notice the 1802 and wreck is not 1802. So you'll recall when I mentioned we had those surplus unused funds. So that's where that difference comes in is we are you those funds uh you will surplus and re in our reserves. So that's why our site is receiving if you will an additional 50 is because it never got used in the first place. Okay.

So, that's why the on the co-sponsored groups, what's that money for? $2,000. What's that going to be used for? Tyler, do you want to talk about the co-sponsor? So, our co-sponsored sports groups, we've got like ORM Youth Baseball and soccer and and we invest in capital improvements to help improve those playing surfaces and increase the betterments that they play on. So, in the past, we've used some of that money to buy like the robot turf painter to help give them the crisp perfect lines on the fields and things like that. So, there's a little bit of money that we invest into that program every year. Um, and that's pink. So, what's our percentage art to wreck?

It's technically 50/50. 5050. Okay. This year we're good at 50. It was on some years we kind of did we're going to do 64 million but next year we're going to do to your point. Yeah. So that was where we got out maybe you got out of balance a little bit and so we had to do that a little there is that 50,000 is kind of that same concept. It's kind of riding that ship a little bit.

Okay. Um so and you can see here are the the items that we discussed with um our our parks and wreck folks um in relation to the rec side of the house. Um you know uh Lakeside Park the the program down there is pretty small for such a a facility that gets used pretty heavily. So they want to do some pretty serious stuff down in that area. Um we haven't determined an exact park. That's why it just says park, but you know, we're looking at a pup track um in relation to one of the our parks in the in the city. Um also doing I have no idea what an RC crawler and pasture course is other than it sounds cool. Uh down at Springwater Park, that's the one down across from the water treatment uh plant. Um library gardens, that would be the park over here in the middle uh between them. and then the Bonavville sports court. Um, and a couple of other the dog park and rainbow bridge which up the canyon as well as um doing some stuff to the ORM elementary softball uh dugouts and that's where care currently is. I don't know if either of you have any comments you want to make. Um, mayor uh, one of I mean our by far our most consistent bar is Sarah.

Mhm. And Adam's here. Oh, hi Adam. I am so sorry I didn't see you there. Welcome. Hi. As you know, Sarah has been on a tear a lot of great things. Uh, the the proposed award for Sarah this year was about $120,000 more than last year. Uhhuh. And so I had reached out to Adam just to if he wanted to share um some of the juices for that increase uh with the council while we're if we have time and if you're interested. Okay. Yeah. Yeah. We've got what is that by 13 minutes? You want to take a few minutes?

Well, what you're Yeah. Thank you. Well, what you're really seeing there, as you know, we you take the full expenses of of of Sierra, for example, you take away the non-qualifying expenses and you have left qualifying expenses and you can ask for 35% of that. So, what that increase really is showing you is not necessarily going forward, but a true picture of expenses from last year. And uh and so, and as you look at that year over year over year, you you see that continually that continued growth. And I think many of you longtime attendees can can can uh talk speak to the the quality how it's continued to go up and up and up. The number of programs continue to go up and up and up. Our attendance is growing growing growing. So you know what that really is showing you is is an actual expense uh that that is in a in a qualifying area. um when there has been less money, you know, historically, um Sarah has to not improve in in facilities and rock bricks and mortar as much and put that towards programming. When there's been more money for programming, we we've been able to, you know, at the same rate of of increasing and accelerating programs and offerings and and quality, uh we've been able to make many improvements to facility as well. So, you know, you're you're look you kind of have to look at the whole picture of of this airplane taking off. And as as we continue to do more, we're going to continue to qualify for more and and you're going to continue to see the programs and you know uh attendance, the quality of the programs, the quantity of the programs and and so forth. So, I think that's what you're really looking at in that in that number. uh not necessarily a dollar for-doll return investment going forward um in that difference but in what actually happened last year is what is the diff difference

in that number. Thank you. I apologize. I didn't even see you back there. Oh, I snuck you in. You were sneaky. Can I tell you the questions? Oh, I just want to make a comment about Adam if I could. Something that I just learned this year. Um, so Adam does an amazing job as we all know at the Sarah, but I've also learned that he is very kind and helpful in offering his experience and resources to a lot of the other people that are on there's a list

and uh for instance our friend at Honeybaked Ham, you know, Adam has been very helpful in helping him get going. And so I I just want to say thanks to Adam for not only the great work that you do as Sira, but the great work that you do in the community at large. Lift all of us.

Well, I I've talked to Bren about this. I I know I'm not technically a city person, but I feel like I wake up every day with the same goal and aspirations that you all have, and that is make him better. And and uh and so, you know, that's that's what we aim to do. And um you know I I I think again those of you that attend regularly can can say and and maybe speak to the the the number of improvements you've seen both in facility and in programs and and everything and that's directly related to the support you give to Sarah. So thank you very much and and we we greatly appreciate it.

Well we appreciate what you give to our community. It's amazing. All right. Anything else?

I would be remiss if uh as Dawson mentioned, if I didn't uh at least show my appreciation for Mr. Bell in the back here, uh I I would probably have had stones thrown at me or people significantly rolling their eyes or shaking their head was not for Mr. Bell. Uh in especially in our in our meetings and all of these, you know, getting everything, setting everything up. Dawson mentioned the SAP spreadsheets and those C matrix and everything like that. Um, so I just wanted to publicly express my appreciation for everything he did in this regard as well. Can I ask

is ourse applications for these groups on our transparency portal? I don't do applicants. So So people can learn about I think some of these I'd like to find out what they're doing and go to their events. So do they have websites or I don't even I don't know what the transparenc I don't know what that means. We can't talk about the transparency

maybe after telling you about that. You have to wrestle. Do you think Pete we could advertise some of these on social media? Yeah. So the arts council uh So, if everybody if all of you are okay with the um this proposal, then what would happen is in our April 28th council meeting, we would be then coming forth uh basically somewhat reiterate showing this exhibit that you just received. Um and then you would pass an ordinance that makes that makes it part of that ordinance uh approval. Council, if you have any questions or anything on that, I contact you.

Yeah, Trevor or myself. either one. And thank you. Well, especially thanks to our advisory commission. I thought they knocked out. Thank you. Yes. And your commission. It's It's not easy allocating money when there's so many more. There's so much more need than money available. For sure. We we wish we could have g everybody 100%, but fortunately, it just wasn't realistic. But it was it was a lot of experience for sure.

Let me just say one more thing before I get in my car and take myself for not saying it. And I'm sure you've heard this with all the many and mid- majors as well. I mean, if we do nothing different and add one more program, just like you've heard for the last how many hours, costs are going up dramatically and and and it and we've definitely seen that in our and it's hard to even get an entry- level person when In and Out's paying $17 an hour to flip the burgers, you know. So, I mean it anyway, it's just it's it's a really tough climate to to keep things going at the at the same rate. So, anyway, I I think you you probably have heard that on many occasions, but

I think every agenda item had some some iteration of that today. Yes. No, it's good to note that in the arts and and I we don't have any salaries or anything in in care. We do have independent contractor fees which is like concerts and and those kind of fees but but I mean even those rates are nothing like they were 10 years ago for example. So all right is there anything else is that I All right. So I guess do we need a motion to adjourn our work session or can we just go? Yeah, you can need a motion.

Normally we just leave. Okay. seconds. I was just gonna leave to bug Steve, but yes, we are ajourned. Okay. Give a stink eye to whoever says no. I vote. All those in favor?