City Council - Special Meeting

Council special meeting agenda for Monday, April the 27th, 2026 at 4:00 p.m. to order. Roll call. Certification of quorum. Madam Secretary, I'll certify we have a quorum present as all members are uh present with the exception of Mayor Proinum Bum who will be absent from the chamber the remainder of the evening. Uh just for everyone, he's taking one for the team. His daughter was diagnosed with a uh with some an infection today that is contagious and so since he's been with her said I probably should stay home and make sure that no spread. So with that, were there any uh citizens comments turned in? None. All right. So with that, we'll move to new business discussion regarding the financial, excuse me, fiscal year 2027 annual budget and council uh priorities. With that, we'll turn it over to staff.

Thank you, mayor, and good afternoon, council. Uh it's hard to believe, but welcome to the early budget input session for fiscal year 27. um come sooner than we we uh think it it's going to come. But uh the budget team and all of our departments have already been hard at work on this fiscal year 27 budget and wrapping up the fiscical year 26 uh budget for uh several months at this point. So I do want to first thank Rachel and uh and her staff. They're all over here. So thanks guys. They've been doing great work. And all of our departments and directors and uh everybody that helps put these budgets together every year. uh we're still early in that process. Um so, you know, it'll be uh light on details and a little more heavy on uh uh projections and mid-range financial planning and things like that tonight. Um so, next slide. What we're going to cover tonight is we'll uh as we usually start with these when we talk talk about our budget and this is as much for the public as as it is for everyone else. Uh but kind of a municipal budgeting overview or 101 and then we'll follow that with the FY26 budget update. And with that we've got some uh new ways to kind of approach it uh that we've worked through this year uh and and worked on with the departments. uh new ways to visualize and think about the budget. Uh including a look at how much of our expenditures are really fixed or kind of nearfixed cost versus how much of the expenditures are really service level driven and easily variable based on those service levels. Uh plus we're going to look at those and how they stack up against our revenue sources. And then we'll uh get into the FY27 budget update which is going to be fairly brief as we are planning on uh developing and delivering a no new revenue uh tax rate based budget. So really only the top priorities the top highest of the top priorities will will be included in that and built into to what we're working on going for forward. Still got a lot of work to do there to get to that but that

that is where we will be. Um, and then we've got our mid-range uh financial planning uh which we did a first iteration of last year. Um, this year it's a little bit simplified because last year we had a bunch of different revenue scenarios and we're building off of really just the no new revenue uh revenue scenario on on our uh property taxes uh for that. So, it's a little bit simplified uh for this year. Uh we'll get into the fund balance policy review work that we're working on. That's one of our strategic priorities. And uh while that work continues and will be built into the budget, we do have uh one recommendation in there on the use of the motor pool capital replacement fund that I think will help us better utilize those dollars uh this year and moving forward. And then uh we'll uh once we completed that and and we've had a chance to discuss and and any questions, we'll go through the remainder of the FY26 and the FY27 budget schedule. So, at this point, I'm going to hand it off to uh Rachel Winslow, our head of office management and budget to go through the presentation. Thank you.

Thank you, Mr. Robertson. Good afternoon, mayor and councel. Um there are two types of budget that the city of Periland makes use of. We have an operating budget, which is a financial plan for a single fiscal year. Starting with the proposed budget that indicates an operational plan developed by departments and presented to the city council for consideration and approval. The council approves the adopted operating budget which includes any modifications and that becomes the operating guide for the fiscal year. The CIP budget which is a five-year plan which addresses development and improvements in the city's infrastructure. The first year of this plan is adopted with the operating budget while the final four years are forecast. There are different types of budgeting methods that can be used to develop an operating budget. The city of Perland uses a hybrid approach which includes traditional line item based budgeting, priority based budgeting and then this year we also implemented some target based budgeting as well. There are different fund types which our operating budget falls into. Uh this includes governmental funds, proprietary funds as well as enterprise and fiduciary funds. Governmental fund types include the general fund, debt service fund, special revenue funds such as hot peg and park development fund as well as others. Capital project funds include general fund and water wastewater funded capital improvements. Proprietary funds include the enterprise fund as well as the internal service funds. Enterprise fund resemble business type activities and are rate supported while our internal service funds provide city operations and are funded by transfers from operating departments.

The internal service funds include motorpool facilities and IT funds. Fund restrictions by type are shown on this slide. General fund is able to support the most activities. Proprietary and special revenue funds can fund activity for which revenue is brought in. Debt and capital funds can fund expenses related to debt and projects but not any operating costs. The city of Perland budget balances these restrictions to make the most out of all different revenue sources in order to manage tax and water rates responsibly. I'll turn it back over to Mr. Eper.

Thank you, Rachel. So, this is a kind of a new slide we brought in this year and it's really it's a general framework that we wanted to put in front of you to kind of help us think about how our development mix, our taxes, and our service levels interact. because as with anything there are always tradeoffs and I think this does help visualize how the three things that drive building a budget and building a city kind of interact. Uh they are essentially the value judgments that you make for our community and how we balance these. So just uh something um you know brought to us uh and we wanted to kind of help put it put the framework around thinking about budgets moving forward in these terms as well as as what we have in the past. And with that, I'm going to hand it back to Rachel to walk us through 26 budget.

Thank you. As part of managing the operational budget, there are two annual budget adjustments. In May, we'll bring forth FY26 budget amendment 2 to council for consideration. Though beginning with the fiscal year 26 budget and the development of the fiscal year 27 departmental requested budgets, target-based budgeting was implemented. A target is when we're giving them a certain expenditure level or limit to hit and a three-year trend history was used to set the target for each department in order to identify budgeted dollars that were utilized compared to the amended budget. With this history, departments were able to more closely scrutinize their budget and spending patterns in order to identify only necessary expenditures. Anticipated operational department savings for FY26 is around 1.5 million in general fund and 300,000 in enterprise fund. These cost savings will either drop to fund balance or be utilized in other areas across the budget to offset increases. The effectiveness of this method when will be evaluated when the fiscal year ends for ongoing implementation. So the budget amendment two which addresses those expenditure and revenue changes will be brought forward on May 18th and the second reading of that will be June 8th. One of the things we wanted to look at with the fiscal year 26 budget as we look ahead to fiscal year 27 is context for the overall revenue and expenditures that build an operational plan. So starting with the revenue, property taxes include including the TUR make up nearly half of general fund revenue. Deltax revenue makes up an additional

25% and other revenue sources throughout the general fund make up 26.6%. While revenue can vary from year to year, there are certain revenue changes that we're anticipating when building future budgets. With the implementation of a no new revenue rate, the property tax growth will come only from new value added in the last year. Sales tax has continued to perform well in the city of Pland, but we have seen it dip locally in other communities. And while it is anticipated to grow, we continue to monitor it closely. Charges for services continues to see growth related to parks and EMS services, but those increases can also come with corresponding expenditure increases as they are related to the services provided. Licenses and permits depends on development and can be hard to forecast and will not be a steady source of increased revenue going forward. This table shows the breakdown of the fisc year 26 adopted general fund expenditures by type and strategic priority. Salaries and wages are the largest type combining for 69% of the general fund expenditures. Police and fire personnel alone make up 48%. The second largest category is transfers out mainly to our internal service funds such as motorpool facilities and IT. We further broke the budget down into a simplified three categories including personnel related uh fixed operational costs and service level variable costs. Included in the personnel is all salaries and benefits which is about 91 million for the whole general fund as well as other personnel costs related to professional

development and uniforms. While fixed operational costs include things like utilities, capital outlay, our appraisal tax payments and audit payments. And the service level variable costs include things like transfers to the internal service funds for operational expenses, street, right-of-way mowing and other contractual services. Because of our reputation as a people first organization and because fixed operational expenses cannot be scaled, the service level variable expense category is the category that is most able to be impacted because only a small portion of the general fund expenditures are service level variable. A seemingly small cut to the general fund would have a proportionally sizable impact to the service standards funded in this category. A 2% reduction into general fund expenditures if applied fully to the service level variable category would be a 17.4% reduction of this that category. This chart takes a highle view of the revenue and expense categories and their indirect relationship to one another. As we can see, our personnel services related budget exceeds the combined revenue sources of property taxes and sales taxes. Even if you broke it into the different departments or categories, public safety personnel is $64 million and is roughly equivalent to the total amount of general fund revenue received from property taxes. Like revenue, we can project and build in future expenditure cost changes. And known cost changes going into FY27 include personnel costs associated with

meet and confer year 2, potential other benefit cost increases and future personnel needs across the organization. We continue to see increases in operational costs, including inflation related cost increases. The next few slides will be covering some of the FY27 budget updates which is still in development. Some of the priorities and pressures that are being considered as the development of the fisc year 27 budget progresses includes vehicle and equipment replacement, street recapitalization, and our internal service funds. In addition to pressures, there are also additional challenges, including how to find resources for departments that don't often get them. There are also unknown factors at this time that will have an impact. Um, economic conditions continue to be monitored for their impact on sales, tax, development, and other factors. And then we must continue to consider the unknown unknown. For a mid-range financial planning scenario, the assumption behind it is that property tax growth across all years is from new value only. So an additional 500,000 for new construction for the next three years. For sales tax in fiscal year 27, it includes a 4% growth rate and 3% in future years. Salaries and wages include the meet and confer agreement and step increases only for all other employees. Transfers out includes a cap of 2.5 million in lease fees, 1.6 million in drainage expenses, and an increase of around $1 million related to the operational costs of IT and facilities

as well as general transfers out. The scenario assumes all future operational costs for CIP projects in progress, including additional street lighting, drainage maintenance related to drainage projects and future parks projects. All other expenditure categories include projected growth based off a three-year average between three and 7% and this all scenario includes an additional 500,000 each year for investment in street. This slide simply shows the no new revenue rate um con compared to the EPI adjusted uh levy to basically indicate that no new revenue rate does not meet inflationary increases assumed across this time period. This chart shows the full scenario with the assumptions discussed on slide 25. Based on those assumptions, the FY27 projected budget meets the fund balance policy, but expenditures would exceed revenue. That potential gap continues through the remainder of the forecast. This is just a forecast using limited assumptions, and those assumptions can change based on actual costs and revenue. While we project a steady amount of new value growth year-over-year, this could vary if there were a large amount of development or robust increase in sales tax. The purpose of this scenario is to look toward the future to allow for discussion of future events and adjustments that may be necessary or desired. So, some additional future factors include additional property development, commercial and residential, including

lower Kirby, Pelican, County Road 100, Rockefeller, PCD, and the eventual end of TUR 2, which we'll have a workshop on later this year. All of these could affect the scenario and make that scenario change in future years. As we've discussed, we're reviewing all of our fund balances policies uh to make sure we're making the best use of all of our dollars. So, a fund balance is the net position of governmental funds and it serves as a measure of the financial resources available in a governmental fund. Um it's used to mitigate risk including economic downturns, natural disasters, and legislative shocks. and it should be articulated in your financial policies. The Government Finance Officers Association or GFOA recommends a formal fund balance policy that maintains 60 to 90 days or two to three months of general fund operating expenditures accounts for unique circumstances and our fund balance policy is a key consideration of our bond ratings agencies. There is a riskbased analysis occurring for fund balance policy that supports incorporating the city of Periland's unique risk factors. In accordance with the GFOA's best practices, we will identify key risk factors, analyze our exposure to these factors, and project their implications on our fund balance. That will be used to recommend any potential changes to our fund balance policy, which would be brought forward with in September of 2026 if recommended. So to fully utilize our fund balance, we want to capture any fund balances that are attributable to the general fund or

maybe overlapping to mitigate risk in the general fund. So we want to ensure there is not double coverage through our health claims fund, risk management fund or other funds. We'd also like to propose the utilization of internal service fund balances, continue capital replacement and ensure replenishment. In the current fiscal year 26, there are $3.2 million in budgeted lease fee transfers from the general fund and an additional 590,000 from the enterprise fund. These are lease fees for vehicles we've purchased uh since 2019 and we're paying the lease fees to the motorpool and capital holding fund going forward. proposal is to cap the general fund lease fees at 2.5 million going forward and begin to utilize the capital holding fund balance to make vehicle purchases, reducing the need to pay lease fees and budget for vehicle replacements from the general fund. In a typical year where we budgeted for both, they would be overlapping. So in addition to the 2.5 million or excuse me 3.2 2 million for lease fees, we would budget another potential half a million to a million dollars for vehicle purchases. However, by utilizing the capital holding fund and continuing to pay cap lease fees per year, we are continuing to replenish it and beginning to use that fund balance to make future purchases. Additionally, we propose using the IT and facilities reserves the same way to make one-time capital purchases and then replenish as needed in order to make additional future capital purchases. With that, I'll turn it back over to Mr. EP.

So, thank you, Rachel. Um, for the most part, that concludes what we're formally presenting tonight, but definitely want to open up to discussion and questions and and hand it back to you, mayor. All right. Uh, we'll open up questions, comments, concerns from council. Chevia. Thank you, Mayor. Do we have an estimate of what the new non-new revenue rate will be tax rate based upon what you've currently received? No, it's too early. It's too early, mayor, to make that call. It will, I would assume, be a reduction in the current rate, but I can't tell you what that is yet. Thank you. We know roughly how much new value has come on the ground? I know we're early, but

in the current year, not yet, mayor, but we're assuming about 160 million. That's been the trend over the last number of years. Obviously, if something larger comes on um in the next couple of years, that will be to our benefit, but right now we're assuming steady growth at about 160 million added to the role. Any other questions, comments? Kosa,

thank you. on uh slide 34 when it talks about the uh the cap lease on the uh vehicles that we have and whatnot. Um about four years ago I asked, you know, is there some type of dollar amount that we need to hit? Are we targeting a dollar amount to have in that fund to be able to fund our purchases per year? How does this work? I don't know what cap mean. Is it a percentage of the uh vehicle's value? What's Please explain that to me.

Uh, no. We have about $10 million currently in the capital holding fund related to motorpool lease fees that we've paid ourselves for vehicles we've purchased since 2019 2019 and received. Um, and so at this time based off the vehicles received through the adopted 26 budget, the value of the lease fees annually was 3.2 2 million for just general fund. And the proposal would be to cap the lease fees from general fund specifically to the motorpool capital holding fund at $2.5 million a year. Um so that we are continuing to replenish that fund and to make purchases not to exceed probably that cap over time. we might exceed it in year one um just to start spending down that fund balance based off the age of our fleet. Um it would really depend on the guidance. We do not have a set target dollar amount target to maintain in that fund at this time. I think one of the ways you know it's taking a little bit different look at it much like u you were you were articulating in much more like we had talked about the the IT and the facilities fund that we need a certain amount in there because in any given year uh for uh it we may need to spend X amount and you draw it down and then you can build that back up over the next year. So exactly where that sits for motorpool we're still uh working to make a recommendation on that. Um, so but but the thought is we start drawing we draw that down to some extent and if one year we needed to buy a million and a half dollars worth of vehicles plus a firet truck and we need to spend three. We spend three it comes down and then we put the work the 2.5 back into it as a cap of what we put in there every year back up to the threshold we set as what we want in there uh in any given year. And if you know if it takes two years to

get it back up there the next year we're probably purchasing a little bit less vehicles. Right. Right. It's utilizing the dollars we have today instead of just sitting there waiting until that the vehicles that paid those particular lease fees need to be replaced themselves.

Okay. But like I said, that's I was kind of curious to know how it was functioning is yes. Are we taking 20% 40%, you know, whatever of a vehicle and to build that 2.5 million that that we need over and above the the three. So that's I was just curious to see you know how it how it operated because I mean four years ago I think it was around 156 million if my memory serves me correctly and I was like you know if we did it on every vehicle this thing could have you know I think we had like 800 900 vehicles u you know it could have a large amount that we wouldn't utilize in Right. So we we don't want to do that. We want to be able to utilize what we have but then still every year be able to buy what we need and replenish it over time. Yes sir.

Yeah. So, I was just trying to understand how that process um how we get there.

Thank you, Mayor. Um Trent, in this proposal, um I guess you guys haven't provided how many new positions you guys are adding or have you guys thought about additional uh resources you guys are adding on. So what uh we you know this this projects uh you know the revenues we'll have under a no new revenue scenario. And so until we get through our all of our budgeting meetings to see how much you know going through the target based budgeting how much we've we've squeezed out of departmental budgets we won't really know whether we've got anything to to look at any additional personnel there. We do have kind of our priority list to look at if there is any ability to add anyone, but there's nobody added in this at this point.

Okay. So, so from my understanding, you're not proposing under the new revenue rate any more positions. Correct. Um I will wait until we actually propose the budget as to whether or not we've been able to reduce any of our other costs to a point where we can add some of the priority personnel. Um but we will be at a noon new revenue. So it will fall within that if we do propose anything.

Fair enough. And and I guess on the revenue side, I know I forgot the slide number. If you can go back to the one that shows the breakdown of where the revenues are coming from general fund and sales tax. Um, I guess there's only two options in my world. Um, either you increase the revenue and decrease the expenses. Um, I guess the the item I would ask you again this year is to consider uh adjusting your fees on services that we provide. That's fair market value. Um, and also in the sales tax. I realize that the sales tax may be I know Victor uh alluded to this that it's you know increasing or sorry Victor you may not have said that maybe u um someone did but I I guess part of the problem is costs have significantly gone up so our sales tax should go up um but I guess the other question on the flip side would be EDC has given up a lot of um tax abatement if you could just put a number on that what that is costing the taxpayer. Uh just to kind of see um these incentives that we are giving um to our businesses that are coming in here and you know what that what that cost is and how much would that be adding back to our bucket if we did not do that. Um because I think it's worth looking at uh how we can push this. And since you're asking for input, I'm also going to tell you, uh, one of my pet peeves is EDC is very fact. Um, I believe they're up to eight employees now. Um, and I think I want to see where that ends meet justification, right? Um, and what I mean by that is how can we use that EDC funds? And I

think we had to think outside the box to try to help us cover some of these expenses. And I I challenge you guys to use more of that money uh whether it's for infrastructure or in other departments that we can justify it. And and and and and I know you guys are going to say we're type two or type B and we can do it. Maybe the question then is do we go back to the voters in the future year, maybe next year, and ask them to change this the the EDC setup so we can use those funds. But uh you know, I know the elections are going on and we keep hearing about it's getting too expensive. So I'm going to hold your feet to the fire. So thank you.

So if I could maybe just give you an update on a couple of those. So fees that is something we're looking at comprehensively this year. I think the direction we received from council um or part of the direction was that um you know as our cost of service to deliver goes up if it's fee based that we look at those fees going up as as the cost goes up as opposed to not looking at fees for many years and then making a large fee increase. So we are comprehensively looking at fees this year. um as far as uh sales tax, you know, it's it's good right now, but we're monitoring that closely. And um you know, with the EDC, we do have the 20% infrastructure and and we'll be going to be going through the EDC budget here soon as well that'll demonstrate, you know, how much they are doing on the infrastructure side. So, we can definitely uh provide the information requested from from a EDC standpoint and have that conversation around the EDC budget as well. Thank you, mayor. Um, would you pull up slide 16, please? This is a great slide that that kind of shows you by priority and and by expense at the top. It's it's always difficult. You can you can understand salaries and wages, materials and supplies, repair and maintenance, all that. Is there any way or in the future I'd like to show a breakout of of transfers out and miscellaneous service because to the citizens and and the the 14 viewers at home that's 20 22% of the budget. That's just a big question mark. Um, not that we have to dive down in in in into the into the details, but something something a little bit more descriptive of what what is that going to? That's

going to internal service funds. Then let's look at what is that going to facilities versus fleet and miscellaneous services. What is that contracted outside services? Can give us a little bit more descriptive buckets to show that breakdown. We we can definitely do that. I think I might have seen a spreadsheet that was much more complicated and kind of scared me to put out in this meeting, but um we can we can pull that back out and and see if we can make it uh where it's reasonably uh ease of use uh to to to show, but we can definitely provide that information. Yes, sir. And you're right. I know when we always put those up there, they're they're get questions on, well, what is that? Because those don't really tell you what it is. and we need to tell that story. So,

and even if it is a a spreadsheet, Pat, throw a link on there. I mean, one of the things that that we're we're good at is is all the data is out there. It's just let let's show the the citizens how to get to it and how to drill down into it to to find the answers because it's all there. It's just it might take you six hours to get there.

Just have one question. Um I forgot what slide it was. It was the one that had expenses um in three sections and um revenue in three sections. Yeah, that's it. um is is um without saying comparison to other cities but compar compared to other cities is that normal to have 79.3% thank you I didn't finish my sentence but thank you or my question and um just sort of I guess echo what council member Carbone said miscellaneous is I I think I've counted miscellaneous for you last year in the budget and that's And you said that's a normal budget term, but it is it is a frustrating. Thank you.

Thank you, mayor. Um, with the absence of Mayor Prom, there were some questions uh that he had sent me uh to ask. Um, so I'd like to go through a few of these and we'll start with the first one. Um, page 27. Um based on staff's presentation which has a lot of assumptions at this stage holding uh to the no new revenue in phys uh fiscal year 28 and 29 would um not only create a sign a significant uh delta between revenue and expenses but also would put our fund balance well below our 90-day policy. Were this to happen, how would this affect our bond rates, our credit ratings, our debt payments, etc. Could the bonding companies call our notes if they found us as a city to be uh becoming too risky? Can you elaborate a little bit about that?

So I think first of all we would never suggest we go to that um type of fund balance uh shown in 29. This is just an illustration of if you uh you know hold our expenses on the uh trajectory we've seen them based on uh the past three years and then we limit our revenues to the assumptions on the previous page that this is where we would be. Now obviously uh in between there um things can change from a revenue standpoint. Sales tax can be better. There can be more development that that comes in that drives those revenues up. We could have a downturn that turns those revenues down. And then we've got to of course turn to the expense side to make sure those are are matching moving forward. And where um you know and and I think this is one of the difficulties in in looking at it uh looking at a no new revenue scenario is that uh it it really doesn't even account for uh inflation or the growing cost of personnel uh and and the other things required for our personnel to be effective moving forward. And so that's why you see that graph go graph grow because you know no new revenue is truly on the tax rate side. It's it's no additional revenue unless there's growth. Um so we would obviously have to look at how to bend those costs uh to match what revenues are at the time. Uh and then of course we're looking at our fund balance policy. I don't know that we'll move it uh overall significantly. We may have some other mechanisms within how how we uh do it in some of our other funds that help with that. But this was really more of an illustration. I wouldn't I wouldn't uh recommend or say we're headed towards that kind of fund balance. So, you know, th those kind of impacts, yes, they would have impacts if we did that. Um but it's not that we're suggesting going there. It's an illustration of of the assumptions we're looking at for the no new revenue budget.

Okay. Thank you. Uh, another question that Mayor Prom Byum asked, uh, just for the record is that he, um, definitely would like more information also on that 12.59 million miscellaneous category, uh, that was mentioned by um, member Carbone. And so I just want to make sure that, you know, that's out there that he is also concerned and would like a little bit more explanation on what that is as well. Uh going on to another question he asked are there any projects that we plan to undertake in 27 28 or 20 29 that are funded by the general fund that we could consider postponing that could assist in you know as we continue to look at no new revenue rate and so forth.

So I think there's maybe kind of two questions in that one. Are we you know funding anything from the general fund debt service side that we could delay? I mean, there's potential, uh, you know, the bond program stuff. Um, and that impacts, of course, the the overall tax rate. Um, and really what we've got going. So, so since we, you know, we're about to sell our debt that we did a, uh, intent to reimburse for in the fall, we're about to sell that debt for FY27. That really locks in our debt service rate for FY F sorry, we're about to sell it for FY26, which locks in our debt rate for FY27. So I don't know that we could delay any projects right now that affect FY27, can we affect the future years? Yes. Um and then the other part of that is if if if the question was about general fund expenditures due to completing uh capital projects, we did have that as one of our assumptions in there that as we complete the projects that are ongoing right now, we're adding in those uh additional incremental operating costs. So when we finish building a street, we got to add the street lights. when we uh finish the expansion of the Hickory Slooh Sports Plex, we've got to add in the cost to mow and maintain that, which portion of that's actually going to come from EDC, but uh we did build in the general fund portion of that. So, we've got those assumptions built in. And you know, and like I said, if we were to delay any capital projects at this point, that impact would we'd see that in 28. Okay. Um last question uh that member U Bum mayor prom asked uh was the projections show on the no new revenue rate out of uh fiscal year 2029 as being expected to outpace revenues substantially. An area of concern is that the compensation increases for staff that are built into projections

are at the step increases only. Those steps for those eligible are 2%. However, a quick search shows that the average cost of living increase since 2021 shows an average cola of 3.54%. Therefore, our projection anticipate a reduction in employee compensation as compared to cola. Can you elaborate a little bit more about what will this no new revenue affect when it comes to thinking of staff across the city? So, I think it's it's much like uh the question that member Patel asked about adding additional personnel and really about adding anything that we didn't already build into this. It's really going to boil down to as we finish going through all of our departmental budgets. um you know what what are we able to to get out of those from the target-based budgeting approach and then also how much is the growth and then really taking a look at you know the baseline is is what's in this in this uh the scenario which is the assumption of other than the meet and confer we'll be at the step plan um but then as we get down in those details we'll see if we can potentially add on um a cola to that to try to make sure we're keeping up with infla in inflation I think, you know, the council's done a great job the last three years and when we updated our or when we really delved into our comparator cities with our public safety groups, so PD a couple of years ago and trying to bring them up to where we want to be within the market and then last year we've made huge strides, I believe, with our our fire personnel as well. And then this year really the focus of our class and compensation study was on uh the rest of our employees to see where do we sit within the market and um how do we address those areas so we do stay competitive uh when we're trying to attract talent or retain our talent um because you we have to be competitive in

the marketplace. So it's it's it's marketbased approach and then we're going to try to work uh work the areas where we feel like we're behind uh work those through the budget process to try to make sure we're in a good place uh for those positions. So a long way to say a lot more to come when we get into the details of the budget. Okay. Thank you.

So thank you mayor. So Trent, have we completed the compensation study? We're getting close. Um, so we've we've got to a point where I think we've got all the comparator uh uh comparison cities we're using. There's a few uh positions we're trying to make sure we've got good comparators for. Um, and we've identified uh a handful of areas where we know we're behind the market. We want to address those obviously. And then I think based on what we've done, you know, the the last uh three years or so, we've put ourselves in a good place with a lot of positions. Um, I didn't we didn't really see any areas where we're outpacing the market, but we we feel like our our compensation plan is is is uh in a good place, but we got to continue to, you know, you you drop one year, you know, we see this, you know, over the years, my experience is that cities will do a class and compensation study every few years and um in between those years haven't always do a good job allocating resources to stay up with the market and keep up with where you need to be to attract and retain good talent. And so then you do the class and compensation study and you it's a huge number and it's almost overwhelming to try to deal with and overcome. Um so I think the way we've approached it the last several years um the last three or four years has has kept us in a better place and we want to continue that and not you know not be uh two three years down the road where we um have have foregone cost of living and things like that and we're behind the market. We got a big huge number. we've got to overcome. That's the approach.

Thank you so much. I'll have more details when we get into the budget. Um Trent, in regards to the the raises, last two years it's been 5%, correct? For non-uniform. Um so it the step just Sure. No, the So the step's 2%. So it was it uh last year it was a 2% cola plus a 2% step. So four total. Okay. So 2% on cola and in the step. Okay. Okay. I thought it was was five, but okay, that's fine. Um because inflation last year was 1.1 and this according to the Bureau of Labor Statistics. Um at the end of February this year, it was 1.3 right now. Sure.

Um so, you know, we've been giving more than COLA in our cola raises. Yeah. And

because I'd asked that question last year and the answer I received was it was a market base. We didn't do cola. We look at the market. So we we do look at the market and then um I think the other thing is that you know the last three years we've been really we we had some catchup to do from the prior years. Um so we were behind the market. So while so there if you go back you know three four and five years we were well below what was uh the the CPI or the or the market. And then uh if last year we were a little bit above that, that was still doing some of that catchup from the prior years. All right. Thank you. Yes, sir.

Any other questions, comments? Thank you, Mayor. Uh Rachel, on slide or Yeah, slide number 27 when you're doing uh future fiscal year 2029 where you're showing the gap and I know Trent said we will never get there. Um, I guess how does the tur that Shadow Creek Tours that has that been considered in here when it goes away in 2029 on that future growth? Would that be considered future growth that comes in?

Um, no, it won't be considered future growth. The scenarios we've done uh does incorporate it into the tax rate. So, it would just go into that property tax category. I don't think it's in 2029. I think it'll impact us in fiscal year 30.

Yeah, it's fiscal year 30 where we'll actually see the impacts here. And so, um, we've been, you know, the last two years when we did our tax rate worksheet, we did an alternate one that looked at, well, what if the TURS ended right now and we'll do that again this fall. We'll have three years worth of data that kind of looks at how that impacts the tax rate and what that looks like. So once we have that, we're planning on a workshop in November um to go through the details of that and what we think we'll be looking at um you know in fiscal year 30 when the when that actually does change.

Okay. And then um I know um member Sharia mentioned about the compensation plan. um in that compensation plan is remind me is it for the entire all the departments or is it just uh public safety?

So um we it's everybody. So going back two years ago, uh we went through the same process we're going through now on everybody with the the police department and working working with the association and kind of looking at who who do we compete with for talent um to attract it and retain it. And so we got our comparable cities we look at for PD. Uh then we worked through last year really updating uh that and doing following the same process and and plan for fire. Uh we used a little bit different mix of cities because not all the cities uh have full service 247 fire departments. And so um then we're basically applying that same uh analysis this year to to the remainder of our employees going out and taking a look at what the market looks like where our pay scales sit in uh relative to that and you know also based on tenure of employees as well.

So I guess does the compensation plan give you a max for a position? Will they will they tell us what the max pay salary should be for a position for I guess an exempt employee?

Yes, sir. So, if you if you take the um the public safety side of things, they've got they've got um what I'd called uh well, their step plans, but they're kind of you start uh at at step one. Uh now, they do have the ability now under meet and confer with PD and fires had that ability um uh without being under civil service to bring in lateral transfer. So if they've got a certain amount of experience at another police department, we they can bring them in at that step up to a certain level um that was part of the meet and confer and they start at that step and then they go up the steps until they reach that top step and then they're they're maxed out there.

On the on the rest of the employees, it's it's a range and um and they do have steps in between each range. Um, but you know, we'll bring employees in based on their their experience and their market value and then they do top out as well.

And then I I know um when Chief Taylor was here um he kind of briefly mentioned to me uh in a discussion that hey, we do send our fire department across city lines. Um, and I know it it kind of bothers me that we are subsidizing uh, and I know you you explained to me that, hey, we have this reciprocal agreements. Uh, but I'm just curious, uh, how how often since we have paid fire department and the surrounding areas have volunteer, how often do our fire trucks make runs outside the city limits? Uh and and you know, I guess it would be important for this council to know where the cost is.

Sure. Um and and again, I'm not telling you not to help our neighbors. Uh but I think is a fair question to ask. Um and the same thing I would tell you uh regarding the uh police academy. Um I know that we have the best training facility and and I appreciate that. Uh but there is a cost that our taxpayers are subsidizing. um for training for other uh civil workers. And so again, I think it's worth while you're going through this trueing up the cost uh and kind of bringing us to par, I think it would be just worth since we have time and runway to look at those things.

Sure. So on the the fire side of things, it's actually, you know, our strate strategic priorities to look at fire service we provide outside of our city limits, whether that be in the ETJ and the ESD or whether it's through mutual aid. And so, um, what we're working to put together right now is a new standards of coverage, uh, uh, uh, standards of coverage study because the last one we did actually occurred before the annexation laws changed. So, it it assumed we would annex all the ETJ area. Um, so we think, you know, it's a great time and and we're moving ahead with the standards coverage update updated study that takes into account, you know, what's actually, you know, what the rules are now and what's on the ground now, um, to decide, you know, what we need to do and and how we move forward. And then we also want to have those conversations and analyze the cost of whether it's an ESD that is paying us for that service, is is it fully paying for that service? If it's mutual aid um and it's a matter of us always providing or almost always providing the mutual aid, what are some things we can do to encourage those areas uh to stand up what we've had to stand up which is you know a full-ervice 247 uh department um or you know get help from elsewhere at times instead of always us. So it's you know we're going to look at all those things through that through that uh study and that lens. Um, and so when we get that all pun bundled up and put together, we we're going to bring back the results and the information uh for the council on that. I think have we provided some of the information on calls and where they are at this point. I don't know if we had ever put that together. I know we're working on all that stuff um that'll go into the study.

Yeah. No, sir. Um right now we're just holding off until we do the RFP for the study. And on slide 19, uh I don't have my reader, so I think that's the slide. Yeah. Um 79% is personnel, but if we can provide maybe a breakdown of true payroll costs, benefits, health cost. I think you're lumping all of that in here, correct?

Yeah, we lumped uh those cost as well as like uniforms, which we can't put people out there doing their jobs without uniforms. And there were a few other things in there, you know, like the the uh u um continuing education, um the things that required for all the certification, everything we have to carry. Um so that we kind of lump those all in that, but we can break those down for sure. Yeah, I think that that would kind of help. I mean, I understand 80% is uh personnel, but I think it can be really broken down and kind of get a better idea. Thank you. Uh slide 16 does show just the salary and benefit costs. That is only strictly the personnel cost, salaries, overtime, health insurance, taxes, etc. So, does that include retirement?

Yes. So, can we break that down? Sure. Thank you, Mr. Kosa. Thank you, mayor. Um, Trent, when you were talking uh to member Patel on the uh meet and confer, I I think I heard you say that the cities that were comparing uh uh pay for were we're were cutting out the uh volunteer. Is that what I heard or what could you kind of explain that a little more?

Sure. So, the meet and confer applies to the PD. Uh they have the meet and confer agreement. Uh but when we did look at the compensation plan uh for fire department and and comparing that to other cities um you know so where we compare our PD to Pasadena we can't compare our fire department to Pasadena um since they're they're a volunteer department um same thing with League City. So we had to find other comparators that did have um you know that have a full service 247 fire department. Right. Right. So it's a little bit different mix for Yeah. Yeah. No, I get that. That's why I just I didn't quite understand what you were saying when you said that. So, I just wanted some clarity on that. Yes, sir.

And then on like the the ESDs, um it's my understanding that they uh whatever their tax rate doesn't cover what we provide to the SD. Is that a correct assumption?

That is what our numbers are showing. We want to, you know, get those numbers looked at when we bring in the firm and just confirm all that. But yeah, basically the ESDs are maxed out at a 10-centent tax rate. And um if you analyze the full cost of providing our fire department as well as, you know, the capital cost for for uh the equipment, the capital cost for the for the buildings, the firehouses, and you take all those things into account and look at our, you know, number of calls and calls for service in the ETJ, um it that 10 cent doesn't cover it.

So is is that 10-centent rate is that set by the state? is that my my understanding is that uh that is set by the state. Um I also understand there may be you you can potentially have a a fire district as well as a medical emergency medical district or EMS district. So that's one of the things we're looking at is whether or not we would propose something like that in those areas to allow for additional revenue to be raised by the people that are served by that. Okay. That's why I was just trying to get a better understanding because it was my basic thought is that we're subsidizing them and I mean just like member Patel I think we should help people but at the same token we shouldn't be funding their shortfalls. Yes sir.

Any other questions, comments? I I I would say you better let Mark Smith know because I think he came and wanted a lower rate than 10 cents. I'll be more than happy to give him a call. Yeah. And the reality is you can have 10 for fire and 10 for EMS. So, right. And that No, but I mean that's what I was understanding what what Trent was saying. If you have, you know, the different if you have I guess emergency services, fire services, and fire and then we need to say, "Hey, you need to up it up because it's not fair to our taxpayers to be subsidizing uh their expenses." Exactly. Any other questions, comments? All right. is was that it or do we

uh we'll just walk through the future dates of what we've got coming up. Uh so for fiscal year 26 in uh in May, we'll have the first reading of budget amendment number two followed by the second reading on June 8th and then in June uh June 22nd we'll really kind of kick off the the real budget stuff. So we'll have our comprehensive CIP workshop. So that is the CIP budget workshop and then moving into the following month uh July 13th we will have budget discussion number one and I think uh the feedback we got was the way we did budget last year was was uh went well and was appreciated and the way we kind of broke it up uh we were able to spend more time on each each section of it and and not have the last minute rush to get through all of it. So starting July 13th, budget discussion one, we'll go through the enterprise fund, special revenue funds, internal service funds, and the economic development corporation uh budget. And then uh we'll follow that discussion if necessary with budget discussion number two uh to follow up on anything from the first discussion. And then uh we'll come back in August once we've got the u assessed value roles and we're able to work through the tax rate worksheet. uh then we can come back and we will just cover the general fund and the debt service fund and then have one more uh scheduled workshop if necessary uh to go through anything uh left over from budget discussion number three that'll be August 24th and then uh that'll get us into September where we have the first reading September 14th first reading of the budget first reading of the property tax rate and fee changes little change there is at no new revenue we do not have to have the tax rate public hearing. Um, and then we'll follow that on September 18th with the second reading of the bud budget, the property tax rate and the fee changes.

And that'll wrap up the budget cycle and we'll head into fiscal year 2027. So, appreciate the discussion tonight and the input and look forward to going through the process this year. Thank you, Mayor. I think the schedule looks great, Mr. Patel. Wait a minute. So, uh, thank you, Mayor. I endorse.

Hey, hey, hey, Trent. Um, recently I'm going to give, uh, Council Member Carbone, uh, the, uh, the idea he came up with. One of the ideas was, I know people complain about the water bill being very high. And um what people forget the trash bill is in there and I think council member Corbone had said that maybe the idea of looking at pickup once uh and then if somebody wants a second uh can I is that something that we can look at in this budget cycle or do we have a contract with Frontier that we can make adjustments?

So we do have a contract it we actually renewed the contract uh the renewal starts this October. Um I don't I don't I don't think that precludes us from making that change if we request you know request that uh we have had some preliminary discussions with them. Um something like that. They said it would be about a 15% reduction in the cost. So I think we're somewhere around $22 right now. So, we're looking at $2 to $3, I think, off of the $22 um to go to one time a week trash, one time a week recycling versus the two times a week trash and one time a week recycling we are today. So, you know, when uh I I've been cautioned by many wise city manager type folks that one thing you don't want to mess with is people's garbage. And uh we did that a few years ago. actually had a pretty successful uh transition from bags to carts. One of the considerations at the time was to go to one time versus two times and the cost associated with that. So, um it's something we can definitely look at. I think we need to be prepared to, you know, for the educational campaign and and you know, the potential uh uh push back we get um because when it gets hot in the summertime here and your garbage is sitting there for a full week or potentially more if you forget one day. Um it's uh

and I think that's a that's a fair point, but I think you know so is the cost savings worth? Yeah. I I mean yeah 15% seems low but um I guess the other point was hey you're keeping a lot of heavy trucks off our roads as well, right? Which is tearing up our roads as well. So I think it's it's worth looking at it. Uh

we can take a look at that. I know you know that's so you know our our solid waste you know contract it takes care of those two things. It also uh does the household hazardous waste. So there's other pieces that go into that we're under contract with them for the that you know they work with uh through the recycle center for uh those types of things as well. So, it's, you know, it's I think that's why we're not seeing, you know, a third reduction, you know, a 30% reduction or something because it's not just the pickups for solid waste two times and and and recycling one time a week. There's those other services that are provided within the contract as well. But we'll have those conversations and be able to talk through that as we move forward.

All right. Uh, with that, we will move to uh adjournment at 501.