City Council - workshop

All right. Good afternoon. It is Thursday, September 3rd. We're going to kick off our study session. This will be a budget presentation by City Finance. And so in order to get going, we're going to turn over to Mr. Johnson and let you take over from here, sir.

Thank you, Mr. Mayor and Council. So again, 2027 operating budget. So let's jump to slide two. Next slide, please, Julie. We're just going to kind of go over a little bit of the timing with the meetings and things like that coming up. What I want to talk about today is some of the key assumptions that go into developing the initial forecast for the budget, mainly around revenues. which drives a lot of the expense forecast then. And then we'll talk about the baseline operating budget and the comparison to the 2026 operating budget, available fund balances and our revenue projections and commitments and kind of around special revenue and capital project funds. In two weeks, we'll be coming back to talk about personnel initiatives and capital projects. So that'll be key to that. So let's jump to the next slide, the calendar. This is the first study session on the budget. We'll have another one again in two weeks. As we progress in October, we do have a study session scheduled. That will be as needed. Same thing with our budget advisory committee. For advisory committee, we'll be meeting next Tuesday, 4 to 6 right now is where it's scheduled. Ryan, I'll talk to you a little bit afterwards. Maybe we have a chance to switch that time a little bit. After that, we get into November, and that's when we're going to start our public hearings, talking about rates and then the actual budget, and then going to adoption is scheduled for the first meeting in December. So let's jump to the next slide. So just a reminder of what a baseline budget is. It consists of the current year's operating budget adjusted for inflation, contractual commitments, cost of living adjustments, population projections, and then the baseline assumes that we maintain our levels of service consistent with current operations. So that's kind of where we start initially with the assumptions, and then we go from there. So jump to the next slide. So these assumptions really help drive the first revenue projections that I do. Some of our revenues come based on our population. So that's a key, especially with state shared revenues. So our population official as of April 1st of this year was 16,820. That was an increase of 530 people since last year. Right now I'm estimating 17,420 next year, approximately 600 increase, and just under 3.6% increase. We have gone from those double digit increases to where we've kind of leveled off now. Household units currently are 6,522, and based on what OFM says are average persons per household, I'm estimating about 202 increase by this time next year, which again matches that same percentage increase as population. The West Region CPI, which we use that for COLAs, that goes for indexing, that was 3.2% in June this year, which was released in July. And then we also do show the Rider-Levitt-Bucknell construction cost index of 4.74%. That is used for school impact fee indexing. We are at the cap for school impact fees, so we won't be coming back and asking for increases there.

How do schools use a different inflationary factor?

Because that one is more correlated to the construction of the schools versus the CPI, which is more correlated to supplies and different things that we use it for in labor increases. That's a difference between the two. So we're gonna jump to, I believe, get here to slide eight. I've got a lot of graphs in here. Excuse me, slide seven. So one back, please. I've got a lot of graphs and charts in here.

Did you pass out copies of the?

Not the entire slide deck, no. So I did, so with that, let me just kind of go The slide deck will be up on the screen. When we get to the main things that I want to talk about, I did do handouts here so that they're a lot bigger. I can't read. If it's up on the screen, it's a little small for me. And I was given a lot of grief today about being old and not being able to see things. So anyway, I'm working from that. You're quite happy about that. Anyway, there's a lot of graphs and charts in there. Some of them mirror what we talked about when we did the economic forecast and looked at some of the factors, but I've updated them as current as possible, but I want those in there for context, especially if any of the public come and look at that so they can kind of see where we're at. We won't really go over many of those. There might be one or two that we look at, but for the most part, there's other things I want to get through here. Comments that were made by the Budget Advisory Committee, we'll try to address those. As far as those slides and the handout here, did make some changes in how it's presented based on some feedback that we got from the Advisory Committee. So on slide seven, some more of the assumptions. Facility leases, we do lease a few different locations. Overall, the lease cost is just over $384,000 for the city. That is a $200,000 decrease from this year because we are expecting next year TMI, specifically for the public safety portion of it, will go down because in the first three years of that agreement, we are paying for tenant improvements as well. That will expire. So those will be paid off. The triple net, which is the public occupancy, operating expense, our share of the public portion of those leases is approximately 95,000. And our current expense that we estimate this is if work stays the same as it is currently, we typically spend on average about 65,000 a year for our share of the expense after revenues. Debt service, general debt service, that's parks, streets, operations center, some equipment, $3.9 million. And water fund estimated is just over $653,000. Why that's estimated is because that depends on how much of the construction we get done at the east side reservoir. Then our debt service next year will be based on how much we have borrowed through December 31st. Stormwater fund debt service estimated at 139,000. We still have that one loan we're working on with the downtown storm projects as well. So now to the next slide. Property tax, I'm estimating in the revenue projection, the 1% increase that we can do by statute, and that would provide an additional 26,500 spread out over the entire tax base. New construction estimate of $200 million. NSS valuation, about $116,000 increase. Annexations, about $615. Total levy amount next year, $2.8 million, which is about $150,000 increase over this year. The tax increment area, and that's specifically to pay for the bonds for Pioneer Widening. an increase of about 104,000 to 354,000. That one's a little bit harder to forecast because that depends on what other public entities are doing, whether they're doing any levy lifts or changes to their levies. That's based on the best information I got from the county forecasting that out, and I have forecast that out for the next five years based on where it is now and that base value of the time that we actually approved the tax increment area versus what the values have increased through this year. Sales and use tax. Good news is our transition is working pretty well. We are now at, through 2025, we're at 71% ongoing retail sales and 29% related to one-time construction. 30%, I think, is doable for the next five to six years because we've still got a lot of land, but our goal is to be in that 20% to 25%, similar to what the state average is in most of the Clark County entities. What I'm forecasting right now is just under 802 million in taxable sales, which is about a 10% increase over 2026 year-end estimate, and about 6.8 million. That does not include the public safety sales tax that you approve specifically for. We're breaking that out as a separate item. And then there's a local criminal justice that's broken out as well. This is strictly flexible sales tax that can be used for any purpose. Utility tax, about a 6% increase from the 2026 estimated year end, mainly due to household and EDU growth, about $134,000. That includes the best information we've received from other utilities that collect and remit utility tax to us as well. General and street fund utility tax estimate, just over $2.5 million. And then indirect allocations, that is the allocation that we receive from building and permitting, water and storm. For work that the general government does, that's mainly HR, admin, finance. It's our risk management for insurance and things like that that is charged out to those funds for the work that we do to help pay for those services. Building and permitting, a 12% decrease from 2026 to just over $640,000. Water fund is the only one that increases at 7%, about $661,000. And storm fund down about 3% to $457,000. And that's based on a model that we use and all the cost drivers that go into it for the work that's done for them.

So that's why it goes up or down.

State shared revenue, per capita revenue. I'm estimating about a 5% increase compared to 2026, 573,000. So we don't get a lot of state shared revenue. We used to have that as 5% of our overall revenue budget. It's now down to about 3%. So most of the per capita allocations have gone down pretty significant. The ones that are really significant are the motor vehicle fuel tax. It's gone down over a dollar, I believe, per person. So that's causing more participation from the general fund to help pay for street fund operations. And we'll talk about that here in a little bit. So Julie, if we can go to slide 18. That's correct. So water rates, Council, you saw our water and stormwater rate models back in 2023 and approved what we had gotten from those. Per those models, it was a 3% inflationary increase for water this year. And it was a steady, it was 18%, 11, I believe 11, 9, 9, and then down to inflation with the stormwater rate. Currently, this year is a 9% increase. This is something that we'll be talking about probably next year a little bit more. Steve and I have a meeting with a consultant that we've used to do these studies for us, and we're going to re-look at storm just for the fact that a lot of the requirements for that permit, we now know what those are. When we did the rate study back in 2023, we didn't have all of the information for that and the expenses to meet our permit requirements are a lot higher than what we expected. So we do have to rebuild that model, and we have to look at that, and we'll have to come back to you with some options of what we can do to make sure we're covering that and going forward for the next five years. Water revenue, about $3.8 million, and storm, about $2.2 million. So part of the forecast for building and permitting affects a couple different areas. It affects the building and permitting fund because council has approved 100% cost recovery. We want to make sure that the service we provide is covered by the fees that we're charging. Getting the permits in, that tells us that we're getting also new homes, so property tax. It's getting new commercials, so there's more sales tax. So that helps us also set our forecast for revenues in other areas just other than the building and permitting fund. So single-family residential building permits, Claire and I talk quite a bit early in the year. We're looking at 250 permits, which meets the budget that we had in 2026. Early this year, it looked like we weren't gonna meet that number. Right now, with what's been coming in, it looks like we're going to meet that and slightly exceed that for this year. That would bring in about 1.2 million. multifamily permits, looking at an estimate of 108 new units next year for about $100,000 in fee income, and then commercial permits, approximately $300,000. Claire went through, this is a question that came up at advisory committee about what types of commercial permits, and she went through, and right now we're forecasting about 472,000 square feet are in the pipeline right now some form of whether it's land use well they put in the permit so Claire maybe you can it's actually the building permit is in okay so but we have four hundred seventy two thousand square feet in there right now and the forecast was for about three hundred thousand but that would bring in about a hundred and fifty thousand in in feet revenues so Plan checks and miscellaneous permit fees, another 1.5 million, including 135,000 right now from cost recovery billing for a total revenue of just under three million. Again, we've talked multiple times that this is a fund that we're gonna need to come back and talk to you. Part of the conversation Steve and I will have with the consultant is around this. They used to do all of our studies for permit fees. this last one they weren't available for. So we want to talk to them about maybe redoing that because right now we're not covering the cost of providing the service. So we do need to look at that because that is an issue that's gonna pop up this year and ongoing until we fix that. But we wanna look at that and then we'll come back to council with different options.

I have a question. what percentage would you guess that get to pre-app get all the way to well paying permit fees um almost all but it can be yeah for sure for sure i was just curious like you know how many actually got across the finish line that actually started at that spot

but a lot of times they come in with different potential tenants. So I think what Claire's indicating is that almost all pre-apps turn into an application at some point because the property doesn't go away. The property at some point is going to develop. The question is, what is it that is going to develop? And the actual configurations and potential businesses, those change a lot from pre-app to pre-app and will do for a single site. I mean, I've been part of at least a couple of our larger parcels where we've had four or five pre-ops for the same part project area and that end up changing because they change hands they change potential tenant configurations so those of like if you're talking about like a specific configuration and how often that translates to the finish line i would say it's more like 20 not 80 okay yeah i guess i'm thinking about through the lens of

you know, these are projections and things like that. And what can we conservatively kind of depend on from a revenue perspective or safely assume from a revenue perspective?

And that's where we're kind of looking at 300,000 square feet that will go to building permit versus the 472 that's in the pipeline right now. So, and that's, you know, I'm glad that you brought that up because that's a really good thing for everybody to know. And what Claire mentioned is, We could get revenue today, but the expense goes on for two or three years. We could get expense that's happening now, but some of it's deferred to when they have to pay. We may not see the revenue for a couple years. So that's one of the things in this particular fund. It's very cyclical, so we do have to make sure that we're trying to even things out, and that's the importance of doing these studies and making sure that we're we're getting the funding where we have some fund balance to keep things flat. Because otherwise, if you're going by the cycles, what a lot of places have to do is they lay off, they hire. They lay off, they hire. You want to keep things even. If we want the service level that we have, which we continually get accommodated, people are very happy with what they receive from us. you need to keep that steady. So that's part of what we're trying to talk about, what we want to come back and kind of show you here at a future date. So let's jump to slide 22. And now we're getting into some of the assumptions for expense. So the assumptions, obviously the biggest expense that we have is personnel. Um, so personal expense, um, again, the two biggest areas for personnel, I'd say three biggest are, um, building and, um, permitting. That would be number three. Then we're talking about, Public safety, and then we're talking about public works. So public works is the one, for the most part, that works across multiple funds. So you've got cemetery, general government for facilities, and you've got parks in the general fund. You've got the street fund for operations and maintenance. You've got the water fund and the storm fund. So with people working across multiple funds, we want to make sure we're getting the money and the allocations to the right place so that they can do their job. And at the end of the year, we're not saying, look, you can't work anymore for this month. So what we do is we do a study for 18 months, 18 months from previous time of what they actually signed out for in their timesheet. And this year we did specifically, we looked at that 18 months but focused on the last six because there were pretty significant changes in public works in how they broke things out. They changed to kind of a division where they have parks and cemetery and then they have the facilities and the streets. So we wanted to really look at that. And so we did that study, met with public works management, went down, worked with the supervisors, kind of looked at things, and then we made sure that we set the allocations according to where we see them working and what the expectation is going to be for 2027. That way, my goal is just to get the money there. Their goal is to get the allocations so they got the bodies in the right place to do the work. So that way we've got that. Overall, what we're looking at, is an estimate of a 6% increase in personnel costs. That includes salaries, that includes benefits. Of that 6%, healthcare, we're estimating a 10% increase. Of all the finance directors I've talked to at other areas, they've been averaging about 11%. We've been pretty lucky with our two labor agreements and the health care that's offered under those labor agreements. Last year, we were about 5% to 6% on Teamsters, and I think it was roughly the same, maybe up to 8% with RPOA. So we've been under that number. We had three or four years in a row where we had no increase. What I've seen requested on the private side to the insurance commissioner is upwards of 20% increases. So we don't hear about benefits for health care and stuff like that until usually late November. So it's after we pretty much already decided what the budget is. So that's where the estimate. But I think 10% is pretty safe for where we're at right now and kind of just initial information we've gotten is we're probably going to be okay there. But overall, that brings the personnel increase to about 6% over all personnel and all funds. So PERS and left contributions, no change from this year. Washington is one of the only states in the country that is fully funded for pensions, so that's a really good thing. So they actually, a year, year and a half ago, they lowered how much we have to put in for PERS, and they haven't had to raise it since. So that's good news for us. We have a couple of potential retirements. We haven't heard that anyone's retiring, but they're capable of retiring next year. So I wanted to make sure and put money in to cover any type of accrual payouts. That would be about $72,000. That's in building and permitting and PD. So that money has been set aside just in case. Hopefully they don't, but that is a possibility. We had others that are on the list, but they've indicated that they're not retiring at this point. So we didn't include that amount in there. Each of those would come out of one of the reserves that we have set up, at least for a portion of it. So we do have some money set aside that would pay for staff retirements. So next slide. This is one that's on your handout. So one of the things that we did was kind of show the advisory committee the personnel costs, since that's our highest expense in the city. And one of the comments that was made was, I'd really like to see what the FTE allocation is for each of the different funds or departments. And why is some of this at the percentage that it is? So this particular handout shows 2026 budget, 2027 budget, the percentage change, the FTE allocation that is estimated for 2027, and then just some brief comments. Most of them are in that 6% range or lower. There's a few that are showing a negative percentage, The reason for that is reallocations to other funds or departments. Just for the fact that as we were doing our study, it looked like people were really working in other departments more than they were working there. Specifically for administration, the 17% reduction. Two of the people that are admin employees actually do more events and stuff like that, so they're really paid out of the general fund facilities. That's where our events budget is, so we move their allocation to there to reflect where they're really working. You'll see in legal that it does show a higher amount. That's just because when we first estimated, we estimated pretty low on where that was, so we're just right-sizing that compared to where it is now.

Now, if we also compare that, real quick on the legal, because it's a 60% increase, and you touched on this before, and I'm trying to remember what you said, but that was about certifications. That's not necessarily going to compensation. It's all about...

This one here is only about compensation. Oh, it is, okay. This is salary and benefits.

Okay.

So one of the things that I kind of looked at also is in the past, and we kind of, estimated our initial salaries based on what we're seeing but we used to have a part-time contract attorney and so when we look at having a full-time attorney and what that cost is and compare that to what the hourly rate was it's significantly less now than what we would have been paying if we were having somebody working full-time for us as a contract Because contract, you're paying upwards of, you know, minimum $250 an hour to $400 an hour. And, you know, we're paying significantly less than that with this and getting a full-time attorney, which we sorely have needed. So the next... Big increase is showing general government facilities. That's because the allocations changed. It has nothing to do with just increased cost per person. It's a pretty significant increase. It's .6, but we also moved partway through this year. We moved some of the allocations, so there's allocation change from this year. compared to last year and then again allocating more next year. It just, we have people both on the public works side and then those two employees that are coming from admin that are going over there and being paid from there instead of where they were. So, and we were routinely over the last couple of years showing a budget deficit in personnel in that particular department. So we had to bring funding from other line items in that fund to make sure that fund budgeted. So we're right-sizing that. But overall, in general fund, it's a 7.7% increase for just about 51 employees. It's a reduction of 0.5 FTE from 2026 to 2027. street fund and tbd are showing a big increase when we did the study we just saw that there was a lot more work part of that was because we found out that some of the people that were signing out thought that some of the work that's really street work was they thought it was parks work because it was along multi-modal trails along streets and the right-of-ways and that really should have been coded to streets and so we've got them coding it properly and we've moved the allocations to the right place TBD is just those capital team members that are actually working on pavement preservation projects and managing that program. We wanted to make sure that we were allocating that so that we could see what that full program cost was. But then when we get down to full personnel cost, again, a 6% increase, and we have the same amount of FTE here as 2026. Any questions? So the next slide, really, it just recaps and it shows 24, 25, and 26 and 7, kind of the allocations throughout. So you can kind of see that's just something for you to look at if you're interested in where our allocations were. 24, 25, and 26 show our increase of positions that were approved by the council. Obviously 26 to 27 right now doesn't show any change because that would come at the next step in the budget process. It wouldn't come at this step. Right now it's just showing allocation changes with the same amount of personnel. Now one key thing here is this is approved FTE count. It doesn't have anything to do with seasonal positions. Council just approves a certain dollar amount for seasonal, and then staff set the seasonal. We do communicate with how many seasonal positions there are, but then staff kind of move them where they need to be. And typically we have, I think right now we have four in storm, we have four in public works, two in parks, two in streets currently. Is that correct, Ryan? Okay, thank you. So let's jump to slide 27. And this one I show pretty much every time we do a budget discussion. This shows how many employees per thousand population. This is something that really helps us kind of show where we're at, especially if we're talking about efficiencies, if we're talking about where people are working and how we're able to keep up. If you look, you can see that we've been pretty consistent throughout the time period from 2020 through the estimate through 2027. Currently, with population increase, obviously it will show a dip in total employees per thousand. And then we also break out the general and street fund. The difference after that would be building and permitting water and storm. So any questions on that?

I got a question on the back slide. Back one.

Okay.

Cemetery. No. That one.

No. You're probably going back to slide 24. That one?

Yeah. Cemetery. 24, we had 0.35. 25, we had 0.70 FTE. and we went back to 4.5 and 4.5, how come it was clear up to the .7 rule?

So that year we had some cemetery projects scheduled.

Okay.

So we had more FTEs scheduled to be working in the cemetery at that time, and then when we came back going into 2026, they didn't have the projects, they just had the maintenance.

So it takes an employee... half of every day of every month to take care of the cemetery?

Yeah, about 0.5, or just about, you're right, 0.5 FTE to be able to take care of that. Typically, though, that doesn't mean they're there every single day. That just means that's the average over the entire year, and then they're there during certain times more and then other times less.

Do they use the shovels to dig the hole?

I don't know.

I haven't watched that.

If you talk to Kelly, he's got a whole bunch of really good stories, though, that I have heard about that.

Just a quick question. Our staffing level per thousand of population, how does that compare with other communities our size?

So the last time we did a comparison, and I'll have to dig that up, we were doing that through AWC because they track that, and we were kind of right in the middle. Yeah, we're a little bit less, but one thing that we kind of look at is And when you talk to other people, we have more efficiencies when it comes to software and things like that. So some of the back office stuff we're able to do with a little bit less people. But we were, you know, if you really looked at that number from AWC, and I'll talk with Lee about getting the access so we can get that and show you guys. We were right kind of in the middle of all of the comparables. Thank you. So on to, yes. So other expenses, supply and service expense, we do a three-year trend. So what we do is we look at the two most recent completed years. and what did we expend in each of the different line items. And then we look at what's the forecast through the end of the current year, so 2026. Then we do a trend to see where we're at. What's the average that we've been spending? What have we been doing? Then I compare it to what the current budget is and what the current forecast is for the end of the year to kind of set that budget going on next year because if they're, If they don't need something, we don't want them to spend it just to spend it. We don't want them to lose it. So what we do is we do that trend and then we look at where they're at and find out why maybe something either was below or above. And then we try to set that and then we have conversations with the different departments to set that budget. Last year when we went into this, obviously we were showing a net deficit going into the budget. So we had gone through and done an exercise to ask everybody to really kind of cut 5% in each fund. This year, we're not showing a net deficit in the general fund. So with that, we didn't ask people. We actually were able, in a couple of the cases, in areas that, you know, because of the growth that we're seeing more, we were able to do some increases in there. And then, obviously, utilities have gone up and different things, and some commitments have gone up. So we made sure that, you know, we set the budget realistically to what they can...

get the job done and what it's going to cost.

So general fund transfer for street operations. This is something I mentioned earlier, you know, our motor vehicle fuel tax is going down. So general fund, one thing that we talked about internally is our sales tax for the TBD is increasing. So this year I'm forecasting about 1.2 million. So we really looked at but is eligible to be paid other than the pavement preservation program, and we can do some street operations out of there. Because this is becoming more and more of an impact on the general fund, we looked at doing 10% of the operating budget for street operations out of TBD which is about 190,000. So that relieves some of the pressure on general fund, and it doesn't impact our pavement preservation program. So we'll talk about that here in just a minute. So general fund transfer is still increasing 11.2%. Imagine the percentage increase if we still had that 190,000 coming out of general fund. And then 10% of the overall street budget, 190,000 coming from TBD is a transfer. Pavement sidewalk preservation program, Grant and Miranda did a presentation earlier this year on what it would take to maintain our pavement preservation. So one of the things that came out of that that I heard, and I want to make sure, it seemed like with the budget advisory committee, everybody heard the same thing, but there were questions as to what do we get. out of that it was 1 million for the pavement preservation that's what was in the presentation to maintain our current index and then increase our sidewalks from 20,000 to 100,000. specifically so we can get that earlier project done of the downtown sidewalks and then we have something to maintain. And that also ties into some of the projects where every time we do a project and we have to redo ADA, it's an average of $15,000 per ADA sidewalk to replace that or put that in. It's pretty expensive for that. So that gives some amount there. We talked with the capital team about what does that one million get us? So with the one million, we maintain our PCI. We're currently at a 79. We maintain that 79. If we stayed at 600,000, we would see a two point reduction annually because we're not keeping up with the maintenance. So basically we go from 79 to 77 to 75. So we'd start seeing our streets declining. So that amount, that's what we came up. Now that still provides some ability to do some of the bigger projects, which obviously we would need to look at grants and stuff and have a grant match there. But part of their plan does include some of those streets as well. And each year as we get into that process, they'll be showing you what the plan is at that time. Go ahead.

So with the $100,000,

they wouldn't have to come to council and request more money because that's already in the budget. So there's no hold up of the work.

Up to that $100,000, yes. Okay, thank you. So for 26, our pavement preservation was still $600,000. So what did our PCI numbers drop? Did they drop in the last year because of that?

Because we haven't funded enough? So that will be at the 79 with what we have currently this year, correct, Miranda?

Yes, so our PCI did drop a little.

Oh, okay, so the widening brought us back up because that was an improvement to an existing road? Correct. Through another, yes, okay. So really like looking at it at $600,000 this last year, and then increasing it by 40% next year, the loss is negligible, like that difference is negligible just because of the TIA project? Correct. Okay. With the sidewalks allocating $100,000 up from $20,000, do we feel like that's adequate? Is that going to get us to what we need to do? I mean, I would like to discuss that probably more just kind of compared to some options, but I want to make sure that that's going to be an adequate amount as well.

Yeah, and with the ADA transition plan that you just approved, we did purchase a module to add in to Street Saver, which is what they use for the pavement preservation for sidewalks. So they're in the process of adding all that information in there. Like a software module? Then they'll be able to come back to you and give you more information on that.

And that's the ongoing. So that $100,000 and what we're talking about as a module, that's the ongoing. There's also the one-time catch-up that we've talked about with council. And there was a study session earlier this year with you where our team put together options for how you might catch up on some of the downtown sidewalks. And there were two different alternatives. And then there was a hybrid alternative that you looked at. That's going to be coming back to you in October. uh, for your review and consideration. So you will see that again, as far as the one time, uh, to be able to catch up on all of the, uh, deficiencies that we see in the downtown sidewalk system. So with the one that's beyond the 100,000, the 100,000 is an ongoing that we would, that we would assume.

How are we going to budget the one time that as I went into, that'll come to you in October. Okay. Not a part of the 26 budget. or not part of the 2027 operating budget?

So right now, we only have the $100,000 in, and it was thought that that would cover that one time initially for 2027. If council wants to do that differently, where it's $100,000 plus the one time to do that, then we'll have to be told to change this budget amount. Correct. Because right now, $100,000 is what's in there.

But again, the $100,000 is operating, ongoing, What we will be bringing to you is one time capital to be able to actually create that catch up. So that's the difference in how we will be presenting it to you. But will it have to go into the 27 budget? Yeah, it's money. I mean, we'll still have to figure out where that money comes from. And most, I mean, street fund, all of those are general fund revenues. Okay. Thank you.

So. On to equipment replacement fund. In 2026, part of the reductions that we did to make sure that we were at a balanced budget was we chose not to transfer any funding into equipment replacement fund other than the water fund. We did just over $40,000 in the water fund. This year, the budget does include transfers again. We did move back the majority, you know, one year for replacements. for some of the stuff. Right now, we're looking at $275,000 in transfers, $200,000 from general, $25,000 from street, and $50,000 from water. Building and permitting and storm water, no transfers into the fund. Neither one of those have any replacements over the next three to four years, so that's okay, and that's a way to keep those funds so that we're using the money for other items. And then there's only one replacement that's scheduled at this point, which is a combination park streets truck that we are starting to see some pretty significant equipment issues, a lot of maintenance stuff. I think this is a third of that same type of truck and the two previous, both the engine blew up. So we do want to get this replaced as soon as we can.

When we replace a truck, do we buy bottom of the line, middle of the line, top of the line? How do we determine what kind of a truck we're going to purchase?

The departments that are using that looks at what are the needs that they have, and they buy it for the needs that they have. They don't buy the Mac Daddy... you know, with everything in it, they buy what they need. So they're looking at utility, and that's how they look at it.

So we're not buying chrome wheels and whatever, whatever.

That would be pretty practical, usable equipment.

Correct.

So basically what you see driving down the street is all utility, and it's based on what are the needs of that department. So that's what they're looking at. Thank you.

And for the truck that we're specifically looking at, the 2006 that we would be replacing, it's an F-350, so we'd be looking at an F-350 to be able to fulfill those needs, although the project team and Kirk, his teams have gotten together and said, all right, well, we can actually move from a diesel to a gasoline engine, to a gas engine, and that'll actually provide some efficiencies and longevity with that. So they do look at, like, What efficiencies can they build in? Sometimes that's by looking at hybrid pieces. We have Ford Lightnings that we've purchased, our police vehicles, a lot of those are hybrid technology. And then in this situation where you do need a larger vehicle, it's, again, how can we create efficiencies within that?

do we have like, is there state level like pricing that we can tap into like pool pricing?

So, um, we tap into the best price that we can find. Um, their state level through department of enterprise services. We're part of the Oregon contract, Arizona contract. We've got, um, King County contract. We've got, um, a couple of national contracts. We look at all of them to see what the best deal is. The funny thing is Arizona seems to have been the best one to use. It's typically quite a bit cheaper and they also ship it with no cost. We did have this last year their government liaison They were transitioning, so it was hard to get anything from them, so we've gone through Northwest Ford, which we've gotten some really good pricing. It's all bid prices to that state level, and we've gotten some really good deals doing it that way.

Clyde and I are really glad you're replacing that truck, because when we worked at a table downtown in one of these days, we heard all about that truck that needed to be replaced.

So if anybody's interested, we'll be putting it on our auction site here before long. So let's go to the next slide, if everyone, no other questions on that. So this is another one of your handouts, number two. So this is the operating fund summary. And I believe this one was asked for last year, but it was also mentioned in the advisory committee here. And this is just a very general, high-level look at each of our funds. So our general fund, it's just about $16.2 million as a current revenue projection, expense about $15.7, so a net of just over $434,000. So that's different, again, than last year. We started off about $855,000 negative. The expense is an increase of 9.2%. Again, a good portion of that's labor. Fund balance estimate at the end of the year, 2027, is 5.5 million. Our policy reserves estimate for next year, well, current year, excuse me, is 4.3 million. So what we would have available is $434,000 for any ongoing as we're getting into the next stage of this. I will be doing another revenue projection. It won't be by the 17th, but it will be in October. So if there's any significant changes, we'll have that. That'll be the last revenue projection during the budget process. One time, if we, let's say we spent everything on ongoing that's mentioned there, then there's still about 782,000 in the general fund. Now, this is the one that I'll mention. These questions came up earlier regarding our credit rating and what happens with that. The one thing that they mentioned, they kept us at AA stable because of our strong management, our strong financial policies, and the fact that we've got really good reserves. With that, they did have the caveat that If we show that we go into policy reserves, that could be a trigger for them to downgrade our credit rating. The reason they said that is because they've seen a steady reduction in our reserves, but they did understand that most of that was planned because we had built up our reserves for this transition. And then we made strategic investments using that. So they understood that, but where they wanted to make sure is we are following our policies on the policy reserves. So street fund revenue, $1.9 million. Expense, $1.9 million. Small net, that expense increases just over 20%. Part of that, again, is the labor reallocation in that department. Estimated fund balance at the end of next year, just over 1,000. We don't keep a fund balance in that one because the majority of the funding comes from general fund. Building and permitting, again, this is the one we need to talk about. There might be something we have to do before the end of the year in this one. We'll talk about that at a later date if that's necessary. Revenue projection, 2.9 million, almost 3 million. Expense, though, $3.6 million. So right there, we're starting with a deficit there. Net of $652,000. Again, I've mentioned this multiple times. They've done a great job of cutting their expenses. They're over $300,000 that they right now are on track to reduce in their budget this year. It's just... the revenues are not covering the costs. And the primary purpose of that fund is to provide the service so that we can get the development going that we want to happen. So that's something that we're working on and we'll come back.

So just to, that was something that I noted with that negative fund balance, but is this a temporary issue or that's what you're saying? There's something structurally wrong that we need to address.

Right now it is a structural deficit, yes. So this isn't the first year for this. We're already in year three or four of this where we started seeing significant increase. In the early 2020s, we were getting significant building permits we were building reserves in there. Then again, you get that timeframe where you get the revenue, but then the expense goes over multiple years. As we started transitioning from single family residential to more commercial, there's more work involved. There's more inspections. There's a lot of stuff that they're not paying for because they already did. So that's part of that. And then you want to keep that level again. You want to make sure that you have your talent that is doing that. Our service level is really, really good. We want to maintain that. So that's why, again, we're re-looking at the fee study and what we need to do to meet your goal of 100% cost recovery. So any other questions on that one?

I've always got a past question. You said our reserves are going down. You said that the bond rating company I could tolerate that because of our plans. Okay, where is our reserves headed for yet? In 27, 28, what do you anticipate?

So right now in 2027, that's the first line on this second handout. our fund balance to be estimated as 5.5 million with our policy reserves at 4.3 million. So it's actually increasing slightly from this year. So right now, now initially we had forecast that we would use reserves this year. Right now, end of the year, I'm forecasting that we're gonna have a slight surplus on that. The reason for that though, keep this in mind is it's mainly because of unfilled positions, mainly in PD, that we didn't have to spend that money. So that has helped us, you know, through this year. So that's a big part of that.

And the counterpoint to that is that you also, because of the work that you did already, you've increased revenue specifically for public safety. that did not exist at the beginning of this budget. So at the beginning of the budget, you did not have the public safety sales tax. We were not eligible for it, had not gotten certified. You did all of that work. Staff did a ton of work to be able to get us certified so we could actually get that ongoing revenue source. Not the grant, the grant's a one time, but that ongoing public safety sales tax did not exist. So yes, there have been salary savings in PD, but When I look at it moving forward, yes, there were salary savings, but there also was not that revenue stream. So the revenue that we are seeing has increased and will continue to increase because it's sales tax. And as Mr. Johnson indicated, that's been increasing between 5% and 10%. So we're seeing an increasing revenue source over the long term that will help us.

And then the other thing to add on to that is... the HB 2015 grant, we had asked for 250,000, we got over a million. Some of that is covering expense that was going to come from general fund, mainly the cars and then some of the radios. So we are submitting to get that reimbursed to us, so that's part of that help with the fund balance as well.

So to clarify, does the revenue we receive from HB 2015, does that replace some of the general fund revenue we've gone to fund public safety in the past? Or is it adding on to it?

Well, let me make sure I'm clear. Are you talking the grant or the sales tax? No, the sales tax. The sales tax right now will be covering the salaries of the new officers.

Just the increases that we would not have bought for that sales tax?

Correct. There probably will be more. you know, ongoing sales tax revenue than what just those two positions are, but there's a lot more to just the personnel costs. Of course, yeah. So it's also going to absorb that and cover all of that so that that's not coming just from the general fund property tax or sales tax, which is the other sales tax. So that's covering really those positions ongoing. Right. And then from there, it'll kind of depend on what we see for the increases.

Real quick. So we're funding public safety at existing levels, and then the public safety sales tax revenue that we receive is going to fund those additional positions, the increases. Correct.

That's reflected in the budget because that budget has gone up, which is our largest budget.

Right, and when I'm talking about the 2026, the salary savings associated with that, those are new positions. So the salary savings that we are capturing, a lot of it has to do with new positions that had just not gotten hired yet. Okay. But those are new positions that are funded with new money that we have already been collecting.

Okay. And we're not getting the grant money for those positions until they were hired. They're both hired now. Now we're able to request the funding for that from the state. But the sales tax revenue. but the sales tax revenue was still coming in. Right, yes. Okay.

Counselor Davis.

Well, I was just going to say, I'm glad you brought that up because that was a part of our conversation when we passed the public safety sales tax. We didn't want to just have, oh, sweet, we can take this money and then free a more general fund. We wanted to do it with the emphasis of increasing investment in public safety.

And have to to that. We have to use it on those positions. Yeah.

yeah yeah but you know instead of making it so like oh sweet we can do that and free up more and other stuff it was an investment yeah increase and and you'll see in the increase in the public safety budget for next year there are pretty significant contractual commitment increases for swat for cresa for evidence and things like that that this public safety sales tax is helping pay for so that that's not impacting other areas. So it's, I mean, it's beneficial and putting that in has really helped us out with that because those costs have significantly gone up. Court costs are the one that have kind of stayed stable and it could cover those, but it's not having to cover any of that. It's strictly in public safety. So, okay. So on to water and stormwater fund. Water fund revenue is 4.8 million with expense about 4.5, so about 244,000 surplus. It's a 23% increase there. We did make some changes in some of the proactive work that we're doing in water. Year-end fund balance is projected to be just under 3.8 million. and about $2.2 million for policy reserves. Ongoing would be about $244,000 with about $1.4 million available for any type of one-time. They do have some stuff that they're requesting, but not significant amounts in the initiatives that will be coming up.

Okay. That was something I wanted clarity on because I saw like a 38% increase with the operation and maintenance, but then only a 23% fund increase.

We'll get to that one in a minute. That's one of the next slides. Okay.

All right.

Um, so stormwater, um, about 2.3 million in revenue and just over 2.3 million in expense. So we are showing a, um, um, deficit there of about $37,000. It's an 8.1% increase. Again, we're looking at trying to get some proactive programs in place with the permit requirements. Now, this is one thing that I did want to talk to you about. So we'll talk here in just a moment about that. Right now, the year-end fund balance projection is $855,000 with a projection for... reserves at 1.2 million, so that's higher. The reason our reserves are so high in stormwater is most of it's capital-related, and from 24 to 27 projection, it's gone up significantly. It's gone up from around, I think it was 750,000, somewhere around there, to 1.2 million. That's significant. And the reason for that is We calculate some of our reserves based on how much capital we have, and we've been averaging about 11 million in new stormwater infrastructure each year because of all the development, most of that provided by developers. And most of that, again, is not something we're gonna have to repair or replace soon because it's all brand new. So we do have a option for council to consider to temporarily change the reserve requirements in stormwater. So we'll talk about that here in just a minute so that we don't show being in policy reserves and we can free up some of that money for some of the work that they wanna do because they do have initiatives that really they need to do to meet these permit requirements, including some of the current work that they're already doing. So just kind of to add on to that, so the capital and the repair and replacement reserves out of the 1.2 million, 958,000 of that is related to capital and capital repair and replacement. The capital repair and replacement specifically is set up for doing some of the work that we want to talk to you about. So reducing that temporarily, and we're talking like in the three to five year range, we're still going to have significant reserves, but that allows that money to do the work to get ahead of that permit and make sure that we're being proactive. Similar, if you look at it kind of in the same vein as the pavement preservation program, where you're doing the work ahead of time, you're saving money on the back end because you're doing the work when it's a lot cheaper versus having to do complete reconstructions. So Julie, jump to, you already did, thank you. So this is the industry standard reserve balances. So, I know it's a lot of words up here, but I kind of want to go through this because this is important for what we're talking about and kind of shows where we're at. So the Government Finance Officers Association, which is the professional organization that the city is involved in, where we get all of our awards from, they have recommendations on reserve balances. So the recommendation is to maintain reserve levels of a minimum of two months, and this is in general in street fund reserves, which is 60 days of regular general fund operating revenues or general fund operating expenditures. So that would average out to about 16.7% for us. So we've done two things. We've done 60 days worth of operating expenses, and we've done 10% of operating revenues from the prior year. The reason that we've always done that is because, first off, initially when we did the revenue portion, we weren't getting a lot of revenue at that time, so we wanted to make sure we had extra reserves on hand because expenses, you know, we want to make sure we can pay our bills, but also we had money to be able to do the work to provide the services we need. How are we on time? So with that combination, our operating reserve balance is 17.4%. So we're already above what the recommended from GFOA is. If you take into account the debt service and the capital reserves in general fund, we're at 27.4%. So we're higher. That's a big reason why we have our credit rating because we've kept it higher than what industry standard is. So when you go to building and permitting, And the utility reserves, we'd like to be at 12.3% for the overall. Building and permitting, we'd like to be at 13.6% based on the expenses there. We're not there, obviously. You've seen that. So we don't have that. Water fund, we're at 16.8%. So we're well reserved for operations. But if you include, again, the separation and capital repair and replacement, we're at 47.5%. Some of that money will be used as we're getting farther along into these capital projects that we're doing. Eastside Reservoir, Kennedy, Refuge Park, things like that. So that money is set aside and in the back of our minds in the planning committed to those projects to make sure that we get the water storage and the water that we need for the future. Stormwater Fund reserves are at 11.2%, slightly under where we would like to be, but if you take into account the separation and capital repair and replacement were at 36.9%. So again, we're well reserved. So the option that I looked at in kind of going through to make sure we're still meeting the requirements or the recommendations, I should say, of GFOA is if we did a temporary, council approved a temporary reduction in the reserve balance of $500,000. I just took This would give us the ability, what the stormwater team has asked for is a couple of line items similar to what we do in pavement preservation, what we do in water, and I'm gonna kind of go back to tell the story of water. We used to always be reactive to everything that happened. We get a water break, we go fix it at that point. A couple of years ago, they set up the program. We had the funding to do it, so they started to set up the fund where we would go and replace older water lines early, where we would go and fix valves early, where we'd go, what were some of the other ones? Hydrant meter replacement, things like that, where we're going and doing these things well ahead of time so that we're not having to react to a catastrophic failure. So that's what they're trying to do in storm now to get to that point so that it doesn't cost us more If you remember in STORM, we don't have a capital fund. We don't have SDCs, and you saw the numbers back when we presented that. That really wasn't something that's justifiable to put in there, not to mention that can only be used for new growth-related projects versus repairing old stuff. So the option that I was looking at was reduce that from the 1.2 million which we're projecting for 2027 down to that would be basically 720,000 roughly. It keeps us where we have money to use so that they can do these projects, get proactive, and then the initiatives that they have coming forward at the next study session are all of those are really those types of projects where they're looking forward and they're trying to get things done ahead of time. The numbers that were provided by Stormwater was 20% of all of their work, so for their labor and stuff, all of that is repair and replacement related. Inspections, things like that that are doing that. And then a lot of that is going in and doing work ahead of time. So that's the type of stuff that we were thinking this would do.

And this is not something that we're asking you to give us a yes or no on today. This is something, because it's related to some of the initiatives that will be moving forward, when you see that in your study session, you can tie the two together. But we want to make sure that you have a sense of what the reserves are now, what the potential options are, and then we'll marry those up with what can you achieve if you make that change as part of the initiatives.

Right. And if council makes that decision later, and that will be when we get into the public hearings and stuff, overall reserves in storm would still be at 32%. So that still leaves a pretty significant reserve balance.

To do that sort of, I guess, conditional action where we're specifically temporarily reducing reserves in order to fund some proactive measures, is that... simply something that we could do in the budget process being that specific? Okay. Yeah, we've done that in the past.

Okay.

Okay. So, Julie, let's jump to the next slide. And this is just I'm not going to really go over that because we've already talked quite a bit about this, but this is just one for you to look at and take home with you that this is where our estimated policy reserves and their comparison to 2026 and percentage changes with the ending fund balance there. So you'll have it all on one sheet so you can kind of look at as we're getting further into the budget process. So let's jump to slide 33, the one past this. So this is the next, or two more, this is the fourth one of the handout. And this was specifically asked for by the Budget Advisory Committee. And what this is is showing our operating budget for general fund, each department, and then each fund after that, including general fund combined. what the variance is from 26 to 27 by both dollar amount and percentage. Then it breaks it out to what that portion is for personnel only with the variance in dollar amount and percentage and the FTE allocation. And then to tie it all together, the O&M portion of that budget compared to 2026 and the variance there. So that way it puts it all on one sheet so you can kind of see each fund and each department with everything together at one point. And this is the one kind of that you were talking about, Councilor. So what was the question on that one?

There was... Operation and maintenance increased at 38%, and then the total fund increased only 23%. So I was just wondering what the difference...

Which one was that again?

It was under waters.

Okay. The reason for that is because personnel allocations went down, and then also... the personnel cost went down because we did have a retirement of a long-time employee and then hiring of an employee at a lower classification. Any other questions on any of the numbers on this? I think this one here is a real key to the operating budget as we get into this because this is where it stands right now. This is kind of that snapshot number. I know it's a lot of numbers on one page, but I'm trying to get everything in one area for you to look at so you don't have to take multiple sheets and kind of go back and forth. That was the specific comment at advisory.

I guess just to even refresh us, like the first line, which is city council, what stuff nests under our operating budget besides the personnel?

Operating budget is personnel. It would be your training and advocacy. It would be your travel costs. It would be election costs.

State of the city.

State of the city. And then there's a small one for supplies. And election costs, just to add on to that, that's not just election costs for you guys. That's for any election that happens in the city. We have to pay our costs to the county for that. And that's the place that it would reside under.

Okay. I was hesitant to do this, but I want to kind of poke at it a little bit right now. Can we talk a little bit more about legal? Because it's a significant increase, and I want to better understand that. I know you've mentioned it before, but can you speak to what the specific increases are and what those are going towards?

Yeah. The majority of it is related to personnel. You're going to see a big percentage when you look at O&M, 166%. but it's going from 15,000 in 2026, the initial budget to 40. So it's $25,000. What that's looking at also is putting a little bit into a fund in case we have to go out for expertise from other attorneys for advice. So adding that in there. As far as the personnel, when we did the initial budget, we had not negotiated the position yet with our city attorney. So we had an estimate. Our estimate was based on some information. I'm getting a spam call. Our estimate based on the best information we had at the time and then the negotiation was done. And Steve can add a little bit more to that.

And I think that's the bulk of it is what Mr. Johnson just indicated to you. I think the other piece that we can bring back to you is a clear evaluation of how we build our legal previously changed is that when we brought it in house, it used to be that, you know, community development, public works, myself, whoever that was getting a hold of legal, that, that each one had kind of a legal budget that they were built in. They had been separated off and they kind of, They got, I don't want to say buried, they were just separated. And so this consolidates all of that. And so instead of having billable hours by department where our city attorney then bills out to every one of the departments and they have a separate budget for it, it's all in here. So like our costs for our city attorney and the legal work that we do, other than those specific areas like remediation, like where we have a, like our, our, our water specialist or whatever other specialist attorney that we would need in for a special project, the vast majority of it is built into this budget. And forgive me if I'm missing any of that.

I think that's... Was it not consolidated in 2026 at all?

2026 was our first time doing it. We just didn't know what it would look like. So it was a matter of like, all right, how much are we using? the contract attorney versus in house. Um, how much is that going to cost? How do we bundle it up? We just hadn't done it before. Okay. So I think a lot of it was, this was new for us and figuring out, all right, what does that, what does it look like, you know, and how to budget that. And so at 26 was, was that transition for us is figuring it out. Okay.

And I just got one comment. Our legal services for the new, uh, building, uh, The YMCA, no, our community center, we had to go to outside people putting that contract together for us rather than doing it in-house or our local legal fund. Which is now in-house, which Janine does. Yeah, yeah. But we went outside. Didn't we go to people with a little more expertise for a little while early? Yeah, yeah.

I guess the other thing, too, on the legal piece, I mean, If I, I would love for anybody to chime in if I'm misremembering this. But, you know, when we looked at the 185, okay, last year that was one of the only asks to add was legal. And, you know, we had the conversation about all the advantages of instead of having to contract out hourly, bringing, you know, somebody in-house, presumably Ms. Parker who, you know, has, I think, done a great job. If I remember right, part of that was also the argument that with Lee Nottanaris stepping away, she would also assume some of the HR function, the legal HR functions. Is that represented in here? Because for HR, I mean, I'm assuming there's a lot that nests under here, but it's also a 10% increase in personnel.

change along with legal going up 60 percent so it it doesn't really change the personnel part because the personnel part is based on the the person the duties though have changed where she's taking on the risk management which whoever comes in and replaces that other position will not do that so That's part of the negotiations on the salary there. They won't be doing some of those higher level risk management. They will still be doing the HR, and Steve can add in a little bit more to that. But as far as personnel, that doesn't change the rate that we're showing in 2027, you know, and that change. It comes down to the negotiations beforehand. We estimated low and budget was already done before we really gone into negotiations with the salary.

And I think, so number one, yes, the risk management functions have already transitioned and Ms. Parker is taking on a lot more of the risk management legal functions because of the transition of the deputy city manager position. with, but to the larger point, one of the things that we did talk about was the additional support legal support that we had not gotten prior to now where we didn't do it because it was contracted. And so whether that's the risk management functions associated with the deputy city manager position, if it's additional legal support, for example, the community and recreation center, Development agreements that you've seen Ms. Parker do more of than she used to, those are all then all contained within that single line item versus contracting out and potentially not going and getting those services externally. So that was kind of the other addition. But we can, I mean, obviously it's something that we can get you additional clarity on and get you some more detail to kind of show you that transition. and what it looks like and, you know, if there's any efficiencies within that that you'd like us to be digging into. But we'll provide you additional detail on it.

I'm always, yeah, more is better. Yeah, that'd be great. Okay, thanks.

Were there any other questions on this particular page? OK. So let's jump ahead to slide 36. So it'll be the special revenue. Yeah. So this is the one, again, this is the final page on your handout. Special revenue and then capital service. These are the funds that we use basically to cover capital and to pay for specific purposes. So this kind of gives you the idea. So I'm not gonna go through each and every one. Tax increment area will be paying debt service next year at a higher rate than it paid this year for the bonds. Affordable housing. What I heard when council first approved the rental assistance was do 50,000 the first two years, but we will reassess early next year how the program's working. So I do have 50,000 in expense in the budget for next year. Am I still, okay. Transportation benefit district. Right now I'm forecasting 1.3 million next year with expenses of just about 1.5 million. But we'll still have a fund balance of about $1.7 million there. And we do have some projects that we're working towards that will be some reconstruction projects in the future that will take that.

We were just talking about there's the one time and then there's the ongoing.

It includes $1.1 million and the $190,000. It includes everything that I've already talked about except for that one time that Steve had mentioned. Was it not a counterpart? Correct. Yeah, that one is not. And then debt services, it's just an in and out of $3.9 million to pay our general government debt service. So the ones that are going to matter going into next study session are capital service, real estate excise tax. I'm forecasting just under $2 million in revenue and $2.7 million in expense, all of that going to debt service. with a fund balance estimate of about 980,000. In the long-term projection, I do have that right now committed to debt service, so that would be something that council would need to make a change there. if they chose to, but with our debt service and then some escalations that will come up as our interest-only payments go to interest and principal, that's why I've got that committed to debt service going forward for the next at least five years. Park and traffic impact fees, very low revenue, and then expense a little bit higher. Most of that for park impact fees, it's debt service and some capital commitment that council set aside this year for the specific project it was set for. That one didn't come into play because we didn't get the grant, but then we got grant for another project that this would transition over to. So that's where that money is now committed to. I'm a little bit concerned that I'm, even too aggressive on the revenue of 226,000 because we've got a lot of credits out there. We've got over 10 million in park impact fee credits and almost 15, I believe it is, in traffic. So I'm a little bit concerned that we're not gonna get even this amount. This is only saying that we get up to 20% of everything that we're projecting would be due. But again, we got a lot of stuff and we'll have, some projections. I don't think I put it in here, but I did put it into a... Actually, Julie, can you go ahead? Yeah, here we are. So this is what we've got, current balance, and then our total credits after some outstanding issuance that we've already got out there that they have to finish projects. But if you look down below, we've gotten 5.8 miles of new roads, a new roundabout, new bridge, 3.1 miles of trail, 75 acres of parkland, and then about 7,900 linear feet of water line. We don't issue a lot of SDC credits. And then right now under construction, we still have a 2.5 acre park, another new collector road and water line, a pedestrian bridge and trails. more park acreage coming. So we've got our bang for our buck on doing this. So initially the hope was we'd have a little bit on both sides, but the reality was we're growing fast. The only way we're gonna be able to build this stuff to keep up with the growth was we work with developers, because they can build it faster and cheaper. And so that was the decision that council made back 2018-2019 timeframe. Do the TIF fees ever expire? Yes. Well, TIF credits expire. They have 10 years to use them. If they don't use them in 10 years, they expire. The only one that's different than that right now is Union Ridge East. with the shut corporation that was through a development agreement where they got 15 years but they're already six or seven years into that and they have not been building anything over there and the union bridge east that's really on the west side of i-5 that's under contract with oliva and all yeah the town center all of that they have to use a credit so we're generated there So I don't anticipate that any Union Ridge East credits will be used on that side. It's all going to have to be used over on the east side of the freeway. So, yeah, there is that potential that we could see some expire, but most of them are out to 2032 or later right now. So, Julie, if we go back.

I was just going to say, I mean, to me, I would appreciate a little bit of a deeper dive on some of this stuff and so i just put out there i'd entertain one of our future study sessions kind of looking at piff tiff credits what's hanging out there like just a deeper dive you know what maybe some of our financial exposure is like expirations and all this all the stuff i think just a focused look at that i would appreciate at least i just put that out there for

Okay, so if you can go back one, Julie, just back to the impact fees. Most everything is committed right now, whether it's debt service or capital commitment. We do have a balance right now in the traffic impact fee fund, but that was committed for one of the sections of Royal Road. And we're barely going to have enough. As you can see, fund balance estimate at the end of 2027 is just under $5,000. So that one's a little sketchy. But everything in there basically is our match for the TIB grant that we got so that we can finish. I think it's a Hillhurst to Water's Edge section of Royal. Is that correct, Miranda? Hillhurst to Hayfield. Hillhurst to Hayfield.

How did the whole – so there was some type of lawsuit on Royal Road when we did that first stretch with the contractor. Has that been settled?

Yes, everything's done with that.

Okay.

Did we end up – I think we came out where we thought it was fair. Okay. And we're done. We have no – yeah, that was a couple years ago.

It's been a while. I don't remember it off the top of my head.

Yeah. It was a couple hundred thousand, I think, is – additional payments, but we're done. No commitments left. So, um, so final one water system development charges. We don't have lots of credits out for that. So I'm forecasting about 1.7 million right now. Um, an expense of 693,000 That's going to change as we get our carry forward stuff coming through. I've been working with the capital team to take the current capital projects that we're doing and how much will be done by December 31st, and then what are we carrying forward to next year. We do have that loan to pay a good portion of that, but there will be a pretty significant amount more that will be due SDC is to come out of there.

We'll try to look at that number right now. It almost feels like it's not even worth looking at that number.

Yeah, we'll look at that. We'll have more information at the next study session, but we have $10.3 million estimated fund balance there. Most of that's going to get used up with these capital projects that we have, but they've been planned for several years now, and that money's been set aside for it. So any questions on either of those two? If we go back to this one, this kind of just gives you an idea of where a lot of the credit-related projects have been for roads, trails, roundabouts, the bridge, and then just a quick snapshot of examples of some of the stuff that's been done, just to show you all of the stuff that we have gotten out of that. So let's jump to the next slide and this will be our next steps. So we have an advisory committee meeting I already mentioned next week. We'll review the personnel initiatives and capital projects request for next year, present the proposed budget. and then have a council work session on the 17th. In October, we have a budget advisory committee meeting on 10-6 if needed, and that will really come out of next week and the 17th, whether or not we feel like we're okay or you need more information, especially if you need more detail. And then final revenue forecast will come in October. and then we'll release the preliminary budget and budget message and have a council work session on the 15th sometimes we don't do the budget advisory committee but we still do the council work session because there really is an input needed from the committee but that we can decide between next week and the next then november we start all the public hearings And then we release the proposed budget to the public by November 1st. And then in December, we have the final public hearings, adoption, and then transmission to the state auditor and MRSC. So that's the next steps. Any questions? Anything that you would like to see for the next study session or when we tie everything together?

Yes, I do.

They're showing about where I expected them to be. We're about, I think it's around 13% higher in 2026 than 2025.

Did you see that? Sorry. I know this is just the baseline going back to that 443,000. And we haven't added in like the initiatives and new capital requests. And some of that we won't see in 2027. We may see that in 2028. But is there a way to actually see kind of what that looks like and how that 434 will be impacted once we start adding things in?

Yeah, when we meet next and we go over initiatives, personnel, we'll show where it's coming from and what the impact is to each fund. So you'll be able to make a decision. What we would hope from the advisory committee is we do above the line, below the line, and then council can make a decision of where they want to go with stuff. We've already met as a management team and we've already made some adjustments where we've eliminated some stuff and we've made changes to request mainly personnel. And then we'll bring that to advisory and then to the council for final decision.

So I know you touched on this earlier, and I was just hoping to go a little bit deeper on it. So last year, we asked every department to make, I think, was it a 5% cut, right? And this year, we didn't have to do that. But I remember, for example, last year, public safety, we cut out some of the optional overtime and some of the optional trainings that had to happen. So going forward this year, Are we adding some of that optional stuff back in for training and overtime, or are we leaving that out and maintaining the service level we did last year?

So we actually didn't cut training in public safety at all. That maintained the same. Optional training, yeah.

There was mandatory training and then optional training.

Right. It was trainings that basically was revenue that wasn't being used. Right. So it wasn't about us cutting anything. Right. No, I understand that. It was they hadn't used the money.

Right.

So when we're looking at it moving forward, we're still looking at it based on, like, what are you actually using? What are your needs? So the only add-backs that we would ever do are if they're actually saying, yes, we actually do need to add back in because we're going to need to use that money.

Okay.

And we did add most of the line items that we – did see unused budget that we reduced last year, we did add back in because there are needs for that. As far as the overtime, because you specifically mentioned that, we did reduce that last year, even though we had seen, but there's that balance between positions that aren't filled, then the overtime just comes from that savings there, which it did this year. Next year, we did increase their overtime budget in addition to any normal increases for personnel costs and things like that. So, yeah.

Kurt, did you take in consideration of the huge jump in sales tax for September 3rd of 26th?

For Goodwill opening? Goodwill this morning. Well, I'm hoping that they beat Costco. Oh, my gosh. It's just one of the things that I think about for all the different businesses that are opening. Yes. Were you out there and did you spend thousands of dollars?

Most all of us were there.

So I remember you went to Tractor Supply when they opened and you bought a bunch of stuff. So I'm always counting on you to increase our budget.

Mm-hmm. Didn't somebody say somebody had come in from Oregon this morning and they were waiting? Yeah, the first two in line. Yeah, I mean, just, you know, crazy things, like they're waiting in line, you know. Yeah. I just know we don't have, like, a cold call. The guy told me that every time they open a store that this is what happens. I mean, that they just have this because, you know, and this is the most northern store now, so we'll get all the people from, you know, Palama, you know what I mean? Mm-hmm. This is going to be...

Well, I think that's a big part of the transition is bringing in people from outside of Ridgefield to help pay the bills of Ridgefield. So, I mean, you know, it's really worked well. So that's why the TBD works well. That's the public safety sales tax. All of that, it brings people in from all different regions. Kirk, what is our current sales tax total? It's 9%. 9%? Yeah. Well, I'm estimating next year $6.8 million annually.

Am I correct? The state charges us a percent to provide us with our sales tax?

Yeah. They get about 15% of ours to administer everything and collect.

So we get what, about? 0.85.

Yeah, we get it's between 0.85 and 0.86 when you carry it out about 10 to 12 different decimal points. So.

Okay. All right.

Well, that's everything I had. So unless there's any other questions.

We'll feed forward into the budget advisory committee process and then coming back to you with additional details.

Great, okay, thank you. Okay, if there's no other questions or comments, we'll conclude this study session and council will resume on September 10th at a regular scheduled council meeting. Thank you, everybody.