City Council - Regular Meeting

yesterday. Okay, we're all here. Good time. Thank you. Good afternoon, everyone. I'm Alan Join, mayor of Winston Salem. It's my pleasure to call to order [laughter] That's how Pilot Mountain lost all their money. Oh, [laughter] you didn't see that in the paper? I don't read. Guy took the mayor's stamp and was stamping checks with We sign everything by hand here. No, [clears throat] I don't. Mr. City Manager, you want introductions? I know uh Scott's coming up here in a minute.

Uh yes. But before we get into the budget side, um, as I've mentioned to all of you, uh, this the UNCC school of government has uh, reached out and asked us to participate uh, with them in a in a project they're doing looking at measuring board effectiveness and um, uh, Colt Jensen and Becca Fischer Gabbard are here that are they're leading that effort and so they they're going to do a just a quick b presentation to you of what they're doing and uh, then ask you to do a quick survey as a first part of the meeting before we head into the the real budget items uh today. But this is um as I mentioned to you, I think it's I was very appreciative that they reached out to us, wanted to looking for best practices and ways to improve the training that they're doing for folks at the school of government. And so I think it's a it's an honor for them to ask us to be that. And I know they're appreciative that you're willing to participate and do this as well. So I think is Colt I know I'll introduce Colt first. I think he's going to give the presentation.

Sir, you have the floor.

Thank you, Mayor and Council. It is a great honor and I'm very grateful to be here today. My name is Cole Jensen. I'm here with Becca Fischer Gabbert from the School of Government. And the School of Government has three guiding values. First, we are nonpartisan, policyneutral, and responsive. And it is the responsiveness piece of our message or our mission that brings us here today. So we are working to be responsive to the ever evolving dynamics of board relations and staff relations and we want to better understand how we can serve both our elected officials and our administrative officials. And as a council that does a lot of ambitious things and does them well, we wanted to reach out to Winston Salem first. So within North Carolina and across the country, we are seeing heightened polarization and conflict. As there's more and more gridlock at the state and federal level, both within parties and between parties, we're seeing more contentious issues filter down to the local level. We're also seeing differences in personality that make it difficult to have a positive working relationship between council members, but also between staff. Um, so what we want to do is to be able to better help and be responsive to our elected and administrative officials as they face uh communication breakdowns and be able to better assist them by pinpointing the areas of friction that are occurring. So what we want to do is better develop a diagnostic tool for workplace dysfunction. Um, and it's quite the opposite that brings us here today. You all are doing really good work. So, we want to have a positive comparison group um so that we can know what things should look like. So, my presentation today is going to be very short. This is going to be less than five minutes and then you're going to get a survey. And this survey, we've conservatively

estimated that it will take 15 minutes to complete, but in reality, it'll likely be far less than 10 minutes. So what we want to do is better understand again how we can serve elected and administrative officials through improving 360 evaluation of elected officials. So at the school of government many folks come to us to understand how they are doing good but they want to do better. So this survey that we are working on would allow for 360 evaluation to get feedback from peer council members, staff members as well as key stakeholders in the community. So this qu this survey will have four questions and all you are doing is assessing your agreement or disagreement with the items on this survey. Participation is completely voluntary. So if you do not feel comfortable participating, you are under no obligation to do so. The risk is very minimal. It will be just asking about com um working relationships that you have both with staff and with elected officials. Please don't write your names on there. We don't want any anything that can be traced back to you. You all are doing good work. The last thing we want to do is collect any personal information. So this is just to learn more sort of about how you all work so well together. Um, and the results of this survey will be reported in the aggregate rather than individually. Um, and on the front page of this survey, we have a little bit of information about the institutional review board process that went through at the University of North Carolina, which means that it's been screened to make sure that all of our procedures are ethical um, and that we are using fully informed consent before collecting any data. And then although there are potentially minimal risk, we want to highlight some of the benefits or what we plan to

deliver as a part of this survey process. So we will send a 1 to two page report of uh findings to you. They'll be actionoriented. So again, the school of government is policy neutral. So, these won't be recommendations suggesting what you should do, but potential considerations that may or may not be helpful that you all can consider within the Winston Salem jurisdiction. And then we will also use this these survey results to create some of our um board builder booklets that will help other communities understand how they can build positive relationships between council members and between staff and council. We'll also continue to develop a 360 tool that will be used at the school of government for those who enroll in our courses. And in front of you, you now have the survey and you also have a schedule of our course listings. And again, Becca and I will talk more about these points that we're talking about in terms of roles and relationships between council and staff in a top 10 primer, which is listed on the upcoming course schedule, as well as developing a one-day intensive course where we talk more about how to work better together regardless of where you are in the organization.

[clears throat]

So this is a little bit of what you'll see in the presentation or in the summary of findings that we'll send. Again, this will be very digestible, one to two pages. Um, looking at some of these things that you all are already familiar with and working on in terms of shared value, common vision. You all have already documented a lot of this in the documents that exist here in Winston Salem that you have adopted. and you're going to talk more about another one which is the budget which solidifies how you function as a team and your shared values. So this is a little bit about what that report will look like. I want to open it up now to questions since you all have this survey in front of you. Um you all can take the survey or you can ask any questions that you all have before beginning the survey.

Okay. So after we do it, if we can all turn our surveys in to the city clerk and she'll get them back to you. Yes. Any questions, comments? Yes, Miss Cypio just had a quick question. How many cities, towns, and villages are involved in your in this effort?

Yeah, that's a great question. So we are beginning and we are we'll be in Nightdale and we've been we'll be in a couple of other cities upcoming and then this will go uh almost in to all of North Carolina counties and then some of the municipalities as well. So this is in the early phases but eventually this will go to all counties in North Carolina and most of the municipalities especially those that have a population above 5,000. Yeah, just to to echo that point, this is really um first phase, pilot phase of this project. Let me introduce myself formally. I'm Fisher. Please give your name and address.

Yes, of course. And and physical address. Uh my name is Becca Fischer Gabbard. I am so glad to be with y'all today. Thank you for lending some of your time to us and to this effort. One other point I wanted to make is that because you are our first uh municipality that's going through this exercise that's contributing to this research project, we'd love to hear too either um comments during your uh survey administration or if you note in sort of the margins if a question is confusing to you or if you're not sure what we're getting at or it seems redundant. Um, we are really trying to hone this tool um, so that it can be as effective as possible.

Any other questions that y'all have before we we give you your homework assignment for the next 10 to 15 minutes? Okay. Doing this now? No, we're not going to do it. We're going to do it later. We're not going to do our hopeless that you would do it now, but we can work with whatever the the board would prefer. We've got a committee meeting that needs to take place. Uh, so y'all we will get them to you. Okay. Any issues there, Colt? Okay. Perfect. Well, thank you all so much. We really appreciate your your effort and time and energy around this project. Um, don't hesitate to reach out with questions. Okay. Thank you very much. Thanks again.

Okay. I mean, if it's a 20 minute survey, I I think it would be better if we did it when we have time to do it. It's only about a 10 It's We're Hopefully it's only about a 10-minute survey. If um Well, I'm chairing a minute committee. We're going to talk about the budget. You are the chair. Can I can I make one more point? If you're if this is going to be a take-home exercise, um don't overthink it. Your sort of first instinct about each question is probably best. Don't don't sort of waffle about, well, maybe it's a four, maybe it's a two. Maybe that's like the SAT. Yes, a little bit. Truly, our instincts are typically our best.

This is the first budget meeting. We've got a full agenda and I need to get through that. Uh, most of us will be here for the rest of the afternoon. We can probably get them to you for you. Completely understand and respect your time. Thank you all very much. Okay, Mr. Tash, are you up? I've been told you got 80 slides. That's why if you were [clears throat] told 80, you're a few short. Few short. Okay. [cough]

So, uh, two things. Uh, one, the agenda does include both operating and capital on it. Generally speaking, we would do the operating budget one day and capital another. Usually, we are short or end early with operating. So, the intent here is we have a chance. We're going to get through all of it at once. uh that way you can ask questions in future workshops and move forward to that. I believe we may need to take a quick break between them if we have time. Also, the agenda for Thursday includes continuing capital if we don't make it through. So, um before I get started, I do want to say uh one thing and that is a healthy thank you to staff who is trying to hide from the TV on the back row. I do get to work with an amazing group of people uh each and every day and they are the ones who put together these documents, do all the entries and make it that way. I did not tell them I was going to do it, but I am quickly going to call out two people. I'd like to say a special thank you to Sarah Coffee, who is our deputy director. We were short in analyst this year. She kept us on pace uh made sure that we were where we supposed to be and also has the job of wrangling me, which is probably the most difficult job in the city. And I would also like to say thank you to Mike Quo Vista who is our capital budget manager. He will be retiring after nearly two and a half decades of service to the city here after this budget season. Uh he has been just a wonder

[applause]

From an operating perspective, uh we are going to look at several things today. We're going to talk about budget priorities. Uh for those who are watching this meeting, I would encourage you to go back to last Monday, watch uh where city manager Pat Pate gave about a 25 or 30 minute presentation of the overall budget priorities as well as talked about our achievements and goals and objectives. within each one of our focus areas. I am going to do my best not to regurgitate that half an hour worth of information. Uh but to add to it, uh and to add the details, we're going to talk about some benefits recommendations. Dr. Kina from our human resources department is here, so she will hop in in a few and talk about health benefits. We will talk about the total budget overall for the city, but as we normally do, we'll spend the vast majority of our time talking about the general fund, which is our general government annual operating budget where things like police, fire, recreation, solid waste collections, and the like take place. And [clears throat] then at the end, we will talk about enterprise funds. Uh we are providing more and more information each year. So, this is a little longer than it was previously. Uh but there is a lot of need in the community and throughout the state. We've heard a lot about providing more information and we are trying to do so. So, having said that, we will hop uh right in. These should look very familiar. They are the same priorities that the city manager showed you on Monday. I'm going to add a few details to a couple of them. So, in terms of strategic investments, this budget does include the WISA routing changes that you approved last month. So, there are fixed route changes uh that include the cross town connectors as well as uh two microtransit zones that will be effective in January. Uh most of that is covered by uh additions in grants. So on the fixed route side, we have additional formulaic uh money that is going to be uh in the operating budget going forward. The um microtransit zones are done with CMAC funding or congestion mitigation and air quality. And that is timelmited. So after those programs have been incepted after about two years, we're going to need to do a program evaluation and determine whether or not we want to continue with that funding.

And if so, it will require additional local resources at that time. This budget does include a lot of technology enhancements. Um we have talked about the Axon contract in police multiple times. We began that discussion in January at your retreat and there was a um presentation at the public safety committee as well by the police department. Uh so we will talk about the Axon contract. There are enhanced uh IT security uh initiatives. There are things that you have already adopted in terms of our Microsoft enterprise agreement uh to get in place. Obviously, we had a cyber event and we have learned from that and we are putting um processes in place to ensure that we are secure as we can be. Uh and also there are some system replacements. We'll get to the IT part of the budget, but there are uh the human resources information system that you budgeted for last year is coming online this year. Uh as well as our uh work order and permitting through inspections. Uh those are being required to be replaced because the vendor is no longer supporting them. uh at the end of next year. Again, we're making some strategic investments into equipment replacement. We've talked about those, but I will have a full list of of those as well. We will talk more in the capital section uh about uh debt funding and how capital improvements are are funded for what's in the six-year planning window. Uh but a note that you all know we have the facility condition assessments that are coming back in the fall. And so there will be a lot of staff work on prioritizing which assets we are going to maintain at what levels, replacements, renovations and those things going forward. And that last bullet point on the bottom right, there has been a lot going on. Again, we'll talk in the capital section. Uh there have been a lot of projects out there. Uh this slide last year said that there is more than $220 million worth of remaining unspent projects in these areas. That number is actually below 150 million. Uh so we have done it's actually about $70 million worth of projects that have been completed. I will show you some of those. So, staff has done a good job at trying to get through some of the capital improvement backlog.

There is uh in this uh budget a 3% raise for all full-time employees who receive a satisfactory performance appraisal. We will discuss that. Retirement costs are included in this budget as well. So, as we look at trying to continue to be an employer of choice in the region, we are looking at the things that are affecting us from a compensation and benefit side. uh the elers or local government employment retirement system has increases of 75 and 88 basis points respectively for non-law enforcement officer positions and then for law enforcement officer positions you can see that's essentially a 5% increase for those. What I will say is that we also have some offsetting decreases in some of our other retirement plans uh particularly whispers we have had some good investment returns and so the arc on those or the annual required contribution has gone down. So although we are paying more to the state uh system for benefits, there are some offsets to that for pension as well. On the health care side, uh we are going to talk about this again. We started this discussion in January. Um healthcare costs have been increasing precipitously and over the course of the last two years, we have used some fund balance to keep those costs down, particularly hoping that some of the larger claims that we've seen were a spike and would regress back to the mean. We have not seen that. So, we're going to be talking to you about $8 million worth of additional health care costs. About two million of that is going to be an employee cost share. And as you see in that bottom right bullet point, what that means is just for the healthcare increase in fiscal year 27, it's going to be about a 7525 cost share between the city uh and the employee. Dr. Kina is going to talk about that number is a little different when we look at the entire plan and where it's at. And then there are probably some longer term discussions coming uh from the city manager and staff about where we want to be in terms of that cost share with an employee employer split. Having said that, I am going to allow Dr. Kina, our human resources director, to come up and provide you with some of

the recommendations related to the healthcare.

Good afternoon.

Good afternoon. I'll be going over the 2027 plan, the benefit plan recommendations. Um, just from a historical perspective, the city has not had any plan changes or design changes or updates since 2016. There also have been no rate or contribution changes since 2018. And as Scott previously mentioned, year-over-year, health care insurance or health insurance costs have increased approximately 10% per year. Our current landscape, we have um since 2022, these are large claimments over $100,000. So you can see there the year, the number of claimants, and then where those costs um lie. So from 2022 with exception of 2023 when there was a decrease the city has been trending up in the cost of their claims. Right now uh we are at 24 million. Um no that's not right.

No we're at Hold on one second. I'm sorry. Closer to like 28 or

Yes. Yes. You're right. is 28 million and that was as of January. So we still have the rest of through June um before that we are able to update those numbers with the current year's cost but it is trending upward. Um the 28 million is medical overall. Our current employer employee cost share is with the city at 84% and the employee share at 16%. The recommendations for this year for the medical plan changes are to increase deductibles overall, increase PCP and specialist co-pays, and also increase maximum out-ofpocket cost. For pharmacy, it is to remove all preventive brand medications and GLP1s from weight loss um for weight loss rather from $0 co-ay. That means it would go into a tier and depending on what brand the employee chooses would depend on what that co-pay is. And also to implement medical management program and that is our pathwell specialty that is for infusions and um injections instead of going to the hospital for those that they now could have inhome um infusions or go to a provider that that handles that which would be less costly than going to the hospital. and also for bone and joint, for shoulders, um hips, knees, that kind of thing to manage that care. And then for premium changes, we are recommending an overall increase of 7% for employees and retirees. Again, we're recommending an overall 7% um for the overall increase for employee contributions. And this is a we're also recommending a lower premium increase for employee only. You will see here on

that employee only is less than the remain the remaining tiers for each plan under the core and the enhanced and the majority of our employees are in employee only. We have 898 employee only on the um active and about 360 on the enhanced. Um that's where the majority of our employees are is in the employeeonly tier. For retirement, it is again an overall increase of 7%. and you can see what those um changes look like over the 2026 plan year versus the 2027 plan year. Essentially, what this means is that um medical the the amounts that you see there would be the contribution changes. Medical 875,000, pharmacy 645, contributions a little over 516,000. the savings is or not necessarily a savings but the the um contribution changes is about 2 million for 2027. The employer versus employee cost shares 83% and 17%. On the right you'll see a chart that has what the changes uh what the recommendations are um current versus proposed. So I won't take time to go through those but that is there for for your um information. And that is what we have uh to present to you today.

Any let's take any questions on the healthc care for now. Uh DI you have one go ahead. Um are we basically right in line with our other peers on the cost share part of the healthc care us being what uh 83 83% and an employee 17%. Yes we are we are also in the process of getting those exact numbers. We don't have them from the localities, but according to the information that we do have, we are um in line and perhaps even above, you know, um contributing more than other localities for that cost share.

Okay. Just a question, city manager, would we be looking at uh decreasing our cost share and employees picking up more of the cost? And I know everybody don't want to hear that, but it is what it is.

That Yeah. Yes, that's I'm going to back up a little bit. I I do think an 8317 split is generous compared to our colleagues that people that I've talked to, but that's anecdotal. So, we're trying to get some real actual data on what the employee employer share is in terms of of cost, but a lot of people are 60, 40, 75, 25 tends to be more of the range that folks are in. So, we have over time put a lot more emphasis on benefits than on our salary and starting pay amounts as a as a city. And so, over the last couple of years, you have changed that. And so, we're putting more money in towards salaries. And so, therefore, as a total compensation, we're going to have to look at our benefits in line. So, one of the things that we we are doing, and there's a variety of changes going on in the in the health benefit area is looking at what those numbers are. This is what the budget is based on. So, I did want to make sure council understood that healthc care changes do not go into effect until January.

Right. So part of our issue is once we have an adopted budget with these amounts in it, there are some other tweaks we can be looking at in terms of we are not changing the programs right now to to a large extent. So other folks go to high deductible plans, other things that can reduce the cost to the employees but continue to provide them with health insurance. Uh, another piece of that that's very I I want to go back to that um that Kina mentioned is that if you look at our contribution increases, we very consciously try to make the employeeonly one a lower amount of an increase on a on a bi-weekly basis with the understanding that a lot of our employees who are at the lower ends of the spectrums are taking employee only or that are newer employees that that are not far up in the ranges tend to be those employee only coverages. So we we are working very hard to to maintain a an affordable health care program for all employees. And so there are higher increases for those of us that have employee spouse, employee children, family coverage than for those that are just employee only. But yes, uh, Mayor Pro Tim Adams, the that concept of what we should be paying as an employer is something that we have to look at and determine, are we at the right percentages now? And if anything, we're probably um, a bit higher than our competition.

Thank you. Thank you. Any other questions, comments? Andre Bowen, I'll give you Thank you, Chair. Um so we've seen a a large increase in um the cost of claims over the past few years. Is that due to the rise of health health care or [laughter] is that a rise in how many employees we have on staff and how many people are making claims.

It is truly the medical condition. Our top three are we've had um we've had an employee this year that had a double lung transplant. cancer. Um cancer is a large part of these claims. So those are um muscoskeleletal those are the large three that that are the top three of what we have represented in these claims that are over 100,000. Okay. Thank you.

Thank you chair. Dr. Jones, you you spoke um on recommendations page um about the um preventative brand and GLP one uh folks choosing which medication, but then you spoke about um shoulders, knees and such. You kind of went past that real quick. Okay. Can you explain that one for me?

Yes, that is the pathwell specialty program. So what that means is there are um infusions and injections that employees may get for various reasons and normally they would go to the hospital to receive those which is more expensive. And so this program allows for them to get those infusions or injections at home or through a network, a provider in the network or a facility if you will um for a cheaper rate. So there's a there would be a savings there. And then also there's the um the the program through Pathwell Specialty for bones and joints. So that's shoulders, knees, hips, that kind of thing. And so that they would manage the care through that particular program with those types of injuries.

Okay. All right. Thank you, Mr. Hall. Did you have a question comment? But I don't anymore. Thank you. Okay. Uh before we leave this, Mr. Manager, I do think it would be helpful to do a survey. I think you're going to sign an 8317 split might be the highest I've ever heard of. I think you're going to find we are way above our peers there. But we need we don't need anecdotal. Go ahead and do the survey and find out what it is. And I thought you said earlier in the presentation we were currently at 8515. So we're adjusted it just a touch. There we go.

8416. 8416. So now we're going down 83%. So it's just slightly different. Um but we're starting to address that. Yes. Thank you. Thank you.

All right, Mr. Tesh [cough] coming back. I will say as the city manager noted those would take a take place in January. So there are a half a fiscal year's worth of uh changes to the budget as a result of that. You will realize a full year's worth of savings uh the following year as they will have been in effect. So we'll talk total budget summary. This is all city funds. Uh again the manager showed you this information. The city's budget is I'm going to say technically going down yeartoyear. I will draw your attention to the bottom right corner to debt going down by 48%. If you will remember in the current year, we'll see this on the next slide, but we budgeted to pay off the leasing program that we had and get out of that. So debt is dropping precipitously. You can see uh the operating budgets uh in all are up a little bit more than 4% and capital I'm really going to call even year-to-year capital improvement plan fluctuates based on uh the types of projects that we're doing from. So again, that $22.3 million decrease will show you $47 million net difference in debt payments year-to-year. Uh again, full-time salaries. So that is reflective of the 3% uh increases that um employees will receive as well as the changes that you have made most recently for uh certified fire employees uh and things of that nature. It also includes and we'll talk about there are a few grant funded positions that are coming fully on um to general fund but we'll talk about the general fund section that benefits piece at $8.4 million that is basically all healthcare. Um there are other ups and downs in our benefits package but it nets out to basically the entire increase in benefits is related to the healthcare um increases that we've seen over the last couple of years that we're catching up to. So we do have again WISA contract changes for the WIS division plus the microtransit routes

equipment replacement overall across all funds at about $2.5 million. I think we'll see 1.9 million of that. Uh I believe that's the number in the general fund but this includes water and sewer solid waste and other enterprise fund equipment replacement as well. Again the police axon contract that we have talked about numerous times. I will say the actual contract is a little more expensive than that. There were some other contracts uh that we are reducing as a result of that. So the net impact of Axon, the Axon contract will be $1.96 million. Uh we are dealing with inflation, we'll talk about that specifically in the general fund. Uh some of those other areas, it charges up $1.4 million. Uh there are quite a few things going on that are causing information technology charges to rise, particularly system replacements. Um, I will say we kind of have a multi-year strategy to dealing with that. So, you will see some increases in fiscal year 28 so that we didn't spike in 27. We're trying to level some of that off. We'll note specifically professional development in the range of about $265,000 across the organization. This was one of the top things that employees told us about in the employee survey. And so, we are going to provide opportunities to train people to give them access to things that will make them better at their jobs. and then uh the bottom a plug number of just a few hundred,000. At a very high level, these are the main budget drivers across the entire budget. So, uh where does the money go and where does the money come from? We did this at the city services expo. Every year when we show this pie chart, environmental health is the largest slice. When we think about all city funds, that includes city county utilities. So, the water and sewer system uh is the largest component of our budget there. Public safety is about a quarter of the city's overall budget. When we get to the general fund, you'll see that police, fire, and emergency management are actually more than 50% of the general fund. And then we go down from there.

Again, I would note if you were looking at this pie chart from last year, debt management would have been a larger percentage um with the large payoff and it has returned back to uh a normalized [clears throat and cough] on the [snorts] revenue side. Uh property taxes make up our largest uh single revenue source, followed closely by charges for services. Again, because of utilities, that includes all of our water and sewer rates and fees that come in. I will say uh it [clears throat] is a best practice to diversify your revenue portfolio. As council member Clark has said a few times, it is the the one knob or lever that the city council really has the ability uh to control. So property taxes as a percentage of overall revenues uh have tended to increase uh over the last couple of years. Um so we will be looking at additional strategies uh in terms of revenue production in the coming years. Um but that is an area that staff is aware of and it obviously places a burden on the tax rate. Um again sales tax about 10% on intergovernmental revenues things like our pow bill money for state street aid. Uh and then net appropriate reserve appropriations again is the fancy way of saying fund balance or that we are using available cash for certain projects. So total budget of just over $700 million. Again, this is very similar to what the city manager showed on Monday, but for all of the residents who are looking at it, this is what is kind of changing. What should I see differently? Property tax increase of 2.6 cents. That is going directly to the general fund. It's about $5.5 uh per month for a median value home. Water and sewer rates again um from the utilities commission uh at about 5% on average. I believe water is a little lower and sewer is a little higher, but that averages out to about $3 a month for the average residential user. Solid waste disposal fees. Most residents won't see these. Uh this is more what the city is paying, what private haulers are paying as they're dumping things. But if you do go to Hannes Landfill, Road Landfill or one

of the other facilities, uh you would see a dollar per ton dump there. Storm water fees increasing at 4%. I believe this is the third year in a row that we have done a 4% increase. Again, uh before that, it was about 15 or 16 years with no increases at all. There are significant capital costs in that fund. When we get to the enterprise section, we're going to have a discussion about that as well. And then there are a few other um miscellaneous uh user fees. So, picnic shelters, uh, special programs at historic Bethabra, and we'll talk about these road closures, annexations, and EV charging fees. [clears throat] Um, so when we look at historical property tax rates, uh, we'll again, uh, draw your attention to there are some decreases and increases. FY22 and FY26 are revaluation years. So, when we had the revaluation, obviously, we looked at, uh, what the revenue neutral rate was and then adopted a rate uh, relative to the resources that we needed. So this proposed budget includes again a 2.6 cent tax rate increase which is uh 4.6%. It is only for the general fund and generally speaking it's covering compensation and benefits particularly the health care costs that we've been talking about equipment replacement technology grant funded positions and inflation. We will have a lot more specifics on these coming. Uh from a property tax base perspective, the manager uh said last Monday evening uh the county does provide us an estimate of what they think the property tax base is increasing yeartoear. That estimate that they gave us was less than 1%. Um they tend to be a little conservative and so we are using a 1% uh increase in the base. Um but you can see that the average growth in non-reval years has been 2.2%. Uh and so budgeting 1% or having actual growth recommended to be less than a percent uh is very difficult to balance a budget with very low property tax base um growth as the manager talked about and again I won't

reiterate the point uh at length. Uh but a lot of what is being built is coming uh up in the city and in the county. But there are a lot of that building permit value that is in nonprofit hospital educational institution things that don't come onto the tax roles. So what does all of this mean for the average household when we look at property taxes, water and sewer fees, storm water uh and motor vehicle privilege tax? uh about call it $8.5 a month for the median regular user household. Um again, motor vehicle privilege tax, I will note that is capped out. You don't have the ability to charge any more for that. The rest of those are things obviously that we can affect uh locally. User fee changes. So this is just quickly the other user fees that we talked about so that you could see them. The two at [clears throat] the top are really related to how much it costs to advertise these things. Um, so haven't touched the street closing permits in just under 20 years. Annexation petition is the same thing. There are costs associated with advertising these per state law and we are trying to recover those. Recreation is looking at increasing $10 per usage for the picnic shelters, resident and non-resident alike. Again, some of those haven't been changed in 20 plus years. Quick note there. Uh we did have separate weekday non-h holiday rates that were lower. We are eliminating those and just going to a here's the fee uh for what day it is. Um and then again at the bottom left historic Mthabra. These are new programs. So I would encourage someone to go out and do some historic trades uh training and and other things. And then I believe Dr. Dr. Shayen Miller has talked about the electric vehicle charging fees, but essentially we are charging a kilowatt hour rate that gets us back what Duke Energy is going to cost us. That rate does not include enough to offset the capital and

maintenance cost associated with EV charging programs. I will stop and say there any questions at the total budget summary before I get into general fund and really into the nuts and bolts. Mio, um Mr. Nesh, when you have full-time salaries on one of your slides of 5.5, does that include uh positions that are authorized but not filled or are they all filled positions?

It it would include all POS personnel forecasting includes every position we have. If we have a vacant position, we budget it at 5% above the minimum rate for that position. So there are that is the merit increases along with any difference in base change for vacant positions across the organization.

Let let me rephrase that a little bit for him that from an applesto apples comparison it is the same. They take they take all the positions. We assume that they all can be filled during the year but Scott also does a backout for vacancies during the year. So, we do not budget 100% okay of the salaries that it would take to fund every position all year long. I think that might have been your question. Yeah, I thought at one point we were budgeting all positions that we were needing whether they were filled or not.

We do budget for all positions, but we also take out an amount with the anticipation that we'll have vacancies during the year and then we have some vacancies now. That's that's coming on a future slide. You'll see that directly. What was that? That salary savings adjustment. I will show you that here on a future slide in just a few.

And I do have another question. When we talked about our um the tax base trend over the years, uh I know we were showing the rate, but [clears throat] I think it'll be interesting to see how many properties we have over the years. Are we increasing in the number of properties, residential, commercial, or are we losing properties um when we look at I don't know if you can figure that out, but I know what the tax rate trend looks like, but I'm thinking about are we losing um the actual tax base or not?

I I think we can go back and look at that. I I believe what I hear you asking is are the number of parcels changing? So because if there there are when a subdivision comes in and so you have one large parcel and then it gets split up into 30 homes then you would have 30 new parcels there. So you would see an increase in the number of parcels and you would see an increase in the tax value because instead of land it would be 30 new homes. So so we are seeing growth. So I I can almost tell you anecdotally we're going to see that there are more parcels now than there have been in the past. Although in some cases you do have some redevelopment that takes out some of the parcels or some things that are combined. But typically we we rely on the the value and to see how the value is going. One of the things that you that again I think you're alluding to that you won't see as much is how much of our property that was taxable is now not taxable. that is significant growing significantly over time

and and that's because it's that's because typically a lot of may be changing ownership from of a profit to a nonprofit. Right. Exactly. And then the medical is is a great example as a doctor's office was independent at one time it had been taxable if it becomes a part of one of the hospital systems they're [clears throat] nonprofit they take it off the tax roles. Um I there's a one that was just announced on University Parkway just this week where a taxable parcel is now going to be owned by one of the hospital systems as urgent care. Not that that's not needed, but that will change the tax base of that parcel. Yes, those sort of kinds of trends we might want to start looking at

because that will impact our tax rate that we need to operate this and we and we are and we do look at those all the time and quite honestly that is absolutely what is causing the the shift between commercial and residential. So there's more value in the residential side now than the commercial side because a lot of the commercial is being used in a different manner and so yes you are seeing that shift miss Adams and

yes a side note we won't have to worry about that Raleigh going to take care of all that for us anyway um Mr. Tash on your slide. It's marked 18. Uh the main to maintain the but the grant funded positions. You probably got a slide, but what are those positions and how many? There are 19 of them. I do have a slide for this. You'll see it. Well, I can wait. I can wait. Scott, thank you, Mr. Chair. Uh earlier you mentioned the um the what we are currently paying for police technology versus what we will be paying potentially for Axon. What was that number again that that we're kind of getting rid of to move towards Axon?

I can follow up and provide you all of the net changes there. It's rounded. It's $2 million, but there's more than $2 million worth of increase in some things. And then there are other contracts that we're getting rid of. Also, as the police department told you, Axon is buying up some of our current providers. And so those provider contracts are going away because that entity is now going to be absorbed into [clears throat] Axon. So the real-time crime center was operated with the Fus camera system. Some of that is coming into Axon as well as our drone as a first responder program. They're buying some of that software, but we do have a I can show you the net difference. Thank you. Love a monopoly.

Thank you, chair. Mr. Tesh, um, two questions. One is the as we talk about this budget, um, the proposed budget, does that include the half cent that we were discussing for housing? No, ma'am. We will talk about that. Okay. as well. Does it include the proposed and ask for 3% for staff raises? Yes. Yes, it does. Thank you. Okay. Any other questions, comments? All right. We'll get keep going.

All right. So, we will move on to the general fund. Again, the city's largest operating fund. There is an increase in the general fund. The manager noted this when he talked on Monday night, and I'm going to show you numbers in some cases that are adjusted. The reason for this is there are some accounting changes and I want you to know what the actual numbers that are being moved look like and we are adjusting them so that you know really kind of more of what's an apples to apples. So I'm going to show you a couple of these slides and be as transparent as I can possibly be about what's actually changing net of some of these accounting changes that we're have to making that the auditors tell us to. So on this slide one of the notes is if you were to look at non-personnel growth you would see a decrease. Non-personnel is not decreasing. It's just because we are crediting something a different way. There's actually about a three and a half percent non-personnel growth and it's about 6% personnel growth. But again, we're going to get into all of this and I'll show you every component of this. So, every year I stand at this podium and say I will not put this giant table on this slide and every year I do that. Uh it is the summary slide that comes from the budget book that is this is what the general fund is increasing by revenue category and expense category. And so we highlight things. Property taxes are going up because the proposed budget includes a property tax rate increase. Uh sales taxes and gross receipt taxes. Gross receipt taxes are your taxes on short-term rentals for cars and construction equipment and things of that like. Again, I'm going to show you uh sales tax information. We're going to talk in depth about um how we're projecting sales tax. You'll see a 5 and a half% growth there. We're actually uh budgeting for what is 3% growth in total sales tax distributions at the county level. Uh licenses and permits. There's a couple of accounting things there. I'll highlight again. Construction permits are actually budgetto budget up about $750,000 a year. We'll talk through that. Uh intergovernmental revenue. If you see licenses and permits going up and intergovernmental going down, we'll talk

about that. There's a one forone swap for revenue sources based on some changes in state law and how we have to spend pal bill funding. As we get down to the personnel side, again, we're going to talk through each one of these on a slide, but you'll see supplies and services increases. Um capital and supplies and services are going to offset each other uh as well. And then we'll talk about some of the support to other funds or transfers uh as well. There is also a decrease uh if you see a second from the bottom blue line. Uh last year we did about $ 1.5 million worth of one-time funding. A million3 of that was for the facility condition assessment as well as ARC flash hazard study. Those have obviously been removed. They were one-time expenses. Uh the small part that is remaining is related to some of the uh ARPA folks that uh work for me and are finishing up. This is the last year of ARPA spending and reporting. So we will dive into the revenue side first and then the expenditures. So again, property taxes with that 2.6 6 cent proposed tax rate increase, generating almost 12 million more dollars. Local option sales tax, again, I'm going to say 3% growth is what we're budgeting in terms of how much we expect retail sales to grow and be distributed back. As I told you, there was a multi-year plan for health care. We are using a million half dollars from one of our employee benefits funds to help stay off the cost in the general fund for this year. Um there are changes coming with the plan changes you're making which will help offset some of that and depending on what growth in healthcare looks like. There is again a multi-year strategy to this. So you will most likely see some kind of healthcare increase if we don't make additional plan changes in the future. Construction permits uh again we'll talk about that. This one is really I want to make sure we stop on the slide and I'll say it again. It's not that construction permits are growing that much. It's that we were a little bit conservative and how we budgeted for them in the current year. But I'll show you the actual growth. Um, utility sales taxes. So, this is one of our three largest areas

of growth and I will have a chart for this as well. But you can see that we are actually budget to budget going down in this area. We are going to miss this year's budget and we'll talk about why. Uh, ABC store allocations. I spoke with the executive director of the ABC store. He tells me people are just not buying alcohol the way that they were. So, this is the second year of a trend. We're going to um hold that one closer if we can. That indirect cost allocation piece is in italics. If you look just at the revenue side, this looks like a reduction. This is that crazy accounting change. Uh we are not losing $6.5 million. It's just being recognized in a different way. I don't want to get into the debits and credits of this, but that's not an actual loss. I've included it because if you're looking at the revenue side and you're looking for a bottom line number, that's how you balance it. And then again about a half a million dollars worth of other revenues that are increasing at various amounts. So we'll tackle these one by one. So uh sales taxes and this is all funds but we have a 3% growth assumption and I will drop you down to the bottom left corner. Uh our distribution of local sales taxes between the city and the county is actually decreasing year-to-year because for science county increased their tax rate and levy more than we did in the prior year. So sales taxes once they come back to the county in Fory County are distributed on an adalorum basis. So we are a smaller share of total property tax levy than the county was. So uh losing about 3/4 of a percent of countywide sales tax distribution because of that. So it it looks like we're flat here. And again these are actuals not budget. There is budget growth. uh but be next year we will not see as much growth as the 3% that we're talking about because of the distribution change from the county. Uh I will also stop and say there 3% seems to be what a lot of our peers are looking at. Um inflation is in that 3 to

4% range. Average growth is usually if you went over the 10 or 15 year period in the four and a half percent range. So we're being a little conservative. um statewide net distributions of sales tax are closer to the 4% range. So we are intentionally being a little more conservative uh than what we're seeing. Just want to make you aware of that. But we do know that there are potentially some things changing with fuel prices where they are. What does that mean for retail sales? So I think we're in a a good conservative place to be with respect to our sales tax projections. So, construction permits again um budget to budget going up um about $760,000 in terms of where we're actually projecting it. Again, you can see from 24 to 25, we had a big jump. We didn't budget for that because we didn't know at the time that was happening. We've been a little conservative and we're catching up. So, as you can see in the bottom left corner, construction permits are actually going to exceed the current year's budget by more than half a million dollars. So, utility sales taxes. This is one again one of our major revenue sources. It's technically four different revenue sources. The largest component of this is the electricity sales tax. Um, it is I want to say 85% of of all of the utility sales taxes are in the form of the electricity sales tax. Again, we're going to miss uh the current year's budget. We budgeted for 4.3% growth and we're actually going to see an annual decrease. You can see that from 22 to 23, 24 and 25, we were having good growth. The League of Municipalities put out a memo as they do every year saying we can expect to see this continued growth and we have not seen it this year. Uh they did say we expect to see a small amount of growth. So we are budgeting for a small amount of growth next year from the projected year end. Uh but this is a place where budget to budget you see a decrease in revenue in one of our larger revenue sources. This is tied to electric bills. So, if

Duke Energy raises rates significantly beyond what they're talking about, you would actually see an increase here as well. So, we talked about ABC uh store allocations. Again, this is just the chart. I don't want to belabor it, but again, we saw a decrease in 25, a projected decrease in 26. Uh we're hopeful that in 27 we don't see that decrease, but we are seeing um decrease in in volume of sales at our local ABC stores. and then other revenue. So, this is my way of getting back to the um $500,000 difference in the other revenues. It rounds uh down a little bit. I want to draw your attention to the two at the top again, motor vehicle privilege tax and our POW bill funds. We are simply switching what goes to capital and what goes to operating based on a state law that requires us to send more of our POW bill money for street resurfacing. So, we are meeting the state requirement by just moving sources between funds. There's no change in the actual budget there. Charges to Forcy County. So this is all of our city county operations. As those budgets increase slightly, so do the revenues from the county covering that cost share. Uh transfer from uh the storm water fund is for the increase in leaf collection costs. And then could go down the list there. Um but you can can see uh the differences. Again, I'll also note that beer and wine is one. We only get that distribution once a year. comes in later in May. So, we actually should get it here soon. Um, but we are budgeting for that to be down. And then the last thing I will note, uh, emergency management. So, this is our, uh, emergency management, uh, state funding that comes every year. We are not getting it this year. I've been told not to expect it and [snorts] potentially not to expect it in the future. That is from state EM. So, uh, again, roughly $63,000 that you would normally see in the emergency management budget that we are not budgeting for because we have been told it may not come.

States keeping it all. [snorts] Yeah, I think there are this is related to federal passroughs to the state as well. Um, so how much money is available at the state level is a function of how much the federal government provides.

Okay. So, I want to stop here. Um when we talk about uh again the general fund, 53% of our general fund, so the majority of our general operating budget is public safety. Police is a third of the city's general fund budget. Fire is almost a fifth of it. Um emergency management a much smaller percentage with their five employees. But when we look at the budget and we look where increases are going to be, when public safety is 50 plus% of your general fund budget, that is where the increases are going to take place. And so this is one of those where I'm trying to be very transparent. If you were looking at the book, I'm going to tell you, don't look at that first column that totals the 9.5. Go to the one on the right that general government atg5 million in that includes that crazy accounting change. I have adjusted for that in the column on the right. What you get is of all of the general fund increases by service area, public safety is 2third of the increases yeartoyear. So I know there's a lot of talk about property tax at the state level and what it gets used for. So more than half of it in the general fund goes to fund public safety and twothirds of the increases in your general fund budget this year are related to public safety. It is the vast majority of where that property tax money is going. Uh so on the personnel side and mayor pro Tim we will uh there bullet points here that I will get to in just a second about your grant funded positions. So recurring salary and wages increases again the benefits cost just like it was for the total budget summary. When you see that $6.6 million there's actually $6.7 million worth of health care benefit increases and a net decrease in all of the other benefits combined in the general fund. Health care is what is driving the general fund benefits cost. Uh we do have a bullet point off to the left. There is a CDL or commercial

driver's license operator study that was part of um the U one-third studies that we are starting. We are expecting to get that information. There is money budgeted for a half a million dollars uh worth of salaries in beginning in January. Uh again with benefits that number is about 730,000. The bullet points here are kind of the policy decisions uh related to uh personnel. The first one there, Mayor Prom, is the 19 grant funded positions. So 15 of them are firefighters that were on a safer grant uh from FEMA and four were bear team members. Part of those costs actually came onto the general fund in FY26. The rest of it is coming on in FY27, but that's an additional $1.1 million for positions we already had where the grant is expiring. Again, all of those are in the fire department. There is technically one position added to the general fund uh in this budget. There is a traffic signal system technician in the department of transportation, 60% funded uh by NC DOT. We are wanting to ensure that we meet the compliance uh sections of the agreement with NC DOT for the signal system and have been told this is a compliance issue and so it is in the budget but again it is covered more than 60% by the state. There are a few position removals. So there were two reorganizations that have happened. One was in human relations uh which netted the removal of one position in the human relations department and then also when we looked at uh the economic development department which includes the former operations division there was a reorganization there that resulted in a net loss of two positions in that department. And so those are reflected in the recurring salary and wages numbers in this table. Um, I could have put this at the beginning and maybe have supported Dr. Kina a little more, but I wanted to hit it again. This is looking at our healthcare fund. So, this is not general fund data, but it's to support the

health care increase in the general fund. This is how much basically just the claims and insurance costs have been increasing year-to-year. Again, Dr. Tina talked about almost 10% average annual growth. We are projecting almost 9% growth to year end. Um we had been hopeful uh that some of those large claims would have been kind of one time and that they would have tapered back down. As Dr. Kina showed you, that has not to date happened. And again, the GLP1 increases uh per our uh benefits um consultant. There's roughly $3 million worth of GLP1s in those increases as well. So that is a large driver of the healthcare increase as well. You can see in FY24 uh or excuse me in 2425 and into 26 we have seen very large increases. Again we've covered some of those with cash. The healthc care benefits increase is to make sure that we're matching operating revenues to operating expenses and not continuing to spend bound spend down fund balance. So switching gears away from personnel to supplies, services and equipment. Uh again about $3.6 million increase in supplies and services. 1.6 6 I think I said 1.9 earlier 1.6 6 in vehicles and equipment. I will note and we'll talk about it on the next slide, but the we do have kind of that multi-year strategy for increased IT charges. We will be looking at that again trying again to flatten out uh some of the multi-year impacts of things that are affecting us. Um I do have here I wanted to show this approved vehicle and equipment funding. This is in the general fund by year. So recently we have been putting a lot more money into that than we have in prior years. Part of the reason that we had to increase significantly in general fund equipment replacement over the last four or five years is because you can see those numbers that were in the 5 million range before it. One of our budget balancing strategies um previously was to cut equipment replacement first. That

has led to you needing to replace more now. Um we are still looking at the appropriate amount for a long-term replacement plan over time. all funds considered and fleet is looking at uh utilization of vehicles either to eliminate vehicles we don't need or at least allow departments or require departments to share them so that when someone says I need a new vehicle we can say no you can have something from the shared pool you're not using it full-time okay again will apologize for the size of this um from an illustration perspective when I said there were $3.6 6 million in changes in supplies and services. This is essentially everything in the general fund on a non-personnel basis that is changing. So, we get a lot of questions and where where is this hidden and all of that. This is literally everything in the general fund that is changing and it fits on one page. Again, police department Axon contract at $1.96 million. almost a million dollars worth of IT charges again covering new systems as well as enhanced security utilities in the form of gas, electric, and water at $340,000. Fleet maintenance. I will say there's one bright spot that I'm going to talk about and hopefully come back to you with some better information. That public safety leased lines of $250,000. We have been chasing increased cost from AT&T. Um the police department, particularly uh the new chief of staff has done some phenomenal chasing. It is our expectation that we're going to have some pretty serious reductions in those. So I want to say thank you publicly to the police department for looking at that uh for following it down. And I hope that I can come to you in the not too distant future and tell you that that money may not be needed in next year's budget. Again, I don't want to go through the entire list here, but you do have things. There are some uh police facilities whose wireless internet infrastructure is more than a decade old. Again, we talked about professional

development across the organization. We do have in here um the position compensation and classification study. So, the one-third study that we keep talking about. This is the first time that we are going to budget that classific compensation and classification study as an ongoing expense. So, that one-third of the organization happens every year going forward. uh inflation adjustments for things related to vegetation management. We do have a new area of Salem Lake Parkway, Salem, excuse me, Salem Parkway. So, the lake does not have its own parkway. Uh Salem Parkway that NC dot built and it's coming on to us for maintenance. And again, I I can go through and answer questions about any of these, but the numbers start to get much smaller as we go down. We'll go down to the bottom and note again 125 thou or $120,000 reduction when we did the operations staffing division reorganization. there were some opportunities to save money on the staff side as well as on the supplies and services side. This budget does include the removal of the hydroponics facility contract. It will be done under a different um contracting agreement whereby we don't have to pay a contractor and we'll hopefully not be responsible for any of the maintenance costs incurred at that facility either. So, we're able to remove that from the budget. And then again, $1.3 million were those were one-time studies that came back out. So when the public says where is all of that money going, there's money going to personnel and then here's where the rest of it is going in the general fund. Vehicle and equipment highlights. So again, a total of $19 million includes 80 police uh police pursuit vehicles as well uh as some other police vehicles that are not pursuit vehicles. We do have two specialized fire apparatus. One is an aerial. I got a picture. I think that's uh truck 19. That's the new one. All right. Uh which is on Glen High Road over by my house. Um do have a a picture of the police vehicles again in the new paint scheme and the Explorer PPV package. And we'll note we continue to have a commitment through fleet to look at um light

vehicles and light trucks for conversion to um electric vehicles andor hybrids. I'm going to stop there again and say that's the general fund summary. Before I hop into enterprise funds, do we have any questions about general fund? All right. Oh, yes, ma'am. Will we get these slides? Yes, abs. They should be loaded into the system, but we will absolutely make sure you have access to them. Um, yes, ma'am.

Thanks. Um on 36, uh page 36, this is going a little further down, but um community agencies at 27,000. I guess we'll talk about that at a different time. That is coming on Thursday, but there is a net increase in the general fund of $27,000 yeartoear for community agency funding. Okay. And then um you talked about the one-third study. You talked about the one-third study happening every year going forward. Just having that in there. Manager P, you mentioned in your report that there would be a review of I think you may have said twothird study. Um but so I want to make sure I don't get the two confused.

Well, the first the first one was supposed to be finished this year. It's not going to be all be completed, but the fires are being done. CDL is being done now. So the balance of what would have been in that one-third plus the next third of the organization. So my comment was that twothirds of the organization will have been studied by the time we get whereby we're at time we're at this place next year looking at the following year budget and then the 27 and then the final onethird would be looked at in next year's budget. But but so we're going ahead and um accounting for onethird of that and this going into 26 27.

Correct. We're basically budgeting to do the study on an annual basis and and technically we'll we'll do about a third of our positions every year. So over a three-year period, everybody will be done. the the only difference. And so at the end of this year, we'll we'll have been two twothirds of the way we have done two of these groups and then we'll just be one group left. Does that make sense? Thank you. And that's in the budget. Correct. Correct. All right. Sure.

Mr. Tesh. Um, on page 36 as well, the yard carts, is that for the yard cart or for the trash can? This is the yard cart program. For years and years and years, they have been replacing yard carts because you have to every year. We have not budgeted for it. We have simply found savings to make those purchases happen. Inflation has caught up with us. And you can call this inflation, but it is in the amount of the yard carts. essentially their supplies and services budget has been exhausted and they can no longer purchase the yard carts they need to every year without an appropriation to do so. Okay. Thank you. Okay. Yes, ma'am.

What does community agencies mean refer to? So, we will talk about this on Thursday, but those are the nonprofits when the um forms that you filled out to talk about which nonprofits. There is a budget-to-budget increase of $27,000 in total available funding in the general fund for nonprofits. We we've adopted a formula. We have it's on a per capita basis. So, it will increase slightly every year as the budget increases. Okay. Go ahead, Scott. Thank you, sir. Um, you mentioned the grant funding for the Bear team. How many of those positions are no longer grant funded after this budget cycle? Four.

So, so after we After the cycle, they will all be fully funded. Yes. Thank you. Sorry, misunderstood the question. There's eight total, right? Seven. I believe like 15. 11 total. 11. 11. It's 11. Okay. Including the bear director, Miss Ryan. Gotcha. All right. A question for clarity when you said this cycle U manager pay will you when you approve this budget oh this budget this budget that you're talking about right now all the bear team will be fully funded by city resources thank you yes okay continue

we will go on to the enterprise funds so for the transit fund what I will say overall the last two years we have increased the tax state both because of the new contractor and contract that we have as well as the what was referred to as a fiscal cliff that we had seen coming for many years where there was not adequate funding for the transit program overall. There are increases in the budget. Uh Jeff Fans, DOT director, and his staff, Kelly Garvin, have talked about these. You have voted on them already. Essentially, all of the increase in this budget is being covered by grants. The ones again to worry about are the transit or the microransit program which about two and a half years down the road will come off of a short-term grant. Uh the other parts are on a formula grant. So the increase is not being covered by an increase in local funding. It's being covered by an increase in federal government funding. This is the projected fund balance for the transit fund which is a slightly better picture than we have shown for a couple of years. Um, you can see a pretty significant increase in 2526. Again, that's additional grant funding that's actually coming in this year and helping offset the costs for the new route structure for next year. I will say the long-term projection for that is it goes up and then back down instead of being as flat. Some of that is just driven by when we're spending the federal grant funding for capital. Um, so if I were to extend this out, you would continue to see a draw down on funds uh for several years after that. And again in fiscal year 30 you will have a decision to make about the microtransit zones and local funding for those notes off to the side. This includes not just the operating but the capital side which is bus replacement for fixed route and trans aid. It does not include matches for federal government grants for major facility renovations at the Clark Campbell Transit Center or at the Hampton Hay facility. Um so those are things that we will talk about on the capital improvement side. Um you're going to see some information.

Uh we've not provided some of this uh in this format. The um public assembly facilities commission uh gets a more detailed analysis of some of our public assembly facilities, but based on requests for information, we're providing that from a fairgrounds perspective. Uh there are some changes in the budget. Again, uh removing one-time debt expenses because of the leasing payoff. Um we are removing general fund um indirect cost allocation from the fairgrounds and Bowman Grey Stadium. This is a fancy way of saying we charge the enterprise funds for part of budget and HR and those administrative costs. The operating subsidies to those funds are now long larger than those charges are. So there is no need to charge them and then send money to cover the charges. So when you see a a drop um in in transfers and I'll I'll show this for um some other area. This one is we used to run the transfer to Bowman Grey Stadium which is $362,000 through this fund and we used to charge at a4 million worth of indirect costs. Those are going down. The net subsidy to this fund is roughly the same as it was in previous years. Again you just have some changes in methods for how we're doing things. um Carolina Classic Fair attendance. So, uh again, the PAFC looks at this as well. 2020 was COVID year where we didn't have one, but overall you can see a downward trend in attendance at the fair, both paid and unpaid. [clears throat]

Uh net subsidy. So, this is what I was talking about. When you see that drop from estimated year end to next year, it's not that that they're miraculously getting a million dollars more efficient. is that we have some changes in how we're uh doing the accounting for these funds, but we will have going forward an operating subsidy to the fairgrounds which is fair and non-fair activities projected to increase each year. Again, Bowman Grace Stadium. I would note on the revenue side uh we uh have had the NASCAR clash event twice now. They are coming back I can't remember it's another two years hopefully. I know. Okay. To be determined. Um, again, we do have removal of one-time debt and uh we're reflecting a a direct general fund subsidy here instead of a pass through uh to the fairgrounds. The Benton Convention Center, what I will say about the Benton, uh, generally speaking, we are, if you look at that line that says HVMG operating deficit, that's the Hospitality Ventures Management Group. So, the amount of net profit or loss that the folks operating the convention center for us, we are expecting that to be held constant. [clears throat] They have been doing a great job over there. We hope that they continue to. The net increase in this budget is related to a roughly $50,000 increase in property insurance um as well as a small increases to uh the management fee. Uh for fun, this is the city share of convention center operations uh net deficit by general fund or occupancy tax fund over the years. So you can see they had some pretty good years in 23 and 24. Um but they've had some uh years where the subsidy was higher going backwards as well.

Go back to that slide a minute. You can also see the CO effect. Yes. And we're coming back up but not where we were pre-COVID. Not yet.

Not yet. Okay. So True Stadium or the downtown ballpark. Um, there is a long-term model for this where the debt service fund transfers money to this fund. After that debt is paid off, the fund transfers money back to the debt service fund. So, you will see a transfer from the debt service fund for many years for this. I will note we have a $250,000 subsidy from the general fund to the ballpark fund uh this year, which is helping to cover insurance and property maintenance [clears throat] and capital costs. Storm water fund. Again, we have the 4% increase in storm water. Uh really the the discussion here is on the capital side for the storm water fund. Again, there are transfer increases for the leaf collection piece, but this is probably the chart that uh we need to be thinking about in long term. Um as more and more proactive and and emergency projects are budgeted for and accomplished in this fund, the revenue source coming in is not enough to continue a PGO only fund for this funding source for this. we will either need to increase revenues or we're going to have to come back and talk about a debt strategy uh for storm water capital improvements. This is very similar to what we've shown for many years. We have pushed this out because of the rate increases that you've done in the last four years or so. Um but this is a an issue that is going to come in the future. And then I'll just put these two up here. So the utilities commission goes through its own budget process with water, sewer, and solid waste disposal funds. uh and uh Courtney and her staff in utilities do a great job answering the commission's questions. So I will just highlight their um expected changes in fund balances here. When you look at the bottom one, you see a a giant drop in solid waste fund unrestricted cash reserves. They are finishing that giant burm out there as well as opening a new cell of the landfill. So it was expected that they would have a large decrease uh as they are finishing those capital projects.

So, what is not included in the budget? Um, there are over $3 million worth of personnel requests from departments that are not included in this budget. So, there are again almost $7 million worth of non-personnel operating requests. Uh, affordable housing is $4 million there. The manager has talked about a half a penny, which would be $2 million. There are different scenarios. There is no additional funding for housing production in the proposed budget. You would have to increase the tax rate in addition to the 2.6 cents. Uh the manager again talked about street resurfacing uh and the need to get closer to a 30-year cycle. That would be roughly in the $5 million range. And there are more than $3.5 million worth of nonprofit agency requests that will not be funded uh under the amounts that are in the proposed budget. That operating request 6.6 6 million. Over to the left, I've created some bullet points because I wanted you to see some of those things. Um, there were requests for additional uh security enhancements at the Clark Campbell Transportation Center from uh DOT and WISA. There is there are no additional pieces of equipment for snow and ice in this budget. I will say about two weeks after the snow and ice event, we received a lot of the trucks that would have been really helpful to have had at that point. Uh but there is not additional funding for more trucks and more plows in this budget. Um the information technology and marketing communications departments requested nearly $800,000 for a website replacement. That has not been included in the budget. Uh City Link, the application that they use to create service requests. When you call in, they would like to replace that. There is no additional funding for youth programming. Some of the operating and personnel requests are from our recreation and parks department. And I know there's some other conversations about that as well. and [snorts] the progressive housing operations. The neighborhood services department submitted roughly a half a million

dollar request on the operating side in the general fund uh related to housing uh homeless um uh individuals and families. Um again, that progressive housing operations piece could be a part of your overall housing strategy if you elected to raise the rate there. But I wanted to be very transparent in saying there are lots of things that departments have asked for and that are potentially priorities that are not funded. As the manager said, this is a no frills budget. We are trying to maintain service levels. Many of these things are service level enhancements and you would need to provide additional resources in order for them to happen. And I'm gonna add on the Scots there. While there we you could call them enhancements. I think there are ways for the departments to do their jobs better in those uh areas. We do know and I know you know as well that there are a lot of community folks that would like for us to actually increase or enhance services. None of those are included in these requests. So we asked departments to submit budgets based on continuing basic services and the absolute ne necessary needs that they had. So we still cannot fund all of those with this proposal. That is all I have in terms of the numbers. Couple of notes here. We do have uh more budget workshops coming. Um I will be uh out this Thursday. It didn't make the list here, but [clears throat] marketing, I will work with marketing to make sure that we get it out. Neighborhood services is doing several different opportunities. And I told you this year we would embed with some of those departments and go out. So, I'll be doing that on Thursday to talk with some folks and then be out at another session in the community on May the 19th at Sprag Street Rec Center. Um, you have your workshop this Thursday, workshop the following Thursday. The public hearing is next Monday evening,

and then we are slated for adoption of the fiscal year 27 budget on June 1st. And that is what I have for the operating budget. And if we hold there a minute, uh I have a number of comments, but I'm going to wait and just go around. Anybody got any questions or comments? And also oftentimes questions the staff oftenimes will have to get back with us later if you're asking for additional information. But I'm just going to start with and come around. Barbara, you got anything? this hall.

Yes, I do. Thank you. Thank you. Um, it is not here and I know you had a slide talking about some of the things that were not included in the budget. Um, I can talk offline so be prepared for an email particularly about the additional funding for youth programming. Um, [snorts] just to kind of see what that what that what the department may have talked about with that. But they may be able to do some other things. Also, I was curious to see and I can also send this by way of email. Um, what so the 3% merit for personnel is included in this and we went over that and talked about that um and also talked about the increasing costs for um staff with health care benefits. So, I would like to see and I know that the merit is 3% but this is not a COLA. There's no COLA at all. This is just merit and that is based off of staff performance. Right normally or is that just just merit? Like will everybody get 3% or is it some get three, some get two, some get one?

No, it's it's a it's a flat amount of 3% if you meet expectations in your performance review. Okay. So either So either you meet it based off of your supervisor's discretion or you don't. So either you get 3% or you don't basically. That is correct. Okay. And that will be paid in July or Jan. Right. Right now we're we're hopeful to do that in December, but we do it for at least half a year. Okay. All right. Okay. Thank you, M. Adams. Mr. Mayor.

Yeah. Two quick things circling back to Jeff Fancler's operation there at WISA and I don't want to seem Paulianish Jeff, but aren't we hopeful that with the changes in the cross town routes that we're going to see that that slide not go down in terms of uh utilization? Maybe it's going to level off and go up a little bit. Come on up, Mr. Fansler. Not to put you on the spot. Not to put you on the spot. Yeah, but you are on the spot. Mayor to answer your question, yeah, utilization is expected based on where we intend to send these with the job clusters and so most definitely we have spent a lot of time researching where we're sending those buses. So the intent would that ridership would reflect that very specifically.

Okay, great. And then the other point was uh Scott don't have a heart attack, but what if this council said to you, we really want to try to do this affordable housing, but we don't want to increase uh the tax rate. Can you find $2 million someplace in that $700 million budget to allow us to do this? I'm not asking you to ask answer that question today, but could you take just a quick peek at that and see what it might take? I'm going to stare down at the city manager respond to that, but we could we can provide a response to that coming back into budget workshops. Okay. Thank you. Okay, Missia, [clears throat]

I I think it's a a decent budget, but my heart says I would love for us not to have to increase our tax rate, although I know this budget includes a tax rate. And I see all of these what's not budgeted, meaning there are some things our departments would love to have that would make them more efficient and effective. Um, [clears throat] but I wonder if there's a way that departments can see how they can do what they do without having an increase in their budget so that we don't have to increase the tax rate. Um, that's just my concern.

M Andre Bowen. Thank you, sir. Um, so I I emailed you this earlier this week, but I wanted to kind of reiterate and maybe have this as a public conversation. So, uh, the general fund has increased, budget has increased, but our overall budget is decreased. Can, um, is there funding anywhere the overall budget that we can kind of subsidize over into the general budget so we don't have to raise that tax rate? We we we we do not operate as the nonprofit or the private sector world.

Funds are set up as governmental standards and the funds are independent. And so it is actually generally speaking u it's it's clearly bad practice. Sometimes it might be even against law to take money for example to to say well we're going to increase our utility rates [snorts] and use $2 million to fund housing. that would be considered um a a we'd probably get challenged on that and and taken away. So, so while we look at the overall increases, those things are independent of each other and the only issue there is debt service. The debt service fund is we we are providing debt with that and that capacity is in there. So again, from a housing standpoint, you could, it doesn't create a sustainable source, but you could do debt service uh in the future and and use some of those funds to do it like for housing as an example.

Thank you. Okay, I got some comments, but I'm going to finish with Thank you, Chair. I um not to beat a dead horse, so to speak, but I want to go back to the uh compensation for staff. Can you tell me that 3% increase? Is that a half a penny, a penny, quarter percent? I would have that sitting in front of me at the entire um until I ask the question. I understand. So why you're looking for

I have it for all funds. Give me just a second and I'll give you something that's close to the number.

So why you're looking for it? Um because I I come back to it because it's I I think it's very important that um we really consider um adequate compensation for staff. Um, I don't know a time where the head of a department has come in and not given praise to the staff that had to come and do the heavy lifting for or with and in partnership to get something done. And um in my world, you know, the the folks that you see up front absolutely have a very um intricate part to do, but the folks you don't see, like in my world, the dishwasher. No one ever pays attention to the dishwasher, but you cannot function on a daily basis without a dishwasher. when you try, you wind up being there at 3, four o'clock in the morning washing dishes and you don't sleep and everybody's very angry. So, I want to make sure that we're able to compensate um not overwhelmingly [snorts] because we are in tough times, but as we as a as a a body are in tough times, I also know that individually nothing no price of anything that anybody has to buy inclusive of the health insurance or the medication is going to go down in the next 6 months or year. So, I want to make sure that we're do as well by them, the least of those, as we have and are trying really hard to do by some of the other more visible departments of our city.

Thank you, ma'am. Um, so that number is, let me make sure I understand the question correctly. There is the question, how much does the 3% merit cost us in the general fund? Yes. So, I'm going to give you my back of the napkin as I stand at the podium here, okay? And we will go back and do some better calculations and bring you a better number, but each percentage point in merit in the general fund is roughly in the neighborhood of $1.3 million. So, 3% would be north of $4 million. Okay, thank you. Thank you.

Okay, now my comments. Um, first [clears throat] off, some data points for everybody. We have in taxable property, I'm rounding this just a little bit, $40 billion. I mentioned that in that we play with a lot bigger numbers than [snorts] people think. But in in the city of Winston Salem, we have $40 billion of taxable property that we now tax at 50.56 cents to the 100, whatever it may be. 56.7

6.7. Secondly, and Mr. Mayor, these are your numbers so you can uh sleep at night. New single family housing permits. This is units, not dollar amounts. Dollar amounts are in here, too. They're in the very first in the city manager's comments to us. And I'm assuming this is calendar year. Uh it is

1,587 housing single family housing permits were issued in 25587. That does not count nonresidential building permits or multif family. That's exactly one more than we issued in 24, which is 1586 permits. So people wondering, oh, we're not building any houses. And by the way, these are single family. There are virtually no single families that come through uh the housing area. We did a few in Happy Hills. We've done a few in Barbinger area over in Cleveland Avenue, but I think in the last two years, the number of single family houses we've actually touched this council has from a subsidy standpoint, I don't think would be more than 30 or 40. It's very, very, very little. So my point is the the I think the private sector is is generating a lot and I will tell you out on metal arc my infamous roads there are two projects that are I think they've been permitted but they certainly haven't started although they're clearing the land and the two combined will be close to 400 homes next. This has been said a couple times I'm going to again this Thursday we're going to talk about community agencies. Now, for you rookies up here, we usually spend more time talking about community agencies than we do everything else combined. So, Thursday's going to be a rough day.

But we do have we all filled out a survey and and said, "Okay, the these various organizations that have requested this is where we would like to spend money if it was up to us." So, we do have a data point to start with and we'll see what happens from there. And this is in no particular order, but these are questions you can get back to. The uh book here calls for the closing of the uh Salsbury Road landfill, that's the CND landfill in 2030. That's not very far away. Uh my question is what's going to happen to that material once it's closed? By the way, the current the sanitary landfill was 2042. I'm not worried about that one. That tonnage will go to Hansill Road Landfill. What's that?

The tonnage will go to Hansill Road Landfill.

Okay. So then the question would be how you don't have to answer this today. Will that impact the lo longevity of that landfill? New bus routes. Mr. Mayor, you stole a little bit of my thunder, but if everybody's got their book, if you can open to page 110, I don't know if you can pull it up on there or not. 110. My favorite chart. Why have I been such a vocal critic for 26 years of the bus system? That's because this line has been going downhill for 22 years or however many is on here, 15 or something. Back in 2012, we had 3.46 million riders. Uh the projected for this year is 1.5. Please notice during COVID you got a little dip in there, but if you were to uh do a regression analysis on there, that line has been steadily down uh to the extent that we're now running versus 2012, which was 14 years ago, we're down 2/3 riderships. I am hopeful and it shows on here that that line will begin to go up. My question to the to the staff to Mr. Finsler Fencler back finsler back there is you don't need to answer it now is when are the bus routes going to go into effect and when do we think we'll see an impact from them and you can reply that later

the answer to your question is the fixed route changes will take place in August August so

we might have after it gets lined out a half a year worth of data there maybe maybe a little bit more I always ask for this if you could provide the total debt GEO, revenue, bonds, cops, etc. Not liabilities, just debt. And a schedule, a payment schedule on kind of how we're coming on that. Uh question on cemeteries. Do we have any plots left to sell at either one? And if so, how many approximately? Uh I know the the number of plots are if not sold out or close. And I think long term or over the next few years, we're going to see a change in the activity. If we're not selling new plots, then we're simply using the ones that have already been sold. So just curious there. My numbers, I wrote down that we had 5.5 million of salary increases in the budget. Um, and I know from prior comments at 1 cent increase in property taxes about $4 million. So to answer your question indirectly now that 5.5 million included some salaries that were paid for by grants in years past.

That $5.5 million is all funds not just general funds. So that includes the folks in your water and sewer funds and storm water. Okay. Yeah. So the general does include all those other things too.

Yeah. So if you back those out maybe uh around 4 million which would be about a penny on the property tax to pay for the salaries. Uh I've already mentioned earlier I it is tough news. I will tell you as a small business owner or at least I was for 30 some years without a doubt the most difficult thing I ever dealt with year in year out was health insurance costs. They go up relentlessly and it's not a whole lot we can do to impact the total amount. Uh please remember we we self-insure our health insurance calls. So when there is a triple lung bypass or whatever that was, that that cost does hit us fully. U if you're in the private sector and you're buying insurance from a Blue Cross or Sigma, whoever it may be, your experience is spread out over everyone else that buys insurance and you kind of uh pay the average. But what we pay for is in fact what we do that. I don't believe we reinsure anything, do we? Maybe. I don't think so. Um I will be curious to see what your study says and I would maybe just limit it to what the three or four or five cities around us do as far as the split. Uh we're 8317 right now. Uh please notice it's in here that the Bulma Gray, the convention center, the fairgrounds, all those auxiliary services are now receive some subsidy. Uh and that's not necessarily bad. I used to use the example Hannes Park is subsidized. Matter of fact, you can pretty much use Hannes Park free. You walk in itever. [clears throat] So a lot of the amenities that we offer are subsidized. All our parks are. Uh but but these

things that are a little more proactive or you you do more activities there are subsidized as well. But to me that's part of the um what we pay for for the u quality of life we have. The last comment I'd like to make and I'm not sure what the answer to this is but folks we are currently under the microscope from Raleigh. Uh the House is presenting a constitutional amendment to limit and they're they're basically addressing counties. I think we will be next. Uh I don't know what that says about how we should behave but but we are being watched and I this is is a direct result of pretty much what happened last year to us and to many other places where the property owners not the owners of the old BB&T building or the owners of of three-way shopping center but private property homeowners saw unbelievable increases uh And those people uh shoeway throughway shopping center does not vote. Matter of fact, the owner uh Saul Properties is out of Baltimore, I think. But the people who got those property tax bills do vote and they let Raleigh know about it. And I I don't know what that means, but I just think we need to be cautious and understand that that we are being watched along with all the other folks. And if in my opinion, if we don't watch out, Raleigh is gonna come help us more than we want to be helped. Uh and I again, I'm not sure what's going on, how it's going to affect us, but it is definitely the spotlight is on what local municipalities do. Uh you know, the old saying, I'm from the government. I'm here to help. Uh I'm afraid that what may be coming. Um, and again, I can't predict any more than anybody else can what what's going to happen,

but we're certainly in the spotlight there. With that, unless there's any other comments. Yes, ma'am. Miss Hall, this is my last comment. That's fine. Have all you want.

Thank you. Um, Chair Clark, uh, Director Tesh, I do have one request of you, and that's based off of the merit question. So some people may not receive three, they may not receive anything. So considering the rising cost just in general that the world is seeing and then rising cost of health care um that the employer would have to take on. I would like to see and you all may have this in the office, you may not, but what a 2% polaro would look like. So that is just just 2% cola. I can talk to you about that offline, but that is something that I would email you about so that you would know.

We could talk about what that what that could look like because that may not have happened before. This might be totally new, but I would like to know what that would look like. If if I could piggy back on that comment, you're saying everyone's getting 3% if they get a if satisfactory rating and and if not, they get nothing. Right. So if you have cost and you get nothing. Well, let me let me finish the question. Been doing this for after I get their attention. Mr. City Manager, I would like to know what percent of the employees get a satisfactory rating. It's a it's a meets expectation rating. A meets expectation. So that's and so the reality is the only people that would not get an increase would be those folks that are typically under performance improvement program

and that's why they wouldn't be getting those. So, so, so I honestly it's the vast majority over 90%. Yes. Well over over 95. Yes. Yeah. I I think it is virtually everyone's going to get 3%. But give us that number. I still would. Yeah. Thank you. We we can we can still tell you what and the question was asked. I'm assuming you're talking about we we 2% coal is just uh typically we would do that if we're going to move the ranges up for everybody and that's just a standard that's given to everybody and I think that's what you're talking about just a just a 2% across the board raised for everyone. I think you're going to find it's 99% of people are getting 3%. But we get the answer. Let's get

Thank you. We get the answer. Okay. Thank you. With that, we'll see everybody back Thursday. Yeah. Let's u remember to get the surveys to Jamie tomorrow if we could so we can get them back to the school of government and we'll do CIP on Thursday. Is that correct? Okay. All those in favor of journing, please say I. I turn.