* This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting. GOOD MORNING, [00:00:01] LADIES AND GENTLEMEN. [I) Call Meeting to Order and Roll Call] TODAY IS SATURDAY, SEPTEMBER, NOT SEPTEMBER, MAY 16TH, MAY 16TH, UH, 2026. AND I AM CALLING, UH, THIS SPECIAL SATURDAY MEETING. UM, CAN I PLEASE HAVE A ROLL CALL? FLORIS KA. HERE. KAAS. PRESENT. ZA. HERE. MEDINA. HERE. ZAPATA. HERE. HARRIS. HERE. MCKINNEY HERE. OKAY. THAT IS SEVEN. WE ARE ALL HERE. UM, NORMALLY WE JUST GO INTO HIS CITIZEN'S COMMENTS, PERIOD. I WOULD LIKE TO STAND UP AND DO THE PLEDGE ALLEGIANCE. SOMETIMES WE DO IT, SOMETIMES WE DON'T. HOWEVER, TO MAKE IT CONSISTENT AND TO REMIND US ALL OF HOW WE ARE ALIGNED TOGETHER. I WOULD LIKE TO MAKE SURE THAT WE ARE GONNA DO THIS BEFORE EVERY MEETING, SO IF I CAN HAVE YOU ALL STAND. ALL RIGHT. THANK YOU VERY MUCH. UP NEXT [II) Citizen Comment Period with City Council] WE HAVE CITIZENS COMMENTS. THE CITY COUNCIL WELCOMES COMMENTS FROM CITIZENS. THOSE WISHING TO SPEAK ARE ENCOURAGED TO SIGN IN BEFORE THE MEETING BEGINS. SPEAKERS MAY BE, WILL BE PROVIDED WITH AN OPPORTUNITY TO SPEAK DURING THIS TIME PERIOD ON ANY AGENDA ITEM OR ANY OTHER MATTER CONCERNING CITY COUNCIL BUSINESS, WE ASK THAT YOU PLEASE OBSERVE THE THREE MINUTE LIMIT. ALL RIGHT, UH, FIRST I HAVE LARRY GOLLICK. UM, AS WE ENTER THE BUDGET SEASON, I'M ASKING THE COUNCIL TO LOOK BACK AT THE LAST YEAR'S WATER AND WASTEWATER RATE DECISIONS AND COMMIT TO TWO THINGS. UM, FIRST, PROVIDE RELIEF. THESE RATES ARE UNSUSTAINABLE FOR FAMILIES INSIDE AND OUTSIDE THE CITY LIMITS. SECOND, COMMIT NOT TO REPEAT LAST YEAR'S MISTAKES. HERE'S WHY IT MATTERS. OUR COMMUNITY IS HURTING SALES TAX REVENUES ARE DOWN HOME, VALUATIONS ARE DOWN, WHICH WILL IMPACT, UH, PROPERTY TAX, UH, REVENUES AS WELL. UM, THIS YEAR THE APPRAISAL DISTRICT DROPS THE ASSESSMENT OF MY HOME BY $30,000 MORE THAN I ASKED THEM FOR . SO IT, IT'S CLEAR THAT THERE ARE, THERE ARE ISSUES. UM, PEOPLE ARE UPSIDE DOWN IN THEIR MORTGAGES. THERE ARE PEOPLE THAT WON'T MOVE HERE. I STOPPED INTO HIGHLAND HOMES IN MY NEIGHBORHOOD AND HE FLAT OUT TOLD ME THEY'RE HAVING A VERY DIFFICULT TIME, AND ESPECIALLY WHEN THEY TELL PEOPLE WHAT THE WATER RATES ARE GOING TO BE, UH, THEY WON'T SHOP HERE. I KNOW THAT IN, IN PARTICULAR, THERE, THERE ARE GROUPS WITHIN MY NEIGHBORHOOD THAT HAVE, UM, BASICALLY SAID WE WE'RE NOT GONNA SHOP IN KYLE. KYLE DIDN'T SUPPORT US. WE'RE NOT GONNA SHOP HERE. I'M NOT SAYING THAT IMPACTS YOUR SALES TAX REVENUE, BUT I THOUGHT IT WAS SOME, IT'D BE SOMETHING I WOULD SHARE. UM, WATER. BILLS OF THREE TO $400 A MONTH ARE PRICING FAMILIES OUT. WHEN YOU SET BUDGET NUMBERS, REMEMBER THAT'S WORK. THAT'S SOMEBODY'S PAYCHECK THAT THEY HAVE TO WORK IN ORDER TO PAY THOSE BILLS. YOU'RE SPENDING OTHER PEOPLE'S MONEY. PLEASE BE RESPECTFUL OF THAT. PLEASE COMMIT TO RELIEF AND ACCOUNTABILITY. THANK YOU. THANK YOU. UP NEXT I HAVE ALICIA HILL, PLEASE. GOOD MORNING, MAYOR AND COUNCIL. KYLE'S ENTERED INTO WHAT I CALL HYPER GROWTH MODE. WITHOUT INCORPORATING FINANCIAL DISCIPLINE MODE, WE ARE A RESIDENTIAL COMMUNITY, NOT A TOURIST DESTINATION. RESIDENTS ARE TAPPED OUT. QUALITY OF LIFE IS DECLINING, TRAFFIC IS WORSENING. UTILITY BILLS CONTINUE RISING AND TRUST IN LEADERSHIP IS ERODING. THE CITY'S OWN FINANCIAL PACKET SHOWS THAT RESERVES DROPPING FROM ROUGHLY 34 MILLION TO 10 MILLION. STAFFING GREW FROM 282 EMPLOYEES TO 471 IN JUST FIVE YEARS, AND OVER 611 MILLION IN TOTAL DEBT OBLIGATIONS. THIS SHOULD CONCERN EVERY RESIDENT IN THE CITY. I'M ASKING THE COUNCIL TO SERIOUSLY CONSIDER BOTH IMMEDIATE AND LONG-TERM REFORMS. FIRST PLACE A TEMPORARY MORATORIUM ON NEW MAJOR SIT PROJECTS, NOT ALREADY UNDER CONSTRUCTION, EXCEPT FOR THE TRUE HEALTH AND SAFETY EMERGENCIES. PAUSE THE BEAUTIFICATION PROJECTS, SPECULATIVE EXPANSIONS AND OVERLAPPING CONSULTANTS STUDIES UNTIL WE RELEASE AFFORDABILITY OR RE REASSESS AFFORDABILITY AND PRIORITIES. SECOND, PRIORITIZE INFRASTRUCTURE BASED ON RESIDENT NEED, NOT SPECULATIVE GROWTH. FOCUS FIRST ON PUBLIC SAFETY, TRAFFIC RELIEF, WATER AND WASTEWATER, MAINTAINING EXISTING ROADS AND PARKS, IMPROVING QUALITY OF LIFE AND FOR CURRENT RESIDENTS BEFORE APPROVING ADDITIONAL EXPANSION PROJECTS. THIRD, REFORM COUNCIL AGENDAS. WHEN MEETINGS CONTAIN MASSIVE PACKETS, CONSULTANT PRESENTATIONS, AND DOZEN, DOZENS [00:05:01] OF AGENDA ITEMS. THERE'S NO REALISTIC WAY FOR COUNCIL, MEDIA OR RESIDENTS TO PROPERLY VET THESE PROJECTS AND THEIR COSTS. THAT CREATES WEAK SCRUTINY AND RUBBER STAMPING, WHICH IS WHAT I BELIEVE GOT US HERE. MAJOR CONTRACTS AND INFRASTRUCTURE PROJECTS SHOULD REQUIRE SEPARATE DISCUSSIONS, INDEPENDENT COST SUMMARIES, PLAIN ENGLISH EXPLANATIONS, AND PUBLIC POSTING OF FINANCIALS BEFORE THEY OCCUR. FOURTH, REQUIRE AN INDEPENDENT THIRD PARTY COST REVIEW FOR MAJOR TRANSPORTATION AND UTILITY PROJECTS. RESIDENTS HAVE THE RIGHT TO ASK, WHY IS THIS INTERSECTION GONNA COST ME $7 MILLION? FIFTH, FREEZE NON-ESSENTIAL HIRING AND REVIEW OVERLAPPING ADMINISTRATIVE ROLES AND CONSULTANT HEAVY DEPARTMENTS, UM, AND UNTIL RESERVES ARE STABILIZED. SIX, CONDUCT REAL FORENSIC AUDIT GOING BACK TO AT LEAST 2020 ON PROCUREMENT PRACTICES, CONSULTANT CONTRACTS, BID PROCESSES, CHANGE ORDERS, PROJECT SCOPE, CREEP DEVELOPER REIMBURSEMENTS, TERMS OBLIGATIONS OVER TIME AND DUPLICATE SERVICES. SEVENTH, PAUSE, NEW INCENTIVE AGREEMENTS AND REEVALUATE ECONOMIC DEVELOP SUBSIDIES WHILE INFRASTRUCTURE COSTS ARE EXPLODING. LONG TERM, KYLE MUST SHIP FROM EXPANSION CULTURE TO OPERATIONAL EXCELLENCE. THIS MEANS FIXING EXISTING ROADS BEFORE BUILDING NEW ONES, REBUILDING EMERGENCY RESERVES, IMPLEMENTING DEBT AFFORDABILITY, PO POLICIES, SLOWING GROWTH TO MATCH INFRASTRUCTURE CAPABILITY, AND FOCUSING ON AFFORDABILITY, MAINTENANCE, AND TRANSPARENCY AND SUSTAINABILITY. RESIDENTS SHOULD ALSO HAVE ACCESS TO FULL TURS TRANSPARENCY DASHBOARD, SHOWING EVERY PROJECT REIMBURSEMENT, DEBT OBLIGATION, DEVELOPER AGREEMENT, AND COST CHANGE IN REAL TIME. AND FINALLY, CREATE REAL CITIZEN OVERSIGHT COMMITTEES WITH MEANINGFUL TRANSPARENCY. INDEPENDENT OVER REVIEW AUTHORITY. MOST IMPORTANTLY, FOCUS ON TRAFFIC FLOW BEFORE EXPENSIVE EXPANSIONS. TURN LANES SIGNALING, TIMING, SYNCHRONIZATION, ACCESS MANAGEMENT, AND PROPERLY DESIGNATED ROUNDABOUTS. GROWTH ITSELF IS NOT A PROBLEM. GROWTH WITHOUT DISCIPLINE, TRANSPARENCY, ACCOUNTABILITY, AND AFFORDABILITY IS THE PROBLEM. KYLE, RESIDENTS DESERVE LEADERSHIP THAT ADOPTS THIS SIMPLE PRINCIPLE, PRINCIPLE. IF IT DOESN'T BENEFIT THE RESIDENTS OF KYLE, WE AREN'T DOING IT. THANK YOU. I DO WANNA NOTE THAT MRS. HILL GAVE ME A QR FOR, UH, US TO SCAN IN. AND THEN IF YOU, JENNIFER, IF YOU COULD JUST, UH, PASS THIS ON TO THE COUNCIL, LIKE EMAIL IT. UM, THIS HAS MORE FOR CONCERNS ON THIS. ALL RIGHT. AND NEXT I HAVE SHARON THOMPSON, PLEASE. GOOD MORNING, MAYOR AND CITY COUNCIL MEMBERS. MY NAME IS SHARON THOMPSON AND I LIVE IN THE SIX CREEK SUBDIVISION. WE BOUGHT OUR HOME IN SIX CREEKS THIS PAST DECEMBER IS OUR RETIREMENT HOME. IMAGINE OUR SURPRISE WHEN WE FOUND OUT THAT WE MIGHT HAVE TO SELL IT BECAUSE WE WON'T BE ABLE TO AFFORD THE HIGH WATER BILLS ON A FIXED RETIREMENT INCOME. AND THERE'S ANOTHER CATCH. WE PROBABLY WON'T BE ABLE TO SELL IT. I ASKED MY REALTOR YESTERDAY TO PROVIDE ME A LIST OF HOMES FOR SALE IN SIX CREEKS, AND CURRENTLY THERE ARE 94 HOMES FOR SALE WITH MORE BEING ADDED EVERY WEEK. I ALSO ASKED HIM TO COMPARE THE AMOUNT OF HOMES IN SIX CREEKS FOR SALE AND OTHER NEIGHBORHOODS NEARBY. AND THERE ARE A DISPROPORTIONATE, DISPROPORTIONATE AMOUNT BECAUSE NO ONE WANTS TO PAY HUNDREDS OF DOLLARS FOR THEIR WATER BILL EACH MONTH. THE WORD HAS GOTTEN OUT THAT ETJ NEIGHBORHOODS HAVE UNAFFORDABLE WATER BILLS AND NO ONE WANTS TO BUY A HOUSE IN THESE NEIGHBORHOODS. I'VE LIVED HERE FIVE MONTHS AND WE ARE ALREADY TALKING ABOUT SELLING OUR HOME WITHIN THE NEXT YEAR, EXCEPT IT PROBABLY WON'T SELL BECAUSE OF THE WATER RATE. AND WE'RE BEING TOLD THE RATES ARE SUPPOSED TO INCREASE YEAR AFTER YEAR. HOW DO YOU EXPECT RETIREES TO AFFORD THIS? I HAVE WORKED SINCE I WAS 14 YEARS OLD, SOMETIMES WORKING TWO JOBS AND HAVE BEEN PLANNING MY RETIREMENT FOR A LONG TIME. AND NOT ONCE DID I FACTOR IN HAVING A WATER BILL SO HIGH THAT IT WOULD AFFECT MY FIXED INCOME. I HAD A REPORTER FROM KU, TEEN KU TEEN NEWS IN AUSTIN REACH OUT TO ME IN MARCH, AND SHE INTERVIEWED ME ABOUT HOW HIGH THE WATER BILL AFFECTS MY DAY-TO-DAY LIFE. THINK ABOUT THAT. THERE ARE A LOT OF THINGS THAT CAN AFFECT YOUR LIFE. MEDICAL ISSUES, BIRTH OF A CHILD LOSING A JOB, RETIREMENT, BUT YOU A WATER BILL SHOULD NOT AFFECT HOW YOU LIVE ON A DAILY BASIS. KUT ALSO INTERVIEWED ANOTHER RETIRED COUPLE AND ENDED UP USING THEIR STORY FOR THEIR ARTICLE. HERE'S A QUOTE FROM THE WOMAN THEY INTERVIEWED. SHE CAREFULLY PLANS WHEN AND IF HER GRANDKIDS CAN COME VISIT, TAKING INTO ACCOUNT THE STRAIN, THEIR ADDITIONAL WATER USAGE WILL PUT ON THE FAMILIES IN FINANCES. I PLANNED MY LIFE AROUND THIS HIGH WATER BILL. SHE SAID, CAN YOU IMAGINE NOT HAVING FAMILY MEMBERS VISIT YOU BECAUSE YOU CAN'T AFFORD [00:10:01] THE WATER BILL FROM THEM STAYING FOR A COUPLE OF DAYS? I'M ALREADY WORRIED ABOUT HOW MUCH IT'S GOING TO COST TO HAVE MY DAUGHTER AND HER HUSBAND COME STAY WITH ME THIS CHRISTMAS. IT'S ABSOLUTELY RIDICULOUS TO HAVE TO FACTOR IN A WATER BILL WHEN INVITING FAMILY OVER. WE ARE BEING TOLD THERE WILL CONTINUE TO BE AN ANNUAL RATE INCREASE TO, IN ADDITION TO THE 77% INCREASE FOR THIS YEAR, HOW DOES COUNCIL EXPECT PEOPLE, ESPECIALLY RETIREES TO AFFORD THIS? WHAT IS TAKING SO COUNSEL, SO LONG TO TAKE ACTION. YOU HAD THIS TOPIC AS AN AGENDA ITEM TODAY. I ASK THAT YOU PLEASE MAKE THE DECISION TO LOWER THE RATES FOR ETJ NEIGHBORHOODS AND THE RETIREES THAT LIVE IN THEM. I'LL END WITH ANOTHER QUOTE FROM THAT KUT INTERVIEW. FAIRNESS MEANS RATES THAT REFLECT ACTUAL SERVICE COSTS, NOT BOUNDARIES. THANK YOU. THANK YOU. UM, NEXT I HAVE KUSH PATEL. GOOD MORNING. MY NAME IS KUSHI PATEL AND I LIVE IN THE SIX CREEKS NEIGHBORHOOD. FIRST, I WANNA WELCOME OUR NEW CITY MANAGER, MR. MOHI, AND WELCOME BACK OUR COUNCIL MEMBERS. WE ARE SO GLAD YOU ARE HERE AND WE REALLY, AND WE ARE REALLY HOPEFUL THAT YOUR ARRIVAL WOULD MARK A FRESH START FOR COMMUNICATION BETWEEN THE CITY AND OUR COMMUNITY. I'M A 20-YEAR-OLD STUDENT AT UT AUSTIN AND I'M HERE TODAY BECAUSE MY NEIGHBORS AND I ARE SIMPLY WAITING AND IN NEED OF IMMEDIATE RELIEF WHEN IT COMES TO OUR WATER BILLS. WE HAVE BEEN COMING HERE TO THESE MEETINGS FOR MONTHS NOW OVER AND OVER AGAIN. AND WE JUST NEED A SOLUTION. PLEASE. MANY FAMILIES IN SIX WEEKS ARE FACING UNPREDICTABLE, MASSIVE MONTHLY BILLS THAT ARE JUST REALLY HARD TO KEEP UP WITH UP WITH. WE WANT TO HELP THIS COUNCIL MOVE FORWARD IN A POSITIVE WAY. WE AREN'T LOOKING TO REPEAT THE MISTAKES OF THE PAST, AND WE JUST WANT TO WORK TOGETHER TO FIND THE FIRST SOLUTION SO OUR ETJ NEIGHBORHOOD CAN THRIVE. THANK YOU. THANK YOU. UP NEXT I HAVE CAROL DUGGANS. MS. DOGAN DUGGANS. AH, SORRY. THAT IS OKAY. OKAY. GOOD, GOOD. UH, GOOD MORNING MARY MAYOR AND COUNCIL MEMBERS. MY NAME IS CAROL DUGGINS. I LIVE IN THE ETJ AREA. I'M HERE THIS MORNING FOR ONE PURPOSE TO MAKE SURE THE DECISIONS MADE IN THIS BUDGET PROCESS DO NOT REPEAT THE MISTAKES OF THE PAST. UNDER A PREVIOUS MAYOR, THE COUNCIL APPROVED 77% WATER INCREASE DURING A BUDGET MEETING. WHEN THE PUBLIC WASN'T, WAS NOT PRESENT, THE DECISION SLID THROUGH QUIETLY WITHOUT PEOPLE WHO WOULD BE PAYING THE PRICE IN THE ROOM TO QUESTION IT. FAMILIES ACROSS KYLE HAS BEEN DEALING WITH THE CONSEQUENCES EVER SINCE. THIS YEAR IS DIFFERENT. WE ARE HERE, WE ARE WATCHING AND WE ARE NOT, UH, ALLOWED, UH, MAJOR FINANCIAL DECISIONS TO MOVE FORWARD WITHOUT PUBLIC SCRUTINY. THE IMPACT, IMPACT THAT WATER HIKES HAS BEEN VERY REAL. IT HAS CHANGED HOW FAMILIES USE WATER, HOW THEY MAINTAIN HOMES, HOW THEY MANAGE THEIR BUDGET. THESE ARE NOT ABSTRACT NUMBERS. THESE ARE LIVED CONSEQUENCES CREATED BY A VOTE THAT HAPPENED WITHOUT THE COMMUNITY. VOICE. TRANSPARENCY IS NOT OPTIONAL. PUBLIC TRUST IS NOT OPTIONAL, AND ACCOUNTABILITY IS NOT OPTIONAL. WE ARE NOT HERE TO BE ADVERSARIAL. WE ARE HERE TO BE PRESENT. WE ARE HERE TO BE HEARD, AND WE ARE HERE TO ENSURE THAT NO FUTURE RATE DECISIONS, WATER, WASTEWATER, AND OR ANY ESSENTIAL SERVICES, IS MADE WITHOUT THE FULL AWARENESS AND THE PARTICIPATION OF THE PEOPLE WHO FUND THIS CITY. YOU MAY NOT HAVE EXPECTED US LAST TIME, BUT YOU CAN EXPECT US FROM NOW ON. THANK YOU. THANK YOU. AND NEXT I HAVE VIC ALLEN, PLEASE. GOOD MORNING, MAYOR AND COUNCIL MEMBERS. I JUST WANTED TO THANK YOU FOR HAVING THIS MEETING ON A SATURDAY. MOST OF US IT'S OUR DAY OFF AND I IMAGINE IT'S YOUR DAY OFF TOO, SO I I APPRECIATE THAT. I JUST WANTED TO SAY A COUPLE THINGS. I DON'T HAVE A PREPARED SPEECH TODAY, BUT I DO APPRECIATE YOU DOING THIS AND HAVING AN OPEN HEARING. WE KNOW, UH, ONE OF THE THINGS WE ALL HAVE TO ADMIT IS THAT THE CITY OF COLLEGE GREW UP AND NOW WE HAVE TO ACT LIKE WE'VE GROWN UP WITH THE, THE POLICIES OF THE [00:15:01] PAST AND THE THINGS THAT HAPPENED YESTERDAY ARE BEHIND US. WE HAVE NEW TALENT AND NEW PEOPLE ON BOARD. AND I APPRECIATE YOUR, YOUR INPUTS AND YOUR VIEW AND YOUR INSIGHTS. UH, IF THERE'S ANYTHING THAT HAS BEEN ALLOWED, SHOULD HAVE BEEN A LOUD VOICE OR BEEN HEARD, UH, IT WAS THE RESULT OF LAST YEAR'S ELECTION THAT THE PEOPLE AND THE RESIDENTS OF KYLE ARE NO LONGER GOING TO TOLERATE THE ACTIONS OF THE PAST. AND I'M SURE THAT YOU'LL ACT RESPONSIBLY. AND I AM COUNTING ON THAT. AND AS ARE THE REST OF US HERE TODAY. THANK YOU VERY MUCH. OH, AND CONGRATULATIONS TO OUR NEW INNER CITY INTER INTERIM CITY MANAGER. AND I BELIEVE THAT, UH, I HAVE FULL FAITH IN HIS ABILITY AND YOUR ABILITY TO CARRY OUT WHAT WE NEED TO GET DONE. THANK YOU. I THANK YOU. I HAVE NO MORE COMMENT FORMS. DOES ANYBODY HAVE A FORM? ALL RIGHT. IF YOU, WE HAVE TWO, YOU CAN HAND 'EM TO COMMANDER, WOULD YOU LIKE TO HAND YOURS IN TOO? I OKAY. THANK YOU. ALL RIGHT, SIR. IF YOU WANNA GO FIRST AND JUST STATE YOUR NAME FOR THE RECORD PLEASE. HI, UH, MY NAME IS CHAD ZAKI AND, UH, WE MOVED HERE IN AUGUST OF LAST YEAR. UH, RETIRED FOUR YEARS GOING ON FIVE YEARS AGO. UH, THE PURPOSE OF OF MOVING HERE WAS BECAUSE THE FACT OUR SON HAS JUST WAS RECENTLY MARRIED AND WE WANT TO BE CLOSER TO THEM. WE MOVED TO THE SIX, UH, CREEKS AREA AND UNBEKNOWNST TO US ABOUT SEVERAL WEEKS LATER, ALL OF A SUDDEN WE'RE TOLD THAT WE'RE GONNA HAVE A 77% INCREASE IN OUR WATER. AND ON TOP OF THAT WE'RE GONNA HAVE WHAT? AN ADDITIONAL 25%. NOW, WHETHER, I DON'T KNOW IF YOU GUYS ARE ON THE COUNCIL THAT VOTED FOR THIS, I COULD REALLY CARE LESS TO BE QUITE HONEST WITH YOU. BUT AGAIN, I'M RETIRED. I'VE LISTENED TO THESE WONDERFUL PEOPLE WHO ARE RETIRED AS WELL AND HAVE BASICALLY SAID THE SAME THING. PUT YOURSELF IN OUR SHOES AND I'M GONNA ASK A QUESTION. ALL OF YOU RIGHT NOW, INCLUDING YOU, IS A SIMPLE QUESTION. RAISE YOUR HANDS IF YOU WOULD AGREE TO A 77% INCREASE IN WATER. SIR, I'M GONNA NEED YOU TO DIRECT TO ASK. I'M SORRY, REGARDLESS. OKAY, THANK YOU. RAISE YOUR HANDS RIGHT NOW IF YOU WOULD APPROVE A 77% INCREASE IN YOUR WATER BILL TODAY. RAISE YOUR HAND RIGHT NOW. ANYBODY? I REST MY CASE. THANK YOU. ALL RIGHT. I THINK I HAVE ONE IN BETWEEN. DID YOU GET THIS ONE? OKAY. ALL RIGHT. NEXT I HAVE STEPHANIE MCDONALD. GOOD MORNING MAYOR AND COUNCIL. THANK YOU FOR YOUR HOURS AND HARD WORK YOU'RE GONNA BE PUTTING INTO THIS YEAR'S BUDGET. IT'S JUST STARTING AND IT'S GONNA BE QUITE A PROCESS. IT WAS SHOCKING TO FIND OUT THAT OUR CITY IS $15 MILLION IN THE HOLE IN THE RED. AND I WONDER IF THAT'S WHY OUR CITY MANAGER, OUR FORMER CITY MANAGER, BRIAN LANGLEY, LEFT BEFORE THE BUDGET PROCESS BEGAN. AND HE HAS A DEGREE IN FINANCE. SO I HEARD RECENTLY THIS SPEAKING ABOUT THIS BUDGET AND AUDIT COMMITTEE AND WE HAVE TO HAVE PEOPLE THAT HAVE FINANCE BACKGROUNDS AND THAT'S SO NOT TRUE. IT'S GOOD TO HAVE PEOPLE THAT HAVE A BACKGROUND, BUT NOT EVERYBODY HAS TO HAVE A BACKGROUND. THERE ARE PLENTY OF PEOPLE THAT HAVE A GOOD UNDERSTANDING OF FISCAL RESPONSIBILITY WITHOUT HAVING A DEGREE IN FINANCE, WITHOUT HAVING A FINANCE BACKGROUND. SO I HOPE YOU CONSIDER THAT. UM, EVERYDAY CITIZENS HAVE BEEN SOUNDING THE ALARM ON OUT OF CONTROL SPENDING. AND WHILE DECISIONS FROM PAST COUNCILS HAVE PUT US IN THIS POSITION, PAST COUNCILS AND PAST CITY STAFF, SOME OF THE CURRENT COUNCIL HAVE BEEN FIGHTING TRANSPARENCY AND ACCOUNTABILITY. UM, COUNCIL MEMBERS, ZAPATA, YOU'VE ACTIVELY FOUGHT HER THE MAYOR'S EFFORTS ON TOWARD MUCH NEEDED TRANSPARENCY. PLEASE CHANGE THAT COMBATIVENESS. I HOPE EACH ONE OF YOU EXAMINE AND SCRUTINIZE OUR CITY'S TRUE NEEDS. REEXAMINE, UNNEEDED PROJECTS, UM, ROUNDABOUTS, EXCESSIVE PARK PLANS, ALLOW A FORENSIC AUDIT, MAINTAIN WHAT'S ALREADY IN PLACE. WE HAVE WASTED SO MUCH MONEY ON THINGS THAT WE HAVE THAT WE ARE NOT MAINTAINING. AND, UM, AS FAR AS THE ETJ, UM, THE GENTLEMAN JUST SPOKE, SAID HE DOESN'T REALLY CARE WHO WAS ON THE COUNCIL BACK THEN, BUT IT WAS IMPORTANT. THERE WERE ONLY THREE MEMBERS. THESE THREE MEMBERS WERE ON THE COUNCIL DURING THAT LAST VOTE. AND COUNCIL MEMBER, TOBIAS IS THE ONE THAT OPENED UP OUR ETJ NEIGHBORS AND [00:20:01] MADE THEM WELCOME. CA HAD, UH, FUNDED HIS OWN, UH, TOWN HALL FOR THEM. AND THAT'S HOW THEY STARTED COMING TO OUR COUNCIL MEETINGS. AND HE TOOK THE TIME TO FOLLOW UP WITH THEM. COUNCIL MEMBER HARRIS AND MCKINNEY VOTED FOR THAT INCREASE. COUNCIL MEMBER TOBIAS DID NOT. SO THAT IS IMPORTANT TO KNOW. WE NEED TO KNOW HOW PEOPLE ARE VOTING AND WHAT THEY'RE STANDING FOR AND I HOPE COUNCIL MEMBERS HARRIS AND MCKINNEY WILL LOOK AT THESE FOLKS IN THE ROOM AND IMAGINE YOURSELF IN THEIR PLACE. UM, PLEASE CONSIDER ALL THE RESIDENTS OF COLS SEEK A SOLUTION FOR ALL. AND I LOOK FORWARD TO SEEING THE RETURN OF FISCAL RESPONSIBILITY TO THE CITY. KYLE, THANK YOU. THANK YOU. UM, NEXT, AND I APOLOGIZE IF I SAY THE NAME WRONG. IT'S CHAD CYNICAL. THAT WAS MEKI SIN. YOU DON'T WANNA HEAR ME AGAIN? ARE YOU SURE? . ALRIGHT. I DON'T MIND. I WELCOME IT. ALL RIGHT. UP NEXT I DO. UP NEXT I HAVE, UH, JOSEPH JUSTICE. THANKS. I DON'T HAVE A PREPARED SPEECH. THESE ARE NICE PEOPLE AND THAT'S HOW WE GOT HERE. OKAY? THESE ARE NICE PEOPLE. OKAY, THIS GENTLEMAN HERE, HE JUST RAN PERILOUSLY CLOSE TO BEING ARRESTED. HE DID. OKAY. AND THAT'S THE TACK. THAT ONE RIGHT THERE IS REALLY GOOD AT DOING. I DON'T FEEL SAFE. YOU THREATENED ME. OKAY? THAT'S A HANGOVER FROM THE ME TOO ERA, OKAY? AND THAT'S WHAT THIS, THIS CITY HAS BEEN RUNNING. ANYTIME YOU OPPOSE THEM OR INTERACT WITH CITY SERVICES, YOU GET THAT. THAT'S WHAT YOU GET FROM THESE PEOPLE. OKAY? IT IS CALLED CIVIL DISOBEDIENCE. THAT ONE RIGHT THERE IS TRAINED IN THAT TECHNIQUE. SHE HAS, SHE HAS HANDLERS. OKAY? OKAY. DON'T WAIT FOR THE TRANSLATION. YOU'RE LONG IN THE TOOTH. YOU CATCH THAT REFERENCE, DON'T YOU? I DON'T HAVE TO TAKE MY SHOE OFF AND BANG IT ON THE GAVEL. YOU'RE LONG IN THE TOOTH. YOU GET THAT ONE TOO. OKAY? I WENT TO PAY MY WATER BILL BECAUSE THEY HIRED A VENDOR, OKAY? THAT SCREWED UP THE ONLINE BILLING. AND THEY STILL CAN'T GET IT STRAIGHT. I CAN'T GIVE THESE PEOPLE MONEY THAT THEY DIDN'T EARN. I CAN'T GIVE IT TO 'EM ONLINE AND THEY SCREW IT UP. AND YOU KNOW WHAT? BEHIND THREE INCHES OF BULLET PLU GLASS, THEY CALLED THE COPS ON ME UP HERE. I CAN'T GIVE THESE PEOPLE MONEY. AND THAT WOMAN BEHIND THE GLASS SAT THERE AND ARGUED WITH ME. IT'S LIKE, I LOOK, I WORKED IN PSYCHIATRY A LONG TIME. DON'T TRY TO HAVE THE LAST WORD WITH A CUSTOMER OR A PATIENT, OKAY? DON'T DO IT. OKAY? LOOK, THESE PEOPLE ARE ALL RIGHT ABOUT THEIR PROPERTIES. YOU WANT TO, YOU WANNA GET EVEN WITH THESE PEOPLE, YOU WANT TO HANDLE 'EM. TURN YOUR PROPERTY INTO A SECTION EIGHT SELL OUT. SIR, PLEASE, CAN YOU ADDRESS ME PLEASE? OR US? YOU KNOW? YEAH. THANK YOU. IT'S ALL OF US. OKAY. SEE, YOU'RE TRYING TO HANDLE ME, YVONNE, DON'T DO THAT. YOU WORK FOR US. DON'T DO THAT. OKAY? THAT'S THE WHOLE PROBLEM HERE, OKAY? WE'RE NOT YOUR EMPLOYEES. GET IT? YOU HAVE A WORTHLESS DEGREE THAT YOU CAN'T DO ANYTHING WITH. I GET WHY YOU'RE HERE, BUT THAT NOTWITHSTANDING, OKAY? ALRIGHT. LOOK, DON'T HIRE ANY OTHER PEOPLE IN THIS PROBATION PALACE YOU WANT TO BUILD. YOU'RE NOT GONNA BE HAPPY TILL YOU GET EVERYBODY ON PAPER, OKAY? AND THEN TURN THIS PLACE INTO SOME KIND OF A FREE RANGE SANCTUARY CITY WHILE THE REST OF US ARE ARE ON PAPER. OKAY? THAT'S ALL I GOT TO SAY. BUT I WILL TURN THIS, I, I WILL TURN MY PROPERTY INTO A SECTION EIGHT HOUSE AND I WILL BECOME AN OUT-OF-STATE SLUMLORD AND MY HOUSE WILL BE A PERPETUAL CRIME SCENE. SO MAYBE YOU SHOULD START WORKING WITH ME AND STICK WITH THE DEVIL, YOU KNOW? THANKS. ALL RIGHT, THANK YOU. DO I HAVE ANY OTHER COMMENT FORMS? ALL RIGHT, SEE NONE. I'M GONNA CLOSE. CITIZEN'S COMMENTS. UM, NEXT CONSIDER [III.1) Receive a report, hold a discussion, and provide staff feedback regarding the 5-Year Preliminary Financial Forecast for the City's four primary operating Funds; General Fund, Water Utility Fund, Wastewater Utility Fund, and Storm Drainage Utility Fund for Fiscal Years 2026-27 through 2030-31.  This staff presentation, report, and discussion will cover the following specific topics:   Discussion Objectives. Recap of Current Approved Budget for Fiscal Year 2025-26. Overview of City's Bond Debt Obligations. Historical Trends for Revenues, Expenditures, & Fund Balances. Latest Estimates for Revenues, Expenditures, Fund Balances, & Budgetary Gap for Current Fiscal Year 2025-26. Assumptions for Developing the City's 5-Year Financial Forecast.  Known & Measurable Changes & Budget Impact for Next Fiscal Year 2026-27. Results of 5-Year Preliminary Financial Forecast for Fiscal Years 2026-27 through 2030-31. Financial Challenges & Opportunities. Summary Conclusions - Key Takeaways & Strategic Implications. Next Steps For Budget Development Process. ] IMPOSSIBLE ACTION. WE'RE GONNA RECEIVE A REPORT, HOLD THE DISCUSSION, AND PROVIDE STAFF FEEDBACK REGARDING THE FIVE YEAR PRELIMINARY FINANCIAL FORECAST FOR THE CITY'S FOUR PRIMARY OPERATING FUNDS, GENERAL FUND, WATER FUND, UM, WATER UTILITY FUND, WASTEWATER UTILITY FUND, AND STORM DRAINAGE UTILITY FUND FOR THE FISCAL USE. 2 20 26 TO 2027 THROUGH 2030 AND 2031. THE STAFF PRESENTATION REPORT AND DISCUSSION WILL COVER THE FOLLOWING SPECIFIC TOPICS. I THINK. CAN I, SHOULD I GIVE THIS OVER TO SOMEBODY ELSE OR DO YOU WANT ME TO, I JUST WANNA MAKE SURE WE'RE NOT GONNA DUPLICATE. ALL RIGHT. NUMBER ONE, DISCUSSION OBJECTIVES. NUMBER TWO, RECAP OF CURRENT APPROVED BUDGET FOR FISCAL YEARS 20 25, 20 26 OVER CAP OF CITY'S BOND DEBT OBLIGATIONS, HISTORICAL TRENDS FOR REVENUE EXPENDITURES AND FUND BALANCES. LATEST ESTIMATES FOR REVENUES, EXPENDITURES, FUND BALANCES, AND BUDGETARY GAP FOR CURRENT FISCAL YEAR 2025 TO 2026. ASSUMPTION FOR [00:25:01] DEVELOP, DEVELOPING THE CITY'S FIVE YEAR FISCAL FORECAST, KNOWN AND MEASURABLE CHANGES IN BUDGET IMPACT FOR NEXT FISCAL YEAR 2026 TO 2027. RESULTS OF FIVE YEAR PRELIMINARY FINANCIAL FORECAST FOR FISCAL YEARS 2026 TO 2027 THROUGH 2030 AND 2031. FINANCIAL CHALLENGES AND OPPORTUNITIES, SUMMARY CONCLUSIONS, KEY TAKEAWAYS AND STRATEGIC IMPLICATIONS. NEXT STEPS FOR BUDGET DEVELOPMENT PROCESS. AND THAT IS GONNA BE ITEM PRESENTER PEREZ MOHIT. SO MAYOR, MAYOR PERAM, COUNCIL MEMBERS, GOOD MORNING. FOR THE RECORD, I AM PAVES MOHI CITY'S INTERIM CITY MANAGER. AND AT THIS POINT I'D LIKE TO INTRODUCE TWO FINANCIAL EXPERTS ON EITHER SIDE OF ME THAT WILL HELP ME IN TODAY'S PRESENTATION. ON MY LEFT IS ANDY ALEJANDRO. HE'S THE CITY'S ACTING OR INTERIM DEPUTY FINANCE DIRECTOR. AND TO MY RIGHT IS HOLLY HOL TORES. SHE'S THE CITY'S, UH, ASSISTANT DIRECTOR OF FINANCE. SO BEFORE I BEGIN, I'D LIKE TO THANK THE CITY COUNCIL MEMBERS FOR GIVING YOUR SATURDAY MORNING FOR THIS VERY IMPORTANT DISCUSSION TODAY. I ALSO WOULD LIKE TO THANK THE RESIDENTS THAT HAVE COME TO THIS MEETING TODAY, CARVING OUT THEIR SATURDAY MORNING INSTEAD OF HAVING PANCAKE BREAKFAST, THEY'RE HERE TO LISTEN TO THIS IMPORTANT DISCUSSION AS WELL AS OUR STAFF THAT'S PRESENT HERE TODAY. SO IT'S, IT'S A VERY IMPORTANT DISCUSSION THAT WE NEED TO HAVE. AND TODAY WE ARE GOING TO COVER THE CITY'S FINANCIAL FORECAST FOR THE NEXT FIVE YEARS. WE WILL COVER THE CURRENT YEAR. WE WILL COVER THE NEXT FIVE YEARS. THE FINANCIAL FORECAST, AS YOU MAY KNOW AND MAY BE AWARE OF FROM PRIOR BUDGET CYCLES, IS THE VERY FIRST STEP IN THE CITY'S BUDGET DEVELOPMENT PROCESS, BOTH FOR THE OPERATING BUDGET AS WELL AS THE CAPITAL BUDGET. IT IS THE VERY FIRST STEP THAT WE RELY UPON TO BRING FORTH A PROPOSED BUDGET BEFORE CITY COUNCIL, UH, IN LATE SUMMER. AND BY CHARTER, WE'LL HAVE TO BRING IT BEFORE YOU BY AUGUST 1ST FOR THE FINANCIAL FORECAST STAFF LOOKS BACK AT THE ACTUAL HISTORICAL TRENDS, BOTH FOR REVENUES AND EXPENDITURES. WE ANALYZE HISTORICAL TREND. IN ADDITION, STAFF ALSO VERY THOROUGHLY EXAMINES THE VERY CURRENT FISCAL YEAR THAT WE ARE IN. HOW ARE WE GOING TO END UP BY FISCAL YEAR END IS ON SEPTEMBER 30TH. WE LOOK AT REVENUES, WE LOOK AT EXPENDITURES, WE LOOK AT TRANSFERS AND CAPITAL SPENDING. IT IS IMPORTANT TO NOTE THAT WE DO THE FINANCIAL FORECAST IN LATE APRIL, EARLY MAY TIMEFRAME. AND THAT IS VERY INTENTIONAL. AND WE DO THAT TO KNOW EXACTLY BY THAT TIME. WE HAVE HIT THE HALF FISCAL YEAR MARK, WHICH IS MARCH 31ST. ALL OUR CURRENT YEAR ANALYSIS IS BASED AT THE MIDYEAR OF THAT FISCAL YEAR. 95 TO 97% OF OUR PROPERTY TAX REVENUES HAVE COME IN. WE ALREADY KNOW WHAT THAT'S GONNA LOOK LIKE. WE ALREADY KNOW THE, THE HOLIDAY SEASON AND SCHOOL SEASON FOR SALES TAX HAS ALREADY HAPPENED. WE CAN PROJECT VERY EASILY FOR THE REMAINING FIVE TO SIX MONTHS. OUR DEVELOPMENT REVENUES, THEY'RE CYCLICAL. THEY HAPPEN IN SPRING AND SUMMER PERMITS MOSTLY. UM, SO WE, WE KNOW BY THIS TIME WHAT THE REVENUES WILL LOOK LIKE, WHAT THE EXPENDITURES WILL LOOK LIKE, AND WE WORK WITH OUR DEPARTMENTS VERY CLOSELY. EACH ONE OF THEM, THE BUDGET STAFF WORKS WITH THEM TO SCRUB THOSE NUMBERS THOROUGHLY. SO WE LOOK AT THE PAST, WHAT OUR HISTORICAL TRENDS HAVE BEEN. WE GO BACK FIVE YEARS. WE LOOK AT THE CURRENT YEAR, AND THEN BASED ON THOSE TWO MAJOR SOURCES OF INFORMATION, WE DO OUR FINANCIAL FORECAST FOR THE IMMEDIATE FISCAL YEAR COMING UP IN 27, AND THEN FOUR YEARS SUBSEQUENT TO THAT. SO WE WILL SHOW YOU WHAT THE CURRENT YEAR ESTIMATES LOOK LIKE. AND THEN BASED ON THAT, WHAT THE FIVE YEAR FORECAST LOOKS LIKE [00:30:04] FOR TODAY. OUR GOAL FOR TODAY, WE SPECIFICALLY WANNA COVER NINE SPECIFIC OBJECTIVES. IF WE CAN GET THROUGH THOSE NINE OBJECTIVES, WE'RE GONNA BE SUCCESSFULLY COMPLETING THIS PRESENTATION BEFORE YOU AND I WILL GO THROUGH THOSE NINE SPECIFIC OBJECTIVES. SO LET'S SEE IF THIS WORKS. AH, SO OUR DISCUSSION OBJECTIVES FOR TODAY ARE WE'LL PRESENT THE CITY'S PRELIMINARY FIVE YEAR FINANCIAL FORECAST TO THE CITY COUNCIL, TO OUR RESIDENTS AND OUR STAFF. AND THE REASON I SAY IT'S PRELIMINARY BECAUSE AS WE MOVE THROUGH THIS TIME SPECTRUM BETWEEN NOW AND SEPTEMBER, SOME OF THOSE ASSUMPTIONS, SOME OF THOSE ESTIMATES WILL CHANGE. IT WILL CHANGE UPWARDS OR IT MAY CHANGE DOWNWARDS. IT IS VERY LIKELY THOSE NUMBERS WILL CHANGE 'CAUSE NONE OF US HAVE A PERFECT CRYSTAL BALL. THIS IS OUR, OUR BEST EDUCATED ESTIMATES BASED ON HISTORICAL TRENDS AND WHAT WE ARE FACING TODAY. NUMBER TWO, WE'RE GONNA DISCUSS THE IMPORTANCE OF THE FINANCIAL FORECAST. WHY IS IT THE FIRST MAJOR STEP IN THE DEVELOPMENT OF THE PROPOSED BUDGET AND CAPITAL BUDGETS FOR THE UPCOMING FISCAL YEAR? SO WE'LL EXPLAIN IN PLAIN ENGLISH. AND I HAVE ASKED BOTH ANDY AND HOLLY TODAY TO SET ASIDE THEIR ACCOUNTING TERMINOLOGIES, THEIR FINANCIAL TERMINOLOGIES, THEIR BUDGETARY TERM TERMINOLOGIES TO USE JUST PLAIN ENGLISH TO EXPLAIN WHAT WE ARE DISCUSSING TODAY. NUMBER THREE, WE'RE GONNA PROMOTE TRANSPARENCY BY CLEARLY OUTLINING AND EXPLAINING THE FINANCIAL CHALLENGES THAT THE CITY IS DEALING WITH AS WE BEGIN THE BUDGET DEVELOPMENT PROCESS FOR NEXT FISCAL YEAR, WHICH IS FFY 26 DASH 27. NUMBER FOUR, WE WANT TO ENSURE THAT WE PROVIDE A COMPREHENSIVE UNDERSTANDING OF THE FINANCIAL CHALLENGES, NOT JUST BITS AND PIECES, NOT JUST ONE PORTION HERE AND ONE PORTION THERE. WE'LL GIVE YOU A COMPLETE PICTURE TODAY FOR THE BENEFIT OF OUR CITY COUNCIL, FOR THE BENEFIT OF OUR RESIDENTS AND FOR THE BENEFIT OF OUR STAFF. WE ALL NEED TO MARCH IN THE SAME DIRECTION. WE ALL NEED TO KNOW WHAT EXACTLY WE'RE DEALING WITH. SO WHEN I'M ASKING A DEPARTMENT TO CUT OR REDUCE OR FREEZE, THEY WILL KNOW THE REASON BEHIND IT. THEY WILL UNDERSTAND WHAT I'M ASKING THAT FOR. NUMBER FIVE, WE'RE GONNA RECAP THE KEY HIGHLIGHTS OF THE APPROVED BUDGET, THE FISCAL YEAR THAT WE'RE IN WITH A PRIMARY FOCUS ON THE CITY'S GENERAL FUND 'CAUSE THAT'S WHERE WE ARE HURTING THE MOST, WHILE ALSO REVIEWING THE CITY'S OTHER THREE MAJOR OPERATING FUNDS. IF YOU RECALL FROM OUR BUDGET DISCUSSIONS IN PRIOR FISCAL YEARS, THE CITY HAS FOUR MAJOR OPERATING FUNDS. THE GENERAL FUND, WHICH IS WHERE WE PAY OUR POLICE OFFICERS, OUR PARK EMPLOYEES, OUR STREET EMPLOYEES. THESE ARE THE GENERAL DEDICATED, UH, OPERATIONS AND MAINTENANCE OF THE CITY THAT WE PAY WITH TAX DOLLARS AND SALES TAX DOLLARS AND THE GENERAL REVENUE OF THE CITY. THE OTHER THREE MAJOR OPERATING FUNDS ARE WATER UTILITY FUND, THE WASTEWATER UTILITY FUND, AND THE STRONG DRAINAGE UTILITY FUND. THESE ARE ENTERPRISE TYPE ACTIVITIES OF THE CITY. THEY RECOUP THEIR COSTS THROUGH USER FEES AND CHARGES. NONE OF THESE EXPENSES ARE EXPENDITURES ARE PAID FROM PROPERTY TAXES. SO THESE ARE THE OTHER THREE ENTERPRISE OPERATIONS THAT WE'LL COVER TODAY AS WELL. NUMBER SIX, REMEMBER I SAID NINE MAIN OBJECTIVES, SO WE'RE GETTING THERE. NUMBER SIX, WE'RE GONNA REVIEW WITH YOU THE HISTORICAL TRENDS THAT STAFF LOOKS AT. THAT STAFF ANALYZES FOR MAJOR REVENUE SOURCES, OPERATING EXPENDITURES, CAPITAL EXPENDITURES. ALSO, WE REFER TO THEM AS CIP AND FUND BALANCES HERE. AGAIN, FUND BALANCES. THE TERM FUND BALANCE IS ALSO INTERCHANGEABLY DESCRIBED AS OUR RESERVES. IT'S [00:35:01] IMPORTANT TO TAKE A PAUSE JUST A COUPLE OF SECONDS TO EXPLAIN TO YOU THE RESERVE REQUIREMENT. IT IS NOT A STAFF POLICY, IT IS NOT A STAFF PROCEDURE. IT IS REQUIRED BY OUR CITY CHARTER. AND THE CHARTER SAYS THAT WE SHALL MAINTAIN, ESPECIALLY IN THE GENERAL FUND, WE WILL MAINTAIN 25% OF OUR EXPENDITURES, UH, IN THAT FISCAL YEAR THAT COUNCIL ADOPTS AS APPROVED EXPENDITURES. 25% OF THAT SHALL BE MAINTAINED AS RESERVES IN THE FUND BALANCE. SO AS WE GO THROUGH THE DISCUSSIONS TODAY, WE WILL REMIND YOU OF THAT. WE WILL REFER TO THAT, BUT I WANTED TO MAKE SURE THAT EVERYBODY UNDERSTANDS IT'S NOT PREZ'S POLICY, IT IS NOT OPERATING POLICY. IT IS A CITY CHARTER REQUIREMENT. NUMBER EIGHT, SORRY. NUMBER SEVEN, PRESENT AND DISCUSS THE PRELIMINARY RESULTS OF THE CITY'S FIVE YEAR FINANCIAL FORECAST IN DETAIL WITH THE CITY COUNCIL, SHARE WITH OUR RESIDENTS AS WELL AS OUR CITY STAFF. NUMBER EIGHT. AT THE END OF OUR, TOWARDS THE CLOSE OF OUR PRESENTATION, I AM GOING TO SUMMARIZE FOR YOUR BENEFIT AND THE BENEFIT OF OUR RESIDENTS AND CITY STAFF, THE CONCLUSIONS AND KEY TAKEAWAYS FROM TODAY'S DISCUSSION THAT WILL REQUIRE CITY COUNCIL'S POLICY DIRECTION TO STAFF AS WE MOVE FORWARD IN THE BUDGET DEVELOPMENT PROCESS FOR NEXT FISCAL YEAR. SO WHEN WE BRING FORTH THE CITY'S PROPOSED BUDGET, WE'RE GONNA BE ASKING FOR DIRECTION, WE'RE GONNA BE ASKING FOR POLICY DECISIONS FOR COUNCIL. SO THOSE DECISIONS WILL BE MADE BY COUNCIL AS WE PROCEED THROUGH THE BUDGET PROCESS. AND IT COULD BE AS STRAIGHTFORWARD AS TAX RATES, UTILITY RATES, WELL, A WATER RATES, UM, EXPENDITURES, PUBLIC TRANSPORTATION PROGRAM, CITY SUPPORT, COSTS FOR PERSONNEL, ALL OF THOSE WE WILL BRING FORWARD FOR YOU TO DECIDE AND GIVE US DIRECTION, WHAT IS THE WILL OF THE COUNCIL. AND THEN FINALLY, I'M GONNA HELP REVIEW NEXT STEPS IN THE BUDGET DEVELOPMENT PROCESS. THERE ARE SOME VERY KEY DATES THAT ARE COMING UP THAT I WANNA MAKE SURE THAT COUNCIL IS FULLY AWARE OF, OUR RESIDENTS ARE FULLY AWARE OF AND OUR STAFF IS FULLY AWARE OF. SO WE CAN MAKE THOSE TARGET DATES. AND WE'RE PREPARED WHEN WE COME BEFORE YOU TO BE ABLE TO ANSWER THOSE QUESTIONS. SO YOU ARE PREPARED, YOU HAVE ENOUGH INFORMATION AHEAD OF TIME TO STUDY THOSE POLICY DECISIONS THAT YOU WILL HAVE TO MAKE. SO THESE ARE THE NINE OBJECTIVES THAT AS OUR GOAL TO SUCCESSFULLY ACCOMPLISH THIS AS WE GO THROUGH OUR PRESENTATION. ANY QUESTIONS THAT Y'ALL MAY HAVE AT THIS POINT? OKAY, SO MOVING ON. SO BASED ON THOSE NINE OBJECTIVES, HERE'S THE PRESENTATION OUTLINE. WHAT ARE WE GONNA SHARE WITH YOU? I'VE ALREADY GONE OVER THE OBJECTIVES FOR TODAY'S DISCUSSIONS. NUMBER TWO, WE'RE GONNA RECAP THE CURRENT APPROVED BUDGET FOR FY 25 26 THAT CITY COUNCIL APPROVED. THIS IS OUR BASELINE. THIS IS WHERE WE ARE STARTING. WE'LL FOCUS ON THE CITY'S GENERAL FUND OVERVIEW OF CITY'S BOND DEBT OBLIGATIONS. I'M GONNA SHOW YOU HOW MUCH WE OWE, WHERE WE PAY THOSE DEBT FROM, HOW IT'S IMPACTED ON THE TAX RATE SIDE, HOW IT'S IMPACTED ON THE WATER RATE SIDE. WASTEWATER RATES, ALL OF OUR DEBT, IT DOESN'T MATTER HOW MUCH IT HAS TO BE REPAID, JUST LIKE OUR CAR PAYMENTS, JUST LIKE OUR MORTGAGE, THERE ARE INVESTORS OUT THERE WAITING FOR THEIR CHECK EVERY SIX MONTHS. AND WE HAVE TO MAKE THOSE PAYMENTS ON TIME. WHERE DO WE GET THE MONEY TO PAY THOSE? WE WILL SHOW YOU THAT ON NUMBER FIVE. WE WILL SHOW YOU THE HISTORICAL TRENDS THAT STAFF ANALYZES TO BASE THEIR FORECAST ON. [00:40:01] WE WILL SHOW YOU WHAT'S BEHIND DOOR NUMBER ONE, WHAT'S BEHIND DOOR NUMBER TWO, WHAT'S BEHIND DOOR NUMBER THREE, WE'LL OPEN UP ALL THE DOORS FOR YOU SINCE THIS IS GOING TO BE A HEAVILY NUMBERS BASED INTENSE DISCUSSION TODAY AFTER THE FIFTH ITEM I, I'M GONNA ASK Y'ALL IF Y'ALL WANNA TAKE A 10 MINUTE BREAK OR IF Y'ALL WANNA PUSH THROUGH AFTER THAT, IF YOU TAKE A BREAK WHEN WE COME BACK, WE WILL. I'VE, I'VE BROKEN DOWN THIS PRESENTATION INTO SIX, UH, THREE CATEGORIES, THREE SEGMENTS. SO AFTER THE FIRST SEGMENT, WE'LL WE'LL ASK YOU IF YOU'RE READY FOR A BREAK OR IF YOU WANNA PUSH THROUGH. THE NEXT SEGMENT, UH, WILL BE OUR CURRENT YEAR ESTIMATES FOR THIS FISCAL YEAR FOR REVENUES AND EXPENDITURES. WE WILL SHOW YOU BASED ON OUR ANALYSIS, WHAT THAT LOOKS LIKE FOR GENERAL FUND AND THE OTHER THREE MAJOR OPERATING FUNDS THAT I MENTIONED. THAT IS THE WATER UTILITY FUND, THE WASTEWATER UTILITY FUND, AND THE STORM DRAINAGE FUND. BEFORE WE PROCEED, CAN I CONFIRM THAT THERE'S A LIVE STREAM? UM, I I WAS UNDER THE ASSUMPTION THAT THIS WAS, PEOPLE WERE GONNA BE ABLE TO VIEW THIS FROM HOME. CAN I JUST HAVE A CONFIRMATION OF THAT? I HAD SOMETHING MESSAGED ME TOO AND THEY SAID THEY, THE, THAT THE YOUTUBE STREAM IS UP. THE YOUTUBE STREAM IS UP. OKAY. SOMEONE JUST SENT A TEXT AND THEY SAID THEY COULDN'T SEE IT. ALL RIGHT, THANK YOU. SORRY, DIDN'T MEAN MEAN TO INTERRUPT FOR CROSS PROMOTION. I JUST WANTED TO CONFIRM IT MASTERS. SO NUMBER SIX, WE WILL SHOW YOU CURRENT YEAR ESTIMATES FOR THIS FISCAL YEAR FOR REVENUES AND EXPENDITURES FOR THE FOUR MAJOR OPERATING FUNDS. THAT WILL GIVE US A BASIS TO EXPLAIN TO YOU HOW WE CAME UP WITH THE FIVE YEAR FORECAST. IN THE FIVE YEAR FORECAST, WE ARE GONNA CLEARLY LAY OUT FOR YOU THE PURPOSE OF FIVE YEAR FORECAST. WHY DO WE DO IT? IS IT BECAUSE PUR JUST WANTS TO DO IT WILL EXPLAIN TO YOU WHAT'S THE REASON BEHIND IT. AND IT'S NOT JUST CITY OF KYLE THAT DOES THIS. EVERY CITY THAT I KNOW OF IN THE STATE OF TEXAS DOES SOME FORM OF FINANCIAL FORECAST. SOME CITIES DO IT FOR TWO YEARS. SOME CITIES DO IT FOR THREE YEARS. SOME CITIES DO IT FOR FIVE YEARS. WE AND KYLE, WE DO IT FOR FIVE YEARS. IT GIVES US A GOOD PICTURE HOW THINGS ARE GONNA LOOK UP UNDER CERTAIN CIRCUMSTANCES, CERTAIN ASSUMPTIONS, AND CERTAIN FINANCIAL CONDITIONS. NOW I'LL BE THE FIRST ONE TO ADMIT THAT PAST YEAR NUMBER THREE THINGS GET A LITTLE FUZZY. AND THAT'S WHY YOU SEE SOME OF THE CITIES DO ONLY THREE YEAR FINANCIAL FORECASTS. WE WILL ALSO EXPLAIN TO YOU WHY WE ARE IDENTIFYING THIS FIVE-YEAR FORECAST AS PRELIMINARY. THERE ARE A NUMBER OF THINGS THAT ARE STILL OUTSTANDING THAT WE DON'T KNOW ABOUT. ONE BEING THE CERTIFIED TAX RULE. WE HAVE PRELIMINARY TAX RULE, WHICH WE GET IN APRIL, BUT THE CERTIFIED TAX ROLL BY STATE LAW, THE CHIEF APPRAISER OF THE COUNTY CAN WAIT UNTIL JULY 25TH TO PROVIDE THAT TO EACH JURISDICTION. OUR, OUR APPRAISAL DISTRICT HAS BEEN VERY GOOD, VERY DILIGENT, AND THEY ALWAYS COME THROUGH AHEAD OF THAT DEADLINE. WE WILL GO OVER IN DETAIL THE KEY ASSUMPTIONS WE ARE USING IN OUR FINANCIAL FORECAST, BOTH FOR THE REVENUES AND EXPENDITURES, WHAT THOSE, BECAUSE THOSE ARE THE KEY DRIVERS THAT PRODUCE THE FINANCIAL FORECAST RESULT. I WANT COUNSEL, I WANT OUR RESIDENTS AND OUR STAFF TO UNDERSTAND WHAT THOSE ASSUMPTIONS ARE FOR NEXT YEAR, FOR THE YEAR AFTER. AND FOR THE CURRENT YEAR. WE WILL GO OVER THE KNOWN AND MEASURABLE CHANGES THAT WE KNOW ALREADY TODAY THAT'S GONNA AFFECT US IN NEXT FISCAL YEAR'S BUDGET. AND BY KNOWN AND MEASURABLE CHANGES. I AM TALKING ABOUT CONTRACTUAL OBLIGATIONS THAT WE KNOW WE HAVE CONTRACTED, WE'RE OBLIGATED. THAT INCLUDES EXISTING DEBT, THAT INCLUDES MEET AND CONFER AGREEMENT WITH THE POLICE ASSOCIATION, UM, HEALTH INSURANCE COSTS, [00:45:01] THINGS OF THAT NATURE, WATER SUPPLY COSTS. WE'LL GO OVER THOSE THAT WE ALREADY KNOW IS GOING TO HAPPEN NEXT YEAR. AND THEN WE'LL WRAP IT UP WITH THE RESULTS OF THE FINANCIAL FORECAST HERE. AGAIN, IT'LL BE A GOOD TIME IF COUNSELS SO CHOOSES, WE CAN TAKE A SHORT BREAK OR WE CAN PUSH THROUGH TO THE LAST SEGMENT. I'M GOOD PUSHING THROUGH. SAME. THANK YOU. SO ON NUMBER NINE, WE'RE GOING TO COVER OUR FINANCIAL CHALLENGES THAT THE CITY IS FACING. AND TO ME, FINANCIAL CHALLENGES ARE BOTH OPPORTUNITIES AS WELL. NOT JUST CHALLENGES, BUT THEY'RE ALSO AN OPPORTUNITY HOW WE ADDRESS THOSE CHALLENGES. AND WE'LL SHOW YOU WHAT AFFECTS CURRENT AND WHAT AFFECTS FUTURE YEARS. NUMBER 10, I'LL SHARE WITH YOU, I'LL GIVE YOU A WRAP UP OF OUR SUMMARY CONCLUSIONS OF EVERYTHING WE TALK ABOUT UNTIL THAT POINT, WHAT SHOULD YOU TAKE AWAY WITH? WHAT ARE THOSE KEY TAKEAWAYS FOR COUNCIL AS POLICY DECISION MAKERS FOR OUR RESIDENTS, FOR THEIR GENERAL INFORMATION AND FOR STAFF AS WE PREPARE THE BUDGET, THEY KNOW UPFRONT WHAT WE'RE DEALING WITH AND HOW WE'RE GONNA GO TAKE CARE OF THOSE. AND THEN FINALLY, I'M GONNA SHOW YOU THE NEXT STEPS IN THE BUDGET DEVELOPMENT PROCESS. LIKE I SAID, THERE ARE SOME VERY KEY STEPS AND MILESTONES COMING UP ON THE HEELS OF TODAY'S DISCUSSION. ANY QUESTIONS ON THE PRESENTATION OUTLINE? IF NOT, WE'RE GONNA MOVE THROUGH. SO THIS IS OUR BASELINE, OUR CURRENT APPROVED BUDGET FOR FISCAL YEAR 25 DASH 26. THE FISCAL YEAR THAT WE'RE IN IS STARTED ON OCTOBER 1ST, 2025. IT'S GONNA END ON SEPTEMBER 30TH, 2026 AND TODAY IS MAY 16TH. SO WE ARE PAST THE MIDWAY POINT. SO IN A NUTSHELL, THE TOTAL BUDGET THAT COUNCIL APPROVED FOR THIS FISCAL YEAR TOTAL $603,883,180. THE BIGGEST CHUNK OF THAT, IF YOU LOOK AT THE BOTTOM FIVE O'CLOCK OR FOUR O'CLOCK POSITION IS CIP 460 MILLION OR 76.2%. AND AS YOU MAY HAVE ALREADY PICKED UP OR FROM YOUR PRIOR EXPERIENCE AS COUNCIL MEMBERS GOING THROUGH THE BUDGET PROCESS, CIP TRANSLATES INTO DEBT WE HAVE TO BORROW TO PAY FOR THIS STUFF. THE NEXT BIGGEST SLICE OF THE PIE IS THE RED SLICE, WHICH IS GENERAL FUND $75.4 MILLION OR 12.5% OF THE TOTAL BUDGET. THE THIRD SLICE, LARGE SLICE IS THE WATER UTILITY, 28.1 MILLION OR 4.7%. THE FOURTH LARGEST SLICE IS DEATH SERVICE. BY DEATH SERVICE, I MEAN PRINCIPLE AND INTEREST THAT WE HAVE TO PAY EVERY AUGUST AND EVERY FEBRUARY TWICE A YEAR ON THE EXISTING DEBT. THAT'S $24.4 MILLION OR 4%. AND THEN OF COURSE WE'VE GOT WASTEWATER UTILITY AT 11 MILLION, STORM DRAINAGE AT 2.8 MILLION. SO THAT'S OUR TOTAL BUDGET THAT COUNCIL APPROVED FOR THIS FISCAL YEAR THAT WE'RE IN. SO LET'S BREAK DOWN THAT LARGEST SLICE OF THE PIE THAT COUNCIL APPROVED, WHICH IS THE CIP SPENDING OR CAPITAL IMPROVEMENTS PROGRAM SPENDING. THE FIVE YEAR SPENDING PLAN COVERS FISCAL YEAR 26 THROUGH 2030. IT HAS 125 PROJECTS AT LEAST WE HAD 125 AT THE TIME. COUNCIL APPROVED IT. SOME OF THOSE PROJECTS HAVE SHIFTED, SOME OF THOSE PROJECTS HAVE BEEN UPDATED, REPLACED WITH OTHER PROJECTS. BUT WHEN THE BUDGET WAS ADOPTED, WE HAD 125 PROJECTS. THE TOTAL FIVE YEAR CIP SPENDING PLAN WAS [00:50:01] $1.3 BILLION, 1.3 BILLION WITH A B. AND OF THAT FOR THE CURRENT FISCAL YEAR WAS $460 MILLION . SO HOW DOES THAT $1.3 BILLION GONNA BE PAID BACK WITH, IF WE STUCK WITH THAT PLAN? IF YOU LOOK AT ITEM NUMBER FOUR, TAX SUPPORTED CIPS TOTAL $490 MILLION OR 38.6% BY TAX SUPPORTED CIPS. I MEAN THESE ARE CAPITAL IMPROVEMENT PROJECTS THAT ARE SUPPORTED WITH PROPERTY TAX REVENUES. SO ANY DEBT WE TAKE, ANY BOND THAT WE ISSUE TO BUILD THESE PROJECTS, THEY WOULD HAVE TO BE PAID FROM PROPERTY TAX REVENUES. I HAVE A QUICK QUESTION. UM, AS WE GO THROUGH THESE NUMBERS, IS IT OKAY IF WE ALSO CONTEXTUALIZE THEM? SO FOR EXAMPLE, NOT JUST SAY LIKE CIP BUT ACTUALLY EXPLAIN, LIKE, PROVIDE SOME OF THE IDEAS OF WHAT THOSE PROPOSED PROJECTS ARE. UH, SALT WHITE PEOPLE UNDERSTAND LIKE, HEY, THIS IS ACTUALLY WHAT IT APPLIES TO AND THIS IS WHAT, UH, AN EXAMPLE OF THE PROJECTS UNDER CRP PLAN RI THINK THAT THAT CONTEXTUAL PORTION IS HELPFUL. CERTAINLY I WON'T GO THROUGH 125 PROJECTS, BUT I WILL GIVE YOU HIGHLIGHTS WHAT THOSE PROJECTS ARE. SO TAX SUPPORT, CIP PROJECTS OR CAPITAL IMPROVEMENT PROJECTS, GOOD EXAMPLE IS THE 2022 ROAD BOND PROJECTS. UH, THE VOTERS APPROVED $294 MILLION WORTH OF ROADS IMPROVEMENTS. SO THAT'S IN THE TAX SUPPORTED DEBT. ARE, UM, PARK IMPROVEMENTS ARE IN THAT BUCKET. SIDEWALKS ARE IN THAT IMP IMPROVE, UM, CAPITAL IMPROVEMENT BRACKET. YES MA'AM. IS THERE ANY WAY TO TELL HOW MUCH WE'VE ALREADY BONDED OUT FOR THE ROAD BONDS? 'CAUSE YOU STATE 296 MILLIONS, BUT THAT THAT FULL AMOUNT HASN'T BEEN ISSUED. THAT'S CORRECT. OKAY. SO I WOULD JUST LIKE TO KNOW OF THE CIPS, HOW MUCH ARE WE BUDGETING OR HAVE WE PAID WITHIN THAT ROAD BOND? OKAY, I'LL, I'LL SHOW YOU BUT I CAN DO IT RIGHT NOW. . SO 294 MILLION WAS AUTHORIZED BY THE VOTERS. UM, WE ARE PRETTY KINSEY WHEN IT COMES TO ISSUING DEBT. I WILL NOT ISSUE DEBT UNTIL I ABSOLUTELY HAVE TO BECAUSE ONCE YOU ISSUE THAT DEBT, THE METER IS RUNNING TO PAY BACK THE INTEREST AND THE PRINCIPLE AND THAT AFFECTS THE TAX RATES. SO I WILL USE EVERY DOLLAR WE HAVE UNDER EVERY MATTRESS, EVERY, UH, COUCH UNTIL I CAN'T FIND ANOTHER DOLLAR. THAT'S WHEN I GO TO THE BOND MARKET AND I COME BEFORE COUNSEL BEFORE WE ISSUE DEBT FOR YOUR APPROVAL BEFORE ISSUE THAT. SO LET ME SHOW YOU WHAT, UM, WE HAVE ISSUED TO DATE. SO OF THE $294 MILLION FOR THE VOTER AUTHORIZED ROAD BOND PROJECT PROJECT, WE HAVE ISSUED $83.9 MILLION AND WE HAVE ANOTHER $210 MILLION TO GO. I DON'T KNOW IF THIS IS THE APPROPRIATE TIME TO ASK. UM, THE TAX RATE WAS RAISED LAST YEAR DUE TO, TO THE HIGHEST RATE VOTER RATE, WHICH IS 0.59 WITHOUT BONDING OUT COMPLETELY. HOW, HOW IS THAT POSSIBLE? I, AND YOU CAN ANSWER IF THERE'S A BETTER TIME TO ANSWER. I JUST WANNA KEEP THAT YEAH, THAT'S, YEAH, WE'LL, WE'LL GO OVER IT. OKAY. WHEN WE TALK ABOUT PROPERTY TAX RATES OKAY. IN JUST A MINUTE. SO, AND COUNCIL MEMBERS ABOUT THAT, I DON'T KNOW IF THAT HELPED EXPLAIN WHAT'S IN THE TAX SUPPORTED. YES, I THINK SO. I JUST WANTED TO MAKE SURE THAT PEOPLE UNDERSTOOD THAT THIS IS, THAT THE CIP APPLIES TO LIKE OUR SIDEWALKS, OUR ROADS IMPROVEMENTS AND PARK MAINTENANCE AND ALL OF THAT. YEAH. SO THE BOND DEBT DOES NOT COVER ANY OPERATING COSTS. SO LET ME CLARIFY THAT. WE DID NOT BORROW MONEY TO PAY OUR DAY-TO-DAY EXPENSES FOR SALARIES, FOR HEALTH INSURANCE, FOR FUEL, FOR CHEMICALS, FOR ELECTRICITY. UH, JUST LIKE WE SHOULDN'T CHARGE GROCERIES ON OUR CREDIT CARDS, BUT WE DO SOMETIMES, UH, BUT FOR PUBLIC FINANCING [00:55:01] WE SHOULD NEVER, AND IT'S NOT ALLOWED. BUT SOME CITIES HAD TO DO IT. YOU SHOULD NOT USE DEBT FOR GENERAL OPERATING EXPENSES. IT'S ONLY WE IN KYLE, WE ONLY ISSUE DEBT FOR CAPITAL IMPROVEMENT PROJECTS. SO FOUR 90 MILLION OF THAT 1.3 BILLION IS TAX SUPPORTED. 781 MILLION OR 61% IS NON-TAX SUPPORTED. IN OTHER WORDS, THEY WILL BE, UH, REPAID FROM UTILITY RATES. AND OUR TS NUMBER TWO, UH, INCREMENTAL TAX REVENUES. AND THESE PROJECTS ARE, A GOOD EXAMPLE WOULD BE THE WASTEWATER TREATMENT PLANT EXPANSION, THE WATER RESERVOIRS THAT WE BUILD, THE WATER PUMP STATIONS WE DESIGN AND BUILD. THESE ARE INFRASTRUCTURE FOR OUR WATER SYSTEM, WATER UTILITY SYSTEM AND INFRASTRUCTURE FOR OUR WASTEWATER UTILITY SYSTEM. AND THEN THERE ARE SOME INFRASTRUCTURE THAT WE HAVE PLANNED WITHIN TUR NUMBER TWO, TAX INCREMENT REINVESTMENT ZONE NUMBER TWO, WHICH IS THE PLUM CREEK AREA. SO THERE ARE SOME IMPROVEMENTS THAT INCLUDE ROAD IMPROVEMENTS, UH, ILLUMINATION IMPROVEMENTS AND ROUNDABOUT IMPROVEMENTS THAT ARE SCHEDULED AND PLANNED FOR THAT AREA. SO THAT'S OUR CIP. ARE YOU SAYING THAT THE, THE TURS ARE CATEGORIZED UNDER NON-TAX SUPPORTED? YES. THEY'RE, THEY'RE INCLUDED IN HERE. I WOULD THINK THAT THEY WOULD BE TAX SUPPORTED. THEY'RE NOT TAX SUPPORTED BY YOUR RESIDENCE. EVERYTHING IS FROM THE PROPERTY TAX, BUT EVERYTHING IS BUT THEY'RE PAYING THE UTILITY BILL. YEAH, YEAH, YOU'RE CORRECT. SO EVERYTHING IS IS BY UTILITY BILLS OR OR TAXES, PROPERTY TAXES, SALES TAX. SO WHAT YOU'RE SAYING IS THESE, THE TAX SUPPORTED ARE FROM PROPERTY TAX? YES. AND BONDS STRICTLY PROPERTY TAX. STRICTLY BUT NOT BOND. SO BOND, SO THE BONDS ARE REPLAYED BY PROPERTY TAX? YES. OKAY. FOR TAX SUPPORTED DEBT. AND THEN THE NON-TAX IS SALES TAX NON-TAX SUPPORTED? NO, THEY'RE STRICTLY ENTERPRISE OPERATIONS. ENTERPRISE. OKAY. SO USER FEES, WATER RATES, WASTEWATER RATES, THAT PAYS BACK THAT DEBT. THANK YOU. THAT'S A LITTLE CLEARER TO ME. YEAH. SO OF THAT $603 MILLION TOTAL BUDGET, THE FOUR MAJOR OPERATING BUDGETS THAT COUNCIL APPROVED FOR GENERAL FUND, IT WAS $75.4 MILLION. THIS IS BEFORE ANY PURCHASE ORDER ROLLOVERS FROM PRIOR YEARS. WATER UTILITY FUND WAS 28.1 MILLION. WASTEWATER, 11.1 MILLION, STORM DRAINAGE, 2.8 MILLION. THEN WE HAVE 61 OTHER FUNDS THAT WE ACCOUNT FOR AND REPORT ON. AND EXAMPLES OF OTHER CITY FUNDS INCLUDE WASTEWATER, CIP FUND, THE ROAD BOND FUND, THE WATER, CIP FUND, CIP FUND THAT I'VE SUPPORTED OR PAID BY GENERAL FUND. WE USED TO PAY CAPITAL IMPROVEMENT PROJECTS WITH GENERAL FUND DOLLARS SURPLUS MONIES THAT WE WOULD SAVE OVER TIME TO AVOID HAVING TO BORROW. SO THAT WAS THAT FUND WE HAD CREATED CHURCH NUMBER TWO AND SO ON AND SO FORTH. THAT ADDS UP TO ABOUT FOUR 70 MILLION. MOST OF THESE YOU WILL NOTICE, THEY ARE CAPITAL IMPROVEMENT PROJECT TYPE FUNDS. THEY'RE NOT OPERATING FUNDS. THEY'RE CIP TYPE FUNDS. A COMPLETE LISTING OF ALL THESE FUNDS ARE AVAILABLE ON OUR CITY WEBSITE WHERE WE ARCHIVE AND SHORT FOR ANYONE WHO WANTS TO SEE THE BUDGET DOCUMENTS ARE AVAILABLE. SO LET'S FOCUS ON CITY'S GENERAL FUND THAT IS IN THE APPROVED BUDGET. SO THIS PIE GRAPH SHOWS YOU THE SOURCES OF FUNDS. IN OTHER WORDS, THE MONEY THAT COMES INTO THE GENERAL FUND, WHERE DOES IT COME FROM? SO FOR THIS YEAR WE HAD PROJECTED $78.6 MILLION WILL COME INTO THE GENERAL FUND AND THE LARGEST PIECE OF THE PIE. THERE ARE TWO ABOUT NECK AND NECK WITH EACH OTHER. [01:00:01] TWO SOURCES OF REVENUES. THE RED PIE IS THE PROPERTY TAX. WE HAD ESTIMATED $21.7 MILLION WOULD COME FROM PROPERTY TAX REVENUES OR 28%. RIGHT BEHIND THAT IS THE DARK BLUE PIECE OR PIE SLICE, WHICH IS THE SALES AND BEVERAGE TAX THAT WE RECEIVE ON SALES OF TRANSACTIONS THAT OCCUR WITHIN THE CITY LIMITS THAT WE HAD PROJECTED AT $22.2 MILLION. ALSO AT 28%, AND YOU MAY HAVE HEARD ME SAY THIS EVERY YEAR DURING BUDGET TIME THAT OF THE TWO SOURCES, THESE ARE TWO MAJOR SOURCES OF REVENUES FOR THE GENERAL FUND. OF THOSE TWO SALES TAX IS THE MOST VOLATILE SOURCE OF REVENUE. A LOT OF CITIES FIND THEMSELVES IN TROUBLE WHEN THEY TRY TO BUDGET FULLY DEDICATED ON SALES TAX. WHEN ECONOMY TANKS, THAT'S THE FIRST THING THAT GOES. AND IF YOU DON'T HAVE A SOLID RESERVE TO PULL THROUGH THOSE BAD YEARS, THEN IT'S A HUGE PROBLEM FOR THOSE CITIES. SO IN OUR CITY, SALES TAXES CREEPING UP AND WE THINK IS GONNA EXCEED PROPERTY TAX REVENUE IN THE NEXT FIVE YEARS. SO LOOKING AT THIS PIE GRAPH, IF YOU LOOK AT THE THIRD LARGEST SLICE OF THE PIE IS TRANSFERS IN TO THE GENERAL FUND. SO WHAT IS TRANSFERS IN? THESE ARE TRANSFERS FROM OTHER CITY FUNDS COMING INTO THE GENERAL FUND TO REPAY FOR A MULTIPLE OF THINGS. SO THE GENERAL FUND IS THE MAIN OPERATING FUND OF THE CITY, RIGHT? SO YOU'VE GOT PARKS, POLICE, CITY ATTORNEY'S, OFFICE, CITY SECRETARY'S OFFICE, FINANCE, PURCHASING, CITY MANAGER'S, OFFICE, CITY COUNCIL. WE ALLOCATE A PORTION OF THE CITY'S GENERAL ADMINISTRATIVE COST TO OTHER FUNCTIONS OF THE UTILITY. SO THEY PAY THEIR FAIR SHARE BACK TO THE CITY'S GENERAL FUND. A GOOD EXAMPLE WOULD BE UL FUNDS WATER FUND WASTEWATER FUND, THEIR OPERATING ENTERPRISES OF THE CITY. BUT THEY DO REQUIRE ASSISTANCE AND SUPPORT FROM THE CITY ATTORNEY'S OFFICE, FROM THE FINANCE DEPARTMENT, FROM THE IT DEPARTMENT, FROM THE CITY MANAGER'S OFFICE. THEY NEED DECISIONS AND POLICY DIRECTION FROM COUNCIL. SO A PORTION OF ALL THESE SUPPORT COSTS ARE ALLOCATED TO INDIVIDUAL THE FUNDS. THE 61 FUNDS I SHOWED YOU A FEW SLIDES AGO, THAT'S THE RE THE COST REIMBURSEMENT OF SUPPORT COSTS PROPORTIONATE SHARE, NOT 100% OF GENERAL FUND. A PROPORTIONATE SHARE COMES BACK AS A REIMBURSEMENT TO THE GENERAL FUND. AND WE DO A STUDY, WE ACTUALLY DO AN INDIRECT COST ALLOCATION PLAN STUDY. WE DON'T GUESS AT THIS A STUDY BASED ALLOCATION PLAN EACH YEAR. WE DID ONE LAST YEAR, WE ARE ABOUT TO START THE NEXT ONE. SO WE CAN HAVE SOME SOLID NUMBERS FOR GOING FORWARD. WE ALSO HAVE EQUITY TRANSFERS FROM THE TWO UTILITIES, WATER UTILITY AND THE WASTEWATER UTILITY. AND THE EQUITY TRANSFER MEANS THIS. AND IT IS JUST, IT'S A COMMON METHODOLOGY USED ACROSS ALL CITY GOVERNMENTS THAT USE OR THAT THEY HAVE AND OPERATE THEIR OWN ELECTRIC UTILITY GAS UTILITY WATER UTILITY, WASTEWATER UTILITY. THE CITIZENS TAXPAYERS OF KYLE OWN THE WATER UTILITY AND WASTEWATER UTILITY, RIGHT? THEY'RE THE, THEY'RE THE OWNERS. SO THIS CONCEPT, ACCEPTABLE PRACTICE AND AS A TAX EXEMPT UTILITY OF THE CITY, THEY DON'T PAY FRANCHISE TAX TO THE CITY. THEY DON'T PAY ANY RIGHT AWAY COST TO THE CITY. THE CITIZENS WHO ARE THE OWNERS OF THE SYSTEM GET A PORTION OF REVENUE [01:05:01] FROM THE UL IN LIEU OF PROPERTY TAXES AND RIGHT AWAY ACQUISITION COSTS AND FRANCHISE TAX. IT'S A POLICY DECISION THAT COUNCIL MAY DECIDE WE NO LONGER WANNA DO THAT. BUT MIND YOU, IF YOU, ANYTIME YOU REMOVE ANY OF THESE TRANSFERS IN, UNLESS YOU REDUCE AN EQUAL AMOUNT ON THE EXPENDITURE SIDE OF THE EQUATION FOR GENERAL FUND, WE WOULD HAVE AN IMBALANCE AND WE WOULD HAVE TO MAKE EITHER A CUT ON THE EXPENDITURE SIDE TO BALANCE THAT, OR WE HAVE TO FIND ANOTHER SOURCE OF REVENUE TO MAKE THAT UP. OR YOU COULD HAVE A COMBINATION OF BOTH. SO AS WE GO THROUGH THE BUDGET PROCESS, I WANNA MAKE SURE Y'ALL UNDERSTAND THE TRANSFERS IN COMING INTO THE GENERAL FUND, IF THEY'RE ELIMINATED OR REDUCED, THERE'S A CONSEQUENTIAL IMPACT TO THE GENERAL FUND QUESTION? YES MA'AM. SO WHAT YOU'RE SAYING IS THAT IF THIS WERE, IF, IF ARE UTILITIES LIKE OUR WATER UTILITIES WERE FOR PROFIT, LIKE IF THEY WERE AQUA OR ONE OF THE OTHER PRIVATE PROVIDERS, UM, THAT ARE FOR PROFIT, UM, THOSE WOULD BE EXPENSES THAT WOULD BE INCURRED IN THE RATES OF THEIR CUSTOMERS? THAT'S CORRECT. AND A GOOD EXAMPLE IS PEC OR CENTER POINT GAS. THEY OPERATE WITHIN OUR CITY. THEY USE OUR STREETS, THEY USE OUR RIGHT OF WAYS, RIGHT? PEC IS TAX EXEMPT. THEY DON'T PAY US TAX, BUT THEY DO PAY US A FRANCHISE TAX FOR THE PRIVILEGE OF OPERATING WITHIN OUR CITY AND USING OUR ROADS AND USING OUR RIGHT OF WAYS. SO THEY REIMBURSE US ON AN ANNUAL BASIS. THE SAME THING IS FOR CABLE COMPANY. THE INTERNET PROVIDERS, THEY ALL PAY THE CITY A FRANCHISE FEE. BUT SINCE THE TAXPAYERS OF KYLE OWN THE WATER AND WASTEWATER UTILITIES, THEY'RE NOT INVESTOR OWNED UTILITIES. WE HAVE A PAYMENT IN LIEU OF TAXES, WHICH IS THE EQUITY TRANSFER. SO GOING DOWN THIS LIST OF REVENUE SOURCES FOR THE GENERAL FUND, THE OTHER 800 POUND GORILLA THAT WE WANT TO TALK ABOUT TODAY IS THAT YELLOW SLICE OF THE PIE DEVELOPMENT REVENUES. THE BUDGET WAS $7 MILLION, WHICH IS 9% OF THE SOURCES OF REVENUES. IT'S A, IT'S A BIG SOURCE. AND WHAT IS MADE UP IN THAT DEVELOPMENT REVENUE. WHEN DEVELOPERS COME UP WITH THEIR DEVELOPMENT PLANS, WE GO THROUGH A VERY THOROUGH DEVELOPMENT REVIEW. SO THERE ARE FEES ASSOCIATED WITH REVIEWING THOSE DEVELOPMENT PLANS. SO YOU HAVE ENGINEERING DEPARTMENT INVOLVED, YOU HAVE THE FIRE DEPARTMENT INVOLVED, YOU HAVE THE PUBLIC WORKS DEPARTMENT INVOLVED. YOU HAVE THE WATER AND WASTEWATER UTILITY FOLKS INVOLVED. SO THERE'S A LOT OF COST INCURRED IN REVIEWING THOSE PLANS. AND WE WANNA RECOUP THAT COST AND THEY ARE RECOUPED THROUGH THESE DEVELOPMENT FEES. IN ADDITION, THE DEVELOPMENT FEES INCLUDE PERMIT FEES WHEN OUR BUILDING INSPECTION DEPARTMENT ISSUES PERMITS FOR BUILDING OR THEY, UM, CHARGE INSPECTION FEES. THEY'RE INCLUDED IN THIS BUCKET IN THE DEVELOPMENT FEES BUCKET. AND THEN WHEN YOU HAVE OTHER, UH, SOURCES OF REVENUES, WE TALKED ABOUT THE FRANCHISE FEES, THAT'S A, THAT'S A GOOD AMOUNT OF MONEY THAT THE CITY RECEIVES FROM PC, FROM CENTERPOINT, FROM OTHER UTILITY PROVIDERS, FROM INTERNET SERVICE PROVIDERS, FROM THE CABLE COMPANY. AND IT'S PRETTY CLOSE TO $4 MILLION EVERY YEAR. AND IT GOES TO EARTH, THE GENERAL OPERATIONS OF THE CITY. SO THIS IS THE SOURCES OF FUNDS, THE REVENUES THAT COME INTO THE GENERAL FUND. SO NOW LET'S TALK ABOUT WHERE DID THE MONEY GO? HOW DO WE USE THAT MONEY? SO ONE THING I DO WANNA POINT OUT, IF YOU LOOK AT THE REVENUES SOURCES IS 78.6 MILLION. IF YOU LOOK AT THE EXPENDITURE OR USES OF FUNDS IS 77.5 MILLION. IT'S LESS THAN THE REVENUES. THIS IS WHAT'S CALLED BALANCED BUDGET. [01:10:02] WE PROPOSED A BALANCED BUDGET TO CITY COUNCIL FOR THIS YEAR. THAT IS, THAT HAS ALWAYS BEEN OUR GOAL TO PRESENT A BALANCED BUDGET. NOW, FROM TIME TO TIME, WE HAVE ONE TIME EXPENDITURES. IF WE HAVE SURPLUS FUND BALANCE, WE WILL USE THAT MONEY FOR BUYING EQUIPMENT, HEAVY TRUCKS, VECTOR TRUCKS, WHATEVER THE, OUR CITY ORGANIZATION NEEDS. BUT THOSE ARE ONLY ONE TIME NOT RECURRING. ONCE WE BUY THAT TRUCK, THAT EXPENDITURE GOES AWAY. BUT IF YOU HIRE EMPLOYEES, THEY'RE RECURRING. IT'S EVERY YEAR. OKAY, SO USES OF FUNDS FOR THE GENERAL FUND. THE LARGEST SLICE OF THE PIE IS THE, THE DARK BLUE IS OUR PUBLIC SAFETY EXPENDITURES, 26% OR $20.4 MILLION OF THAT 77 MILLION. AND IN THAT PUBLIC SAFETY BUCKET WE HAVE OUR POLICE DEPARTMENT, OUR EMERGENCY EMERGENCY MANAGEMENT SERVICES IS IN THAT BUCKET. ANYTHING RELATED TO PUBLIC SAFETY IS IN THAT SLICE OF THE PIE. AND I CALLED IT THREE PS. THESE ARE DEPARTMENTS, THEIR NAMES START WITH THE LETTER P. SO YOU'VE GOT POLICE DEPARTMENT. NEXT UP IS OUR TRANSPORTATION AND PUBLIC WORKS DEPARTMENT, WHICH IS THE YELLOW, OUR MUSTARD, 18% OR ALMOST $14 MILLION. THESE ARE THE FOLKS THAT TAKE CARE OF OUR SIDEWALKS, OUR POTHOLES, OUR STREET MAINTENANCE, UH, STREET RECONSTRUCTION THAT WE DO WITH OUR OWN CREWS. THIS IS WHERE THAT BUCKET IS. AND THEN IF YOU LOOK AT THE OTHER, THE OTHER, THE THIRD P IS THAT GREEN AT THE FIVE O'CLOCK POSITION, PARKS AND RECREATION, 9.7 MILLION OR 13%. AND THEN EVERYTHING ELSE IS BASICALLY THE, UH, SUPPORT SERVICE DEPARTMENTS, INFORMATION TECHNOLOGY, UH, CITY SECRETARY'S OFFICE, CITY ATTORNEY'S OFFICE, CITY MANAGER'S, OFFICE MAR AND COUNCIL. COUNCIL YOU WILL SEE TO THE LEFT AT THE 10 O'CLOCK POSITION. SOLID WASTE SERVICES. LET ME EXPLAIN THAT. WHAT THAT IS. THAT IS THE TRASH SERVICE THAT WE PROVIDE TO OUR RESIDENCE. THAT IS THROUGH A CONTRACT WITH TEXAS DISPOSAL SYSTEM. THEY CHARGE US 4.5. WE PASS THROUGH THAT CHARGE TO OUR CUSTOMERS. WE DON'T MAKE ANY PROFIT. WE DON'T UPCHARGE IT. WE ADD WHAT COSTS THE CITY TO PROVIDE THAT CUSTOMER SERVICE. THE PEOPLE AT THE FRONT WINDOW, THEY TAKE THEIR UTILITY BILLS, I MEAN THEIR TRASH BILLS, THEY ANSWER THE PHONES, THEY CONNECT AND DISCONNECT SERVICE. THAT'S INCLUDED IN THERE. BUT I WOULD SAY 99% OR 95% OF THAT COST IS TO PAY TDS OR TEXAS DISPOSAL SYSTEMS. SO THIS IS HOW THE CITY'S GENERAL FUND, UH, MONEY IS USED EVERY YEAR. QUICK QUESTION. YES. ON THE GENERAL FUND, THE SOURCES COMING IN AND THE, THE USES OF THESE FUNDS SO FAR, WOULD YOU SAY THAT WE'RE ON TARGET FOR RECEIVING IN AND SPENDING OUT, UM, N NO, THAT'S THE EXERCISE TODAY. OKAY. THAT WE'LL SHOW YOU. OKAY. WE ARE ON TARGET ON THE EXPENDITURE SIDE. MM-HMM . BUT WE'RE NOT ON TARGET ON THE REVENUE SIDE. PERFECT. JUST WANNA MAKE SURE THAT'S SHARED. IF YOU LIVE IN KYLE AND IF YOU RECEIVE A TAX BILL AND YOU'RE A PROPERTY OWNER, YOU HAVE THESE JURISDICTIONS THAT APPEAR ON YOUR TAX BILL. SO THE LARGEST CONTRIBUTOR IS THE SCHOOL DISTRICT. IS THE, THE DARK BLUE OR THE NAVY BLUE HAY. CISD IS 46% OF YOUR TAX BILL THEN GOING CLOCKWISE. NEXT IS THE RED IS THE CITY OF KYLE. OUR CURRENT TAX RATE, IT'S 59.57%. SO WE REPRESENT ABOUT 24% OF YOUR TAX BILL. MOVING UP IS HAYES COUNTY AS 16% OR [01:15:01] 39 99 IS THEIR TAX RATE. BUT HAY COUNTY, YOU HAVE TO ADD ANOTHER PIECE TO IT. THEY HAVE TWO TAX RATES. ONE IS FOR THEIR GENERAL GOVERNMENT, WHICH IS THE 39 CENTS, THE MUSTARD YELLOW. AND THEN AT THE 11 O'CLOCK POSITION IS THE HAYES COUNTY ROAD TAX AT 4 CENTS. SO YOU HAVE TO ADD LITERALLY BOTH OF THOSE TO COME UP WITH THE REAL HAYES COUNTY TAX. AND THEN OF COURSE WE HAVE THE COMMUNITY COLLEGE, HAYES COUNTY, ESD FIVE, HAYES COUNTY, SD NINE PUBLIC, UM, PUBLIC PLUM CREEK CONSERVATION DISTRICT, AND PLUM CREEK GROUNDWATER DISTRICT. THEY'RE ALL ON OUR TAX BILL. SO I JUST WANTED TO SHOW YOU THAT OF THE $2 AND 48 CENTS OR 49 CENTS, THE TAX RATE, TOTAL TAX RATE FOR PEOPLE RESIDING IN KYLE, WHAT THE CITY'S PORTION IS AND WHO THE OTHER TAXING JURISDICTIONS ARE. SO PROPERTY TAX RATE, THE ADOPTED TAX RATE FOR A YEAR THAT WE'RE IN, AND REMEMBER THE TAX RATES ARE ADOPTED IN SEPTEMBER. THE TAX BILLS GO OUT IN OCTOBER. SO WHEN THE TAX ASSESSOR COLLECTOR, OR THE HAYES COUNTY APPRAISER CHIEF APPRAISER REFERS TO A TAX YEAR, THEY'RE ALWAYS REFERRING TO THE CALENDAR YEAR WHEN THE TAX RATE IS ASSESSED AND IMPOSED. THAT IS ON YOUR TAX BILL. SO FOR 2025, TAX YEAR IS CITY'S FISCAL YEAR 26. SO I JUST WANNA MAKE SURE I'M NOT CONFUSING Y'ALL. THIS REFERENCE IS CALENDAR YEAR WHEN THE TAX IS ASSESSED AND IS ON YOUR TAX BILL. AND IF YOU RECALL FROM MY PRESENTATIONS IN THE PRIOR YEARS DURING BUDGET, WHEN WE TALK ABOUT PROPERTY TAX RATES, IT HAS TWO COMPONENTS THAT MAKE UP THE TOTAL TAX RATE MAINTENANCE AND OPERATIONS. THIS PAYS FOR THE GENERAL GOVERNMENT THAT I SHOWED YOU ON THAT PIE CHART, THE POLICE DEPARTMENT, THE CITY MANAGER'S OFFICE, THE FINANCE DEPARTMENT, THE PURCHASING OFFICE, THE CITY ATTORNEY'S OFFICE, THAT'S THAT TAX RATE. AND THEN INTEREST IN SINKING RATE, OR MOST COMMONLY REFERRED TO AS THE DEBT SERVICE RATE. THIS IS TO PAY FOR THE DEBT SERVICE PRINCIPLE AND INTEREST THAT WILL BE DUE IN THAT FISCAL YEAR, NOT FOR A PAST YEAR, NOT FOR A FUTURE YEAR DEBT THAT WE HAVE ALREADY ISSUED FOR WHICH WE ARE ON THE HOOK AND OBLIGATED TO PAY PRINCIPAL AND INTEREST IN AUGUST AND FEBRUARY. SO THAT'S THE TAX RATE TO PAY THAT ARE THAT IF YOU ADD THOSE TWO UP, OUR TAX RATE, TOTAL TAX RATE FOR 25 ON YOUR TAX BILL THAT YOU RECEIVED AND PAID BY FEBRUARY WAS 59.57 CENTS PER $100 OF TAXABLE ASSESSED VALUATION. BY TAXABLE ASSESSED VALUATION, I MEAN THE NET PROPERTY VALUE FOR YOUR HOME THAT IS TAXABLE BECAUSE YOU HAVE GROSS ASSESSED VALUATION, THEN YOU GET EXEMPTIONS RIGHT. FOR HOMESTEAD, FOR VETERANS AND FOR SCHOOL. CAN, CAN I CONFIRM THAT OF THAT 59.5957, WE'RE LOOKING AT 46% OF THAT FEE IS IN INTEREST AND SINKING RATE? THAT'S CORRECT. YOU MEAN OUTSIDE DEBT SERVICES? 54% IS FOR OPERATIONS AND 46% OF THAT IS FOR DEBT SERVICE OF THAT TAX RATE. WOULD THIS BE A GOOD TIME TO TALK ABOUT THE PREVIOUS ISSUE THAT I BROUGHT UP OF THE MAX CAPACITY FOR THE ROAD BOND, THE MAX RATE? SURE. OR WE CAN WAIT TILL THE NEXT SLIDE. OKAY. I'LL WAIT TILL THE NEXT SLIDE. I JUST, I JUST DON'T WANNA FORGET . SO HERE I WANTED TO SHOW Y'ALL A COMPARISON BETWEEN THE 24 TAX RATE AND THE 25 TAX RATE. [01:20:03] SO MAINTENANCE AND OPERATIONS WENT FROM 28 89 TO 32 12. THE INTEREST IN SINKING RATE WENT FROM 1804 TO 27 45. OR IF YOU LOOK AT THE LAST LINE, WE WENT FROM 46 93 TO 59 57. THAT'S A 12.64 CENTS INCREASE IN ONE YEAR. THAT'S 26.9%. AND I BELIEVE ONE OF THE SPEAKERS EARLIER SAID OR REMINDED US THAT MAYOR PRO TEM TOBIAS WAS THE ONLY COUNCIL MEMBER THAT DID NOT VOTE FOR THE TAX RATE INCREASE QUESTION. THAT'S A HUGE BUMP IN ONE YEAR FOR OUR HOMEOWNERS. CORRECT. SO THE INTEREST AND SINKING RATE IS PRIMARILY BASED ON OUR BOND ISSUE OR ENTIRELY ON OUR BONDS. THAT IS CORRECT. SO HOWEVER, THAT'S PRIMARILY WATER AND ROADS, NOT WATER. THESE ARE JUST ROADS, ROADS, PARKS, INTERSECTION IMPROVEMENTS, SIDEWALKS. OKAY. SO IT MIGHT BE THE, THE, UM, TAX, THE THE BONDS THAT THE VOTERS VOTED FOR, OR IT MIGHT BE THE, UM, THE BONDS THAT WE'RE VOTING FOR. SO TWO TYPES OF BONDS. YEAH. YEAH. SO THAT IS, YOU'RE ABSOLUTELY RIGHT. IT'S INCLUDED THE AMOUNT OF DEBT PAYMENT THAT WAS DUE IN 25, 26 WAS INCLUDED IN THERE. MM-HMM . HOWEVER, THERE WAS ANOTHER 4.5, 4.7 MILLION THAT WAS ADDED TO THE DEBT SERVICE TO INCREASE THE TAX RATE. THAT ADDITION WAS TO PREPAY DEBT THAT WAS DUE IN THE FUTURE. YOU, YOU Y'ALL MAY REMEMBER THE DISCUSSION ABOUT DFE MM-HMM . WE PREPAID FUTURE PRINCIPLE THAT WAS NOT DUE THIS YEAR. WE BROUGHT IT FORWARD, WHICH IMPACTED THE TAX RATE AND ALSO ALLOWED US TO PAY LESS INTEREST. ULTIMATELY, IF WE'RE PAYING IT OFF MORE QUICKLY. WE PAID LESS FOR THE PRINCIPAL AMOUNT THAT YOU PAID THREE YEARS EARLY OR FOUR YEARS EARLY. I I DON'T RECALL HOW MUCH YOU DID SAVE SOME INTEREST MONEY MM-HMM . BUT THE QUESTION IS, WAS IT NECESSARY? WAS IT, DID IT HAVE ENOUGH ECONOMIC VALUE TO OFFSET THE TAX BURDEN WE INCREASED? THAT'S THE QUESTION. MM-HMM . THAT'S THE QUESTION. THAT'S AN EXCELLENT QUESTION BECAUSE MY QUESTION WOULD BE HOW MUCH INTEREST IF THESE LOANS ARE GETTING READY TO EXPIRE, THAT TELLS ME THEY'RE PROBABLY A LITTLE BIT OLDER LOANS. AND SO THE INTEREST RATE MAY NOT BE AS HIGH AS IF IT WERE TODAY. SO I WOULD BE INTERESTED TO KNOW HOW MUCH WE SAVED VERSUS HOW MUCH EXTRA THE TAXPAYERS ARE PAYING, GIVING THEM THIS EXTRA FINANCIAL BURDEN. SO, AND YOU DON'T HAVE TO ANSWER THAT NOW. THAT'S JUST MY, THAT WOULD BE MY THEORY. AND WHEN WE BRING FORWARD THE CALCULATION OR TAX RATES FOR 27, YOU WILL SEE THAT CLEARLY. OKAY. YEAH. AND THAT, THAT WE SAW THOSE CALCULATIONS AND THAT'S WHY WE VOTED FOR THAT. RIGHT. THAT IT MADE A GREAT DEAL OF SENSE TO DO THAT BOTH FOR THE TAXPAYER, UM, AND FOR THE BUDGET. I MEAN, IT'S A PUBLIC POLICY DECISION. STAFF WILL DO WHATEVER COUNCIL'S WILL IS, RIGHT. YOUR JOB AS ELECTED OFFICIALS, I DON'T HAVE TO REMIND YOU, IS TO MAKE POLICY DECISIONS. OUR JOB IN OUR LANE, WE STAY IN OUR LANE, IS TO CARRY OUT THE DIRECTION AND THE WILL OF THE COUNCIL BONDS. SO BONDS, SO LET'S TALK ABOUT SALES TAX. IF YOU BUY COCA-COLA OR POTATO CHIPS OR SHOES OR CLOTHES OR ORDER ONLINE FROM WITHIN THE CITY LIMITS OF KYLE, YOU ARE CHARGED EIGHT AND A QUARTER PERCENT SALES TAX. WE DON'T GET ALL OF THAT 8.25% OF THE SALES TAX. SO THIS IS HOW THE SALES TAX IS DISTRIBUTED. THE REVENUE, EVEN BEFORE WE [01:25:01] SEE ANY OF THAT COME TO US, STATE OF TEXAS RETAINS 6.25% FOR CITY OF KYLE GENERAL FUND OPERATIONS. WE GET 1% CITIES ALLOWED UP TO 2%. YOU CAN, ALL CITIES CAN IMPOSE UP TO 2%. THE CITY OF KYLE IMPOSED 1.5% AND THAT 1.5% IS 1% IS FOR GENERAL OPERATIONS THAT 0.5%. THE CITY OF KYLE VOTERS BY REFERENDUM DEDICATED THAT PORTION OF THE SALES TAX TO BE USED TO REDUCE THEIR PROPERTY TAX RATE BURDEN. AND WE DO THAT, WE APPLY THAT 0.5% OF SALES TAX REVENUE TO REDUCE THE IMPACT ON THE TAX RATES AND REVENUE QUESTION. IF THAT'S THE CASE, THEN SAY IF WE DIDN'T HAVE THAT, THE TAX RATE WOULD BE HIGHER BY 0.5, NOT EXACTLY 0.5, BUT IT WILL BE SLIGHTLY HIGHER. OKAY. YEAH. I'VE, I'VE ARGUED THAT THAT HAS BEEN NEGATED OVER TIME. THAT THAT JUST THE PROPERTY TAX RATE HAS BEEN INCREASED SO THAT IT JUST WASHES IT OUT. YEAH. ALL RIGHT. THANK YOU. RENTERS LOVE BONDS, THEY LOVE. AND THE LAST PIECE, 0.5% OF THE SALES TAX GENERATED WITHIN THE CITY LIMITS OF KYLE GOES TO HAYES COUNTY FOR THEIR GENERAL OPERATIONS. THIS TOO, I BELIEVE, WAS DONE BY REFERENDUM SOME YEARS BACK BEFORE MY TIME HERE. UM, I HAVE BEEN REMINDED THAT THERE IS SOME REFERENDUM. I I WAS, I WASN'T ABLE TO RESEARCH IT. I DIDN'T HAVE THE TIME, BUT SOME REFERENDUM EXISTS THAT ALLOWED THIS TO HAPPEN. UM, I DON'T THINK WE CAN TAKE IT BACK AT THIS POINT. UH, BUT WE COULD HAVE, HAD WE NOT DONE THAT, WE COULD HAVE RETAINED ANOTHER 0.5% FROM SALES STOCKS. SO I'LL SHARE WITH YOU OVERVIEW OF CITY'S BOND DEBT OBLIGATIONS AS WE SPEAK. THE CITY OF KYLE OWES $385.3 MILLION. THIS IS AFTER THE FEBRUARY PAYMENT WE MADE. AND OF THAT $385 MILLION THAT THE CITY OWES, THE LARGEST PIECE IS THE BLUE SLICE OF THE PIE IS $163.2 MILLION OR 42% OF THE TOTAL PIE. IT IS FOR WATER UTILITY INFRASTRUCTURE WA THE CITY'S WATER UTILITY SYSTEM INFRASTRUCTURE THAT INCLUDES ALL DEBT ISSUED BY AWA ON THE CITY'S BEHALF TO BRING THAT WATER FROM CARRIZO WILCOX WATERSHED OR AQUIFER TO CITY OF CAL TO DELIVER TO US. IT ALSO INCLUDES THE DEAD CITY ISSUED ON ITS OWN FOR WATER SUPPLY, FOR WATER PIPES, PUMP STATIONS, RESERVOIRS. UM, YOU'LL SEE WHEN YOU DRIVE DOWN 16, 26, THOSE HUGE TANKS THAT WE KEEP OUR WATER BEFORE IT GOES TO OUR CUSTOMERS. ALL THOSE TYPES OF INFRASTRUCTURE COSTS ARE IN HERE THAT WE BORROWED THE MONEY TO BUILD THOSE ASSETS. THE NEXT SLICE, THE LARGEST SLICE IS THE GREEN ONE. THIS IS PAID BACK 155 MILLION OR 156 MILLION OR 41% OF THE TOTAL IS PAID BACK FROM PROPERTY TAX COMING INTO THE CITY. AND THESE PROJECTS ARE ROAD BOND PROJECTS, UH, PARK IMPROVEMENT PROJECTS, SIDEWALK PROJECTS, INTERSECTION IMPROVEMENT PROJECTS, UH, SIDEWALKS, POTHOLES, UH, STREET, UH, RESURFACING, ALL OF THOSE ARE IN HERE. AND THEN YOU HAVE T NUMBER ONE OS ABOUT $8.8 MILLION. THIS WAS THE VERY FIRSTT [01:30:01] CREATED IN THE CITY OF KYLE THAT OPENED UP CITY OF KYLE FOR ECONOMIC DEVELOPMENT. THE ENTIRE MONEY BORROWED BY TUR THROUGH TS NUMBER ONE, WAS TO DESIGN AND BUILD FM 1626. WE REIMBURSED TDOT TO BUILD THAT ROAD AHEAD OF SCHEDULE. WE COULDN'T WAIT. AND I THINK THAT WAS A VERY SMART DECISION BY COUNCIL AT THE TIME, NOT TO WAIT ON TXDOT. WE WOULDN'T BE SEEING THE, THE DEVELOPMENT TODAY IN KYLE WITHOUT THAT. THAT OPENED UP KYLE. AND THEN OF COURSE WE HAVE CHARGE NUMBER TWO, UM, $17 MILLION THAT WE HAVE ISSUED TO DATE FOR ROUNDABOUTS, ROAD IMPROVEMENTS, MEDIAN IMPROVEMENTS, AND ILLUMINATION IMPROVEMENT PROJECTS. SO THIS IS IN A PIE GRAPH. SOME PEOPLE UNDERSTAND PIES BETTER THAN UH, TABLES, BUT I'M GIVING YOU BOTH OPTIONS. SO HERE'S THE SAME INFORMATION IN A TABLE FORMAT, 150, UH, 56 MILLION FOR A GENERAL FUND, OR 40% WATER RATES HAS TWO PIECES, 40.8 MILLION THAT WE ISSUED OURSELVES DIRECTLY. AND THEN 122 MILLION THAT WE ISSUED THROUGH CONDUIT. OUR, OUR AGENCY ARAWA, THEY ISSUED CONTRACT REVENUE BONDS ON OUR BEHALF FOR OUR PORTION OF THAT INFRASTRUCTURE TO BRING US WATER CONTRACT REVENUE BONDS. BASICALLY MEANS WE'RE UNDER A CONTRACT WITH AWA TO PAY THE, THE PRINCIPAL AND INTEREST DUE ON THAT DEBT THROUGH OUR WATER RATES. THEN OF COURSE YOU HAVE $40 MILLION FOR WASTEWATER SO FAR, AND THAT NUMBER IS GONNA GO UP DRASTICALLY BECAUSE THERE IS ONE BIG PROJECT THAT IS UNDERWAY, THE WASTEWATER TREATMENT PLANT EXPANSION THAT WILL, AS WE ISSUE DEBT FOR THAT, THAT NUMBER IS GONNA INCREASE. AND THEN SAME THING FOR SAME INFORMATION I SHOWED YOU FORT NUMBER ONE, ANDT NUMBER TWO. SO BOTTOM LINE WE OWE AS OF TODAY, 385,295,000. YES. IT'S MY UNDERSTANDING THAT THE STATE HAS SOME GUIDELINES RELATED TO HOW MUCH, UM, PERCENTAGE OF REVENUE THE CITY CAN INCUR IN DEBT. THERE'S A FORMULA. YES. AND WE BRING THAT POLICY EACH YEAR, UH, BEFORE COUNCIL. THE CITY'S FINANCIAL POLICY HAS THOSE FORMULAS EMBEDDED IN THERE IS BASED ON OVERALL ASSESSED VALUATION OF THE CITY, TAXABLE ASSESSED VALUATIONS. UM, AND THEN THERE ARE OTHER TARGET NUMBERS THAT WE HAVE TO BE BELOW THAT AND WE'LL GO THROUGH THAT AS WE BRING THE DETAILED DEBT INFORMATION DURING THE, AND WE WERE IN COMPLIANCE WHEN WE PASSED THE BUDGET. YES. ONE OF THE THINGS I'D LIKE TO EMPHASIZE IS THE BONDS FOR CITY ARE LIKE YOU BUYING YOUR HOUSE. YOU KNOW, I TOOK OUT A LOAN TO BUY MY HOUSE. I COULD NOT HAVE AFFORDED IT. IT'S A 30 YEAR LOAN , WHICH OUR BONDS ARE USUALLY 30 YEARS. UM, SO THAT I COULD LIVE IN THAT HOUSE. UM, I CHOOSE TO NOT CARRY DEBT ON MY CREDIT CARD. UH, SO THAT IS A HUGE PERCENTAGE OF MY BUDGET IS EVERYTHING THAT I I BUY GOES ON A CREDIT CARD AND I I PAY THAT OFF ON A MONTHLY BASIS. SO IT'S VERY SIMILAR TO THE DEBT THAT THE CITY INCURS. YOU KNOW, WE WOULD NOT HAVE, WE'VE GOTTA HAVE THE WATER. UH, WE HAVE A, WHAT, 17-YEAR-OLD AGREEMENT NOW WITH ARAWA TO DO THAT. AND A NUMBER OF OTHER CITIES ALSO ARE PART OF ARAWA. I'M ON THAT BOARD. I SEE THE NUMBERS THERE AND HOW EXPENSIVE IT IS TO OPEN NEW WELL FIELDS TO GET A 70 MILE PIPELINE TO US. UM, SO IT'S, IT'S A, IT'S A HUGE EXPENSE UNFORTUNATELY WITH THE STATE OF WATER IN THE STATE OF TEXAS, UH, AND THAT WE HAVE NO SURFACE WATER EXCEPT FOR CANYON LAKE. WE USE SOME WATER OUT OF CANYON LAKE, UM, THAT IS IN ORDER FOR US TO PROVIDE THE WATER THAT THIS CITY IS NOW NEEDING DUE TO ITS GROWTH AND ITS NEW DEVELOPMENT, WHICH INCLUDES SIX CREEKS AS NEW DEVELOPMENT. THAT'S ONLY, WHAT, SEVEN YEARS? NO, EIGHT YEARS OLD, [01:35:01] MAYBE SIX WEEKS, SOMETHING LIKE THAT. YES. UM, SO THAT IF THEY'RE, THEY'RE USING THE ARAWA WATER. UM, IT'S JUST, IT'S, IT'S WHAT WE HAVE TO DO. IT'S LIKE OUR HOUSE PAYMENT. UH, WE'VE GOT TO PROVIDE THOSE RESOURCES. AND THE SAME WITH THE ROADS. UM, WE CAN'T BUILD THEM ALL AT ONCE. UH, THAT WOULD BE WONDERFUL IF WE COULD JUST SAVE UP MONEY AND SAVE UP MONEY. BUT THE STATE DOES NOT ALLOW YOU TO DO THAT. UM, THERE IS A MAXIMUM AMOUNT, RIGHT, THAT THE STATE SAYS YOU CAN SAVE BEFORE YOU HAVE TO REDUCE THE RATES OF THE TAX RATES. SO WE CAN'T JUST SAVE OUR MONEY LIKE YOU MIGHT DO FOR YOUR OWN HOUSE, FOR YOUR OWN PROPERTY, YOUR OWN DRIVEWAY, UM, OR THE FENCE YOU WANT TO BUILD OUT BACK. UM, WE HAVE TO PAY THAT, UH, IN SOME OTHER WAY. SO THAT'S, IT'S VERY SIMILAR. IT'S JUST A BIGGER AMOUNT FOR THE CITY THAN FOR MY INDIVIDUAL HOUSE. YES. COUNCIL MEMBER HARRIS, YOUR ANALOGY IS RIGHT ON THE MARK FOR A GROWING CITY AND THESE TYPES OF INFRASTRUCTURE WE DON'T DESIGN AND BUILD FOR THE NEXT TWO YEARS OR NEXT FIVE YEARS, THEIR LONG TERM ASSETS AND INFRASTRUCTURE, WE DON'T HAVE THAT MUCH CASH LAYING AROUND TO PAY ON CASH. SO TO COMPLY WITH CITY GROWTH DEMANDS TO COMPLY WITH TCQ REQUIREMENTS TO COMPLY WITH FEDERAL REQUIREMENTS, WE HAVE TO BUILD INFRASTRUCTURE AHEAD OF TIME. I CAN GIVE YOU A GOOD EXAMPLE FOR THE WASTEWATER TREATMENT PLANT FACILITY. THE STATE LAW REQUIRES OUR TCQ POLICY OR STANDARDS OR RULES REQUIRE THAT ONCE YOU HIT 75% OF YOUR CAPACITY, TREATMENT CAPACITY, THOU SHALL BE IN DESIGN. WHEN YOU HIT 90% OF CAPACITY, IT REQUIRES THOU SHALL BE IN CONSTRUCTION. SO THERE ARE SOME LIMITATIONS AND CHALLENGES THAT WE MUST ABIDE BY FOR A GROWING CITY. WHAT I WAS LEADING UP TO IS FOR A GROWING CITY LIKE CITY OF KYLE THAT DIDN'T HAVE ANY INFRASTRUCTURE NOT TOO LONG AGO, AND WE DID NOT OWN THE WASTEWATER PLANT. RIGHT. THAT WAS AQUA AND THEY HAD SOME MAJOR ISSUES, WHICH WE HAVE HAD TO CLEAN UP AS THOUGH WE BASICALLY STARTED OVER WITH THE WATER TREATMENT PLANT WASTEWATER TREATMENT. YES. THE WASTEWATER TREATMENT PLAN. SORRY, CAN I JUST CONFIRM, WHEN WE TALK ABOUT TAXABLE ASSESSED VALUE, DOES THAT INCLUDE, UM, REAL ESTATE OR ITEMS THAT NOT CASH ON HAND? 'CAUSE WHEN I WAS READING THE LAST YEAR'S AUDIT, IT HAD LIKE TWO DIFFERENT AMOUNTS AND IT TALKED ABOUT THIS IS HOW MUCH WE HAVE FOR TAXABLE ASSIST VALUE, BUT THAT ALSO INCLUDED LIKE REAL ESTATE OR TANGIBLE THINGS, THINGS THAT YOU CAN'T IMMEDIATELY GO AND GET CASH FOR. SO IS THE BOND DEBT, IS THAT ISSUED UNDER THAT BIG AMOUNT? OR IS IT ISSUED UNDER REVENUE AND IN ACTUAL CASH THAT WE RECEIVE AS A CITY? SO WHEN WE ISSUE DEBT, THERE ARE TWO TYPES OF DEBT. WE TYPICALLY ISSUE THE GENERAL OBLIGATION BONDS AND CERTIFICATES OF OBLIGATION. THE GENERAL OBLIGATION BONDS ARE, ARE DEBT INSTRUMENTS THAT THE VOTERS DECIDE. THEY DECIDE WHAT WE ARE GONNA USE THAT MONEY FOR AND HOW MUCH WE'RE GONNA ISSUE THAT DEBT FOR THE CERTIFICATES OF OBLIGATION TYPE DEBT ARE NON VOTER AUTHORIZED, MEANING WE DON'T GO TO THE VOTERS, BUT WE ISSUE DEBT FOR PROJECTS THAT WE MUST BUILD TO COMPLY WITH STATE LAW OR REGULATIONS OR WHAT HAVE YOU. BUT IT IS A POLICY DECISION BY COUNCIL, WHICH ONES WE TAKE TO VOTERS, WHICH ONES WE DON'T. Y'ALL CAN DECIDE, YOU CAN TELL US YOU CAN ISSUE A SINGLE DIME WITHOUT VOTER'S AUTHORIZATION OR YOU CAN TELL US CONTINUE THE POLICY YOU ARE MAINTAINING THOSE TYPES OF QUESTIONS. WE'RE GONNA BRING BEFORE YOU ON JUNE 13TH WHEN WE TALK ABOUT OUR CIP SPENDING PLAN. OKAY, LET ME REPHRASE MY QUESTION. . NO, I'M GETTING TO THAT. OKAY. OKAY. I JUST WENT ABOUT THE LONG WAY. SO WHEN WE ISSUED GENERAL OBLIGATION BONDS, WE ARE PROMISING AND GUARANTEEING TO THE BOND HOLDERS THAT WE WILL THE CITY COUNCIL AND THE VOTERS PROMISE [01:40:01] TO REPAY THAT THROUGH THEIR PROPERTY TAX RATES AND THEY WILL REPAY AT A TAX RATE, WHATEVER IT MIGHT NEED TO HAVE TO BE. RIGHT. SO IF THE VALUES DROP, THE TAX RATES HAVE TO GO UP TO MAKE THAT PAYMENT. THAT'S THE GUARANTEE WE'RE MAKING TO THE BOND HOLDERS WHEN WE ISSUE THAT DEBT. AND THEY'RE GUARANTEED BY THE FULL FAITH AND CREDIT OF THE CITY OF KYLE GOVERNMENT, LOCAL GOVERNMENT. AND OUR CREDIT RATING IS AA MINUS AT THIS TIME THE COS OR CERTIFICATES OF OBLIGATION, THEY CAN BE ISSUED WITH, WITH THE FULL FAITH AND CREDIT OF THE PROPERTY TAX GUARANTEED BY TAX RATES OR EXCLUSIVELY GUARANTEED BY THE UTILITY RATES OR EXCLUSIVELY GUARANTEED BY T IN OUR CASE, OUR UTILITIES ARE NOT LARGE ENOUGH OR THEIR REVENUE STREAMS ARE NOT LARGE ENOUGH TO GUARANTEE THEIR SELF-SUFFICIENCY TO GUARANTEE ANY DEBT THAT THEY TAKE ON. SO WHEN WE ISSUE COS SORRY, CERTIFICATES OF OBLIGATION FOR UTILITY PROJECTS, THEY'RE GUARANTEED BY THE FULL FAITH AND CREDIT OF THE CITY GOVERNMENT. IF THE UTILITY FAILS TO BE ABLE TO PAY BACK, THE CITY IS SAYING WE'LL STEP IN AND USE OUR PROPERTY TAX MONEY TO PAY OFF THAT DEBT. AND OUR, OUR RATING IS IMPACTED. UM, OUR, OUR RATING IMPACTS THE INTEREST RATE ON THOSE BONDS DRAMATICALLY. YES. THE RATINGS IS VERY SIMILAR TO THE CREDIT SCORES WE EACH HAVE. THE HIGHER THE SCORE, THE BETTER INTEREST YOU GET. CREDIT RATING WORKS THE SAME WAY, BUT IS AS A CITY GOVERNMENT LEVEL OR COUNTY GOVERNMENT LEVEL OR STATE GOVERNMENT LEVEL, OUR CURRENT RATING IS DOUBLE A MINUS. WE HAVE BEEN GETTING GOOD CREDIT BASED ON THAT, BUT NEXT TIME WE GO OUT FOR BOND, WE'RE GONNA GET REEVALUATED AGAIN. THEY'RE GONNA LOOK AT OUR FINANCIAL POSITIONS, JUST LIKE YOUR CREDIT SCORE DEPENDS ON YOUR INCOME AND HOW MUCH YOU OWE, WHERE DO YOU OWE, HOW OFTEN WERE YOU MISSING YOUR PAYMENTS AND WHAT YOUR ASSETS ARE. RIGHT? THEY GO, WE GO THROUGH THE EXACT SAME THING BUT AT A MUCH LARGER SCALE. AND THAT SCRUTINY IS VERY THOROUGH. I WOULD RATHER GO FOR A DENTAL EXAM OR DRILLING THAN, THAN THAT. IT IS NOT, IT'S NOT VERY, UH, PLEASANT. THEY'RE DOING THEIR DUE DILIGENCE. I DON'T BLAME THEM. RIGHT. THEY'RE GIVING THEIR CREDIT RATING SEAL OF STAMP ON OUR NAME THAT WE CAN GO TO THE BOND HOLDERS. THE BOND HOLDERS AND THE INVESTORS ARE RELYING ON THAT CREDIT RATING. OKAY, I'M GETTING SIDETRACKED. I CAN TALK ABOUT THAT. AND BONDS ALL DAY LONG. . SO THAT SAME $385 MILLION WHEN YOU PAY WITH INTEREST UNTIL MATURITY, JUST LIKE YOUR MORTGAGE, YOU BUY A HUNDRED THOUSAND DOLLARS HOME, YOU TAKE OUT A HUNDRED THOUSAND, IT'S A 15 YEAR MORTGAGE OR A 30 YEAR MORTGAGE, YOU END UP PAYING SOMETHING LARGER THAN WHAT YOU HAD INITIALLY BORROWED THE FINANCING COST. SO ON $385 MILLION, IF WE KEEP THESE BONDS UNTIL MATURITY, MEANING WE DON'T PAY PREPAY THEM OR DEFUSE THEM, WE'LL PAY ANOTHER $226 MILLION IN FINANCING COST. AND THAT TOTAL IS $611 MILLION TOGETHER. AND HERE I'VE SHOWN YOU BY WHO'S GONNA PAY PROPERTY TAX, WATER RATES, WASTEWATER RATES, UH, CHARGE ONE, CHARGE TWO. CAN I ASK A QUESTION? THIS IS ON EXISTING DEBT. I'M SORRY, MAYOR, GO AHEAD. SORRY. NO, YOU'RE GOOD. SO THE $385.3 MILLION DOES NOT INCLUDE THE EXISTING 200 AND MILLION $210 MILLION FOR THE ROAD BOND. IS THAT CORRECT? OR THERE'S $7 MILLION THAT THE VOTERS APPROVED FOR THE PARKS OR THE $69 MILLION THAT THE PREVIOUS CITY COUNCIL APPROVED FOR THE ANIMAL SHELTER AND OTHER PROJECTS. IS THAT CORRECT? PARTIALLY CORRECT. OKAY. SO LET ME CLARIFY THAT. THE $10 MILLION THAT THE VOTERS APPROVED IN 2020 FOR THE PARKS [01:45:01] IMPROVEMENTS, WHICH WAS GOING TO BE MATCHED DOLLAR FOR DOLLAR BY THE COUNTY, THAT 10 MILLION HAS BEEN ISSUED. OKAY? SO THAT'S IN THIS $385 MILLION, THE $294 MILLION THAT THE VOTERS AUTHORIZED IN 2022 FOR THE ROAD IMPROVEMENTS. NOT ALL OF IT HAS BEEN ISSUED, BUT ONLY THE PORTION THAT HAS BEEN ISSUED IS INCLUDED IN HERE. THAT WOULD BE THE 83.9 MILLION. YES. THEN THE $69 MILLION THAT YOU REFERRED TO ABOUT THE ANIMAL SHELTER, OR I THINK IT WAS LIKE THE ANIMAL SHELTER, THE SENIOR CENTER OR SPORTS, SPORTS OR WHATEVER THAT DISCUSSION WAS. NO, WE, WE HAVE NOT ISSUED ANY DEBT, I DON'T THINK, FOR ANIMAL SHELTER OR SPORTS COLLECT. OKAY. ALL RIGHT. JUST WANNA MAKE SURE. SO WHAT'S, WHAT'S CAUSING THE DEBT? WE TALKED ABOUT IT EARLIER. YOU KNOW, WE, WE TALKED ABOUT A GROWING CITY HAVING NEEDS FOR ITS CAPITAL IMPROVEMENT PROJECTS. SO THAT'S NUMBER ONE. NEW CAPITAL IMPROVEMENT PROJECTS WE MUST BUILD, WE HAVE TO BUILD, THERE ARE SOME THAT ARE MUST, THERE ARE SOME THAT ARE NICE TO HAVES. NUMBER TWO, FUNDING REQUIREMENTS FOR THE FIVE YEAR SPENDING PLAN. WHAT'S IN THE PLAN? NUMBER THREE IS THE EXPEDITED TIMING OF THOSE CAPITAL PROJECTS. WE'VE BEEN GOING A HUNDRED MILES AN HOUR TRYING TO BUILD EVERYTHING AT ONE TIME. WE'RE GONNA HAVE TO SLOW DOWN. I'M GONNA BE UPFRONT WITH YOU. THOSE PROJECTS THAT HAVE TO BE DONE, LIKE THE ROAD BONDS, THOSE PROJECTS THAT REQUIRE PUBLIC SAFETY CONCERNS, EMERGENCY CONCERNS THEY WILL GET DONE. BUT THOSE PROJECTS THAT WE CAN WAIT AND NOT HARM OUR RESIDENTS IN ANY WAY, THOSE WILL GET PUSHED. WE CAN'T AFFORD ALL OF THESE AND WE'LL SHOW YOU ON JUNE 13TH, WE'RE GONNA HAVE TO HAVE A BUDGET REALITY CHECK. THE CHANGES IN PROJECT SCOPE IS INCREASING COST INCREASES IN PROJECT ESTIMATES IS INCREASING COST. WE'VE ALREADY TALKED ABOUT OUR $1.3 BILLION BEFORE WE, BEFORE WE LEAVE THAT PAGE. SO ONE OF THE THINGS ABOUT EXPEDITING THE PROJECTS THAT WE TALKED ABOUT LAST YEAR WHEN WE TALKED ABOUT EXPEDITING, ESPECIALLY THE ROAD BOND PROJECTS, YES. BUT WAS THAT THE COSTS WERE GOING UP. UM, AND THAT, WELL THE COSTS HAD BEEN ESTIMATED, BUT THEY HAD GONE DOWN SOME, UM, IN THE LAST COUPLE OF YEARS AND EXPEDITING THEM WAS SAVING US MONEY WHERE IF IT THEN GOES UP IN THE FUTURE, UM, WE WOULD'VE ALREADY ACCOMPLISHED THOSE PROJECTS. SO THERE WAS A TRADE OFF THERE. IT WASN'T JUST LIKE, OH, LET'S HURRY UP. IT WAS LET'S GET THINGS DONE WHILE THE COSTS ARE HAVE GONE DOWN. AND IN FACT WE SAVED A GREAT DEAL OF MONEY BY DOING THAT ON THE, ON PROJECTS, IF I'M CORRECT. BUT WE ALSO HAVE TO COUNCIL MEMBER WITH ALL DUE RESPECT, WE ALSO HAVE TO BALANCE THAT WITH THE IMPACT ON OUR RESIDENTS. WELL, CERTAINLY TAX RATE. YEAH, CERTAINLY. UM, BUT THAT IS THAT, THAT WAS SOME OF THE DISCUSSION WE JUST HAD LAST YEAR. YOU'RE CORRECT. WELL, AND TO COUNCIL MEMBER HARRIS'S CREDIT, UH, THOSE WERE FACTORED INTO LAST YEAR'S BUDGET AND YEP. LAST YEAR'S TAX RATES. YEAH, RIGHT. WE WERE, WE WERE VERY INTENTIONAL WITH LONG TERM TRYING TO MINIMIZE THE IMPACT ON THE RESIDENTS. SO NOW WE'RE GONNA TALK ABOUT THE HISTORICAL TRENDS FOR REVENUES AND EXPENDITURES. SO WITH THAT, I'M GONNA PASS IT ON TO MR. ANDY. ALEJANDRO, THANK YOU PROFESS. THANK YOU, SIR. YOU HAVE TO POINT IT TO THAT CAMERA. OKAY. THANK YOU. GOOD AFTERNOON, MAYOR. MAYOR, PRO TEM COUNCIL MEMBERS FOR THE RECORD. I'M ANDY ALEJANDRO, THE CITY'S INTERIM FINANCE, UH, INTERIM DEPUTY FINANCE DIRECTOR. I'M NOT TRYING TO TAKE THAT TITLE . I HAVE NOT, I HAVEN'T HAD TO WRITE EVERYTHING I HAD DOWN. I WAS GONNA SAY, I'M NOT AS GOOD AS PERVE. I CAN'T JUST TALK OFF THE CUFF LIKE KEITH CAN, BUT I'LL TRY TO DO AS GOOD JOB AS I CAN. IN THIS SECTION, I'LL BE FOCUSING ON THE CITY'S HISTORICAL TRENDS, WHICH PROVIDE CRITICAL CONTEXT FOR UNDERSTANDING OUR CURRENT FINANCIAL, FINANCIAL CONDITION AND THE CHALLENGES WE ARE FACING AS WE MOVE INTO THE NEXT BUDGET CYCLE. OVER THE NEXT SEVERAL SLIDES, [01:50:01] WE'LL WALK THROUGH KEY FINANCIAL INDICATORS ACROSS THE PAST SEVERAL FISCAL YEARS, SPECIFICALLY TRENDS IN REVENUES, EXPENDITURES, FUND BALANCE, STAFFING LEVELS, PERSONNEL COSTS, CAPITAL INVESTMENT AND DEBT SERVICE REQUIREMENTS. AND I KNOW THAT THIS IS A LOT OF INFORMATION AND IF Y'ALL NEED ME TO SLOW DOWN OR STOP, OR IF YOU HAVE QUESTIONS, PLEASE LET ME KNOW. I CAN DEFINITELY TAKE MY TIME. IT WORKED. OKAY. THIS FIRST CHART IS A SMO HEAT CHART. I CAN'T TAKE CREDIT FOR THIS ONE, BUT IT DOES SHOW THE LONG-TERM EVOLUTION OF BOTH THE M AND O, THE MAINTENANCE AND OPERATION AND THE INS, THE INTEREST IN SHRINKING TAX RATES FROM 1998 THROUGH 2026. AND I'D LIKE TO TAKE FOR YOU TO NOTICE THE LOW OF 0.27 CENTS IN 2008 TO A HIGH OF 0.69 CENTS IN TWO IN 1992. AND ALONG WITH OUR CURRENT TAX RATE OF 0.60 CENTS, RECENT INCREASES IN THE INTEREST IN SINKING RATES REFLECT RISING DEBT OBLIGATIONS RELATED TO OUR CAPITAL PROJECTS. AS PERVE BROUGHT UP EARLIER, AT THIS TIME, DEBT OBLIGATION, DEBT OBLIGATIONS ARE CONTRIBUTING MORE TO THE INCREASE IN TOTAL RATE THAN OPERATIONAL COSTS. ARE THERE ANY QUESTIONS? GO BACK. GO BACK. I'M SORRY. OH, SO COUNSEL, THERE WAS A QUESTION. SO ON THIS BAR GRAPH, THE BLUE REPRESENTS THE M AND O RATE THAT WE SHOWED YOU EARLIER. AND THE YELLOW REPRESENTS THE INS RATE THAT WE NEED TO PAY OUR DEBT SERVICE EACH YEAR. YOU'LL NOTICE THAT IN THE PAST, PRIOR TO 2008, THE YELLOW PORTION WAS MUCH HIGHER AND WE'VE BEEN PAYING OFF, PAYING OFF THE DEBT AND THE YELLOW WAS SHRINKING. BUT AS WE HAD TO INVEST IN INFRASTRUCTURE, THE, THE INS PORTION IS INCREASING. WE JUST HAVE TO BE COGNIZANT OF THAT FACT AND BE SMART ABOUT IT. HOW WE MANAGE THESE TWO ELEMENTS OF THE TAX RATE GOING INTO THE FUTURE. UH, THE, THE M AND O RATE HAS BEEN RELATIVELY FLAT OVER THE LAST HALF DECADE. IT'S THE, THE INS RATE THAT'S BEEN MORE FLUCTUATING AND HAD THE LARGEST IMPACT IN OUR TAX RATE. WOULD THAT BE A FAIR ASSESSMENT? THAT'S A FAIR ASSESSMENT BECAUSE WE WERE ABLE TO USE OTHER SOURCE SOURCES OF REVENUE TO PAY OUR INCREASING MAINTENANCE AND OPERATION COSTS. AND WE'LL SHOW YOU IN A MINUTE. YES, SIR. THANK YOU. AND A LOT OF THAT INCREASES DUE TO OUR INCREASE IN POPULATION. UM, I THINK WE DISCUSSED THAT, LIKE THE PERCENTAGE OF INCREASE IN POPULATION, AND THIS IS BETWEEN ME, COUNCIL MEMBER GOZA AND MAYOR PRO TEM. AND IT WASN'T EXACTLY PROPORTIONATE TO THE GROWTH. NOT EXACTLY. YEAH. I MEAN, I WOULDN'T EVEN SAY EXACTLY. IT WOULD JUST, THERE WAS A DIFFERENCE. SO THE GROWTH DIDN'T EXACTLY MATCH THE, THE SPENDING OR THE HIRING PROCESS. SO THAT'S NOW, IF YOU'RE, IF YOU'RE PLANNING FOR THE FUTURE, WHICH WE ARE 30 YEARS, IF WE'RE TAKING OUT A 30 YEAR BOND, YOU WOULD NOT EXPECT IT TO DO EXACTLY MATCH CURRENT. WELL, I THINK WHAT WE WERE TALKING ABOUT WAS MAINTENANCE AND M AND O. SO THAT'S REALLY JUST STAFF AND MAINTENANCE AND NOT NOTHING TO DO WITH DEBT, EVERYTHING TO DO WITH JUST, UM, YOU KNOW, HIRING AND, UM, DAILY EXPENDITURES. KIND OF LIKE OPERATIONAL. THOSE ARE SOME OF THE THINGS WE HAVE MORE CONTROL OVER. YEAH. THANK YOU. THIS NEXT CHART SHOWS OUR SALES TAX COLLECTIONS FROM 2008 THROUGH OUR CURRENT BEST ESTIMATE IN 2026. UH, YOU CAN SEE OUR REVENUES ROSE FROM 2.2 MILLION IN 2008 TO ROUGHLY MORE, OR FOR OUR BEST ESTIMATE OF $20.2 MILLION IN 2026. AS YOU CAN SEE, THE, THE GROWTH HAS CONTINUED TO INCREASE, BUT IT'S BEEN AT A MORE MODERATE RATE LATELY. SO WE CANNOT ASSUME THE CONTINUED HIGH GROWTH TRENDS THAT WE'VE SEEN GOING FORWARD. ON THIS SLIDE, YOU CAN SEE THE GENERAL FUND REVENUES BROKEN DOWN BY THE FOUR MAJOR CATEGORIES, PROPERTY TAX, SALES TAX DEVELOPMENT REVENUES, AND OTHER REVENUES WE PUT ON THERE. YOU CAN SEE THE ACTUALS FROM FISCAL YEAR 20 20, 21 FOR FIVE ACTUAL FISCAL YEARS, THE APPROVED BUDGET IN THE CURRENT YEAR, 20 25, 26. AND THEN OUR CURRENT BEST ESTIMATE FOR 20 25, 26. UM, ONE OF THE BIGGEST TAKEAWAYS IS THAT REVENUE GROWTH HAS SLOWED AND UNDERPERFORMED EXPECTATIONS BECAUSE OF THE SLOWDOWN. THE CITY HAS BECOME MORE DEPENDENT ON TRANSFERS IN. AND THOSE INCLUDE WATER WASTEWATER AND INDIRECT SUPPORT COSTS, LIKE PROS MENTIONED EARLIER. AND THE, YOU CAN SEE IN THE GRAPH, YOU CAN NOTICE HOW THE TOTAL REVENUE HAS SLOWED DOWN IN THE PAST FEW YEARS. [01:55:01] AND OUR TR WE'VE BEEN MORE RELIANT ON TRANSFERS IN TO OFFSET THE, THE SLOW DOWN OF THE REVENUES. WE NEED MORE LOSS SHOPPER. EXPLAIN THE DIFFERENCE VARIANCE. OH, AS YOU CAN SEE, UH, THE PROPERTY TAX IS, WAS IT 800 MILLION BELOW OUR APPROVED BUDGET? SALES TAX IS 1.7 MILLION BELOW OUR BUDGET AND DEVELOPMENT REVENUES IS ROUGHLY $2 MILLION SHORT OF OUR PROJECTIONS. SO THAT LEADS US TO THE $4 MILLION SHORTFALL THAT WE'RE SEEING IN REVENUES CURRENTLY RIGHT NOW. I I DO HAVE A QUICK QUESTION ABOUT THAT. UM, THE STATE COMPTROLLER REPORTS THAT WE'VE GOTTEN YEAR TO DATE, 8,000,800, $12,833 AND 53 CENTS, WHICH IS A 9.21% INCREASE OVER A YEAR TO DATE PREVIOUS YEAR, WHICH MATCHES WHAT OUR, OUR ORIGINAL APPROVED BUDGET AMOUNT WAS. SO I HAVE A QUESTION ABOUT WHERE THE, THE DIFFERENCE IS FALLING THERE ALSO, UH, FROM THE HAYS COUNTY TAX ASSESSOR COLLECTOR'S OFFICE, THE KYLE 2025 PROPERTY TAX REVENUE WAS $42,522,312 AND 47 CENTS. I UNDERSTAND NOT ALL OF THAT MAKES IT TO THE GENERAL FUND. I WOULD LIKE TO KNOW, UH, LIKE WHERE THAT DIFFERENCE IS AND KIND OF HOW THE, THE WATERFALL HAPPENS TO, TO CREATE THAT DIFFERENCE BETWEEN THAT DOLLAR AMOUNT AND WHERE WE'RE AT IN THE GENERAL FUND. I DON'T EXPECT YOU HAVE THAT. NO, I CAN TELL YOU RIGHT NOW. OKAY. THAT $42 MILLION IS THE TOTAL TAX THAT WE RECEIVED. NOT ALL OF IT IS FOR GENERAL FUND. THE OTHER HALF IS FOR THE INS. SO THAT THIS NUMBER THAT ANDY IS SHOWING YOU IS THE M AND O PORTION OF THAT TAX REVENUE. WE HAD BUDGETED 21.7 MILLION AND WE HAVE COLLECTED TO DATE 20.8 AND OUR BEST ESTIMATE TO FINISH BY NINE 30, MOST OF OUR TAX REVENUES HAVE ALREADY COME IN. MM-HMM . VERY LITTLE IS GONNA COME IN FOR THE REST OF THE YEAR. OUR BEST ESTIMATE IS WE'RE GONNA FINISH THE YEAR BY NINE 30 AT 20,828,000. SO THAT'S THE M AND O PIECE OF IT. THE 42 OR 40 MILLION, WHATEVER YOU'RE REFERRING TO MM-HMM . IS THE TOTAL PROPERTY TAX. THE OTHER HALF GOES TO, OR THE, THE DIFFERENCE GOES TO INS FUND. OKAY. WHICH IS NOT ACCOUNTED FOR IN THE GENERAL FUND. THAT ANSWERS MY QUESTION. THANK YOU. YEAH. YEAH. 'CAUSE THIS SCREEN IS JUST FOR REVENUE, RIGHT? CORRECT. AND REVENUES IN EXCESS OF STUFF THAT WE HAVE TO PAY. YES. YEAH. OKAY. JUST FOCUSED ON REVENUES. YES, MA'AM. YEAH. THANK YOU. OKAY. ON THIS NEXT SLIDE YOU'LL SEE THIS WILL BE THE OPERATION AND MAINTENANCE COST FOR, JUST FOR THE GENERAL FUND. AGAIN, YOU NOTICE THAT WE HAD ACTUALS FOR 20 20 21 THROUGH 20 24, 25. SO WE HAVE FIVE FISCAL YEARS OF ACTUALS, THE APPROVED BUDGET FOR 20 25, 26, AND OUR BEST, OUR BEST ESTIMATE FOR THE REST FOR THE REMAINDER OF 20 25, 26. AND THIS, THIS SLIDE SHOWS HOW THE GENERAL FUND MAINTENANCE AND OPERATIONS HAVE GONE FROM ROUGHLY $34 MILLION IN 20 20, 21 TO $77 MILLION IN OUR ESTIMATE FOR THE REST OF THE FISCAL YEAR. SOME EXAMPLES OF THE MAINTENANCE AND OPERATION COSTS FOR THE CITY, YOU KNOW, ARE THE POLICE DEPARTMENT, PARKS AND RECREATION FINANCE AND THE CITY MANAGER'S OFFICE. THESE COSTS INCLUDE PERSONNEL COSTS, INSURANCE, EQUIPMENT, UTILITIES, AND FUEL. SOME OF THE PRIMARY DRIVERS OF THIS INCREASE IS AN INCREASE IN STAFFING AND SERVICE EXPANSION. AND IN THE GRAPH YOU WILL SEE A RAPID INCREASE OF OUR EXPENDITURES THROUGHOUT THE YEARS TO WHERE WE'RE AT RIGHT NOW WITH THE $77 MILLION. AGAIN, YOU'LL, YOU'LL SEE A SIMILAR TREND WITH A LOT OF MY CHARTS. YOU'LL SEE THE, THIS IS THEY HAVE FUND BALANCE FOR THE GENERAL FUND. YOU'LL SEE FOUR ACTUALS, FIVE ACTUALS, I'M SORRY, FROM 20 20 20 21 THROUGH 20, 24, 25. AND OUR BEST ESTIMATE FOR THE REMAINDER OF THE YEAR FOR 20 25, 26, YOU'LL SEE THAT OUR, OUR FUND BALANCE HAS IN, HAS STARTED OFF AT $21 MILLION IN FISCAL YEAR 20 20, 21 TO A PEAK OF $34.2 MILLION IN FISCAL YEAR 20, 22, 23. AND IT DECLINES TO OUR CURRENT $10.3 MILLION IN OUR BEST ESTIMATE FOR FISCAL, FOR FISCAL YEAR 20, 25, 26. IN THIS GRAPH, YOU WILL NOTICE THE RAPIDLY WE ARE RAPIDLY DRAWING DOWN ON OUR RESERVES. AND THE FUND BALANCE IS BEING USED TO SU SUPPORT ONGOING OPERATIONS. THIS TREND [02:00:01] IS NOT SU SUSTAINABLE FOR THE LONG TERM HEALTH OF THE CITY. AND, AND TO, TO HELP EXPLAIN THE FUND BALANCE EQUATION IS THE REVENUES MINUS EXPENDITURES IS THE BOTTOM LINE THAT FLOWS THROUGH THAT EQUATION. MAY I ASK, WHAT IS OUR 25%, UM, CHARTER REQUIREMENT AMOUNT? WE'LL SHOW YOU WHEN HOLLY GOES THROUGH, WE'LL SHOW YOU THAT. THANK YOU. BUT THAT'S WHAT THIS IS. THE 10 M IS NOT 25%. YEAH. BUT THI THIS IS WHAT THAT 25% REFERS TO. YES. IS THIS EXACT CHART. YES. YES. I HAD A QUICK QUESTION, IF YOU DON'T MIND GOING BACK TO THAT. NO, NO. SO IF WE STARTED TO SHOW A DEATH, WE STARTED SHOWING AT 34 MILLION IN 20, 22, 23, THEN WHY IN 23, 24 AND THEN 24, 25, WE WEREN'T SHOWN THOSE NUMBERS DECREASING TO WHERE WE COULD HAVE CAUGHT IT. WE WERE, WE WERE, WE I HAD YOU DID MANY CONCERNS LAST YEAR AND HAD MANY, MANY CONVERSATIONS ABOUT WHY WE DROPPED ROUGHLY $9 MILLION IN OUR GENERAL FUND MM-HMM . AND I WAS ASSURED THAT OUR ESTIMATES WERE ON POINT AND WE WOULD NOT BE WHERE WE'RE AT TODAY. AND THAT, THAT, THAT JUST RAISES THE QUESTION, YOU KNOW, ON THAT END, WHERE DO THOSE NUMBERS GO? IF WE WERE SEEING THAT WE, THAT THAT SHOULD HAVE BEEN A RED FLAG FOR US BACK THEN. UH, IN 20, 23, 24, AND THEN 25, AND NOW WE'RE AT 10 MILLION WHERE WE'RE GONNA BE, WE'VE LOST ALMOST $24 MILLION IN DECREASE IN THE GENERAL FUND IN OUR BALANCE. YES. ALL RIGHT. MOVING ON. DID, DID YOU HAVE A, YOUR QUESTION ANSWERED AGAIN, JUST WE'LL SHOW YOU MAYOR PER YES SIR. A FEW SLIDES. OKAY. WHAT'S DRAWING DOWN THE FUND BALANCE? OKAY. WE SHOWED YOU, GO BACK TO THE M AND O SLIDE. SO RIGHT HERE, THIS IS THE TOTAL OPERATING EXPENSES OF THE GENERAL FUND. WE'RE TALKING ABOUT GENERAL FUND ONLY. THIS IS THE BOTTOM LINE. EXPENSES OF THE GENERAL FUND, ALL YOUR EMPLOYEES, THEIR SALARIES, THEIR PAYROLL, TAXES, RETIREMENT, ALL OF THE CONTRACTUALS. THESE ARE THOSE TYPE OF LINE ITEMS SUCH AS, UH, OFFICE SUPPLIES, TRAVEL TRAINING, UH, CONSULTANTS THAT WE HIRE FOR STUDIES, NON CAPITAL RELATED STUDIES. UH, COMMODITIES. UH, COMMODITIES INCLUDE THINGS LIKE WE BUY EQUIPMENT, UH, LAPTOPS, UH, FOOD, MEALS, OFFICE SUPPLIES, PRINTING MAPS, THOSE TYPES OF THINGS. THE DAY-TO-DAY POWER, ELECTRICITY FOR THE BUILDINGS, THINGS LIKE THAT. SO THE BOTTOM LINE, OPERATING EXPENSES FOR THE GENERAL FUND, IF YOU LOOK AT THE FIRST COLUMN IN 2021, RIGHT? WAS $34 MILLION. DO YOU SEE THAT? AND WHERE IT SAYS TOTAL EXPENDITURES, I WISH WE HAD A POINTER, A LASER POINTER. WE CAN DO WHAT? UM, I DO. OH, YOU DO? I DON'T KNOW HOW IT WORKS THOUGH. . OH, THERE YOU GO. THERE YOU GO. SOMEBODY ELSE. I'M NOT DOING THAT. SOMEBODY ELSE IS DOING. I'M NOT THAT GOOD. I THINK IT'S, I THINK IT'S CHRIS IN THE CONTROL ROOM. THANK YOU CHRIS. THANK YOU CHRIS. SO POINT AT THE $34 MILLION. DO YOU SEE THAT MAYOR PURAM? YES. SO FIVE YEARS AGO, OUR TOTAL OPERATING EXPENSES WAS $34 MILLION. AND THEN IF YOU MOVE TOWARDS THAT TIME SPECTRUM ALL THE WAY TO ACTUAL, IN 24 25, IT WENT UP TO 68 MILLION. AND THEN WHEN YOU LOOK AT THE BUDGET THAT WE APPROVED FOR THIS YEAR WENT UP TO 77 MILLION. AND OUR BEST ESTIMATE IS THAT WE'RE GONNA BE WITHIN BUDGET. MM-HMM . BUT IT'S $77 MILLION. SO FROM 34 MILLION TO 77 MILLION, WE DOUBLED IT IN FIVE YEARS. RIGHT. THAT'S ALMOST, UH, 127%. SO THAT EXPLAINS SOME OF THAT QUESTION YOU HAD MM-HMM . WHAT HAPPENED TO THE FUND BALANCE? WHERE DID IT GO? OKAY. IT GOT EATEN UP BY EXPENDITURES AND IT KEPT GOING UP. THE REVENUES DIDN'T GO UP THAT FAST. AND WE'LL SHOW YOU AS, AS, YEAH. MM-HMM . I DON'T KNOW IF THAT'S AN OMEN , THAT, THAT THAT'S THE WARNING THAT, THAT WE HAD. IT COULDN'T BE ANY CLEARER . PERFECT TIMING. SO MAYOR PER I JUST MAKE SURE [02:05:01] WE'RE SOUNDING THE ALARM. EVERYBODY WE'RE SOUNDING THE ALARM. BEFORE WE GO ANY FURTHER, I WANNA MAKE SURE I ANSWERED YOUR QUESTION. YES SIR. YOU SURE DID. OKAY. THANK YOU. AND PROFESS YOU WILL BE GOING IN MORE DETAIL YES. ON WHAT THOSE EXPENSES WERE. YES. WHY THEY INCREASED THE, THE MAKEUP OF THOSE AND WHAT OUR DECISIONS WERE ON THOSE. BECAUSE THEY, WE KNEW THEY WERE INCREASING. IT'S LIKE NOT A SURPRISE. UM, SO THERE WERE DEFINITE REASONS. WE WERE BEHIND ON A LOT OF THINGS, UM, THAT WE SHOULD HAVE BEEN PAYING ATTENTION TO AND WEREN'T. SO WE ARE NOW PAYING ATTENTION TO THEM. SO IT'S, IT'S NOT, IT, IT, IT KIND OF SOUNDS LIKE OVER THE TOP SPENDING. IT MAY NOT HAVE BEEN, BUT WE WILL GO OVER THAT. WELL, IT'S ALWAYS OVER THE TOP WHEN YOU DON'T HAVE ENOUGH REVENUE TO BREAK TO PAY THOSE BILLS. WELL, WE ESTIMATED THAT. WE DID. YES. THAT WE'VE GOT, WE, WE HAVE TO MAKE SOME ADJUSTMENTS. THIS IS THE ONLY FUND, BY THE WAY, CENTURY. PLEASE. THIS IS THE ONLY FUND THAT HAS A DEFICIT. IS THAT CORRECT? RIGHT NOW GENERAL FUND IS THE ONLY FUND. THANK YOU. BUT LOOKING FORWARD, UH, WE WANNA BE CAREFUL. I'M SORRY. WE WANNA BE CAREFUL WITH EVERYTHING. YES, YES. SURE. SO THAT'S THE FUND BALANCE. SO NOW WE'RE GONNA OVERLAY THAT OVERALL PICTURE WITH WHAT ARE THE, SOME OF THE COST DRIVERS ONE AND ONE OF THE BIGGEST COST DRIVERS FOR THE CITY IS OUR AUTHORIZED POSITIONS. SO YOU'LL SEE, AGAIN, WE HAVE OUR, OUR APPROVED NUMBERS THAT WE HAVE FROM FISCAL YEAR 20 20 21 FOR FIVE FISCAL YEARS FOR 20 24, 25 THROUGH OUR CURRENT ESTIMATE OF 471 EMPLOYEES. SO WE STARTED IN 20 20 21 WITH 282 EMPLOYEES. AND OF COURSE WE ROSE TO 471 IN FISCAL YEAR 25, 26. THIS IS ABOUT A 67% INCREASE IN THIS FIVE YEAR WINDOW. THE CITY HAS EXPANDED SERVICES AND STAFFING SIGNIFICANTLY. THIS INCREASE DI DIRECTLY CONTRIBUTES TO THE RISING OPERATION OPERATING COST AS SEEN IN SLIDE 27. AS YOU'LL SEE IN THE GRAPH, THE FTES HAVE STEADILY INCREASED YEAR OVER YEAR. AND THIS CHART, YOU WILL SEE THE TOTAL PERSONNEL COST FOR ALL MAJOR OPERATING FUNDS. AND THIS, THIS INCLUDES THE GENERAL FUND, WATER UTILITY FUND, WASTEWATER UTILITY FUND, AND THE STORM DRAINAGE UTILITY FUND. AGAIN, YOU WILL SEE ACTUALS FROM FISCAL YEAR 2020 FOR FIVE FISCAL YEARS GOING THROUGH 20 24, 25 TO OUR CURRENT BEST ESTIMATE OF 25 26. THIS SLIDE IS DIRECTLY CONNECTED TO THE CHARTING GRAPH ON THE PREVIOUS, PREVIOUS SLIDE 29. WITH, WITH THE INCREASE OF FTES THAT HAS DIRECTLY IMPACTED THE TOTAL PERSONNEL COST. PERSONNEL COST, I'VE GROWN FROM ABOUT $20 MILLION IN FISCAL YEAR 20 20 21 TO NEARLY 57 MILLION IN FISCAL YEAR 20 25, 26. PERSONNEL COST HAS NEARLY TRIPLED IN THE LAST FIVE YEARS. PERSONNEL IS NOW ONE OF THE LARGEST AND FASTEST GROWING COST, COST DRIVERS FOR THIS CITY. SOME OF THESE COSTS INCLUDE OUR WAGES OVER TIME, RETIREMENT, PAYROLL, TAXES, INSURANCES. PLEASE NOTE THAT THE AREA HIGHLIGHTED IN BLUE, WHICH SHOWS THE CUMULATIVE CHANGE FROM FISCAL YEAR 20 20 21 TO FISCAL YEAR 20, 25, 26, YOU'LL SEE AN INCREASE OF $37.1 MILLION ARE 186.28%. ONE THING TO NOTE HERE, COUNSEL, IS THE OPERATING BUDGET OF THE CITY. 65%, ROUGHLY 65% IS PERSONNEL COST. I DO, GO AHEAD. DO YOU HAVE A QUESTION? WHEN YOU, UM, PRESENT TO US A PLAN FOR REDUCING THIS DEFICIT, UM, I ASSUME THAT YOU WILL ALSO PRESENT TO US, 'CAUSE IT'S GONNA HAVE TO BE IN PERSONNEL OBVIOUSLY, UH, WHAT THE IMPACT TO SERVICES WILL BE BY REDUCING THAT. IF WE REDUCE OUR POLICE DEPARTMENT, WHAT IS THE IMPACT ON THAT SERVICE? IF WE REDUCE OUR ROAD DEPARTMENT, WHAT WILL BE THE IMPACT ON THOSE SERVICES? SO YOU'LL BRING THAT BACK TO US? YES, THAT IS CORRECT. SO WHEN I BRING THE PROPOSED BUDGET IN, IN LATE JULY, ON AUGUST 1ST, ACTUALLY IT'LL BE A BALANCED BUDGET. AND HOW WE DO IT, WE'LL SHARE THAT WITH YOU. YOU HAVE TO BE A COMBINATION OF ALL OF THE ABOVE. MM-HMM . WELL THAT, THAT ALL PERSONNEL EQUATES TO THE SERVICES THAT THE CITY OFFERS TO OUR RESIDENTS. SO SOME ARE DIRECT, SOME ARE NOT SO DIRECT. I'LL BE LOOKING FOR THOSE REDUNDANCIES FIRST BEFORE WE TOUCH POLICE PUBLIC SAFETY, THINGS LIKE THAT. THANK YOU. CAN I CONFIRM THAT BETWEEN 2024 AND 2026, [02:10:02] IT LOOKS LIKE THERE WAS, SO YOU'RE LIKE A 66% INCREASE JUST IN THOSE TWO YEARS ALONE? THAT'S PROBABLY CORRECT BECAUSE WE INCREASED THE, UM, PUBLIC SAFETY SALARIES QUITE A BIT. I THINK I'M JUST, I'M ASKING THE FINANCE DIRECTOR OR INTERIM CITY MANAGER. YEAH, I'M JUST SAYING. CAN YOU CONFIRM THAT I REMEMBER THAT IF, IF YOU WOULD PLEASE REPEAT YOUR QUESTION. SURE. UM, I JUST WANTED TO CONFIRM THERE'S A, IT'S LIKE A 66% INCREASE IN THE LAST TWO YEARS. IF YOU LOOK AT THE LINE THAT'S, THAT SAYS CHANGE FROM PRIOR FISCAL YEAR. SO IN 2324, IT WENT UP BY 10 MILLION, ALMOST 9.9 FROM THE YEAR BEFORE. AND THE FOLLOWING YEAR IT WENT UP ANOTHER 8.6 FROM THE YEAR BEFORE. SO THAT'S 18 MILLION IN TWO YEARS. OKAY. ALRIGHT. I THINK, I HOPE I ANSWERED YOUR QUESTION. GOOD. YOU, YOU DID GOOD ENOUGH. OKAY. THANK YOU. THANK YOU. AND ON, ON THIS CHART, YOU'LL SEE ONE OF THE BIGGEST BIGGER COST DRIVERS FOR THE PERSONNEL IS OVERTIME. AND THIS IS, THIS SHOWS OVERTIME FOR ALL CITY DEPARTMENTS FOR ALL FUNDS, AGAIN, FROM FISCAL YEAR 20 20 21 THROUGH FISCAL YEAR 20, 24, 25, INCLUDING OUR, OUR CURRENT BEST ESTIMATE FOR FISCAL YEAR 20 25, 26 OVERTIME IS, IS A COMPONENT OF THE TOTAL TOTAL PERSONNEL COST. AS WE MENTIONED IN SLIDE 30. TOTAL OVERTIME HAS INCREASED FROM APPROXIMATELY 684,000 IN FISCAL YEAR 20 20, 21 TO ABOUT 1.7 MILLION IN FISCAL YEAR 20 25, 26. AS YOU CAN SEE, THAT'S FROM OUR, OUR BEST ESTIMATE FOR RIGHT NOW. THESE DEPARTMENTS ARE PRESENTED HERE FROM HIGHEST TO LOWEST, ALLOWING YOU TO SEE WHERE THE LARGEST IMPACTS ARE OCCURRING ACROSS THE CITY. PLEASE NOTE THE ERROR HIGHLIGHTED IN BLUE AGAIN, WHICH SHOWS THE CUMULATIVE CHANGE SINCE FISCAL YEAR 2021. AS YOU CAN SEE OVER TIME HAS INCREASED BY NEARLY $1 MILLION ARE 145.84% OVER THAT TIME PERIOD. THIS TREND REINFORCES WHAT WE SAW ON THE PRIOR SLIDE OVERTIME AND OVERTIME IS A SIGNIFICANT AND GROWING COST PRESSURE ACROSS MULTIPLE DEPARTMENTS AND WILL BE AN IMPORTANT AREA OF FOCUS AS WE WORK TO MANAGE OPERATING COSTS GOING FORWARD. AND ONE ADDITIONAL COMMENT TO CLARIFY, OVER TIME, THE MILLION DOLLARS FOR POLICE DEPARTMENT LOOKS LIKE A BIG NUMBER. RIGHT. BUT YOU ALSO HAVE TO UNDERSTAND IT'S NOT JUST FOR DIRECT POLICE ACTIVITIES. IT IS ALSO THINGS LIKE WHEN WE HAVE FESTIVALS AND FAIRS AND OTHER PUBLIC EVENTS WHERE THEY HAVE TO PROVIDE SECURITY COUNCIL CHAMBERS. THESE ARE ALL OVERTIME RELATED COSTS. SO I HAVE ASKED THE PARKS DIRECTOR AND THE PARKS TEAM AND JESSE TO COME BACK WITH A, A PLAN THAT SHOWS IDENTIFIES ALL THESE PROGRAMS THAT WE PROVIDE THROUGH THE PARKS DEPARTMENT THAT ARE DRIVERS OF OVERTIME. KYLE FAIR IS A GOOD EXAMPLE. IT IS GREAT. EVERYBODY LOVES IT, RIGHT? BUT IT'S NOT JUST THE PARKS DEPARTMENT THAT IS IN THE COST FACTOR OR CALCULATION OF THE COST. THERE ARE OTHER DEPARTMENTS THAT ARE ALL HANDS ON DECK. SO WHEN YOU HAVE VOLUNTEERS FROM THE PUBLIC WORKS DEPARTMENT OR FROM FINANCE DEPARTMENT OR FROM CITY ATTORNEY'S OFFICE, THESE PEOPLE GET PAID OVERTIME IF THEIR HOURLY EMPLOYEES POLICE DEPARTMENT HAS TO BE CALLED IN TO PROVIDE PUBLIC SAFETY OR SECURITY. SO THESE ARE ALSO DRIVERS. SO WE DON'T HAVE TO JUST LOOK AT WHAT POLICE DEPARTMENT IS DOING, BUT WHAT ARE WE DOING THAT CAUSES POLICE DEPARTMENT TO INCUR MORE OVERTIME? THAT IS TRUE. WHEN WE HAVE OUR EVENTS SUCH AS OUR FOUNDER'S DAY PARADE, WE HAVE OUR VETERANS DAY PARADE, AND THEN ALSO WE HAVE ALL THE OTHER ACTIVITIES THAT WE HAVE, ESPECIALLY DURING THE HOLIDAY SEASON WHEN WE HAVE THE GRINCH ON THE FEST AND ALL THESE OTHER EVENTS THAT WE WANNA DO ON YOU MUSIC, ON THE GREENS, HOWEVER YOU DO IT, YOU HAVE TO PROVIDE THE POLICE PRESENCE THERE AS WELL. AND AGAIN, WHEN YOU GO TO LIKE THE KYLE FEST, YOU DO SEE CITY EMPLOYEES OUT THERE MANNING THE POST AND MANNING THE, UH, FACILITIES ITSELF AND MAKING SURE IT RUNS SMOOTH, ESPECIALLY WHEN YOU HAVE THE HOLIDAYS, UH, [02:15:01] SQUARE OPEN UP. YOU DO SEE A LOT OF STAFF OUT THERE WORKING. IT'S NOT SAYING THAT THEY'RE NOT ALSO DOING THEIR EIGHT TO FIVE JOB, BUT THEY'RE ALSO HAVING TO COVER FOR A LOT OF THOSE. YOU KNOW, WE COULD ALSO LOOK AT SAYING, IF WE'RE GONNA HAVE THESE EVENTS, WE CAN OUTSOURCE AND HIRE A COMPANY THAT COME OUT THERE TO DO ALL THAT. BUT THEN THERE'S A COST THERE. SO TO GO BACK TO WHAT DR. HARRIS, YOU'RE, YOU'RE SAYING, YES, WE WE'RE GONNA PROBABLY NEED TO GO AND, AND REEVALUATE WHAT'S CONSIDERED THE OVERTIME HOURS AND THEN IF IT MEANS THAT WHEN IT COMES TO STAFFING, IF, UH, YOU KNOW, YOU KNOW, WE DON'T WANT TO USE THE WORD REDUCTION OR, OR LAYOFFS, NOTHING LIKE THAT. RIGHT? THAT'S, THAT'S HARD TO HEAR. BUT IF IT'S A MATTER OF RESTRUCTURING OR REORGANIZING EACH DEPARTMENT AND, AND MAYBE SOMEONE'S GONNA HAVE TO PULL, BE TRANSFERRED TO ANOTHER DEPARTMENT OR TRY TO BE ABLE TO WORK THROUGH THAT. AND I THINK YOU'LL BE ABLE TO DO THAT, BUT IT'S SOMETHING TO CONSIDER AS WELL. BECAUSE OF OUR PUBLIC SAFETY WE HAVE, WE WANT TO CONTINUE TO HAVE THESE EVENTS IN OUR CITY. YOU KNOW, THOSE ARE THINGS THAT WE AS A COUNCIL GONNA NEED TO DECIDE HOW WE'RE GONNA BE ABLE TO FUND THOSE. I WOULD ALSO RECOMMEND STAFF AND EVEN COUNCIL, GOING BACK TO LOOK AT THE 2023 MEETING WE HAD, UM, IT WAS A FINANCE MEETING AND IT WAS A WHOLE CONVERSATION ABOUT THE OVERTIME FOR THE POLICE DEPARTMENT. IT WAS VERY INFORMATIVE AND IT KIND OF DISCUSSED AND DETAILED WHAT EXACTLY, UH, ENCOMPASSES THE OVERTIME. UH, I WASN'T AWARE OF IT. IT WAS AN AGENDA ITEM BROUGHT BY, UH, MAYOR MITCHELL. AND IT WAS VERY INFORMATIVE. SO IF, IF, I DON'T KNOW IF WE CAN FIND IT AND GIVE IT TO THE COUNCIL AND JUST SO WE'RE AT A GOOD UNDERSTANDING AND WE'RE NOT REPEATING THINGS THAT WE HAD CONCERNED BACK THEN BECAUSE THEY WERE ALREADY ADDRESSED. UM, AND I THINK IT WAS LIKE A 30, 40 MINUTE CONVERSATION. SO IT SHOULD BE SIMPLE ENOUGH FOR US TO, IT WAS IN THE AUDIENCE AT THE TIME. I VAGUELY REMEMBER IT. YES, IT WAS GOOD. IT, IT WAS MM-HMM . VERY INFORMATIVE BECAUSE WHEN YOU DO LOOK AT THE POLICE DEPARTMENT, YOU ALSO HAVE TO LOOK AT, THERE ARE ALSO OFFICERS THAT ARE EITHER ON MEDICAL LEAVE OR VACATION OR TRAINING. UH, AND THEN ALSO YOU HAVE, YOU HAVE ALSO IF THERE'S A MAJOR ACCIDENT RIGHT AT SHIFT CHANGE, YOU KNOW, YOU GOTTA WORK THAT THEME AND THAT COULD TAKE A COUPLE HOURS AND YOU GOTTA COMPENSATE ON THAT IN THAT, THAT'S WHY I SPECIFICALLY DISTINGUISHED BETWEEN WHAT POLICE DEPARTMENT HAS TO DO, MUST DO. RIGHT. AND THOSE THINGS THAT WE'RE ASKING THEM TO DO THAT ARE OPTIONAL. WE HAVE TO SERIOUSLY LOOK AT THAT. I HAVE ASKED THE, AND I WAS SAYING EARLIER, I'VE ASKED THE PARTS DEPARTMENT AND JESSE TO HELP ME COME UP WITH THE LIST OF ALL PART ACTIVITIES THAT REQUIRE POLICE SUPPORT OR OTHER DEPARTMENT SUPPORT THAT WE BRING TO YOU AS POLICY MAKERS. OKAY. WE HAVE A LIST OF 30 OF THESE AND HERE'S THE COST FOR EACH ONE OF 'EM. YOU LET US KNOW WHICH ONES ARE YOUR TOP PRIORITIES THAT YOU WANT TO CONTINUE AND WHICH ONES WE NEED TO SHED OFF, OR AT LEAST PAUSE. THANK YOU. YES. HOW, HOW MUCH OF THIS 1.68 MILLION, UH, IN ESTIMATED OVERTIME EXCEEDS WHAT WE'D BUDGETED FOR? I COULD TELL YOU THAT I DON'T HAVE THAT NUMBER. 1.3 MILLION. IT WAS NOT, IT WAS NOT WELL BUDGETED. SO, SO WE ONLY BUDGETED FOR 300,000 IN OVERTIME WHEN ACCORDING TO THIS CHART I'M LOOKING AT, WE'VE NEVER BEEN CLOSE TO THAT . EXACTLY. YEAH. I THINK ONE YEAR WAS 99,000 AND ANOTHER YEAR WAS 200,000. SO YEAH, IT WOULD BE COMBINED 25, 26 BOTH YEARS. 300,000. I LOOKED BECAUSE I LOOKED AT THAT. IT'S ACTUALLY ONLINE IN OUR DIGITAL WORKBOOK. AND I, BECAUSE HISTORICALLY WE HAVE NEVER BEEN UNDER 400 TO $500,000 WOULD BE AN AVERAGE. BUT AS YOU SEE OVER TIME, TIME LOOKING AT THIS, I MEAN, GOING BACK TO 20 26, 84 WAS THE LOWEST. WELL THAT'S FOR TOTAL OVERTIME. JUST FOR THE POLICE DEPARTMENT I WAS TALKING ABOUT. IT WAS 452,000. OH, I I WAS SAYING FOR THE TOTAL, THE, THE 1.68. YEAH, I AGREE. SO THESE ARE THE THINGS WE'RE GONNA BE VERY CLOSELY SCRUTINIZING AND THE DEPARTMENTS WHO HAVE BEEN PROMISING, I'LL MAKE UP THE OVERTIME THROUGH VACANCY SAVINGS. WE'RE GONNA CALL THEM OUT PERIOD. ALL RIGHT. MOVING ON. THANK YOU. THIS CHART IS DIRECTLY RELATED TO THE SLIDE WE SAW PREVIOUSLY. INSTEAD OF BREAKING OVERTIME DOWN BY DEPARTMENT AND FUND, THIS SLIDE SHOWS THE TOTAL OVERTIME COST ACROSS THE CITY. AS STATED PREVIOUSLY, OVERTIME COSTS HAVE SIGNIFICANTLY INCREASED OVER TIME FROM APPROXIMATELY 684,000 IN FISCAL YEAR 20 20 21 [02:20:02] TO ABOUT 1.7 MILLION IN FISCAL YEAR 20 25, 26. THAT RE REPRESENTS MORE THAN A DOUBLING OVERTIME COST OVER THIS FIVE YEAR PERIOD. AND THIS TREND HIGHLIGHTS A GROWING COST PRESSURE COST TO ORGANIZATION AND REFLECTS ORGAN INCREASED OPERATIONAL DEMANDS. ANY OTHER QUESTION ABOUT THIS ONE? ON THIS SLIDE, YOU'LL SEE THE CASH TRANSFERS FROM GENERAL FUND TO FUND CIP PROJECTS. AGAIN, YOU'LL SEE THAT WE HAVE THE ACTUALS FROM FISCAL YEAR 20 20, 20 21 OF $11.2 MILLION TO OUR ACTUALS FOR 20 24, 25 OF ANOTHER $11.2 MILLION. AND IN OUR ESTIMATE WE HAVE ZERO. THE GENERAL FUND TRANSFERS ARE A KEY FINANCIAL TOOL WE USE TO SUPPORT CAPITAL PROJECTS ON A PAY AS YOU GO BASIS, WHICH HELPS REDUCE OUR RELIANCE ON ISSUING ADDITIONAL DEBT. TRANSFERS HAVE FLUCTUATED FROM YEAR TO YEAR BASED ON THE CAPACITY ALLOWED FROM THE GENERAL FUND. IT HAS GROWN FROM A, A HIGH OF THE $13.9 MILLION. YOU CAN SEE IN FISCAL YEAR 20 23, 24 TO THE ZERO THAT WE HAVE CURRENTLY, THE GENERAL FUND'S CAPACITY SUPPORT CAPITAL HAS DECLINED SIGNIFICANTLY. AND THIS HAS CAUSED A GREATER RELIANCE TO DEBT FUND. THE CIP AND THIS GRAPH SHOWS HOW THE TRANSFERS HAVE VARIED OVER THE YEARS DOWN TO THE ZERO WE HAVE CURRENTLY, IF YOU GO BACK TO SLIDE 28 REAL QUICK, SO THE CIP TRANSFERS, CASH TRANSFERS, WE RELY ON SURPLUS FUND BALANCE. SO IF WE HAVE SURPLUS FUND BALANCE, BLESS AND WE HAVE CIP EXPENDITURES, WE GOTTA BUILD AND CONSTRUCT PROJECTS. WE WOULD VERY MUCH LIKE TO EVERY TIME USE CASH TO AVOID HAVING TO BORROW. RIGHT. IT SAVES US MONEY IN THE LONG TERM AS THE FUND BALANCES HAVE DECLINED OVER TIME. YOU CAN LITERALLY OVERLAY THIS GRAPH TO THE CIP TRANSFERS AND YOU'LL SEE THE EXACT SAME TREND LINE AS THE FUND BALANCE HAS DECLINED. NOW GO BACK TO YOUR CIP, WE'VE BEEN UNABLE TO USE SURPLUS FUNDS TO FUND CIP PROJECTS. SO NOW THE CIP STAYS ABOUT THE SAME. WE DON'T HAVE CASH TO PAY FOR THAT NOW. WE ARE A HUNDRED PERCENT BORROWING TO BUILD THOSE PROJECTS. THAT'S THE MESSAGE HERE IN THIS SLIDE TO A POINT WHERE NOW THIS APPROVED BUDGET THAT WE'RE IN, WE HAD ZERO FOR CIFP CASH FUNDING 'CAUSE THE FUND BALANCE HAS ALREADY BEEN ABSORBED BY OPERATING REQUIREMENTS. MOVING ON. THANK YOU. THIS, THIS CHART IS A SNAPSHOT OF THE CITY'S FIVE YEAR CAPITAL IMPROVEMENT PROGRAM, OUR CIP AND THIS SHOWS THE, THE FIVE YEAR SNAPSHOT FOR EACH FISCAL YEAR ON, ON THE CHART. AS YOU CAN SEE, THERE HAS BEEN SIGNIFICANT GROWTH OVER THIS PERIOD. THE FIVE YEAR CIP HAS INCREASED FROM $175 MILLION IN FISCAL YEAR 2019 TO ABOUT $1.3 BILLION IN FISCAL YEAR 20 20 26. THIS IS REFLECTING A SUBSTANTIAL EXPANSION IN THE CAPITALS IN THE CITY'S CAPITAL IMPROVEMENTS WITH THIS LEVEL OF GROWTH AND CAPITAL PROJECTS, THE CITY HAS HAD TO RELY MORE HEAVILY ON DEBT ISSUANCE TO FUND THESE INVESTMENTS, WHICH HAS IN TURN INCREASED OUR LONG-TERM OBLIGATIONS. AS A RESULT, THE RAPID EXPANSION OF THE CIP IS A MAJOR DRIVER OF THE FINANCIAL PRESSURE THE CITY IS CURRENTLY FINANCING. THE GRAPH ILLUSTRATES THIS TREND CLEARLY SHOWING A STEADILY AND SIGNIFICANT INCREASE IN THE SIZE OF THE FIVE YEAR CIP PLANS OVER THE PAST EIGHT FISCAL YEARS. SO THE MESSAGE HERE, COUNSEL, IS WE CANNOT SUSTAIN $1.3 BILLION CIP PROGRAM PERIOD. WE HAVE TO REEXAMINE, REEVALUATE HOW WE DO OUR CIP PLANNING. I'VE ALREADY TALKED TO MIKE TRIMBLE AND HIS CIP DELIVERY TEAM, HOW WE'RE GONNA SCALE BACK. WE'RE GONNA SEPARATE THE MUST HAVES FROM ONCE AND WE'RE GONNA BRING THAT LIST BACK TO YOU ON JUNE 13TH. Y'ALL TELL US, [02:25:01] DO YOU WANNA GO TO THE VOTERS? DO YOU WANT US TO CONTINUE THE, THE, THE PATHWAY WE'RE ON OR ANY COMBINATION THEREOF. I I DO HAVE A QUESTION. SORRY. SAY WE WOULD BE, FOR THOSE PEOPLE THAT ARE LIKE, NO, NO, NO, WE HAVE TO MOVE FORWARD. WE HAVE TO DO THIS. CAN YOU BRING BACK SOMETHING THAT SHOWS US WHAT IT WOULD LOOK LIKE IF WE STAYED ON THIS TRAJECTORY AND WE DECIDED TO PUSH FORWARD WITH ALL THE, THE EVERYTHING THAT PEOPLE SAID THAT THEY, THEY WANTED. 'CAUSE SOME PEOPLE SAY, THIS IS NOT REALISTIC LIKE THIS, THIS IS, WE'RE MAKING A BIGGER DEAL OUT OF THIS. THIS IS NOT A BIG DEAL. WE'RE OVER BLOWING IT, ET CETERA, ET CETERA. AND THEY'RE, THEY'RE CALLING ME, YOU KNOW, IT'S A CHICKEN, LITTLE , WHATEVER THEY WANNA DESCRIBE IT AS. UM, 'CAUSE I'VE HAD THESE CONCERNS FOR PROBABLY FIVE PLUS YEARS. SO LET'S SAY, OKAY, YOU'RE RIGHT, WE ARE GONNA DO THIS. THE RESIDENTS SAY THEY WANNA MOVE FORWARD. THEY WANNA PUSH THROUGH WITH $1.3 BILLION AND ADDITIONAL, OBVIOUSLY CO BONDS BECAUSE WE CANNOT, OR CO OR GO BONDS. 'CAUSE WE CANNOT SUSTAIN OFF OF THE GENERAL FUND. CAN YOU BRING US SOMETHING BACK THAT WOULD SHOW OUR RESIDENTS A TAX RATE OR SOMETHING THAT, HEY, THIS IS WHAT IT'S GONNA LOOK LIKE IF WE PROCEED. SURE, I CAN, BUT I'VE ALREADY SHOWN YOU. I I AGREE, BUT I'M JUST SAYING WHAT'S HERE. IF WE HAD A NUMBER LIKE, HEY, GUESS WHAT? WE'RE GONNA HAVE TO RAISE YOUR TAX RATE A HUNDRED PERCENT, 150%, WHATEVER THAT IS. YOU REALLY WANT ME TO GET TAR AND FEATHERED ? NO, ABSOLUTELY NOT. WHAT I, WHAT I WANNA DO IS TO PROVE A POINT, RIGHT? LIKE WE ARE NOT A REACHING, WE'RE NOT NO, WE CAN SHOW YOU THAT. OKAY. WE CAN SHOW YOU WHAT IT WILL DO TO THE WATER RATES. WE WILL SHOW YOU WHAT IT'LL DO TO THE WASTEWATER RATES. WE WILL SHOW YOU WHAT IT'LL DO TO THE PROPERTY TAX RATES. OKAY. NEWARK, NEW JERSEY. AND, AND THAT YOU MAKE A GOOD POINT, MAYOR. 'CAUSE THERE ARE A LOT OF PEOPLE OUT THERE AND, AND, YOU KNOW, I'LL, I'LL TAKE ACCOUNTABILITY FOR THIS MYSELF. 'CAUSE I'VE BEEN ON THESE COUNCILS. I TAKE ACCOUNTABILITY FOR A LOT OF THE SPENDING THAT WE'RE DOING, AND I HOLD MYSELF TO THAT. UM, BUT, BUT YOU ARE, YOU ARE RIGHT, MAYOR. THERE ARE CERTAIN THINGS THAT PEOPLE ARE SAYING, YOU GUYS ARE OVERBLOWING THIS AND, AND WE NEED TO HAVE CERTAIN PROJECTS DONE. IF WE DO THAT, IF WE'RE ON THIS MARK TO WE'RE AT 1.2 BILLION, UH, WHERE'S IT GONNA PUT OUR TAX RATE? ARE WE GONNA NEED TO GO TO OUR WHOLE CITY ITSELF, YOU KNOW, FROM THE EXPENDITURES THAT ARE, THAT ARE RIGHT HERE AND, AND LOOKING AT THESE NUMBERS HERE. UM, AND THEN I LOOK AT MY DISTRICT THAT IS SO DESPERATELY NEEDING THOSE ROADS MM-HMM . WIDEN AND FIXED. AND WE STILL HAVE TWO TEMPORARY TRAFFIC LIGHTS THAT ARE AT MAJOR INTERSECTIONS AND THEN SEEING WHERE WE'RE AT ON OUR SPENDING. AND I CAN'T GET ONE DAMN ROAD FIXED. IT. IT JUST, THAT, THAT'S WHAT, THAT'S WHAT GETS ME THE MOST. AND YES, WE CAN SAY IT'S GONNA COST US MORE IN THE FUTURE. UH, IF WE DON'T GET THIS DONE NOW, WE GOTTA DRIVE FORWARD. WE GOTTA CONQUER, WE GOTTA A CONQUEST. BUT, UM, A A AGAIN, IT, IT'S, IT'S, NOW WE'RE LOOKING AT SCALING BACK EVEN MORE AND, AND, AND, AND I'M, IT SEEMS LIKE I'M STUCK AGAIN. MAY I POINT OUT? YOU, YOU RAISE A GOOD POINT. BUT THERE'S, THERE'S A SOLUTION TO THIS, RIGHT? THE SOLUTION IS WE HAVE TO BE REALISTIC. WE CANNOT DO $1.3 BILLION WORTH OF CIP PROJECTS IN A FIVE YEAR WINDOW. THERE IS NO WAY ON GOD'S GREEN EARTH THAT WE CAN LIFT THAT KIND OF PROJECT LEVEL. WE HAVE TO BE REALISTIC. WHAT CAN WE REALLY DO? THE 2022 ROAD BOND PROJECTS STAFF WAS TOLD THOU SHALL DO IT IN FIVE YEARS. THAT'S UNREALISTIC. IT'S NOT GONNA HAPPEN. SO THE FIRST EXERCISE WE'RE GONNA HAVE TO DO INTERNALLY BEFORE WE COME BEFORE YOU IS WHAT IS OUR REALISTIC CIP SPENDING PLAN THAT WE CAN ACTUALLY LIFT AND DELIVER? THAT'S ONE TWO OF THAT, HOW MUCH IS REALLY MUST HAVE TO ME, TRANSPORTATION, ROADS, ROAD BONDS, THEY'RE ON TOP OF THE LIST. I'LL SHOW YOU IN A FEW SLIDES. WATER, WATER CAPACITY IS THERE, RIGHT? TO ME, VIBE, TRAIL, NEW KENSINGTON PARK, THOSE CAN WAIT. RIGHT? SO THAT'S WHAT WE NEED TO COME BACK TO WITH YOU AS, AS ELECTED OFFICIALS AND BODY TO GIVE US DIRECTION. ARE WE ON THE RIGHT PATH? DO Y'ALL AGREE WITH THIS AS THE PRIORITY? CORRECT. I DON'T WANNA GET THUMBS UP, THUMBS DOWN FROM Y'ALL. I WANT YOU TELL ME EXACTLY ON THAT LIST [02:30:01] WHERE YOU WANT TO DRAW THE LINE SO THERE IS NO CONFUSION BETWEEN STAFF AND WHAT YOUR DIRECTION IS. THAT SEEMS FAIR. THANK YOU. AND THEN I HAVE, UM, A FURTHER QUESTION OR, OR INPUT. UM, BUT WHEN IT COMES TO HOW IT IS THAT WE ARE GOING TO BE, I GUESS, DETERMINING WHAT CIP PROJECTS OR WHERE THEY FALL, WHAT COUNTS AS A MUST HAVE AND WHAT COUNTS AS A WANT. UM, I UNDERSTAND THAT WE HAVE, UH, DIFFERENT MASTER PLANS IN WHICH WE HAVE IDENTIFIED, FOR EXAMPLE, LIKE OUR SIDEWALK IMPROVEMENT PLAN. WE'VE IDENTIFIED, HEY, ON, BASED ON THIS MATRIX, WE'VE DETERMINED THAT THESE ARE OUR TARGETS. WE DO THE SAME THING FOR LIKE DRAINAGE, STORM WATER, DRAINAGE, UH, ROADS. UM, BUT IT, IT'S BEEN SOMETHING THAT I'VE POINTED OUT CONSISTENTLY IN THE PAST, UM, IN, IN A FEW OF THE COUNCIL MEETINGS WHERE WE DISCUSS THESE MASTER PLANS. UH, BUT WHAT THEY DON'T TAKE INTO CONSIDERATION IN THESE MATRICES IS HISTORIC INVESTMENT AND EQUITY. AND SO WHEN IT COMES TO HOW IT IS THAT WE MOVE FORWARD IN WHAT CIP PROJECTS DO MOVE FORWARD, I WANT US TO TAKE INTO CONSIDERATION IN, WITHIN THOSE MATRIXES, UM, MATRICES THAT HISTORIC INVESTMENT AND EQUITY. SO THAT WAY WE CAN, AS A COUNCIL, BETTER UNDERSTAND, HEY, YOU KNOW, IT'S BEEN, UH, X NUMBER OF YEARS SINCE THIS ROAD THAT'S LISTED ON OUR, UH, YOU KNOW, MASTER PLAN HAS BEEN IMPROVED, OR IT'S BEEN YEARS SINCE IN THIS AREA OF TOWN. THE SIDEWALKS ON OUR SIDEWALK IMPROVEMENT PLAN HAVE BEEN TOUCHED OR IMPROVED. UM, BECAUSE I THINK THOSE ARE THE THINGS IN WHICH, WHEN I'M THINKING OF, OF WHAT WE DO MOVING FORWARD, I THINK ABOUT WHAT ARE THE AREAS THAT HAVE DESPERATELY NEEDED IMPROVEMENTS FOR SO LONG THAT WE HAVEN'T TOUCHED YET. UM, AND THOSE AREN'T INCLUDED. THAT THAT INFORMATION IS NOT INCLUDED IN HOW WE PRIORITIZE CURRENTLY. AND TO ME, THAT THAT IS THE FAILURE OF, OF, OF, I THINK WHAT'S BEEN MISSING IS THE FACT THAT WE NEED TO PRIORITIZE THOSE UNDER INVESTED AREAS. FIRST AND FOREMOST. I ABOUT A PARKING GARAGE FOR YOU. I NEED TO HAVE, OKAY. SO I I CAN, I CAN GET ON BOARD WITH THAT. I SEE WHAT SHE'S SAYING. IF ANYBODY WHO'S LIVED IN KYLE FOR AN EXTENDED PERIOD OF TIME UNDERSTANDS MARTINEZ LOOP, UNDERSTANDS SUNFLOWER, UM, WHICH IS A CITY ROAD THAT RESIDENTS HAVE PAID INDIVIDUALLY $600 A YEAR TO MAINTAIN THEMSELVES. THAT IS WHAT THAT LOOKS LIKE. WE ARE NOT WAITING IN DISTRICT SIX. IN DISTRICT SIX, AND WE MET WITH THESE RESIDENTS LAST SUNDAY, AND THEY WERE EXPLAINING TO US SINCE THE ROAD IS NOT BUILT OUT OVER THERE, WHICH IS A CITY ROAD, WHEN IT RAINS, IT, IT'S, IT'S DIRT, IT ROADS, I MEAN, ANYBODY THAT UNDERSTANDS, UH, THE ECONOMICAL, THE TREES AND ROCK STUFF, RIGHT. IF YOU CAN UNDERSTAND THAT, THE ENVIRONMENTAL ASPECT YEAH. IT'S, IT'S A SCARY SITUATION FOR THEM. AND IT'S UNFORTUNATE THAT THEY'VE HAD TO PULL OUTTA THEIR OWN POCKETS TO BUILD THEIR OWN HALF ROAD. YOU KNOW WHAT I MEAN? AND SO THAT'S, I GET THAT. WE, WE NEED TO PRIORITIZE THOSE THAT WE'VE KIND OF LEFT BEHIND AS A CITY FOR THE LAST DECADE. UM, AND, AND I, I'M GONNA BE ON BOARD WITH THAT A HUNDRED PERCENT JUST TO ENSURE THAT, UM, THOSE PEOPLE FEEL LIKE THEY'RE HEARD MM-HMM . SO IF WE CAN JUST MAKE SURE THAT WHENEVER, OR THE DIRECTION THAT'S GIVEN TO TRIMBLE, UM, THAT IT INCLUDES THAT AND WHATEVER PLAN IS BROUGHT FORWARD, THAT WE CLEARLY HAVE THOSE THINGS OUTLINED IN A PRESENTATION TO US. SO I WOULD APPRECIATE THAT. CERTAINLY. I, I WOULD LIKE SOME CLARIFICATION FROM STAFF. UH, WHEN I BROUGHT THIS UP, I THINK LAST YEAR THEY SHOWED ME, UM, AN OWNERSHIP MAP AND IT WAS THE MAJORITY OF THAT STREET WAS NOT CITY OWNED THAT IT WAS PRIVATE. SO I WOULD LIKE, I WOULD LIKE SOME CLARIFICATION ON THAT IF I COULD. I I'D LIKE TO JUST MAKE A COMMENT. IT ISN'T SO MUCH PROFLIGATE SPENDING THAT WE'RE LOOKING AT, WE BASE THIS ON OUR ESTIMATES OF INCOME. THE PROBLEM IS WE DO, OUR ESTIMATES ON INCOME DIDN'T MATURE . UM, WE'RE HAVING LESS INCOME THAN WHAT WE PROJECTED BUDGET WISE. WE'RE RIGHT ON. UM, WE KNEW WHAT WE WERE GONNA SPEND. THAT'S WHAT WE HAVE BEEN SPENDING. I WOULD ALSO LIKE TO EMPHASIZE THAT WE ARE NOT THE ONLY CITY IN THIS REGION THAT HAS THESE ISSUES. EVERY SINGLE ONE OF US IS LOOKING AT THESE ISSUES BECAUSE OF THE CURRENT ECONOMY. UM, SO I DON'T WANT TO SAY, OH, WELL, YOU KNOW, WE JUST THREW THIS MONEY IN HERE, UM, FOR NOTHING. YOU KNOW, THERE ARE PROJECTS THAT THE CITIZENS HAVE PRIORITIZED, NOT JUST THE COUNCIL. WELL, WE'VE HAD PUBLIC HEARINGS ON ALL OF THEM. UM, AND I BELIEVE [02:35:01] TWO THIRDS OF, UM, OUR ROAD DEVELOPMENT, SIDEWALK DEVELOPMENT IS, IS PROJECTED FOR THE EAST SIDE. SO, WHICH IS THE NEGLECT, MOST OF THE NEGLECTED AREA, NOT ENTIRELY ALL OF THE NEGLECTED AREA. THERE'S STILL SOME ON THE WEST SIDE OF 35, BUT, YOU KNOW, WE WERE DOING OUR VERY BEST TO ADDRESS ALL THOSE ISSUES, I THINK IN PREVIOUS COUNCILS, AND WE'LL CONTINUE TO DO SO. WE JUST NEED TO ADJUST SOME SPENDING. RIGHT? YEAH. THESE ARE ALL GOOD POINTS. AS WE BRING FORWARD, WE'LL TRY TO ADDRESS 'EM AND COUNCIL MEMBERS BOTHER YOU RAISE A VERY GOOD, GOOD QUESTION AND A, AND THOSE POINTS. BUT THE OTHER THING THAT IS MISSING FROM ALL OUR MASTER PLANS THAT NOBODY ASKS, HOW ARE YOU GONNA PAY FOR IT? IT'S GOOD TO HAVE THESE MASTER PLANS. THEY'RE JUST PLANS. YEAH. AND JUST BECAUSE THEY'RE IN MASTER UNTIL THEY'RE FUNDED, THEY'RE NOT THERE. RIGHT. YOU KNOW, THEY'RE, BUT THAT DISCUSSION SHOULD HAPPEN BECAUSE I'M FINISH. AT THE TIME, MASTER PLAN IS ADOPTED. WHAT'S YOUR BIG PLAN? HOW ARE YOU GONNA PAY FOR IT? IF I'M STILL HERE IN 12 MONTHS? YES. REASONABLE. ASK ME. YEAH. WELL, AND ADDITIONALLY, I THINK I BROUGHT UP SOME CONCERNS ABOUT WHAT IF WE DON'T GROW THE WAY WE THOUGHT WE WERE GOING TO. WHAT IF WE STAY THE SAME? OR WHAT IF WE SHRINK? I MEAN, THESE ARE ALL REALITIES. UM, WE HAVE LIMITED RESOURCES. WE MAY, MAY NOT BE ABLE TO GIVE WATER TO EVERY SINGLE PERSON THAT WANTS, OR BUSINESS THAT WANTS TO COME TO KYLE. AND SO I THINK PART OF THAT MASTER PLAN MOVING FORWARD SHOULD ALWAYS INCLUDE NOT JUST THIS EXPANSIVE GROWTH, BUT ALSO SUSTAINING AND THEN MAYBE, UH, NOT GROWING AS, AS WE ANTICIPATED. WE DON'T ALWAYS HAVE THAT OPTION. UNFORTUNATELY, THE STATE DOESN'T GIVE US THE OPTION ON MOST OF THE THINGS THAT WE, THAT ARE GROWING. UM, SO WE, WE HAVE TO DEAL WITH THAT. OKAY. WE'RE MOVING ON. YEAH. OKAY. ON THIS CHART, YOU'RE GONNA SEE THE DEBT SERVICE REQUIREMENTS FOR EXISTING DEBT, WHICH INCLUDES PRINCIPAL AND INTEREST FOR FISCAL YEARS 20 20 21 THROUGH FISCAL YEAR 20, 25, 26. DEBT SERVICE HAS INCREASED FROM A LOW OF $9.5 MILLION IN 20 21, 22 TO A HIGH OF $26.7 MILLION IN THE CURRENT FISCAL YEAR, 20 25, 26. THE DEBT SERVICE HAS NEARLY TRIPLED IN FIVE YEARS, AND IT'S CONSUMING A LARGER SHARE OF THE BUDGET THAN IN PREVIOUS YEARS. SOME OF THE IMPLICATIONS OF THIS INCREASE REDUCES FLEXIBILITY FOR SERVICES, STAFFING, AND RESERVES. BECAUSE OF THIS DEBT SERVICE IS BECOMING A STRUCTURAL CONSTRAINT ON FUTURE BUDGETS. AGAIN, YOU CAN SEE IN THE GRAPH HOW THE, HOW THE DEBT SERVICE HAS INCREASED OVER THE PAST FIVE FISCAL YEARS AND WHERE WE'RE AT TODAY. SO ARE YOU TELLING ME WE PAY $26.7 MILLION A YEAR IN DEBT SERVICES FOR, FOR THIS YEAR? WE'RE GONNA PAY 26. YES, MA'AM. JUST FOR GENERAL FUND, WE HAVE DEBT SERVICE AND WATER WASTEWATER SEPARATE. INTERESTING. SO WHEN WE TOTALLY BOND OUT, THAT'S GONNA, FOR THE ROAD BOND OR FOR THE PARKS, THAT'S ALL GONNA GO UP. THE, THE PAYMENTS EVERY MONTH OR EVERY YEAR, EVERY YEAR. THAT SERVICE FOR NEW DEBT WILL GO UP. BUT ALSO KEEP IN MIND, WE'RE PAYING OFF SOME PRINCIPLES AS WE GO. RIGHT. SO THAT'S GONNA COME DOWN. SO THE, THE NET, DEPENDING ON HOW MUCH WE ISSUE, HOW FAST WE ISSUE THE, THE, THE GOAL IS TO KEEP THAT LINE FLAT FROM HAVING TO GO UP. THANK YOU. CAN I GET SOME CLARIFICATION? YOU SAID THAT THIS 26.7 DID NOT INCLUDE WATER AND WASTEWATER, BUT THERE ARE TWO LINES ON THIS. NO, IT INCLUDES, YEAH, IT INCLUDES ALL FUNDS. YEAH. GENERAL FUND. SO THE FIRST LINE, THE 18 MILLION YES. IS ALL GENERAL FUND. IT DOES NOT INCLUDE ROAD BOND. THE ROAD BONDS IS INCLUDE IN THE GENERAL FUND, THE 80 MILLION GENERAL FUND. YES. BREAKDOWN. LET'S KEEP GOING. , HE'S GONNA GO. OKAY. WELL, I KNOW THAT, THAT SOME PEOPLE MIGHT HAVE TO BE AT THE, UH, FAIR AT ONE. NO, NO. YEAH. OH YEAH. WE'RE NOT FINISHING. I KNOW. YEAH. YEAH. IF WE COULD KEEP GOING, BECAUSE WE DO HAVE PEOPLE IN THE AUDIENCE AND PEOPLE ONLINE. I MEAN, IF WE HAVE TO TAKE A BREAK OURSELVES, WE COULD JUST GO AND THEN COME BACK. IT'S OKAY. JUST BE RESPECTFUL FOR EVERYBODY THAT'S HERE. IF YOU DON'T MIND, MAYOR. OKAY. FOR THE RECORD, HOLLY RES, ASSISTANT DIRECTOR OF FINANCE. UH, MAYOR COUNCIL, GOOD AFTERNOON. THIS MORNING, WE'VE SEEN SEVERAL IMPORTANT TRENDS. PROPERTY TAX CAPACITY, SALES TAX GROWTH AND STABILIZATION, GENERAL FUND REVENUE PERFORMANCE, OPERATING COST GROWTH, FUND BALANCE DECLINE, STAFFING AND PERSONNEL COST GROWTH, OVERTIME TRENDS, DEBT SERVICE REQUIREMENTS, AND THE GROWING CIP SPENDING PLAN. [02:40:02] NOW I'M GOING TO TAKE THOSE HISTORICAL TRENDS AND BRING THEM FORWARD INTO THE CURRENT YEAR ESTIMATE AND THE FIVE YEAR FINANCIAL FORECAST FOR EACH OF THE FOUR MAJOR FUNDS. MY PORTION OF THE PRESENTATION TODAY FOCUSES ON WHERE WE CURRENTLY STAND FINANCIALLY IN FISCAL YEAR 20 25, 26, USING HEAVILY SCRUB PRELIMINARY CURRENT YEAR ESTIMATES FOR REVENUES, EXPENDITURES, AND FUND BALANCES ACROSS THE CITY'S FOUR MAJOR OPERATING FUNDS. THESE ESTIMATES ARE ESPECIALLY IMPORTANT BECAUSE THEY FORMED THE FOUNDATION OF THE FIVE YEAR FINANCIAL FORECAST THAT WILL BE DISCUSSED THROUGHOUT THE REMAINDER OF THE PRESENTATION. I ALSO WANT TO EMPHASIZE THAT THESE ESTIMATES WERE DEVELOPED COLLABORATIVELY ACROSS DEPARTMENTS USING ACTUAL YEAR TO DATE PERFORMANCE, CURRENT OPERATING TRENDS, CONTRACTUAL OBLIGATIONS, STAFFING ASSUMPTIONS, AND KNOWN COST PRESSURES. THE KEY POINT HERE, VERY IMPORTANT, THE FIVE-YEAR FORECAST IS NOT BUILT IN ISOLATION. IT STARTS WITH WHERE WE ESTIMATE THE FY 20 25, 26 YEAR WILL ACTUALLY END, NOT SIMPLY WHERE THE ADOPTED BUDGET BEGAN. FROM THERE, WE APPLIED THE BEST KNOWN ASSUMPTIONS AVAILABLE TO US AT THIS TIME, AND KNOWN MEASURABLE CHANGES TO ESTIMATE THE CITY'S FINANCIAL POSITION OVER THE NEXT FIVE YEARS. AS PART OF THIS PROCESS, STAFF CONDUCTED A DETAILED REVIEW OF BOTH REVENUES AND EXPENDITURES LINE BY LINE IN COORDINATION WITH DEPARTMENTS TO BETTER UNDERSTAND WHERE WE ANTICIPATE ENDING THE FISCAL YEAR. WE WILL, OF COURSE, BEGIN WITH THE GENERAL FUND. THE SLIDE EMPHASIZES, PARDON ME, SUMMARIZES THE GENERAL FUND CURRENT YEAR ESTIMATE FOR FY 20 25 26. THE GENERAL FUND REMAINS THE CITY'S PRIMARY OPERATING FUND AND SUPPORTS CORE SERVICES THAT HAVE BEEN MENTIONED PRIOR, INCLUDING PUBLIC SAFETY PARKS, STREETS, ADMINISTRATION PLANNING, AND OTHER ESSENTIAL OPERATIONS. I'M GOING TO WALK THROUGH THIS SLIDE FROM SIDE TO SIDE, TOP TO BOTTOM SO THAT THE FINANCIAL POSITION IS CLEAR. YOU WILL NOTICE THAT ON THE FAR LEFT COLUMN, IT CONTAINS ALL OF THE CATEGORIES, INCLUDING ALL REVENUES AND EXPENDITURE CATEGORIES. THE SECOND COLUMN COLUMN IN THE MIDDLE CONTAINS THE FY 20 25, 26 APPROVED BUDGET ALLOCATIONS FOR EACH OF THESE CATEGORIES. AND FINALLY, THE THIRD COLUMN CONTAINS THE CURRENT YEAR ESTIMATES FOR EACH CATEGORY, EACH OF THE FOUR MAJOR FUND CURRENT YEAR ESTIMATES THAT I WILL REVIEW WITH YOU TODAY FOLLOW THIS EXACT SAME FORMAT. WE BEGIN WITH THE BEGINNING FUND BALANCE, WHICH IS THE AMOUNT AVAILABLE AS WE ENTER 20 25, 26. IT IS IMPORTANT BECAUSE IT SERVES AS A CITY'S OPERATING CUSHION. THE APPROVED 20 25, 26 BUDGET ASSUMED A BEGINNING FUND BALANCE OF 19.2. YOU CAN SEE THERE AT THE TOP. HOWEVER, BASED ON AUDITED RESULTS FROM OUR 20 24 25 FISCAL YEAR, WE ARE NOW PROJECTING A BEGINNING FUND BALANCE OF $14.8 MILLION. 14.98, PARDON ME, THIS REPRESENTS A REDUCTION OF $4.3 MILLION, AND IT IS A RESULT OF LESS THAN BUDGETED REVENUES RECEIVED FOR FISCAL YEAR 20 24, 25. THAT MATTERS BECAUSE THE FUND BEGAN THE YEAR WITH LESS AVAILABLE RESERVE CAPACITY THAN ORIGINALLY BUDGETED BY A SIGNIFICANT AMOUNT BY $4.3 MILLION. NEXT, WE'RE GOING TO ADD CURRENT YEAR REVENUES. WE'VE TALKED QUITE A BIT ABOUT THIS IN DETAIL. THESE INCLUDE PROPERTY TAX, SALES, TAX DEVELOPMENT, REVENUES, FRANCHISE FEES, ACCESS FEES, TRASH, OTHER GENERAL FUND REVENUES FOR REVENUES. THE APPROVED BUDGET WAS $63.47 MILLION, BUT THE CURRENT YEAR ESTIMATE IS $59.38 MILLION. THIS IS A REDUCTION OF APPROXIMATELY 4.09 MILLION FROM THE BUDGETED REVENUE EXPECTATIONS. THE LARGEST DRIVERS OF THIS ESTIMATED REDUCTION ARE PROPERTY TAX, SALES TAX AND DEVELOPMENT REVENUES. AS WE'VE COVERED EARLIER IN THE PRESENTATION, THIS TIES DIRECTLY BACK TO ANDY'S EARLIER SLIDES SHOWING THAT WHILE SALES TAX GROWTH HAS GROWN OVER TIME, THE PACE IS NOT ENOUGH TO ABSORB THE CURRENT EXPENDITURE STRUCTURE. IT ALSO TIES TO THE DEVELOPMENT REVENUE TREND WHERE WE'RE SEEING CONTINUED SOFTNESS COMPARED TO PRIOR BUDGET ASSUMPTIONS, WHICH IS MATERIALLY IMPACTING PLANNING AND PERMIT REVENUES. TRANSFERS THEN REMAIN ESSENTIALLY FLAT OR AT BUDGET AT $15.13 MILLION, WHICH BRINGS TOTAL REVENUES AND TRANSFERS TO 74.51% PER MILLION. PARDON ME. THEN WE SUBTRACT CURRENT YEAR EXPENDITURES ON THE EXPENDITURE SIDE. OPERATIONAL SPENDING INCLUDES, AS WE'VE MENTIONED BEFORE, PERSONNEL RELATED COSTS, TECHNOLOGY SUPPORT NEEDS, CONTRACTUAL EXPENSES, AND ONGOING SERVICE DEMANDS ASSOCIATED WITH GROWTH. OPERATING AND MAINTENANCE EXPENDITURES ARE ESTIMATED [02:45:02] AT 77.08 MILLION, SLIGHTLY UNDER THE APPROVED BUDGET OF 77.13 MILLION. SO THAT'S FAVORABLE. ON THE EXPENDITURE SIDE, TRANSFERS OUT ARE APPROXIMATELY 2.11 MILLION. WE'VE KEPT THAT AT BUDGET, OF COURSE, BRINGING TOTAL EXPENDITURES AND TRANSFERS OUT TO $79.19 MILLION. SO THE FIRST CALCULATION IS 74.51 MILLION, WHICH IS TOTAL REVENUES AND TRANSFERS IN MINUS 79.19 MILLION IN EXPENDITURES AND TRANSFERS OUT. THIS MEANS THAT EXPENDITURES ARE HIGHER THAN REVENUES, THUS CREATING A CURRENT YEAR OPERATING SHORTFALL OF APPROXIMATELY $4.68 MILLION. AS EXPENDITURES MAY NOT EXCEED REVENUES BY EVEN A DOLLAR, WE MUST PRESENT AND MAINTAIN A BALANCED BUDGET AT ALL TIMES. AFTER REVENUE EXPENDITURES ARE APPLIED, WE ARRIVE AT THE ESTIMATED ENDING FUND BALANCE OF $10.3 MILLION. WE START WITH THE CURRENT YEAR BEGINNING FUND BALANCE OF 14.99 MILLION. SUBTRACT THE, SUBTRACT THE OPERATING SHORTFALL OF $4.68 MILLION THAT I MENTIONED, AND THAT LEAVES AN ESTIMATED ENDING FUND BALANCE OF $10.3 MILLION. THE CITY'S CHARTER, AS PER MENTIONED EARLIER, SPECIFICALLY, THE RESERVE POLICY REQUIRES A MINIMUM FUND BALANCE EQUAL TO 25% OF OPERATING EXPENSES AND MINIMUM, WHICH IS APPROXIMATELY $9.8 MILLION FOR THE GENERAL FUND. SO WE COMPARE THE ESTIMATED ENDING FUND BALANCE OF $10.3 MILLION TO THE REQUIRED MINIMUM OF $19.8 MILLION, AND THAT CREATES A RESERVE POLICY SHORTFALL OF APPROXIMATELY $9.5 MILLION. THE TOTAL GAP REQUIRING BALANCING IS THEREFORE THE CURRENT YEAR OPERATING SHORTFALL OF $4.68 MILLION, PLUS THE RESERVE POLICY SHORTFALL OF 19.9 0.5 MILLION FOR A TOTAL GENERAL FUND GAP OF $14.17 MILLION. THE FINAL LINE IS THE MOST IMPORTANT POLICY NUMBER ON THIS SLIDE. THE TOTAL GAP REQUIRED TO BALANCE THE BUDGET. THIS REPRESENTS THE AMOUNT THAT MUST BE ADDRESSED THROUGH EXPENDITURE REDUCTIONS, REVENUE ADJUSTMENTS, USE OF AVAILABLE FUND BALANCE, OR A COMBINATION OF STRATEGIES. EVEN AFTER EXTENSIVE REVIEW AND REFINEMENT OF PROJECTIONS, THE GENERAL FUND ENDING POSITION REMAINS SIGNIFICANTLY TIGHTER THAN PRIOR YEARS. THE KEY TAKEAWAY IS THAT THE GENERAL FUND IS UNDER STRUCTURAL PRESSURE. REVENUES ARE NOT KEEPING PACE WITH CURRENT LEVEL OF RECURRING EXPENDITURES, AND THAT DIRECTLY AFFECTS THE FIVE-YEAR FORECAST. NO, WHAT IS PARTICULARLY IMPORTANT IS NOT JUST THE CURRENT YEAR RESULT ITSELF, BUT HOW THAT RESULT COMPOUNDS OVER MULTIPLE YEARS OF STRUCTURAL ADJUSTMENTS ARE NOT MADE VERTA. IN THE PRESENTATION, I'M GOING TO SHOW YOU HOW THAT ENDING FUND BALANCE OF $10.3 MILLION BE BECOMES THE BEGINNING FUND BALANCE FOR YEAR ONE FOR FY 27. SO WE'LL TALK ABOUT HOW THOSE ARE COMPOUNDED. NOW I DO HAVE A QUESTION. OF COURSE, IF I MAY, WHEN COUNSEL RECEIVED THIS INFORMATION FROM PREVIOUS CITY MANAGER, THERE WAS ONLY A DEFICIT OF 9.4 MILLION. BO, NOW WE'RE SEEING A 14.172 MILLION. MAY I ASK WHY WOULD YOU LIKE TO TAKE THAT QUESTION? SORRY, GO AHEAD. RESPECTFULLY, MAYOR. UM, THERE WE'RE SOLVING FOR MULTIPLE ISSUES. THANK YOU FOR THE QUESTION. WE'RE SOLVING FOR MULTIPLE ISSUES HERE TO REPRESENT THE GAP THAT'S REQUIRED TO BALANCE THE BUDGET AS 9.4, 9.5 MILLION, UM, WOULD BE DISINGENUOUS. THERE ARE, THERE ARE MULTIPLE CHALLENGES THAT I, I'VE GONE THROUGH. THEY ALL FLOW THROUGH FROM THE BEGINNING FUND BALANCE OF, OF MINUS 4.3. UM, AND SO BECAUSE WE HAVE TWO SHORTFALLS, THE SUM TOTAL OF THOSE REPRESENTS THE GAP REQUIRED TO CLOSE TO BALANCE THE BUDGET. THE INFORMATION THAT WAS SHARED WITH YOU ALL, UM, THIS INFORMATION WAS SHARED WITH PRIOR LEADERSHIP, UH, AND THEN THERE WAS A, A REQUEST MADE TO REMOVE THAT BOTTOM LINE TO SHOW IT AT THE $9.5 MILLION LEVEL. UM, I, I WANT TO BE VERY TRANSPARENT WHEN I SAY THAT MATHEMATICALLY, I UNDERSTAND THAT THERE'S SOME QUESTION ABOUT, WELL, IF YOU SAW FOR WHEN YOU SAW, BUT LET US BE CLEAR, FULLY TRANSPARENTLY, WE HAVE MULTIPLE SHORTFALLS HERE. WE MUST REPRESENT IT IN A SUM TOTAL OF MULTIPLE SHORTFALLS. YES. IF YOU MANIPULATE ANY OF THESE NUMBERS, YES, THEY FLOW THROUGH AND ADJUST THE BOTTOM LINE. THEY DO FAVORABLY OR UNFAVORABLY. HOWEVER, WE ARE CONSIDERING THESE SHORTFALLS AS THEY ARE SEPARATE SHORTFALL CHALLENGES. THAT IS THE PROPER NUMBER TO REPRESENT [02:50:01] 14.2. OKAY. BUT TO CONFIRM PREVIOUS LEADERSHIP HAD ALL INFORMATION THAT IS CORRECT. I WANNA MAKE SURE THAT THE 14.9 WAS PREVIOUSLY PRESENTED. THAT IS CORRECT, MAYOR. ALL RIGHT. THANK YOU. I WOULD LIKE TO ASK A QUESTION AS WELL. WERE YOU SPECIFICALLY ASKED BY FORMER LEADERSHIP TO, UM, REPRESENT ONE SPECIFIC NUMBER VERSUS ALL OF THE TOTALITY OF OUR SHORTFALL? UM, LET ME THINK OF HOW TO ANSWER THAT QUESTION. UH, I WOULD SAY THAT WE AS FINANCE PROFESSIONALS REPRESENTED FULLY AND TRANSPARENTLY AT ALL LEVELS. AS I'M SHOWING IT TO YOU, THERE HAS BEEN A LOT OF CONVERSATION THAT CAME FROM PRIOR LEADERSHIP WHO FELT, YOU KNOW, EVERYONE HAS A PERSPECTIVE. ABSOLUTELY. AND WE RESPECT THAT. BUT OUR PERSPECTIVE IS WHAT IS FULL AND TRANSPARENT AND, AND, AND PROPER AS FINANCE, AS SUBJECT MATTER EXPERTS. IT WAS MY UNDERSTANDING THAT FORMER LEADERSHIP PUT YOU IN A A AND ASKED YOU TO DO SOMETHING THAT WAS AGAINST YOUR OWN PERSONAL CODE OF ETHICS AND EVEN A CODE THAT YOU'RE REQUIRED TO TAKE. AND SO WE WANNA ENSURE MOVING FORWARD THAT, UM, ONE THAT THAT'S RECOGNIZED AND TWO, THAT THAT'S NOT AN ACCEPTABLE PRACTICE. AND WE WANT TO BE VERY TRANSPARENT, AND I APPRECIATE YOU SO MUCH FOR STANDING ON YOUR GROUNDS FOR THAT. THANK YOU SO MUCH. UM, I I WOULD SAY THAT, UM, AS FINANCIAL PROFESSIONALS, WE WANT TO SHOW EVERY LEVEL OF DETAIL THAT WE POSSIBLY CAN FOR COUNSEL, UM, FOR OUR STAFF, FOR OUR RESIDENTS. WE BELIEVE THAT YOU ALL DESERVE TO SEE EVERY DETAIL. UM, AND WE ETHICALLY AND MORALLY ALSO BELIEVE THAT. SO THANK YOU SO MUCH. JUST TO, FOR MY CLARIFY MY THINKING, SO REVENUE IN EXCESSIVE REQUIREMENTS, THAT'S OUR BALANCE BETWEEN EXPENSES AND REVENUE. SO FOR THE ESTIMATE AT THE END OF THIS YEAR, RIGHT? YES. IT'S 4.67 REVENUES AND EXCESSIVE EXPENDITURES IS NEGATIVE 4.7. OKAY. AND THEN IF YOU ADD, ONCE YOU ADD IN OUR FUND BALANCE, OUR RESERVE FUND BALANCE, OUR RESERVE FUND BALANCE, WHICH WE HOPE TO HAVE BY THAT 25% BY CHARTER, WE'RE REQUIRED. THAT'S WHAT GETS DOWN TO THAT, THAT OUR ACTUAL REVENUE IN EXCESSIVE REQUIREMENTS IS THE 4.6. YES. 4.7 MILLION UNDERREPRESENTS. THE FACT THAT EXPENDITURES ARE ESTIMATED TO BE HIGHER THAN REVENUE BY THAT AMOUNT, RIGHT. OF WHICH WE MAY NOT PRESENT ANY BUDGET THAT IS NOT BALANCED TO PEREZ'S POINT EARLY IN THE PRESENTATION. RIGHT. THAT IS THAT CURRENT ESTIMATE SHORTFALL 4.6? THAT'S CORRECT. OKAY. THANK YOU FOR THE QUESTION. CAN YOU HELP ME TO UNDERSTAND THE, THE VERY TOP LINE BEGINNING FUND BALANCE? OF COURSE. I MEAN, THAT'S A, THAT'S A PRETTY BIG DIFFERENCE. AND WHEN WE APPROVED OUR BUDGET, WE WERE EXPECTING OUR FUND BALANCE TO BE THAT 19.2. IS THAT CORRECT? THAT'S CORRECT. WHERE WHERE IS THE DIFFERENCE? WHY, WHY IS THERE SUCH A, THAT'S A DRAMATIC DIFFERENCE. CAN YOU HELP ME UNDERSTAND THAT? ABSOLUTELY. IN FACT, UM, I APPRECIATE THE QUESTION. WE'D LOVE TO HAVE THIS ON RECORD. IT'S BEEN, UM, IT'S BEEN A TOPIC THAT'S ALSO COME UP. I I'M GOING TO BEGIN THE ANSWER AND I'M, THEN I'M GOING TO TURN IT OVER TO, UH, INTERIM DEPUTY FINANCE DIRECTOR FOR THE DETAILS OF THIS, BECAUSE WE WANT IT TO BE UNCLEAR RECORD FOR EVERYONE. UM, THE, THE APPROVED BUDGET IS APPROVED AT THE END OF SEPTEMBER, PRIOR TO THE BEGINNING OF THE FISCAL YEAR. THE AFER BEGAN. IT IS PERFORMED AFTER THAT. IT'S THE CLOSING OF FY 24 25. RIGHT. AND SO BASED ON THE AFER AND AS THOSE NUMBERS COME IN, IN THE CASE OF THE GENERAL FUND, CAN YOU SPELL OUT ACCURATE PLEASE? I'M SORRY. IT'S THE ANNUAL COMPREHENSIVE FINANCIAL REPORT. AND IT USED TO BE CALLED, UH, THE CER FOR ALL THOSE, UH, OLDER FINANCIAL PEOPLE. BUT, UM, THERE IS AN ADJUST, NO OFFENSE. ME TOO. I CALLED IT THE CER, BUT THERE IS AN ADJUSTMENT THAT HAPPENED AS A RESULT OF THE AUDIT. AND, UH, AND LET ME, LET ME ALSO HAVE OUR DEPUTY FINANCE DIRECTOR SPEAK ON THE DETAILS OF THAT SO THAT WE'RE VERY CLEAR ON RECORD WHY THERE'S A DISCREPANCY. THANK YOU. PLEASE. YEAH. AND WE DO GO BACK AND WE DO RECONCILE THOSE NUMBERS BACK TO WHAT WE ACTUALLY RECEIVED TO THE BUDGET. AND THAT NUMBERS THAT WE HAD WAS OUR ESTIMATE AT THE TIME LAST YEAR. AND THEN AS WE GO THROUGH AND AS REVENUES AS WE SHOWED YOU PREVIOUSLY THAT WERE REVENUES WERE SHORT. SO THAT MAKES UP THAT DIFFERENCE. THE MAJORITY OF THAT DIFFERENCE WAS OUR REVENUES DIDN'T HIT EXPECTATIONS FOR THAT FOR LAST FISCAL YEAR. SO THAT BROUGHT DOWN OUR REVENUE, OUR, OUR FUND BALANCE FROM 19.2, WHICH WAS OUR ESTIMATE TO THE 14.9 THAT YOU SEE TODAY. THAT WAS FOR THE LAST [02:55:01] FISCAL YEAR. YES, MA'AM. YES. AND WE TALKED ABOUT IT IN DETAIL AT THE AUDIT REPORT PRESENTATION IN MARCH. I JUST TOAND THE NUMBERS PRIMARILY. WHY DON'T YOU GO OVER THE SPECIFIC LINE ITEMS THAT WERE, THAT WERE OFF FROM THE BUDGET AND WHY I HAVE TO PULL IT UP. YEAH, I CAN GET IT. BUT THAT WAS MARCH. IT WAS YES, MA'AM. TWO MONTHS AGO. YES. SO, YOU KNOW, THERE'S ONE MISUNDERSTANDING I THINK I'M GETTING FROM LISTENING TO COUNCIL MEMBERS AND STAFF. IT'S THE SAME MESSAGE THAT KEEPS COMING BACK OVER AND OVER AGAIN THAT MAYBE WE NEED TO PUT IT TO BED RIGHT NOW AT THIS TIME ON RECORD. THIS DID NOT HAPPEN THIS MONTH, LAST MONTH, LAST QUARTER. THIS WAS, THIS SITUATION HAS BEEN IN THE MAKING MULTIPLE FISCAL YEARS. SO ANYONE TO SAY THAT IS BECAUSE OF THE ECONOMIC CONDITIONS, SURE, IT IS PART OF IT, IT INTENSIFIED IT. BUT THIS SITUATION HAS BEEN IN THE MAKING. WE JUST SHOWED YOU 80 SOME, SOME SLIDES, RIGHT? OH, BY THE TIME WE GET DONE, IT'LL BE 80 SOME SLIDES WHAT THOSE DRIVERS ARE AND WHEN THEY STARTED. SO THIS IS A NET RESULT OF THOSE DECISIONS OVER THE YEARS. YOU CAN'T GET AROUND IT. WE HAVE TO OWN IT. BE NICE, AND WHEN WE OWN IT, WE NEED TO MOVE FORWARD. WE HAVE TO TAKE THIS ORGANIZATION IN A DIFFERENT DIRECTION OVER THE NEXT 12 TO 24 MONTHS, OR WE ARE GONNA HAVE BIGGER PROBLEMS. YES. WE'RE GONNA HAVE, WE'RE GONNA LOSE OUR CREATIVE RATINGS. THAT'S THE FIRST THING THAT'S GONNA GO OUT THE DOOR. I GET IT. WE UNDERSTAND BECAUSE FOR SO LONG, I HAVE BEEN ALWAYS STRESSING ABOUT HAVING ACCURATE INFORMATION PUT IN FRONT OF ME TO MAKE MY DECISIONS. AND THAT'S WHAT'S INFURIATING SO MUCH HEARING ALL THIS OF ALL THE STRUGGLES THAT I'VE BEEN TRYING TO GET DONE ON MY, ON, IN, IN MY AREA, AND HEARING FROM THE RESIDENTS OF THE SPENDING. AND, AND LIKE I SAY, I, I OWN IT. I OWN SOME OF IT. THE DOWNTOWN PROPERTIES, THE PROPERTIES AT LAKE KENSINGTON, THE, THE INFORMATION WE'LL BE GIVING ABOUT THE, UH, THE SENIOR BUILDING ON DACY. I HAVE ALWAYS TRUSTED THAT THE CITY MANAGER, FINANCE, WHOEVER IT IS, WAS GIVING ME THE ACCURATE AND MOST HONEST INFORMATION UP FRONT. AND NOW SEEING ALL THIS, IT, IT, IT, ONE THING THAT, THAT NEEDS TO BE SAID AND CLARIFIED FOR ALL OF YOU AS CITY COUNCIL MEMBERS, THE CITY MANAGER IS THE ULTIMATE AUTHORITY WITHIN THE CITY ADMINISTRATION, RIGHT? YEAH. EVERY ONE OF US BELOW THAT LEVEL REPORTS TO THAT. HE OR SHE IN THAT POSITION. NONE OF US, INCLUDING MYSELF AS THE CITY'S DIRECTOR OF FINANCE, CONTROLS THAT NARRATIVE. I AM ONE OF 15 OTHER ADVISORS THAT THE CITY MANAGER HAS ONCE THAT DOOR OPENS. AND IT'S NOT ILLEGAL. I AM GOING TO SUPPORT HIM OR HER AS A CITY EMPLOYEE. I DO NOT CONTROL WHAT HE OR SHE AS CITY MANAGER DECIDES TO SHARE WITH YOU OR NOT SHARE WITH YOU. I HAVE NO CONTROL OVER THAT. WE HAVE GIVEN THE CITY MANAGER, NOT JUST THIS FORMER CITY MANAGER, ALL CITY MANAGERS PRIOR TO HIM, EVER SINCE I'VE BEEN HERE, YES. FULL COMPLETE INFORMATION. NOW, HE OR SHE, WHATEVER THEY WANT, DECIDE AFTER THAT, THAT'S THEIR PR I GET IT. YEAH. I, I GET, I WORKED WITHIN THAT CHAIN OF COMMAND. AND I, AND I UNDERSTAND THAT, AND I, I'M JUST TALKING FOR MYSELF SIR, SIR, BEING HERE ON THIS DAIS FOR SIX YEARS, THAT I HAVE ALWAYS TRUSTED CITY STAFF AND I'VE TRUSTED OTHER, WHETHER IT'S THE MAYOR OR OTHER PEOPLE COMING TO ME AND SAYING, THIS IS THE INFORMATION. YOU'VE GOT TO MAKE YOUR BEST DECISION ON THIS. AND, AND JUST CAN I, I DO WANNA SAY THAT THIS IS NOT END ALL RIGHT. I KNOW I UNDERSTAND THE ROAD. I UNDERSTAND. BUT THIS IS THAT WE'RE GOING TO MOVE FORWARD. THE ROAD BOND IS GONNA MOVE FORWARD. HOW WE MOVE FORWARD [03:00:01] IS GONNA DEPEND ON OUR PRIORITIES AS A COUNCIL AND AS OUR RESIDENTS. THIS IS NOT THE END ALL. WE ARE GOING TO BE FINE. I HAVE NO DOUBT THAT OUR LEADERSHIP IS GOING TO TAKE US INTO A PRODUCTIVE, SUCCESSFUL DIRECTION. AND THAT MEANS ALL OUR STAFF, I HAVE FULL CONFIDENCE IN THEM AT THIS POINT. AND SO I UNDERSTAND THE FRUSTRATIONS. I WANT TO SAY MY GOAL IS TO GIVE THOSE ROADS TO YOUR DISTRICT. HOW WE DO THAT IS GONNA BE DEPENDENT ON THE COUNCIL. BUT I'M IN FULL SUPPORT OF THIS ROAD BOND AND MOVING FORWARD. SO I THINK WITHOUT A DOUBT, WE'RE GONNA BE OKAY. THE FIRST STEP OR HURDLE IS TO BRING THIS TO OUR ATTENTION SO THEN WE CAN ADDRESS IT MOVING FORWARD. AND FOR FULL DISCLOSURE, I FEEL LIKE SOME OF THIS STUFF HAS ALREADY BEEN ADDRESSED. WE SAW THE $4 MILLION DEFICIT IN MARCH. HOW, WHY WE DIDN'T MOVE ON, IT IS QUESTIONABLE, RIGHT? LIKE WE, WE AS COUNCIL COULD HAVE PUT THAT ON AN AGENDA AND SAID, LET'S DISCUSS THIS CITY MANAGER COULD HAVE BROUGHT THAT TO OUR ATTENTION AND SAID, LET'S DISCUSS THIS. THERE'S GONNA BE ACCOUNTABILITY, NO DOUBT, BUT MOVING FORWARD, WE'RE GONNA MAKE BETTER DECISIONS AS A COUNSEL. I DO NOT QUESTION THAT. SO, AND SO COUNSEL, BEFORE WE MOVE FORWARD, I WOULD LIKE TO MAKE SURE THAT WE ANSWER COUNCIL MEMBER MCKINNEY'S QUESTION AND EXPLAIN THE VARIANCE BETWEEN THE BEGINNING BALANCE OF 19 MILLION THAT WAS IN THE ADOPTED BUDGET AND HOW IT TURNED OUT TO BE 14.9 MILLION IN THE ACTUAL AUDITED FINANCIAL STATEMENTS. AND THE BIGGEST VARIANCE IS GONNA BE FOR THE DEVELOPMENT REVENUE. WE BUDGETED $9.4 MILLION MM-HMM . AND OUR, WHAT WE ACTUALLY RECEIVED WAS $4.6 MILLION, WHICH WAS A DECREASE OF ABOUT $4.9 MILLION. SO THERE WAS SOME OTHER VARIANCES IN THERE, BUT THAT WAS THE MAIN DRIVER OF WHAT REDUCED THAT FROM THE 19.2 TO THE 14.9, IF I REMEMBER CORRECTLY. SORRY, GO AHEAD. IF I'M REMEMBER CORRECTLY, THAT WAS THE, THE BIGGEST SHORTFALL FROM THE PREVIOUS YEAR AS WELL, WAS THAT CATEGORY? YES. YES, SIR. MAY I ASK WHAT FINANCE'S ADVICE WAS DURING THOSE MEETINGS? SO FINANCE HISTORICALLY DID ALL THE REVENUE PROJECTIONS, EVERY SINGLE ONE OF 'EM FROM PROPERTY TAX ALL THE WAY DOWN TO THE INTEREST INCOME, MISCELLANEOUS INCOME. LAST THREE FISCAL YEARS, THE PLANNING DEPARTMENT WAS GIVEN THE CHARGE OF FORECASTING THEIR DEVELOPMENT REVENUES. OKAY. SO THIS IS THE ONLY GENERAL FUND IS THE ONLY ONE RUNNING A DEFICIT RIGHT? AT THIS MOMENT. YEAH. OKAY. AND IT'S, IT LOOKS TO ME THAT IT'S, THAT DEFICIT IS ABOUT 14%, NO MILLION, 14 MILLION, 14% AS WELL. UM, OR LESS THAN 14%. SO TOTAL ESTIMATED FUNDS AVAILABLE ARE 89 MILLION, UH, DEFICIT OF, WE'LL SAY 14 MILLION, INCLUDING THE REPAYING THE, UM, ARE FUND BALANCE. UM, SO IT'S, IT'S A, IT'S A SIGNIFICANT PERCENTAGE OF THAT ESTIMATED FUNDS AVAILABLE. RIGHT. BUT IT'S A PERCENTAGE OF THAT. IS THAT A STATEMENT OR A QUESTION? I'M NOT REALLY SURE WHERE WE'RE GOING WITH THAT. I MEAN, I JUST FIGURED IT OUT, BUT YES. I MEAN, I JUST SIT ON MY CALCULATOR. UM, THE 14, HOWEVER WE PARSED THIS MILLION DOLLAR GAP, UH, COUNCIL MEMBER, HOWEVER WE PARSE THIS, THE BOTTOM LINE IS THIS IS A SNAPSHOT OF A CURRENT YEAR ESTIMATE. RIGHT. WE HAVE TO SOLVE FOR EACH ONE OF THOSE OVALS, RIGHT. THAT SHE JUST WENT THROUGH. RIGHT. AND THE BOTTOM LINE IS WE HAVE TO SOLVE FOR $14 MILLION. SO WE HAVE ABOUT 13% OF OUR BUDGET IN THIS FUND THAT WE NEED TO ADDRESS. THAT IS NOT BALANCING THE PERCENTAGE. THAT IS NOT BALANCING, I'M NOT FOLLOWING THAT. I THINK SHE JUST WANTS YOU TO CONFIRM WHAT PERCENTAGE OF THE $14 MILLION IS IN OUR OVERALL TOTAL ESTIMATED FUNDS AVAILABLE. 89 MILLION. WE NEED MORE THAN THAT APPARENTLY. AND THAT IS LIKE 13%, 14 MILLION OF ABOUT 90 MILLION IS 89 MILLION OVER 15. YEAH. BALLPARK OF 15%. SOME PEOPLE WANT DOLLARS. OTHER PEOPLE WANT PERCENTAGE. YEAH. SO [03:05:02] I MEAN, I'M JUST SAYING THAT'S NOT 50% OF OUR BUDGET THAT WE'RE SOLVING FOR. IT'S ABOUT, I DON'T THINK ANYBODY SAID IT WAS 50. I DIDN'T SAY THAT. I'M JUST SAYING IT IS, IT'S A PERCENTAGE OF THIS PARTICULAR GENERAL FUND BUDGET. IT IS NOT THE WHOLE BUDGET, WHICH IS SOME 600 AND SOME ODD MILLION. UM, IT IS 14 15% OF ONLY THE GENERAL FUND. 15, 16%. YEAH. EVERYTHING ELSE IS BALANCED. NO, IT'S NOT. WHAT IS NOT BALANCED WHEN YOU ARE $14 MILLION IN A NEGATIVE POSITION? HOW CAN I SAY THAT? YOU ARE BALANCED? NO. WELL, THE OTHER FUNDS SHOW A BALANCE. THIS IS THE ONE THAT IS SHOWING THAT IT, THAT WE NEED ADJUSTMENT AT THIS TIME. THIS YEAR. GENERAL FUND WILL BE THE ONE THAT'S IN THE HOLE. YES. AND NEXT YEAR, ALL FOUR FUNDS WILL BE IN THE HOLE. OKAY. WE, SO WE NEED TO DEFINITELY ADJUST THIS YEAR AND THEN WE NEED TO LOOK AT WHAT PERCENTAGE WE NEED TO ADJUST IN COMING YEARS AND WE'LL COME BACK WITH A PLAN. YEAH. OKAY. MOVING FORWARD, UNLESS WE HAVE ADDITIONAL QUESTIONS. ALL RIGHT. THANK YOU. OKAY. WELL, YEAH. OKAY. THIS SLIDE REFLECTS THE CURRENT YEAR ESTIMATE FOR THE WATER UTILITY FUND. THE WATER UTILITY FUND CONTINUES TO EXPERIENCE SUBSTANTIAL OPERATIONAL AND INFRASTRUCTURE PRESSURES ASSOCIATED WITH RAPID GROWTH AND LONG-TERM WATER SUPPLY OBLIGATIONS. AS WE MENTIONED FOR THE WATER UTILITY FUND, WE FOLLOWED THE SAME STRUCTURE. WE START WITH THE BEGINNING FUND BALANCE, WHICH REFLECTS THE FUND'S AVAILABLE RESOURCES AT THE START OF THE FISCAL YEAR FOR THE WATER UTILITY FUND. THE BEGINNING FUND BALANCE IS PROJECTED AT 18.20 MILLION, CONSISTENT WITH THE APPROVED BUDGET. WE THEN ADD PROJECTED WATER REVENUES, WHICH ARE PRIMARILY DRIVEN BY SERVICE CHARGES, CUSTOMER GROWTH, USAGE TRENDS, AND OTHER OPERATING REVENUES. TOTAL REVENUES ARE ESTIMATED AT $28.38 MILLION SLIGHTLY BELOW THE APPROVED BUDGET OF 28.63 MILLION. WATER SALES ARE PROJECTED LOWER THAN BUDGET, BUT OTHER REVENUES ARE PROJECTED HIGHER, WHICH PARTIALLY OFFSETS THE DECREASE. FROM THERE, WE SUBTRACT PROJECTED EXPENDITURES INCLUDING OPERATIONS, PERSONNEL, DEBT SERVICE, CONTRACTUAL OBLIGATIONS, AND WATER SUPPLY COSTS. TOTAL EXPENDITURES ARE ESTIMATED AT 28.03 MILLION BELOW THE APPROVED BUDGET OF 28.72 MILLION, TRANSFERS OUT AT 4.67. WE'VE HELD THAT AT BUDGET, INCLUDING TRANSFERS TO THE GENERAL FUND, DEBT SERVICE AND OTHER TRANSFERS THAT BRINGS TOTAL EXPENDITURES AND TRANSFERS OUT TO $32.70 MILLION. ONE OF THE BIGGEST DRIVERS IN THIS FUND IS THE COST OF LONG-TERM WATER SUPPLY. THESE COSTS ARE LARGELY NECESSARY AND TIED TO MAINTAINING CAPACITY FOR CURRENT AND FUTURE DEMAND. THE LARGEST FINANCIAL DRIVER CONTINUES TO BE WHOLESALE WATER SUPPLY COSTS, INCLUDING REGIONAL COMMITMENTS AND CONTRACTUAL OBLIGATIONS TIED TO LONG-TERM CAPACITY PLANNING. AT THE SAME TIME, THE CITY CONTINUES INVESTING HEAVILY IN INFRASTRUCTURE EXPANSION AND SYSTEM RELIABILITY TO SUPPORT BOTH CURRENT RESIDENTS AND FUTURE GROWTH. WHILE REVENUES CONTINUE TO GROW. EXPENDITURE GROWTH AND DEBT RELATED OBLIGATIONS ARE OUTPACING HISTORICAL OPERATING PATTERNS. THE CURRENT YEAR ESTIMATE THEREFORE SERVES AS AN IMPORTANT BASELINE FOR EVALUATING LONG-TERM AFFORDABILITY AND SUSTAINABILITY AFTER ACCOUNTING FOR PROJECTED REVENUES AND EXPENSES. WE ARRIVE AT THE ESTIMATED FUND BALANCE WHEN WE COMPARE TOTAL REVENUES OF 28.38 MILLION TO TOTAL EXPENDITURES AND TRANSFERS OUT OF 32.7 MILLION. THE WATER UTILITY FUND HAS A CURRENT YEAR OPERATING SHORTFALL OF APPROXIMATELY $4.32 MILLION. HOWEVER, UNLIKE THE GENERAL FUND, THE WATER UTILITY FUND HAS SUFFICIENT RESERVE CAPACITY. ESTIMATED ENDING FUND BALANCE IS 13.87 MILLION COMPARED TO THE MINIMUM REQUIRED RESERVE OF 8.17 MILLION. THAT LEAVES APPROXIMATELY 5.7 MILLION ABOVE THE MINIMUM RESERVE REQUIRED. THE GAP REQUIRED TO BALANCE SHOWS WHAT WOULD NEED TO BE ADDRESSED TO KEEP THE FUND FINANCIALLY STABLE WHILE CONTINUING TO MEET SERVICE INFRASTRUCTURE AND DEBT OBLIGATIONS. BECAUSE THE FUND BALANCE REMAINS ABOVE POLICY, THERE IS NO CURRENT YEAR BALANCE GAP SHOWN FOR THE WATER UTILITY FUND FOR THIS CURRENT YEAR. QUESTIONS ABOUT THAT? I DO HAVE A QUESTION. DID WE, IN 20 25, 20 26, WE BUDGETED AT A DEFICIT OF $4.7 MILLION. UH, THE CURRENT YEAR ESTIMATE IS SHOWING THAT THE REVENUES WILL BE UNDER THE EXPENDITURES. SO THE, SORRY, REVENUE AND EXCESSIVE REQUIREMENTS. OH, IN THE APPROVED BUDGET, YES. WHEN THEY APPROVED THE BUDGET [03:10:01] APPROVED BY THE COUNCIL PRIOR TO WAS A NEGATIVE $4.7 MILLION. AM I READING THAT WRONG? THAT'S CORRECT. THE, WE CAN LOOK UP THE BUDGET REAL QUICK. A LOT OF THIS HAS TO DO WITH THE PURCHASE ORDERS COMMITMENT, LEGAL COMMITMENT, CONTRACTUAL COMMITMENTS THAT GOT ROLLED OVER FROM LAST YEAR TO THIS YEAR. SO MY QUICK, OH, BECAUSE THIS IS, THIS IS WHERE WE GET TO MUDDY WATERS, RIGHT? THIS IS WHERE WE'RE LIKE, OKAY, WE DO HAVE A RESERVE FUND, BUT, AND THAT'S OKAY IF WE COME, IF WE BUDGET UNDER IMBALANCE, YOU KNOW, NOT, INSTEAD OF ZERO NOW WE'RE GONNA BE, UH, NEGATIVE $4 MILLION AND IT'S OKAY BECAUSE WE HAVE RESERVES. THAT TO ME IS SCARY BECAUSE WE'RE USING OUR RESERVES. AND IF WE WENT ON THIS TRAJECTORY, MY QUESTION WOULD BE LIKE, WHAT WOULD IT LOOK LIKE IN TWO OR THREE YEARS IF WE CONTINUED TO USE OUR RESERVES? MY MEMORY HEAD A BREAK EVEN ON THIS FUND, I, WELL BREAK EVEN. IT WOULD NOT BE A NEGATIVE 4.76. WE'RE GONNA OKAY, BUT YOUR, OKAY. WE'LL SHOW YOU A FEW SLIDES. OKAY. I'M GONNA SHOW YOU THE FIVE YEAR FINANCIAL FORECAST, UM, BASED ON THESE CURRENT YEAR ESTIMATES FOR ALL FOUR MAJOR FUNDS. YES. OKAY. THANK YOU. BUT THE KEY TAKEAWAY IS THAT THE WATER UTILITY FUND IS NOT JUST AN OPERATING FUND. IT'S ALSO HEAVILY TIED TO LONG-TERM INFRASTRUCTURE, CAPACITY PLANNING AND FUTURE RATE DISCUSSIONS. THIS IS PARTICULARLY IMPORTANT BECAUSE WATER UTILITY OPERATIONS ARE HIGHLY INTERCONNECTED WITH FUTURE CAPITAL PLANNING, DEBT ISSUANCE, AND FUTURE RATE STABILIZATION DISCUSSIONS. OH, OKAY. SO ZERO GAP THERE. ALRIGHT. ALRIGHT. THIS SLIDE WALKS THROUGH THE WASTEWATER UTILITY FUND. WE BEGIN WITH THE BEGINNING FUND BALANCE, WHICH GIVES US THE STARTING FINANCIAL POSITION FOR THE YEAR. THE WASTEWATER BEGINNING FUND BALANCE IS PROJECTED AT $18.89 MILLION. WE THEN ADD PROJECTED WASTEWATER REVENUES, PRIMARILY FROM WASTEWATER SERVICE CHARGES AND RELATED OPERATING REVENUES. TOTAL REVENUES ARE ESTIMATED AT $15.7 MILLION, SLIGHTLY BELOW THE APPROVED BUDGET OF 15.84 MILLION. WASTEWATER SERVICE CHARGES ARE LOWER THAN BUDGET, BUT OTHER REVENUE IS HIGHER, WHICH HELPS OFFSET THAT VARIANCE. NEXT, WE SUBTRACT PROJECTED EXPENDITURES INCLUDING DAILY OPERATIONS, PERSONNEL SYSTEM MAINTENANCE, TREATMENT RELATED COST, AND DEBT OBLIGATIONS. THE WASTEWATER UTILITY FUND REFLECTS MANY OF THE SAME GROWTH PRESSURES WE'RE SEEING ON THE WATER SIDE, PARTICULARLY AS THE CITY PREPARES FOR FUTURE TREATMENT CAPACITY EXPANSION AND INFRASTRUCTURE DEMANDS. CURRENT YEAR ESTIMATES REFLECT INCREASING OPERATIONAL COSTS, DEBT OBLIGATIONS, INFLATIONARY PRESSURES, AND ONGOING MAINTENANCE AND REGULATORY NEEDS FOR EXPENDITURES. OPERATIONS AND MAINTENANCE ARE ESTIMATED AT 9.44 MILLION SIGNIFICANTLY BELOW THE APPROVED BUDGET. 11.26 MILLION, THAT'S FAVORABLE. TRANSFERS OUT REMAIN AT APPROXIMATELY 2.64 MILLION, WHICH IS AT BUDGET. TOTAL EXPENDITURES AND TRANSFERS OUT ARE PROJECTED AT 12.08 MILLION. SO THE WASTEWATER UTILITY FUND IS PROJECTED TO END FISCAL YEAR 20 25 26 WITH REVENUES EXCEEDING REQUIREMENTS BY APPROXIMATELY $3.64 MILLION. ONCE REVENUES AND EXPENDITURES ARE APPLIED, WE ARRIVE AT THE ENDING FUND BALANCE OF APPROXIMATELY $22.53 MILLION. THE MINIMUM RESERVE REQUIREMENT IS APPROXIMATELY 3.02 MILLION. SO WASTEWATER IS PROJECTED TO REMAIN WELL ABOVE POLICY WITH ABOUT $19.51 MILLION IN EXCESS RESERVE CAPACITY. THIS IS WHY NO CURRENT YEAR GAP BALANCING GAP IS SHOWN FOR WASTEWATER. THERE'S ZERO. THE KEY TAKEAWAY IS THAT WASTEWATER FINANCIAL PLANNING MUST BALANCE OPERATING NEEDS, REGULATORY REQUIREMENTS, CAPITAL EXPANSION, DEBT AFFORDABILITY, AND FUTURE RATE IMPACTS. AS WE MOVE INTO THE FORECAST DISCUSSION LATER IN THE PRESENTATION, WASTEWATER WILL REMAIN ONE OF THE KEY AREAS REQUIRING CLOSE MONITORING DUE TO THE LONG-TERM FINANCIAL IMPACT ASSOCIATED WITH TREATMENT EXPANSION PROJECTS AND RELATED DEBT SERVICE. QUESTIONS ON WASTEWATER? NO. OKAY. FOR THE STORM DRAINAGE UTILITY FUND, THE STRUCTURE IS THE SAME AS THE OTHER THREE FUNDS. WE START WITH THE BEGINNING FUND BALANCE, WHICH REFLECTS THE RESOURCES AVAILABLE AGAIN AT THE BEGINNING OF THE FISCAL YEAR OF 26. STORM DRAINAGE BEGINNING FUND BALANCE IS $1.71 MILLION. WE THEN ADD PROJECTED STORM DRAINAGE REVENUES, WHICH ARE PRIMARILY GENERATED THROUGH STORM DRAINAGE. UTILITY FEES, TOTAL REVENUES ARE PROJECTED AT 1.87 MILLION COMPARED TO AN APPROVED BUDGET OF 2.14 MILLION. THE MAIN DECREASE IS IN DRAINAGE FEES. NEXT, WE SUBTRACT PROJECTED EXPENDITURES INCLUDING OPERATIONS, MAINTENANCE, INFRASTRUCTURE SUPPORT, AND DRAINAGE RELATED SERVICE COSTS. ALTHOUGH THIS FUND IS [03:15:01] SMALLER THAN THE GENERAL FUND WATER FUNDED WASTEWATER FUND, IT IS STILL VERY IMPORTANT BECAUSE IT SUPPORTS DRAINAGE INFRASTRUCTURE, FLOOD MITIGATION, AND LONG-TERM SYSTEM RESILIENCY. THE STORM DRAINAGE UTILITY FUND IS SMALLER IN SCALE COMPARED TO THE OTHER MAJOR OPERATING FUNDS, BUT IT REMAINS CRITICALLY IMPORTANT FROM AN INFRASTRUCTURE AND RESILIENCY STANDPOINT. CURRENT, YOUR ESTIMATES REFLECT ONGOING MAINTENANCE, DRAINAGE, INFRASTRUCTURE NEEDS, AND THE OPERATIONAL SUPPORT ASSOCIATED WITH MANAGING STORMWATER SYSTEMS CITYWIDE. AS DEVELOPMENT CONTINUES IN INFRASTRUCTURE AGES, MAINTAINING ADEQUATE FUNDING WITHIN THIS FUND WILL REMAIN IMPORTANT TO REDUCING LONG-TERM OPERATIONAL AND INFRASTRUCTURE RISKS. TOTAL EXPENDITURES ARE ESTIMATED AT $2.45 MILLION AND TRANSFERS AT ARE APPROXIMATELY $240,000 AT BUDGET. WHEN WE COMPARE REVENUES OF $1.87 MILLION AGAINST EXPENDITURES AND TRANSFERS OF $2.69 MILLION, THE FUND HAS AN OPERATING SHORTFALL OF APPROXIMATELY $819,506. AFTER ACCOUNTING FOR REVENUES AND EXPENDITURES, WE ARRIVE AT AN ESTIMATED FUND BALANCE PROJECTED AT 895,000 0 2 0. THE MINIMUM RESERVE REQUIRED IS $672,435. SO THE FUND REMAINS MINIMUM ABOVE THE MINIMUM RESERVE REQUIRED BY APPROXIMATELY $222,000, $223,000. HOWEVER, THAT EXCESS RESERVE IS NOT ENOUGH TO FULLY OBSERVE THE OPERATING SHORTFALL. SO THE GAP REQUIRING BALANCING IS THE OPERATING SHORTFALL OF 819 505 0 6 LESS THE FUND BALANCE AVAILABLE ABOVE POLICY, WHICH IS 222,586, WHICH LEAVES A REMAINING GAP OF APPROXIMATELY $596,921. THE GAP REQUIRED TO BALANCE SHOWS WHETHER CURRENT REVENUES ARE SUFFICIENT TO SUPPORT THE PROJECTED SERVICE LEVEL AND INFRASTRUCTURE NEEDS. THE KEY TAKEAWAY FOR STORM DRAINAGE REMAINS COMPARATIVELY SMALLER, BUT FU FUTURE INFRASTRUCTURE AND MAINTENANCE DEMANDS WILL CONTINUE TO REQUIRE DISCIPLINED PLANNING. SO ACROSS ALL FOUR MAJOR OPERATING FUNDS, THE PATTERN WE ARE REVIEWING IS THE SAME. WHERE WE STARTED, WHAT WE EXPECT TO BRING IN, WHAT WE EXPECT TO SPEND, WHERE THAT LEAVES THE FUND BALANCE AND WHAT GAP MUST BE ADDRESSED TO BALANCE EACH FUND. THESE CURRENT YEAR ESTIMATES ARE THE FOUNDATION OF THE FIVE-YEAR FINANCIAL FORECAST. IF THE STARTING POINT IS CONSTRAINED, THE LONG-TERM FORECAST BECOMES CONSTRAINED AS WELL. QUESTIONS ON STORMWATER? NO. ALRIGHT. ALRIGHT. NOW LET'S TALK ABOUT THE PURPOSE OF THE FIVE-YEAR FINANCIAL FORECAST. THIS FORECAST IS THE FIRST MAJOR STEP IN BUDGET DEVELOPMENT. AS PERVE MENTIONED, IT HELPS US UNDERSTAND THE FISCAL CONDITION OF THE CITY BEFORE WE MAKE BUDGET DECISIONS. IT IS NOT THE PROPOSED BUDGET, BUT RATHER A PLANNING TOOL. THE PURPOSE IS TO ANSWER SEVERAL QUESTIONS. WHAT DOES THE CURRENT YEAR LOOK LIKE? WHAT ARE THE MAJOR REVENUE AND EXPENDITURE ASSUMPTIONS? WHAT HAPPENS IF THOSE ASSUMPTIONS CONTINUE OVER THE NEXT FIVE YEARS? AND WHAT LEVEL OF ACTION IS NEEDED TO CREATE A STRUCTURALLY BALANCED BUDGET? NORMALLY WE BEGIN THIS WORK IN THE SPRING AFTER SIX MONTHS OF ACTUAL DATA AND PRELIMINARY VALUATIONS. WHAT WE ARE SEEING IS AN ECONOMIC SLOWDOWN LEADING TO BUDGETARY PRESSURES ACROSS ALL FOUR MAJOR FUNDS. SOME IMPACTED THIS YEAR, THIS FISCAL YEAR, AND SOME IN FUTURE YEARS. BECAUSE WE STARTED IN JANUARY. YES. AND I'M GONNA, I'M GONNA ACTUALLY SAY THAT RIGHT NOW. YOU JUST READ MY MIND. THE FORECAST IS BUILT ON THE CURRENT YEAR ESTIMATE AS OF MARCH 31ST, 2026. THAT MEANS WE'RE NOT FORECASTING FROM THE ADOPTED BUDGET ALONE. WE'RE FORECASTING FROM WHERE WE ESTIMATE THE FISCAL YEAR. 20 25, 26 WILL ACTUALLY END. AS I SAID, THIS IS WHY THE CURRENT YEAR ESTIMATE SLIDES ARE SO IMPORTANT. IF THE CITY ENDS THE YEAR BELOW REVENUE EXPECTATIONS BELOW FUND BALANCE EXPECTATIONS, OR WITH HIGHER COST PRESSURES, THOSE CONDITIONS WILL CARRY FORWARD INTO THE FORECAST. THE FORECAST ALSO USES THE BEST ASSUMPTIONS OF CURRENTLY AVAILABLE. THESE ASSUMPTIONS WILL BE REFINED AS DEPARTMENTS COMPLETE BUDGET DEVELOPMENT AS CERTIFIED ASSESSED. VALUATIONS BECOME AVAILABLE IN JULY, AND AS THE CITY MANAGERS PROPOSED BUDGET IS FINALIZED, UH, I ALSO WANNA MENTION WE BEGAN THIS PROCESS A BIT EARLIER GIVEN SORT OF THE INFORMATION THAT WE HAD ON HAND. SO WE BEGAN IT IN JANUARY, FEBRUARY, EVEN, EVEN A BIT EARLIER, UM, THIS YEAR. [03:20:02] OKAY, SO NOW WE'RE GONNA TALK ABOUT KEY ASSUMPTIONS FOR THE GENERAL FUND. THE, THE FORECAST ASSUMES A 1% DECLINE IN PROPERTY VALUATION FOR FY 27 THAN GRADUAL IMPROVEMENT OVER THE FORECAST PERIOD THIS MORNING. EARLIER THIS MORNING, WE'VE HEARD DETAILS ABOUT PROPERTY VALUATION AND THE SLIGHT DECLINE THERE. THIS ASSUMPTION FOR YEAR ONE TAKES THAT INTO ACCOUNT. THIS IS IMPORTANT BECAUSE PROPERTY TAX IS ONE OF THE GENERAL FUND'S LARGEST RECURRING REVENUES. SALES TAXES ASSUMED TO GROW MORE MODERATELY IN THEIR NEAR TERM, 4% IN FY 27 AND 28, THEN INCREASING 5%, 6%, AND 7% IN LATER YEARS. DEVELOPMENT REVENUES ARE HELD FLAT IN THE FIRST TWO YEARS OF THE FORECAST BECAUSE WE'RE NOT ASSUMING IN IMMEDIATE REBOUND. WE'VE TALKED ABOUT DEVELOPMENT REVENUES AND WHAT WE'VE SEEN AND WHAT WE'RE EXPERIENCING. WE DON'T ASSUME THEM TO REBOUND QUICKLY IN YEARS ONE OR TWO NECESSARILY. UM, SO THAT'S A CONSERVATIVE APPROACH BASED ON THE DEVELOPMENT REVENUE SHORTFALLS. THAT WILL ALSO BE SHOWN LATER IN THE PRESENTATION. OTHER REVENUES AND INTEREST INCOME ARE GROWN MODESTLY. AND FINALLY, THE FORECAST ALSO INCLUDES SCHEDULED TURS TWO LOAN REPAYMENTS STARTING AT $785,000 IN FY 27 AND INCREASING BY $50,000 PER YEAR THROUGH THE FIFTH YEAR THROUGH FY 2031. AND COUNSEL, UH, AS WE TRY TO SOLVE THE BUDGET DEFICIT, THIS IS ONE OF THOSE ITEMS THAT I MAY HAVE TO INCREASE, EXPEDITE A REPAYMENT OF THAT LOAN FROM CHARGE NUMBER TWO BACK TO THE GENERAL FUND. IF YOU RECALL, THE GENERAL FUND LOANED $16 MILLION FOR THE DESIGN AND CONSTRUCTION OF THOSE TWO PARKS IN WITHIN TS TWO. AND THE UNDERSTANDING THAT COUNCIL APPROVED WAS THAT TS TWO WILL REPAY BACK THAT LOAN. SO THIS IS ONE LINE THAT I WANT Y'ALL TO DRAW ATTENTION TO, THAT WHILE WE ARE ASSUMING $785,000 NEXT YEAR, I MAY HAVE TO INCREASE THAT SIGNIFICANTLY TO THE EXTENT TS TWO CAN AFFORD TO BALANCE THE GENERAL FUND GAP. SO THAT WOULD REQUIRE AN INCREASED REVENUE FROM TS TWO, RIGHT? TO BALANCE THAT? YES. IF THERE ARE FUNDS AVAILABLE UNDER THOSE SITUATION ONLY, WILL I CONSIDER THAT I WILL NOT PUT TS TWO IN DEFICIT. SORRY. OH, NO, THAT'S FINE. THANK YOU. OKAY. FOR WATER WASTEWATER AND STORM DRAINAGE REVENUES, THE FORECAST ASSUMES MODERATE SERVICE REVENUE GROWTH IN THE EARLY YEARS, BEGINNING AT 2%, THEN GRADUALLY INCREASING TO 5% BY YEAR FIVE. THIS DOES NOT MEAN RATES ARE INSIGNIFICANT. THE CITY'S UTILITY FUNDS ARE ALSO IMPACTED BY FUTURE RATE ASSUMPTIONS, CAPITAL COSTS, DEBT SERVICE, AND LONG-TERM INFRASTRUCTURE NEEDS. THE KEY POINT IS THAT UTILITY REVENUES GROW, BUT EXPENDITURES, ESPECIALLY DEBT SERVICE, WATER SUPPLY COSTS, AND CAPITAL RELATED COSTS GROW FASTER IN LATER YEARS. ON THE EXPENDITURE SIDE, THE FORECAST FOR THE GENERAL FUND ASSUMES CONTINUED COST GROWTH IN SEVERAL MAJOR CATEGORIES. THE SWORN PUBLIC SAFETY POSITIONS, THE FORECAST INCLUDES BASE WAGE INCREASES OF 5% IN FY 27 AND 28 PER THE MEET AND CONFER AGREEMENT THAT'S CURRENTLY IN PLACE, THEN 3% PER YEAR IN LATER YEARS. FOR ALL ELIGIBLE NON-SWORN EMPLOYEES, MERIT OR COLA IS ASSUMED AT 3.5% ANNUALLY. MEDICAL INSURANCE IS ONE OF THE LARGEST KNOWN COST PRESSURES. THE FORECAST ASSUMES 15.67% INCREASE OR 15.7 FOR FY 27 FOLLOWED BY 10% ANNUALLY. CONTRACTUAL COSTS ARE ASSUMED TO GROW BY 5% ANNUALLY AND COMMODITIES BY 10% ANNUALLY. THESE ASSUMPTIONS ARE IMPORTANT BECAUSE THEY SHOW THAT EVEN IF REVENUES GROW, THE EXPENDITURE BASE IS GROWING AT A RATE THAT OUTPACES AVAILABLE RECURRING REVENUE. ALL RIGHT. THIS SECTION IDENTIFIES THE ITEMS WE KNOW TODAY. I'M SORRY, GO BACK ONE SLIDE PLEASE. SO ON THE COMMODITIES LINE, YOU'LL SEE 10% INCREASE YEAR OVER A YEAR. UM, WE MAY HAVE TO INCREASE THAT ASSUMPTION FOR YEAR NUMBER ONE BECAUSE OF EVERYTHING THAT WE ARE FACING TODAY IN THE, AT THE NATIONAL LEVEL AS WELL AS STATE LEVEL. AND THEN CASCADING DOWN TO THE LOCAL LEVELS. WHEN WE BUY CHEMICALS, WHEN WE BUY FUEL FOR OUR TRUCKS AND VEHICLES, WHEN WE HAVE TO, UH, REPAIR EQUIPMENT, [03:25:01] ALL THOSE COSTS ARE GOING UP. SO WE HAVE TO, EVEN IF THE WAR STOPPED TOMORROW, WE'RE NOT GONNA SEE A DECLINE IN THOSE COST INCREASES FOR QUITE SOME TIME. SO WE HAVE TO PLAN FOR THAT AND ACCOUNT FOR THAT. SO THAT'S WHY YOU'RE SEEING COMMODITIES GROWING AT 10% PER YEAR. THE OTHER THING THAT I WANT TO DRAW YOUR ATTENTION TO IS THE SECOND TO THE LAST LINE, CASH FUNDING. FOR CIP, WE ARE ASSUMING ZERO CASH FUNDING FOR CIP, MEANING EVERY DOLLAR WE SPEND IN CIP WILL BE BORROWED IN ONE FORM OR ANOTHER. THIS IS NOT YOUR SUGGESTION. THIS IS WHAT WAS PROPOSED. IS THAT CORRECT? YES. OKAY. I JUST WANNA MAKE SURE THAT THAT CAN BE CHANGED AND IF WE WERE TO CONTINUE ON THAT TREND, THAT'S WHAT WE ARE ASSUMING OUR FORECAST ON. OKAY, THANK YOU. OKAY. THIS SECTION IDENTIFIES THE ITEMS WE KNOW TODAY THAT MATERIALLY AFFECT THE FORECAST. THESE ARE NOT SPECULATIVE ITEMS. THESE ARE KNOWN OR MEASURABLE CHANGES THAT WE EITHER HAVE DOCUMENTATION FOR OR CONTRACTUAL OBLIGATIONS FOR PRELIMINARY VALUATION DATA OR CURRENT COST ESTIMATES FOR SIR. SO THERE'S AT LEAST 11 ITEMS THAT WE WANNA MAKE SURE WE GO OVER WITH YOU THAT WE KNOW NOW WILL AFFECT NEXT YEAR'S BUDGET. SO THERE ARE NO SURPRISES WHEN WE BRING FORWARD A PROPOSED BUDGET THAT HAS THESE ITEMS BUILT INTO IT. NUMBER ONE, WE'LL GO OVER THE PRELIMINARY TAXABLE ASSESSED VALUATIONS THAT WE RECEIVE FROM HAYES CAT OR HAYES CENTRAL APPRAISAL DISTRICT FROM THEIR CHIEF APPRAISER THAT CERTIFIED PRELIMINARY ROLES FOR 26 27. WE WILL GO OVER THE CHIEF APPRAISERS NOTICE THAT THEY HAVE PLACED US ON NOTICE NOW TO MAKE US AWARE OF TWO POSSIBLE EVENTS THAT WILL AFFECT US ON OUR, IN OUR NEXT BUDGET. WE'LL GO OVER THAT WE HAVE ALREADY CO COVERED, BUT WE'LL GO OVER IT ONE MORE TIME. THE SHORTFALL IN THE AUDITED BEGINNING BALANCE FOR 24 25 THAT ROLLS INTO THIS YEAR, WHICH ROLLS INTO NEXT YEAR. WE WILL GO OVER THE DEVELOPMENT REVENUES, HOW THAT IS GONNA LOOK, WHAT WE KNOW ABOUT THAT ALREADY. WE'RE GONNA COVER THE HEALTH EMPLOYEE, UH, EMPLOYEE HEALTH INSURANCE COSTS FOR NEXT YEAR. THAT IS BUILT INTO OUR ASSUMPTIONS AND WHAT WE ARE DOING ALREADY TO MINIMIZE OR MITIGATE THAT RATE, INCREASE THE IMPACT OF MEET AND CONFER RELATED COST. WE HAVE A THREE YEAR MEET AND CONFER AGREEMENT. WE ARE IN YEAR NUMBER ONE. NEXT YEAR IS YEAR NUMBER TWO. WE'LL SHOW YOU THE IMPACT OF THAT. NUMBER SEVEN, THERE ARE KNOWN CONTRACTUAL SUPPORT COSTS THAT WE NOW ALREADY KNOW IS GONNA HAVE TO BE INCLUDED IN NEXT YEAR'S BUDGET. WE'LL GO OVER THOSE. THERE ARE TWO OF THOSE. ONE FOR POLICE DEPARTMENT AND ONE FOR OUR WATER. UTILITY DEBT SERVICE PAYMENTS WILL GO OVER THOSE, NOT ONLY WHAT WE ALREADY COVERED FOR THE EXISTING DEBT. WE WILL ALSO SHOW YOU OUR FIRST CUT OF WHAT MIGHT BE FOR FUTURE DEBT INCREASE THAT IMPACTS NEXT YEAR. WE'LL COVER THOSE. THOSE ARE PRELIMINARY, BUT WE'LL BRING IT TO YOUR ATTENTION. WE WANNA TALK ABOUT NUMBER NINE, PUBLIC TRANSPORTATION, HOW THAT COST HAS TO BE BUILT IN. IF WE'RE GONNA CONTINUE THAT PROGRAM AND AT WHAT LEVEL WE ARE GONNA CONTINUE THAT PROGRAM. ALL THAT IS GONNA COME BACK TO COUNCIL FOR OUR FINAL DECISION. BUT WE WANNA GIVE YOU A HEADS UP WHAT THAT TREND IS AND WHAT IT LOOKS LIKE FOR NEXT YEAR. CIP SPENDING PLAN. WHAT IT LOOKS NOW, THE UPDATE VERSION THAT STAFF HAS ALREADY STARTED TO WORK. AND I HAVE GIVEN MIKE TRIMBLE, UH, ANOTHER SET OF DIRECTIONS OF TRIMMING BACK, HOW TO TRIM BACK. WE'RE GONNA BRING BACK THAT ENTIRE PLAN ON JUNE 13TH, UH, FOR YOU TO REVIEW AND GIVE US YOUR FEEDBACK AND CONSIDERATION. AND THEN FINALLY, WE'RE GONNA SHOW YOU THE FORECASTED WATER AND WASTEWATER SERVICE RATES BASED ON THE 20 UH, FIVE UPDATE, 24 UPDATE, 25 UPDATE. WE ARE NOW STARTING 26 UPDATE, BUT BASED ON 25, WHAT THE RATE INCREASE FORECAST WAS. SO LET'S GO OVER THE PROPERTY TAX VALUATIONS [03:30:01] THAT WE HAVE RECEIVED AS PRELIMINARY CERTIFIED ESTIMATES FOR THE ENTIRE CITY. SO IN 2026, THE CERTIFIED TAX ROLL IS 7,153 MILLION. THIS IS FOR THE ENTIRE CITY. THIS INCLUDES ALL SIX S THAT WE HAVE IN 25. FOR THE SAME GEOGRAPHICAL AREA, IT WAS 7 BILLION, ONE 72 MILLION. THAT IS A NET DECLINE OF $19 MILLION OR 0.27% DECREASE FROM THE YEAR BEFORE. MIND YOU, THIS IS THE ENTIRE CITY THAT INCLUDES THE S. NOW I AM GOING TO SEPARATE THE TWO FOR YOU SO YOU CAN SEE WHAT'S HAPPENING WITHIN THE CORE CITY WITHOUT THE TURS AND WHAT'S HAPPENING INSIDE THE SEVEN TERRAS. SIX SIXT. SORRY. AND PLEASE, PLEASE DON'T ADD A SEVENTH ONE. SO IF YOU JUST LOOK AT THE CORE CITY WITHOUT THE TSIS LAST YEAR OR THIS NEW YEAR THE CHIEF APPRAISER IS CERTIFYING THE PRELIMINARY ESTIMATE AT $6.12 BILLION. THAT'S SAME AREA WITH SOME ANNEXATIONS DIFFERENCES. LAST YEAR IT WAS $6.22 BILLION. WE, IF THIS ESTIMATE DOES NOT CHANGE, WE'RE LOOKING AT A HUNDRED MILLION DOLLARS DECLINE IN THE TAXABLE, EXCUSE ME, NET TAXABLE ASSESSED VALUATION FOR NEXT YEAR. OH, 1.6% DECLINE. AND IT'S, IT'S A PRETTY SIMPLE MATH. WHATEVER THE NEXT NET DECLINE IS IN THE TIV OR TAX ASSESS VALUATION, YOU WILL RECEIVE THAT MUCH LESS TAX REVENUES. NOW, IF WE SEPARATE THE TURS FROM THE CORE CITY, JUST THE S IS ALL SIX OF 'EM, THAT'S WHERE ALL THE GROWTH IS HAPPENING. SO THIS NEW YEAR, THE NET PAV OR TAX ASSESSED VALUATION IS SLIGHTLY OVER A BILLION DOLLARS. LAST YEAR IT WAS 944 MILLION. THE T ARE GAINING 80 MILLION OR ALMOST 81 MILLION IN TAXABLE ASSESSED VALUATION, OR A 8.52% IN INCREASE. WHEREAS WHEN YOU JUST LOOK AT THE CORE CITY, WE'RE LOSING A HUNDRED MILLION DOLLARS OR 1.6%. SO WHAT YOU'RE SAYING IS, AND FOR THOSE THAT DON'T UNDERSTAND WHAT THE TS IS, IS A CERTAIN PERCENTAGE, AND I THINK ALL EXCEPT FOR ONE OF 'EM, KEEPS 50% OF ITS TAXES WITHIN THAT ZONE. IS THAT CORRECT? THAT IS CORRECT. WITH THE EXCEPTION OFTS NUMBER THREE AND FOUR. OKAY. SO WHAT THAT'S SAYING IS THIS IS MONEY THAT COULD BE GOING TO THE GENERAL FUND, BUT IT GETS ALLOCATED IN THESE CERTAIN AREAS. IT HAS TO REMAIN WITHIN THAT BOUNDARY GEOGRAPHIC BOUNDARY, OKAY. FOR THE BENEFIT OF PROPERTIES WITHIN THAT BOUNDARY. OKAY. AND ONE COULD ARGUE THAT THAT IS THE REASON WHY YOU HAVE THAT 8.5% INCREASE IS BECAUSE THE REINVESTMENT IN THAT AREA HAS GENERATED MORE INVESTMENT. RIGHT? WHICH IS WHY A TUR SHOULD ONLY BE USED IN BLIGHTED AREAS. SO, YOU KNOW THAT, THAT'S KIND OF MY CONCERN, IS THE AREAS THAT ARE THESE TS THESE BOUNDARIES THAT ARE GETTING THE UPDATES ARE NOT NECESSARILY BOUNDARIES THAT NEED THE UPDATES, RIGHT? SO IF WE HAD THAT ABILITY TO SHARE THAT MONEY, PUT IT IN THE GENERAL FUND, THE CITY COULD ALLOCATE IT TO AREAS THAT ARE IN NEED OF UPDATES OR INFRASTRUCTURE, SIDEWALKS, WHATEVER YOU WANNA CALL IT. SO THAT, THAT'S MY ONLY CONCERN WITH THESE TURS, IS I DON'T FEEL LIKE EVERY ONE OF THE TURS THAT WE HAVE, UH, WITH THE EXCEPTION OF PROBABLY THE ONE TURS ONE, UM, REALLY NEEDS TO RETAIN THAT MONEY IN THAT AREA. THAT'S IT. THAT'S MY COMMENT. WE LEAVE FORWARD. IT'S A POLICY DECISION. I WANNA STAY IN MY LANE. IT'S A DECISION. MM-HMM . I THINK JUST ADDING ONTO THAT REAL QUICK, UM, LIKE THAT'S BEEN A CONCERN THAT I'VE HAD FOR A HOT MINUTE NOW. UM, THE HABITAT FOR HUMANITY [03:35:01] ACTUALLY WARNS AGAINST THE CREATION OF TURS, UM, IN A LOT OF CIRCUMSTANCES. FOR EXAMPLE, THE CITY OF HOUSTON HAS OVER A HUNDRED AND SOMETHING TURS. UM, AND THEY USE THAT AS A PRIMARY EXAMPLE OF HOW IN HOUSTON, YOU SEE SUCH LARGE DISCREPANCIES FROM NEIGHBORHOOD TO NEIGHBORHOOD THAT ARE JUST WITHIN BLOCKS OF EACH OTHER. AND IT'S BECAUSE THERE'S NO, UH, SORT OF GUIDANCE OR OVERARCHING POLICY ON HOW A TURS IS CREATED IN THE FIRST PLACE. THERE'VE BEEN A LOT OF STUDIES DONE THAT HAVE PROVEN OVER TIME THAT WHEN TS ARE CREATED, IT TAKES AWAY FROM THE CORE CITY, UH, OR MUNICIPAL GOVERNMENT, AND THE CORE CITY SUFFERS OVER TIME, ECONOMICALLY. SO LET'S TALK ABOUT THE TWO NOTICES THAT THE CHIEF APPRAISER HAS CAUTIONED US FOR THIS COMING YEAR. SO ONE IS, AND THE CITY ATTORNEY HAS ALS ALREADY BRIEFED Y'ALL ON THIS ONE. THERE IS A LAWSUIT PENDING ON TWO PROPERTIES WITHIN CITY OF KYLE BOUNDARIES THAT THE PLEASANTON HOUSING FINANCE CORPORATION OWNS. AND THEY HAVE SUED THE APPRAISAL DISTRICT, AND THE CITY HAS JOINED THAT LAWSUIT AS WELL. THE ESTIMATED TAXABLE VALUE OF THAT PROPERTY, THOSE TWO PROPERTIES, IS ALMOST A HUNDRED MILLION DOLLARS. IF THAT LAWSUIT GOES INTO FAVOR OF THE HOUSING FINANCE CORPORATION AT OUR CURRENT TAX RATE OF 59 57, THAT'S AN IMPACT OF ALMOST $600,000 TO THE CITY OF KYLE. SO THAT'S ONE THING. THE SECOND THING THE CHIEF OF APPRAISER HAS APPRISED US OF, OF A CHANGE IN STATE LAW HOUSE BILL NINE. THIS IS A GOOD THING OVERALL IS INTENDED, WELL INTENDED. HOWEVER, IT DOES HAVE FINANCIAL CONSEQUENCES FOR THE JURISDICTION. IT AFFECTS BASICALLY, HOUSE BILL NINE, INCREASED THE EXEMPTION AMOUNT FOR SMALL BUSINESS OWNERS FOR PERSONAL PROPERTY THAT THEY USE WITHIN THEIR BUSINESS ESTABLISHMENT. SO BY PERSONAL PROPERTY, I MEAN FURNITURE, CHAIRS, EQUIPMENT, STOVES, MICROWAVE, THOSE SORT OF THINGS. TV, UM, FROM $2,500 PER YEAR TO $125,000 A YEAR. AND MOST OF OUR SMALL BUSINESSES, AND KYLE WOULD BE ELIGIBLE FOR THIS, AND THEY WILL PROBABLY BE WITHIN THE MAXIMUM EXEMPTION AMOUNT IF THEY'RE SMALL BUSINESSES. SO THE ESTIMATED TAXABLE VALUE OF THAT INCREASE FROM 2,500 TO 125,000 IS $59 MILLION. AND IF WE USE OUR CURRENT TAX RATE, THE ESTIMATED TAX LOSS IS ABOUT $353,000. SO I JUST WANNA MAKE Y'ALL AWARE OF, WITH EVERYTHING ELSE WE HAVE TO BALANCE AND MANAGE, THESE ARE TWO NEW THINGS ON OUR PROPERTY TAX REVENUE HORIZON FOR NEXT YEAR. AND MO GOING FORWARD, CAN I, CAN I STATE, UM, HOUSE BILL NINE IS YAY BOO, RIGHT? LIKE, YAY FOR THE BUSINESSES. KIND OF BOO FOR US. BUT CAN WE MAKE SURE THAT OUR STAFF IS LETTING THE SMALL BUSINESSES, NO ONE UNDERSTAND THIS, MAYBE JUST A PAMPHLET, JUST LIKE THIS IS WHAT HOSPITAL LINE IS. SO MAYBE TO ENCOURAGE THEM TO, TO UTILIZE THIS. IT IS AUTOMATIC. SO IT'S ALMOST LIKE YOUR HOMESTEAD EXEMPTION. SO IF THEY HAVE ALREADY DECLARED PROPERTY ASSESSMENT ON TO THE HAY, IT WILL HAPPEN. BUT WE, I WILL MAKE SURE THAT VICTORIA AND OUR ECONOMIC DEVELOPMENT DEPARTMENT IS AWARE OF THIS AND THEY ENCOURAGE THE NEW BUSINESS OWNERS COMING ONLINE TO TAKE ADVANTAGE OF THIS. OKAY. I APPRE AND JUST FYI, MY NEIGHBOR DID NOT KNOW WHAT THE HOMESTEAD WAS. SO EVEN THOUGH A MAJORITY OF PEOPLE SHOULD KNOW WHAT YOUR, LIKE YOUR HOUSE BILL NINE AND YOUR HOMESTEAD, THERE'S UNFORTUNATELY PEOPLE THAT DON'T STAY IN THE LOOP OR DON'T UNDERSTAND OR REALIZE. SO, UM, JUST A LITTLE BIT OF LIKE, HEY, THIS IS A HEADS UP THAT, THAT WOULD BE GREAT FOR OUR BUSINESSES. SURE, WE'LL DO THAT. OKAY. THIS SLIDE EXPLAINS WHY THE GENERAL FUND BEGINS THE FORECAST FROM A WEAKER POSITION. WE'VE, WE'VE TALKED ABOUT THIS, BUT JUST TO, JUST AS A SUMMARY, THE FY 24 25 [03:40:01] AUDITED BEGINNING FUND BALANCE CAME IN $4.27 MILLION BELOW THE APPROVED BUDGET ASSUMPTION. THE PRIMARY REASON FOR THAT ACTUAL REVENUES, THEY CAME IN BELOW BUDGET, ESPECIALLY IN DEVELOPMENT REVENUES. DEVELOPMENT REVENUES WERE APPROXIMATELY $7.35 MILLION BELOW BUDGET. SALES TAX WAS ABOUT $780,000 BELOW BUDGET. PROPERTY TAX IS ANOTHER $306,000 BELOW BUDGET. THIS MATTERS BECAUSE FUND BALANCE IS CUMULATIVE. IF WE START THE FORECAST WITH LESS FUND BALANCE, WE HAVE LESS CAPACITY TO ABSORB CURRENT YEAR DEFICITS AND LESS ABILITY TO MEET THE CITY'S RESERVE POLICY. AS I'VE SHOWN YOU IN THE PREVIOUS SLIDES, THESE NUMBERS WERE SHOWN AND REPORTED BY THE CITY'S AUDITED ANNUAL COMPREHENSIVE FINANCIAL REPORT AND FISCAL YEAR ENDING SEPTEMBER 30TH, 2025, AND DISCUSSED DURING THE INDEPENDENT AUDITOR'S REPORT PRESENTATION ON MARCH 24TH, 2026. THIS SLIDE SHOWS THAT THE DEVELOPMENT REVENUE ISSUE IS NOT ISOLATED TO ONE YEAR IN FFY 20 20, 20 21 AND FY 20 21, 22 DEVELOPMENT REVENUES ACTUALLY EXCEEDED BUDGET BY 4.1 7000005.61 MILLION RESPECTIVELY. BUT BEGINNING IN FY 2223, THE TREND REVERSED, DEVELOPMENT REVENUES WERE BELOW BUDGET BY $1.83 MILLION, THEN BELOW BUDGET BY $3.43 MILLION, THEN BELOW BUDGET BY $7.35 MILLION IN 20 24 25. FOR THE FY 20 25, 26 CURRENT YEAR ESTIMATE DEVELOPMENT REVENUES ARE STILL PROJECTED TO BE BELOW BUDGET BY APPROXIMATELY $2.07 MILLION. THIS IS WHY THE FORECAST DOES NOT ASSUME AN IMMEDIATE RECOVERY AND DEVELOPMENT REVENUES, AS I MENTIONED BEFORE, HEALTH INSURANCE. OKAY? MEDICAL INSURANCE IS A MAJOR COST PRESSURE FOR FISCAL YEAR 20 26, 27. THE ESTIMATED FY 20 27, 26 27 PREMIUM IS $7.24 MILLION COMPARED TO $6.26 MILLION IN THE CURRENT FISCAL YEAR. THIS IS AN INCREASE OF APPROXIMATELY $981,000 OR 15.67% INCREASE. THIS IS BUILT INTO THE FORECAST BECAUSE IT'S A REAL COST INCREASE THAT MUST BE FUNDED UNLESS PLAN, DESIGN, PROVIDER STRUCTURE, OR OTHER OPTIONS CHANGE. STAFF IS CURRENTLY WORKING WITH THE CITY'S MEDICAL INSURANCE ADVISOR, MARSH MCLENNAN AGENCY TO REVIEW OPTIONS FOR MINIMIZING COST INCREASE FOR THE NEXT FISCAL YEAR. HOLLY, I DO HAVE A QUESTION ABOUT THAT. UM, WHAT SORTS OF OPTIONS LIKE WOULD THAT BE, FOR EXAMPLE, IF YOU HAVE A, OH, THAT'S A GREAT QUESTION. UM, COME JULIE, PLEASE. HERE I CAN ANSWER. OKAY. SO WE HAVE THREE MAJOR HEALTH INSURANCE PLANS FOR OUR EMPLOYEES, P-P-O-H-M-O AND HIGH DEDUCTIBLE. THE PPO IS THE MOST ROBUST PLAN THAT WE OFFER OUR EMPLOYEES THAT HAS THE MOST COST, MOST NUMBER OF BELLY BUTTONS COVERED UNDER THAT PROGRAM. HMO, BY JUST SHEER HOW IT'S STRUCTURED, IT'S A MUCH LOWER COST OPTION FOR THE CITY. WE ARE LOOKING AT OPTIONS FOR THE EMPLOYEE FAMILY COVERAGE. IN THE PAST, WE HAVE TARGETED 90% OF THE COST OF COVERING FAMILY, EMPLOYEES FAMILIES AT 90% OF WHATEVER THE COST IS. MOST EMPLOYERS STAY SOMEWHERE BETWEEN 65 AND 75% GOVERNMENTAL ENTITIES, MORE SO ON THE LOWER SIDE. WE'RE LOOKING AT ALL OF THAT POSSIBILITY. I AM GOING TO STOP ADDITIONAL ENROLLMENT IN THE PPO PLAN. WE'VE TALKED ABOUT IT AND WE'RE GONNA IMPLEMENT IT TOMORROW. 'CAUSE I WANTED TO DISCUSS THIS, LET Y'ALL KNOW. I WANNA STOP THAT. BLEEDING FOR NEW ENROLLMENTS, THAT JUST MEANS THAT IF WE HIRE SOMEBODY, THEY WILL NOT HAVE PPO PLAN AVAILABLE TO THEM. THEY WILL HAVE TO BE GOING TOWARDS HMO OR HIGH DEDUCTIBLE. IF THERE IS A MAJOR EVENT THAT CHANGES COVERAGE, YOUR EMPLOYEE WANTS TO CHANGE COVERAGE, THEY WILL NOT BE ABLE TO CHANGE IN PPO. THEY'LL HAVE TO GO TO HMO. THIS COST [03:45:01] IS A MAJOR COST DRIVER IN THE PERSONAL COST CATEGORY WE SHOWED YOU EARLIER. WE HAVE TO MANAGE THIS. WE CANNOT BE THE TOP PROVIDER OF HEALTH INSURANCE AMONGST ALL CITIES OR ALL EMPLOYERS IN THE REGION. AFFORDABILITY IS A HUGE FACTOR FOR US TO CONSIDER. 90%. IT IS SUPER ROBUST PLAN. OKAY. I THINK, I DON'T KNOW IF I ANSWERED YOUR QUESTION. NO, NO, I THINK SO. I THINK FOR ME, I JUST HAVE A CONCERN WITH, I DON'T KNOW, I THINK THIS IS MORE EXISTENTIAL, UM, IN TERMS OF, I DO NOT WANNA PUT OUR EMPLOYEES IN WORSE CONDITIONS, GIVE THEM WORSE HEALTHCARE INSURANCE PLANS. UM, MY WORK HAD TO UNFORTUNATELY MAKE THE CUT. AND SO, LIKE MY OUT OF POCKET MAXIMUM WENT FROM LIKE $9,000 TO LIKE $28,000. UM, AND LIKE I CAN JUST SEE THE ACTUAL REAL HUMAN EFFECTS THAT IT'S HAD ON MYSELF AND OTHERS. UM, AND SO I JUST, I WANNA MAKE SURE THAT, YES, I KNOW THAT WE'RE TALKING ABOUT AFFORDABILITY AND UNDERSTAND THAT WE'RE GOING TO HAVE TO DO WHAT WE HAVE TO DO. UM, BUT I ALSO WANNA MAKE SURE THAT WE'RE THINKING ABOUT IT IN TERMS OF REAL HUMANS, UM, AND LIVES THAT WE ARE TALKING ABOUT. UM, I JUST WANNA MAKE SURE THAT THAT ISN'T LOST ON US WHEN WE'RE HAVING THESE CONVERSATIONS. DEFINITELY NOT. WE'RE NOT GONNA LOSE THAT. UH, OUR HMO PROGRAM IS, IS VERY GOOD PLAN. WE WILL, AS HOLLY WAS TALKING EARLIER, WE WILL BE WORKING WITH OUR HR DEPARTMENT, OUR INSURANCE CONSULTANT, AND LOOKING AT DIFFERENT OPTIONS OF WHERE DO WE TWEAK THAT WE'RE NOT HURTING OUR EMPLOYEES OR THEIR DEPENDENTS, BUT AT THE SAME TIME, WE'RE MINIMIZING THE COST BURDEN TO THE CITY. WELL, AND WE SAY TO THE CITY, BUT WE MEAN TO THE TAXPAYERS, YOU KNOW, TAXPAYERS AND RESIDENTS. UM, COUNCIL MEMBER GOZA MADE A STATEMENT WHEN WE WERE, WHEN WE MET, AND IT WAS, SHE SAID, YOU KNOW, SOME PEOPLE HAVE THIS MENTALITY LIKE, IT'S NOT MY MONEY. IT'S NOT, YOU KNOW, YOUR MONEY, IT'S THE CITY'S MONEY. AND THAT'S HOW SOME PEOPLE SEE IT. IT'S, IT'S A CITY'S MONEY, BUT AT THE END OF THE DAY, IT'S THE TAXPAYER'S MONEY. SO IT'S OUR MONEY. SO I COMPLETELY UNDERSTAND WHAT COUNCIL MEMBER SATA IS SAYING. UH, AND THESE ARE THE HARD DECISIONS THAT WE'RE GONNA HAVE TO MAKE. AND SO, YOU KNOW, SOMETIMES YOU HAVE BENEFITS AND SOMETIMES YOU HAVE OR GOOD BENEFITS, AND SOMETIMES YOU HAVE GOOD SALARIES. AND SO IF WE HAVE TO CHOOSE BETWEEN THE TWO, BECAUSE WE CAN'T MOVE FORWARD WITH OUR CURRENT PLAN, UM, THOSE ARE THE CHOICES THAT WE'RE GONNA HAVE TO MAKE. AND, AND I WOULD LOVE TO RECOMMEND, THERE'S A BOOK CALLED GREEDY BASTARDS BY, UH, CHERYL SCULLY, AND SHE WAS THE SAN ANTONIO CITY MANAGER, AND SHE TALKED ABOUT HOW SHE HAD TO LOOK AT THEIR BENEFITS THAT THEY OFFERED, AND I THINK IT WAS JUST TO THE PD AND TO THE FIRE DEPARTMENT, UM, AND, AND HOW THEY KNEW THAT IF THEY STAYED ON THIS TRAJECTORY, THAT THEY WOULD GO BANKRUPT. AND SO, I, I FOR ONE, WANT TO SEE GREAT BENEFITS FOR OUR EMPLOYEES. UM, I, BUT I THINK WE'VE KIND OF, OUR, OUR SALARIES ARE REALLY, WELL, NOT ALWAYS FOR THE BOOTS ON THE GROUND, BUT WE HAVE, UH, GOOD SALARIES. AND THAT'S BEEN A TOPIC OF DISCUSSION, UM, DURING, UM, INTERVIEWS THAT I'VE SEEN ONLINE WITH OUR STAFF. UM, SO UNFORTUNATELY, IF WE DO HAVE TO MAKE THAT, THAT THE DECISION, YOU KNOW, BRINGING BACK ALL INFORMATION SO WE CAN MAKE THOSE, UM, CHOICES WITH, WELL, LIKE YOU SAID, WITH REAL PEOPLE, THESE ARE REAL, UM, THESE ARE, THESE ARE, WE DON'T WANNA DESTROY THEIR LIVES. WE DON'T WANNA MAKE IT DIFFICULT, BUT, SO WE WILL BE LOOKING AT THAT AS WE PROPOSE NEXT YEAR'S BUDGET. BUT GIVEN OUR FINANCIAL SITUATION NOW, THERE ARE ACTIONS THAT I MUST TAKE NOW IN THIS FISCAL YEAR. UNDERSTOOD. SO THAT'S WHY I AM ADVISING Y'ALL THAT THE NEW ENROLLMENT IN THE PPO PLAN STOPS TOMORROW. THIS IS, THIS INCLUDES OUR SWORN OFFICERS, RIGHT? EVERYONE? OKAY. THANK YOU. GO AHEAD. SORRY. THANK YOU, SIR. OKAY. THE FORECAST ALSO INCLUDES THE FINANCIAL IMPACT OF THE MEET AND CONFER AGREEMENT FOR THE KYLE POLICE DEPARTMENT. AS I'VE MENTIONED, THIS AGREEMENT PROVIDES A 2% INCREASE EACH YEAR IN BASE COMPENSATION FOR ELIGIBLE SWORN POSITIONS. WE HAVE 83 SWORN POSITIONS. 81 ARE ELIGIBLE BECAUSE THE CHIEF AND THE ASSISTANT CHIEF ARE NOT ELIGIBLE. AND AN ANNUAL STEP INCREASE ON THE HIRING ANNIVERSARY DATE FOR FY 20 26, 27, THE ESTIMATED BUDGET IMPACT IS $573,000 944 CENTS. THIS IS IMPORTANT BECAUSE PUBLIC SAFETY COMPENSATION [03:50:01] IS A RECURRING COST. ONCE IT IS ADDED TO THE BASE, IT CARRIES FORWARD INTO EVERY YEAR OF THE FORECAST. GO BACK. JUST A QUICK QUESTION ON THE MEET AND CONFER. COULD, UH, FINANCE DEPARTMENT GIVE YOUR OPINION ON, ON THE MEET AND CONFER? YES, SIR. . AND MORE IMPORTANTLY, WHAT WAS YOUR OPINION DURING THE NEGOTIATIONS? I WAS NOT A PARTY TO THE CITY TEAM. CAN YOU ELABORATE ON WHO WAS PART OF THAT TEAM THAT NEGOTIATED THAT? I WAS NOT INVOLVED? SO I REALLY DON'T KNOW. I'M GONNA ASK JULIE BEGGS. HE'S, SHE'S HERE. UH, JULIE, IF YOU WOULD PLEASE STEP UP AND, AND LET COUNSEL KNOW. GOOD AFTERNOON. GOOD AFTERNOON. JULIE BEGGS, DIRECTOR OF HR AND CIVIL SERVICE FOR THE CITY OF KYLE. THE CORE, UH, NEGOTIATING TEAM INCLUDED, UH, OUR CHIEF OF POLICE, JESSE ELIZONDO, OUR ASSISTANT CITY MANAGER, MYSELF, WHO WAS THEN SERVING AS THE ASSISTANT DIRECTOR OF ADMINISTRATIVE SERVICES. WE HAD, UH, SERGEANT KEITH CONGDON FROM KPD. WE HAD, UH, MARK SPENCER, SERGEANT, KPD, WHO ALSO SERVES AS THE PRESIDENT OF THE, UH, KYLE LAW ENFORCEMENT ASSOCIATION AND OFFICER DRIBBLE. AND OFFICER PATE ADVISORY MEMBERS ALSO INCLUDED BRIAN LANGLEY, THE THEN CITY MANAGER, UH, ROSIE TRULOVE, WHO THEN SERVED AS THE CIVIL SERVICE DIRECTOR, AND AMY ALCORN REED CITY ATTORNEY. SO THERE WAS NO FINANCIAL, HOW, HOW DID YOU GUYS RECEIVE YOUR FINANCIAL GUIDANCE? AS OUR COMMITTEE, WE WOULD WALK THROUGH THOSE SCENARIOS AND COME UP WITH ESTIMATIONS, BUT I DO NOT RECALL AT ANY TIME REACHING OUT TO FINANCE DIRECTLY. OKAY. ALL RIGHT. THANK YOU. I'VE GOT A QUESTION, JULIE, ON MEET AND CONFER. THE, UM, STATE HAS GUIDELINES RELATED TO MEET AND CONFER WHO'S REQUIRED TO BE PART OF THAT TEAM, HOW THAT IS CONDUCTED? UM, IT'S NOT JUST ALL LEFT UP TO THE AUSPICES OF THE CITY. YES, THAT'S CORRECT. WE HAVE TO HAVE REPRESENTATION FROM THE ASSOCIATION FROM THE DEPARTMENT AND THE CITY. AND AT THAT TIME, THE CITY MANAGER WAS THE ONE WHO SELECTED THE BARGAINING COMMITTEE FOR THE CITY. THANK YOU. YOU'RE WELCOME. I DON'T THINK WE HAVE ANY OTHER QUESTIONS. I GUESS JUST WHAT AHEAD, UM, ONE LAST QUESTION ABOUT MEET AND CONFER. WHEN IS THAT GENERALLY BROUGHT BACK FOR COUNCIL APPROVAL? OUR CURRENT CONTRACT IS A THREE YEAR CONTRACT. THERE IS A PROVISION IN THE CONTRACT TO AMEND IT FOR AN ADDITIONAL YEAR IF ALL THREE PARTIES AGREE. IF NOT, THE ASSOCIATION TRIGGERS THAT, UM, START IN JANUARY OF THE YEAR THAT IT EXPIRES TO ACKNOWLEDGE THAT THEY WANNA BE AT THE NEGOTIATING TABLES AND THEY'D LIKE TO START THE BARGAINING PROCESS. IS IT, IF MY MEMORY SERVES CORRECTLY, DID WE, UH, APPROVE THAT LAST FISCAL YEAR? WAS THAT THE LAST TIME IT CAME UP? YES. AFTER NEGOTIATIONS GO THROUGH AND THE ASSOCIATION VOTES ON THAT, WE BRING IT BACK AS STAFF TO COUNCIL FOR, UM, ADOPTION AND APPROVAL. THAT WAS CONDUCTED IN JUNE OF 2025. MM-HMM. TO BE EFFECTIVE OCTOBER ONE THROUGH SEPTEMBER OF 2028. OKAY. THANK YOU. MM-HMM. SO, ONE FINAL COMMENT ON THIS SLIDE. I, I DON'T KNOW IF HE'S IN THE AUDIENCE OR NOT. I HAD INVITED THE CHAIR OF THE ASSOCIATION. THERE IS A CLAUSE IN THE MEETING AND CONFER. I DON'T WANNA INVOKE THAT CLAUSE, BUT GIVEN OUR FINANCIAL CONDITION, EVERYTHING IS ON THE TABLE, I MAY HAVE TO SIT ACROSS THE TABLE FROM THE PRESIDENT OF THE ASSOCIATION AND MAY HAVE TO RENEGOTIATE A PORTION OF THAT AGREEMENT. IF WE CAN'T AFFORD IT. AND IT AFFECTS OTHER CITY EMPLOYEES, I HAVE TO TREAT ALL OUR CITY EMPLOYEES THE SAME WAY. THERE IS A PROVISION IN THE MEETING AND CONFER THAT SHOULD BE IN THERE THAT BASICALLY SAYS THAT THE CITY DOES NOT HAVE THE MONEY, THAT THESE THINGS WILL NOT APPLY. JUST IN GENERAL, I DON'T HAVE THE SPECIFIC WORDS IN FRONT OF ME. SO WHAT I AM TRYING TO TELL Y'ALL UPFRONT, SO YOU'RE NOT SURPRISED THAT I MAY HAVE TO APPROACH THE ASSOCIATION FOR SOME CONCESSION FOR NEXT FISCAL YEAR, DEPENDING ON HOW WE SOLVE THIS PROBLEM. THEY HAVE TO BE AT THE TABLE TO HELP US SOLVE THIS PROBLEM AS WELL. IS IN, ARE HEALTH INSURANCE INCLUDED IN MEET AND CONFER? I'M NOT SURE IF THEY DID. NO, NO. THANK YOU. SO THIS 5 73 IS JUST 4 20 26. 2027. THAT'S FINE. [03:55:01] DO WE KNOW WHAT THAT WOULD LOOK LIKE IN THE OTHER YEAR? IN THE NEXT YEAR? 'CAUSE THIS IS, IT'S A THREE YEAR CONTRACT. RIGHT? SO THIS, THIS INCREASES JUST FOR ONE YEAR, IT COMPOUNDS. RIGHT. SO WE CAN CALCULATE THAT NUMBER FOR YOU. OKAY. ALL RIGHT. THANK YOU. OKAY. POLICE TECHNOLOGY SUPPORT COSTS ARE ALSO INCREASING FROM $441,000 IN FY 26 TO APPROXIMATELY $730,000 IN FY 27. THAT'S AN INCREASE OF NEARLY $300,000 OR 66%. THE MAJORITY OF THIS INCREASE IS ATTRIBUTED TO THE ONGOING AXON CONTRACT. THERE'S ANOTHER EXAMPLE. THIS IS ANOTHER EXAMPLE OF RECURRING CONTRACTUAL COSTS THAT BECOMES PART OF THE ONGOING EXPENDITURE BASE. DOES THAT AMOUNT INCLUDE THE GRANT? I DON'T BELIEVE THAT IT INCLUDES THE GRANT. NO. YEAH, TAXON IS NOT A GRANT FUNDED PROGRAM. IT OH, IT'S NOT, NO, NOT THIS IS TAXON FUNDED. YEAH. IT IMPACTS THE GENERAL FUND. AND THEN EVEN WITH FLOCK AS WELL, IT'S ONLY A SMALL PERCENTAGE THAT'S COVERED BY, UM, GRANT FUNDING. CORRECT? CORRECT. FOR THE WATER UTILITY FUND, POTABLE WATER SUPPLY COSTS ARE INCREASING FROM 6.10 MILLION TO 6.5 8,000,016. SORRY, SIX, PARDON ME. 16. I'M SORRY. IT'S GETTING A LITTLE LATE. , THIS IS AN INCREASE OF APPROXIMATELY $473,000 OR 3%. THIS COST IS A MA IS A MAJOR DRIVER OF THE WATER UTILITY FORECAST BECAUSE WATER SUPPLY IS ONE OF THE LARGEST OPERATING COSTS IN THE FUND. BLESS YOU. BLESS YOU. OKAY. THIS SLIDE SHOWS THE PROJECTED RATE PATH BASED ON THE COST OF SERVICE REPORT. PROJECTED WATER AND WASTEWATER SERVICE RATES BASED ON COST OF SERVICE REPORT WAS DATED TEN NINE TWENTY TWENTY FIVE FOR WATER AND PROJECTED INCREASE FOR WATER. THE PROJECTED INCREASES ARE SIGNIFICANT, PARTICULARLY IN THE EARLY FORECAST YEARS. INSIDE CITY LIMIT WATER RATES ARE PROJECTED AT 20%, 20%, 25, 8, AND 5% ACROSS THE PERIOD. SHOWN FOR WASTEWATER. INSIDE CITY LIMIT RATES ARE PROJECTED AT 6%, 12, 25, 20 AND 2%. UM, AND THEN OF COURSE YOU CAN SEE THE IN INSIDE CITY LIMIT AND OUTSIDE CITY LIMIT FOR BOTH WATER AND WASTEWATER. THE KEY MESSAGE IS THAT RATE ACTION IS PART OF THE FINANCIAL SOLUTION, BUT EVEN WITH PROJECTED RATE INCREASES, THE UTILITY FORECAST STILL SHOW PRESSURE BECAUSE OF OPERATING COSTS, DEBT SERVICE, AND INFRASTRUCTURE NEEDS THAT ARE SUBSTANTIAL. DOES THIS INCLUDE THE C FUTURE CIPS, THE WATER RATES INCLUDES IT? YES, IT DOES. OKAY. I ASK BECAUSE IF WE ARE GONNA CONTROL THIS, I THINK THAT IS ONE FACTOR THAT WE CAN LOOK AT. MM-HMM . UM, 'CAUSE I AM NOT ON BOARD, I WASN'T ON BOARD WITH THE LAST YEAR'S INCREASE. UM, AND CERTAINLY CAN'T SEE ADDING ANOTHER 20% TO FOR THE NEXT COUPLE YEARS, SO. UNDERSTOOD. THANK YOU. OKAY. SO COUNSEL, THIS SLIDE SHOWS TWO THINGS. ONE IS THE DEBT SERVICE FOR NEXT YEAR ON EXISTING DEBT WITHOUT ADDING ANOTHER DOLLAR. SO IF YOU LOOK AT THE EXISTING DEBT, IT'S GONNA GO FROM 26.8 MILLION IN 25 26. THE FIRST COLUMN, SORRY, THE SECOND COLUMN TO 22.2 MILLION IN 26, 27, BECAUSE WE'RE PAYING OFF PRINCIPLE, RIGHT? SO THAT IS LOWERING. I WISH, UM, ANDY OR HOLLY WOULD'VE ADDED A DOLLAR TO THAT NUMBER. UM, NEVERMIND. THAT'S AN INSIDE JOKE. SO, ON THE PROJECTED DEBT, THIS IS BASED ON THE CURRENT FIVE YEAR SPENDING PLAN. SO PLEASE KEEP THAT IN MIND. WE'RE SCRUBBING THAT. WE'RE GONNA LOWER THAT. WE ARE GONNA REDUCE IT. SO THE NEW DEBT ISSUED WILL BE LESS THAN WHAT YOU'RE SEEING HERE. THIS BASICALLY SAYS THAT WE CONTINUE ON THE FIVE YEAR SPENDING PLAN TREND THAT WE'RE ON THE DEBT SERVICE, ADDITIONAL DEBT SERVICE FOR NEXT YEAR FOR PROPERTY TAX BASED WILL GO UP BY ALMOST 7 MILLION. AND FOR NON-TAX SUPPORTED DEBT LIKE UTILITY AND TURS WILL GO UP BY ALMOST $12.7 MILLION, A TOTAL OF [04:00:01] 20 MILLION. SO WHEN YOU ADD THE EXISTING DEBT AND THE NEW PROJECTED THAT IT ADDS UP TO $42 MILLION, THAT'S AN INCREASE OF 15. THERE IS NO WAY WE'LL BE ABLE TO SU UH, SUPPORT INCREASE OF 19.5 MILLION IN NEW DEBT SERVICE PAYMENTS. SO WE, THE FINANCE TEAM IS WORKING WITH THE ENGINEERING TEAM TO MINIMIZE THE FIVE YEAR SPENDING PLAN BASED ON REALISTIC NUMBERS, WHAT WE CAN ACTUALLY LIFT AND DELIVER. SO THE CASH FLOWS LINE UP WITH WHAT WE NEED TO ISSUE DEBT AND WHEN, SO WE'RE WORKING ON THAT. UH, RIGHT NOW, IT'S NOT GOING TO BE EVEN CLOSE TO 19.5 IN DEBT SERVICE FOR NEW DEBT. UH, IT'S GONNA BE CLOSER TO ABOUT 9 MILLION AT THE MOST 10 MILLION. SO JUST WANTED TO MAKE SURE Y'ALL SAW THAT AND NOT BE ALARMED BY THE, THE FIRST ESTIMATE WE ARE DOING, PUB PUBLIC TRANSPORTATION COSTS HAVE GROWN SIGNIFICANTLY IN FISCAL YEAR 2020. 2021 ACT. THIS IS THE UBER PROGRAM. YEAH. SPECIFICALLY ACTUAL COSTS WERE APPROXIMATELY $21,264, AS YOU CAN SEE THERE BY FY 20 25, 26, THE CURRENT YEAR ESTIMATE, THAT AMOUNT IS PROJECTED TO BE $1.15 MILLION. THAT IS A CUMULATIVE INCREASE OF APPROXIMATELY $1.13 MILLION OR 5312% OF AN INCREASE. THIS IS IMPORTANT BECAUSE THE GENERAL FUND IS ABSORBING IN MUCH LARGER RECURRING PROGRAM COST THAN IT DID JUST A FEW YEARS AGO. DO WE KNOW IT'S ACTUALLY BEEN USED? LIKE THAT'S THE BUDGET, BUT I'M CURIOUS TO KNOW WHAT WE'VE PAID FOR IN THE LAST COUPLE YEARS. THAT'S RIGHT THERE. YEAH. THE ACTUALS ARE ON THE TOP. THAT IS ACTUAL HOW THE ACTUALS OKAY. MM-HMM . OKAY. YEAH. AND I THINK THE LAST TIME WE LOOKED AT IT FOR 26, IT WAS OVER THE, I MEAN, IT WAS, IT'S CERTAINLY ON TREND TO BE AT 1.2 MILLION OR SO. YEAH. SO THESE ARE ACTUAL USES, BUT DO WE HAVE A BUDGETED AMOUNT? IS THIS LIKE A FREE FOR ALL THEY COULD JUST CHARGE AND WE PAY FOR IT? YEAH, IT'S A, IT IS BEEN A CHALLENGE. I, I THINK AT ONE POINT THE BUDGET WAS, I MEAN, IT'S, IT'S NOT, I DON'T THINK THE BUDGET HAS CHANGED MUCH. I THINK THE BUDGET STAYS STATIC AND THE EXPENSES HAVE GROWN. SO YOU'D HAVE TO LOOK AT THE BUDGET FOR, I REMEMBER US HAVING A DOLLAR AMOUNT, BUT I I, IT WAS ABOUT, WANNA SAY IT WAS 900, BUT THAT'S GOING OFF OF MEMORY. OKAY. IT, IT, THE BUDGET, IT JUST INCREASED THROUGH THE YEARS, UH, MAYOR MM-HMM . YOU KNOW, ON THAT END, BECAUSE IT WAS, IT WAS SOLD TO US AS THE AMOUNT OF PEOPLE THAT WERE USING IT. AND IT WAS A, UM, A WAY FOR PEOPLE TO GET AROUND TOWN AND GET TO THE AIRPORT. AND IT WAS THAT KIND OF A PROGRAM STARTED OFF AS A PILOT PROGRAM, AND NOW WE'RE AT 1.5 MILLION ON 1.1 MILLION ON THAT, THAT IN, IN THAT AMOUNT, I WOULD BE QUESTIONING THE AMOUNT IT WOULD COST TO DO A BUS SYSTEM, BECAUSE I KNOW WE WERE SPECIFICALLY TOLD IN MY FIRST TERM THAT THE UBER PROGRAM IS CHEAPER THAN A BUS SYSTEM. BUT IF WE'RE LOOKING AT $1.1 MILLION, I HAVE TO QUESTION WHETHER OR NOT WE'RE, WE'RE JUSTIFYING NOT USING A BUS SYSTEM. YES. AND THE WAY WE ARE BEEN CONTROLLING THE COST IN UBER, UH, YEAR TO YEAR HAS BEEN TO ADJUST HOW MANY RIDES A PERSON CAN HAVE. WE ADJUSTED LAST YEAR THE PERCENTAGE THAT WE PAID FOR AIRPORT TRANSIT. UM, SO WE'VE BEEN, THAT'S HOW WE'VE BEEN CONTROLLING THAT. I DON'T KNOW THAT WE'VE ACTUALLY TURNED ANYBODY DOWN, UM, FOR A REQUESTED RIOT AT THIS POINT. SO COUNSEL, WHEN WE BRING BACK THE PROPOSED BUDGET, THIS WILL BE ONE OF THOSE THINGS THAT WE WILL DISCUSS WITH Y'ALL. HERE ARE THE OPTIONS THAT, YOU KNOW, WE COULD USE TO CONTROL THE COST. THE CURRENT APPROVED BUDGET IS AROUND $700,000. WE HAVE TO RETHINK OUTSIDE THE BOX. IT STARTED OUT WITH A VERY SPECIFIC OBJECTIVE. THEN OVER THE YEARS, WE HAVE EXPANDED THE, UH, THE GOAL AND THE SERVICE. WE HAVE TO RETHINK THE NUMBER OF VOUCHERS WE GIVE THE, THE RIDER'S PARTICIPATION PERCENTAGE. DO WE REALLY NEED TO GIVE UBER RIDES TO THE AIRPORT AND BACK? BECAUSE I KNOW FOR A FACT PEOPLE PARK HERE IN KYLE [04:05:01] AT THEIR RELATIVE OR FRIEND'S HOUSE FROM OUTSIDE OUR CITY SURROUNDING CITIES THAT TAKE ADVANTAGE OF THAT PROGRAM FOR RIDES TO THE AIRPORT AND BACK. RIGHT? WELL, AND HERE'S THE, YOU KNOW, I, I DON'T WANNA COMPLETELY LEAVE RESIDENTS WITHOUT THE ABILITY TO TRAVEL WITHIN OUR CITY. UM, I KNOW SEVERAL PEOPLE WHO USE THIS. SOME PEOPLE USE IT TO GO TO SCHOOL. AND SO WITHOUT AN ALTERNATIVE TRANSPORTATION, UM, I DON'T WANNA COMPLETELY TAKE IT AWAY, BUT I DO AGAIN, TO THE AIRPORT. THAT DOESN'T MAKE, WE CAN TWEAK THE PROGRAM. UH, IT IS WELL INTENDED, VERY MUCH NEEDED WITHIN OUR COMMUNITY. BUT WE HAVE TO QUESTION, DO YOU REALLY WANNA GIVE AIRPORT RIDES? IS IT WORTH, YOU KNOW, WHAT WE WANT? MM-HMM . IT DURING OUR VISIONING WORKSHOP, UH, WAS IT MARCH, FEBRUARY? FEELS LIKE FOREVER AGO, BUT IT WASN'T THAT LONG AGO. UM, I HAD BROUGHT UP THE, UH, SENIORS TAKING A RIDE THE STAR PROGRAM THAT BETA HAS, WHICH IS LARGELY GRANT FUNDED. UM, I REALLY WANNA MAKE SURE THAT WE'RE LOOKING AT OPPORTUNITIES LIKE THOSE TO BRING TO THE TABLE DURING THIS BUDGET SEASON. UM, I KNOW GRANT FUNDING IS, YOU KNOW, KIND OF UP IN THE AIR IN A LOT OF CIRCUMSTANCES, BUT I DO THINK THAT WE HAVE, UH, CITIES THAT ARE RIGHT NEXT TO US THAT HAVE PROVEN THAT THEY CAN OBTAIN GRANT FUNDING FOR THESE THINGS. SO I DON'T SEE WHY WE WOULDN'T BE ABLE TO DO SO AS WELL. UM, SO IF WE COULD JUST MAKE SURE TO TAKE THOSE THINGS IN CONSIDERATION, I WOULD APPRECIATE IT. WE'RE GONNA HAVE STAFF ANALYZE THE USAGE DATA OF THE UBER PROGRAM. WE ALSO HAVE THE SPECIAL RIDE PROGRAM IN ADDITION TO THE UBER. UM, AND LOOK AT THE POSSIBLE OPTIONS THAT COUNCIL MAY CONSIDER, UH, SUCH AS THE ONE YOU JUST MENTIONED THAT THE CITY OF BUDDA IS DOING. WHAT ARE THE POSSIBILITIES? ARE THOSE GRANTS STILL AVAILABLE OR NOT AVAILABLE? AND IF WE WERE TO DO IT ON OUR OWN, WHAT WILL THAT COST? THINGS LIKE THAT. SO WE'LL INCLUDE THAT DISCUSSION. ALL RIGHT. GOING ON. OKAY. SLIDE SHOWS THE PRELIMINARY DRAFT CIP SPENDING PLAN BY FISCAL YEAR. WE'VE TALKED ABOUT THIS, BUT I WANTED TO BRING IT BACK. THE PLAN INCLUDES APPROXIMATELY $462.8 MILLION FOR FY 27, UM, ANOTHER 330.3 MILLION IN FY 28 AND SO FORTH. YOU CAN SEE THE NUMBERS THERE DECREASING DUE, UM, THE 26 MILLION, UH, IN FY 2031 FOR A PRELIMINARY FIVE YEAR CIP SPENDING PLAN OF A TOTAL OF $1.1 BILLION WITH A B. SO HERE AGAIN, UH, MAYOR COUNSEL, IT'S IMPORTANT TO NOTE THAT STAFF IS STILL WORKING THIS PLAN OUT. IT IS UNREASONABLE TO ME THAT WE'RE GONNA HAVE $462 MILLION IN ONE YEAR NEXT YEAR AND HAVE ONLY 26,000,030 31. SO THIS NEEDS TO BE FLUSHED OUT SOME MORE. I'M GONNA SIT DOWN WITH THEM HOW TO MANAGE THIS, BUT IT HAS TO BE REALISTIC. THERE'S NO WAY WE'RE GONNA BE ABLE TO DELIVER FOUR $62 MILLION IN ONE YEAR. IT'S JUST NOT GONNA HAPPEN. SO WHY EVEN INCLUDED IN PLAN AND THEN THE, THE RATES ARE DRIVEN OFF OF THIS, RIGHT? SO WE'RE GONNA LEVELIZE THIS. WE'RE GONNA COME BACK ON JUNE 13TH WITH Y'ALL AND GO OVER THE LIST OF PROJECTS. GO OVER THE LIST OF HOW WE'RE FUNDING IT, GO OVER THE LIST OF PROJECTS THAT YOU WANT US TO CONTINUE. NOT CONTINUE. DO YOU WANNA GO TO THE VOTERS? NOT GO TO THE VOTERS. ALL THOSE WILL BE LAID OUT FOR YOU TO DECIDE. OKAY. OH, SORRY. OH, THAT'S FINE. ALRIGHT, NOW WE'RE GONNA MOVE FROM ASSUMPTIONS AND KNOWN CHANGES INTO THE ACTUAL PRELIMINARY FORECAST RESULTS. THIS IS WHERE ALL OF THOSE INPUTS COME TOGETHER THAT WE'VE DISCUSSED TODAY. CURRENT YOUR ESTIMATES, REVENUE ASSUMPTIONS, EXPENDITURE ASSUMPTIONS, DEBT SERVICE TRANSFERS, RESERVE POLICY AND FUND BALANCE. WE WILL START A COURSE WITH THE GENERAL FUND BECAUSE IT SUPPORTS CORE SERVICES AS WE'VE MENTIONED, PUBLIC SAFETY PARKS, TRANSPORTATION AND PUBLIC WORKS, LIBRARY, FINANCIAL SERVICES ADMINISTRATION, AND OTHER GENERAL GOVERNMENT FUNCTIONS. LEMME GO BACK. WE'LL START WITH THE, WE'RE GONNA START WITH THE GENERAL FUND. AND I WANNA BEGIN WITH THE BEGINNING FUND BALANCE HERE. THIS IS AGAIN, ALL OF THE INFORMATION THAT WE'VE COVERED. I'VE SEGMENTED IT OUT AND THEN I'M GONNA PUT IT ALL TOGETHER IN ONE COMPREHENSIVE SLIDE FOR YOU. FOR THE GENERAL FUND. I'LL ALSO DO IT FOR WATER WASTEWATER AND STORM DRAINAGE. THE GENERAL FUND BEGINS WITH THE FY 27 PROJECTED BEGINNING FUND BALANCE OF $10.3 MILLION. AS I MENTIONED, THE ENDING FUND BALANCE FOR THE CURRENT YEAR ESTIMATE WILL CARRY UP, UP TO YEAR ONE. THAT WILL BEGIN, THAT WILL BECOME THE BEGINNING FUND BALANCE [04:10:01] REVENUES ARE PROJECTED AT $60.21 MILLION IN FY 27 WITH THE ASSUMPTIONS THAT WE'VE DISCUSSED IN THE PREVIOUS SLIDES. APPLIED INCREASING TO 69.61 MILLION BY FY 2031. TOTAL REVENUES AND TRANSFERS IN ARE PROJECTED AT 75.40 MILLION IN FY 27, GROWING TO 84.99 MILLION BY FY 2031. HOWEVER, BEGINNING FUND BALANCE DECLINES EACH YEAR BECAUSE THE FUND IS PROJECTED TO OPERATE AT A DEFICIT EACH YEAR. SO WHAT THIS IS SHOWING YOU IS, AS WE MENTIONED, WE HAVE SOME CHALLENGES GIVEN THE CURRENT YEAR ESTIMATE, AND THOSE WILL CONTINUE TO COMPOUND INTO THE NEXT FIVE YEARS. UM, IF, IF WITHOUT COST CONTAINMENT, WITHOUT ADDRESSING THEM. NOW GENERAL FUND EXPENDITURES AND TRANSFERS OUT. SO THIS IS THE SECOND PART OF THE SEGMENT THAT I SHOWED YOU ADDED IN THE FIVE YEAR FINANCIAL FORECAST PERIOD FOR EXPENDITURES AND TRANSFERS OUT. GENERAL FUND EXPENDITURES AND TRANSFERS OUT ARE PROJECTED AT 83.24 MILLION IN FISCAL YEAR 27, GROWING TO 97.53 MILLION VIA FISCAL YEAR 2031. THE KEY ISSUE IS THAT EXPENDITURES ARE GROWING FASTER THAN REVENUES. AS WE'VE TALKED ABOUT THROUGHOUT THE DAY. FOR EXAMPLE, AN FY 27 TOTAL REVENUES AND TRANSFERS IN ARE AT 75.40 MILLION WHILE TOTAL EXPENDITURES AND TRANSFERS OUT ARE AT 83.24 MILLION. THAT CONTINUES TO CREATE AN OPERATIONAL DEFICIT IN THIS CASE IN THE YEAR ONE OF $7.84 MILLION BY FISCAL YEAR 2031. REVENUES AND TRANSFERS ARE PROJECTED AT 84.99 MILLION WHILE EXPENDITURES AND TRANSFERS ARE PROJECTED AT 97.53 MILLION, CREATING AN ANNUAL OPERATING DEFICIT OF 12.54 MILLION. SO AGAIN, THE, THE DEFICIT WILL CONTINUE TO, TO COMPOUND IN LATER YEARS OR WITHOUT COST CONTAINMENT MEASURES TAKEN. NOW THIS IS THE GENERAL FUND FUND BALANCE AND GAP. AGAIN, WE'VE TALKED ABOUT THIS. I WANNA SEGMENT IT OUT FOR YOU, YOU SO THAT YOU CAN SEE THE FIVE YEAR FINANCIAL FORECAST GOING FORWARD. ALL THINGS CONSIDERED AND FY 27, THE GENERAL FUND STARTS WITH THE $10.30 MILLION IN FUND BALANCE, AS WE'VE MENTIONED, AFTER THE PROJECTED OPERATING DEFICIT OF 7.84 MILLION, ENDING FUND BALANCE DROPS TO $2.46 MILLION. THE REQUIRED MINIMUM FUND BALANCE AT THAT TIME IS ESTIMATED TO BE 20.81 MILLION. SO THE FUND IS NOW SHORT A RESERVE POLICY BY $18.35 MILLION. THE TOTAL GAP REQUIRING BALANCING IS THE OPERATING DEFICIT OF 7.84 MILLION, PLUS THE RESERVE POLICY SHORTFALL OF 18.35 MILLION FOR A TOTAL FY 27 GAP OF $26.19 MILLION. THAT GAP GROWS EACH YEAR REACHING $77.55 MILLION BY FISCAL YEAR 2031 IF NO CORRECTIVE ACTION IS TAKEN. ALL RIGHT. THIS OVERALL VIEW BRINGS THE GENERAL FUND TOGETHER. THE MOST IMPORTANT MESSAGE IS STRUCTURAL IMBALANCE. REVENUES ARE GROWING, BUT THEY'RE NOT GROWING FAST ENOUGH TO COVER RECURRING EXPENDITURES AND RESTORE RESERVES. THE GENERAL FUND IS PROJECTED TO MOVE FROM A FISCAL YEAR 26 CURRENT YEAR GAP OF $14.17 MILLION TO A YEAR, ONE FORECAST GAP OF $26.19 MILLION AND THEN TO $77.55 MILLION BY YEAR FIVE. THIS IS WHY THE CITY CANNOT RELY ON ONE TIME FIXES ALONE. THE SOLUTION HAS TO ADDRESS BOTH SIDES OF THE EQUATION. RECURRING REVENUE CAPACITY, AND RECURRING EXPENDITURE GROWTH. THIS DEFICIT DID NOT OCCUR IN ONE FISCAL YEAR ALONE, BUT RATHER OVER THE COURSE OF SEVERAL FISCAL YEARS, NOR WILL IT BE FIXED OVER THE COURSE OF ONE FISCAL YEAR. IT WILL REQUIRE STRUCTURED, DISCIPLINED BUDGET DEVELOPMENT AND MANAGEMENT OVER THE COURSE OF SEVERAL FISCAL YEARS TO RESTORE THE FUND'S HEALTH. THIS IS REVENUES BASED ON, I I THINK IT'S PROBABLY PRETTY HARD TO ESTIMATE REVENUES OUT INTO YEAR THREE, FOUR, AND FIVE BASED ON CURRENT REVENUES WHICH ARE DOWN, UM, WHICH MAY OR MAY NOT STAY DOWN AND THERE'S A GOOD CHANCE THEY WON'T STAY DOWN. SO IT'S USING WHAT KIND OF AN INCREASE? FIVE, 5% INCREASE OR WELL, EACH OF THE REVENUE LINES USE. WE, WE'VE REVIEWED THE ASSUMPTIONS THAT WERE APPLIED FOR YEARS ONE THROUGH FIVE. THAT IS WHAT THIS IS SHOWING YOU. IF GIVE ALL YOUR ALL THINGS CONSISTENT RIGHT NOW WITH CURRENT, YOUR ESTIMATE, THOSE ASSUMPTIONS APPLIED AT THE REVENUE LEVELS AND AT THE EXPENDITURES, BECAUSE THEY'RE [04:15:01] NOT ALL THE SAME. RIGHT. THERE'S, THERE'S SOME NUANCES THERE. THAT IS WHAT YOURS ONE THROUGH FIVE WOULD LOOK LIKE WITHOUT COST CONTAINMENT. 26 WE'RE REALLY GUESSING AT REVENUES. WELL, EVEN THROUGH 2028, I MEAN, THAT'S STILL A $37 MILLION. YEAH, THAT'S EXACTLY WHAT THEY DO TO CREATE THE BUDGET. REMIND EVERYBODY, RIGHT. IT'S EXACTLY WHAT WE DO, WE GUESS AT REVENUES AND THEN WE TRY TO MATCH, UM, EXPENDITURES. BUT IT'S REALLY HARD TO PREDICT. RIGHT? WELL, TO ME, THIS IS A CONSERVATIVE, UM, FORMAT AS OPPOSED TO, AND THAT'S THE WAY I'M ALWAYS GONNA GO BECAUSE IT'S BETTER TO HAVE MM-HMM . BE LIKE, OH, WE GOT EXTRA MONEY, AS OPPOSED TO, OH, NOW WE HAVE A DEFICIT OF 14 MILLION. SO TO YOUR POINT, ABSOLUTELY THAT'S WHAT HAPPENS IS WHEN WE MAKE THESE GESTURES, THEN WE, WE HAVE TO DECIDE DO WE WANNA GUESS HIGH? DO WE WANNA GUESS LOW? DO WE WANNA GUESS EVEN CONSISTENTLY I THINK WOULD BE GOOD IS NOT TO ALWAYS INCREASE IT AND NOT TO ALWAYS DECREASE IT. BUT WE CAN ALWAYS STAY ON THE SAME TRAJECTORY THAT WE'VE ALWAYS BEEN ON AND IT'LL GIVE YOU, YOU KNOW, THE FIVE YEAR FORECAST, WHICH WE, WHICH WAS REQUIRED AND WHAT WE NEED IN ORDER TO PLAN A CITY. AND THIS IS ONLY SHOWING 9 MILLION INCREASE IN REVENUES OVER THIS PERIOD. RIGHT. TOTAL REVENUES OVER FIVE YEARS, IS THAT WHAT YOU'RE SAYING? MM-HMM . NO. 10.3, I THINK THIS IS INDIVIDUAL YEAR TOTAL REVENUES THIS YEAR IS EXPECTED TO BE 59 MILLION AND TOTAL REVENUES 20, 30, 60 9 MILLION. YEAH. SO IT'S BASED ON, BASED ON ASSUMPTIONS WE SHARED WITH YOU AND PRIOR SLIDES. IF COUNSEL WANTS US TO JACK UP THEIR REVENUE ESTIMATE FOR PROPERTY TAX OR SALES TAX, YOU TELL US AND YOU ARE RESPONSIBLE FOR IT. NOT NOT THE FINANCE DIRECTOR OR THE CITY MANAGER, I'M JUST SAYING. YEAH, THEY ARE VERY CONSERVATIVE NUMBERS. YEAH. AND HE'LL PROCEED HOWEVER WE DECIDE. SO COLLECTIVELY AS A COUNCIL, WE SAY, YEAH, YOU, YOU MAKE THE POLICY DECISION AND WE'LL CRANK IT OUT. THANK YOU. YEAH, KEEP GOING. RIGHT. NEXT IS THE WATER UTILITY FUND. UNLIKE THE GENERAL FUND, THE WATER UTILITY FUND IS SUPPORTED BY USER RATES. IT'S A, UM, THE FINANCIAL CHALLENGE HERE IS TIED TO WATER SUPPLY COSTS, INFRASTRUCTURE INVESTMENT, DEBT SERVICE, AND RATE AFFORDABILITY. THE WATER UTILITY FUND BEGINS THE FORECAST WITH $13.87 MILLION IN FUND BALANCE AND FY 27 REVENUES ARE PROJECTED AT 28.89 MILLION. WHILE EXPENDITURES AND TRANSFERS ARE PROJECTED AT $37.61 MILLION. THAT CREATES AN OPERATING SHORTFALL OF $8.72 MILLION. AFTER THAT SHORTFALL ENDING FUND BALANCE DROPS TO 5.15 MILLION, THE REQUIRED MINIMUM RESERVE IS 9.40 MILLION. SO THE FUND IS BELOW POLICY BY $4.25 MILLION. THE TOTAL FY 27 GAP REQUIRING BALANCING IS THEREFORE $12.97 MILLION. BY FISCAL YEAR 20 31 1, THE PROJECTED GAP GROWS TO $172.59 MILLION. THE PRIMARY DRIVER IS THAT EXPENDITURES, INCLUDING WATER SUPPLY AND FUTURE COST OBLIGATIONS GROW SIGNIFICANTLY FASTER THAN PROJECTED REVENUES. NEXT IS THE WASTEWATER UTILITY FUND. THE FUND STARTS FROM A STRONGER RESERVE POSITION THAN THE WATER UTILITY FUND, BUT FUTURE DEBT SERVICE AND INFRASTRUCTURE RELATED COST CREATES SIGNIFICANT PRESSURE OVER THE FORECAST PERIOD. WASTEWATER BEGINS FY 27 WITH A $22.53 MILLION FUND BALANCE AND FY 27 REVENUES ARE PROJECTED AT $16 MILLION WHILE EXPENDITURES AND TRANSFERS ARE PROJECTED AT $20.42 MILLION. THAT CREATES AN OPERATING SHORTFALL OF $4.41 MILLION. HOWEVER, BECAUSE THE FUND BEGINS WITH STRONG RESERVES, THE ENDING FUND BALANCE REMAINS ABOVE THE REQUIRED MINIMUM IN FY 27. THAT IS WHY THERE IS NO FY 27 BALANCING GAP SHOWN. BUT IN FISCAL YEAR 28, THE FUND BALANCE FALLS BELOW POLICY. THE GAP REQUIRING BALANCING IS 13.09 MILLION IN FISCAL YEAR 2028. BY FISCAL YEAR 2031, THE WASTEWATER GAP GROWS TO $67.56 MILLION. THE MAIN MESSAGE IS THAT WASTEWATER HAS MORE SHORT TERM CUSHION THAN WATER, BUT THE FORECAST STILL SHOWS A STRUCTURAL ISSUE IN THE OUT YEARS. I HAVE A QUICK QUESTION. UM, FOR WATER AND WASTEWATER, UH, IN THESE FORECASTS, I THINK ONE THING THAT WOULD HELP ME, UH, TO BETTER UNDERSTAND THEM IS, UH, WHAT PERCENTAGE OF THIS OR WHAT NUMBER OF THIS IS FOR ITEMS THAT WE HAVE TO STATU THAT ARE STATUTORY, THAT ARE [04:20:01] STATUTORILY REQUIRED. I THINK THAT WOULD HELP MAKE A BIG DIFFERENCE IN HELPING ME UNDERSTAND, OKAY, WHAT DO WE HAVE TO DO IN ORDER TO MEET STATE LAW? RIGHT. OKAY. SO IF THAT DO BE INCLUDED, I THINK THAT REALLY, REALLY HELPED. GREAT SUGGESTION. WE CAN DO THAT FOR SURE. YEAH. THANK YOU. OF COURSE. OKAY. AND FINALLY WE HAVE THE STORM DRAINAGE UTILITY FUND. THIS IS A SMALLER FUND, AS I'VE MENTIONED, BUT IT STILL FACES THE SAME BASIC CHALLENGE. REVENUES ARE NOT SUFFICIENT TO SUPPORT PROJECTED EXPENDITURES, TRANSFERS, RESERVE REQUIREMENTS, AND FUTURE DEBT RELATED COSTS. STORM DRAINAGE BEGINS FISCAL YEAR 27 WITH 895,000 0 2 0 IN FUND BALANCE AND FISCAL YEAR 2027 REVENUES ARE PROJECTED AT 1.91 MILLION WHILE EXPENDITURES AND TRANSFERS ARE PROJECTED AT $2.81 MILLION. THAT CREATES AN OPERATING SHORTFALL OF $904,698. ENDING FUND BALANCE BECOMES NEGATIVE IN FISCAL YEAR 2027 AT APPROXIMATELY NEGATIVE $9,678. THE REQUIRED MINIMUM RESERVE IS $703,000. SO THE FUND IS BELOW POLICY BY APPROXIMATELY $713,000. THE TOTAL FISCAL YEAR 2027 GAP, REQUIRING BALANCING IS 1.62 MILLION. BY FISCAL YEAR 2031, THE STORM DRAINAGE GAP GROWS TO APPROXIMATELY 14.99 MILLION. THE KEY TAKEAWAY IS THAT EVEN THOUGH STORM DRAINAGE IS SMALLER IN DOLLAR TERMS, THE FUND IS STRUCTURALLY OUT OF BALANCE AND REQUIRES ACTION TO MAINTAIN SERVICES, SUPPORT INFRASTRUCTURE AND MEET RESERVE POLICY. TO ME, STORM DRAINAGE IS ONE OF THE MOST IMPORTANT FUNDS AND ACTIVITIES THAT WE HAVE WITHIN OUR CITY BECAUSE IT DOES LIMIT OUR DEVELOPMENT IF WE DON'T HAVE THE STORM DRAINAGE ALL SET UP, UM, AS WE SEE IN, UM, ISSUES THAT WE HAVE ON THE EAST. SO IT'S GONNA BE IMPORTANT THAT WE'RE ABLE TO MAINTAIN THAT. UH, SO I JUST WANNA, BEFORE I TURN IT OVER TO PERVEZ, UH, I, WHAT I WANNA SAY IS THE FORECAST IS NOT INTENDED TO SAY THAT THESE OUTCOMES ARE INEVITABLE. AND MAYOR, YOU MADE SUCH A GOOD POINT EARLIER ABOUT THAT. IT'S INTENDED TO SHOW THAT REALLY WHAT HAPPENS IF WE DON'T MAKE CHANGES NOW, UM, THE VALUE OF THIS FORECAST IS THAT IT GIVES COUNCIL STAFF IN THE COMMUNITY A CLEAR VIEW OF THE SIZE, TIMING, AND DRIVERS OF THE FINANCIAL CHALLENGE. SO THAT FISCAL YEAR 26, 27 BUDGET CAN BE DEVELOPED WITH TRANSPARENCY, DISCIPLINE, AND A PATH TOWARD LONG-TERM SUSTAINABILITY. ALRIGHT, THANK YOU. THANK YOU. OF COURSE. THANK YOU MS. TORRES. SO, ION COUNCIL, Y'ALL WANT TAKE A BREAK OR PUSH THROUGH 10 SLIDES. POWER THROUGH. LET'S GO. OKAY, WE GOT 10 SLIDES LEFT. WE'RE GOOD. ALL RIGHT. SO NOW WE'RE GONNA TALK ABOUT FINANCIAL OPPORTUNITIES AND CHALLENGES. I SEE GLASS HALF FULL MOST OF THE TIME, BUT BEFORE I DO THAT, UH, Y'ALL MAY RECALL THAT OUR COMMUNICATIONS DEPARTMENT DID A BUDGET SURVEY NOT TOO LONG AGO. AND WE SHARED THE RESULTS WITH COUNSEL ON MAY 4TH. UH, THERE WERE 403 SURVEY RESPONDENTS. WHEN I COMBED THROUGH THE SURVEY RESULTS, I READ EVERY SINGLE COMMENT THAT WAS ON THAT SURVEY DOCUMENT. IT WAS IN HUNDREDS. THE SIX COMMON TAKEAWAYS I WALKED OFF AFTER READING THOSE COMMENTS ARE THESE SIX I'M GONNA WALK YOU THROUGH. THEY'RE NOT LISTED IN ANY, UH, PRIORITY ORDER. I JUST JOTTED THEM DOWN AS TO WHAT I SAW IN THOSE SURVEY RESULTS. ROADWAY IMPROVEMENTS, THESE ARE PRIORITIES EXPRESSED BY THE 403 SURVEY RESPONDENTS, ROADWAY IMPROVEMENTS, WATER SUPPLY CAPACITY, MAINTAIN EXISTING PARTS AND RECREATION FACILITIES BEFORE INVESTING IN NEW FACILITIES. REDUCTION IN PROPERTY TAX RATES. THEY'RE LOOKING FOR RELIEF AND PROPERTY TAX RATES, REDUCTION IN WATER AND WASTEWATER SERVICE RATES AND REDUCTION IN CITY'S OVERALL COSTS. THESE ARE THE SIX COMMON THEMES I READ OVER AND OVER AND OVER AGAIN IN THOSE 200 OR 300 COMMENTS THAT WERE INCLUDED IN THE SURVEY. YOU HAVE A COPY OF THAT AS WELL THAT OUR COMMUNICATION DEPARTMENT, UH, SENT ON MAY 4TH. SO WHEN WE DO THE PROPOSED BUDGET, WE'RE GONNA FRAME AROUND THESE THINGS AS WE DISCUSS WITH COUNSEL, WE ARE GONNA FRAME AROUND THESE THINGS, UH, THESE PRIORITIES. UH, MR. MOHIT, YES, I WOULD JUST LIKE TO SAY, UM, THANK YOU. IT IS VERY REFRESHING TO [04:25:01] KNOW THAT YOU WENT THROUGH ALL OF THESE AND, UM, READ IT SOMETHING I DO EVERY SINGLE TIME I POST EVERY, IT'S, IT'S CUMBERSOME, IT'S LONG, BUT IT'S SO IMPORTANT THAT WE DO THAT AS STAFF AND ELECTED OFFICIALS TO GET A GOOD IDEA OF WHAT OUR RESIDENTS WANT. SO I WANT TO THANK YOU FOR DOING THAT. CERTAINLY. SO MOVING ON, THESE, WE CAN LOOK AT THESE AS OPPORTUNITIES. UH, THERE ARE CERTAINLY CHALLENGES OVER THE NEXT THREE YEARS. UM, BUT THEY CAN ALSO BE USED AS OPPORTUNITIES. THE NUMBER OF ONE AREA IS TO HAVE A, A BALANCED BUDGET AND FUND BALANCE, UH, TO, TO REGROW OR REPLENISH OUR FUND BALANCE. AND BY THAT I MEAN WE'LL HAVE TO BY DOING THAT. TO ACHIEVE THAT, WE WOULD HAVE TO CONTROL OPERATIONS AND MAINTENANCE COSTS GOING FORWARD. DEVELOPING STRUCTURALLY SUSTAINABLE BUDGETS. BY THAT I MEAN WE, WE USE THIS TERM VERY UH, LOOSELY STRUCTURAL, BUT WHAT DOES THAT MEAN? IT HAS TO, THE REVENUE MUST BE EITHER EQUAL TO OR ABOVE THE EXPENDITURES FOR EACH BUDGET CYCLE. SO THAT'S WHAT WE MEAN BY STRUCTURAL BALANCE. AND WHEN IT'S OUTTA WHACK AND WE SHOWED YOU THAT WHAT, WHAT COULD HAPPEN, THE CATASTROPHIC RESULTS, IT PRODUCES PROPERTY TAX RATES. WE DON'T KNOW YET WHAT THE CERTIFIED TAX RULES WILL BE. WE WON'T KNOW THAT UNTIL LATE JULY. SO WE CAN SHARE THAT WITH COUNSEL WHEN WE DO RECEIVE IT. BUT ASSOCIATED WITH PROPERTY TAX RATES, WHAT DRIVES IT? WE GOTTA LOOK AT THAT. THOSE THINGS, RIGHT? SO IF YOU LOOK AT TWO B, WE HAVE TO, WE HAVE TO, AND WE MUST MANAGE OUR CIP SPENDING PLAN THAT AFFECTS OUR ROAD IMPROVEMENTS, OTHER CITYWIDE PROJECTS AND ALSO HAVE TO TALK ABOUT FUTURE BOND ELECTION. 'CAUSE ONCE WE GET DONE WITH THE 22 ROAD BOND PROGRAMS, WE'RE NOT DONE WITH ALL OUR ROADS. THERE ARE STILL MANY ROADS THAT WILL NEED AND REQUIRE RECONSTRUCTION AND WE AND MAINTAIN. WE NEED TO PLAN FOR THOSE. AND AT LEAST AT THE STAFF LEVEL, WE'RE LOOKING AT 28 29 TIMEFRAME FOR ANOTHER ROUND OF BOND ELECTION IF COUNCIL DESIRES. SO WE'LL SHOW YOU WHAT'S UNFUNDED IN OUR FIVE YEAR CIP SPENDING PLAN ON JUNE THE 13TH. AND Y'ALL HELP US DECIDE AND GIVE US DIRECTION. WHICH WAY DO YOU WANNA GO? WE ALSO HAVE TO MANAGE THE IMPACT OF TAX INCREMENT REINVESTMENT ZONES. AS I SHOWED YOU, THE GROWTH IS HAPPENING WITHIN THE TSS, NOT IN THE CORE CITIES. HOW DO WE MANAGE THAT? HOW DO WE COVER OUR EXPENDITURES TO KEEP IT STRUCTURALLY BALANCED ON THE CORE CITY SIDE, WE STILL NEED PUBLIC SAFETY, WE STILL NEED POLICE OFFICERS, WE STILL NEED UM, OUR PARKS EMPLOYEES. SO HOW DO WE MANAGE THAT? THOSE ARE THE CHALLENGES WE GOTTA ADDRESS. ON THAT NOTE, MAYOR, UH, YVONNE FLORES AND I HAVE ALREADY HAD THOSE CONVERSATIONS. IT COULD BE JUST A MATTER OF RELOOKING AT ALL THE TS AND SEEING IF THERE IS RESTRUCTURING THAT NEEDS TO BE THAT CAN TAKE PLACE. VERY GOOD POINT. MAYOR PORTA NUMBER THREE, WATER SERVICE RATES. WE JUST SHOWED YOU BASED ON THE LAST COST OF SERVICE UPDATE, WHAT THOSE RATE INCREASE PROJECTIONS ARE. THEY'RE NOT MINIMAL. THEY'RE 20%. 20%. WE HAVE TO MANAGE THE FINANCIAL IMPACT OF LONG-TERM WATER SUPPLY CAPACITY. WE KNOW WE HAVE GAPS. WE KNOW WE HAVE TO PLAN FOR IT. WE KNOW WE HAVE TO BUY AND RESERVE THAT, THAT WATER. BUT WE HAVE TO LOOK AT WHEN THOSE GAPS ARE OCCURRING. WHEN WE NEED TO INVEST THOSE DOLLARS. WE DON'T HAVE TO GO BUY ALL THE WATER TODAY. WE DON'T HAVE TO PAY MILLION DOLLAR A YEAR RESERVATION FEES TODAY. WE HAVE TO PLAN FOR THOSE. AND PART OF THE LONG TERM WATER SUPPLY CAPACITY IS NOT JUST BUYING WATER FROM OTHER [04:30:01] ENTITIES. WE HAVE TO REVISIT THE MASTER PLAN. MM-HMM THAT WAS SHARED WITH CITY COUNCIL A COUPLE OF YEARS AGO, MAYBE THAT NEEDS TO BE UPDATED. MIKE MURPHY AND HIS TEAM ARE WORKING WITH THE CONSULTANTS TO UPDATE THAT MASTER PLAN FOR WATER SUPPLY. AND IT HAS A LOT OF OTHER OPTIONS WE CAN LOOK AT THAT MIGHT BE CHEAPER TO FILL THOSE GAPS SOONER THAN LATER. SO WE'RE EXAMINING THAT AND WE'LL BRING BACK THAT TO TO COUNCIL. AND THEN OF COURSE THREE C, HOW DO WE STABILIZE OUR RATE INCREASES THAT WE ARE FORECASTING AND MANAGE THE BILL IMPACT ON OUR CUSTOMERS? 'CAUSE EVERYTHING THAT WE DO IN WATER AND WASTEWATER, EVERYTHING WE DO ON THE GENERAL FUND ENDS UP IN PROPERTY TAX RATE INCREASES OR IMPACTS. EVERYTHING WE DO ON THE WATER AND WASTEWATER SIDE ENDS UP IN THE UTILITY BILL. AND THAT UTILITY BILL IS FOR OUR HOUSEHOLDS IN OUR COMMUNITY. AND I DON'T MEAN THIS IN A NEGATIVE WAY. WE ARE NOT WOODLANDS TEXAS. WE'RE NOT WESTLAKE HILLS. WE ARE A WORKING CLASS COMMUNITY. WE NEED TO RECOGNIZE THAT PEOPLE ARE STRUGGLING TO PAY THEIR WATER BILLS. I HEAR IT FROM MY OFFICE WHEN THEY'RE WORKING OUT THEIR PAYMENT PLAN AT THE FRONT WINDOW. WE IMPACT THEIR HOUSEHOLD BUDGETS. WE NEED TO BE SUPER SERIOUS ABOUT HOW WE MANAGE THESE THINGS AND WHAT KIND OF BURDEN WE'RE PLAY PLACING ON OUR HOUSEHOLDS IN OUR COMMUNITY. AND WE ALSO HAVE TO TAKE INTO CONSIDERATION THAT THAT SAME HOUSEHOLD HAS BESIDES THEIR FOOD AND MORTGAGE AND CAR PAYMENTS IS GONNA GET TAX BILL FROM US IS GONNA GET WATER BILL FROM US IS GONNA GET WASTEWATER. BILL FROM US IS GONNA GET TRASH BILL FROM US. WE ALREADY KNOW CONTRACTUALLY TRASH IS GONNA GO UP TO AND HALF PERCENT NEXT YEAR BASED ON THAT AGREEMENT WE HAVE. SO WE JUST HAVE TO BE SMART ABOUT IT. WE JUST HAVE TO BE PRACTICAL AND REALISTIC ABOUT IT. HOW WE ARE IMPACTING. WE HAVE SENIOR CITIZENS, WE HAVE PEOPLE IN OUR COMMUNITY THAT ARE FIXED INCOME. WE HAVE VETERANS IN OUR COMMUNITY. WE HAVE TO CONSIDER THE IMPACT ON ALL OF THOSE. WE CANNOT ASSUME WE ARE IN WOODLANDS, TEXAS OR WESTLAKE HILLS. WE JUST HAVE TO GET SNAP OUT OF IT. THANK YOU FOR ADDRESSING THAT. THANK YOU SO MUCH. YES SIR. AND THEN LASTLY, HOW DO WE MANAGE OUR DEBT? LONG-TERM DEBT POSITION? THESE ARE ALL, ALL FIVE OF THESE ARE INTERCONNECTED, INTERDEPENDENT, RIGHT? THEY ALL DEPEND ON EACH OTHER AND ONE IMPACTS THE OTHER. AND IT'S LIKE A DOMINO. IF WE DON'T TAKE CARE OF THE FIRST DOMINO, IT'S JUST GONNA GET WORSE AND WORSE AND WORSE. SO ON THE DEBT MANAGEMENT SIDE, WE'RE CONCERNED ABOUT MAINTAINING OUR CREDIT RATING. 'CAUSE IF WE ARE GOING TO ISSUE DEBT, THE NEXT ROUND WILL BE LATE THIS SUMMER, I'M GOING TO COME BEFORE YOU TO ASK YOUR AUTHORIZATION TO ISSUE THAT. WE GOTTA REIMBURSE THE CITY FOR THE TREATMENT PLANT EXPANSION. WE'RE PAYING THOSE BILLS RIGHT NOW USING OUR SAVINGS ACCOUNT, BUT THAT SAVINGS ACCOUNT IS DEPLETING FASTER THAN I CAN PUT MONEY BACK IN THERE. I AM BURNING $5 MILLION A WEEK, $5 MILLION A WEEK. AND THAT'S ON THE OPERATING SIDE. 2 MILLION OF THAT A PER MONTH IS PERIL. SO WE GOTTA BE VERY METHODICAL, VERY SURGICAL ABOUT WHAT WE'RE GONNA DO IN COST CONTAINMENT. WE'RE GONNA HAVE TO TIME OUR BOND ISSUANCES AND WE'RE GONNA HAVE TO MANAGE THE IMPACT ON OUR PROPERTY TAX RATES BECAUSE LIKE I SAID, THEY ALL BOIL DOWN TO YOUR TAX BILL AND YOUR UTILITY BILL. SO WE HAVE TO BE SUPER, SUPER, UM, CAREFUL HOW WE'RE DOING THESE THINGS. SO HERE ARE THE TAKEAWAYS. I'M GONNA SUM IT UP MY CONCLUSIONS FOR Y'ALL IN THE 83 PLUS SLIDES THAT WE HAVE [04:35:01] TALKED ABOUT SO FAR. SO IN OUR WORK SESSION TODAY, COUNSEL, WE PRESENTED COMPREHENSIVE AND DETAILED FINANCIAL INFORMATION TO SUPPORT AND EXPLAIN THE CITY'S OVERALL BUDGETARY CONDITION TO OUR CITY COUNCIL MEMBERS, TO OUR RESIDENTS, AND HOPEFULLY TO OUR CITY STAFF. OUR GOAL WAS TO PRESENT THIS BUDGETARY INFORMATION IN A FORMAT THAT PROVIDED CLARITY, TRANSPARENCY, AND EASE OF UNDERSTANDING AS TO HOW WE GOT HERE. THE CITY'S BUDGETARY AND FINANCIAL CHALLENGES DID NOT SIMPLY EMERGE THIS MONTH OR THIS FISCAL YEAR. THESE BUDGETARY CHALLENGES HAVE DEVELOPED OVER MULTIPLE FISCAL YEARS. BEGINNING WITH THE 2324 BUDGET CYCLE. EVERY CHART WE SHOWED YOU, YOU CAN GO BACK AND DRAW A LINE WHERE IT STARTED TO INCLINE ON THE EXPENDITURE SIDE AND DECLINE ON THE REVENUE SIDE AND THE FUND BALANCES IN ADDITION. SO IF THIS IS WASN'T BAD ENOUGH, IN ADDITION, THE CURRENT ECONOMIC CONDITIONS THAT WE'RE ALL FACING HAVE FURTHER INTENSIFIED THE BUDGETARY AND FINANCIAL CHALLENGES THAT WE'RE FACING THE CITY IS FACING TODAY. AND OUR RESIDENTS, OUR TAXPAYERS. SO TO SUM IT UP, THE NATURE OF THE CITY'S CURRENT BUDGETARY AND FINANCIAL CHALLENGES ARE MULTIFACETED, RIGHT? WE WENT OVER THOSE OVALS THAT THAT, UH, HOLLY TALKED ABOUT. MULTIFACETED IS IT AFFECTS THE REVENUE SIDE, IT AFFECTS THE EXPENDITURE SIDE. IT AFFECTS TRANSFERS BOTH IN AND OUT. IT AFFECTS CIP SPENDING. IT AFFECTS TAX RATE, BUDGET, UH, UTILITY RATES. NUMBER TWO, WE HAVE AN STRUCTURAL IMBALANCE IN OUR FUNDING SCHEMES AND PLANS. WE HAVE TO UPRIGHT THAT AND CORRECT THAT. THE IMPACT IS LONG TERM. IF WE DON'T FIX IT NOW, IF'S GONNA IMPACT NOT ONLY NEXT YEAR, BUT DOWN THE ROAD. THESE BUDGETARY AND FINANCIAL CHALLENGES HAVE DEVELOPED OVER MULTIPLE FISCAL YEARS. I CAN'T REPEAT THIS OVER AND OVER AGAIN ENOUGH. IT DIDN'T HAPPEN THIS YEAR. IT DIDN'T HAPPEN LAST QUARTER. IT HAPPENED OVER MULTIPLE YEARS BECAUSE IT HAPPENED OVER MULTIPLE YEARS. THE RECOVERY WILL ALSO TAKE AND REQUIRE MULTI-YEAR, MULTI-YEAR EFFORT BY COUNCIL, BY STAFF AND OUR CONSULTANTS THAT WE EMPLOY AND HIRE TO GIVE US ADVICE. SO WHAT'S OUR PATH FORWARD WITH CITY COUNCIL'S DIRECTION AND SUPPORT? THESE BUDGETARY AND FINANCIAL CHALLENGES ARE SOLVABLE, RIGHT? WE TALKED ABOUT ALL THESE THINGS AFFECTING US. THE POSITIVE SIDE TO ALL THIS DISCUSSION IS IT CAN BE FIXED. WE CAN SOLVE IT TOGETHER. ALL OF US, STAFF, COUNCIL, RESIDENTS, TAXPAYERS, EVERYBODY TOGETHER, WE ALL HAVE TO GO IN THE SAME DIRECTION. BUT TO DO THAT, WE WILL REQUIRE DECISIVE AND IMPACTFUL CHANGES IN THE ORGANIZATION. WE CANNOT CONTINUE BUSINESS AS USUAL, PERIOD. SO LET ME REPEAT THAT. WE WILL REQUIRE DECISIVE AND IMPACTFUL CHANGES. AND WHAT DOES THAT MEAN? SO I HAVE A LIST OF SIX THINGS, BUT THEY'RE NOT LIMITED TO THAT. THAT MIGHT BE MORE AS I GO THROUGH THESE SIX REFOCUSING THE MANAGEMENT CULTURE THAT WE HAVE IN THE CITY GOVERNMENT, CITY ADMINISTRATION. [04:40:04] I'M NOT GONNA BEAT AROUND THE BUSH. I'VE ALWAYS BEEN UPFRONT WITH COUNSEL, WITH STAFF, AND I'M NOT ABOUT TO CHANGE THAT. I HAVE TO TAKE THIS ORGANIZATION IN A VERY DIFFERENT DIRECTION THAN WE HAVE BEEN, PERIOD. AND TO DO THAT, I HAVE TO REFOCUS THE MANAGEMENT CULTURE WE HAVE TODAY. WE HAVE TO ALIGN OUR ORGANIZATIONAL PRIORITIES. AND BY THAT I MEAN POLICE CAN BE GOING NORTH AND PARKS IS GOING SOUTH, AND WATER UTILITIES IS GOING EAST, AND WASTEWATER AND ENGINEERING ARE GOING WEST. WE ALL HAVE TO GO IN THE SAME DIRECTION AT THE SAME TIME, BASED ON OUR PRIORITIES, WHAT WE ARE TRYING TO SOLVE. AND THOSE THAT DON'T WANNA GO AND MARCH IN THE SAME DIRECTION WITHIN OUR ORGANIZATION THAT YOU HAVE EMPOWERED ME TO FIX, I WILL FIX THAT, NO DOUBT. BUT I DON'T WANT Y'ALL TO BE SURPRISED WHEN I'M DOING THAT. I WANT YOU TO KNOW THAT THAT WILL HAPPEN. NUMBER THREE, THIS IS IMPORTANT. CONSOLIDATION OF OVERLAPPING FUNCTIONS TO ELIMINATE REDUNDANCY AND DUPLICATION OF EFFORTS. COUNCIL MEMBERS TALKED ABOUT IT. WE'VE HEARD FROM THE RESIDENTS AND WE KNOW WE HAVE THESE IN OUR ORGANIZATION. WE JUST NEED TO HAVE THE GUTS TO ADDRESS 'EM AND TAKE THOSE BOLD STEPS. NUMBER FOUR, WE HAVE TO STRENGTHEN THE EMPHASIS ON, NOT BECAUSE I'M A FINANCE TYPE PERSON, WE HAVE TO STRENGTHEN THE EMPHASIS ON BUDGETARY CONTROLS AND FISCAL DISCIPLINE. THIS HAS TO BE AT THE COUNCIL LEVEL, THIS HAS TO BE AT THE STAFF LEVEL, AND THIS HAS TO BE AT OUR RESIDENT LEVEL SO THEY CAN HOLD US ACCOUNTABLE. AND BY THAT I MEAN EVERY DECISION WE MAKE, WE EVALUATE THE IMPACT, THE FISCAL IMPACT OF THAT DECISION BEFORE WE EMBARK ON IT. I MEAN, I CAN GIVE YOU EXAMPLES AFTER EXAMPLES THAT WE MADE DECISIONS WITHOUT ANY CONSIDERATION OF PHYSICAL IMPACT. AND WE'RE SEEING THE RESULTS OF THAT. THAT IS GOING TO, AND MUST STOP IT STARTED TO STOP ON MAY 11TH. AND ANYBODY THAT IS NOT ON BOARD WITH ME ON THAT MATTER, WE CAN HAVE A DISCUSSION. BUT THIS WILL PREVAIL. IT HAS TO BE DONE. THERE'S NO, IT'S BUTSON. SORRY. YOU, YOU WERE IN THE MIDDLE OF SOMETHING. UM, 'CAUSE IF YOU WANTED TO FINISH, I CAN ASK MY QUESTION AFTER I'M, IT'S GOT TWO MORE TO GO. WE HAVE TO REEXAMINE OUR PLANNING AND DEVELOPMENT PROCESS. WE'VE GOT ALL THESE DAS FLOATING OUT THERE. EVERY DA'S A LITTLE DIFFERENT. IF WE HAVE CODE IN PLACE, WHY DO WE HAVE TO HAVE ALL THESE DAS? HAVE WE EVER WONDERED THAT? HAVE WE EVER ASKED THAT QUESTION? WHY DO WE HAVE TO CUSTOMIZE THESE DEVELOPMENTS? MAKE 'EM FOLLOW THE CODE. IF WE WANT SOMETHING SPECIFIC, WE CAN WORK WITH THEM. BUT OTHER THAN THAT, FOLLOW OUR CODE. IF THE CODE IS NOT STRINGENT ENOUGH, WHAT COUNCIL WANTS, LET'S CHANGE THE CODE. FIX THE CODE. WE GOT ZILLIONS OF DAS. STAFF DOESN'T EVEN KNOW THE INVENTORY OF DAS WE HAVE. WHAT'S IN THOSE DAS? DO THEY OWE US MONEY? HAVE WE ACCOUNTED FOR THAT? DO WE KNOW WHEN THEY OWE US THAT MONEY? HAVE WE COLLECTED THAT MONEY? I COULDN'T TELL YOU. AND NOR CAN ANYBODY IN THE ORGANIZATION THAT NEEDS TO BE FIXED. REEVALUATING ECONOMIC DEVELOPMENT STRATEGIES AND INCENTIVES. WE ARE NO LONGER A FARM TOWN ANYMORE. WE DON'T HAVE TO GIVE INCENTIVES FOR RESTAURANTS AND MCDONALD'S AND EBD STUFF. IF THEY ARE GOING TO BRING JOBS, [04:45:01] NOT JUST MINIMUM PAYING JOBS. PEOPLE WHO CAN EARN A LIVING, RAISE THEIR FAMILY HERE, LIVE HERE, BUY A HOME HERE, EVERYTHING THEY NEED TO DO, BE ABLE TO AFFORD THAT HERE ON THAT JOB CREATION. THOSE ARE THE ONES WE NEED TO INCENTIVIZE. NOT, NOT THESE IT BITTY STUFF THAT'S NOT GONNA MOVE THE NEEDLE. NOT GONNA HELP OUR RESIDENTS MAKE MONEY IF THEY'RE NOT GONNA KEEP 'EM IN KYLE. THEY STILL HAVE TO DRIVE TO AUSTIN OR GEORGETOWN OR SAN ANTONIO TO KEEP THEIR LIVELIHOOD. WHY ARE WE INCENT INCENTIVIZING? I MEAN, THERE'S MILLIONS OF DOLLARS TIED TO THESE INCENTIVES. WE NEED TO REEXAMINE THAT, HOW WE DO IT. SO THESE ARE SOME EXAMPLES OF THAT REALIGNMENT OF CIP SPENDING PLAN BASED ON AFFORDABILITY AND COUNCIL DIRECTION. THIS IS THE DRIVER FOR DEBT SERVICE AND COUNCIL MEMBERS ABOUT, I FORGOT I HAD 11. I'LL PAUSE HERE AND ANSWER YOUR QUESTION. IT'S OKAY. I WAS GONNA LET YOU GO. UM, BUT THANK YOU FOR PAUSING. UM, IN OUR STAFF, UH, MEMOS THAT ARE PUT ON THE AGENDAS, UH, THERE'S AN AREA FOR FISCAL IMPACT. UH, BUT I'VE NOTICED THAT VERY RARELY IS THERE ACTUALLY NUMBERS A LOT OF THE TIMES THAT WE'LL JUST SAY LIKE, NA OR LIKE NO FISCAL IMPACT. UM, IS THERE A REASON FOR THAT OR WHO PUTS TOGETHER THOSE STAFF MEMOS? SO IF THERE IS JUST A STAFF REPORT THAT STAFF IS PRESENTING, IT'S JUST A CONCEPT. WE DON'T HAVE ANY FISCAL IMPACT UNTIL THAT BECOMES A PROJECT OR A SERVICE. IF COUNCIL IS AWARDING A CONTRACT OR IF COUNCIL IS AWARDING, UM, SOME KIND OF AWARD, YOU WILL ALWAYS SEE A FISCAL IMPACT STATEMENT. IT WILL BE TOWARDS THE END. HOLLY AND HER STAFF PREPARES THAT. IT BASICALLY SAYS FOR COUNSEL, BEFORE YOU DECIDE WHERE THE MONEY'S COMING FROM, WHERE MUCH MONEY DO WE HAVE OR DON'T HAVE. 'CAUSE SOMETIMES THE DEPARTMENTS WILL COME, HEY, I NEED A FISCAL NOTE. THIS ITEM IS $5 MILLION, BUT THEY GOT ZERO ON THE BUDGET. SO WE KIND OF HELP TO HELP THEM ALONG. GO BACK, DO YOUR HOMEWORK. BUT WHEN IT COMES ON THE AGENDA, NINE OUTTA 10 TIMES, YOU WILL SEE WHAT THE SOURCE OF THE MONEY IS, HOW MUCH IS IN THE BUDGET, HOW MUCH IS FOR THIS ITEM THE COUNCIL IS ABOUT TO VOTE ON, AND HOW MUCH WILL BE LEFT AFTER THAT DECISION IS MADE. OKAY. I IS IT, UH, POSSIBLE IF WE CAN INCLUDE LIKE A NARRATIVE PORTION AS WELL IN THAT? BECAUSE I THINK RIGHT NOW IT'S JUST QUITE LITERALLY THE NUMBERS THAT ARE THROWN ON THERE. UM, AND SORT OF LIKE A GRAPH. UM, BUT IT, I THINK IT WOULD BE HELPFUL IF THERE WAS ALSO JUST A SMALL NARRATIVE PORTION THAT EXPLAINED THAT OR ANY OF THE DISCUSSIONS THAT WERE HAD AROUND THE, THE FISCAL IMPACTS. UM, I FEEL LIKE THAT WOULD ALSO BE HELPFUL TO TAKE INTO CONSIDERATION OR KNOW AS WE'RE MAKING THESE DECISIONS. SO WE, WE CAN ADD A CATEGORY IN THE STAFF MEMO THAT THIS DEPARTMENTS WILL HAVE TO EXPLAIN WHAT THEY HAVE DONE SO FAR, WHAT HAS BEEN DISCUSSED WITH COUNCIL, WHAT HAS BEEN AUTHORIZED. BECAUSE THE FISCAL IMPACT IS JUST A TABLE THAT BASICALLY GIVES YOU THE, THE BUDGET AUTHORITY AND HOW MUCH IS AVAILABLE. OKAY. I, YEAH. 'CAUSE I THINK A NARRATIVE PORTION WOULD BE HELPFUL. UM, WHEN I WORKED AT THE STATE AND WE HAD TO DO, UH, FISCAL NOTES FOR, UH, LEGISLATIVE UH, REQUESTS, UH, WE HAD TO INCLUDE, UH, AN ACTUAL NARRATIVE PORTION ALONG WITH IT. AND THAT REQUIRED THE DIFFERENT PROGRAMS AND DEPARTMENTS TO ALSO PROVIDE INFORMATION, UM, FOR OUR LEGISLATORS. SO I THINK THAT WOULD BE HELPFUL. YES. I MEAN THAT'S A VERY GOOD POINT. WE SHOULD SEE THAT ENTIRE STAFF MEMO AS THE, AS THE IMPACT STATEMENT OF THAT ACTION. THE TABLE, THE, WHAT WE CALL THE FISCAL IMPACT REALLY IS NOT THE TRUE FISCAL IMPACT. IT'S JUST GIVES YOU A BUDGET STATUS. THAT ENTIRE MEMO BY THAT DEPARTMENT SHOULD EXPLAIN WHAT ARE WE DOING IT, WHY ARE WE DOING IT? HOW MUCH IS GONNA COST NOT ONLY NOW, BUT FOR THE NEXT TWO OR THREE YEARS. YEAH. YEAH. I THINK THAT WOULD BE GREAT IF WE COULD INCLUDE SURE. A VERSION OF THAT. THANK YOU. O SO I JUST WRAPPED UP ON NUMBER SEVEN, REALIGNMENT OF CIP SPENDING. WE TALKED A GREAT DEAL ABOUT THAT. NUMBER EIGHT, ADVANCING WATER AND WASTEWATER SERVICE RATE STABILIZATION EFFORTS. WHAT CAN WE DO START DOING NOW THAT WILL HELP US STABILIZE THE WATER RATE INCREASES THAT WE SEE IN THE FUTURE? [04:50:02] WE CAN LOOK AT THE EXPENDITURE SIDE. WHAT ARE WE, HOW ARE WE SPENDING AND WHEN ARE WE SPENDING AND WHY ARE WE SPENDING THAT TRANSLATES INTO THE RATE IMPACT. WE CAN LOOK AT THE COST OF SERVICE STUDY METHODOLOGY, HOW WE ALLOCATE COST, HOW RATES ARE ESTABLISHED. WE CAN LOOK AT WHAT THE MINIMUM CHARGE PERHAPS MAY INCLUDE UP TO 2000 GALLONS OR 3,500, WHATEVER THAT IS. THOSE ARE THE THINGS I'M TALKING ABOUT IN STABILIZING THE RATE EFFORTS. AND WE ARE GOING TO DO THAT IN THE 26TH UPDATE. SO WHEN WE BRING THE COST OF SERVICE STUDY RESULTS TO COUNCIL, YOU WILL SEE THE CHANGES AND THE, UH, METHODOLOGY IMPACT ON THE, ON THE UTILITY RATES. NUMBER NINE, RESOLVING RATE AND RATE RELATED DISPUTES. SO THINK ABOUT IT, WE HAVE A COUPLE OF PUC CASES OUTSTANDING. WE HAVE CROSSWIND IS IN THERE. WE HAVE SIX CREEKS IN THERE. WE HAVE DA DISPUTES WITH SIX CREEKS DEVELOPER. ALL OF THESE ARE COSTING US MONEY. AND, AND I'M NOT PICKING ON ANY ONE PROFESSION, BUT THE ONES THAT MAKE OUT LIKE ABANDONED ON BOTH SIDES ARE THE ATTORNEYS. AND ON MAY 19TH, YOU'RE GONNA SEE TWO AGENDA ITEMS THAT WE HAVE PLACED. IF WE GO CONTINUE GOING FORWARD ON THE TWO PUC CASES, WHAT WE, OUR BEST ESTIMATE IS AFTER TALKING TO THE ATTORNEYS INVOLVED, HOW MUCH MORE MONEY DO WE NEED TO ADD TO THEIR CONTRACTS? SAME THING FOR THE RATE EXPERT. 'CAUSE NOT ONLY DO YOU NEED THE ATTORNEY, YOU ALSO NEED THE RATE CONSULTANT AND THEIR TEAM OF EXPERTS. SO BETWEEN THOSE TWO, IT'S ALMOST A MILLION DOLLARS ON YOUR AGENDA NEXT WEEK, OR NOT NEXT WEEK, BUT ON THE 19TH. YEAH, IT IS NEXT WEEK. SO WE HAVE TO THINK THROUGH THOSE. DO WE WANNA STOP THE BLEEDING OR DO WE WANNA CONTINUE THIS ON THIS SPECTRUM? NUMBER 10, IMPLE IMPLEMENTING SUSTAINED COST CONTROL INITIATIVES. BY THIS I MEAN SOME OF THE THINGS THAT THE FORMER CITY MANAGER HAD ALREADY STARTED IMPLEMENTING THE HIRING FREEZE AND, AND UH, DISCRETIONARY SPENDING CONTROLS. WE ARE GONNA GO FURTHER THAN THAT AND LOOK AT OTHER THINGS THAT WE CAN CONTROL THE CONTRACTS THAT ARE IN PLAY NOW WE ARE GOING TO SIT DOWN WITH EACH DEPARTMENT AND ASSESS IF THOSE ARE NECESSARY TO CONTINUE. AND ON THE COST CONTROL INITIATIVES, WHEN WE SPEAK OF HIRING FREEZE, IT IS NOT CUT AND DRY HIRING FREEZE. NOBODY GETS TO HIRE. IT HAS TO BE INDIVIDUALLY ASSESSED AND EVALUATED. WHICH POSITIONS ARE NECESSARY THAT WE CAN RELEASE FROM THE HIRING FREEZE AND WHICH POSITIONS MUST STAY UNTIL WE GET THINGS IN A BETTER POSITION. THERE ARE I THINK 14 OR 17 POSITIONS THERE IN THE HIRING FREEZE LIST. AND I'LL GIVE YOU AN EXAMPLE TO RIGHT AFTER THIS MEETING. I'M GONNA TALK TO JULIE ABOUT FREEING UP ONE POSITION. WE DESPERATELY NEED THAT POSITION, SO WE ARE GONNA ADVERTISE THAT POSITION, BUT AT THE SAME TIME, IN MY HEAD, I AM THINKING OF HOW I'M GONNA OFFSET THAT, RIGHT? SO I GOTTA MAKE IT WHERE IT IS COST NEUTRAL. I HAVE A QUESTION FOR THE VACANT POSITIONS. HOW, WHAT ARE THEY BUDGETED AT? IS IT LIKE MIDWAY? OKAY. ALRIGHT, THANK YOU. NUMBER 11, THIS IS WHERE YOU COME INTO PLAY. I'M GOING TO HAVE HOLLY, WELL LET ME BACK UP. LET ME GIVE YOU A LITTLE HISTORY. LET MOST OF YOURE NEW. MOST OF OUR STAFF IS NEW CITY CHARTER REQUIRES THE DIRECTOR OF FINANCE TO PROVIDE FINANCIAL STATUS REPORTS EVERY QUARTER TO CITY COUNCIL. AND WE'VE BEEN DOING THAT. I WOULD COME BEFORE CITY COUNCIL EVERY QUARTER AND PROVIDE THAT REPORT. IT WAS [04:55:01] A COMPREHENSIVE REPORT ON EVERYTHING WE TALKED ABOUT TODAY. REVENUES, EXPENDITURES, INVESTMENTS, DEBT. YOU HAD YOUR FINGER ON THE PULSE OF THE CITY ORGANIZATION AS COUNSEL. OVER TIME, AS AGENDA GOT LONGER AND LONGER, I WAS ASKED INSTEAD OF IN-PERSON REPORTS, POST 'EM ON THE WEBSITE. SO WE STARTED DOING THAT. WE HAVE SINCE MOVED FROM QUARTERLY TO MONTHLY FOR YEARS NOW. AND WE ARE POSTING THOSE ON THE WEBSITE NOW WITH HOLLY AND HER TEAM'S HELP. AND ANDY AND HIS TEAM'S HELP. WE HAVE THOSE REPORTS UPDATED EVERY NIGHT. SO IF YOU WANNA SEE WHAT FINANCE SPENT THROUGH YESTERDAY OR TODAY, IT'S AVAILABLE AT YOUR FINGERTIP. BUT THE DIRECTION GIVEN TO THE FINANCE DIRECTOR WAS, WE'RE TOO BUSY. AGENDA IS TOO LONG. IT TAKES TOO MUCH TIME. YOU CAN JUST POST IT ON THE WEBSITE. WE HAVE CHECKED OFF THAT CITY CHARTER REQUIREMENT. WE'VE BEEN DOING THAT. WE'VE BEEN IN COMPLIANCE. BUT WHAT I WANNA CHANGE THAT WITH YOUR HELP, AS I'M GOING TO REQUEST HOLLY, EVERY MONTH, EVERY SINGLE MONTH, ON THE SECOND MEETING OF THE MONTH, SHE WILL PRESENT A FINANCIAL STATUS REPORT TO CITY COUNCIL AND FOR THE BENEFIT OF OUR RESIDENTS AND STAFF, SHOW YOU EXACTLY WHERE WE ARE ON REVENUES AND EXPENDITURES FOR THE MA FOUR MAJOR OPERATING FUNDS WHERE WE ARE ON DEBT, WHERE WE ARE ON INVESTMENTS, WHERE WE ARE ON INTEREST INCOME. ALL OF THAT UP FRONT, UNLESS YOU TELL ME OTHERWISE, WE'LL KEEP DOING IT ON THE WEBSITE. CAN WE INCLUDE A COMPARISON BETWEEN WHERE WE WERE EXPECTED TO BE AND WHERE WE'RE ACTUALLY AT? YES. IT'LL HAVE A BUDGET VARIANCE. THANK YOU. DISCUSSION. SO THAT WILL HAPPEN EVERY MONTH ON YOUR SECOND REGULAR MEETING OF THE MONTH FOR THE MONTH PRIOR. SO IN JUNE WE WILL SHOW YOU THROUGH MAY 31ST. RIGHT? SO WE'RE STARTING JUNE. YES SIR. , WITH THIS SITUATION WE'RE AT, WITH EVERYTHING THAT'S GOING ON WITH OUR BUDGET, IT'S, IT'S GONNA BE A, A REQUIRED THING. AND, AND SO WE, WE CAN SEE WHERE WE'RE AT EVERY FOUR WEEKS. I THINK IT'S VERY IMPORTANT HOW WE'RE IMPORTANT, HOW WE'RE MAKING PROGRESS YEAH. AND WHERE WE NEED IT. TWEAK IT AT. AND WE'LL SHOW YOU THAT ON THE EXPENDITURE SIDE AS WELL, YOU KNOW, BY DEPARTMENT. YEAH, I WHAT THE BUDGET? I, I THINK THIS IS GONNA BE VERY IMPORTANT. I'M EXCITED TO ACTUALLY TO, TO GIVE A MONTHLY UPDATE. UH, I WILL SAY THAT, YOU KNOW, A BIG FRUSTRATION FOR ME PERSONALLY, AND I DON'T WANNA SPEAK FOR EVERYBODY, WAS I BELIEVE APRIL 20TH WAS THE FIRST TIME THAT WE AS A COUNCIL GOT NOTIFIED THAT, THAT THERE WAS A SEVERE ISSUE. AND WHILE I UNDERSTAND CHAIN OF COMMAND, I, THERE, THERE ARE TWO PEOPLE BY CHARTER THAT THE COUNCIL HIRES AND FIRES. TECHNICALLY NOW IT'S ONE, BUT , UM, I, I WOULD LIKE TO TO SAY THAT FOR ME, I WOULD LIKE FOR MY FINANCE DIRECTOR IF HE FEELS LIKE THERE'S AN ISSUE AND IT'S NOT GETTING THROUGH THE CITY MANAGER AND, AND THERE'S GONNA COME A TIME WHERE PEREZ, IT'S NOT GONNA BE YOU. LIKE I'M, I'M, I'M SPEAKING TO ANY FINANCE DIRECTOR EVER GOING FORWARD IN THAT CONVERS POSITION. THAT'S, THAT I WOULD, I WOULD EXPECT THAT FINANCE DIRECTOR TO LET THE COUNCIL KNOW, HEY, I FEEL LIKE THERE'S AN ISSUE. AND I'VE HEARD SEVERAL TIMES TODAY THAT THIS HAS BEEN A MULTI-YEAR ISSUE AND YOU KNOW, I'VE, I'VE BEEN A PART OF THIS FOR, YOU KNOW, A LITTLE OVER A YEAR NOW. UM, IT'S, IT'S A DRAMATIC DIFFERENCE IN, IN INFORMATION FROM WHAT I GOT PREVIOUSLY. UM, I I WOULD LIKE MORE TRANSPARENCY FROM MY FINANCE DIRECTOR WHEN IT COMES TO CONCERNS. IT AM I, THE CHARTER REGULATES THE FACT THAT THE CITY FINANCE DIRECTOR REPORTS DIRECTLY TO THE CITY MANAGER. I I UNDERSTAND THAT. SO I AGREE WITH THAT. AND MAYBE THERE'S, IT ALSO SAYS THAT WE GET QUARTERLY REPORTS, RIGHT? AND IN THAT REPORT, HE CERTAINLY IS WELL WITHIN HIS RIGHTS, RESPONSIBILITIES AND AND BOUNDS [05:00:01] TO SAY, HEY, THIS IS THE REPORT AND THIS IS WHY I THINK THIS IS AN ISSUE. THERE'S, THERE'S A REASON WHY THE CITY MANAGER CAN'T FIRE HIM. AND IT'S SO THAT HE'S ACCOUNTABLE TO US AND NOT THE CITY MANAGER ULTIMATELY. RIGHT. BUT, AND MAYBE WE CAN LOOK AT A CHARTER UPDATE NOT THIS YEAR, BUT NEXT YEAR. 'CAUSE WE HAVE TO WAIT EVERY TWO YEARS THAT STATES, THAT GIVES HIM THE AUTHORITY BECAUSE ACCORDING TO OUR CHARTER, HE HAS TO GIVE THAT INFORMATION TO THE CITY MANAGER. AND, AND THEN WE RECEIVE THAT INFORMATION FROM THE CITY MANAGER. SO A AGAIN, YOU HAVE A, ALL OF OUR STAFF, THERE'S A LINE OF DUTY, RIGHT? LIKE THEY HAVE TO, IT ALL GOES THROUGH THE CITY MANAGER WHO IS THE ONLY EMPLOYEE THAT WE OVERSEE. SO EVEN THOUGH I THINK THE CITY ATTORNEY AND THE, UH, FINANCE DIRECTOR ARE HIRED AND FIRED BY US, I JUST WANNA CORRECT THAT. SORRY, IS IT JUST THE CITY? THE I AM HIRED AND FIRED BY CITY COUNCIL AND I, WHILE I REPORT TO THE CITY MANAGER IN THE CHARTER, I DO HAVE AN ETHICAL DUTY TO THE COUNCIL AND WILL COMMUNICATE WITH YOU WHEN NEEDED. UM, THE FINANCE DIRECTOR IS HIRED BY THE CITY MANAGER, BUT CANNOT BE FIRED UNLESS, UNLESS THE FIRING IS CONFIRMED BY CITY COUNCIL. OKAY. ALRIGHT. SO THOSE ARE DIFFERENT, DIFFERENT RANGES. SO THEY'RE, THEY'RE LIMITED STAFF IS LIMITED. UM, AND AGAIN, MAYBE THAT'S SOMETHING THAT WE CAN LOOK AT EITHER BY CHARTER, BY ORDER. I DON'T KNOW WHAT WE CAN DO, BUT I AGREE WITH WHAT YOU'RE SAYING. I WAS GONNA SAY NO, WE TELL ME IF SOMETHING'S WRONG. THAT'S WHAT I'M ASKING. YES, NO, I AGREE. AND I, AND I WAS KIND OF, OF THE UNDERSTANDING IN MY FIRST TERM THAT HE WAS UNDER OUR PURVIEW. AND THEN AS, AS YOU LEARN, YOU SERVE, YOU READ THE CHARTER, YOU READ ALL THE ORDINANCES AND THE RULES OF COUNCIL, YOU LEARN THAT IT'S NOT SO CUT AND DRY. AND SO, UM, YOU KNOW, PROTECTING STAFF HAS ALWAYS BEEN A FOCUS FOR ME, EVEN IN 2020, YOU KNOW, MY LAST TERM. UM, BUT WE DO, I THINK AT SOME, AT THE END OF THE DAY, THIS IS THE SECOND TIME, SECOND TIME THAT PEREZ HAS HAD TO PULL OUR CITY OUT OF A FINANCIAL SITUATION. AND SO HOW DO WE MOVE FORWARD AND ENSURE THAT THIS DOESN'T HAPPEN YET AGAIN, BECAUSE I DON'T KNOW IF WE'RE GONNA HAVE A PEREZ NEXT TIME. UM, BUT WHAT, WHAT WE DO KNOW IS WE HAVE HIM NOW AND THEN MOVING FORWARD, WHAT DO WE DO TO PROTECT, UM, TO PROTECT THE RELATIONSHIP BETWEEN THE FINANCE DIRECTOR AND, AND THE COUNCIL? I THINK YOU BRING A GOOD POINT. I SAY THAT SOME PEOPLE REALLY REALIZED THE TRAJECTORY THAT WE WERE HEADED IN BEFORE THIS CAME UP. THAT WAS ONE OF THE THINGS THAT I CONSTANTLY KEPT SAYING DURING MY CAMPAIGN WAS WE CANNOT SUSTAIN MOVING FORWARD IN THE SAME DIRECTION. BUT, UM, TO MARK'S POINT AND YOURS, I BELIEVE WE DO NEED TO PUT PROTECTIONS IN PLACE TO ENSURE THAT OUR FINANCE DIRECTOR ALWAYS HAS A VOICE TO BE ABLE TO EXPRESS THOSE CONCERNS TO COUNSEL AND GO ABOVE AND BEYOND IF IT'S NOT GETTING OUT. UM, IN THE CHARTER, I KNOW THAT, UH, IT'S OUTLINED THAT OUR CITY ATTORNEY HAS ETHICAL DUTIES TO THE COUNCIL. IS IT NOT THE SAME THING FOR THE FINANCE DIRECTOR? NOT IN THE CHARTER. THAT IS MY OBLIGATION AS AN ATTORNEY. I HAVE AN OBLIGATION TO THE ENTITY. I DO NOT REPRESENT PERVEZ. I DON'T REPRESENT ANY ONE OF YOU INDIVIDUALLY. I REPRESENT THE ENTITY AND IF I'M AWARE OF INFORMATION, I'M REQUIRED TO INFORM THE CITY COUNCIL BECAUSE I REPRESENT THE ENTITY AND YOU ARE THE REPRESENTATIVES OF, OF THOSE ENTITIES UNDER THE CHARTER. THERE ARE CERTAIN OBLIGATIONS THAT FALL IN THE FINANCE DIRECTOR. I'D HAVE TO, MY COMPUTER DIED, SO I APOLOGIZE. I'D HAVE TO PULL IT UP AND GO THROUGH THEM. UM, AND THAT'S SOMETHING I'M HAPPY TO SEND OUT TO COUNCIL, BUT AS THE MAYOR MENTIONED, THE FINANCE DIRECTOR IS HIRED BY THE CITY MANAGER AND DOES REPORT TO THE CITY MANAGER. OKAY. THAT THE PROVISION MELY DEALS WITH FIRING. I THINK THAT WOULD BE HELPFUL. SO IN CASE WE EVER DO DECIDE TO DO A CHARTER UPDATE, WE CAN ALSO INCLUDE LIKE JUST ETHICAL DUTIES TO REPORT DIRECTLY TO COUNCIL IF THERE'S LIKE, MAJOR CONCERNS BECAUSE OVERALL THE DUTIES TO THE RESIDENTS. UM, SO I THINK LIKE THAT MIGHT BE SOMETHING THAT WE CAN INCLUDE IN ANY UPDATES. ALL RIGHT. QUESTION HARRIS? ONE OF THE CONCERNS FOR DOING MONTHLY UPDATES IS CERTAINLY FOR ME, THE FACT THAT OUR REVENUE REPORTS LAG NOT FROM YOU, BUT THE SALES TAX REPORTS LAG THREE MONTHS. I THINK. UM, THE REPORTS ON THE PROPERTY TAXES, YOU KNOW, WE DON'T GET OUR PROPERTY TAXES TILL ALMOST THE DAY WE FINALIZE OUR BUDGET. SO THAT'S, YOU KNOW, WE, WE NEED TO CONSIDER HOW WE ESTIMATE THOSE REVENUES. UH, WHEN WE'RE DOING A MONTHLY REPORT, I THINK IT MAKES IT DIFFICULT. THE, THE MONTHLY REPORTS COUNCIL MEMBER WILL NOT HAVE ESTIMATES. IT WILL SHOW YOU WHAT THE BUDGET IS AND WHERE WE ARE AS OF THAT MONTH. WELL, WE DON'T KNOW BECAUSE EVERY THREE MONTHS WE GET, IT'S GONNA BE MORE OF A CASH FLOW STATEMENT. OKAY. CASH FLOW STATEMENT. BUT THAT'S NOT NECESSARILY THE BUDGET. YOU KNOW, IF THEY'RE LAGGING THREE MONTHS AND TELLING US WHAT [05:05:01] OUR CURRENT SALES TAX REVENUES ARE YOU, THAT, THAT MAKES IT DIFFICULT. WE BUDGET BASED ON WHEN WE RECEIVED THE SALES TAX REVENUE, IT MIGHT BE FOR A MONTH AND A HALF PRIOR, BUT IF WE GOT IT IN MARCH, WE REPORTED IT AS MARCH REVENUE, WE DON'T GO BACK TO THE MONTH IT BELONGS. SO YOU'LL BE CURRENT ON THE SALES TAX RECEIPTS, YOU WILL BE CURRENT ON PROPERTY TAX RECEIPTS. AND WHEN YOU SAY CURRENT, IT'S WHENEVER YOU RECEIVE IT, THEN WE'LL RECEIVE IT. SO, I MEAN, WE'RE NOT GONNA, WE'RE NOT PREDICTING FUTURE. YOU ARE TELLING US WHAT HAPPENED, RIGHT? WELL THE CITY THAT THE, THE STATE'S GOT IT. THEY'RE JUST NOT UP TO DATE, BUT THEY'RE GIVING US EVERY MONTH. IT'S A THREE MONTH LAG. THEY'RE NOT HOLDING IT FOR THREE MONTHS. WE'RE RECEIVING MONEY EVERY MONTH. YEAH. RIGHT. YES. SO, WE'LL THAT'S TRUE. WE'LL REPORT IT AS WE RECEIVE. SO I GUESS I THINK WHAT SHE'S STATING, WHICH YOU SEEM TO NOT, WELL, I UNDERSTAND EXACTLY. IS THERE A THREE MONTH LAG? SO SALES TAX ARE, IF I WAS A RESTAURANT OWNER, RIGHT, THE SALES TAX I AM SUPPOSED TO REPORT EVERY MONTH BY THE 20TH OF THE MONTH IS FOR THE MONTH PRIOR. RIGHT? SO HE GOES TO THE STATE, MAY 20TH, I'M REPORTING FOR APRIL, MY APRIL SALES GOES TO THE STATE, I PAY MY TAXES. THEN IN JUNE, THE STATE WILL ALLOCATE THE MONEY TO THE CITIES OR JURISDICTIONS IT BELONGS TO, BUT IT'S FOR THE MONTH OF APRIL. RIGHT? SO THAT'S WHAT COUNCIL MEMBERS ARE REFERRING MM-HMM . HOWEVER, WE, THE CITY WE'RE GETTING EVERY MONTH, EVEN THOUGH IT'S THREE MONTHS PRIOR, WE'RE GETTING CASHFLOW EVERY MONTH FROM THE STATE. SO WE DON'T DISTINGUISH BETWEEN WHAT THAT MONEY, WHICH MONTH IT BELONGS TO. WE RECORDED THE MONTH WE RECEIVED AND THAT'S HOW WE BUDGET. SO THE BUDGET TO ACTUAL WILL BE BASED ON LIKE COUNCIL MEMBER MCKINNEY WAS SAYING IS ON A CASH BASIS. OKAY. THANK YOU. GO AHEAD. OH, OKAY. YEAH, WE'RE ALMOST DONE. ALRIGHT, SO NEXT STEPS IN THE BUDGET DEVELOPMENT PROCESS. SO DURING THE MONTH OF MAY AND JUNE, THE BUDGET TEAM WILL BE DEVELOPING OPTIONS, HOW BEST TO CLOSE THIS FUNDING GAP. EVERYTHING AND EVERYTHING IS GONNA BE CONSIDERED DEPARTMENTS WILL BE FINALIZING THEIR PROPOSED BUDGETS. WE WILL BE REVIEWING THEIR BUDGETS. WE HAVE ASKED THEM TO GIVE US A 10% REDUCTION PLAN. WE WILL BE GROWING OVER THOSE WITH EACH DEPARTMENT AND DETERMINE WHICH ONES ARE PRACTICAL AND REASONABLE TO, TO ACCEPT. SO THAT'S GONNA HAPPEN IN MONTH OF MAY AND JUNE. JUNE 13TH, WE COME BACK BEFORE YOU TO REVIEW AND GET YOUR FEEDBACK ON THE FIVE YEAR CIP SPENDING PLAN. WE WILL SHOW YOU THE CURRENT FUNDING PLAN FOR TAX SUPPORTED PROJECTS. WE WILL SHOW YOU THE CONSIDERATION OF FUTURE BOND ELECTION TAX SUPPORTED PROJECTS. AND WE'RE GONNA ASK YOU TO GIVE US DIRECTION. HOW DO YOU WANT US TO MOVE FORWARD? DO YOU WANT US TO CONTINUE THE EXISTING FUNDING PLAN, WHICH IS IF YOU DON'T HAVE ANY MONEY, YOU GO BORROW IT WITH THE CO OR DO YOU WANT US TO DO SOMETHING DIFFERENT, WHICH IS CONTINUE SPENDING ON THE VOTER AUTHORIZED PROJECTS AND THOSE THAT YOU DO NOT HAVE VOTER AUTHORIZED FUNDING, WE SET THOSE ASIDE FOR VOTER APPROVAL OR WE ISSUE COS OR A HYBRID OF THE TWO. SO WE'LL LAY IT OUT FOR YOU. WATER AND WASTEWATER PROJECTS ARE A LITTLE DIFFERENT. THEY'RE REGULATED. WE HAVE TO MEET THE PERMIT, WE HAVE TO MEET THE TEC KEY REQUIREMENTS AND WE, WE CAN ASK YOU AND WE WILL ASK YOU IF YOU'RE OKAY WITH THE CITY USING CERTIFICATES OF OBLIGATION TO COVER EXPENDITURES FOR UTILITY RELATED INFRASTRUCTURE. NOT PARKS, NOT SIDEWALKS, NOT ROADS, JUST UTILITIES. SO THOSE QUESTIONS WILL, WILL ASK YOU TO GIVE US SOME DIRECTION ON. THEN JULY 25TH IS THE STATE LAW UNDER WHICH THE CHIEF APPRAISER MUST PROVIDE 2026 CERTIFIED TAX ROLLS FOR EVERY JURISDICTION IN HAYES COUNTY. [05:10:01] AND WE'RE ONE OF 'EM. SO LOT, MOST OF THE TIME THE CHIEF APPRAISER IS PRETTY GOOD ABOUT GIVING IT TO US EARLY ENOUGH. BUT SOME YEARS WE HAVE WAITED TILL JULY 25TH BECAUSE OF THE NUMBER OF PROTESTS THAT ARE GOING THROUGH AND TRYING TO RESOLVE THOSE. AUGUST ONE BY CITY CHARTER, THE CITY MANAGER MUST PROPOSE BUDGET TO CITY COUNCIL FOR FY 26 27, AUGUST 15TH. THE PROPOSED PROPERTY TAX RATES WILL BE DISCUSSED WITH COUNCIL. THIS IS A STATE LAW REQUIREMENT. THE SECOND ITEM, AND WE WANT TO INCLUDE IT AS AN INSURANCE. OKAY? WE DON'T HAVE TO DO IT, BUT IT IS INCLUDED IN OUR PLAN A RESOLUTION TO RECORD COUNCIL'S VOTE TO CONSIDER A TAX RATE INCREASE. SO IF THE TAX RATE IS ABOVE THE KNOWN NEW REVENUE RATE, BUT BELOW BUT BELOW THE VOTER AUTHORIZED RATE COUNCIL IS REQUIRED TO RECORD YOUR VOTE ON RECORD ROLL CALL, VOTE HOW OR IF YOU INTEND TO CONSIDER A RATE INCREASE BECAUSE THAT IS CONSIDERED A RATE INCREASE ANYTHING HIGHER THAN NO NEW REVENUE RATE AT A FUTURE COUNCIL MEETING. AND I HAVE TO POST THAT IN THE NEWSPAPER OF RECORD, WHICH IS, HAS FREE PRESS REPRESS BY EACH COUNCIL DISTRICT HOW YOU VOTED ON IT. SO I PUT IT THERE IN CASE WE ARE GOING ABOVE THE NO NEW REVENUE TAX RATE AS, AS A, AS A SAFEGUARD. 'CAUSE IF WE MISS THAT DEADLINE, UM, WE'RE IN SERIOUS TROUBLE. I HAVE A QUESTION. IS THAT RELATED TO THE, UH, SB 1851 AS IT IS BEEN IN, UH, THE NEW REV, NO NEW REVENUE RATE REQUIREMENTS? SB TWO DROVE THAT. SO IT USED TO BE EFFECTIVE TAX RATE AND ROLLBACK TAX RATE PRIOR TO SB TWO. THAT REQUIREMENT HAS BEEN THERE FOR A WHILE. OKAY. IT'S JUST DIFFERENT NAMES WE'RE USING. OKAY. UM, I THINK, 'CAUSE I JUST HAD SOME CONCERNS WITH THERE BEING SOME POSSIBILITY THAT WE WERE SOMEHOW IN VIOLATION WITH SB UH, 1851. UM, SO I THINK I JUST WANNA PUT THAT ON OUR RADAR BECAUSE THAT'S INFORMATION THAT IS BEING SPREAD AROUND, BUT I DON'T KNOW IF IT'S FACTUAL. WHAT WAS 1851 COVERING THAT IS YOU HAVE TO TIMELY FILE YOUR REPORT. YEAH. AND I'M SO GLAD SHE BROUGHT THAT UP BECAUSE I'M ASKED AND THEN, BECAUSE IF YOU'RE NOT, IF YOU DON'T MEET THE, UH, TRANSPARENCY OR FILING UH, DEADLINE DEADLINE, THEN YOU ARE NOT ALLOWED TO ADOPT A HIGHER PROPERTY TAX RATE. SO THERE IS, SHE'S RIGHT. SO THERE IS, LIKE I, I SAW, AND I HAVE IT RIGHT HERE, I WAS JUST ABOUT TO ASK THE SAME QUESTION. IT'S, UH, YOU KNOW, CITIES THAT, UH, THE GOVERNOR IS OH, THE AUDIT REPORT? YES. MM-HMM . YEAH. YES. AND SO FOR SOME REASON, KYLE'S NAME IS ON THAT LIST. WELL, NOT ON THE OFFICIAL OHG. RIGHT? YOU'RE RIGHT ON THE OFFICIAL ONE RELEASED BY KEN PAXTON. KYLE'S NOT LISTED, BUT THERE'S LIKE OTHER LIKE AI FLYERS THAT ARE ROAMING AROUND THAT HAS KYLE'S NAME ON IT. SO I JUST WANTED TO ADDRESS THAT DIRECTLY. I'M GLAD YOU BROUGHT THAT UP. LET'S, LET'S CLEAR THAT RECORD. . OKAY. WE ARE IN FULL COMPLIANCE OF SB 1851. WE COMPLETED OUR AUDIT ON TIME AND UNDER BUDGET WE NOTIFIED THE AGS OFFICE. WE ARE REQUIRED TO FILE A COPY OF THE REPORT WITH THEM. WE DID THAT ON TIME. UM, WE ARE NOT IN THE SAME BOAT AS CITY OF ODESSA. CITY OF ELGIN. AND THERE'S LIKE, THERE'S LIKE 130 ON THIS LIST FOR THAT KEN PAXON RELEASE. OKAY, WELL NO, WE MADE SURE THAT GOOD. THAT DIDN'T HAPPEN ON MY WATCH. GOOD, GOOD. I APPRECIATE THAT AND I APPRECIATE BEING ABLE TO CLEAR THE AIR AND JUST SET IT STRAIGHT RIGHT NOW. OFFICIAL RECORD, WE'RE IN THE CLEAR. ALRIGHT. OKAY. SO AUGUST ONE, THE CITY CHARTER REQUIRES IT, OH, SORRY, I'M ON AUGUST, UH, AUGUST 15TH. ON SEPTEMBER 15TH, WE'LL HAVE OUR FIRST ROUND OF PUBLIC HEARING. WE HAVE TO HAVE TWO SEPARATE PUBLIC HEARINGS, ONE ON THE BUDGET, OUR RATES FOR UTILITY AND FEES [05:15:01] AND CHARGES. AND WE HAVE TO HAVE A SEPARATE HEARING FOR TAX RATES. IT MUST BE DONE SEPARATELY AND THEY HAVE TO BE DONE IN A CERTAIN SEQUENCE. YOU CANNOT HAVE VOTE ON THE TAX RATES BEFORE YOU VOTE ON THE BUDGET. SO WE HAVE TO BE MINDFUL OF THOSE STEPS. UH, SEPTEMBER 5TH IS OUR FIRST READING PUBLIC HEARING, FIRST ROUND OF PUBLIC HEARINGS, AND FIRST READING OF THE ORDINANCES FOR THOSE TWO. AND SEPTEMBER 15TH WE HAVE THE SECOND ROUND OF PUBLIC HEARINGS AND SECOND READING OF THE TWO ORDINANCES ACTUALLY WE'LL HAVE THREE ORDINANCES. AND THEN ON SEPTEMBER 16TH, PERVEZ GOES ON VACATION . SO I DO HAVE ONE REQUEST OF COUNCIL AND I'M GONNA ASK THE CITY SECRETARY TO KIND OF DO A POLL, A STRAW POLL, SEE IF YOUR AVAILABILITY, BECAUSE WE TALKED ABOUT A COUPLE OF ITEMS THAT I WOULD LIKE TO BRING IT BACK TO COUNCIL BEFORE I PUT IT IN THE PROPOSED BUDGET FOR YOUR FEEDBACK AND DISCUSSION. SO WE'RE GONNA HAVE TO ADD SOME MEETINGS BETWEEN JUNE 13TH AND AUGUST 1ST. SO I'M GONNA GO BACK AND WORK WITH OUR BUDGET TEAM, FIGURE OUT WHAT THOSE DATES HAVE TO BE. AND I WOULD VERY MUCH LIKE TO DO OUTSIDE OF YOUR REGULAR AGENDA, PLEASE. SO WE CAN INVEST SOME TIME. AND SO THAT MEANS WE'LL HAVE TO MEET ON A SATURDAY OR SUNDAY. UM, BUT WE, OUR CITY SECRETARY WILL GET BACK WITH THE, THE CALENDAR THAT WE ARE LOOKING AT AND SEE IF YOU'RE AVAILABLE. AND THEN LASTLY, ALL OF THIS INFORMATION THAT WE DISCUSSED TODAY IS AVAILABLE ON OUR WEBSITE. UM, IF THEY JUST GO TO THE FINANCE PAGE, EVERYTHING IS AT THEIR FINGERTIPS. AND THAT MAYOR AND COUNCIL WRAPS UP MY PRESENTATION TODAY. ALL RIGHT. WELL THANK YOU. UH, THANK, DO YOU HAVE SOMETHING TO SAY? UH, YEAH, I JUST GOT A COUPLE THINGS. UM, FIRST OF ALL, THANK YOU GUYS. I KNOW HOW MUCH WORK WENT INTO THIS. THANK YOU FOR BRINGING EVERYTHING TO OUR ATTENTION. UM, THERE'S A A I'M GONNA REQUEST FOR A COUPLE PIECES OF INFORMATION 'CAUSE MY MEMORY'S PRETTY GOOD, BUT IT'S NOT AS AS GOOD AS I'D LIKE IT TO BE. UM, ONE OF THE THINGS PROFESSOR YOU BROUGHT UP WAS INCENTIVES. AND I DON'T REMEMBER THAT THERE WERE ANY INCENTIVES THAT HAVE COME UP SINCE I'VE BEEN ON COUNCIL. SO I WOULD LIKE FOR YOU GUYS TO PRO PROVIDE ME, UH, JUST MAYBE FOR THE LAST TWO BUDGET CYCLES, ANY INCENTIVES THAT WE PUT FORWARD TO BUSINESSES. UM, ALSO SOME OF THESE NUMBERS LOOK LIKE THEY, THEY WERE NEW INFORMATION TO ME. I WENT TO GO LOOK, UH, FOR THE SEPTEMBER, 2025 ER, AND IT'S NOT ON THE WEBSITE. I'M ASSUMING WE GOT A DIGITAL COPY. UH, YOU GUYS WOULDN'T MIND. YEAH, IT'S NOT, IT'S ON THERE. JUST THINGS HAVE MOVED WHEN WE UPDATED OUR WEBSITE. OKAY. UH, YEAH, IF YOU GUYS COULD WE'LL, WE'LL SEND YOU A LINK. EMAIL. YEAH, EMAIL ME THAT LINK. UH, I'D APPRECIATE THAT. UM, BUT YEAH, THANK YOU GUYS SO MUCH. UH, YOU PUT A LOT OF WORK IN, YOU KNOW, WE APPRECIATE, YOU KNOW, THE DIRECTION THAT YOU'RE GIVING US AND, AND, AND THE INFORMATION YOU'RE GIVING US TO, TO PROVIDE YOU GUYS DIRECTION. SO SURE. THANK YOU. THANK YOU. ALL RIGHT. COUNCIL MEMBER MEDINA, I WOULD LIKE TO JUST THANK THE THREE OF YOU FOR THE DETAILS THAT YOU PUT INTO THIS. I KNOW IT TOOK A WHOLE LOT OF INFORMATION AND TIME ON YOUR PARTS TO PUT IT ALL TOGETHER AND WE DEFINITELY APPRECIATE ALL OF THE KNOWLEDGE THAT YOU'VE BROUGHT FORTH AND ESPECIALLY THE TRANSPARENCY THAT MAKES A, A BIG DEAL FOR US AS COUNCIL AND I KNOW AS OUR RESIDENTS. UM, AND MOST IMPORTANTLY TO SHOW WHERE WE'RE GOING, WHERE WE'RE GOING TO BE IF WE DON'T MAKE THESE CHANGES. UM, NOT JUST AS A CITY, BUT MOST IMPORTANTLY FOR OUR RESIDENTS AND FOR OUR TAXPAYER MONEY. SO I KNOW THEY GREATLY APPRECIATE ALL OF THIS AS WELL TO KNOW THAT THEY'RE BEING HEARD. UM, SO THANK YOU GUYS SO MUCH FOR EVERYTHING TODAY. THANK YOU. ANYBODY ELSE BEFORE WE ADJOURN? ALRIGHT. JUST AS A REMINDER, JUST THANK THE RESIDENTS, SAY WE'RE HERE, LET'S STAY THROUGH ALL OF THIS. I UNDERSTAND IT, IT TOOK A LOT OF YOUR TIME, BUT IT'S VERY IMPORTANT WE'RE TURNING A NEW PAGE. AND, UM, SO AGAIN, THANK YOU TO YOUR TEAM AND FOR ALL YOU THAT ARE HERE, CITY STAFF AS WELL. COUNCIL MEMBER GZA. I WANNA SAY I AM SO EXCITED, UM, WITH THE INVOCATION OF THE NEW CULTURE AND THE TRANSPARENCY THAT'S HAPPENING. UM, IT'S REALLY BEEN KIND OF EYE-OPENING, SEEING EXACTLY WHAT WAS HIDDEN OR MANIPULATED PREVIOUSLY. UM, AND MAYBE NOT WILLFULLY, BUT UH, JUST, YOU KNOW, HEY, WE'LL GET IT DONE AND NOT REALLY CONSIDERING THE COST TO THE CITIZENS AND THE RESIDENTS. UM, AND SO I'M, I'M SUPER GRATEFUL THAT WE'RE BEING MINDFUL OF THAT. AND THANK YOU FOR PUTTING ALL OF THIS TOGETHER AND FOR REALLY MAKING IT CLEAR WHERE WE NEED TO CHANGE WAYS. THANK YOU. ALRIGHT. [05:20:01] AS A REMINDER, THERE IS A TEXAS, THERE'S A KYLE FAIR. SO IF ANYBODY CAN MAKE IT OUT THERE TODAY, IT'S OFF OF, UM, LAYMAN ROAD TO THE RIGHT AT LAKE KYLE. SO WE HOPE TO SEE EVERYBODY OUT THERE. IT WAS A GOOD TIME YESTERDAY. WEATHER. WEATHER WAS AMAZING. SO, UM, THANK YOU GUYS. AND I, IF YOU GET THIRSTY, BUY SOME WATER FROM CLIENT COLLINE CLUB. YEAH, . YOU KNOW WHAT ELSE THEY HAVE? THEY HAVE LIKE A BIG, THE CITY HAS LIKE THIS BIG GALLONS OF WATER. YOU CAN JUST GO REFILL YOUR CUP. SO WE ARE ADJOURNED. THANK YOU. * This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting.