Aug 01, 2026 City Council Special Meeting

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ALL RIGHT. GOOD EVENING EVERYBODY. I'M GOING TO GO AHEAD AND GET STARTED.

[I) Call Meeting to Order and Roll Call]

AND I'D LIKE TO WELCOME EVERYBODY TO THIS SPECIAL BUDGET MEETING.

MAY I GET A ROLL CALL, PLEASE? FLORES HERE. TOBIAS.

PRESENT HERE. MEDINA HERE. ZAPATA HERE. HARRIS.

MCKINNEY HERE. OKAY. WE HAVE SEVEN PEOPLE. WE HAVE A QUORUM.

NEXT, I'D LIKE TO STAND UP TO DO THE PLEDGE OF ALLEGIANCE. I PLEDGE ALLEGIANCE TO THE UNITED STATES OF AMERICA AND TO THE REPUBLIC FOR WHICH IT STANDS. ONE NATION UNDER GOD, INDIVISIBLE, WITH LIBERTY AND JUSTICE FOR ALL.

ALL RIGHT. THANK YOU. UP NEXT, WE HAVE CITIZENS COMMENTS. PERIOD. THE CITY COUNCIL WELCOMES COMMENTS FROM CITIZENS EARLY IN THE AGENDA OF CITY COUNCIL MEETINGS.

[II) Citizen Comment Period with City Council]

SPEAKERS WILL BE PROVIDED WITH AN OPPORTUNITY TO SPEAK DURING THIS TIME PERIOD ON ANY AGENDA, ITEM OR ANY OTHER MATTER CONCERNING CITY BUSINESS.

WE DO ASK THAT YOU OBSERVE THE THREE MINUTE TIME LIMIT.

ALL RIGHT. UP FIRST, I HAVE CYNTHIA BOLLING. GOOD EVENING, MAYOR AND COUNCIL. I DO APPRECIATE THIS OPPORTUNITY TO SHARE MY THOUGHTS WITH YOU VERY MUCH.

LET ME BEGIN BY STATING THAT I MOST CERTAINLY BELIEVE IN JESUS TEACHING.

THAT TELLS US THE GREATEST COMMANDMENT IS TO LOVE THE LORD WITH ALL OUR HEART AND TO LOVE OUR NEIGHBOR AS OURSELVES.

I ALSO BELIEVE IN WHAT WE JUST STATED IN THE PLEDGE OF ALLEGIANCE.

LIBERTY AND JUSTICE FOR ALL. THAT BEING SAID, I AM HAPPY TO SEE THAT PAGE 61 OF TONIGHT'S PACKET STATES THAT THE BUDGET DOES NOT INCLUDE FUNDING FOR PRIDE CELEBRATIONS OR EVENTS IN 2027.

MR. POTTER, YOU MADE A POST ON SOCIAL MEDIA STATING, YAY, WE DID IT! THE CITY OF KYLE IS HOSTING A PRIDE EVENT IN 2027.

YOUR STATEMENT IS INACCURATE AND MISLEADING. THAT WAS NOT MR. TOBIAS'S MOTION, WHICH WAS MOST DEFINITELY AN OLIVE BRANCH TO LOWER THE TEMPERATURE IN THE ROOM, AND WAS A DIRECTIVE FOR YOU TO WORK WITH NONPROFITS AND BRING BACK A PLAN TO COUNCIL AS TO WHAT A PRIDE EVENT MIGHT LOOK LIKE IN 2027.

YOU LABELED THOSE OF US WHO RESPONDED WITH CORRECTIONS TO YOUR POST AS INACCURATE.

EXCUSE ME, CORRECTIONS TO YOUR INACCURATE POST AS BIGOTS.

WE'RE NOT BIGOTS. THOSE OF US MY AGE. THE BABY BOOMERS GREW UP IN AN ERA OF HORRIFIC INJUSTICES AND INTOLERANCES. IT WAS NOT UNTIL 2003 THAT BEING GAY WAS THANKFULLY, THANKFULLY DECRIMINALIZED. AS WE HAVE AGED, THANKFULLY, WE HAVE GRACEFULLY LEARNED THAT INCLUSION IS A MUCH BETTER WAY TO LOVE OUR NEIGHBOR AND THAT WORKING TOGETHER AS A COMMUNITY IS A MUCH BETTER OPTION.

LET'S NOT LABEL EACH OTHER. LET'S WORK TO MAKE THE GREAT CITY OF KYLE EVEN BETTER.

THANK YOU. THANK YOU. NEXT I HAVE LARRY GOLICK.

MAYOR. MAYOR PRO TEM COUNCIL. GOOD EVENING. MY NAME IS LARRY GULICK. I'M A RESIDENT OF SIX CREEKS AND A PROUD TO CALL THE CITY OF KALAMI HOME.

I'M HERE WITH A REQUEST FOR EXPERT ADVICE AND OUTSIDE COUNSEL TO REVIEW A CONTRACT EARLIER THIS YEAR.

QUESTION CAME UP ABOUT THE PREVIOUS CITY MANAGER'S CONTRACT, SPECIFICALLY HIS LEAVE BALANCE AND WHAT HE WAS OWED, DEPENDING ON WHETHER HE RESIGNED OR WAS TERMINATED, BECAUSE THE CITY ATTORNEY'S OWN EMPLOYMENT CONTRACT IS STRUCTURED IN THE SAME WAY.

THE COUNCIL AND INTERIM CITY MANAGER RIGHTLY DECIDED SHE COULDN'T OBJECTIVELY ADVISE ON THE QUESTION AND BROUGHT AN OUTSIDE COUNSEL, FRANK GARZA, TO ANSWER IT. MR. GARZA HAS REPRESENTED THIS CITY'S INTEREST WELL IN THE PAST, SERVING AS THE CITY ATTORNEY FROM ABOUT 2011 TO 2018, INCLUDING THE PERIOD WHEN THE CONTRACT WAS DRAFTED AND SIGNED, AS WAS DONE WITH THE CONTRACT. I'M ASKING THE CITY COUNCIL TO DO THE SAME THING.

BRING IN MR. FRANK GARZA TO PROVIDE GUIDANCE TO THE STAFF AND CITY COUNCIL REGARDING THE 2017 DEVELOPMENT AGREEMENT WITH THE BLANCO RIVER RANCH.

THE AGREEMENT THAT GOVERNS THE WATER AND WASTEWATER SERVICE TO THE SIX CREEKS DEVELOPMENT.

MR. GARZA ISN'T A STRANGER TO THIS DOCUMENT. HE IS LISTED AS A CITY ATTORNEY DURING THIS PERIOD IN HIS FIRM REPRESENTED THE CITY'S INTEREST WHEN THIS AGREEMENT WAS CREATED AND SIGNED. IF ANYONE OUTSIDE THE CURRENT CITY ATTORNEY OFFICE UNDERSTANDS THE COUNCIL'S INTENT WHEN THIS WAS APPROVED,

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SECTION 401 AND 701 SAY THE CITY WILL PROVIDE SIX CREEKS WITH THE SAME SERVICE AT THE SAME RATES AS CUSTOMERS INSIDE THE CITY'S LIMITS.

SECTION 102 DEFINES THOSE HOMEOWNERS AS THE CUSTOMERS IN SECTION 12.112 SPEAKS DIRECTLY TO WHO THAT PROMISE WAS MADE TO.

MY POSITION IS AND HAS BEEN. THE COUNCIL'S LEGISLATIVE INTENT IS NOT IN QUESTION.

IT'S WRITTEN IN THE AGREEMENT. THERE IS NO OTHER ORDINANCE, RESOLUTION OR COUNCIL ACTION THAT EVER PLACED SIX CREEKS OUTSIDE INTO THE OUTSIDE CITY RATE CLASS. THE FAILURE IS ADMINISTRATIVE. IT IS HOW THE UTILITY BILLING DEPARTMENT IMPLEMENTED OR FAILED TO IMPLEMENT WHAT THE COUNCIL AGREED TO.

THAT MEANS THIS DOESN'T REQUIRE A NEW POLICY OR A NEW VOTE TO FIX THE SUBSTANCE.

THE UTILITY BILLING DEPARTMENT COULD CORRECT EVERY SIX CREEKS ACCOUNT TO THE PROPER ENTITY CLASSIFICATION AS SOON AS MONDAY.

THE OUTSIDE CITY BILLING IS AN ADMINISTRATIVE FAILURE, BUT TO AVOID FURTHER LEGAL WRANGLING, I DO AGREE THIS BODY SHOULD FORMALLY REAFFIRM THE POSITION AND PUT IT IN WRITING.

THAT WAS PUT IN WRITING IN 2017. SO THERE'S NO DOUBT WHAT THIS COUNCIL INTENDED AND WHAT IT EXPECTS THE CITY'S UTILITY DEPARTMENT TO DO.

SO MY ASK IS TWOFOLD REAFFIRM WHAT THE AGREEMENT ALREADY SAYS.

SECOND, BRING MR. GARZA BACK TO ANSWER THIS COUNCIL'S QUESTIONS ABOUT IMPLEMENTATION AND ABOUT THE CITY'S LEGAL AND FINANCIAL EXPOSURE.

IF THAT CORRECTION DOESN'T HAPPEN. TIME IS TICKING.

THIS COUNCIL COULD RESOLVE THIS NOW ON ITS OWN TERMS, OR THE CITY MAY END UP FACING FAR MORE THAN A REGULATORY PROCEEDING.

THANK YOU. ALL RIGHT. THANK YOU. UP NEXT, I HAVE BRIAN SHOCKLEY.

GOOD EVENING, MAYOR AND COUNCIL MEMBERS. MY NAME IS BRIAN SHOCKLEY AND I TO LIVE IN THE SIX CREEKS NEIGHBORHOOD.

I'M HERE TONIGHT BECAUSE THE ISSUE IS ABOUT MORE THAN WATER RATES.

IT'S ABOUT TRUST. WHEN PEOPLE PURCHASE THEIR HOMES IN SIX CREEKS, WE RELIED ON THE AGREEMENTS THAT GOVERN THIS DEVELOPMENT.

THOSE AGREEMENTS WEREN'T JUST BETWEEN THE CITY AND A DEVELOPER.

THEY WERE THE FOUNDATION UPON WHICH FAMILIES INVESTED HUNDREDS OF THOUSANDS OF DOLLARS AND CHOSE TO MAKE KYLE THEIR HOME.

MANY OF US BELIEVE THOSE AGREEMENTS PROMISED THAT SIX CREEKS WOULD RECEIVE THE SAME UTILITY RATES AS CUSTOMERS INSIDE THE CITY.

TODAY, WE ARE PAYING SIGNIFICANTLY MORE DESPITE THAT UNDERSTANDING.

THIS ISN'T ABOUT ASKING FOR A SPECIAL FAVOR. IT'S ABOUT ASKING THE CITY TO HONOR THE COMMITMENTS THAT ENCOURAGE THIS COMMUNITY TO BE BUILT IN THE FIRST PLACE.

THANK YOU. THANK YOU. THOSE ARE ALL THE FORMS I HAVE.

WOULD ANYBODY ELSE LIKE TO COME UP AND SPEAK? ALL RIGHT.

IF YOU COULD JUST STATE YOUR NAME FOR THE RECORD AND THEN FILL OUT A FORM.

THANK YOU. KENNETH ROCHA, DISTRICT FOUR. GOOD EVENING, COUNCIL MAYOR.

I'M GOING TO TAKE ADVANTAGE OF MY THREE MINUTES BY READING. SO I WAS HERE LAST YEAR PRAISING THE FORMER CITY MANAGER ABOUT THE COST SAVINGS FINANCE DISCOVERED ONLY TO SEE THE ORGANIZATIONAL CHANGES PERFORMED POST BUDGET ADOPTION THAT WIPED THAT ALL OUT.

I ASKED THE FORMER COUNCIL TO CONSIDER AUDITING OPERATION EXPENSES, EXECUTIVE SALARY, INFLATION AND OPPOSED THE TAX RATE AND UTILITY RATE INCREASES, HIGHLIGHTING THE IMPACT TO TAX AND UTILITY PAYERS.

WE SEE WHERE THOSE DECISIONS LANDED US. I WENT DURING THIS COUNCIL'S VISIONARY WORKSHOP.

ADVOCATING FOR REDUCTION IN SIPS AND SHARING THE FAILURE OF THE DEBT DECISION.

LOOKING AT THE PROPOSED BUDGET, I WILL APPLAUD THE INTERIM CITY MANAGER, FINANCE TEAM AND THE DEPARTMENT HEADS FOR IDENTIFYING THE COST AND THE COST CONTAINMENT.

I KNOW IT ISN'T EASY. THE FACTS ARE PROPERTY TAXABLE ASSESSED, VALUES DROPPED, SALES TAX SOFTENED, INTEREST YIELDS DROPPED, AND OUR REQUIRED RESERVE FUND WAS USED TO SUPPORT AN INFLATED M AND O.

THANK YOU FOR MAKING THE COURSE CORRECTION. I UNDERSTAND THAT IT IS A BALANCE TO MAKE SURE THAT ON PAPER, THE FUNDS SUPPORT THE REALITY OF EFFECTIVE SERVICE DELIVERY.

THAT'S WHY I WOULD ASK IF THE CITY INTERIM CITY MANAGER AND COUNCIL MAY CONSIDER AN INCREASE TO CITY EMPLOYEES WAGES. I KNOW IT WAS AN ITEM ON THE MEMO THAT WE WEREN'T GOING TO CONSIDER THAT WITH THE SURPLUS THAT WE MAY BE GAINING, IF THE COLLECTION OF TAXES TURN OUT TO BE WHAT THEY ARE, WE CAN REWARD.

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AS A PUBLIC SERVANT, I WILL ADVOCATE FOR THAT.

AND MAYBE 1% AND MAYBE 2%, WE MAY BE ABLE TO SQUEEZE IN WHAT OTHER CITIES HAVE WITH A 3 OR 4%.

I THANK YOU FOR APPLAUDING. I APPLAUD YOU FOR CONTINUING TO SUPPORT OUR KPD AND OUR OFFICERS AND MEETING THEIR MEET AND CONFER AGREEMENTS AND SUPPORTING THE TECHNOLOGY THAT'S IMPORTANT FOR THEM TO DO THEIR JOB.

THANK YOU. ALL RIGHT. THANK YOU. THOSE ARE ALL THE FORMS I HAVE.

WOULD ANYBODY ELSE LIKE TO COME AND SPEAK? ALL RIGHT.

SEEING NONE CITIZENS COMMENTS IS CLOSED. NEXT, WE HAVE CONSIDERING POSSIBLE ACTION.

WE'RE GOING TO RECEIVE A PRESENTATION, HOLD A DISCUSSION AND PROVIDE STAFF DIRECTION REGARDING THE INTERIM CITY MANAGER'S RECOMMENDED PROPOSED BUDGET FOR FISCAL YEAR 2026 TO

[III.1) Receive a presentation, hold a discussion, and provide staff direction regarding the Interim City Manager's Recommended Proposed Budget for Fiscal Year 2026-27 totaling $416,966,023 for all City Funds including but not limited to the following discussion highlights:   1.28% decline in the 2026 certified taxable assessed valuations net of taxable valuations within the City's six (6) TIRZ' as compared to 2025. No increase in water service rates for inside and outside City utility customers. No increase in wastewater service rates for inside and outside City utility customers. No increase in storm drainage fees for residential and commercial customers. No increase in other City rates, fees, and charges. Addition of one new fee for cost recovery of industrial pretreatment sampling. A 2.5% increase in solid waste & recycling collection service charges (trash collection) per contract terms with Texas Disposal Systems (TDS.) 11.0 positions eliminated for a total of 460.0 full-time equivalent positions included in the proposed. 24.0 total number of positions frozen or unfunded in the proposed budget. Restructuring of Transportation & Public Works and Parks & Recreation departments to improve operational efficiency, streamline services, and eliminate redundant functions and responsibilities. ]

MOHIT. SO MAYOR PRO TEM MAYOR, COUNCIL MEMBERS. GOOD EVENING. FOR THE RECORD, I AM PERVEZ MOHIT CITY'S INTERIM CITY MANAGER.

BEFORE WE BEGIN THE FORMAL PRESENTATION THIS EVENING OF THE CITY MANAGERS RECOMMENDED PROPOSED BUDGET FOR FISCAL YEAR 2627.

I WOULD LIKE TO PROVIDE SOME CONTEXT REGARDING THE BUDGET THAT IS BEFORE YOU THIS EVENING.

THE RECOMMENDED PROPOSED BUDGET FOR FISCAL YEAR 2627 IS MORE THAN A FINANCIAL DOCUMENT.

SPEAKING OF FINANCIAL DOCUMENT, YOU SHOULD HAVE A BEAUTIFUL PROPOSED BUDGET DOCUMENT IN FRONT OF YOU.

WE MADE SURE THAT Y'ALL HAD A DETAILED LINE ITEM BUDGET.

IT'S OVER 200 PAGES AND IT'S GOT EVERYTHING THAT YOU WANT TO KNOW ABOUT THE CITY'S PROPOSED BUDGET.

IT'S MORE THAN A FINANCIAL DOCUMENT BECAUSE IT IS A FINANCIAL PLAN FOR THE CITY OF KYLE FOR THE UPCOMING FISCAL YEAR THAT IS BASED ON THE CITY'S CURRENT BUDGET PRIORITIES AND IS A REFLECTION OF OUR COMMITMENT TO RESPONSIBLE STEWARDSHIP OF PUBLIC FUNDS.

AFTER THE RECOMMENDED PROPOSED BUDGET FOR FISCAL YEAR 2627 HAS BEEN CONSIDERED AND APPROVED BY THE CITY COUNCIL, IT WILL THEN SERVE AS THE POLICY FRAMEWORK THAT GUIDES THE DELIVERY OF ESSENTIAL MUNICIPAL SERVICES TO OUR RESIDENTS AND BUSINESSES, WHILE ENSURING THE LONG TERM FINANCIAL SUSTAINABILITY OF THE CITY OF KYLE ORGANIZATION. BEFORE I GO ANY FURTHER, FOR THE RECORD, I WOULD LIKE TO INTRODUCE THE MEMBERS OF OUR EXECUTIVE TEAM AND THE FINANCE TEAM WHO HAVE BEEN INSTRUMENTAL IN THE DEVELOPMENT OF THIS PROPOSED BUDGET AND WHO WILL BE ASSISTING ME THIS EVENING FOR THE BUDGET PRESENTATION.

SO STARTING TO MY RIGHT. HOLLY HALL TORRES, ASSISTANT DIRECTOR OF FINANCE.

YOU CAN WAVE. ANDY ALEJANDRO, INTERIM DEPUTY DIRECTOR OF FINANCE.

AND THEN WE HAVE AMBER SCHMITZ, DEPUTY CITY MANAGER, AND JESSE ELIZONDO, ASSISTANT CITY MANAGER.

YOU AS A COUNCIL, YOU ALREADY KNOW THEM. I WANTED TO MAKE SURE THAT PEOPLE IN THE TV LAND ALSO KNEW WHO THEY ARE.

AS YOU WILL HEAR THROUGHOUT THIS PRESENTATION, I AM RECOMMENDING A BALANCED BUDGET FOR FISCAL YEAR 2627.

WHILE THAT STATEMENT MAY APPEAR STRAIGHTFORWARD, THE WORK REQUIRED TO REACH THIS POINT HAS BEEN ANYTHING BUT EASY AND STRAIGHTFORWARD. AS YOU WELL KNOW, THE CITY ENTERED THIS BUDGET CYCLE FACING A SIGNIFICANT AND MANY FINANCIAL CHALLENGES. PRIOR TO DEVELOPING THE PROPOSED BUDGET FOR NEXT FISCAL YEAR, IT WAS CRITICAL THAT WE ADDRESSED THE PROJECTED 14.2 MILLION BUDGET DEFICIT IN THE CITY'S GENERAL FUND FOR THE CURRENT FISCAL YEAR 2526 OPERATING

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THIS REQUIRED A METHODICAL REVIEW OF OPERATING AND CAPITAL EXPENDITURES, ORGANIZATIONAL PRIORITIES AND PRACTICES, FINANCIAL ASSUMPTIONS AND LINE BY LINE ITEM EXPENDITURE.

TREND ANALYSIS OF EVERY SINGLE DEPARTMENT, EVERY SINGLE CITY FUND, EVERY SINGLE CIP CAPITAL IMPROVEMENTS PROJECT. BEGINNING IN EARLY MAY 2026.

THE MANAGEMENT TEAM INITIATED AGGRESSIVE COST REDUCTION AND COST CONTAINMENT MEASURES DESIGNED TO STABILIZE THE CITY'S FINANCIAL POSITION WHILE PRESERVING CORE MUNICIPAL SERVICES.

THESE EFFORTS HAVE BEEN ONGOING FOR A NUMBER OF MONTHS NOW, AND ON JULY 16TH, COUNCIL RECEIVED A DETAILED BRIEFING REGARDING THE STATUS OF THOSE INITIATIVES AND THE PROGRESS WE HAVE HAD TO DATE.

REGARDLESS OF WHETHER A COMMUNITY IS A LARGE CITY LIKE DALLAS, A SMALL CITY LIKE ULAN, OR ANY SIZE IN BETWEEN.

ONE OF THE MOST IMPORTANT AND CRITICAL RESPONSIBILITIES OF A CITY MANAGER IS DEVELOPING THE OPERATING AND CAPITAL BUDGETS FOR CITY COUNCILS. REVIEW AND APPROVAL. THE BUDGET SERVES AS THE CITY'S PRIMARY FINANCIAL AND POLICY DOCUMENT, TRANSLATING THE COUNCIL'S GOALS AND PRIORITIES INTO A PRACTICAL PLAN FOR DELIVERING SERVICES AND INVESTING IN INFRASTRUCTURE. DEVELOPING A BALANCED, SUSTAINABLE AND STRATEGIC BUDGET IS CRITICAL TO MAINTAINING PUBLIC TRUST, ENSURING ORGANIZATIONAL EFFECTIVENESS AND POSITIONING THE CITY OF KYLE FOR LONG TERM SUCCESS.

THE PROPOSED BUDGET BEFORE YOU THIS EVENING IS THE RESULT OF THOSE EFFORTS.

IT REFLECTS DISCIPLINED FINANCIAL MANAGEMENT, DIFFICULT ORGANIZATIONAL DECISIONS AND A COMMITMENT TO ALIGNING EXPENDITURES WITH AVAILABLE REVENUES. FINALLY, I WOULD LIKE TO TAKE A MOMENT TO ACKNOWLEDGE A GROUP OF SILENT, WHAT I CALL SILENT STAKEHOLDERS, WHOSE CONTRIBUTIONS TO THE DEVELOPMENT OF THIS PARTICULAR BUDGET, ESPECIALLY THIS FISCAL UPCOMING FISCAL YEAR, CANNOT BE OVERSTATED.

THIS GROUP OF SILENT STAKEHOLDERS ARE OUR VERY OWN CITY EMPLOYEES.

THROUGHOUT THE BUDGET PRESENTATION THIS EVENING, YOU WILL HEAR REPEATED REFERENCES BY ME TO A BALANCED PROPOSED BUDGET.

HOWEVER, IT IS IMPORTANT TO RECOGNIZE THAT ACHIEVING A BALANCED PROPOSAL.

PROPOSED BUDGET ALSO REQUIRES SIGNIFICANT SACRIFICES ACROSS THE CITY OF KYLE.

ORGANIZATION TO REDUCE RECURRING OPERATING EXPENDITURES AND TO PROTECT THE CITY'S LONG TERM FINANCIAL POSITION.

THE PROPOSED BUDGET INCLUDES THE SUSPENSION OF SEVERAL EMPLOYEE BENEFITS FOR FISCAL YEAR 2627, AND I'LL GIVE YOU A FEW EXAMPLES, INCLUDING PAY INCREASES AND COST OF LIVING ADJUSTMENTS FOR ALL CIVILIAN EMPLOYEES.

NONE OF US. IS BUDGETED FOR A PAY INCREASE, OR A MARKET ADJUSTMENT, OR A COST OF LIVING ADJUSTMENT FOR ALL CIVILIAN EMPLOYEES. THE LEAF BUYBACK PROGRAM HAS BEEN SUSPENDED TEMPORARILY.

THE TUITION REIMBURSEMENT PROGRAM HAS BEEN SUSPENDED TEMPORARILY.

THE CITY PAID 12 WEEK PARENTAL LEAVE PROGRAM HAS BEEN SUSPENDED TEMPORARILY.

EMPLOYEES CAN STILL TAKE THIS LEAVE, THIS VERY SPECIAL LEAVE, BUT THEY WILL HAVE TO COME FROM THEIR ACCRUED LEAVE BALANCE.

THESE DECISIONS WERE NOT MADE LIGHTLY. AS THE INTERIM CITY MANAGER, I FULLY RECOGNIZE THE IMPACT OF THESE ACTIONS ON OUR WORKFORCE.

OUR EMPLOYEES ARE THE CITY'S MOST VALUABLE ASSET.

THEY ARE THE INDIVIDUALS WHO DELIVER SERVICES, RESPOND TO EMERGENCIES, MAINTAIN OUR INFRASTRUCTURE,

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DESPITE THESE FINANCIAL CHALLENGES, OUR EMPLOYEES STEPPED UP AND HAVE CONTINUED TO DEMONSTRATE EXCEPTIONAL PROFESSIONALISM, RESILIENCE AND COMMITMENT TO PUBLIC SERVICE. THEIR WILLINGNESS TO ADAPT DURING A PERIOD OF FISCAL CONSTRAINT HAS PLAYED A CRITICAL ROLE IN HELPING THE ORGANIZATION NAVIGATE THESE FINANCIAL CHALLENGES.

TO EVERY CITY EMPLOYEE, I WANT TO EXPRESS MY SINCERE APPRECIATION AND GRATITUDE.

I WANT ALL OUR EMPLOYEES TO KNOW THAT THEIR DEDICATION TO THIS ORGANIZATION, AND TO THE RESIDENTS AND BUSINESSES THAT WE SERVE HAS NOT GONE UNNOTICED, EITHER BY ME OR BY THE CITY COUNCIL.

I ALSO WANT TO EMPHASIZE THAT THE ACTIONS REFLECTED IN MY RECOMMENDED PROPOSED BUDGET FOR FISCAL YEAR 2627 ARE INTENDED TO ADDRESS CURRENT FINANCIAL AND ECONOMIC REALITIES.

IT IS NOT TO DEFINE OUR FUTURE AS A CITY ORGANIZATION.

THIS IS TEMPORARY. WE'RE GOING TO GET OUT OF THIS.

THE OBJECTIVE OF MY RECOMMENDED PROPOSED BUDGET FOR NEXT FISCAL YEAR IS TO RESTORE STRUCTURAL BALANCE, STRENGTHEN THE CITY'S FINANCIAL FOUNDATION, AND TO POSITION THE CITY OF KYLE ORGANIZATION FOR LONG TERM FINANCIAL STABILITY.

WHILE THE BUDGETARY DECISIONS BEFORE US ARE DIFFICULT, I AM CONFIDENT THEY ARE NECESSARY TO ADDRESS THE FINANCIAL CHALLENGES WE, AS THE CITY OF KYLE ARE FACING TODAY. I'M EQUALLY CONFIDENT THAT THROUGH DISCIPLINED FINANCIAL MANAGEMENT, MANAGED BUDGET PRIORITIES AND CONTINUED FOCUS ON ORGANIZATIONAL IMPROVEMENTS.

THE CITY OF CAIRO ORGANIZATION WILL EMERGE FROM THIS CHALLENGING PERIOD, AND IT WILL BE STRONGER, MORE RESILIENT AND BETTER POSITIONED TO MEET THE NEEDS OF OUR COMMUNITY.

THIS EVENING, WE PLAN TO PROVIDE A DETAILED OVERVIEW OF THE RECOMMENDED PROPOSED BUDGET FOR FISCAL YEAR 2627.

I ESTIMATE THAT IT WILL TAKE US ABOUT 5 TO 6 HOURS THIS EVENING.

I WANTED TO BE FORTHRIGHT WITH YOU. IT'S A DETAILED BUDGET.

YOU NEED TO KNOW COMPLETE INFORMATION. WE DON'T WANT TO SKIMP ON IT.

WE DON'T WANT TO SHORTEN THAT DISCUSSION. WE WILL GIVE YOU THE DETAIL ON THAT BUDGET.

WITH THAT MAYOR AND COUNCIL. I WILL TAKE MY SEAT AND BEGIN THE PRESENTATION.

MAYBE IF YOU STOOD UP, IT WOULD GO A LITTLE FASTER. I'M JUST KIDDING.

BUT MAYBE SOMEBODY SHOULD ORDER SOME COFFEE. SO WE HAVE ABOUT 150 SLIDES.

AND AND ASSUMING TWO MINUTES AVERAGE, TWO MINUTES PER SLIDE.

THAT'S HOW I CAME UP WITH MY ESTIMATE. SO OUR OBJECTIVES FOR OUR PRESENTATION TONIGHT.

WE WANT TO PRESENT THE RECOMMENDED PROPOSED OPERATING AND CAPITAL BUDGETS TO THE CITY COUNCIL FOR THE UPCOMING FISCAL YEAR SIX.

27. REVIEW HIGHLIGHTS AND IMPLICATIONS OF STRUCTURALLY BALANCED RECOMMENDED BUDGET FOR NEXT FISCAL YEAR WHILE ADDRESSING DECLINING REVENUES, INCREASING COSTS, MAINTAINING RESERVES AND PROVIDING LONG TERM FINANCIAL STABILITY.

WE WANT TO PROVIDE AN OVERVIEW OF THE CITY'S FINANCIAL OUTLOOK, BUDGET PRIORITIES, THE FINANCIAL CHALLENGES THAT WE'RE FACING, AND ORGANIZATIONAL REALIGNMENTS. WE'RE MAKING.

REALIGNMENTS TO TWO OF OUR LARGEST CITY DEPARTMENTS.

WE WANT TO PROMOTE TRANSPARENCY BY CLEARLY OUTLINING AND EXPLAINING THE FINANCIAL CHALLENGES THAT THE CITY IS HAVING TO ADDRESS.

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FISCAL YEAR 2627. WE WANT TO ENSURE COMPREHENSIVE UNDERSTANDING OF THE RECOMMENDED BUDGET FOR NEXT FISCAL YEAR BY THE CITY COUNCIL, BY OUR RESIDENTS, AND ALSO OUR CITY STAFF.

WE WILL REVIEW KEY DATES AND NEXT STEPS WITH YOU THIS EVENING.

SO BEFORE I GET INTO THE DETAILS, I WANT TO MAKE SURE THAT I LAY OUT HOW WE'RE GOING TO PRESENT THIS.

THE PRESENTATION IS GOING TO BE IN FIVE DISTINCT SEGMENTS AS FOLLOWS.

THE OVERALL DISCUSSION OF RECOMMENDED PROPOSED BUDGET WILL BE PRESENTED BY ME, AND I'LL COVER BECAUSE WE HAVE A FEW NEW COUNCIL MEMBERS. AND THIS IS YOUR FIRST BUDGET CYCLE WITH US.

I WANTED TO MAKE SURE WE ALSO GIVE YOU THE FRAMEWORK THAT WE HAVE TO ABIDE BY.

SO I'M GOING TO COVER CITY CHARTER REQUIREMENTS, CITY'S BUDGET DEVELOPMENT, ADOPTION PROCESS, AND KEY DATES. I'M GOING TO GO OVER THE COMMUNITY BUDGET SURVEY RESULTS THAT WE DID EARLIER THIS SPRING.

I'M GOING TO GO OVER THE GUIDING PRINCIPLES THAT WE USED TO DEVELOP THE BUDGET.

WE JUST DIDN'T THROW THINGS ON THE WALL AND SEE WHAT WOULD STICK.

WE HAD A PLAN AND WE HAD AN ORGANIZED PLAN. SO WE'RE GOING TO SHARE WITH YOU WHAT GUIDED US THROUGHOUT THIS PROCESS.

WE WILL SHARE WITH YOU THE BUDGET DEVELOPMENT CHALLENGES THAT WE FACED AS WE WERE PUTTING THIS BUDGET TOGETHER.

I WILL REVIEW WITH YOU BUDGET HIGHLIGHTS, SOME OF THE HIGHLIGHTS THAT'S IN THE PROPOSED BUDGET.

I WILL TOUCH ON BUDGET SUMMARY, GIVE YOU A VERY HIGH LEVEL OF OUR PROPOSED BUDGET.

AND THEN I HAVE ADDED TWO SLIDES AT THE END BECAUSE I WAS GETTING A LOT OF CALLS.

I WAS GETTING A LOT OF INQUIRIES. YOU TOOK THE SANTA CLAUSE OUT OF THE BUDGET OR YOU MADE THE GRINCH GO AWAY. NEXT YEAR, I WANT TO CLARIFY THAT. I WANT TO MAKE SURE PEOPLE UNDERSTAND, INCLUDING OUR COUNCIL STAFF AND OUR RESIDENTS, WHAT'S IN THE BUDGET AND WHAT'S NOT IN THE BUDGET.

I'LL GO OVER THOSE AND THEN I WILL COVER THE PROCESS FOR BUDGET AMENDMENTS THAT COUNCIL, IF COUNCIL CHOOSES TO AMEND ANYTHING IN THE PROPOSED BUDGET THAT I AM PROPOSING, THERE IS A PROCESS THAT WE FOLLOW.

SO I'LL GO OVER THOSE. SO THAT'S FIRST SEGMENT.

THE SECOND SEGMENT WE'RE GOING TO TALK ABOUT ORGANIZATIONAL REALIGNMENT OF THE TRANSPORTATION AND PUBLIC WORKS DEPARTMENT.

THIS WILL BE PRESENTED BY OUR DEPUTY CITY MANAGER, MISS AMBER SCHMITZ.

SHE WILL REVIEW WITH YOU THE RESTRUCTURING STRATEGY, WHY WE DID WHAT WE DID, THE KEY BENEFITS AND EFFICIENCIES THAT WE'RE GOING TO GAIN.

AND THEN SHE WILL WALK YOU THROUGH THE NEW ORGANIZATION STRUCTURE.

SIMILARLY, IN THE THIRD SEGMENT, OUR ASSISTANT CITY MANAGER, JESSE ELIZONDO, WILL DO THE SAME FOR OUR PARKS AND RECREATION DEPARTMENT.

HE WILL REVIEW WITH YOU THE POSITIONS WE ARE ELIMINATING IN THE PROPOSED BUDGET.

HE WILL REVIEW WITH YOU THE NOTABLE CHANGES AS TO WHY WHAT WE DID, AND THE KEY BENEFITS AND EFFICIENCIES THAT WE ARE GOING TO GAIN FROM THOSE CHANGES. AND THEN HERE AGAIN, HE WILL REVIEW WITH YOU THE BEFORE AND AFTER OF THE ORGANIZATION STRUCTURE OF PARKS AND RECREATION IN SEGMENT FOUR. WE WILL REVIEW THE RECOMMENDED PROPOSED BUDGET IN DETAIL.

THIS IS WHERE I'M GOING TO COVER THE HIGH LEVEL AT 500 ZERO FOOT LEVEL.

HOLLY AND ANDY ARE GOING TO GET IN THE DETAILS, SO THEY WILL COVER THE FRONT STRUCTURE OF THE CITY OF KYLE.

HOW DO WE ACCOUNT AND BUDGET IN CITY OF KYLE, WHERE THE MONEY GOES, WHERE THE MONEY COMES FROM.

WE WILL UPDATE YOU IN THE FINANCIAL FORECAST FOR THIS FISCAL YEAR AND NEXT YEAR.

WE WILL SHOW YOU THE BEFORE AND AFTER. WE TALKED ABOUT THE $14.2 MILLION DEFICIT IN GENERAL FUND.

WE WILL SHOW YOU WHERE THAT WAS, AND WE WILL SHOW YOU WHERE WE ARE.

AFTER THE COST REDUCTIONS AND COST CONTAINMENT MEASURES THAT WE IMPLEMENTED AND AGGRESSIVELY AT THAT.

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COMING INTO THE NEXT FISCAL YEAR. WE WILL COVER THE GENERAL FUND, THE FOUR MAJOR OPERATING FUNDS, WHICH ARE GENERAL FUND, WATER UTILITY FUND, WASTEWATER UTILITY FUND AND STORM DRAINAGE.

WHEN WE TALK ABOUT GENERAL FUND, WE WILL ALSO REVIEW WITH YOU THE THREE PRIMARY OR MAIN SOURCES OF REVENUES FOR THE GENERAL FUND TAXES, PROPERTY TAXES, SALES TAX AND DEVELOPMENT REVENUES.

AND THEN WE WILL ALSO COVER, AS PART OF THIS PART OF THE DISCUSSION OR PRESENTATION, WE WILL COVER THE FIVE YEAR CIP SPENDING PLAN. AND WE WILL ALSO SHOW YOU HOW WE INTEND TO PAY FOR THAT FIVE YEAR CIP FUNDING PLAN.

WE WILL COVER THE EXISTING DEBT. HOW MUCH DO WE OWE CITY AS A WHOLE? WE WILL SHOW YOU THE PRINCIPAL AND INTEREST PAYMENTS DUE BY FUNDING SOURCE FOR NEXT FISCAL YEAR.

BY FUNDING SOURCE, I MEAN HOW MUCH WILL HAVE TO BE PAID FROM PROPERTY TAXES? HOW MUCH OF THAT DEBT SERVICE OR PRINCIPAL AND INTEREST WILL HAVE TO BE PAID FROM WATER RATES, WASTEWATER RATES AND STORM DRAINAGE FEES? THEN WE'LL REVIEW BRIEFLY OTHER RACE FEES AND CHARGES THAT THE CITY HAS. AND THEN FINALLY, WE'LL TOUCH UPON ALL OTHER CITY FUNDS THAT ARE NOT.

THE PRIMARY OPERATING FUNDS WILL GIVE YOU A BROAD OVERVIEW OF WHAT MAKES UP THOSE OTHER FUNDS AND HOW MUCH IS BUDGETED IN THOSE FUNDS.

AND THE LAST SEGMENT IS GOING TO BE FOR CITY COUNCIL.

THIS IS WHERE IF YOU HAVE ANY QUESTIONS OR COMMENTS OR DIRECTION FROM CITY COUNCIL TO STAFF, WE'LL COVER THOSE AT THE END. SO THAT'S THE FORMAT OF THIS EVENING'S PRESENTATION.

SO WITH THAT, I'M GOING TO GO OVER QUICKLY WITH THE CITY CHARTER SAYS ABOUT THE BUDGET DEVELOPMENT PROCESS.

SO ARTICLE EIGHT AND SECTION 8.05 SPECIFICALLY SPEAKS TO BUDGET PROCESS AND ADOPTION.

IT SAYS THE CITY MANAGER SHALL BE RESPONSIBLE FOR THE TIMELY PREPARATION AND PRESENTATION OF THE BUDGET, AND SHALL PRESENT HIS OR HER RECOMMENDED BUDGET TO THE CITY COUNCIL NO LATER THAN 60 DAYS PRIOR TO OCTOBER 1ST OF EACH YEAR. SO WE'RE DOING THAT TONIGHT. AUGUST 1ST.

SO WE MET THAT THE PROPOSED BUDGET SHALL BECOME A PUBLIC DOCUMENT AND RECORD WHEN PRESENTED TO THE CITY COUNCIL.

SO AFTER TODAY THIS DOCUMENT IS A PUBLIC DOCUMENT.

IT'S IN THE CITY SECRETARY'S RECORD. FROM AND AFTER ITS RECEIPT OF THE BUDGET, THE CITY COUNCIL SHALL THEN. IT HAS THREE SPECIFIC REQUIREMENTS.

THIS PARAGRAPH WE'RE GOING TO COVER VERY SLOWLY BECAUSE IT'S.

ONE. IT HAS A LOT OF BACKGROUND, BUT ONE VERY SPECIFIC REQUIREMENT IS EMBEDDED IN HERE AT THE FIRST COUNCIL MEETING, FOR WHICH TIMELY NOTICE MAY BE GIVEN.

CAUSE TO BE POSTED IN CITY HALL AND PUBLISHED IN A NEWSPAPER OF GENERAL CIRCULATION IN THE CITY.

A GENERAL SUMMARY OF THE PROPOSED BUDGET AND A NOTICE STATING THE TIME AND PLACES WHERE COPIES OF THE BUDGET ARE AVAILABLE FOR PUBLIC INSPECTION. SO THAT'S THE BACKGROUND. IT SETS UP.

THEN IT SAYS THE TIME AND PLACE NOT LESS THAN 15 DAYS AFTER SUCH PUBLICATION, MEANING THIS.

NOTICE A PUBLIC HEARING ON THE BUDGET AND SUCH OTHER PUBLIC HEARINGS AS ARE NECESSARY.

SO BASICALLY, IN A NUTSHELL, WHAT IT SAYS IS THAT AFTER THIS DOCUMENT, OUR BUDGET IS PRESENTED TO COUNCIL.

THAT THE CITY SHALL PROVIDE A NOTICE IN THE NEWSPAPER, WHICH IS OUR HAYS FREE PRESS FOR OUR CITY COLLEGE.

[00:35:01]

SO THAT'S THE FIRST REQUIREMENT. ANDY, WOULD YOU BE SO KIND AS TO CONFIRM THAT AUGUST.

19TH. SO THE SECOND REQUIREMENT AFTER THE FIRST PUBLIC HEARING, THE COUNCIL MAY ADOPT THE BUDGET WITH OR WITHOUT AMENDMENTS. MEANING THE CITY MANAGER'S PROPOSED BUDGET COUNCIL CAN MAKE AMENDMENTS OR NOT.

SO AS LONG AS WE HAVE THE FIRST PUBLIC HEARING DONE, COUNCIL CAN ADOPT THE BUDGET.

THE COUNCIL MAY AMEND THE PROPOSED BUDGET TO ADD, INCREASE, DECREASE OR DELETE ANY PROGRAMS OR AMOUNTS EXCEPT EXPENDITURES REQUIRED BY LAW OR FOR DEBT SERVICE.

MEANING PRINCIPAL AND INTEREST THAT IS DUE NEXT YEAR, PROVIDED THAT NO AMENDMENT SHALL INCREASE THE AUTHORIZED EXPENDITURES TO TO AN AMOUNT GREATER THAN THE TOTAL ESTIMATED FUNDS AVAILABLE FROM ALL SOURCES.

IN OTHER WORDS, WE HAVE PRESENTED A BALANCED BUDGET.

IF COUNCIL WAS TO INCREASE THE EXPENDITURES, WE WILL HAVE TO EITHER INCREASE REVENUES, WHICH IS VERY LIKELY AT THIS POINT, UNLIKELY. SO THE ONLY THING REMAINING TO TO BALANCE IS TO CUT OTHER EXPENDITURES OR TO DRAW FROM THE RESERVES.

THOSE ARE THE ONLY TWO OPTIONS AVAILABLE. IF YOU WERE TO ADD MORE TO THE EXPENDITURES, THE THIRD REQUIREMENT.

THE BUDGET SHALL BE FINALLY ADOPTED BY ORDINANCE, NOT LATER THAN THE THIRD THURSDAY OF SEPTEMBER, WHICH I BELIEVE IS SEPTEMBER 16TH. PROVIDED THAT IF THE COUNCIL TAKES NO FINAL ACTION ON OR PRIOR TO SUCH DAY, THE BUDGET AS SUBMITTED BY THE CITY MANAGER SHALL BE DEEMED TO HAVE BEEN FINALLY ADOPTED BY THE COUNCIL.

SO IT HAS A SAFETY FEATURE BUILT IN THAT IF THE COUNCIL IS UNDECIDED OR THEY'RE SPLIT AND CAN'T VOTE ON THE BUDGET TO ADOPT THE BUDGET, AND I BELIEVE IT TAKES FIVE VOTES. CITY ATTORNEY TO ADOPT THE CITY BUDGET TAKES FIVE VOTES TO ADOPT THE TAX RATE WHICH IS NEEDED FOR THE BUDGET.

OKAY, SO IT'S A SAFETY VALVE BUILT IN THAT IF COUNCIL IS UNDECIDED THAT THE CITY MANAGER'S PROPOSED BUDGET WILL AUTOMATICALLY GET ADOPTED BY THE THIRD THURSDAY IN SEPTEMBER.

SO THAT'S BASICALLY IN A NUTSHELL, WHAT THE CITY CHARTER REQUIRES ABOUT THE BUDGET DEVELOPMENT ADOPTION.

SO THAT'S THE CITY CHARTER. NOW I'M GOING TO GO OVER WHAT THE CITY'S PROCESS HAS BEEN FOR BUDGET DEVELOPMENT AND ADOPTION.

IT'S A VERY TRANSPARENT, TRANSPARENT AND CITIZEN FOCUSED BUDGET PROCESS.

IN MARCH, WE BEGIN THE BUDGET PROCESS. THE KICKOFF IS WITH CITY COUNCIL'S VISIONING WORKSHOP THAT HAPPENED IN MARCH DURING MARCH, APRIL TIME FRAME.

WE DO A BUDGET SURVEY, OUR CITIZEN SATISFACTION SURVEY, WHICH WE DID IN APRIL, AND WE SHARED THE RESULTS WITH COUNCIL, AND I'LL GO OVER IN A FEW MINUTES AT A VERY HIGH LEVEL, THE THE MAIN RESULTS.

THEN IN MAY, JUNE, JULY, WE BEGIN BUDGET PLANNING MEETINGS WITH CITY COUNCIL IN AUGUST BY CITY CHARTER.

[00:40:05]

WE WILL TALK ABOUT PROPERTY TAX RATES WITH COUNCIL.

WE WILL TALK ABOUT WATER AND WASTEWATER RATES IN AUGUST.

THAT'S ON AUGUST 13TH, AND I'LL GO OVER THE SCHEDULE IN A FEW MINUTES.

IN SEPTEMBER, WE HAVE PUBLIC HEARING ON THE PROPOSED BUDGET.

AS AMENDED BY CITY COUNCIL. IF Y'ALL AMEND THE BUDGET, WE WILL HAVE PUBLIC HEARING ON THE PROPOSED TAX RATES, AND THEN WE WILL HAVE ORDINANCES FOR THE ADOPTION OF THE BUDGET AND A SEPARATE ORDINANCE FOR THE ADOPTION OF THE PROPERTY TAX RATES.

AND THIS IS SOMETHING IMPORTANT TO NOTE, IN CASE I FORGET, THE STATE LAW REQUIRES THAT THE BUDGET HAS TO BE ADOPTED FIRST. WE CANNOT ADOPT THE TAX RATE BEFORE THE BUDGET.

SO THE BUDGET HAS TO BE ADOPTED BY CITY COUNCIL FIRST BEFORE CITY COUNCIL CAN ADOPT THE PROPERTY TAX RATES.

SO THAT WILL HAPPEN IN SEPTEMBER. AND THE TENTATIVE SCHEDULE IS SEPTEMBER 5TH IS OUR FIRST SET OF PUBLIC HEARINGS AND THE FIRST ORDINANCE READING OF THE ORDINANCES. THEN ON SEPTEMBER 15TH IS OUR FINAL AND SECOND PUBLIC HEARING ON PROPOSED. BUDGET AND PROPOSED TAX RATES. SEPTEMBER 5TH IS A. SATURDAY AND SEPTEMBER 15TH IS A TUESDAY.

THE CITY CHARTER REQUIRES THAT THE ADOPTION OF THE BUDGET.

IF WE HAVE TWO MEETINGS, ONE OF THEM SHALL BE DURING A REGULAR CITY COUNCIL MEETING.

SO SINCE WE ARE. OUR FIRST READING IS ON A SATURDAY, THE FINAL READING HAD TO BE ON A TUESDAY, WHICH IS SEPTEMBER 15TH, BUT IT HAS TO BE BEFORE SEPTEMBER 16TH.

CITY CHARTER REQUIRES THAT BY THURSDAY WE MUST ADOPT.

SO I'LL GO OVER THOSE DATES REAL QUICK HERE. SO MARCH 6TH THROUGH EIGHTH, CITY COUNCIL VISIONING WORKSHOP WAS WAS DONE WAS COMPLETED RIGHT HERE IN CITY COUNCIL CHAMBERS APRIL 24TH OF THIS YEAR.

THE COMMUNITY SURVEY WAS COMPLETED AND THE RESULTS WERE SHARED WITH THE CITY COUNCIL.

MAY 16TH WAS OUR FIRST CITY COUNCIL BUDGET PLANNING MEETING THAT WAS TO COVER AND DISCUSS.

WE REVIEWED THE FIVE YEAR FINANCIAL FORECAST.

JUNE 13TH WAS OUR SECOND CITY COUNCIL BUDGET PLANNING MEETING AND AT THIS MEETING, WE REVIEWED WITH COUNCIL AND REQUESTED COUNCIL TO HELP PRIORITIZE THE CITY'S FIVE YEAR CIP SPENDING PLAN.

THEN ON JUNE 27TH, WE HAD THE THIRD COUNCIL BUDGET PLANNING MEETING.

AT THIS MEETING, WE REVIEWED AND REQUESTED COUNCIL TO HELP PRIORITIZE THE PUBLIC TRANSPORTATION PROGRAM AND OUR SPECIAL PUBLIC EVENTS PROGRAMS. ON JULY 16TH WAS OUR FOURTH COUNCIL BUDGET PLANNING MEETING.

AT THIS MEETING, WE DISCUSSED AND SHARED WITH COUNCIL AND PROVIDED AN UPDATE ON ANTICIPATED SAVINGS FROM COST CONTAINMENT MEASURES IMPLEMENTED TO MITIGATE THE 14.2 MILLION IN ROUND NUMBERS.

14.3 MILLION PROJECTED DEFICIT FOR FISCAL YEAR 2526, WHICH IS THE CURRENT FISCAL YEAR FOR THE GENERAL FUND.

AUGUST 1ST. TONIGHT IS OUR FIFTH COUNCIL BUDGET PLANNING MEETING.

THIS IS WHEN WE ARE ROLLING OUT THE INTERIM CITY MANAGER'S RECOMMENDED PROPOSED OPERATING CAPITAL BUDGETS FOR FISCAL YEAR 2627, AS REQUIRED BY CITY CHARTER. AUGUST 13TH IS OUR NUMBER SIX OR NUMBER SIX COUNCIL BUDGET PLANNING MEETING.

AT THIS MEETING, WE PLAN TO DISCUSS WITH COUNCIL THE RESULTS OF THE 2026 COST OF SERVICE STUDY UPDATE AND RATES

[00:45:04]

I AM NOT RECOMMENDING ANY INCREASES TO THE WATER AND WASTEWATER SERVICE RATES FOR INSIDE CITY CUSTOMERS OR OUTSIDE CITY CUSTOMERS FOR 2627. ZERO. NO INCREASE.

HOWEVER, SINCE WE HAD UNDERTAKEN AT COST OF SERVICE STUDY.

WE WE THE CITY COMMISSIONED THAT. I WANT YOU ALL TO SEE THE RESULTS OF THAT STUDY.

WHAT IT SHOWS THAT WILL HAPPEN ON AUGUST 13TH.

ALSO ON AUGUST 13TH WE WILL SHOW YOU THE 2026 CERTIFIED PROPERTY VALUATIONS.

WE WILL GO OVER THE PROPERTY TAX RATE CALCULATIONS FOR MAINTENANCE AND OPERATIONS COMPONENT, AND ALSO GO OVER THE TAX RATES FOR THE INS INTEREST AND SINKING FUND, WHICH PAYS FOR PRINCIPAL AND INTEREST ON TAX SUPPORTED DEBT. A GOOD EXAMPLE OF TAX SUPPORTED DEBT WOULD BE THE ROAD BONDS.

ANYTHING WE BORROW FOR SIDEWALKS, THINGS OF THAT NATURE.

AND LASTLY. THIS IS ONLY IF IT IS NECESSARY, WE WILL ASK YOU TO CONSIDER RESOLUTION TO RECORD CITY COUNCIL'S VOTE TO CONSIDER PROPERTY TAX RATE INCREASE AT A FUTURE COUNCIL MEETING.

AND LET ME EXPLAIN TO YOU BEFORE EVERYBODY GETS CONCERNED ABOUT THIS, IT'S ONLY IF IT'S NECESSARY.

THERE ARE THREE TAX RATES. ONE IS CALLED. THE VERY FIRST ONE IS THE NO NEW REVENUE TAX RATE, WHICH IS BASICALLY AT THE TAX RATE.

WE WOULD COLLECT THE SAME AMOUNT OF MONEY THAT WE COLLECTED IN THE CURRENT YEAR.

THAT'S TAX RATE NUMBER ONE. TAX RATE NUMBER TWO IS VOTER VOTER APPROVAL TAX RATE. SO THIS IS THE TAX RATE THAT IS CALCULATED BASED ON STATE LAW.

IS THE UPPER LIMIT THAT YOU CAN GO UP TO THIS AMOUNT OR TAX RATE.

AND ANYTHING ABOVE THAT YOU WOULD HAVE TO GO TO THE VOTERS FOR APPROVAL.

AND THE THIRD TAX RATE IS WHAT THE CITY COUNCIL AND THE CITY MANAGER ARE PROPOSING FOR NEXT YEAR.

SO THE LAW SAYS THE STATE LAW SAYS THAT IF YOU ADOPT A TAX RATE, ANY TAX RATE, WHETHER IT'S THE PROPOSED TAX RATE OR. ANYTHING HIGHER THAN THE NO REVENUE, NO NEW REVENUE TAX RATE, IT'S CONSIDERED A TAX RATE INCREASE. AND IF YOU DO THAT, THE LAW SAYS YOU MUST.

PRESENT A RESOLUTION. YOUR. YOUR GOVERNING BODY MUST CONSIDER A RESOLUTION AHEAD OF ADOPTING THAT TAX RATE.

YOU WILL HAVE TO VOTE ON IT. YOU WILL HAVE TO TAKE A ROLL CALL.

VOTE ON IT AS TO YOUR INTENT. YOU'RE BASICALLY DECLARING YOUR INTENT THAT AT A FUTURE COUNCIL MEETING, YOU WILL CONSIDER A TAX RATE INCREASE. REMEMBER ANYTHING ABOVE.

NO NEW REVENUE TAX RATE IS CONSIDERED A TAX INCREASE.

SO IF YOU WERE TO GO ABOVE THAT, THIS RESOLUTION HAS TO BE VOTED ON.

AND THE LAW FURTHER STATES THAT IT MUST BE PUBLISHED IN THE NEWSPAPER.

HOW EACH MEMBER OF THE GOVERNING BOARD VOTED, SO I WOULD HAVE TO IN THE NEWSPAPER, I WOULD HAVE TO DECLARE THAT MAYOR VOTED. HOW MAYOR PRO TEM VOTED HOW DISTRICT ONE THROUGH SIX VOTED. I WANT TO MAKE SURE THAT I EXPLAIN THAT CLEARLY.

IT IS ONLY IF IT IS NECESSARY BECAUSE WE MAY.

ONCE WE GO OVER ON AUGUST 13TH, COUNCIL AS A BODY MAY DIRECT US TO PROPOSE A TAX RATE THAT IS EQUAL TO OR LESS

[00:50:01]

BUT IF IT IS EVEN A FRACTION OF A PENNY HIGHER THAN THAT, THAN THIS RESOLUTION WILL KICK IN.

SO ON THAT DATE, WE INTEND TO SHOW YOU THE VALUATIONS.

WE INTEND TO SHOW YOU WHAT EACH ONE OF THOSE TAX RATES WILL RAISE ESTIMATED REVENUES FOR MAINTENANCE AND OPERATIONS, WHICH IS BASICALLY PAYING FOR OUR POLICE OFFICERS, OUR PARKS EMPLOYEES, OUR PUBLIC WORKS EMPLOYEES, CITY MANAGER'S OFFICE, CITY ATTORNEY, ALL OF THE THE REGULAR STANDARD OPERATING EXPENSES OF THE CITY OF LOCAL GOVERNMENT.

WE WILL ALSO SHOW YOU UNDER EACH ONE OF THOSE RATES, HOW MUCH IT WILL RAISE TO PAY OUR DEBT SERVICE.

AND IF THAT IS NOT ENOUGH, WE WILL HAVE TO RAISE THE INS PORTION OF IT.

BUT WE CAN ADJUST THE NO PIECE TO MANAGE THE TOTAL TAX RATE.

I KNOW IT'S A LITTLE. ABSTRACT AT THIS POINT, BUT WHEN I LAY IT OUT IN FRONT OF YOU WITH ACTUAL NUMBERS.

IT WILL BELIEVE ME, IT WILL MAKE SENSE, AND IT WILL BE CLEAR FOR YOU TO MAKE DECISIONS ON THAT DAY.

SO BEFORE I MOVE ON FROM THIS SLIDE, I WANT TO MAKE SURE THAT YOU ALL DON'T HAVE ANY QUESTIONS ABOUT THAT RESOLUTION IT'S ONLY TO EXPRESS YOUR INTENT ONLY IF IT IS NECESSARY. YES, I DO HAVE A QUESTION.

SO IF WE CAN ALL AGREE, THE BUDGET THAT YOU'RE GOING TO PRESENT TO US IS GOING TO, IS THAT GOING TO REFLECT THE NO NEW REVENUE RATE? THE BUDGET I AM PRESENTING TONIGHT, I DO NOT HAVE THE TAX RATES BECAUSE I DO NOT HAVE THAT INFORMATION FROM THE HAYS COUNTY TAX OFFICE YET.

OKAY. I HAVE THE CERTIFIED TAX ROLL FROM THE APPRAISAL DISTRICT, BUT I DO NOT HAVE THE ACTUAL 85 STEP OR 82 STEP CALCULATION FROM THE HAYS COUNTY TAX ASSESSOR'S OFFICE.

WE SHOULD BE GETTING THAT NEXT WEEK, EARLY NEXT WEEK, BUT WE'LL HAVE THAT INFORMATION.

SO WHAT WILL HAPPEN IS, LET'S SAY ON 13TH, IF COUNCIL'S DESIRE IS TO MAINTAIN THE NO REVENUE, NO NEW REVENUE TAX RATE AND OUR BUDGET EXCEEDS THAT, WE WOULD HAVE TO AMEND THE BUDGET AT THAT POINT TO ADJUST THE REVENUE THAT I'M SHOWING FOR PROPERTY TAX, AND THEN AN EQUIVALENT AMOUNT EITHER IN THE EXPENDITURES OR THE SURPLUS THAT I AM SHOWING, ADJUST THE SURPLUS.

SO WE'LL HAVE SOME OPTIONS FOR YOU HOW WE CAN MANAGE THAT.

OKAY. I GUESS MY QUESTION IS GOING TO BE WHO'S GOING TO REALLY BE.

IS IT GOING TO BE ON THE SHOULDERS OF THE COUNCIL OR OF STAFF TO DECIDE WHETHER OR NOT WE USE THIS RESOLUTION? BECAUSE IF YOU'RE GOING TO PRESENT A NO NEW REVENUE ISH, THEN WE KNOW THAT ANY CHANGES THAT WE MAKE ARE GOING TO DEPEND ON THIS RESOLUTION.

SO ON THE 13TH, BASED ON THE ACTUAL CALCULATIONS OF THE TAX RATE, I WILL RECOMMEND TO YOU A TAX RATE. THEN YOU AS A BODY, YOU ALL DECIDE IF YOU WANT TO TAKE THAT RECOMMENDATION OR BECAUSE I WILL ALSO SAY AS PART OF THAT RECOMMENDATION, WHAT THE FINANCIAL IMPACT IS ON THE PROPOSED BUDGET.

I WILL ALSO SHOW YOU THAT IF THAT IS ACCEPTABLE, YOU CAN ACCEPT IT.

IF IT'S NOT ACCEPTABLE, THEN WE CAN PROPOSE A DIFFERENT TAX RATE AND WE CAN WORK THROUGH THAT FINANCIAL IMPACT.

OKAY. THANK YOU. WE ARE LISTENING TO OUR RESIDENTS AND I'LL SHOW YOU IN A MINUTE ON THE SURVEY. I INTEND IF I CAN MAKE IT HAPPEN.

I WOULD LIKE TO PROPOSE A TAX DECREASE, OR AT LEAST MAINTAIN THE NO NEW REVENUE TAX RATE.

THAT IS OUR OBJECTIVE AND GOAL. BUT I DON'T KNOW WHAT THE FINAL NUMBERS WILL LOOK LIKE.

SEPTEMBER 5TH IS OUR SEVENTH COUNCIL BUDGET PLANNING MEETING.

AT THIS MEETING, WE'LL HAVE THE FIRST PUBLIC HEARING ON PROPOSED BUDGET FEES AND UTILITY RATES.

WE'LL HAVE OUR FIRST PUBLIC HEARING ON A PROPOSED TAX RATES.

FIRST READING OF THE BUDGET ADOPTION ORDINANCE.

AND THESE HAVE TO GO IN THE SEQUENCE. FIRST READING OF THE PROPERTY TAX RATE ORDINANCE.

[00:55:03]

SO THIS IS JUST LIKE THAT RESOLUTION. IF WE HAVE A TAX RATE THAT IS HIGHER THAN THE NO NEW REVENUE TAX RATE, THEN WE WILL NEED THAT THIRD ORDINANCE, OTHERWISE WE WON'T.

ON SEPTEMBER 15TH IS OUR NUMBER EIGHT COUNCIL BUDGET PLANNING MEETING.

DIDN'T SEEM LIKE IT'S GOING TO BE THAT MANY, BUT IT ADDS UP.

ON SEPTEMBER 15TH IS OUR FINAL SECOND PUBLIC HEARING ON THE PROPOSED BUDGET.

CITY FEES AND UTILITY RATES. SECOND PUBLIC HEARING ON PROPOSED PROPERTY TAX RATES.

SECOND READING OF THE BUDGET ADOPTION ORDINANCE, SECOND READING OF THE PROPERTY TAX RATE ADOPTION ORDINANCE AND IF WE NEEDED SECOND READING OF PROPERTY TAX RATE INCREASE RATIFICATION ORDINANCE.

ANY QUESTIONS ON THE SCHEDULE? IF NOT, I'M GOING TO BRIEFLY GO OVER THE SURVEY RESULTS. THIS IS MORE TO REFRESH OUR MEMORIES.

WHAT THE SURVEY BUDGET SURVEY RESULTS INDICATED, WHETHER OR NOT THE CITY MANAGER OR INTERIM CITY MANAGER AND HIS TEAM LISTEN TO THE SURVEY RESULTS AND INCORPORATED THOSE FEEDBACK INTO THE BUDGET OR NOT.

AND WE WILL SHOW YOU TONIGHT HOW WE DID. SO THE SURVEY RESULTS WERE SHARED WITH CITY COUNCIL ON MAY 4TH, 2026. WE HAD 403 SURVEY RESPONDENTS. SIX RECURRING BUDGET PRIORITY ITEMS FOR UPCOMING FISCAL YEAR SHOWED UP IN THE COMMENTS.

I WENT THROUGH PERSONALLY. I WENT THROUGH 200 PLUS COMMENTS.

THIS IS WHERE YOU GET THE THE REAL SENSE OF WHAT OUR RESIDENTS AND RESPONDENTS ARE SAYING, BECAUSE WHEN THEY ANSWER THE QUESTIONS, THEY'RE ALL BOXED IN.

THEY HAVE TO FIT IN IN THOSE RESPONSES. BUT WHEN YOU READ THE COMMENTS, YOU CAN REALLY SEE WHAT THOSE RESPONDENTS ARE SAYING.

AND THESE ARE NOT LISTED IN ANY PRIORITY ORDER, I LISTED THEM.

THE MORE I SAW THE TOPICS, I LISTED THEM IN THAT FASHION.

SO THE SIX RECURRING THEMES THAT I READ IN THE COMMENTS OF THE BUDGET SURVEY.

OUR RESIDENTS WANT ROADWAY IMPROVEMENTS. WATER SUPPLY CAPACITY IS IMPORTANT TO THEM.

THEY WANT US TO MAINTAIN OUR EXISTING PARKS AND RECREATION FACILITIES BEFORE WE BUILD MORE.

OR INVEST IN MORE FACILITIES. THEY WANT US TO AFFORD TO FIX OUR OUR PLAYGROUNDS, OUR PARK BENCHES, OUR PUBLIC RESTROOMS BEFORE WE START BUILDING NEW FACILITIES.

THAT'S A VERY IMPORTANT MESSAGE. THEY WANT TO SEE THE PROPERTY TAX RATES MANAGED BETTER.

THEY WANT TO SEE A REDUCTION. THEY WANT TO SEE A REDUCTION IN WATER AND WASTEWATER SERVICE RATES, OR AT LEAST NOT GO UP ANYMORE. THEY WANT TO SEE A REDUCTION IN CITY'S OVERALL COSTS.

SO THESE SIX THEMES, AS I DESCRIBE THEM, KEPT REPEATING IN THE COMMENTS 200 PLUS COMMENTS. SO HERE'S A A QUESTION THAT WAS POSED TO OUR RESIDENTS IN THIS SURVEY. IF THE CITY HAD ADDITIONAL FUNDING NEXT YEAR, WHICH AREAS SHOULD RECEIVE THE HIGHEST PRIORITY? IF MONEY WAS NOT AN OBJECT OR CONCERN, WHERE WOULD YOU PUT WHERE WOULD YOU WANT THE CITY COUNCIL TO INVEST PUBLIC RESOURCES.

WATER RESOURCES WAS NUMBER ONE. TRANSPORTATION AND PUBLIC WORKS WAS NUMBER TWO, PARKS AND RECREATION WAS THREE.

AND THEN POLICE AND EMERGENCY MANAGEMENT SERVICES NUMBER FOUR.

SORRY, MARCO. INFORMATION TECHNOLOGY WAS IT?

[01:00:05]

NUMBER THREE WAS LIBRARY SERVICES. I WAS SURPRISED TO SEE POLICE AND EMERGENCY WAS NUMBER FIVE.

USUALLY THEY'RE IN THE TOP THREE. ON THE RIGHT SIDE OF THIS SPLIT SCREEN, WE ASKED OVER THE NEXT FIVE YEARS WHICH TYPES OF PROJECTS SHOULD BE THE CITY'S LONG TERM FOCUS? TOP THREE. TRAFFIC. INFRASTRUCTURE. ROADWAYS.

IN OTHER WORDS. STREETS AND ROADWAYS. WATER AND WASTEWATER.

INFRASTRUCTURE AND QUALITY OF LIFE TYPE ACTIVITIES AND FUNCTIONS.

THIS INCLUDED PARKS, LIBRARY, ARTS, COMMUNITY PROGRAMS, AND THEN PUBLIC SAFETY, HOUSING AFFORDABILITY, ECONOMIC GROWTH, AND JOB CREATION. SO THE PROPOSED BUDGET.

INCLUDES OR EMBEDS WHAT OUR RESIDENTS ARE SAYING.

AND YOU'LL SEE THAT CLEARLY. YOU WILL SEE THAT.

SO IF THERE ARE NO QUESTIONS ON THIS SURVEY, I WOULD LIKE TO GO OVER THE GUIDING PRINCIPLES WILL BE USED TO DEVELOP THE NEXT YEAR'S BUDGET. THIS IS BASICALLY OUR INTERNAL GUIDEBOOK.

THE FOUR CORNERS OF OUR PROPOSED BUDGET WAS DEVELOPED.

SO. NUMBER ONE, WE SAID WE WANT TO PRESERVE AND MAINTAIN CORE CITY SERVICES FOR OUR RESIDENTS AND BUSINESSES IN KYLE.

WE WANT TO MAKE SURE THAT WHATEVER WE PROPOSE DOES NOT ELIMINATE ANY ESSENTIAL BASIC CITY SERVICES FOR OUR RESIDENTS. NUMBER TWO, WE WANT TO MAKE SURE WE MINIMIZE MONTHLY AND ANNUAL FINANCIAL IMPACT OF THOSE ESSENTIAL SERVICES ON OUR HOUSEHOLDS AND BUSINESSES IN KYLE.

SO WE WANTED TO MAINTAIN THE ESSENTIAL SERVICES, BUT WE ALSO WANTED TO MAKE SURE THAT THOSE ESSENTIAL SERVICES DO NOT BECOME A FINANCIAL BURDEN ON OUR RESIDENTS AND OUR BUSINESSES.

NUMBER THREE, WE WANTED TO MAKE SURE WE DID IT IN FULL TRANSPARENCY FOR CITY COUNCIL, FOR OUR RESIDENTS, OUR EMPLOYEES AND ALL OTHER STAKEHOLDERS, INCLUDING OUR AUDITORS, BONDHOLDERS, CREDIT RATING AGENCY AND REGULATORS LIKE T, C, E, Q OR PUC.

NUMBER FOUR, WE WANTED TO PRIORITIZE BALANCING SERVICE DELIVERY EXPECTATIONS WITH AVAILABLE RESOURCES WHILE PRESERVING CITY'S LONG TERM FINANCIAL SUSTAINABILITY.

SO THERE ARE THREE PARTS TO THIS ONE. WE WANTED TO PRIORITIZE BALANCING SERVICE DELIVERY EXPECTATIONS, MEANING WE WANTED TO PROVIDE ESSENTIAL SERVICES.

BUT THOSE THAT WERE OPTIONAL, OR WE COULD MAYBE TRIM BACK A LITTLE BIT TO MATCH THE AVAILABLE RESOURCES. THE THIRD PART OF THAT IS, AT THE SAME TIME, WE WANT TO MAKE SURE THAT WE DO NOT HARM THE CITY'S LONG TERM FINANCIAL SUSTAINABILITY. NUMBER FIVE, WE WANTED TO ENSURE THAT ONE TIME REVENUES ARE NOT TO BE RELIED UPON TO SUPPORT ONGOING OPERATIONS. IN OTHER WORDS, IF THERE WAS A ONE TIME SOURCE OF REVENUE COMING INTO THE CITY AND IT WAS NOT GOING TO REOCCUR AGAIN, EVER AGAIN, AT LEAST IN THAT FISCAL YEAR, WE WOULD NOT RELY UPON THAT TO SUPPORT ONGOING

[01:05:08]

NUMBER SIX, WE WOULD DEVELOP A STRUCTURALLY BALANCED BUDGET.

TO MEAN THAT PLANNED RECURRING OPERATING REQUIREMENTS MUST NOT EXCEED PROJECTED RECURRING REVENUES AVAILABLE.

IN OTHER WORDS, IF WE HAD $10,000 IN RECURRING REVENUES, WE WOULD NOT SPEND MORE THAN $10,000 IN RECURRING EXPENDITURES.

PERIOD. THAT WAS A MUST IN THE PROPOSED BUDGET.

NUMBER SEVEN, THE PROPOSED BUDGET MUST COMPLY WITH ALL CITY CHARTER AND CITY'S FINANCIAL POLICY REQUIREMENTS THAT WE WERE NOT GOING TO WAIVE OR SKIP OR SKIMP ON ANY CITY CHARTER REQUIREMENTS, ANY CITY FINANCIAL POLICY REQUIREMENTS.

AND THIS INCLUDES STATE LAW, FEDERAL LAW THAT THOSE ARE GIVEN.

WE'RE NOT GOING TO BREAK THOSE. BUT WHEN IT COMES TO CITY'S OWN FINANCIAL POLICIES, WE WANTED TO MAKE SURE THAT THE PROPOSED BUDGET COMPLIED EVERY BIT OF THAT.

NUMBER EIGHT. AND THIS IS A VERY IMPORTANT ONE.

WE WANTED TO PLAN OUR BUDGET IN SUCH A WAY. THAT IT WOULD SUSTAIN ECONOMIC DOWNTURN RELATED FINANCIAL IMPLICATIONS FOR AT LEAST TWO CONSECUTIVE FISCAL YEARS. WE REALLY WANTED TO BALANCE THE BUDGET RIGHT ON THE BUBBLE AND CALL IT A DAY.

THAT WE'VE SOLVED THE PROBLEM. EVERYTHING IS GOOD.

BACK TO SPENDING THE WAY WE WANT. WE WANTED TO BUILD IN A SMALL CUSHION IN THE PROPOSED BUDGET THAT IF THE REVENUES WERE TO SLIDE SOME MORE, EITHER IN THE MIDDLE OF THE FISCAL YEAR OR THINGS GOT WORSE AT THE END, THAT WE WOULD HAVE SOME CUSHION BUILT IN FOR THE FOLLOWING FISCAL YEAR.

FISCAL YEAR 28. YOU'LL RECALL MY BRIEFING TO COUNCIL ON MAY 16TH.

WE SAID THAT THIS DIDN'T HAPPEN IN ONE YEAR. IT HAPPENED OVER MULTI MULTI FISCAL YEARS AND WE WOULD HAVE TO SOLVE IT OVER MULTI FISCAL YEARS. SO THIS IS IN DIRECT RESPONSE TO THAT.

WE WANT TO BE PREPARED NOT JUST THIS FISCAL YEAR BUT THE UPCOMING FISCAL YEAR AS WELL.

BECAUSE WE'RE NOT OUT OF THE WOODS. JUST BECAUSE I'M PRESENTING TO YOU A BALANCED BUDGET DOES NOT MEAN IT'S OVER.

WE STILL HAVE TO DEAL WITH SOME MORE. AND I'LL SHOW YOU IN A MINUTE.

NUMBER TEN. I'M SORRY. NUMBER NINE. ABSOLUTELY NO DROUGHT.

DRAWDOWN OF RESERVES TO COVER OR PAY FOR RECURRING OPERATING EXPENDITURES THAT THIS BUDGET MUST LIVE WITHIN OUR MEANS. AND WE DID THAT. NUMBER TEN WE WILL PLAN AND AIM AND HOPEFULLY ACHIEVE TO MAINTAIN, RESTORE AND MAINTAIN OUR REQUIRED RESERVES.

AND WE HAVE DONE THAT. WE'LL SHOW YOU HOW WE GOT THERE, WHAT IT TOOK TO GET THERE.

NUMBER 11. THIS IS FOR OUR MOST VALUABLE ASSET THAT THE CITY HAS.

OUR EMPLOYEES TO PRESERVE ESSENTIAL JOBS AND POSITIONS WITHIN THE CITY ORGANIZATION.

WE DIDN'T WANT TO LEAVE OUR EMPLOYEES OUT OF THIS GUIDING SET OF GUIDING PRINCIPLES.

THEY WERE PART AND PARCEL OF OUR PLANNING PROCESS.

AS PART OF THIS EXERCISE, WE WANTED TO REVIEW METHODICALLY EACH CITY DEPARTMENT'S ORGANIZATION STRUCTURE TO MAXIMIZE OPERATIONAL EFFICIENCY AND ELIMINATE DUPLICATION OF EFFORTS AND OTHER ORGANIZATIONAL REDUNDANCIES.

[01:10:05]

ALL THAT WAS TOSSED OUT. WE LOOKED AT IT AND WE QUESTIONED EVERY SINGLE LINE ITEM.

WE ASKED THE DEPARTMENTS TO JUSTIFY HOW THEY GOT THOSE NUMBERS.

NO MORE CARRYOVER BECAUSE WE'VE HAD IT FOR FIVE YEARS.

WE'RE GOING TO HAVE IT FOR ANOTHER FIVE YEARS.

WE SCRATCHED ALL THAT. WE LOOKED AT THEIR ACTUAL EXPENDITURE TRENDS.

WE LOOKED AT THEIR MISSION. WE LOOKED AT THEIR BUSINESS REQUIREMENTS AND WE ALIGNED THEM.

THEIR EXPENDITURES WITH THOSE. AND HOLLY WILL SHOW YOU THAT IN A FEW MINUTES.

NUMBER 14. WE WANTED TO AVOID AT ANY COST, IF WE COULD.

LAYOFFS. REDUCTION IN FORCE, SALARY REDUCTIONS, FURLOUGHS, AND OTHER SEVERE COST CUTTING MEASURES THAT WOULD NEGATIVELY AFFECT OUR CITY EMPLOYEES. THAT WAS ONE OF OUR TENETS FROM THE VERY GET GO.

AND YOU WILL SEE HOW WE ACCOMPLISH THAT BY TEMPORARILY SUSPENDING SOME OF THE EMPLOYEE BENEFITS.

WE THEY MADE THOSE SACRIFICES. WE MADE THOSE SACRIFICES TOGETHER TO SAVE JOBS, TO SAVE HAVING TO REDUCE SALARIES, BECAUSE IT'S NOT JUST OUR CITY EMPLOYEES THAT ARE GOING TO BE AFFECTED WITH LAYOFFS AND FURLOUGHS AND OTHER MAJOR CUTS.

IT'S THEIR FAMILIES AS WELL. AND THE LAST TENANT, WE SAID WE WILL HONOR THE CITY'S COMMITMENT THAT THE CITY MADE IN ITS THREE YEAR MEET AND CONFER AGREEMENT WITH ITS POLICE OFFICERS ASSOCIATION, CHI LAW ENFORCEMENT ASSOCIATION. THE CURRENT YEAR IS YEAR NUMBER ONE.

NEXT YEAR IS YEAR NUMBER TWO. WE WANTED TO MAKE SURE THAT WE HONORED EVERY EVERY PROVISION IN THAT CONTRACT.

AND AND YOU WILL SEE THAT IN A MINUTE. SO THESE WERE THE 15 GUIDING PRINCIPLES THAT HELPED US PROGRAM THE PROPOSED BUDGET AND STAY FOCUSED WHAT OUR MISSION WAS.

SO THAT WAS THE GUIDING PRINCIPLES WE FOLLOWED TO DEVELOP THE BUDGET, TO COME UP WITH STRATEGIES TO COME UP WITH IDEAS TO TO THINK OUTSIDE THE BOX. JUST BECAUSE WE'VE ALWAYS DONE IT, DOESN'T MEAN WE HAVE TO DO IT AGAIN NEXT YEAR.

SO BEFORE I GO INTO THE NEXT PART OF MY PRESENTATION, WHICH IS THE CHALLENGES WE FACED AS WE WERE DEVELOPING THE BUDGET, DO YOU ALL HAVE ANY QUESTIONS ON THE GUIDING PRINCIPLES? ARE THERE ANY IN THERE THAT JUST DOESN'T MAKE SENSE OR SHOULDN'T HAVE BEEN THERE? NO. I DO WANT TO NOTE. SO WHEN PEOPLE HAVE QUESTIONS ABOUT THE BUDGET AND HOW WE CAME HERE, THAT WE CAN GUIDE THEM TO THESE SLIDES, BECAUSE SOMETIMES PEOPLE AREN'T ABLE TO WATCH OR THEY FORGET.

BUT IT'S VERY CLEAR AS DAY HOW YOU AND STAFF MADE YOUR DECISIONS FOR THIS BUDGET.

SO I KNOW IT ENDS AT SLIDES 24. CAN YOU GO BACK TO THE BEGINNING PAGE SO WE CAN KIND OF MEMORIZE AND PROVIDE THESE SLIDE NUMBERS TO ANYBODY WHO MIGHT HAVE QUESTIONS.

OKAY. 22 TO 24. MAYOR ALL OF THESE DOCUMENTS HAVE ALREADY BEEN POSTED.

IT'S ON OUR WEB PAGE, MAIN WEB PAGE. THERE'S A YELLOW BUTTON THAT IF YOU CLICK ON IT, IT WILL TAKE YOU TO THE BUDGET TRANSMITTAL.

IT WILL TAKE YOU TO THE SLIDES. AND IT WILL ALSO GIVE YOU THE ENTIRE BUDGET DOCUMENT THAT READ DOCUMENT THAT'S IN FRONT OF YOU.

[01:15:03]

YES, SIR. WE'LL DO THAT. I THINK ALSO JUST AS A QUESTION.

SO THESE ARE ALL POLICY CHOICES. CORRECT. SO THESE ARE THINGS THAT IF, FOR EXAMPLE, COUNCIL WERE TO MAKE AMENDMENTS TO THE PROPOSED BUDGET THESE CAN BE TRANSLATED AND UNDERSTOOD IN DIFFERENT WAYS.

I THINK THAT'S WHAT I'M TRYING TO HELP ENSURE IS THAT YES, THESE ARE GUIDING PRINCIPLES, BUT THEY'RE ALSO CHOICES, RIGHT? AND THE WAYS IN WHICH YOU INTERPRET THEM CAN ALSO BE CHANGED OR BE SUBJECTIVE.

AND SO I JUST WANT TO MAKE SURE THAT AS PEOPLE READ THIS, THAT THEY'RE NOT UNDERSTANDING THIS AS LIKE, THIS IS A POLICY MUST. WE CANNOT BREAK THIS. THESE ARE JUST CHOICES THAT ARE BEING MADE AS WE ENTER THIS PROCESS.

BUT IN NO WAY DOES IT MEAN THAT THERE AREN'T ALLOWED TO BE SUBJECTIVE DIFFERENCES IN HOW THOSE ARE INTERPRETED.

THESE ARE BY NO MEANS AN ADOPTED CITY POLICY.

THESE ARE SIMPLY GUIDING PRINCIPLES THAT WE AS STAFF INTERNALLY USE TO DEVELOP THE BUDGET.

I WAS GOING TO SAY THAT LIKE ON TOP OF THE SLIDE IT SAYS GUIDING PRINCIPLES.

AND SO WHEN PEOPLE ARE REFERRED TO THAT PAGES 22 TO 24, IF YOU MAYBE WE CAN HIGHLIGHT IT SO PEOPLE UNDERSTAND THIS IS NOT SET IN STONE BECAUSE I DON'T THINK WE'VE SEEN ANYWHERE WHERE IT SAYS POLICY. SO I DO APPRECIATE THAT CLARIFICATION.

CERTAINLY. THANK YOU. SO THE NEXT PART OF MY PRESENTATION IS TO KIND OF REVIEW WITH YOU SOME OF THE CHALLENGES WE FACED AS STAFF PUTTING THIS BUDGET TOGETHER. SO I WANT TO START WITH THE DISCUSSION I HAD WITH COUNCIL ON MAY 16TH. THIS IS WHEN WE PRESENTED THE FIVE YEAR FORECAST.

THE THE WE WENT OVER THE CURRENT DEFICIT. BUT WHAT I WANT TO HIGHLIGHT IS THE KEY TAKEAWAYS I SHARED WITH COUNCIL ON THAT DATE. SO THE KEY TAKEAWAYS AND STRATEGIC IMPLICATIONS THAT WE SHARED AT THE END OF THAT PRESENTATION WAS THE NATURE OF THE CITY'S CURRENT BUDGETARY AND FINANCIAL CHALLENGES.

WE WERE TALKING ABOUT THE CURRENT FISCAL YEAR AND HOW IT WAS GOING TO IMPACT THE THE NEXT FISCAL YEAR MOVING FORWARD.

SO I SAID, I CLEARLY LAID OUT THAT IT WAS MULTIFACETED.

IT HAD AT LEAST FOUR PARTS TO THAT DEFICIT. WHAT CAUSED IT? IT WAS DUE TO STRUCTURAL IMBALANCE. IT WAS LONG TERM IN NATURE, AND THAT THOSE BUDGETARY AND FINANCIAL CHALLENGES HAD DEVELOPED OVER MULTIPLE FISCAL YEARS, BEGINNING IN FISCAL YEAR 2324 BUDGET CYCLE.

AND I ALSO REMINDED COUNCIL AS A TAKEAWAY THAT THE RECOVERY, THE FINANCIAL RECOVERY WILL ALSO REQUIRE MULTI-YEAR EFFORT.

AND THE LAST ONE IS IMPORTANT BECAUSE YOU HEARD ME JUST SAY A FEW SLIDES AGO THAT EVEN THOUGH IT'S A BALANCED BUDGET, WE ARE PLANNING FOR TWO AT LEAST TWO FISCAL YEARS TO GIVE SOME CONSERVATIVE CUSHION BUILT IN THAT WE CAN ABSORB SHOULD THERE BE A A FURTHER SLIDE OF OUR REVENUES. AS PART OF THAT KEY SET OF KEY TAKEAWAYS THAT I SHARED WITH COUNCIL ON MAY 16TH.

I ALSO WENT OVER HOW WE COULD MOVE FORWARD. SO THE PATH FORWARD I DISCUSSED WITH COUNCIL THAT DAY.

I ASKED FOR CITY COUNCIL'S DIRECTION AND SUPPORT ON THE FOLLOWING ITEMS, BUT I ALSO ASSURED YOU THAT THOSE PROBLEMS WERE SOLVABLE. WE COULD TOGETHER SOLVE IT, AND WHICH IS WHAT WE'RE GOING TO DO AND SHOW YOU IN THE PROPOSED BUDGET. IT WOULD REQUIRE FOR US TO SOLVE IT. IT WOULD REQUIRE REFOCUSING MANAGEMENT CULTURE IN THE CITY OF KYLE ORGANIZATION, WHICH WE'VE ALREADY STARTED.

ALIGNMENT OF ORGANIZATIONAL PRIORITIES. WE'VE ALREADY STARTED THAT AS OF MAY 6TH.

CONSOLIDATION OF OVERLAPPING FUNCTIONS TO ELIMINATE REDUNDANCY AND DUPLICATION OF EFFORTS.

IT WOULD REQUIRE STRENGTHENING EMPHASIS ON BUDGETARY CONTROLS AND FISCAL FISCAL DISCIPLINE.

[01:20:08]

WE'VE ALREADY STARTED THAT REEVALUATING ECONOMIC DEVELOPMENT STRATEGIES AND INCENTIVES.

WE HAVE STARTED THAT. SO ALL OF THOSE SIX THINGS ARE IN PLAY NOW AND HAVE BEEN SINCE MAY 6TH.

YOU WILL SEE IN OUR PROPOSED BUDGET ALMOST ALL OF THESE BEING ADDRESSED.

WE ALSO SAID GOING FORWARD, OUR PATH FORWARD WAS TO REALIGN OUR CIP SPENDING PLAN BASED ON AFFORDABILITY AND COUNCIL DIRECTION. YOU'LL RECALL OUR CIP SPENDING PLAN WAS $1.3 BILLION.

THERE IS NO WAY ON GOD'S GREEN EARTH WE CAN AFFORD THAT AND PAY FOR IT WITHOUT RAISING TAXES.

YOU WILL SEE HOW WE TRIM BACK TO REALITY PRACTICAL LEVELS.

I ALSO SHARED WITH YOU THAT OUR PATH FORWARD MUST.

ADVANCE OUR EFFORTS TO STABILIZE WATER AND WASTEWATER SERVICE RATES.

WE MUST RESOLVE ALL RATE RELATED DISPUTES. THAT HAS TO BE DONE.

NUMBER TEN. GOING FORWARD, AS PART OF OUR STRATEGIES, WE MUST IMPLEMENT SUSTAINED COST CONTROL INITIATIVES, WHICH WE HAVE STARTED, AGGRESSIVELY STARTED AND THAT WE WILL SHOW YOU ON A MONTHLY BASIS. I MADE A PROMISE TO YOU ON MAY 16TH AND WE HAVE DONE THAT.

HOLLY COMES BEFORE YOU EVERY MONTH. SECOND MEETING OF THE MONTH AND GIVES YOU A BUDGET STATUS REPORT WHERE WE ARE ON THE BUDGET, ON THE REVENUE FORECAST, WHICH DEPARTMENTS ARE SPENDING MORE, WHICH DEPARTMENTS ARE SPENDING LESS, HOW THE GENERAL FUND IS DOING, HOW THE GENERAL FUND RESERVES IS LOOKING.

AND SHE ALSO COVERS THE OTHER THREE OPERATING FUNDS OF THE CITY WATER, WASTEWATER AND STORM DRAINAGE.

SO THOSE WERE DISCUSSIONS ON MAY 16TH. I KIND OF LAID OUT A ROADMAP OF MOVING FORWARD, WHAT WE'LL HAVE TO DO TO STRUCTURALLY BALANCE OUR BUDGET AND CLOSE THE GAP.

SO MOVING FORWARD IN THE PROPOSED BUDGET. THE CHALLENGES WE FACED ARE ALMOST THE SAME CHALLENGES WE WERE TALKING ON MAY 16TH. HOW DO WE PRESERVE ESSENTIAL MUNICIPAL SERVICES WHILE BALANCING THE BUDGET AND RESTORING CITY'S RESERVE BALANCES? THAT'S A HUGE UNDERTAKING. YOU'VE GOT THREE COMPETING INITIATIVES GOING IN OPPOSITE DIRECTIONS.

WE GOT TO KEEP THE SERVICES, ESSENTIAL SERVICES THAT THE TAXPAYERS ARE PAYING US AND EXPECT NOT OPTIONAL SERVICES, BUT KEEPING THE LIGHTS ON, PICKING UP THE TRASH.

WATER IS COMING OUT OF THE FAUCET WHEN THEY OPEN THE FAUCET, AND IT GOES AWAY WHEN THEY WANT THAT DIRTY WATER TO GO AWAY.

KEEPING ALL THAT AND BALANCE THE BUDGET AND RESTORE THE RESERVE ALL AT ONCE.

THREE VERY COMPETING INTEREST AND OBJECTIVES.

CREATING A BUDGET. A PROPOSED BUDGET THAT WILL RESULT IN LONG TERM FINANCIAL SUSTAINABILITY.

THAT WAS ANOTHER BIG CHALLENGE. AT THE SAME TIME, WHILE WE'RE DOING THIS.

INFLATIONARY COST PRESSURES, THE EFFECTS OF INFLATION WAS NIPPING AT OUR FRONT DOOR AT THE NATIONAL AND STATE ECONOMIC LEVELS. THESE ONLY THESE INFLATIONARY PRESSURES MADE IT WORSE. IT INTENSIFIED THE BUDGETARY AND FINANCIAL CHALLENGES THAT THE CITY WAS FACING.

[01:25:05]

WE'RE SAYING BY THIS TIME, CPI OR THE CONSUMER PRICE INDEX BY WHICH WE MEASURE INFLATIONARY INDEX WOULD BE CLOSE TO 2%. WE HAD GONE UP AS MUCH AS 4.2% IN MAY.

WE ARE NOW DOWN TO ABOUT THREE AND A HALF IN ROUGH AVERAGE NUMBERS.

IT'S NOWHERE CLOSE TO 2% THAT THEY WERE PREDICTING.

NUMBER FIVE, WE'RE EXPERIENCING EXPERIENCING A SLOWING GROWTH IN CITY'S TWO PRIMARY SOURCES OF REVENUES.

YOU WILL HEAR THIS OVER AND OVER AGAIN. PROPERTY TAX REVENUES AND SALES TAX REVENUES.

WE CONTINUE TO SEE A DECLINE IN THE CITY'S THIRD REVENUE.

SOURCE NUMBER THREE, SOURCE OF REVENUE IN THE CITY'S GENERAL FUND, WHICH IS THE DEVELOPMENT REVENUES.

AND WE'VE TALKED ABOUT THAT IN DETAIL AT THE MAY 16TH DISCUSSION.

NUMBER SEVEN, THE NEED TO RESTORE AND MAINTAIN RESERVE BALANCES WHILE AVOIDING RELIANCE ON ONE TIME REVENUES.

HOW DO YOU DO THIS? MAINTAIN ESSENTIAL SERVICES.

THE COST OF WHICH IS GOING UP BECAUSE OF INFLATION.

YOU CANNOT RELY ON ONE TIME REVENUES. SO THAT'S SET ASIDE.

AND NOW YOU HAVE TO MAINTAIN OR BRING BACK OR RESTORE THE RESERVE BALANCES.

IT WAS QUITE, QUITE A CHALLENGE. NUMBER EIGHT, WE HAVE SIGNIFICANT LONG TERM CAPITAL FUNDING REQUIREMENTS ROAD BONDS, WATER INFRASTRUCTURE, WASTEWATER INFRASTRUCTURE.

WE'RE UNDERGOING A ALMOST $200 MILLION WASTEWATER TREATMENT PLANT EXPANSION PROJECT.

WE HAVE SIDEWALKS TO BUILD. WE HAVE ROADS TO BUILD OUTSIDE OF THE ROAD BOND PROGRAM.

WE HAVE DRAINAGE PROJECTS THAT WE HAVE TO BUILD.

WE HAVE PARK SYSTEM INFRASTRUCTURE THAT NEEDS MONEY.

SO WE HAVE A HUGE CAPITAL FUNDING REQUIREMENT FOR THE CITY BECAUSE IT'S A GROWING CITY.

YOU'RE GOING TO HAVE JUST AS MUCH. YOU HAVE OPERATING PRESSURES TO ADD MORE POLICE OFFICERS, TO ADD MORE STREET MAINTENANCE FOLKS RIGHT AWAY.

MAINTENANCE FOLKS. YOU HAVE SIMILAR PRESSURES ON INFRASTRUCTURE.

WE HAVE TO BALANCE THAT. NUMBER NINE, RISING OPERATING AND CAPITAL COSTS.

I BRIEFLY TOUCHED ON THAT PERSONNEL COST IS GOING UP.

WE'LL SHOW YOU IN A MINUTE. ALMOST $1 MILLION INCREASE IN HEALTH INSURANCE.

WE'RE NOT SKIMPING ON OUR EMPLOYEES. WE'RE COVERING THAT.

WE MADE ROOM FOR THAT AND THEIR FAMILIES. PUBLIC SAFETY COST IS INCREASING.

CONSTRUCTION MATERIALS IS GOING UP AND ALL OTHER SUPPORT COSTS FROM ELECTRICITY TO FUEL TO OFFICE SUPPLIES, COFFEE CUPS, ALL OF THAT IS GOING UP.

NOTHING IS STAYING THE SAME OR COMING DOWN. AND THE LAST ONE, THIS ONE REALLY BAFFLES ME PERSONALLY. THE BASE BUDGET EXPENDITURE REQUIREMENTS IS IS FORECASTED TO EXCEED RIGHT. COSTS ARE GOING UP.

SO WE KNOW THAT THE $10 FOR OFFICE SUPPLIES THIS TIME LAST YEAR IS NOT GOING TO BE $10.

NEXT YEAR. WE KNOW THAT. SIMILARLY ALL OUR OTHER SUPPORT COSTS IS GOING UP.

SO WE KNOW THE BASE BUDGET IS GOING TO BE HIGHER IF WE KEEP BUSINESS AS USUAL.

WE KNOW OUR FORECASTED REVENUES ARE COMING DOWN.

BUT THERE SEEMS TO BE AN INCREASING EXPECTATION AND PRESSURE FROM STAKEHOLDERS, WHETHER IT'S FROM COUNCIL, WHETHER IT'S FROM RESIDENTS, WHETHER IT'S FROM BUSINESSES, WHETHER IT'S FROM THE TRAIL COALITION.

[01:30:10]

THEY DON'T WANT ANY REDUCTIONS IN PERSONNEL. THEY DON'T WANT ANY REDUCTION IN OPERATING COSTS.

THEY DON'T WANT ANY TRIM BACKS IN SERVICES OR PROGRAMS. HOW DO WE DO THAT? YOU CAN'T BE DOING THE SAME THING OVER AND OVER AGAIN AND EXPECT DIFFERENT RESULTS. WE HAVE TO INTENTIONALLY CONTROL THE COST.

WE HAVE TO INTENTIONALLY PRIORITIZE OUR SPENDING.

THAT'S WHAT I MEANT, THAT IT BAFFLES ME A LITTLE BIT THAT PEOPLE KNOW WE ARE STRUGGLING TO BALANCE THE BUDGET.

PEOPLE KNOW IT'S NOT A SECRET. IT'S EVERYWHERE.

PEOPLE KNOW AND UNDERSTAND THAT WE'RE HAVING DIFFICULTY AND CHALLENGES TO PAY OUR DAY TO DAY OPERATING COSTS, BUT YET THEY WANT US TO CONTINUE THE SAME.

IS THE LOGIC ESCAPES ME. I HAVE SOMETHING THAT I WANTED TO ADD JUST REAL QUICK. I WOULD PREFER THAT IF MOVING FORWARD, ALL OF US TRY NOT TO IDENTIFY LIKE ONE SPECIFIC GROUP OR COALITION OR CATEGORY OF RESIDENTS, BECAUSE THERE'S A LOT OF RESIDENTS WHO WANT A LOT OF DIFFERENT THINGS.

AND I THINK SIGNALING OUT CERTAIN ONES, IT JUST SEEMS KIND OF UNNECESSARY.

I THINK WE CAN MAKE THE POINTS WITHOUT SPECIFICALLY IDENTIFYING ONLY SPECIFIC COALITIONS OR GROUPS OR RESIDENTS.

DULY NOTED. I'D LIKE TO MAKE SURE THAT IS APPLICABLE TO ALL COUNCIL MEMBERS AND NOT JUST TO YOU.

ESPECIALLY FOR THOSE OF US WHO ARE SITTING ON THE DAIS.

I THINK THAT'S IMPORTANT. IT'S A, IT'S A GREAT REMINDER AND IT'S APPRECIATED, BUT I HOPE GOING DOWN FROM DISTRICT ONE TO DISTRICT SIX AND INCLUDING THE MAYOR, THAT WE CAN ALL HONOR THAT IN THE SAME WAY. PLEASE CONTINUE.

SO THOSE WERE THE TOP TEN CHALLENGES WE AS STAFF FACED IN PUTTING TOGETHER THIS BUDGET FOR NEXT YEAR.

BECAUSE I WANTED NOT ONLY THE COUNCIL TO KNOW AND UNDERSTAND, BUT ALSO THE RESIDENTS, OUR BUSINESSES AND OUR COMMUNITY, OUR EMPLOYEES TO UNDERSTAND BECAUSE NOT ALL OUR EMPLOYEES ARE INVOLVED IN THE BUDGET DEVELOPMENT.

I WANT THEM TO HEAR AND UNDERSTAND WHAT IT TOOK TO PUT THIS BUDGET TOGETHER.

AND WHY WE MADE THOSE CHOICES DIFFICULT CHOICES.

SO NOW I'M GOING TO GO OVER SOME BUDGET HIGHLIGHTS THAT OF THE THE PROPOSED BUDGET, THE CITY MANAGER'S RECOMMENDED PROPOSED BUDGET FOR FISCAL YEAR 2627. THE RECOMMENDED PROPOSED BUDGET FOR FISCAL YEAR 2627 THAT WILL BE PRESENTED TODAY IS A STRUCTURALLY BALANCED BUDGET.

THE PROPOSED BUDGET FUNDS ALL ESSENTIAL CITY SERVICES, OPERATIONS AND MAINTENANCE.

THE PROPOSED BUDGET FOCUSES ON CORE CITY SERVICES.

BY MUNICIPAL SERVICES, I MEAN CITY SERVICES, BECAUSE WE ARE A MUNICIPALITY WHICH INCLUDES PUBLIC SAFETY, EMERGENCY SERVICES, STREET MAINTENANCE, SIDEWALK AND RIGHT OF WAY MAINTENANCE, SOLID WASTE AND RECYCLING, COLLECTION SERVICES, WATER SUPPLY SERVICES, WASTEWATER COLLECTION SERVICES, PARKS, MAINTENANCE, LIBRARY SERVICES AND 311 CUSTOMER SERVICE SUPPORT SERVICES.

THERE ARE A LOT OF OTHER SERVICES OR SUB PARTS TO THESE MAJOR CATEGORIES.

I'VE JUST LISTED SOME OF THE MAIN ONES THAT OUR RESIDENTS AND BUSINESSES RELY ON.

THE PROPOSED BUDGET. THE BALANCE PROPOSED BUDGET MAINTAINS RESPONSIVE SERVICE SERVICE LEVELS FOR ALL ESSENTIAL NOT OPTIONAL. ESSENTIAL CITY SERVICES. TO EFFECTIVELY SERVE OUR RESIDENTS AND BUSINESSES IN KYLE.

[01:35:10]

THIS PROPOSED BUDGET, THIS BALANCE PROPOSED BUDGET, DOES NOT PROPOSE CLOSURE OF ANY CITY FACILITY, AND THAT'S IMPORTANT TO NOTE. WE'RE NOT CLOSING ANY PUBLIC RESTROOMS. WE'RE NOT CLOSING THE LIBRARY. WE'RE NOT CLOSING THE EMERGENCY CENTER.

WE'RE NOT CLOSING THE PUBLIC WORKS BUILDING. WE'RE NOT SHUTTING DOWN THE PARKS, FACILITIES, PLAYGROUNDS, SPLASH PADS, SWIMMING POOL. SANTA IS COMING TO TOWN.

ALL OF THAT IS INCLUDED IN. THE PROPOSED BUDGET MAINTAINS A STRUCTURALLY BALANCED BUDGET WHERE RECURRING REVENUES.

THIS IS IMPORTANT. RECURRING REVENUES SUPPORT RECURRING EXPENDITURES.

WE'RE LIVING WITHIN OUR MEANS OR WE'RE PLANNING TO LIVE WITHIN OUR MEANS NEXT FISCAL YEAR.

REVENUE AND EXPENDITURE ESTIMATES HAVE BEEN CAREFULLY EXAMINED IN THE PROPOSED BUDGET AND ANALYZED TO MAINTAIN A CONSERVATIVE.

THIS IS WHAT I WAS TALKING ABOUT EARLIER A CONSERVATIVE MARGIN TO ABSORB SOME LEVEL OF DECLINE IN ECONOMIC CONDITIONS. SO WE BALANCE THE BUDGET.

WE HAVE BUILT IN SOME EXTRA CUSHION TO ABSORB SHOULD THE ECONOMIC CONDITIONS WORSEN.

AND IF IT DOESN'T, IT GIVES US A HEAD START FOR THE FOLLOWING FISCAL YEAR.

AND WE DON'T KNOW WHAT 28 IS GOING TO BRING. THE PROPOSED BUDGET PROVIDES FOR CONTINUED CAPITAL INVESTMENT IN CRITICAL PUBLIC INFRASTRUCTURE, FOR MOBILITY, FOR SIDEWALKS, FOR WATER SUPPLY AND DISTRIBUTION, WASTEWATER TREATMENT AND COLLECTIONS, PARKS AND OTHER MAJOR CITY FUNCTIONS AND ACTIVITIES.

THE BUDGET PROVIDES FOR THE CONTINUATION OF CONSTRUCTION OF NEW ROADS AND INTERSECTION IMPROVEMENTS UNDER THE ROAD BOND PROGRAM.

WE HAVE NOT STOPPED OR CHANGED THE ROAD BOND PROGRAM.

IT CONTINUES AND WILL CONTINUE NEXT FISCAL YEAR.

THE PROPOSED BUDGET LEVERAGES GRANT OPPORTUNITIES AND EXTERNAL FUNDING SOURCES WHENEVER PRACTICAL AND FEASIBLE. CAPCOM. TEXAS. WATER. DEVELOPMENT. BOARD.

WILDLIFE. TEXAS. WILDLIFE. WE'RE LOOKING AT EVERY POSSIBILITY FOR.

FOR FUNDING. IN THIS PROPOSED BUDGET.

THERE ARE NO EMPLOYEE LAYOFFS. NONE. NO FURLOUGHS OR OTHER TYPES OF REDUCTION IN WORKFORCE. INCLUDED IN THE INTERIM CITY MANAGER'S RECOMMENDED BUDGET FOR NEXT FISCAL YEAR.

THE BUDGET FUNDS FULLY FUNDS THE CONTINUATION OF CONTRIBUTIONS BY THE CITY FOR EMPLOYEE AND FAMILY COVERAGE FOR HEALTH INSURANCE, EVEN THOUGH THE COST IS GOING UP. WE ARE ABSORBING THAT TO HELP OUR EMPLOYEES AND THEIR FAMILIES.

THE BUDGET PROVIDES FUNDING FOR CITY'S FINANCIAL OBLIGATIONS AGREED TO UNDER THE THREE YEAR MEET AND CONFER AGREEMENT WITH THE POLICE OFFICERS ASSOCIATION, THE LAW ENFORCEMENT ASSOCIATION, OR CALEA.

AND AS PART OF THAT, ALL FOREIGN CIVIL SERVICE CITY EMPLOYEES.

THESE ARE POLICE OFFICERS. ALL SWORN CIVIL SERVICE CITY EMPLOYEES WILL RECEIVE AN AVERAGE 4% PAY

[01:40:01]

IN ADDITION TO THAT, ALL POLICE OFFICERS WHO ARE CORPORAL WILL RECEIVE AN ADDITIONAL 2%. A PEER CITY BASED PAY INCREASE PER THIS AGREEMENT.

AND LET ME EXPLAIN THAT TO YOU HOW THAT WORKS.

SO IN THE MEET AND CONFER AGREEMENT, THE CITY AGREED TO DO A.

COMPENSATION REVIEW OF THE TEN PEER CITIES EVERY MAY.

AND IF THE RESULTS CAME BACK THAT ANY CLASS OF OUR OFFICERS WAS NOT IN THE TOP THREE. THAT THE CITY WOULD PAY 2% ON THE FOLLOWING OCTOBER 1ST. SO LET ME MAKE SURE EVERYBODY UNDERSTANDS THIS.

SO THERE ARE TEN CITIES FROM SAN ANTONIO TO GEORGETOWN, PRETTY MUCH ON THE I-35 CORRIDOR.

IN THE MEDIAN CONFER AGREEMENT, THE CITY IS REQUIRED.

OUR HR DEPARTMENT IS PRETTY MUCH DOES THIS, AND THEY RECENTLY DID IT IN MAY.

THE AGREEMENT REQUIRES THAT WE WILL COMPARE OUR OFFICERS PAY TO THOSE TEN CITIES.

AND IF THE CITY OF KYLE OFFICERS ARE NOT IN THE TOP THREE.

THEN WE WILL GIVE THEM A 2% ADJUSTMENT. ON THE OCTOBER 1ST OF THE COMING FISCAL YEAR. SO, FOR EXAMPLE, WHEN THEY DID THE MAY ASSESSMENT OR COMPARISON, THEY FOUND THAT THE CORPORALS IN KYLE, THEIR COMPENSATION WAS, I BELIEVE THEY WERE RANKED NUMBER FOUR OF THE TEN CITIES AND EVERYBODY ELSE WAS WITHIN THE TOP THREE. SO WE HAVE TO ADJUST THE CORPORALS PAY AND GIVE THEM A 2% ON OCTOBER 1ST. SO THE PROPOSED BUDGET INCORPORATES THAT FUNDING THAT IS REQUIRED TO HONOR THIS REQUIREMENT.

UNFORTUNATELY, THE PROPOSED BUDGET, IN ORDER TO BALANCE IT DOES NOT INCLUDE ANY PAY INCREASE FOR CIVILIAN CITY EMPLOYEES.

SO ANYBODY THAT IS NOT A SWORN OFFICER THAT WORKS FOR THE CITY OF KYLE, AT LEAST IN THE PROPOSED BUDGET, UNLESS COUNCIL AMENDS IT, THE PROPOSED BUDGET DOES NOT INCLUDE ANY FUNDING FOR A PAY INCREASE OR MARKET ADJUSTMENT, OR A COST OF LIVING ADJUSTMENT.

ANY ADJUSTMENT TO THEIR PAY FOR CIVILIAN EMPLOYEES.

IN ORDER TO BALANCE THE BUDGET, WE HAD TO TEMPORARILY SUSPEND SELECTED BENEFITS FOR ALL CITY EMPLOYEES.

THIS IS FOR ALL CIVILIAN AND SWORN. WE HAVE TO SUSPEND THE LEAVE BACK PROGRAM AND THE LEAVE BUY BACK PROGRAM BASICALLY, IS THAT THE EMPLOYEES BUY ADMINISTRATIVE POLICY, NOT COUNCIL POLICY. ADMINISTRATIVE POLICY CAN SELL THEIR ACCRUED LEAVE UP TO A LIMIT EACH YEAR, TWICE A YEAR, NOVEMBER AND MARCH. FOR CASH. SO THEY CAN CASH OUT.

IT HELPS THE CITY. IT HELPS THE EMPLOYEES. IT HELPS THE CITY BECAUSE IT REDUCES THE THE LIABILITY CITY HAS ON ITS BOOK OF UNPAID BUT ACCRUED LEAVE. BECAUSE THE LONGER YOU WAIT FOR THAT EMPLOYEE TO TAKE THAT LEAVE.

IT GETS EXPENSIVE BECAUSE THEY'RE GETTING RAISES EACH YEAR.

SO SOONER THAT LIABILITY COMES OFF THE BOOKS, THE BETTER THE CITY IS.

AND IN THE SAME TOKEN, THE OTHER SIDE OF THAT COIN IS IT'S GOOD FOR OUR EMPLOYEES IF THEY WANTED TO USE THE CASH.

BUT. IT COSTS CASH TO BUY THAT ACCRUED LEAVE.

[01:45:08]

WE HAVE SUSPENDED 100% CITY PAID 12 WEEKS OF PARENTAL LEAVE PROGRAM LIKE I MENTIONED EARLIER.

THIS LEAVE IS STILL AVAILABLE TO OUR EMPLOYEES INSTEAD OF CITY PAYING FOR IT.

THEY WILL HAVE TO USE THEIR ACCRUED LEAVE. AND WE HAVE TEMPORARILY SUSPENDED THE CASH CONTRIBUTION TO HEALTH REIMBURSEMENT ARRANGEMENT ACCOUNT, OR HRA.

I WANT TO TAKE A SECOND TO EXPLAIN WHAT THIS IS.

EVERY JANUARY, THE CITY ADDS $1,000 $1,000 TO EACH EMPLOYEES HRA ACCOUNT. THIS WAS CREATED SOME YEARS BACK WHEN THE CITY DID NOT OFFER A REASONABLE FAMILY INSURANCE FOR OUR EMPLOYEES.

IT WAS VERY EXPENSIVE. SO TO HELP OUR EMPLOYEES, THE CITY STARTED GIVING $1,000 AS A CONTRIBUTION TO HELP TOWARDS MEDICAL EXPENSES OF OUR EMPLOYEES.

THEY COULD GO TO WALGREENS, GET THEIR PRESCRIPTIONS, EYEGLASSES.

ANYTHING THAT WAS PRESCRIBED, THEY COULD USE THAT $1,000 TOWARDS.

THAT'S HOW IT STARTED. NOW THAT WE ARE, WE HAVE A VERY ROBUST HEALTH INSURANCE PREMIUM FOR OUR EMPLOYEE FAMILIES.

WE NEEDED TO REEXAMINE THIS PROGRAM TO BEGIN WITH, BUT FOR RIGHT NOW, WE'RE TEMPORARILY SUSPENDING IT.

I MEAN, YOU CAN DO THE MENTAL MATH 1000 EMPLOYEE, I MEAN, $1,000 PER EMPLOYEE PER YEAR TIMES 470 EMPLOYEES.

THE LAST ONE IS SOMETHING THAT I WANT TO PROPOSE TO CITY COUNCIL TO CONSIDER APPROVING.

WE HAVE ASKED A LOT OF OUR CITY EMPLOYEES. YOU'LL SEE THAT IN THE BUDGET.

YOU'VE ALREADY HEARD ME SAY WHAT WE HAVE ASKED OUR EMPLOYEES TO SACRIFICE.

I'M ASKING AND REQUESTING RESPECTFULLY OF CITY COUNCIL TO APPROVE MY PROPOSAL TO ADD AN ADDITIONAL PAID HOLIDAY FOR ALL CITY EMPLOYEES TO OBSERVE GOOD FRIDAY. IT WILL NOT COST THE CITY AN ADDITIONAL DOLLAR BECAUSE WE'RE PAYING OUR EMPLOYEES. THEY'RE ON THE PAYROLL.

IT'S JUST THAT THEY WILL BE OFF THAT DAY. ASIDE FROM RELIGIOUS REASONS, IN HAYS COUNTY, ALMOST ALL AGENCIES ARE CLOSED. OUR EMPLOYEES, ESPECIALLY YOUNG PARENTS OF YOUNG CHILDREN, HAVE A TOUGH TIME FOR CHILDCARE.

FINDING CHILD CARE BECAUSE CITIES OPEN, SCHOOLS ARE CLOSED, DAYCARES ARE CLOSED.

AND THEN THOSE EMPLOYEES, WHICH ARE REFERRED TO AS THE SANDWICH GENERATION, WHERE THEY'RE TAKING CARE OF THEIR ELDERLY PARENTS AND THEY'RE ALSO TAKING CARE OF THEIR YOUNG CHILDREN. THEY ALSO HAVE A TOUGH TIME FINDING CARE FOR THEIR ELDERLY PARENTS OR GRANDPARENTS. SO THIS WOULD GO A LONG WAY FOR OUR EMPLOYEES TO HAVE THIS SPECIAL HOLIDAY TO OBSERVE WITH THEIR FAMILIES. GOOD FRIDAY. SO THESE WERE MY TOP 18 HIGHLIGHTS OF THE PROPOSED BUDGET.

SO VERY QUICKLY I'M GOING TO GO OVER THE BUDGET SUMMARY.

THANK YOU FOR THAT RECOMMENDATION BECAUSE THAT IS TRUE.

THE SCHOOL IS CLOSED ON THE 26TH OF GOOD FRIDAY NEXT YEAR.

YES, SIR. SO THANK YOU. DID WE EVER TRY RENEGOTIATING? MEET AND CONFER. OR LIKE OPENING THAT BACK UP BECAUSE IN ARTICLE TEN UNDER THE NON APPROPRIATION SECTION, IT DOES STATE THAT IF WE DON'T HAVE SUFFICIENT FUNDS, WHICH IF WE WERE $14 MILLION IN DEFICIT, WE DIDN'T HAVE SUFFICIENT FUNDS, THEN WE WOULD BE ABLE TO OPEN NEGOTIATIONS AGAIN.

SO I'M JUST WONDERING IF THAT WAS SOMETHING THAT WAS PURSUED.

I DID NOT PURSUE THAT. NO. IF COUNCIL GIVES ME DIRECTION TO DO THAT, I WILL CERTAINLY FOLLOW UP.

[01:50:05]

YEAH. I THINK HE HAD MENTIONED IT. SO I THINK HE LET IT GO.

YEAH, I KNOW BECAUSE I'M LIKE, I THINK THAT WAS MENTIONED BEFORE. SO I JUST WANTED TO KNOW IF THOSE CONVERSATIONS EVER DID HAPPEN.

JUST BECAUSE IT SEEMS KIND OF DIFFICULT FOR ME TO RECONCILE INCREASES IN PAY WHILE COMPLETELY GUTTING VERY IMPORTANT ASPECTS OF THE REST OF THE BUDGET. SO YEAH, WITH THAT SAID, I WOULD HOPE THAT YOU WOULD NOT PROCEED ON DOING ANYTHING OF THAT SORT UNTIL YOU GOT DIRECTION FROM COUNCIL.

SO I'M GLAD IT WAS BROUGHT UP. AND IF COUNCIL SO SEES, AS THEY WANT TO HAVE YOU GO BACK AND NEGOTIATE BECAUSE OF THAT CLAUSE.

I THINK THAT CAN BE A TOPIC OF DISCUSSION, BUT I DO APPRECIATE YOU NOT TAKING THAT UPON YOURSELF TO TRY TO RENEGOTIATE WITHOUT DIRECTION, NOT WITHOUT COUNCIL DIRECTION. THANK YOU. SO HERE ARE THE BUDGET SUMMARY.

AT A VERY HIGH LEVEL, THE PROPOSED BUDGET RECOMMENDED PROPOSED BUDGET TOTALS AND $23 IN ROUND NUMBERS IS 417 MILLION. IF YOU'LL RECALL, THE CURRENT BUDGET.

APPROVED BUDGET IS 603 MILLION AND SOME CHANGE.

THE LARGEST PIECE OF THIS PIE IS CIP SPENDING.

THIS IS FOR ROAD BONDS, WATER INFRASTRUCTURE, WASTEWATER INFRASTRUCTURE, SIDEWALKS, THINGS OF THAT NATURE PARK IMPROVEMENTS.

THAT IS 69.2% OR $289 MILLION. THAT'S THE THE BIGGEST SLICE OF THE PIE THAT THE DARK BLUE. THE NEXT SLICE IS THE CITY'S GENERAL FUND.

CAN I BEFORE WE MOVE FORWARD, CAN I ASK A QUICK QUESTION? WHAT IS THE DIFFERENCE BETWEEN THE CURRENT 600 MILLION AND THE 2026 2027 400 MILLION. THAT'S LIKE A DIFFERENCE OF 200 MILLION.

SO WHY WAS IT 600 MILLION LAST YEAR AND 400 MILLION THIS YEAR? SO WE'LL SHOW YOU IN A MINUTE. BUT IN A NUTSHELL THE COST ESTIMATES WERE HIGHER.

THEY THOUGHT THEY COULD DO ALL THOSE PROJECTS IN ONE YEAR, BUT IT WAS UNREALISTIC.

SO THE BUDGET REFLECTED THAT UNREALISTIC ESTIMATE.

WE ARE SCALING BACK BASED ON. REVIEWING THOROUGHLY WHAT OUR CASH FLOW REQUIREMENTS WILL BE, HOW MANY OF THOSE PROJECTS WE CAN ACTUALLY LIFT OFF THE GROUND AND BE AND BE PRACTICAL ABOUT IT.

SO GENERAL FUND IS 17% OR $69 MILLION. WATER UTILITY IS 28 MILLION OR 7%.

WASTEWATER UTILITY OPERATING BUDGET IS 9.7 MILLION, OR 2.3%.

STORM DRAINAGE IS 1.6 MILLION, OR 0.4%. DEBT SERVICE NEXT YEAR IS 14.5 MILLION 3% 3.5%. DOES THAT COVER ALL OF OUR DEBT SERVICE OR IS THAT JUST.

YEAH, I WAS JUST ABOUT TO TO CLARIFY THAT THAT IS ONLY THE GENERAL FUND PORTION OF THE TAX PORTION OF IT.

THE UTILITIES DEBT COMPONENTS ARE INCLUDED IN THE WATER AND UTILITY WASTEWATER UTILITY FUND NUMBERS.

OKAY. SO THAT'S THAT'S JUST THE DEBT SUPPORTED.

YEAH. OR THE TECH SUPPORT. TECH SUPPORT INS. THANK YOU.

AND THEN THE OTHER IS 5.8 MILLION. THESE ARE THE OTHER FUNDS THAT HOLLY WILL GO OVER AND SHOW YOU WHERE THOSE FUNDS ARE.

NOW ONE THING I WANT TO POINT OUT THAT THE NUMBERS WE ARE SHOWING AT THIS HIGH LEVEL FOR GENERAL FUND WATER, WASTEWATER, STORM DRAINAGE IN PARTICULAR, FOR THOSE FOR OPERATING FUNDS, THEY ARE SLIGHTLY LESS THAN WHAT YOU'RE GOING TO SEE WHEN WE TALK INDIVIDUALLY FOR THOSE FUNDS, BECAUSE THE WAY THE TRANSFERS IN AND TRANSFERS OUT WORK AT A GLOBAL LEVEL FOR THE ENTIRE CITY. THEY WASH OUT. BUT WHEN YOU LOOK AT GENERAL FUND BY ITSELF, YOU WILL SEE TRANSFERS OUT AS PART OF REQUIREMENTS. YOU WILL SEE FOR WATER, WASTEWATER, AND I'LL SHOW YOU IN A MINUTE.

[01:55:02]

THERE WE GO. WE ARE SO PROUD OF OUR BALANCED OPERATING BUDGET FOR NEXT YEAR THAT YOU'RE GOING TO SEE THIS HEADLINE IN EVERY SLIDE.

BALANCED OPERATING BUDGET FOR FISCAL YEAR 2627.

EACH ONE OF US LOST ABOUT 30 POUNDS DURING THE BUDGET PROCESS.

SO FOR GENERAL FUND, THE TOTAL IS $71.34 MILLION.

YOU REMEMBER I SHOWED YOU IT WAS 69 HERE BECAUSE IT DOES NOT INCLUDE TRANSFERS OUT AT THE GLOBAL LEVEL.

HERE THE TRANSFERS ARE ARE INCLUDED. SO 71.3 MILLION FOR TOTAL PROPOSED BUDGET FOR GENERAL FUND IS ALMOST $8 MILLION LESS THAN THE CURRENT APPROVED BUDGET, OR 10%.

2.35 5 MILLION ESTIMATED REVENUES ABOVE ESTIMATED EXPENDITURES.

THAT'S THE CUSHION IN OUR GENERAL FUND RIGHT NOW.

THE ESTIMATED FUND BALANCE THAT WE ARE PROJECTING AT FISCAL YEAR END 930, 2027 WILL BE CLOSE TO 20 MILLION IF OUR PROJECTIONS COME THROUGH. IF REVENUES HOLD AND WE CAN HOLD OUR EXPENDITURES THAT WE HAVE IN THE BUDGET, THEN WE WILL SEE A FUND BALANCE OF 20 MILLION OR CLOSE TO IT.

SO FAR. THE PROPERTY TAX ROLL THAT WE RECEIVED FROM OUR APPRAISAL DISTRICT SHOWS A ALMOST A 1.3% DECLINE IN THE 2026 CERTIFIED TAXABLE ASSESSED VALUATION.

WHEN YOU COMPARE TO THE SAME SET OF NUMBERS FOR 25 ON THE SAME BASIS.

AND LET ME EXPLAIN THE BASIS. I HAVE REMOVED.

THE SIX. THE VALUES INSIDE ARE SIX TERMS FROM THIS CALCULATION.

SO THIS IS JUST FOR THE CORE CITY. THE VALUATIONS ARE 1.3% LESS THAN 2025.

AS I MENTIONED BEFORE, WE'RE WAITING ON OUR 26 CERTIFIED PROPERTY TAX RATE CALCULATIONS.

I AM CONFIDENT THAT WE WILL GET IT EARLY NEXT WEEK BECAUSE WE KNOW THEY HAVE ALREADY STARTED WORKING ON IT.

WE'VE SEEN SOME OF THEIR INFORMATION, EVERYTHING THAT WE NEED TO PROVIDE TO THEM, WE HAVE DONE SO.

THEY HAVE STARTED WORKING ON IT AND WE THINK WE'LL HAVE IT EARLY NEXT WEEK, BUT FOR SURE ON AUGUST 13TH, WHEN WE GO OVER IT WITH YOU, YOU'LL HAVE THE DETAILS FOR THE WATER UTILITY FUND.

PROPOSED BUDGET EQUALS 32.45 MILLION. THIS IS A MILLION, OR 3% LESS THAN THE CURRENT APPROVED BUDGET.

THERE'S A $2.6 MILLION. REVENUES ARE ABOVE EXPENDITURES.

THE FUND BALANCE PROJECTED FOR OUR WATER UTILITY FUND AT SEPTEMBER 30TH IS ABOUT $24 MILLION.

SAME THING HERE. IF REVENUES HOLD AND WE ARE FIRM, FOLLOW OUR STRICT DISCIPLINE ON FINANCIAL BUDGET. WE SHOULD SEE A $24 MILLION FUND BALANCE.

AND THE PROPOSED BUDGET AND MY PROPOSED BUDGET FOR NEXT YEAR.

I AM NOT PROPOSING A RATE INCREASE FOR WATER SERVICE FOR INSIDE CUSTOMERS OR OUTSIDE CUSTOMERS.

NO RATE INCREASES WHATSOEVER. ZERO. REGARDLESS OF WHAT THE COST OF SERVICE WILL SHOW YOU.

BECAUSE WITH A $24 MILLION ESTIMATED FUND BALANCE, WE CAN DEFER A RATE INCREASE AT LEAST FOR NEXT YEAR.

IF YOU RECALL, THE LAST COST OF SERVICE STUDY HAD PROJECTED 20% RATE INCREASE NEXT YEAR.

SO WE'VE COME A LONG WAY. WE'VE WE HAVE SCALED BACK ON CIP SPENDING LEVELS TO A REALISTIC LEVEL.

[02:00:02]

COUNCIL MEMBER ZAPATA HAS A QUESTION. HOW MUCH OF THAT NUMBER IS DUE TO THE FACT THAT IN THE REORGANIZATION OF TPW AND PARKS AND REC, IT LOOKED LIKE THE THE WAY THAT WE ACCOUNTED FOR THOSE WAS KIND OF SPREAD ACROSS DIFFERENT FUNDS.

SO IT WAS LIKE 0.2 OR 0.33% WAS IN LIKE WATER UTILITY FUND ACCOUNTED FOR LIKE PAYING FOR THE FTE OR WASTEWATER.

AND THEN WHEN WE DID THE REORGANIZATION, THEY ALL GOT RECONCILED COMPLETELY UNDER THE GENERAL FUND.

SO I GUESS I WANT TO KNOW HOW MUCH OF THAT IS THE REASON THAT WE HAVE THAT 23.96 MILLION ESTIMATED FUNDS, MOST OF THE $24 MILLION IS GOING TO BE BASED ON RATES, AND THE PARKS HAS NOTHING TO DO WITH THE WATER UTILITY DEPARTMENT. THERE ARE SOME ADJUSTMENTS TO THE INDIRECT COST RECOVERY.

BUT THAT DOES NOT INCLUDE ANY BENEFIT TO THE WATER UTILITY FROM PARKS DEPARTMENT, ANY REDUCTIONS IN PARKS DEPARTMENT FOR TRANSPORTATION AND PUBLIC WORKS THEN, BECAUSE WHAT I SAW HAPPENING IN THE BUDGET BOOK WAS THAT THE FTES WERE SPREAD ACROSS SOME OF THESE.

SO THAT WAY IT WAS ABSORBED BY SOME OF THE FUND.

AND NOW, INSTEAD OF BEING BALANCED ACROSS RATEPAYERS AND TAXPAYERS, SOME OF THOSE ARE JUST FALLING COMPLETELY ONTO TAXPAYERS.

WHEN WE DID THE REORGANIZATION, AND WE'LL SHOW YOU THAT IN A MINUTE.

WHEN HOLLY GOES OVER HOW WE CLOSE THIS GAP, YOU WILL SEE THE FTES OR POSITIONS WILL BE ELIMINATED, HOW THEY WERE FUNDED, WHICH FUNDS THEY BENEFIT OR NOT.

OKAY. AND THEN JUST ALSO FOR THE ONES THAT WERE RESTRUCTURED, BECAUSE I DON'T THINK I SAW THAT IN THE PRESENTATION, LIKE WHAT THOSE COSTS ARE, BECAUSE MOVING SOME OF THAT OVER MEANS THAT INSTEAD OF ALL RATEPAYERS WHO BENEFIT FROM SOME OF THIS WORK, IT'S JUST TAXPAYERS, JUST LIKE THE RESIDENTS WHO ARE GOING TO BE ON THE HOOK FOR THE GENERAL FUND, FTE COSTS. BUT ALL FUNDS ARE GOING DOWN. NEXT YEAR.

I THINK WHAT I'M JUST TRYING TO UNDERSTAND IS THERE IS GUIDING PRINCIPLES THAT CAN SAY, YES, YOU CAN RECONCILE UNDER LIKE THE GENERAL FUND ENTIRELY.

LIKE THAT'S DOABLE. YOU CAN ALSO SPREAD IT ACROSS THE FUNDS BASED ON THE WORK THAT THE FTE IS DOING.

RIGHT. AND SO SOMETIMES THAT'S THE THE WAY THAT MUNICIPALITIES CHOOSE TO DO IT BECAUSE IT'S MORE BALANCED.

SO THAT WAY IT'S NOT JUST THAT ALL THE FTE COSTS ARE ON THE BACKS OF ONLY RESIDENTS AND INSTEAD SPREAD ACROSS TO ALL RATEPAYERS. SO IF I IF I CAN ADDRESS THIS AND EVEN COUNCILMEMBER GOZA MAY BE ABLE TO ADDRESS THIS, I THINK IF WHAT I'M UNDERSTANDING IS CORRECT IS LIKE AT ONE POINT, AND IT STILL MAY BE THIS WAY, LIKE SOME OF THE SALARY OF THE CITY MANAGER WAS IN THE WATER IN THE WATER FUND.

SOME OF WELL, THIS IS LIKE ACTUAL FIELD STUFF.

LIKE THIS IS LIKE ACTUAL LIKE MAINTENANCE, LIKE EVERYDAY STUFF.

AND SO IF THEY'RE PERFORMING THAT WORK, IT JUST FEELS KIND OF WEIRD TO HAVE IT.

I MEAN, IT'S NOT YOU CAN'T, YOU CAN DO IT, RIGHT? IT'S NOT LIKE WRONG TO DO IT, TO RECONCILE IT ALL UNDER THE GENERAL FUND.

BUT I JUST WANT TO MAKE SURE THAT IT'S BALANCED.

SO THAT WAY IT'S NOT LIKE SOME SORT OF UNDUE BURDEN THAT WE'RE PUTTING ON RESIDENTS INSTEAD OF SAYING, HEY, YOU KNOW, EVERYONE WHO'S A RATEPAYER BENEFITS FROM THE WORK THAT THIS FTE DOES.

AND THAT'S WHY WE SPREAD THAT SALARY ACROSS DIFFERENT FUNDS.

SO IF WE COULD JUST GET SOME OF THAT INFORMATION, BECAUSE I DON'T THINK THAT'S PROVIDED IN THE PRESENTATION.

I THINK I WANT TO MAKE SURE I UNDERSTAND THE QUESTION. SO IS A QUESTION LIKE SOME OF THE FULL TIME EMPLOYEES, BECAUSE I WANT TO MAKE SURE PEOPLE UNDERSTAND WHAT FTE MEANS.

SO IT'S FULL TIME EMPLOYEES. YOU'RE SAYING SOME OF THEM CAME OFF OF THE WATER UTILITY OR ONE DEPARTMENT AND THEN WAS PUT ON THE GENERAL FUND? YES. AND THE REORGANIZATION. AND SO BECAUSE OF THAT ACCOUNTING METHOD, THAT MEANS THAT IN THE GENERAL FUND, RESIDENTS ARE GOING TO BE ABSORBING LIKE 100% OF THOSE FULL TIME EMPLOYEE COSTS WHEN ACCOUNTING WISE, MUNICIPALITY WISE, WE HAVE THE OPTION TO ACTUALLY SPREAD THAT COST ACROSS.

SO THAT WAY IT PROPERLY REFLECTS RATEPAYER USAGE.

SO I JUST WANT A CLEAR UNDERSTANDING OF THAT.

OKAY. AND MAYBE WE CAN LOOK IN THE BUDGET AND IT'LL SHOW LIKE IT'LL SHOW EXACTLY HOW MANY EMPLOYEES WERE THERE LAST YEAR VERSUS THIS,

[02:05:06]

AND LIKE, THERE'S NO CHANGE IN THE EMPLOYEE REALLY, IT'S JUST HOW THEY'RE ACCOUNTED AND, AND WHO'S PAYING FOR THEM BASICALLY.

AND SO THE SWITCH IS LIKE, ALL OF THEM BASICALLY GET SWITCHED OVER TO JUST RESIDENTS VERSUS RATEPAYERS.

I MAY BE MISTAKEN, BUT I THOUGHT PART OF THE TRANSFERS IN AND OUT WERE TO ACCOUNT FOR THAT FOR THE INDIRECT COST RECOVERY.

YES. YOU'RE CORRECT. THANK YOU. I THINK SOME OF IT, BUT IT DOESN'T ACCOUNT FOR THE LARGE AMOUNT THAT WE HAVE MOVING OVER INTO THE GENERAL FUND NOW. SO THAT'S WHY I WAS A LITTLE BIT CONFUSED ON HOW WE ACCOUNT FOR THAT.

YEAH. WE MAY HAVE OVER ACCOUNTED FOR THAT LAST YEAR THOUGH. I KNOW LIKE $3.2 MILLION WAS FROM THE WATER AND WENT TO THE GENERAL FUND.

SO THAT MIGHT HAVE BEEN KIND OF LIKE THE PILOT TAX, WHICH IS THE PAYMENT IN LIEU OF TAXES.

AND SO I SEE WHAT I SEE WHAT COUNCIL MEMBER GOES AS SAYING.

BUT IF WE'RE IF WE ARE COMPARING LAST YEAR TO THIS YEAR, I FEEL LIKE MAYBE LAST YEAR WE MIGHT HAVE OVER WE PUT TOO MUCH IN THE GENERAL FUND FROM THE WATER FUND, I DON'T KNOW.

BUT THAT'S SOMETHING THAT WE CAN ADDRESS AND TALK ABOUT AS YOU MOVE ON TO THE NEXT SLIDE.

YEAH. WHEN HOLLY AND ANDY GO OVER, WE'LL SHOW YOU IN DETAIL WHAT THE TRANSFER ENDS TO THE GENERAL FUND, INCLUDE WHERE IT'S COMING FROM AND WHAT IT COMPRISES OF.

OKAY, SO THAT WAS WATER UTILITY FUND. MOVING ON TO WASTEWATER UTILITY FUND.

THE TOTAL EXPENDITURES IS 12.3 MILLION. IT'S 1.7 MILLION LESS THAN THE CURRENT APPROVED BUDGET FOR THAT UTILITY.

AND WE'RE PROJECTING THAT 5 MILLION REVENUES WILL EXCEED 5 MILLION ABOVE THE ESTIMATED REQUIREMENTS.

AND THAT'S PRIMARILY BECAUSE WE DID NOT ISSUE THE DEBT THAT WAS ANTICIPATED FOR THE TREATMENT PLANT EXPANSION.

IT DIDN'T HAPPEN. THE EXPENDITURES DIDN'T HAPPEN AS FAST AS WHAT THE ENGINEERS WERE PROJECTING AT THE TIME.

SO THIS WILL CATCH UP IN NEXT FISCAL YEAR. AND SO THE FUNDS, WHEN WE GET INTO FISCAL YEAR 28, THOSE FUND BALANCES WILL BE DRAWN DOWN BY THE DEBT SERVICE.

THE NEW DEBT THAT WE WILL ISSUE IN THE COMING FISCAL YEAR THAT WILL IMPACT 28.

WE'RE STILL GOING TO HAVE THE NINE MGD, THOUGH.

YES. OKAY. SO HERE AGAIN FOR THE PROPOSED BUDGET DOES NOT INCLUDE ANY RATE INCREASES FOR WASTEWATER SERVICE FOR OUR INSIDE OR OUTSIDE CITY UTILITY CUSTOMERS.

ZERO. STORM DRAINAGE. THE TOTAL PROPOSED BUDGET IS 1.8 MILLION.

WE'VE REDUCED IT BY 1.2 MILLION. THERE WERE ONE TIME EXPENDITURES THAT WE ARE NOT INVESTING AGAIN IN 27.

THAT WAS FOR HEAVY EQUIPMENT FOR THAT UTILITY.

WE'VE ALREADY BOUGHT IT THERE IN A GOOD POSITION.

THEY DON'T NEED TO BUY ANY MORE EQUIPMENT NEXT YEAR.

THERE IS HALF $1 MILLION CUSHION BETWEEN REVENUES AND EXPENDITURES IN A POSITIVE WAY.

THE ESTIMATED FUND BALANCE IS ABOUT 1.5 MILLION AT 930.

HERE AGAIN, NO FEE INCREASE IS BEING PROPOSED FOR STORM DRAINAGE, EITHER FOR OUR RESIDENTIAL CUSTOMERS OR COMMERCIAL CUSTOMERS. DRAINAGE FEES ONLY APPLY TO INSIDE CITY CUSTOMERS, NOT IT'S NOT APPLICABLE TO OUTSIDE CITY CUSTOMERS.

SO NONE OF OUR RESIDENTIAL CUSTOMERS OR COMMERCIAL CUSTOMERS WILL SEE A FEE INCREASE FOR DRAINAGE NEXT YEAR.

THIS IS ONE OF THE ITEMS ON YOUR UTILITY BILL.

IT WILL BE THE SAME FEE GOING INTO NEXT FISCAL YEAR.

THE CIP. SO THE BUDGET SUMMARY FOR FIVE YEAR CAPITAL IMPROVEMENTS PLAN.

FIRST I WILL TALK ABOUT NEXT YEAR AND THEN WE'LL GO OVER THE FIVE YEARS.

WE HAVE A TOTAL OF 82 PROJECTS IN OUR SPENDING PLAN.

FOR NEXT YEAR. OUR COST ESTIMATE PROVIDED TO US BY OUR ENGINEERS AFTER THEY WENT THROUGH ROUNDS AND ROUNDS OF SCRAPING AND REEXAMINING WHICH PROJECTS ARE MOVING FASTER OR SLOWER, WHAT THEY WILL NEED FOR SURVEY. FOR DESIGN. FOR CONSTRUCTION.

[02:10:02]

WHEN YOU LOOK AT THE FIVE YEAR SPENDING PLAN, WHICH IS ALSO AT THE BOTTOM, YOU'LL SEE A LITTLE TABLE.

IT ADDS UP TO $839 MILLION. YOU RECALL A FEW SLIDES AGO, I SAID THAT THE CURRENT YEAR'S APPROVED FIVE YEAR SPENDING PLAN WAS $1.3 BILLION. WE HAVE SCALED THAT BACK TO 838 BY USING PRACTICAL ESTIMATES THAT WE CAN ACTUALLY DO THESE PROJECTS, NOT JUST THINK WE'RE GOING TO DO IT AND JUST THROW A NUMBER OUT THERE BECAUSE IT IMPACTS OUR BOND SIZING.

BECAUSE IF THESE NUMBERS ARE NOT CLOSE TO ACCURATE, WE MAY END UP ISSUING BONDS THAT WE SHOULDN'T HAVE.

WE DIDN'T NEED TO. SO WHAT I'M DOING NOW AND WILL DO NEXT YEAR, I'M HOLDING BACK ON ISSUING DEBT.

UNTIL SUCH TIME, I ACTUALLY NEED IT. AND THE ENGINEERS HAVE SPENT THE MONEY.

SO WE'VE GONE INTO A REIMBURSEMENT MODE RATHER THAN DRAWING DOWN IN ADVANCE.

SO IF THEY SPEND 10 MILLION, WE'RE GOING TO SELL 10 MILLION.

IF THEY SPEND FIVE, WE'LL ISSUE FIVE. NOT BASED ON PRELIMINARY ESTIMATES.

SO OF THE FIVE YEAR $838 MILLION PROGRAM 45%.

THIS IS UNDER ITEM NUMBER FOUR. 45% OF THAT IS TAX SUPPORTED.

MEANING WHEN WE SPEND THIS MONEY AND WE BORROW THE BONDS, WE ISSUE THE BONDS TO BORROW THE MONEY.

45% OF THAT WILL BE PAID THROUGH PROPERTY TAX RATES, AND 55% WILL BE PAID THROUGH WATER RATES, WASTEWATER RATES. TERS REVENUES, THINGS LIKE THAT OTHER THAN PROPERTY TAX RATES.

SO WHAT I WANT TO DRAW YOUR ATTENTION TO IS THE TABLE AT THE BOTTOM, EVEN THOUGH IT ADDS UP TO $838 MILLION.

WHEN I SAID WE WENT ROUND AND ROUND AND ROUND REVIEWING THE NUMBERS WITH OUR ENGINEERS AND OUR FINANCIAL TEAM.

IT STILL LOOKS A LITTLE STRANGE AND ODD, AND WE'RE NOT DONE YET BECAUSE THIS IS A FIVE YEAR PLAN.

WE CAN MOVE THINGS AROUND BETWEEN YEARS. WHAT MATTERS THE MOST IS THE IMMEDIATE THE FIRST YEAR OF THE FIVE YEAR.

WHAT LOOKS ODD IS THAT WE ARE GOING TO DO $300 MILLION A YEAR, AT LEAST IN THE FIRST THREE YEARS, AND THEN IT TAPERS OFF TO 60 AND 50 MILLION. THE LAST TWO YEARS ARE NOT QUITE FINISHED YET.

OUR ENGINEERS HAVE A LOT MORE WORK TO DO BECAUSE.

BASED ON MY EXPERIENCE AND MY REVIEW OF WHAT WE ARE SPENDING ON AN ANNUAL BASIS.

EVEN THE 288 IS ON THE HIGH SIDE FOR NEXT YEAR.

SO SINCE IT DOES NOT IMPACT OUR BONDS OR SELLING OF THE BONDS, REMEMBER I AM ONLY ISSUING DEBT WHEN WE HAVE SPENT THE MONEY. I'M GOING TO SIT DOWN ONE MORE TIME WITH OUR ENGINEERS TO SCRUB THESE NUMBERS BEFORE WE ADOPT THE FINAL.

AND IF THESE NUMBERS CHANGE, I WILL COME BACK BEFORE YOU TO AMEND THE PROPOSED BUDGET.

AND IF THEY DON'T CHANGE, IT'S FINE. WE CAN KEEP GOING, BUT WE WON'T ISSUE DEBT UNTIL WE HAVE SPENT THE MONEY.

SO THAT'S THE SAFETY NET BUILT IN THAT EVEN IF THESE ESTIMATES ARE.

ARE OVERLY AGGRESSIVE THAT WE CAN MANAGE IT ON THE BOND SIDE.

THE, THE, THE, THE THING THAT WOULD IMPACT OUR, OUR RATEPAYERS, OUR RESIDENTS, OUR UTILITY CUSTOMERS, WE CAN CONTROL THAT AND MANAGE THAT. THAT MAKES SENSE.

OKAY. SO THAT'S OUR CIP SPENDING PLAN. WE'RE PROPOSING A TOTAL OF 460

[02:15:02]

IT'S 11 LESS THAN THE APPROVED BUDGET. WE'LL SHOW YOU IN A MINUTE WHAT THOSE ARE.

THERE ARE NO EMPLOYEE LAYOFFS OR FILLED POSITIONS BEING ELIMINATED IN THE PROPOSED BUDGET.

NO WAGES OR SALARY REDUCTIONS INCLUDED IN THE PROPOSED BUDGET.

11 POSITIONS ARE BEING ELIMINATED. THAT WAS IN THE FIRST BULLET.

I'M PROPOSING TO ELIMINATE 11 POSITIONS. THOSE 11 POSITIONS ARE AT A VERY HIGH LEVEL MANAGING MANAGEMENT POSITIONS. THEY'RE NOT EVERYDAY WORKER BEES THAT ACTUALLY DO STREETS OR PARKS OR FIX ROADS OR POTHOLES. THESE ARE MANAGEMENT POSITIONS.

AND WE'LL SHOW YOU THAT WE ELIMINATED THOSE IN THE CURRENT FISCAL YEAR.

AND WE ARE TAKING IT OFF. THE PAYROLLS ARE OFF THE BOOKS.

THEY WON'T EXIST IN NEXT BUDGET. THEY'RE VACANT RIGHT NOW.

THAT WILL GIVE US ALMOST $2 MILLION IN RECURRING SAVINGS.

ANOTHER 24 POSITIONS ARE FROZEN OR UNFUNDED IN THE PROPOSED BUDGET.

WE'LL SHOW YOU THOSE BY FREEZING THOSE POSITIONS, WE'RE SAVING $2.5 MILLION, RECOVERING 2.5 MILLION.

AND I KIND OF TALKED ABOUT THE CERTIFIED TAX ROLL.

IT'S ABOUT 1.3% DECLINE. WE'RE WAITING ON THE TAX RATES.

WE'LL TALK ABOUT IT ON AUGUST 13TH. WE'LL ALSO GO OVER THE PROPERTY TAX RATE OPTIONS FOR COUNCIL TO CONSIDER ON AUGUST 13TH.

AND I WANT TO MAKE SURE THAT PEOPLE UNDERSTAND AND PICK UP ON THESE THREE ITEMS. NO RATE INCREASE PROPOSED FOR WATER SERVICE RATES FOR INSIDE OR OUTSIDE CITY CUSTOMERS.

NO RATE INCREASE IS BEING PROPOSED FOR WASTEWATER SERVICE FOR INSIDE OR OUTSIDE CITY CUSTOMERS.

NO FEE INCREASE PROPOSED FOR STORM DRAINAGE FOR RESIDENTIAL OR COMMERCIAL CUSTOMERS.

THERE IS, HOWEVER, A 2.5% RATE INCREASE INCLUDED IN THE PROPOSED BUDGET FOR SOLID WASTE RECYCLING AND COMPOSTING SERVICES. BASICALLY OUR TRASH COLLECTION.

THIS IS BASED ON THE CITY'S CONTRACT WITH TEXAS DISPOSAL SYSTEM TDS.

SO THAT'S BUILT IN INTO THE CONTRACT AND THE PROPOSED BUDGET.

INCLUDES THAT THERE IS ADDITION OF ONE NEW FEE FOR OUR WATER UTILITY DEPARTMENT.

THIS IS FOR THEIR WASTEWATER INDUSTRIAL PRETREATMENT SAMPLING.

THEY'RE PROPOSING A NEW FEE TO BASICALLY RECOVER THEIR COST OF PROVIDING THIS SERVICE.

CAN I COUNCIL MEMBER HARRIS, WOULD YOU GO BACK ONE SLIDE, PLEASE? SURE. SO ON THE CERTIFIED TAXABLE ASSESSED VALUATION.

THAT IS EXISTING PROPERTIES, RIGHT. DO WE TAKE INTO ACCOUNT THOSE PROPERTIES THAT ARE COMING ONLINE THAT WE KNOW WILL BE COMPLETED IN THAT TAX YEAR.

THAT'S INCLUDES THAT. BUT THE, THE, THE COUNTY WOULD NOT KNOW THAT.

YEAH, THEY DO IF THEY WERE ON THE BOOKS ON JANUARY 1ST.

THEY'RE INCLUDED IN THE CERTIFIED TAX, THE ONES THAT ARE BEING COMPLETED THIS YEAR. LIKE IF PARAMOUNT DOES MORE HOMES, IF WE HAVE A COUPLE OF BUSINESS DEVELOPMENTS THAT WILL BE COMPLETE IN THE NEXT FEW MONTHS OR SIX MONTHS, BUT THEY WON'T SHOW UP ON THE TAX BILL. THAT'S WHAT I MEAN.

SO WE DON'T TAKE THAT INTO CONSIDERATION THAT WE WILL RECEIVE.

WE WON'T RECEIVE ANY TAXES FROM THAT. RIGHT. THEY WON'T GET THEY WON'T GET CHARGED FOR THE FIRST YEAR.

SO THEY'LL GET A TAX PAYMENT THE NEXT YEAR. SO LIKE IF I BUY A HOUSE THIS YEAR, I DON'T PAY IT ON IT.

ESPECIALLY NEW HOUSES SAY IT'S A DIFFERENT I GET IT.

OKAY. ALL RIGHT. THANK YOU. THANK YOU. I DO HAVE A QUESTION. CAN YOU GO TO THE NEXT PAGE? OKAY.

I NEED I WANT TO MAKE SURE THAT THE RESIDENTS UNDERSTAND BECAUSE THEIR GARBAGE IS ON THEIR WATER BILL, AND THAT'S GOING TO BE AN INCREASE. AND I WOULD HOPE THAT WE CAN FIND A WAY FOR THEM TO UNDERSTAND THIS IS NOT A WATER INCREASE.

[02:20:05]

SO WHEN WE DO THE OUR COMMUNICATIONS DEPARTMENT, OUR PUBLIC INFORMATION STAFF, PUTS TOGETHER THE HIGHLIGHTS OF THE PROPOSED BUDGET. THEY WILL INCLUDE THIS. OKAY. AND IT GOES INTO EFFECT APRIL 1ST.

JUST KIDDING. APRIL FOOLS. SO IT'S NOT FOR THE ENTIRE YEAR.

I WANTED TO MAKE SURE THAT YOU ALL UNDERSTAND THAT THE WAY THAT THAT CONTRACT IS SET UP, IT CHANGES.

APRIL 1ST. OKAY. OKAY. AND WE WILL, LIKE YOU SAID, WE WILL MAKE SURE OUR CUSTOMERS KNOW THAT IT WILL BE ON THE UTILITY BILL.

WE WILL HAVE MESSAGES THERE. IT'LL BE ON THE WEBSITE.

IT'LL BE IN OUR NEWSLETTERS. ALL OF THAT WILL BE COVERING THAT.

OKAY. THANKS. OKAY. SO THESE ARE THE SLIDES I MADE.

I MADE SURE THAT I WANTED TO HIGHLIGHT WHAT'S CURRENTLY IN THE BUDGET AND THE PROPOSED BUDGET, THINGS THAT I HEARD PEOPLE CALL ME ABOUT, OR PEOPLE SENT ME CLIPS OF FACEBOOK DISCUSSIONS IN OUR COMMUNITY. SO SANTA CLAUS IS TOP OF MY LIST. SANTA CLAUS WILL BE COMING TO THE DOWNTOWN PARK.

HE WILL HELP TURN ON THE CHRISTMAS LIGHTS. HE WILL TAKE PHOTOS WITH CHILDREN OF ALL AGES.

SO JESSE CAN GO AND TAKE PICTURES. AND RIDE ALONG THROUGH OUR NEIGHBORHOODS.

WE SIMPLY COMBINE THE TWO PROGRAMS TOGETHER. THE RIDE ALONG AND THE DOWNTOWN ACTIVITY. THERE ARE NO CHANGES IN SANTA PLANS.

THE GRINCH WILL ALSO BE THERE. NO CHANGE IN HIS PLANS AS WELL.

COUNCIL MEMBER HARRIS. BUT WE'RE NOT DOING GRINCH FEST.

YES WE ARE. ARE WE DOING GRINCH FEST? YES. OKAY.

I'LL ADD TO THAT. THERE'S BEEN SOME DISCUSSION IN THE NONPROFIT WORLD FOR TRYING TO FILL THE GAP ON THE THE SANTAS DOWNTOWN EVENT. RIGHT. SO. BUT HE IS COMING TO TOWN. ALL CITY PARKS WILL CONTINUE TO BE FUNDED, REMAIN OPEN, FULLY MAINTAINED, INCLUDING THE CITY'S SWIMMING POOL, SPLASH PADS, SKATE PARK, PLAYGROUNDS, BALL FIELDS, RESTROOMS, PARKING LOTS.

ALSO IN THE. THE BUDGET IS 4% AVERAGE PAY INCREASE OR STEP INCREASE FOR ALL OUR SWORN POLICE OFFICERS, A 2% PAY INCREASE FOR ALL CORPORAL RANKED POSITIONS IN THE POLICE DEPARTMENT.

THIS IS IN ADDITION TO THE STEP INCREASE. ALL ROAD BOND PROGRAM PROJECTS ARE CONTINUING.

NO WORK STOPPAGE OF THAT NATURE IS INCLUDED IN THE PROPOSED BUDGET.

ALL ESSENTIAL CITY SERVICES ARE FUNDED, INCLUDING.

BECAUSE I DIDN'T LIST ALL OF THEM, JUST THE MAJOR ONES, INCLUDING BUT NOT LIMITED TO PUBLIC SAFETY, EMERGENCY SERVICES, CODE ENFORCEMENT, BUILDING PERMITTING AND INSPECTION SERVICES.

SOLID WASTE RECYCLING COLLECTION SERVICES THREE.

ONE. ONE. CUSTOMER SUPPORT SERVICE PROGRAM. STREETS AND ROADWAY MAINTENANCE.

PUBLIC TRANSPORTATION PROGRAM. RIGHT OF WAY MAINTENANCE.

WATER SUPPLY SERVICES. WASTEWATER COLLECTION SERVICES.

STORM. DRAINAGE SERVICES. PARKS AND RECREATION SERVICES.

LIBRARY SERVICES. THEY'RE ALL INCLUDED AND FUNDED IN THE PROPOSED BUDGET.

AND THEN HIGHLIGHTS OF ITEMS CURRENTLY NOT IN THE BUDGET.

I WANT TO MAKE SURE THERE'S NO MISUNDERSTANDING.

FUNDING FOR PAY INCREASE FOR CIVILIAN CITY EMPLOYEES IS NOT INCLUDED IN THE PROPOSED BUDGET.

[02:25:02]

FUNDING FOR EMPLOYEE LEAVE. BIKE LEAVE. BUYBACK PROGRAM.

TUITION REIMBURSEMENT. CITY PAID. 12 WEEKS. PARENTAL LEAVE.

PROGRAM. CASH CONTRIBUTION TO HRA IS NOT INCLUDED IN THE PROPOSED BUDGET.

FUNDING FOR FEDERAL OR STATE LOBBYIST IS NOT INCLUDED IN THE PROPOSED BUDGET.

FUNDING FOR ANNUAL BANQUET FOR CITY BOARDS AND COMMISSIONS IS NOT FUNDED IN THE PROPOSED BUDGET.

FUNDING FOR DINNER SERVICE FOR CITY COUNCIL MEETINGS IS NOT FUNDED IN THE PROPOSED BUDGET.

FUNDING FOR PRIDE CELEBRATIONS OF PRIDE SPECIAL EVENTS PROGRAM IS NOT INCLUDED IN THE PROPOSED BUDGET.

FUNDING FOR UNDERGROUNDING OF EXISTING OVERHEAD UTILITIES IS NOT INCLUDED.

FUNDING FOR PROPOSED OR NEW DEVELOPMENT WILL BE BORNE BY THE DEVELOPMENT.

I JUST WANTED TO ADD SOMETHING. SO I THINK WHAT'S ALSO NOT IN THE PROPOSED BUDGET ARE THE COSTS OF THE NEW ENGINEERING ANALYSIS.

FOR ALL THE INTERSECTIONS THAT WE'RE REDOING, AND THE COST FOR THE FORENSIC AUDITS AREN'T INCLUDED EITHER.

SO I GUESS I'M JUST WONDERING, LIKE, HOW ARE WE ACCOUNTING FOR THOSE BECAUSE THOSE AREN'T LISTED.

SO THIS IS NOT A 100% COMPREHENSIVE LIST. THIS LIST WAS MADE UP BASED ON THE INQUIRIES THAT CAME TO ME DIRECTLY.

SO I GOT THE IMPRESSION PEOPLE WERE NOT CLEAR ABOUT THESE SPECIFIC ITEMS. SO WHAT I'M SAYING THAT THE OTHER ITEMS AREN'T APPEARING IN THE BUDGET AT ALL EITHER.

THEY ARE. THEY'RE THERE. IF SO, WE HAVE THE ESTIMATED COST FOR THOSE THINGS.

YES. WE'LL SHOW YOU. OKAY. BECAUSE I JUST DIDN'T UNDERSTAND THE REASONING FOR SINGLING OUT PRIDE WHEN WE HAVE YET TO EVEN RECEIVE AN ESTIMATE ON WHAT THAT MIGHT COST OR WHERE THAT WOULD BE ABSORBED OR ANYTHING.

WELL, I'M GLAD YOU BROUGHT THAT UP. I CAN EXPLAIN THAT VERY CLEARLY.

SO. WHEN THIS ITEM WAS DISCUSSED, MAYOR PRO TEM ASKED YOU SPECIFICALLY FOUR DIFFERENT WAYS. AT LEAST I REMEMBER. WHAT WAS YOUR VISION THAT YOU WANTED? I WAS HOPING THAT YOU WOULD SHARE THAT SO I COULD BUILD INTO THE BUDGET, BUT THAT DIDN'T HAPPEN.

THE MOTION THAT MAYOR PRO TEM MADE THAT NIGHT WAS JUST A DIRECTION TO COME BACK FOR STAFF TO COME BACK WITH A PLAN THAT Y'ALL WOULD DECIDE WHAT WOULD BE INCLUDED OR NOT INCLUDED. SO I HAD NO BASIS TO INCLUDE ANYTHING IN THE BUDGET AT THIS TIME.

AND THAT'S WHY YOU DON'T SEE ANY FUNDING. YES.

NO. AND I UNDERSTAND THAT PART BECAUSE I DID WANT IT TO BE A CHOICE THAT ALL OF COUNCIL MADE.

I THINK MY QUESTION IS IF WE HAVE YET TO UNDERSTAND THAT.

BUT SOMEHOW WE NOW KNOW THE COSTS OF ALL THE ENGINEERING ANALYZES THAT NEED TO BE DONE AND THE FORENSIC AUDITS.

WHY WASN'T THAT INFORMATION PROVIDED TO US THE MOMENT THAT WE RECEIVED IT? I DON'T QUITE UNDERSTAND YOUR QUESTION, BUT I WILL TRY TO EXPLAIN TO THE EXTENT I DO UNDERSTAND.

SO WE WERE STILL WORKING ON THE PROPOSED BUDGET.

COUNCIL TOOK A FORMAL VOTE ON THE FORENSIC AUDIT.

THEY GAVE ME DIRECTION. THESE ARE THE FIVE THINGS WE WANT YOU TO COME BACK WITH.

RIGHT. SO WE HAD A FORMAL COUNCIL DECISION THAT SAYS WE'RE GOING FORWARD ON THESE FIVE SCOPE OF WORK FOR FORENSIC AUDIT.

IT WOULD BE. IRRESPONSIBLE OF ME NOT TO INCLUDE A PLACEHOLDER OR A COST ESTIMATE.

THE BEST I CAN IN THE BUDGET TO FOLLOW THROUGH THE DIRECTION I RECEIVE FROM COUNCIL.

THAT'S THE PART THAT I'M ASKING. WHERE IS THAT LOCATED AT IN THE BUDGET, OR IF THAT CAN BE GIVEN, IF THAT INFORMATION CAN BE GIVEN TO US? BECAUSE WE DON'T I DON'T THINK ANY OF US HAVE AN IDEA OF WHAT THOSE COSTS ARE EITHER, EVEN IF PROJECTED. COUNCIL MEMBER THIS IS THE FIRST TIME I AM PRESENTING THE PROPOSED BUDGET.

YEAH, I'M JUST ASKING FOR THAT. NOT NECESSARILY LIKE, OH, IT HAD TO HAVE BEEN GIVEN TO US, BUT I'M JUST ASKING IF THAT CAN BE GIVEN TO US NOW.

WELL, IT'S IN THE IT'S IN THE, THE PRESENTATION.

SO IF WE JUST ALLOW IT'S NOT IT'S NOT LISTED.

IT'S NOT, IT'S NOT NO, IT'S NOT LISTED. THERE'S NOT A LINE ITEM FOR IT IN THE PROPOSED BUDGET BOOK FOR EITHER THAT OR FOR THE ENGINEERING ANALYZES.

SO THAT'S WHY I'M TRYING TO UNDERSTAND HOW WE'RE ACCOUNTING FOR THOSE COSTS.

[02:30:03]

LIKE YOU. THERE'S NO LINE ITEM IN THIS BUDGET THAT YOU GAVE US FOR THOSE FOR THE ENGINEERING OR FOR THE BECAUSE DON'T WE HAVE TO DO RFPS AND STUFF IN ORDER TO GET THAT AMOUNT FROM THE FORENSIC AUDIT? OKAY, SO LET'S TAKE ONE AT A TIME. THE FORENSIC AUDIT, THE BALLPARK ESTIMATE AS A PLACEHOLDER I HAVE IN THE BUDGET IS IN THE OFFICE OF THE CITY MANAGER.

THERE IS A SPECIFIC LINE. SO IF YOU WERE TO GO THROUGH THAT BUDGET, THE REASON I'M A LITTLE HESITANT TO PUBLICLY ANNOUNCE HOW MUCH IS AVAILABLE BEFORE I GO FOR AN RFP.

I GET IT. IF I SAY I HAVE $50 MILLION, I'M GOING TO GET AN RFP BACK FOR 49.99.

YEAH, LET'S NOT TALK ABOUT IT. LET'S JUST JUST WAIT.

I CAN SEND YOU ON AN EMAIL. TONIGHT OR TOMORROW MORNING, SHOW YOU EXACTLY WHICH PAGE NUMBER AND WHERE, WHICH LINE IT HAS THAT PLACEHOLDER. I'M OKAY WAITING IF YOU WANT IF SOMEBODY ELSE WANTS IT.

I UNDERSTAND THE WHOLE TOPIC. AND THE WHOLE QUESTION WAS BEGAN WITH PRIDE.

AND NOW WE'RE TALKING ABOUT SOMETHING ELSE. AND SO I JUST WANT TO STAY ON TRACK.

IF THERE'S A CERTAIN QUESTION ABOUT A CERTAIN EVENT THAT CAN BE ANSWERED, AND THEN AS WE MOVE ON, WE CAN ASK ADDITIONAL QUESTIONS. BUT I THINK WE'VE GOTTEN SIDETRACKED.

AND SO WHAT I'D LIKE TO DO IS JUST KIND OF PUT US BACK ON, YOU KNOW, THE RAILROAD TRACK THAT'S GOING TO TAKE US TO.

HEY, THE MEETING'S ADJOURNED. NOT THAT THE QUESTION IS NOT IMPORTANT.

I JUST FEEL LIKE THAT THAT WHOLE CONVERSATION WENT SIDEWAYS.

IT WENT FROM A TO Z, AND IN BETWEEN, I GOT CONFUSED.

AND SO I WAS TRYING TO FOLLOW ALONG. AND THEN WHEN YOU GAVE YOUR PERFECTLY LOGICAL EXPLANATION OF YOU DON'T WANT TO PUT THAT NUMBER OUT THERE BECAUSE WE HAVE NOT DONE OUR RFP YET. I UNDERSTOOD I THINK ALL OF COUNCIL UNDERSTANDS THAT, AND I'M OKAY WAITING TO RECEIVE THAT INFORMATION, BECAUSE YOU COULD GIVE US A NUMBER, BUT IT COULD ALSO BE INACCURATE.

AND SO I DON'T REALLY NEED YOU TO GO ON RECORD TO GIVE ME AN ASSUMPTION, ALTHOUGH I DO APPRECIATE THE PLACEHOLDER.

WHEN YOU GET THAT NUMBER BACK, IF COUNCIL WOULD LIKE THAT NUMBER RIGHT AWAY, THEN THEN WE CAN TALK ABOUT IT THEN.

BUT I THINK RIGHT NOW IS PREMATURE. BUT WHAT WE'RE DOING IS WE'RE HIDING COSTS IN A DIFFERENT VALUE.

AND RESIDENTS DESERVE TO KNOW HOW MUCH THESE THINGS COST.

BUT HE DOESN'T KNOW HOW MUCH IT COSTS. I THINK EVEN THE ESTIMATED I MEAN, PEOPLE DON'T.

PEOPLE DESERVE TO KNOW HOW MUCH IT IS THAT WE MIGHT SPEND ON IT INSTEAD OF IT BEING HIDDEN INSIDE OF A VALUE IN THE BUDGET BOOK, BECAUSE THERE'S NO SPECIFIC LINE ITEM. I MEAN, AS WE WERE JUST TOLD, IT'S KIND OF ABSORBED SOMEWHERE IN THE CITY MANAGER THING, BUT THERE'S NOT LIKE A SPECIFIC LINE ITEM FOR IT.

SO I CITY ATTORNEY OFTEN TELLS US THAT WE DON'T TALK ABOUT NEGOTIATIONS UPFRONT.

SO IF WE TALK ABOUT A DOLLAR VALUE IN FRONT BEFORE WE SEND OUT AN RFP OR WE RECEIVE THEM BACK, THAT PUTS US AT A FINANCIAL DISADVANTAGE. SO I DON'T I DON'T THINK IT'S HIDDEN.

LIKE HE DOESN'T WANT ANYBODY TO KNOW. I THINK HE HAS A GUESSTIMATE, WHICH IS NOT SOMETHING THAT WE SHOULD PUT OUT THERE.

ONE, IT COULD BE OVER OR IT COULD BE UNDER. IT COULD BE INACCURATE.

IT COULD CAUSE ISSUES WITH THE RFP THAT WE RECEIVE.

I IF FOR NO OTHER NEGOTIATION, WOULD WE EVER BE HAVING THIS DISCUSSION.

SO WHAT ABOUT OUR LIKE ENGINEERING COSTS AND WHATNOT TO FOR LIKE THE SO ALL OUR ENGINEERING COSTS ARE ACCOUNTED FOR IN THE ROAD BOND PROGRAM. THERE IS NOT A SPECIFIC LINE ITEM THAT WILL SAY STUDY, STUDY OF TRAFFIC STUDIES. ROUND NUMBER TWO OR ROUND NUMBER THREE? WE HAVE A TOTAL BUDGET BY ROADS. SO IF WE DO ANOTHER STUDY WE IT'LL COST US MORE.

IT GETS CHARGED TO THAT ROAD BOND PROJECT THAT IT PERTAINS TO.

SORRY. YES, WE WE DO EXACTLY THAT WITH EVERYTHING ELSE.

WE USE ROAD BOND MONEY TO MOVE THAT TREE. YES, SIR.

WHICH IS EXACTLY WHERE IT SHOULD HAVE BEEN. YEAH.

YEAH. I DON'T THINK ANYBODY'S SAYING THAT EVERYBODY'S DOING THAT. BUT THAT'S WHERE THE MONEY COMES FROM.

THAT POT OF MONEY. I THINK THE POINT IS, IS PEREZ IS NOT DOING ANYTHING OUT OF THE NORMAL.

HE'S DOING EXACTLY WHAT THE PREVIOUS CITY MANAGER DID.

AND I JUST I WANT TO TREAT HIM WITH THE SAME KIND OF RESPECT THAT YOU GUYS WOULD HAVE EXPECTED FROM THE PRIOR ADMINISTRATION.

I MEAN, IT'S JUST ASKING A QUESTION ABOUT COST. IT'S NOT DISRESPECTFUL JUST TO ASK ABOUT THAT, BECAUSE THE COST OF THAT IS GOING TO IMPACT WHETHER THAT FLUCTUATES, THAT'S GOING TO IMPACT OUR OVERALL BUDGET BEING PROPOSED.

[02:35:06]

AND SO I'M JUST CONFUSED WHY IT WOULD BE DONE ANY DIFFERENTLY THIS TIME.

BECAUSE WHEN IF I COULD JUST QUICKLY INTERVENE SO WE CAN GET BACK ON TRACK.

WE DON'T HAVE THOSE NUMBERS HERE BECAUSE WE HAVEN'T BEEN GO OUT FOR THE BID YET.

SO IT'S LIKE ASKING SOMEBODY, HEY, YOU WANT TO BUY YOUR HOUSE? AND YOU SAY, OKAY, WELL, GIVE ME A NUMBER. IT'S THE SAME THING HERE ON THIS END.

WE DON'T KNOW EXACTLY WHAT IT IS. AND IF IT COMES BACK TO WHERE IT'S AN ENORMOUS PRICE, IT'S GOT TO COME BACK FOR A VOTE ANYWAY.

WE COULD SAY NO. I WOULD LIKE TO KNOW THE JUST BETWEEN THE COUNCIL.

I WOULD LIKE TO KNOW THE PLACEHOLDER AMOUNTS FOR THE FORENSIC AUDIT.

NO, PLEASE DON'T SAY THAT. HERE. WE CAN TAKE A VOTE ON THAT.

YEAH. YES. COUNCIL. YOU CAN HAVE AMY SEND THAT AS CLIENT ATTORNEY PRIVILEGE SO IT DOESN'T YOUR ESTIMATION DOES NOT GET PUBLISHED AS FACT.

THAT WOULD BE MOST APPRECIATED. YEAH, THAT WOULD BE APPRECIATED. I'LL WORK WITH THE CITY ATTORNEY TO GET THAT INFORMATION TO YOU.

THANK YOU. THANKS. SO I'M ALMOST TO THE END OF MY FIRST SEGMENT.

IT'S 8:00. SO THERE'S A PROCESS THAT WE HAVE FOLLOWED THAT WORKS REALLY WELL. AND I WANT TO EMPHASIZE THIS FOR OUR NEW COUNCIL MEMBERS, HOW WE GO ABOUT MAKING AMENDMENTS TO THE CITY MANAGER'S PROPOSED BUDGET.

IF THERE IS AN ITEM THAT Y'ALL WANT TO AMEND, THIS IS WHAT WE'VE DONE IN THE PAST.

SO RECOMMENDED PROPOSED BUDGETS, SINCE THE RECOMMENDED PROPOSED BUDGET, AS SUBMITTED TO THE CITY COUNCIL, IS A STRUCTURALLY BALANCED BUDGET. ANY AMENDMENTS TO THE PROPOSED BUDGET, RESULTING IN A NET INCREASE TO TOTAL EXPENDITURES, WILL REQUIRE A CORRESPONDING EXPENDITURE REDUCTION TO MAINTAIN THAT BALANCED BUDGET, AS RECOMMENDED BY THE INTERIM CITY MANAGER FOR NEXT FISCAL YEAR.

IF THERE IS A AMENDMENT, A MOTION DESCRIBING THE BUDGET AMENDMENT, INCLUDING THE AMOUNT FOR THE AMENDMENT, IS MADE BY THE SPONSORING COUNCIL MEMBER. IT IS SECONDED AND THEN A ROLL CALL VOTE IS TAKEN.

IF THE MOTION PASSES, THEN CITY STAFF WILL MAKE THE CHANGES TO THE INTERIM CITY MANAGERS RECOMMENDED PROPOSED BUDGET, AND THE SPECIFIC AMENDMENT IS THEN INCLUDED IN THE CITY'S FINAL BUDGET FOR ADOPTION BY CITY COUNCIL.

SO IT'S A VERY STRAIGHTFORWARD PROCESS. A MOTION IS IS RECOMMENDED BY THE SPONSOR AND COUNCIL MEMBER DESCRIBING WHAT THAT AMENDMENT IS.

IT DESCRIBES OR SPECIFIES THE AMOUNT. AND THEN A ROLL CALL VOTE IS TAKEN.

BUT THE IMPORTANT THING TO KEEP IN MIND IS IF WE'RE ADDING A DOLLAR, WE HAVE TO SUBTRACT A DOLLAR SO THAT COUNCIL SPONSORING COUNCIL MEMBER AND THE PERSON OR THE COUNCIL MEMBER SECONDING THAT MOTION SHOULD ALSO RECOMMEND WHERE THEY WOULD LIKE THAT MONEY TO COME FROM, SO STAFF CAN FOLLOW THAT DIRECTION FROM COUNCIL, WHETHER WE'RE CUTTING ANOTHER EXPENDITURE OR WE'RE TAKING IT FROM THE RESERVE BECAUSE WE CANNOT CREATE A NEW REVENUE AT THIS POINT. ANY QUESTIONS ON THE AMENDMENTS OR THE PROCESS? IF NOT. I'M GOING TO HAND IT OVER TO MISS AMBER FOR THE NEXT SEGMENT.

GOOD EVENING MAYOR, MAYOR PRO TEM COUNCIL AMBER SMITH, DEPUTY CITY MANAGER FOR THE RECORD.

SO AS PERVEZ DISCUSSED WITH YOU ALL TONIGHT, WE'VE HAD A SET OF GUIDING PRINCIPLES THAT HAVE GUIDED THIS BUDGET PROCESS.

AND NUMBER 12 ON THAT LIST, I BELIEVE THERE ARE 15 WAS TO REVIEW EACH CITY DEPARTMENT'S ORGANIZATIONAL STRUCTURE TO MAXIMIZE OPERATIONAL EFFICIENCY, ELIMINATE DUPLICATION OF EFFORT, AND REDUCE ORGANIZATIONAL REDUNDANCIES.

AND SO THAT'S WHAT JESSE AND I ARE GOING TO TALK TO YOU ABOUT TONIGHT.

SO FIRST, WE ARE GOING TO SPOTLIGHT THE TRANSPORTATION AND PUBLIC WORKS DEPARTMENT.

OUR STRATEGY HERE WAS TO CREATE TWO SEPARATE DEPARTMENTS.

THE FORMER TRANSPORTATION AND PUBLIC WORKS DEPARTMENT WOULD BE DIVIDED INTO THE DEPARTMENTS OF TRANSPORTATION AND PUBLIC WORKS,

[02:40:04]

SO FORMALLY, THE CIP WAS A DIVISION, AND IT ANSWERED DIRECTLY TO THE TRANSPORTATION AND PUBLIC WORKS DIRECTOR.

SO SEPARATING THOSE TWO FUNCTIONS OUT, I THINK WE WILL SEE A LOT OF EFFICIENCIES AND EVEN COST SAVINGS.

SO I'LL WALK YOU THROUGH THAT. THE TRANSPORTATION AND PUBLIC WORKS DEPARTMENT WILL FOCUS ON THE CITY'S DAY TO DAY OPERATIONS AND MAINTENANCE, INCLUDING STREETS, MAINTENANCE AND CONSTRUCTION, PERMITTING AND INSPECTIONS, DRAINAGE FLEET AND RIGHT OF WAY AND STREET LIGHTS MAINTENANCE.

AND THEN THE CIP AND ENGINEERING DEPARTMENT WILL FOCUS EXCLUSIVELY ON THE PLANNING, DESIGN, ENGINEERING, PROJECT MANAGEMENT AND CONSTRUCTION OF THE CITY'S CAPITAL IMPROVEMENT PROGRAM IN THE 2022 AYE ROAD BOND PROGRAM.

THE SECOND WAY TO ACHIEVE THIS IS TO APPOINT CHRIS ARNOLD AS THE INTERIM DIRECTOR OF TRANSPORTATION AND PUBLIC WORKS, AND ESTABLISH AN ASSISTANT DIRECTOR POSITION TO SUPPORT HIM.

CURRENTLY, HE SERVES AS A DEPUTY DIRECTOR. HE'S DONE A GREAT JOB IN THAT ROLE.

HE HAS EXTENSIVE OPERATIONAL KNOWLEDGE AND EXPERIENCE WITH THE DEPARTMENT CURRENTLY.

HE'S DEMONSTRATED ABILITY TO SUCCESSFULLY LEAD THESE TEAMS TO CONTINUE EXCELLENT SERVICE DELIVERY.

AND WE, HE TALKS ABOUT HIS ASPHALT AVENGERS TEAM.

AND IN 24, 25 FISCAL YEAR, THEY MADE 386 POTHOLE REPAIRS, REPLACED 229 SIGNS SWEPT 1980 MILES OF STREETS LAID 1882FT OF NEW SIDEWALK, 1730FT OF SIDEWALK REPAIR, 102,000FT OF PAVEMENT STRIPING 18.63 LANE MILES OF STREET IMPROVEMENTS WERE COMPLETED AND 14,212 TONS OF ASPHALT WERE PLACED. SO THESE GUYS ARE GREAT, AND CHRIS HAS BEEN THE LEADER OF THOSE TEAMS AND WE LOVE THEM.

HE DOES A GOOD JOB. AND SO WE ALSO WANTED TO CREATE A VACANT ASSISTANT DIRECTOR POSITION TO STRENGTHEN AND SUPPORT THE OPERATIONAL LEADERSHIP THERE, AND THEN PROVIDE ADDITIONAL MANAGEMENT CAPACITY FOR HIM TO CONTINUE THE EXCELLENT SERVICE DELIVERY THAT WE REALIZE.

ALSO, AS PART OF THAT, WE WANT TO REORGANIZE THE BEAUTIFICATION DIVISION, WHICH CURRENTLY IS UNDER THE PARKS AND REC DEPARTMENT INTO THE RIGHT OF WAY MAINTENANCE DIVISION, AND SO THEY WOULD BE RENAMED AS WELL.

SO THEY WILL COME UNDER THE DEPARTMENT OF TRANSPORTATION AND PUBLIC WORKS.

THEY WOULD DO MOWING, STREET LIGHT MAINTENANCE, EVERYTHING THEY'RE STILL DOING TODAY, BUT THE MOWING STREET MAINTENANCE WOULD COME OVER AND THEN IT WOULD BE FOLDED INTO AS PART OF THE PERMITTING AND INSPECTIONS, TRAFFIC CONTROLLED RIGHT OF WAY MAINTENANCE.

THEY'RE ALL COMPLIMENTARY FUNCTIONS, SO WE THINK FOLDING THEM INTO THIS DEPARTMENT MAKES A LOT OF SENSE.

POTENTIAL COST SAVINGS. WE THINK WE CAN SAVE ABOUT $40,000 A YEAR FOR USING THE RIGHT OF WAY DIVISION TO MAINTAIN OUR CITY'S FACILITIES AND ELIMINATE SOME OF THOSE CONTRACTS FOR LANDSCAPING SERVICES. WE HAVE COUNCIL MEMBER HARRIS.

THERE ARE A COUPLE OF ISSUES THAT I'D LIKE TO ADDRESS REAL QUICKLY ON THIS THAT MAY AFFECT THE BUDGET.

ONE OF THE THINGS THAT I'M SEEING IN THE MOTION OF THE RIGHT OF WAYS IS THAT WE HAVE ALMOST ALL JUST PLAIN GRASS, BERMUDA PRIMARILY IF WE CONVERT THAT TO NATIVE PLANTINGS WILDFLOWERS WE COULD MOW TWICE A YEAR INSTEAD OF ALL THE TIME THAT WE'RE MOWING AND DRAMATICALLY REDUCE THE RIGHT OF WAY MAINTENANCE COSTS.

I THINK THAT SEE, I HAD ANOTHER ONE ON THAT. NOPE.

THAT'S IT ON THAT PARTICULAR ONE. WE CAN TAKE A LOOK AT THAT.

OH, THE STREET LIGHTS. THE STREET LIGHT MAINTENANCE WAS THE OTHER PERMITTING AND INSPECTIONS AS WELL.

STREET LIGHT MAINTENANCE. WE WERE USING BRIGHT WHITE LIGHTS FOR THE DARK SKIES.

WE SHOULD PROBABLY BE USING AMBERS. WE WERE AMBERS AND THEY'VE ALL BEEN CONVERTED TO BRIGHT LIGHTS.

I'M A FAN OF AMBERS, SO LET'S JUST BECAUSE YOU ARE, I AM PERMITTING AND INSPECTIONS WHICH PERMITTING AND INSPECTIONS IS THAT SO THAT WOULD WE HAVE AN INSPECTION DIVISION? I'LL GO OVER THAT WITH YOU. BUT PERMITTING AND INSPECTIONS IS FOR OUR RIGHT OF WAY.

FOR THE RIGHT OF WAY? YES. OKAY. YES. ANY WORK IS INSPECTED THAT IS PERFORMED IN OUR RIGHT OF WAY BY OUR INSPECTORS.

OKAY. THANK YOU. REAL QUICK, WAS A LOT OF THIS INFORMATION PROVIDED FOR YOU FROM YOU GUYS FROM THE 311 DATABASE TO WHERE YOU'RE ABLE TO MAKE A LOT OF THESE DECISIONS, INCLUDING SOME OF THE THE WORK THAT MR.

[02:45:02]

ABSOLUTELY. AND ALL OF THE DATA AND ANALYTICS THAT DROVE ALL OF THIS DECISION MAKING CAME PRIMARILY, ESPECIALLY WHEN IT COMES TO PUBLIC WORKS. AND THE ASPHALT AVENGERS AND ALL THE GREAT WORK THAT THEY DO.

STRAIGHT OUT OF THE 311 DATA. YES. OKAY. OKAY.

SO THE FOURTH PIECE OF THIS WAS TO APPOINT LEON BARBA AS DIRECTOR OF THE CAPITAL IMPROVEMENT PROJECTS AND ENGINEERING DEPARTMENT.

HE WILL RETAIN HIS TITLE OF CITY ENGINEER AS WELL, BUT WE WANTED TO MAKE HIM THE DIRECTOR OF THAT NEW DEPARTMENT.

A PART OF THIS WAS WE WANTED TO CENTRALIZE THE DELIVERY OF THE CITY'S CIP PROGRAM AND PROVIDING A SINGLE DEPARTMENT THAT SERVES ALL CITY DEPARTMENTS AND IMPROVES COORDINATION, CONSISTENCY AND ACCOUNTABILITY FOR OUR CAPITAL PROJECTS.

EVERY DEPARTMENT HAS SOME SORT OF CAPITAL PROJECT THAT THEY WILL GO TO THIS DEPARTMENT FOR HELP WITH AND LEADING THEM THROUGH THE PROJECT.

SO WE THINK CENTRALIZING THAT FUNCTION MAKES A LOT OF SENSE, AND IT CREATES AN INTERNAL SERVICE DEPARTMENT THAT SUPPORTS THE ENTIRE ORGANIZATION.

AND THEN LEON'S ENGINEERING EXPERTISE, FAMILIARITY WITH THE CITY'S CIP ALREADY, AND INSTITUTIONAL KNOWLEDGE MAKE HIM VERY WELL SUITED TO LEAD THIS NEWLY ESTABLISHED DEPARTMENT. AND HE CELEBRATED 50 YEARS AS A PROFESSIONAL ENGINEER IN 2025, SO WE'RE EXCITED FOR HIM.

THANK YOU. YOU KNOW, LEON'S AMAZING. THAT MEANS YOU CAN'T QUIT ANYTIME SOON.

AND SO I LIKE I LIKE THIS CHANGE. YES. HE CAN'T LEAVE US.

OKAY, SO HERE IS THE NEW ORGANIZATIONAL CHARTS.

AT A GLANCE YOU CAN SEE WE'VE GOT THE INTERIM DIRECTOR ASSISTANT DIRECTOR UNDER THE BLUE, AND THEN WE'VE GOT THE DIVISION MANAGER FOR STREETS, FACILITIES, FREE FUEL, RIGHT OF WAY MAINTENANCE AND FINALLY INSPECTIONS.

AND HERE'S THE STREETS DIVISION. WE'VE GOT MAINTENANCE AND CONSTRUCTION, DRAINAGE DIVISION FACILITIES, FLEET RIGHT OF WAY MAINTENANCE, THE NEWLY CREATED DIVISION THAT'S COMING OVER FROM PARKS AND REC AND INSPECTIONS.

AND THEN HERE'S WHAT THE CIP AND ENGINEERING ORGANIZATIONAL CHART WILL LOOK LIKE.

WE'VE GOT THE DIRECTOR, LEON, AT THE TOP AND BLACK.

WE'VE GOT TRAFFIC AND TRANSPORTATION MANAGEMENT, CIP AND PLANNING, ENGINEERING DIVISION AND MANAGEMENT ASSISTANT.

AND HERE'S WHAT THOSE LOOK LIKE REALLY QUICKLY.

OKAY, JESSE. GO AHEAD. SORRY. SO I THINK THIS IS WHERE MY QUESTION ABOUT THE COST ALLOCATIONS COMES UP BECAUSE I, I TALLIED IT UP AND IT LOOKS LIKE WE ARE ADDING WHAT'S THE NUMBER? A TOTAL OF LIKE 9.44 FULL TIME EMPLOYEES OVER FROM LIKE THE WATER FUND, WASTEWATER FUND STORMWATER FUND IN OVERALL JUST TO GENERAL FUND. SO I GUESS I WANT TO COST OF WHAT THOSE 9.44 FTE COSTS ARE BECAUSE IT SEEMS LIKE IF WE'RE CREATING THAT CIP DEPARTMENT, TO ME, IT MAKES SENSE TO SPREAD IT ACROSS THE FUNDS IF THEY'RE GOING TO BE HELPING POTENTIALLY ALL THE CIP PROJECTS, WHICH WILL INCLUDE WATER, WASTEWATER, STORMWATER.

BECAUSE THAT MEANS THAT RESIDENTS ARE GOING TO BE COVERING THE TOTAL COSTS.

OF THOSE 9.44 EMPLOYEES. AND THE TRANSFERS DON'T ACTUALLY ACCOUNT FOR HOW MUCH THOSE EMPLOYEES MIGHT ACTUALLY COST.

SO IF WE COULD GET A BETTER UNDERSTANDING BECAUSE I THINK THE REORGANIZATION MAKES SENSE, BUT WHAT I'M WORRIED ABOUT IS THE COST ALLOCATION.

COULD WE DO IT BY I MEAN JOB BECAUSE ARE ALL THESE PEOPLE THE THE REALLOCATIONS, WERE THEY ALL FROM WATER AND WERE THEY DOING DOUBLE JOBS BEFORE? AND WERE WE CHARGING THE WATER PEOPLE FOR STUFF THAT THEY WERE DOING OVER HERE FOR THE CITY? THEY'RE THEY'RE LITERALLY MOVING AS A UNIT, A GENERAL FUND UNIT IN PARKS AND REC, MOVING TO TRANSPORTATION AND PUBLIC WORKS DEPARTMENT AS A WHOLE UNIT.

WE'RE NOT DELETING. WE'RE NOT MOVING. WE'RE NOT CHANGING THEIR JOBS THE RIGHT OF WAY.

MAINTENANCE IS CURRENTLY RESIDING IN PARKS AND REC.

WE'RE MOVING THAT ENTIRE UNIT IN ITS ENTIRETY TO NOW RESIDE WITHIN PUBLIC WORKS.

I THINK HER CONCERN WITH THE SALARIES WAS THE CIP1.

SO AND I SEE WHAT SHE'S SAYING. SHE'S WE'RE BECAUSE WE HAVE A CIP DEPARTMENT NOW, RIGHT.

AND THOSE. WHERE DID THOSE EMPLOYEES COME FROM? THEY CAME FROM THE GENERAL FUND. ANDY ALEJANDRO, INTERIM DEPUTY DIRECTOR OF FINANCE FOR THE RECORD, THOSE WERE PREVIOUSLY IN THE BUDGET. AND IN THE CURRENT YEAR WE'RE IN, THOSE WERE BUDGETED IN THE GENERAL FUND.

[02:50:04]

SO THAT'S WHY WE ALLOCATED THOSE ENGINEERS TO THOSE PROJECTS.

BUT NOBODY ELSE WAS CHANGED. SO THERE'S STILL THE SAME.

BUT THE BUDGET BOOK DOESN'T STATE THAT. SO I'M LOOKING, FOR EXAMPLE, AT A TRANSPORTATION AND PUBLIC WORKS INSPECTOR.

AND I WENT THROUGH IT AND IT WAS 0.2% OF THAT.

FTE WAS SUPPORTED BY WATER FUND 0.2, SUPPORTED BY WASTEWATER FUND, 0.2, SUPPORTED BY STORMWATER FUND.

AND NOW IT'S ALL BEING REALLOCATED TO GENERAL FUND.

THEY WERE. I HAVE TO DOUBLE CHECK ON OUR SPREADSHEET TO MAKE SURE IT'S CORRECT.

BUT FOR FISCAL YEAR 2526, THEY ARE 100% IN THE GENERAL FUND.

WE HAVE THAT DIVISION FOR THEM. I DON'T KNOW WHAT COLOR THE INSPECTORS ARE.

OH WAIT. NO GREEN. GREEN. SO THEY WERE IN THERE IN 2526.

AND THEY'RE GOING TO STAY IN THE GENERAL FUND IN 2627.

BUT THAT IS LITERALLY THE EXACT OPPOSITE OF WHAT IS IN THE PUBLISHED BUDGET BOOK.

IT SAYS FOR FY 2526, THOSE NUMBERS TO MAKE SURE THOSE ARE CORRECT.

I MEAN, IT'S ALL OF IT THEN, BECAUSE FOR FY 26 OR 2526, YOU LOOK AT LIKE I'M LOOKING AT PAGE LIKE 36, FOR EXAMPLE, UNDER WATER ADMINISTRATION AND IT SAYS LIKE TRANSPORTATION AND PUBLIC WORKS INSPECTOR 4.2.2.

SUPERVISOR. 0.25 MANAGEMENT ASSISTANT. 0.5 DIVISION MANAGER.

0.5. AND THOSE ARE NOW ALL BEING CHANGED TO ZERO LIKE ZEROED OUT BECAUSE THEY'RE BEING THE COSTS ARE BEING GIVEN OVER TO THE GENERAL FUND.

YES, MA'AM. SO I JUST WANT TO MAKE SURE. CORRECT.

BUT THIS THIS DOCUMENT WE WE'VE MADE CHANGES SINCE THEN AND ALL THESE INSPECTORS ARE COMING OUT OF THE GENERAL FUND.

SO THIS THESE NUMBERS ARE NOT CORRECT. 25. 26 SHOULD HAVE THEM ALL.

ZERO BUT LIKE I SAID, WE CAN GO AND DOUBLE CHECK THOSE NUMBERS TO MAKE SURE EVERYTHING'S CORRECT.

BUT I DO KNOW THAT THOSE POSITIONS ARE BEING ALLOCATED TO THE GENERAL FUND CURRENTLY.

WHEN DID THAT CHANGE HAPPEN? OCTOBER 1ST, 2025.

SO THEN WHY ISN'T IT CORRECTLY LABELED IN OUR PROPOSED BUDGET THEN? THAT'S SOMETHING I'LL HAVE TO DOUBLE CHECK AND WE'LL GET. THAT JUST MAKES ME. YES, MA'AM.

I'M A LITTLE NERVOUS BECAUSE THAT'S THAT'S A THAT'S THE LOT.

YES. SO IF WE COULD JUST VERIFY THOSE NUMBERS BECAUSE I JUST LIKE I SAID, I WANT TO MAKE SURE THAT THE COST ALLOCATIONS AREN'T CHANGING.

SO THAT WAY WE'RE NOT MOVING AWAY FROM SOME OF THE COST ALLOCATION BEING ON ALL RATEPAYERS AND THEN MOVING IT OVER TO ALL RESIDENTS.

YES, MA'AM. SO WE'LL DOUBLE CHECK THOSE NUMBERS AND WE'LL GET THEM BACK TO YOU.

OKAY. THANK YOU. I WONDER IF THAT'S IN TRANSFERS IN.

TRANSFERS OUT OF THOSE FUNDS. FOR THE PERCENTAGE THAT COST ALLOCATION.

THE COST ALLOCATION DOES COVER. BUT THAT COVERS THE THE ALL THE ALL THE CITY DEPARTMENTS THAT HANDLE EVERYTHING.

SO LIKE FINANCE HUMAN RESOURCES, IT AND THIS SO IT MAY HAVE BEEN INCLUDED IN TRANSFERS IN. I'LL HAVE TO DOUBLE CHECK THAT. OKAY. THANK YOU.

WHAT. ANDY DID NOT CLARIFY. IS THE CURRENT BUDGET FOR THOSE POSITIONS IS THE SAME AS THE PROPOSED BUDGET? THE PERSONNEL SCHEDULE WAS NOT CHANGED. STAFF CANNOT CHANGE ANYTHING IN THE APPROVED BUDGET UNLESS IT'S FORMALLY AMENDED BY CITY COUNCIL. SO WHEN THAT FUNDING PLAN CHANGED BY THE FORMER CITY MANAGER, WE WERE NOT ALLOWED TO BRING A BUDGET AMENDMENT TO CORRECT THAT. IS THAT CORRECT? SO THEN IS IT SOMETHING THAT WE SHOULD CORRECT NOW? THEN IT'S TOO LATE. WE'LL JUST CORRECT IT AS PART OF THE PROPOSED BUDGET.

SO WITH ALL OF THESE FEES THAT ARE CURRENTLY 100% COVERED BY GENERAL FUND WILL SPLIT THEM BETWEEN THE UTILITY FUNDS AS APPLICABLE PER POSITION.

NO, WE'RE NOT TOUCHING THE FUNDING SIDE. THE LISTING OF THAT POSITION AND THE APPROVED BUDGET IS INCORRECT.

JUST THE LISTING. THE DOLLARS AND THE EXPENDITURES ARE ALL IDENTICAL, AS WE ARE DOING TODAY IN THE 26 BUDGET WILL BE DONE EXACTLY THE SAME WAY IN 27.

YES, BUT WHAT I'M SAYING IS IT THAT MAY NOT BE THE BEST.

THEN IF YOU HAVE AN EMPLOYEE WHO IS DOING WORK THAT IS FOR THE WATER WASTEWATER, I JUST WANT TO MAKE SURE THAT THE TRANSFERS IN THEN ARE EQUAL TO THE AMOUNT OF WORK THAT THOSE FTES ARE DOING FOR THESE OTHER FUNDS OR THAT ARE RELATED TO THESE OTHER FUNDS,

[02:55:02]

WHAT COUNCIL MEMBER HARRIS WAS TALKING ABOUT THE TRANSFERS IN AND THE GENERAL FUND WILL RECOUP WHATEVER TIME THAT EMPLOYEE IS SPENDING ON WATER, WASTEWATER, STORM DRAINAGE BECAUSE THEIR SALARY IS 100% GENERAL FUND.

AND IF THEY SPEND ANY TIME, THE INDIRECT COST PLAN RECOVERS THAT AND BRINGS IT BACK AND PAYS BACK THE GENERAL FUND.

OKAY. YEAH. I THINK ONCE WE GET THE UPDATED, I GUESS, BUDGET BOOK, BECAUSE THAT'S LIKE 30 PAGES INCORRECT.

THAT I THINK THAT'LL HELP CLARIFY SOME STUFF.

YEAH. SO WHAT YOU'RE SAYING IS LIKE THE $3.2 MILLION THAT CAME OVER FROM THE WATER REVENUE LAST YEAR THAT ESSENTIALLY COVERS THAT EMPLOYEE BEING USED.

I'M SURE WE DON'T USE $3.2 MILLION IN SHARED COSTS.

SO SO I SEE WHAT SHE'S SAYING. SHE JUST, I THINK, WELL, WHAT I KNOW, WHAT SHE'S SAYING IS SHE WANTS TO MAKE SURE THAT THE INSIDE WATER USERS ARE NOT BEING CHARGED FOR OUTSIDE WATER USE WITH OUR FTES OR FULL TIME EMPLOYEES.

AND I, I UNDERSTAND THAT CONCERN TO MAKE SURE THAT WE'RE ALLOCATING BECAUSE A WATER FUND IS A FUND OF ITS OWN RIGHT.

SO IT DOESN'T SHOULDN'T NORMALLY GENERALLY MIX WITH THE GENERAL FUND.

BUT WHAT THEY'VE DONE HISTORICALLY OR LAST YEAR WAS TAKE THAT $3.2 MILLION, WHICH IS REVENUE, AND THEY'VE APPLIED IT TO THE GENERAL FUND AS, LIKE YOU SAID, THE USE I CAN'T REMEMBER EXACTLY WHAT YOU CALLED IT, BUT INDIRECT COSTS. INDIRECT COSTS. CORRECT. OKAY.

SO OTHER THAN THE NUMBERS BEING OFF AND I'M NOT SURE ABOUT THE WHOLE 30 PAGES, I'D HAVE TO GO BACK AND FIGURE IT OUT.

BUT OTHER THAN THAT, I THINK THE COST IS COVERED.

AND SINCE THEY'VE ALWAYS COME FROM THE GENERAL FUND AND THEY'RE STILL COMING FROM THE GENERAL FUND, THAT AS LONG AS WE HAVE THOSE INDIRECT COSTS RECOVERED THROUGH THE INDIRECT COST. YEAH, I THINK THAT WOULD HAVE JUST SOLVED THE ISSUE.

IS THAT EXPLANATION. BUT IT TOOK LIKE A LITTLE BIT TO GET THERE BECAUSE ALSO WHAT WE HAVE ONLINE FOR EVERYONE IS WRONG.

IT'S TRUE. YEAH. CAN WE CAN WE KIND OF BECAUSE IS THAT IS PAGE 36.

AND I GUESS I DIDN'T REALLY UNDERSTAND THE THE INCONSISTENCY LIKE WHAT HAPPENED IN.

SO ALL OF FY 2526 RIGHT HERE. IT'S SUPPOSED TO ALL SAY ZERO IS WHAT THEY'RE SAYING.

ALL OF THESE THAT SAY 0.5 OR 0.2, 0.25. THEY'RE ALL SUPPOSED TO SAY ZERO.

OKAY. DID YOU GUYS JUST USE THE BOOK FROM LAST YEAR? OKAY. YEAH. I'M JUST WONDERING IF IT WAS INCORRECT LAST YEAR AND WE JUST BROUGHT IT OVER.

NO, WE JUST DIDN'T BRING IT OVER JUST FOR THE SAKE OF BRINGING IT OVER.

THE APPROVED BUDGET IS WHAT'S IN THE BOOK. STAFF CANNOT CHANGE WILLY NILLY WITHOUT AMENDING THE BUDGET DOCUMENT.

OKAY, SO YOU GET THAT. OKAY. SO WHAT YOU'RE SAYING IS THE NUMBERS THAT YOU GUYS BROUGHT UP, YOU HAD TO BRING OVER BECAUSE AND YOU PROBABLY WOULDN'T DOUBLE CHECK BECAUSE THAT WAS PASSED AND APPROVED BY COUNCIL AND THE CITY MANAGER OF LAST YEAR.

YES. SO WE COULDN'T CHANGE THIS EVEN IF WE WANTED TO WITHOUT A VOTE, BUT WITHOUT A FORMAL AMENDMENT TO THE BUDGET DOCUMENT.

OKAY. I'M GLAD I ASKED, BECAUSE THAT'S IMPORTANT INFORMATION TO KNOW THAT BECAUSE THE DIFFERENCE IS THE FAULT, NOT THE FAULT, BUT THE RESPONSIBILITY BEING ON ANDY VERSUS THE RESPONSIBILITY BEING ON PREVIOUS ADMINISTRATION AND COUNCIL.

OKAY. ANDY ALWAYS GETS BLAMED. ANDY, IT'S ALL YOUR FAULT.

NO THANK YOU. AND THANK YOU FOR BEING GRACEFUL ABOUT THAT.

YOU WERE JUST VERY LIKE, OKAY, I'LL FIX IT. I DID IT AND IT'S VERY WELL, IT MAY VERY WELL BE ACCOUNTED FOR AND TRANSFERS IN.

TRANSFERS OUT. IT IS, IT IS. WE JUST DON'T HAVE A LIST OF EVERYTHING THAT'S INCLUDED IN THAT LINE ITEM.

PEREZ YOU HAVE A VERY ACTIVE COUNCIL, SO I APPRECIATE THAT.

BUT I ALSO UNDERSTAND YOU'RE GOING TO GET A LOT OF QUESTIONS. SO I DO APPRECIATE IT.

NO, I EXPECT THAT. OKAY. THANK YOU. GO AHEAD.

THANK YOU, MAYOR AND COUNCIL. I'LL CONTINUE. WHERE FOLLOWING UP WHERE AMBER LEFT OFF.

I WILL SAY A BRIGHT SPOT. WELL, AS SHE WENT THROUGH ALL OF THOSE ORG CHARTS, WE PROBABLY GOT CLOSER TO THE TWO MINUTES PER SLIDE BECAUSE WE PICKED UP ABOUT 15 AS WE CLICKED THROUGH THERE. SO THAT'S GOOD.

THAT'S POSITIVE. THAT'S FAIR. IF I GO, IF I GO ANY LONGER, IT'S IF I GO ANY LONGER, IT'S ANDY'S FAULT.

OKAY, SO I'M JUST GOING TO TALK ABOUT THE OTHER SIDE OF THAT, WHICH IS WHAT CHANGED, WHAT HAPPENED, WHAT CHANGED AND WHAT HAPPENED IN THE THE PARKS AND RECREATION FOR REALIGNMENT. AND WHILE I WON'T REPEAT THE GUIDING PRINCIPLES THAT AMBER MENTIONED, WE ALSO LOOKED AT IT FROM THAT STANDPOINT, AS WELL AS THE FACT THAT THE PARKS, AS PERVEZ SAID AT THE BEGINNING OF THE PRESENTATION, IS ONE OF THE LARGEST GENERAL FUND DEPARTMENTS.

AND SO THEY DID A TREMENDOUS JOB THIS YEAR, THE PARKS DEPARTMENT DID, OF SCALING BACK OF COST CONTAINMENT AND DOING A TREMENDOUS AMOUNT OF THINGS TO NOT ONLY HELP WITH THE BUDGET DEFICIT AND, AND INTO FUTURE YEARS, BUT ALSO, AS WE LOOKED FROM SOME OF THESE CHANGES,

[03:00:06]

SO AS WE LOOKED AT WHAT TOOK PLACE, AS WE REALIGNED IN DPW, WE WANTED ALSO TO REALIGN PARKS TO BE MUCH MORE EFFICIENT AND HAVE KIND OF AN UMBRELLA WHERE THEY HAVE THEIR ALL OF THEIR DIFFERENT DIVISIONS ARE CENTRALIZED, AND THEN THEY CAN THEY CAN ALSO UTILIZE A LOT OF THE DIFFERENT POSITIONS THAT WE MOVED AROUND TO HELP EACH OTHER AND THE DIFFERENT DIVISIONS AS WE MOVE FORWARD. SO THAT'S WHAT THAT'S HOW WE LOOKED AT IT. AND THAT'S, THAT IS WHAT WE DID AS WE WENT FORWARD. I WANT TO OUTLINE IT FOR YOU GUYS AS WE GO THROUGH THIS SLIDE.

SO THE ACTUAL ELIMINATED POSITIONS, THE POSITIONS THAT ARE NO LONGER IN THE BUDGET, THOSE 11 THAT THAT PERVEZ POINTED OUT A LITTLE BIT EARLIER, ONE OF THEM IS THE PARKS DEPUTY DIRECTOR. THAT POSITION WENT AWAY AND AND IS NOT IN THE UPCOMING BUDGET.

THE OTHER ONE IS THE BUSINESS AND STRATEGIC PLANNING MANAGER. THAT WAS A POSITION, A MANAGEMENT POSITION THAT WAS UNDER THE ADMINISTRATIVE SECTION OF THE PARKS DEPARTMENT.

THE ASSISTANT DIRECTOR IS BEING ELIMINATED, BUT IT'S NOT BEING IT'S NOT BEING COMPLETELY REMOVED.

IT'S BEING REPURPOSED INTO WHAT WE'RE CALLING A PARKS OPERATIONS MANAGER.

AND I'LL WALK THROUGH THAT AND SHOW YOU. AND THEN THE RECREATION.

WE HAD TWO DIVISION MANAGERS, ONE OVER RECREATION FOR ALL OF OUR PARKS RECREATION AND ONE OVER SPECIAL EVENTS FOR ALL OF OUR PARKS, SPECIAL EVENTS. WE HAVE COMBINED AND MERGED FOR MULTIPLE REASONS THAT INTO ONE DIVISION MANAGER.

THIS WILL BE ONE DIVISION MANAGER OVER RECREATION AND SPECIAL EVENTS THAT WILL THAT WILL HELP UTILIZE AND RUN BOTH SPECIAL EVENTS AND RECREATION WITH THE HELP OF THE OTHER DIVISION DIVISIONS AND EMPLOYEES UNDER PARKS.

THE NOTABLE POSITION CHANGES WE. LIKE I SAID, WE CREATED THE NEW PARKS OPERATIONS MANAGER TO OVERSEE THE DIVISION MANAGERS.

YOU'LL SEE THAT. I THINK VISUALLY, WHEN WE LOOK AT THE WHEN WE LOOK AT THE ORGANIZATION CHART AGAIN, RECREATION AND SPECIAL EVENTS HAVE BEEN BLENDED INTO ONE.

DIVISION MANAGER PARKS OR PARKS PLANNING AND PROJECT MANAGER, WHICH WHICH REPORTED DIRECTLY TO THE ADMINISTRATIVE SIDE OF PARKS AND REC.

WE'RE MOVING THAT POSITION TO DEVELOPMENT SERVICES.

SO THAT WAS MAINLY LOOKING AT HIGH LEVEL CIP PROJECTS AND, AND PROJECTS WITHIN PARKS.

THAT POSITION, WE FELT FIT BETTER, ESPECIALLY ONCE YOU SEE HOW WE'RE ALIGNING THE PARKS DEPARTMENT, LOOKING AT HOW, HOW TO MAKE THEIR ORGANIZATION MORE EFFICIENT, BUT ALSO HOW TO UTILIZE THE DIFFERENT DIVISIONS ACROSS THE PARKS DEPARTMENT.

THAT POSITION STOOD OUT AS KIND OF JUST HANGING OFF ON ITS OWN, AND WE FELT LIKE IT WOULD IT WOULD WORK BETTER WITH NOT ONLY HELPING THE DEVELOPMENT SERVICES DEPARTMENT AS WE MOVE THROUGH WITH PROJECTS, BUT ALSO THAT DEPARTMENT WORKING DIRECTLY WITH THE CIP DEPARTMENT ON THE PROJECTS THAT THEY'RE THAT THEY'RE LOOKING AT THE THIS IS A THIS IS A NUANCED POSITION, BUT GIVEN ALL OF THE CONVERSATION ABOUT POOLS AND SPLASH PADS, I THINK IT'S VERY IMPORTANT TO POINT OUT THE AQUATICS MAINTENANCE TECH, WHICH PREVIOUSLY REPORTED TO THE RECREATION DEPARTMENT.

DIVISION WILL NOW BE MOVED AND REPORT DIRECTLY TO THE PARKS MAINTENANCE DIVISION.

IT FITS MORE APTLY IN THAT DIVISION BECAUSE THEY INSPECT AND LOOK AT THE SPLASH PADS AND THE POOLS, AND IT WILL ALSO HELP TREMENDOUSLY TO MAKE SURE THAT THOSE STAY NOT ONLY PROPERLY MAINTAINED, BUT UP AND RUNNING. AND THEN, LIKE AMBER OUTLINED, THE ENTIRE BEAUTIFICATION DIVISION IS MOVING UNDER TRANSPORTATION AND PUBLIC WORK.

WORKS. I WANT TO OUTLINE BEFORE WE LOOK AT THE ORG CHART, SOME OF THE KEY BENEFITS AND EFFICIENCIES, BECAUSE IT WASN'T JUST ABOUT COST CUTTING, IT WAS REALLY ONCE WE BETTER UTILIZED ALL THESE DIVISIONS AND PUT THEM UNDER ONE UMBRELLA, HOW IT WAS BETTER UTILIZING WHAT THE DIVISIONS COULD DO TO HELP EACH OTHER AS THEY MOVE FORWARD WITH DIFFERENT OPERATIONS.

WE RESTRUCTURED THE DEPARTMENT ITSELF FROM 64 POSITIONS TO 45.

THAT IS, THOSE ARE NOT ELIMINATED POSITIONS. WE DIDN'T GET RID OF POSITIONS THAT IS THIS RESTRUCTURING, BUT IT SHOWS YOU THE LARGE AMOUNT OF POSITIONS THAT WE'RE WE'RE WE'RE NOT BEING AS EFFICIENTLY UTILIZED, I THINK, UNDER THE OLD ORGANIZATION THAT THEY WILL BE WITH THIS NEW BUDGET.

IT CREATES A LEANER ORGANIZATION IN PARKS, BUT IT HELPS THEM MAINTAIN THEIR CORE MISSION AND SERVICES.

THAT REALLY WE LOOKED AT THAT CAME OUT OF THOSE, THAT BUDGET SURVEY THAT PERVEZ WALKED THROUGH OF WHAT THE CITIZENS AND WHAT THE WE'VE HEARD FROM COUNCIL, WHAT THEY WANT OUT OF THE SPECIFIC FOCUS AND MISSION OF THE PARKS DEPARTMENT.

WE CREATED THIS PARKS OPERATION MANAGER POSITION TO ALIGN THE DIVISION PRIORITIES BECAUSE WITHOUT THIS POSITION, THE DIVISIONS KIND OF ARE WORKING INDEPENDENTLY UNDER THEIR DIVISION MANAGERS, AND IT WILL HELP COORDINATE THAT POSITION, WILL HELP COORDINATE THE RESOURCES AND STRENGTHEN THEIR DAY TO DAY OPERATIONS.

IT CONSOLIDATES. WE'VE CONSOLIDATED MANY MANAGEMENT LAYERS TO STREAMLINE DECISION MAKING AND IMPROVE ACCOUNTABILITY ACROSS THE ENTIRE PARKS DEPARTMENT.

AND THEN WE'VE IMPROVED CROSS-DIVISIONAL COLLABORATION BETWEEN THE RECREATION, PARKS, CONSERVATION, AQUATICS AND SPECIAL EVENTS.

ANYONE WHO'S BEEN WITH THE CITY FOR A LONG TIME OR HAS BEEN AROUND THE CITY FOR A LONG TIME, KNOWS THAT OUR PARKS DEPARTMENT IS SECOND TO NONE IN HELPING EACH OTHER OUT WHEN IT COMES TO THE DIFFERENT DIVISIONS.

WHEN YOU HAVE WHEN YOU HAVE A SPECIAL EVENT, YOU DO NOT ONLY SEE SPECIAL EVENTS STAFF OUT THERE,

[03:05:04]

AND THEN THE RESPONSIBILITIES BETTER MATCH THE DEPARTMENT EXPERTISE.

YOU'LL SEE THAT WHEN WE SHOW THE BREAKDOWN AND IT ENHANCES THE ORGANIZATIONAL FLEXIBILITY TO SUPPORT CURRENT OPERATIONS WHILE WE PREPARE FOR THE MEASURED GROWTH OF THE CITY AS WE MOVE FORWARD AND NEW PARKS FACILITIES THAT WILL BE COMING ONLINE, LIKE OUR 1500 DACEY FACILITY AND SOME OTHERS.

SO I JUST WANTED TO SHOW, WHEN WE'RE TALKING ABOUT THE REALIGNMENT AND THE THE EFFICIENCY OF THE DEPARTMENT, THE THIS IS THE OLD ORG CHART. YOU HAVE THE EXECUTIVE TEAM.

I KNOW IT'S SMALL, BUT YOU HAVE THE EXECUTIVE TEAM ON THE LEFT AND THEN ALL THOSE DIFFERENT DIVISIONS THAT ARE SPLIT OUT.

NOW, WHILE ALL THOSE DIVISIONS ARE VERY STRONG AND DO A VERY GOOD JOB, THEY WEREN'T TRULY CENTRALIZED UNDER ONE UMBRELLA FOR PARKS.

SO WE'RE MOVING THE BEAUTIFICATION DIVISION OVER AND THEN REALIGNING THEM ALL TO HAVE A DIRECTOR, A PARKS OPERATION MANAGER THAT OVERSEES ALL THE THREE MAJOR DIVISIONS.

AND THEN OF COURSE, OUR MANAGEMENT ASSISTANT AS WELL. SO THAT'S THIS, THAT THIS IS THE 64 POSITIONS THAT HAVE BEEN REALIGNED AND REPURPOSED INTO A MORE STREAMLINED PARKS DEPARTMENT. SO HOPEFULLY THAT HELPS FROM THE PARK SIDE.

AND THEN I'LL TAKE ANY QUESTIONS BEFORE WE MOVE ON TO COST CONTAINMENT.

ANY QUESTIONS? I DO WANT TO GIVE A SHOUT OUT TO OUR PARKS TEAM WHO HAS BEEN PHENOMENAL.

THE WAY THEY WERE ABLE TO DO THE FIREWORKS SHOW, THE WAY THEY'VE BEEN ABLE TO DO THE SPLASH PADS, JUST BE ABLE TO MOVE FORWARD AND AT A TIME WHERE THEY'VE LOST A LOT OF STAFF, I SAY MY HATS OFF TO THEM SPECIFICALLY.

I, YOU KNOW, I'VE TALKED TO BENITO AND HE'S BEEN SUCH A RAY OF SUNSHINE.

HIS POSITIVE ATTITUDE, I THINK, IS WHAT KEEPS HIS DIVISION REALLY STRONG.

THAT THAT DEPARTMENT. THANK YOU. THAT'S I'M SURE THEY VERY MUCH APPRECIATE THAT THAT DEPARTMENT AND THE OTHER DEPARTMENTS THAT WORK WITH THEM. THERE'S WE DON'T EVER DO ANYTHING ACROSS THE CITY THAT THEY DON'T ALL HELP EACH OTHER WITH.

SO WE'RE VERY PROUD OF IT. THANK YOU TO THE PARKS TEAM.

THEY HAVE DONE A PHENOMENAL JOB. I DO HAVE A QUESTION.

WE'RE CREATING NEW PARK SUPERINTENDENT ROLE. DO WE HAVE THAT FILLED ALREADY? ARE WE PROMOTING FROM WITHIN? THAT IS THE PARK'S OPERATIONS MANAGER.

SO THAT IS JUST BEING CREATED IN THE BUDGET. AND THEN WE'LL HAVE TO DO A HIRING FOR IT. OKAY.

ALL RIGHT. LET'S TALK COST CONTAINMENT. HOLLY HOLT, FOR THE RECORD, ASSISTANT DIRECTOR OF FINANCE.

I'VE BEEN WITH YOU ALL MANY TIMES BEFORE SPEAKING ABOUT THE BUDGET FOR FY 26 AND NOW COMPONENTS OF THAT AND COMPONENTS OF 27.

AND TONIGHT WE GET TO PULL ALL OF THAT TOGETHER FOR YOU ALL.

COUNCIL WILL RECALL THAT THROUGHOUT THE BUDGET DEVELOPMENT PROCESS, STAFF COMMUNICATED SEVERAL TIMES THAT THE CITY WAS FACING SIGNIFICANT STRUCTURAL FINANCIAL CHALLENGES. RATHER THAN RELYING ON ONE TIME SOLUTIONS AND RESERVE FUNDING.

I'VE SAID THIS MULTIPLE TIMES. INTERIM CITY MANAGER DIRECTED STAFF TO IDENTIFY RECURRING OPERATIONAL SAVINGS THAT WOULD PERMANENTLY IMPROVE THE CITY'S FINANCIAL POSITION.

THIS NEXT SLIDE IS GOING TO SUMMARIZE THE RESULTS OF THAT EFFORT.

SO AGAIN, WHEN I BRIEFED YOU ALL ON THE BUDGET EACH MONTH, WE MOST RECENTLY TALKED ABOUT THE COST CONTAINMENT FOR 26.

WE DID NOT TALK ABOUT 27. NOW WE'RE GOING TO TALK ABOUT 27 TONIGHT, WHICH CONTAINS ALL OF THOSE ITEMS THAT INTERIM CITY MANAGER PAVEZ HAS MENTIONED MULTIPLE TIMES THROUGHOUT THE PRESENTATION ALREADY TONIGHT.

THE RECOMMENDED BUDGET INCORPORATES APPROXIMATELY $11.91 MILLION IN RECURRING COST CONTAINMENT MEASURES ACROSS ALL FOUR MAJOR OPERATING FUNDS.

THESE SAVINGS WERE DEVELOPED OVER SEVERAL MONTHS THROUGH A COMPREHENSIVE REVIEW OF DEVELOPMENTAL I'M SORRY, DEPARTMENTAL OPERATIONS, STAFFING, CONTRACTUAL OBLIGATIONS, OPERATIONAL PRACTICES, AND EMPLOYEE BENEFIT PROGRAMS AS IT IS MENTIONED.

THE LARGEST CATEGORY WE BEGIN WITH AT THE TOP, OF COURSE, IS PERSONNEL STRATEGIES, REPRESENTING APPROXIMATELY $5.87 MILLION AND RECURRING ANNUAL SAVINGS. THESE SAVINGS WERE ACHIEVED PRIMARILY THROUGH POSITION FUNDING ADJUSTMENTS, ELIMINATION OF SELECTED VACANT POSITIONS, ORGANIZATIONAL RESTRUCTURING AND PERSONNEL RELATED EFFICIENCIES, AS PERVEZ HAS MENTIONED. IMPORTANTLY, I JUST WANT TO NOTE THIS AGAIN.

AS PERVEZ MENTIONED, THE RECOMMENDED BUDGET DOES NOT INCLUDE LAYOFFS OF FILLED POSITIONS, NOR DOES IT INCLUDE A REDUCTION TO STAFF SALARIES.

INSTEAD, STAFF FOCUSED ON VACANCIES, ORGANIZATIONAL REDESIGN AND NATURAL ATTRITION WHEREVER POSSIBLE.

THE SECOND CATEGORY, APPROXIMATELY $4.1 MILLION, IS IN OPERATIONAL EFFICIENCIES.

THESE SAVINGS REFLECT HUNDREDS OF INDIVIDUAL DECISIONS MADE THROUGHOUT THE ORGANIZATION, AS PERVEZ MENTIONED.

DEPARTMENTS. REVIEWED SOFTWARE SUBSCRIPTIONS, FOR EXAMPLE.

FLEET UTILIZATION. OPERATING BUDGETS. THE TRANSPORTATION PROGRAM.

YOU'LL REMEMBER WE HAD A COUNCIL MEETING ON SPECIAL EVENTS, SAME LOBBYIST SERVICES COUNCIL MEETING EXPENDITURES,

[03:10:08]

EACH EXPENDITURE WAS EVALUATED TO DETERMINE WHETHER IT DIRECTLY SUPPORTED THE CITY'S CORE MISSION AND STRATEGIC PRIORITIES.

THE THIRD CATEGORY REFLECTS APPROXIMATELY $1.23 MILLION IN EMPLOYEE BENEFIT CHANGES.

THESE HAVE BEEN REVIEWED, BUT I JUST WANT TO GIVE AGAIN A SUMMARY ACROSS ALL FOUR MAJOR FUNDS.

THESE INCLUDE, AGAIN, THE TEMPORARY SUSPENSION OF HR CONTRIBUTIONS, LEAVE BUYBACK, TUITION REIMBURSEMENT, AND PAID PARENTAL LEAVE. THESE RECOMMENDATIONS RECOMMENDATIONS WERE NOT MADE LIGHTLY.

STAFF CAREFULLY EVALUATED EVERY OPTION WITH THE GOAL OF PRESERVING JOBS AND MAINTAINING ESSENTIAL MUNICIPAL SERVICES WHILE ADDRESSING THE CITY'S LONG TERM STRUCTURAL IMBALANCE. COLLECTIVELY, THESE RECURRING SAVINGS ALLOW THE CITY TO PRESENT A STRUCTURALLY BALANCED BUDGET THAT RELIES ON RECURRING REVENUES TO SUPPORT RECURRING EXPENDITURES. PERHAPS MOST IMPORTANTLY, THESE ACTIONS IMPROVE THE CITY'S LONG TERM FINANCIAL OUTLOOK.

RATHER THAN BALANCING ONE FISCAL YEAR THROUGH TEMPORARY SOLUTIONS, THESE RECOMMENDATIONS PERMANENTLY REDUCE THE CITY'S RECURRING EXPENDITURE BASE, PROVIDING A STRONGER FINANCIAL FOUNDATION FOR FUTURE BUDGET CYCLES.

I DO HAVE TWO QUESTIONS, IF I MAY. OF COURSE, BECAUSE I REALLY WANT TO ENCOURAGE TIME OFF.

SO THE BUYBACK I'M I'M OKAY WITH. BUT WHEN WAS THAT IMPLEMENTED? BECAUSE IT'S KIND OF A FAIRLY NEW PROGRAM. LEAVE BUYBACK, I THINK TWO FISCAL YEARS AGO, TWO FISCAL YEARS AGO.

SO IT'S ONLY A TWO YEAR PROGRAM SO FAR. SO FAR.

OKAY. THIS IS THE SECOND FISCAL YEAR. WHEN WAS THE 12 WEEK PAID PARENTAL LEAVE PROGRAM CREATED? YOU KNOW, SAME TIME AROUND THE SAME TIME. SO TWO YEARS AGO.

OKAY. WHO WAS QUALIFIED FOR THE TWO, THE 12 MONTH.

LIKE FOR EXAMPLE, IF SOMEBODY STARTED WORK NEXT WEEK.

OKAY. JULIE'S COMING. YEAH. WE'LL GET JULIE TO COME.

SHE CAN. YEAH. IT WAS IMPLEMENTED TO. BUT MY QUESTION IS, DO YOU HAVE TO BE.

DO YOU UNDERSTAND MY QUESTION? ALL RIGHT. GOOD EVENING, JULIE BAGS, HR DIRECTOR.

SO YOUR QUESTION, AS I UNDERSTAND IT, IS WHO IS ELIGIBLE FOR THAT BENEFIT UNDER THE PAID PARENTAL LEAVE? YOU MUST MEET THE ELIGIBILITY REQUIREMENTS OF THE FEDERAL MEDICAL LEAVE ACT.

SO YOU HAVE TO HAVE AT LEAST 1250 HOURS THAT YOU HAVE ALREADY WORKED IN THE LAST YEAR.

YOU HAVE TO HAVE MEDICAL RECEIPT AND DOCUMENTATION THAT IT IS THAT QUALIFYING EVENT.

AND THEN ONCE YOU GET THAT 12 WEEKS, YOU HAVE TO USE THAT WITHIN 26 WEEKS.

OKAY, SO WHEN YOU GIVE ME THE HOURS, COULD YOU GIVE THAT TO ME AGAIN? IT WAS 1250 50. OKAY, SO AFTER AND THEN YOU GET 480 HOURS PAID LEAVE.

OKAY, SO THAT'S 31 WEEKS. SO YOU HAVE TO WORK HERE FOR 30.

I TOOK 1250 DIVIDED BY 40 HOURS. YEAH. IT VARIES BECAUSE SOME OF OUR OFFICERS, FOR EXAMPLE, THEY WORK AN 84 HOUR WEEK. OKAY. THAT'S IMPORTANT TO KNOW.

SO AFTER 31 WEEKS THEY COULD 31 WEEKS IS NOT EVEN A YEAR THEY COULD QUALIFY TO HAVE FOUR MONTHS PAID OFF.

NO, YOU HAVE TO HAVE I'M SORRY. YOU HAVE TO HAVE AT LEAST ONE YEAR WITH THE ORGANIZATION.

OKAY. AND THEN YOU HAVE TO HAVE AT LEAST WORKED 1250.

SO IT COULD BE THAT SOMEONE IS HERE A YEAR, THEY MEET THAT ELIGIBILITY, BUT MAYBE THEY'VE TAKEN TIME OFF, MAYBE THEY HAVEN'T WORKED THAT MANY HOURS. OR IF THEY'RE PART TIME, THEY WOULD NOT QUALIFY.

OKAY. BECAUSE PART TIMERS DO NOT WORK MORE THAN 1000 HOURS A YEAR.

OKAY, PERFECT. OKAY. I WAS JUST CURIOUS. WAS THAT DO WE KNOW HOW MANY TIMES THAT WAS USED? IT'S POPULAR. IT'S A POPULAR PROGRAM. AND WE HAVE A LOT OF FAMILIES WHO FIND THAT VERY BENEFICIAL.

IT'S A VERY GENEROUS BENEFIT. AND WE'LL SEE OFTEN THAT OUR EMPLOYEES WILL USE IT INTERMITTENTLY.

SO IT'S NOT AS FREQUENT THAT WE WILL HAVE AN EMPLOYEE OUT FOR 12 STRAIGHT WEEKS.

OFTEN THEY WILL USE IT INTERMITTENTLY AND TAKE A COUPLE OF DAYS A WEEK. SO THEY KEEP THE WORKLOAD UP AND OPERATIONS BACK AT THE CITY GOING, OKAY. ALL RIGHT. SO TWO YEAR PROGRAM, USUALLY YOU HAVE TO BE THERE.

YOU HAVE TO BE HERE FOR A YEAR. THAT'S CORRECT.

AND YOU HAVE TO USE THE YOU HAVE TO HAVE 1250 HOURS.

THAT'S CORRECT. OKAY. THAT'S CORRECT. AND IT WAS APPROVED, I THINK JUNE OF 2024, 2024.

OKAY. SO BARELY TWO YEARS. THAT'S CORRECT. OKAY.

COUNCIL MEMBER ZAPATA, DOES THAT ACCOUNT FOR THE LIKE FMLA STANDARD OF USING ALL OF LIKE YOUR ACCRUED LEAVE BEFORE YOU START GETTING THE PAYOUT? SO IS IT THAT THE CITY JUST COVERS WHATEVER THE EMPLOYEE DOESN'T HAVE COVERED? OR IS IT THAT THEY USE SOME OF THAT AND THEN THEY GET FOR 80 AND THEY CAN CHOOSE TO USE THAT.

HOWEVER, UNDER THIS BENEFIT, THE CITY PAYS FOR ALL 12 WEEKS.

YOU DO NOT HAVE TO USE YOUR SICK OR VACATION.

OKAY. ALL RIGHT. ALL RIGHT. ANY OTHER QUESTIONS? COUNCILMEMBER MCKINNEY. I JUST WANT TO GET SOME CLARIFICATION BECAUSE WE SAID EARLIER THAT WE DIDN'T CHANGE ANYTHING FROM THE MEET AND CONFER, BUT IT SAYS MEET AND CONFER

[03:15:03]

I'M GLAD YOU ASKED. THE REASON IT SAYS THAT IS BECAUSE $1.2 MILLION WAS BUDGETED FOR THE YEAR ONE, RIGHT, WHICH IS THIS FISCAL YEAR. BUT FOR FISCAL YEAR TWO, WE DON'T WE DON'T NEED ALL OF THOSE FUNDS BECAUSE APPROXIMATELY 343,000 IS THE THE STEPS AT THE ANNIVERSARY DATE FOR THE MEET AND CONFER AGREEMENT.

AND THEN ANOTHER APPROXIMATELY 16,000 IS THE CORPORALS THAT GET THE 2% INCREASE OCTOBER 1ST.

SO THERE'S SAVINGS THERE FROM THE ORIGINAL 1.2 BUDGETED TO WHAT WE ACTUALLY NEED IS ABOUT $360,000 FOR YEAR TWO.

OKAY. THANK YOU. YEAH. OKAY. ANY OTHER QUESTIONS? THANK YOU. OH. COUNCILMEMBER HARRIS. I AM CONCERNED THAT WE'RE NOT GIVING RAISES, AT LEAST IN ANY AMOUNT, TO OUR CURRENT EMPLOYEES. I'M AFRAID THAT THAT WILL DISCOURAGE PEOPLE FROM COMING TO THE CITY WHO MIGHT MAKE GOOD EMPLOYEES.

AND I'M AFRAID THAT IT WILL CAUSE US TO LOSE SOME EMPLOYEES WHO HAVE OTHER OPTIONS.

IS THAT A POTENTIAL THAT WE COULD LOSE OR NOT RETAIN? COULD THE LACK OF A MERIT OR COLA IMPACT OUR RECRUITMENT OR RETENTION EFFORTS? YES. POTENTIALLY YES. HOWEVER, I WILL SHARE WITH YOU THAT MANY OF THE CITIES ALONG THIS CORRIDOR ARE FACING THE SAME CHALLENGES THAT WE ARE.

AND SO OUR NEIGHBORS TO THE NORTH AND SOUTH, THEY'RE FACING THE SAME SITUATION WHERE THEY MAY BE AT A 0% MERIT OR COLA FOR THIS FISCAL YEAR. WELL, THAT WAS MY OTHER QUESTION. HOW DO WE RANK WITH OTHER CITIES? HOW ARE THEY DOING THAT? WE'RE IN A VERY SIMILAR SITUATION IS LOOKING.

THEY WILL PROBABLY BE AT 0%. AUSTIN IS AT 0%.

I DON'T KNOW THAT NEW BRAUNFELS AND SAN MARCOS HAVE LANDED OR HAVE STATED PUBLICLY WHAT THEY WILL BE AT YET, BUT THIS WHOLE REGION IS FACING THAT SAME DEFICIT.

THEY ARE WE'RE NOT UNUSUAL IN THIS. THAT'S RIGHT, THAT'S RIGHT.

WE ALL ARE FEELING THE PAIN POINTS. CAN YOU TELL US THE LAST TIME THAT WE GAVE THEM A RAISE.

A FISCAL OCTOBER 1ST OF 2025. OKAY. SO THE COUNCIL WE PRESENTED AS A CITY IN THE CITY MANAGER'S PROPOSED BUDGET, A MERIT OF AN AVERAGE OF 3%. AND SO THAT VARIED BY PERFORMANCE.

SOME OF OUR EMPLOYEES WHO MAY HAVE BEEN EXCEEDING THE PERFORMANCE EXPECTATIONS COULD HAVE SEEN A LITTLE BIT HIGHER.

AND THOSE THAT MAYBE WERE NOT MEETING THOSE PERFORMANCE METRICS MAY HAVE SEEN A LITTLE BIT LESS.

OKAY. I APPRECIATE THAT. THANK YOU. YOU'RE GOOD.

OKAY. THANK YOU. GOOD. NOT FOR SORRY. NOT FOR PERSONNEL.

I'VE GOT ANOTHER QUESTION. OKAY. OKAY. NOT FOR YOU.

OH, NOT FOR ME. THANK YOU. YOU'RE EXCUSED. THIS IS ON RESERVE FUND.

THE STATE HAS NO REQUIREMENTS FOR CITY RESERVE FUNDS AT ALL.

WE ARE USING 25%. HOW MANY OF OUR FUNDS OF THE 60 FUNDS HAVE A RESERVE FUND? DO THEY ALL. NO. I SAW SEVERAL THAT HAD RESERVE FUNDS AS WELL.

THE CHARTER REQUIRED THE CHARTER REQUIRE MORE THAN SO WHAT DO OUR CITIES USE FOR RESERVE FUNDS? BECAUSE 25% IS VERY HIGH. I THINK. THAT RESERVE REQUIREMENT COMES FROM THE CITY CHARTER. I KNOW THAT, BUT WHAT WHAT DO OUR COMPARABLE CITIES USE? I DON'T KNOW OFF THE TOP OF MY HEAD. 25%. IT'S QUITE HIGH.

SOME OF THE RESERVE FUND BALANCES THAT ARE IN THE BUDGET ARE ALMOST 100% OF THE EXPENDITURES.

SO THAT'S THAT SEEMS TO BE ME TO ME TO BE VERY HIGH.

IT'S NOT A REQUIREMENT. COUNCIL MEMBER. I KNOW THAT'S A BALANCE IN THAT FUND, RIGHT.

AND IT'S WAY MORE THAN 25% OF THE RESERVE FUND IN THAT FUND.

SO I MEAN, I'M JUST POINTING THAT OUT. DO WE KNOW WHAT THE TOTAL OF ALL THOSE RESERVE FUNDS IS? I DON'T THINK IT'S A RESERVE. I THINK WE COULD SPEND IT IF WE NEEDED TO. RIGHT. YEAH. THERE'S A DIFFERENCE BETWEEN A BALANCE AND A RESERVE THAT'S BEING CARRIED AS RESERVE.

AND ALL OF THOSE IN LOOKING AT THE RESERVE. YES.

IT SHOWS RESERVE FUND BALANCE. WOULD YOU GIVE ME AN EXAMPLE.

COUNCIL MEMBERS. SO WE CAN LOOK IT UP. I'M SORRY I CAN'T WITHOUT TAKING FIVE MINUTES TO LOOK AT EACH ONE.

WE WOULD BE GLAD TO LOOK IT UP IF YOU GIVE US THE PAGE NUMBER AND THE FUND.

I CAN EMAIL THAT TO YOU. SURE. BUT IT DID. IT DID OCCUR TO ME, AS I WAS LOOKING AT THAT, THAT THOSE RESERVE FUNDS, SOME OF THEM WERE 138% OF EXPENDITURES. AND THAT'S THAT SEEMED VERY HIGH.

AND I DON'T KNOW WHAT THE TOTAL IS OF ALL RESERVE FUNDS THAT, THAT WERE LISTED.

I ALSO KNOW THAT THE STATE DOES NOT REQUIRE RESERVE FUNDS, AND I'D LIKE TO KNOW WHAT OUR CAPACITIES ARE USING.

IF THEY'RE USING 25%. THERE IS A MISUNDERSTANDING WHAT YOU'RE SAYING.

[03:20:02]

WELL, IF YOU KNOW THAT YOU'RE ASKING ME TO JUSTIFY OR EXPLAIN, I'M TRYING TO EXPLAIN TO YOU.

THAT'S JUST THE FUND BALANCE. IF YOU LOOK AT THE ALL FUND SUMMARY AT THE FRONT OF THE BUDGET BOOK, IT WILL SHOW YOU THE FUND BALANCE OF EACH ONE OF OUR FUNDS.

SO I JUST DID A SEARCH FOR RESERVE IN OUR, IN OUR BUDGET ONLINE PDF, WHICH I APPRECIATE.

AND IT'S ONLY, IT'S ONLY IN THERE ONCE, SO I DON'T KNOW IF IT'S IN THERE AS SOMETHING ELSE, BUT THE WORD RESERVE IS ONLY IN THERE ONCE. I DO WANT TO SAY IF YOU KNOW COUNCIL MEMBER HARRIS, IF YOU HAVE AN ISSUE WITH THE 25%, THAT'S SOMETHING THAT COULD BE PLACED ON A BALLOT.

AND THEN WE CAN LET THE RESIDENTS DECIDE WHAT THEY WANT.

BUT I MEAN, TO TO GET KIND OF FRUSTRATED OR TO SHARE YOUR CONCERNS WITH EVEN COUNCIL OR THE INTERIM CITY MANAGER.

I DON'T THINK IT'S QUITE FAIR BECAUSE NONE OF US CONTROL THAT AT THIS POINT.

WE JUST HAVE TO DO. I'M NOT ASKING FOR CONTROL.

I'M ASKING FOR, YOU KNOW, WHAT, WHAT DO COMMITTEES DO? IS THAT DO THEY DO 25% IF THAT'S BEEN IN OUR CHARTER, IS THAT WAS THAT ARBITRARY? IS THAT SOMETHING WE NEED TO LOOK AT? IS IT REALISTIC FOR US TO HAVE A 25% RESERVE FUND? THOSE ARE JUST QUESTIONS, BUT I THINK THEY RELATE TO THE BUDGET DRAMATICALLY RELATE TO THE BUDGET? IN FACT, SO IT WOULD HELP TO HAVE AN ANSWER TO SOME OF THOSE QUESTIONS.

YEAH. IF YOU GUYS COULD. I MEAN, NEXT TIME WE COULD JUST SEND AN EMAIL BEFORE AND SAY, HEY, THESE ARE QUESTIONS BECAUSE I DON'T KNOW IF ANYBODY'S GOING TO KNOW OFF THE TOP OF THEIR HEAD. I KNOW I'VE GOOGLED IT A COUPLE TIMES AND YOU LITERALLY HAVE TO GO INTO A CITY'S, I THINK I DID, BUT AS A CITY'S CHARTER OR CITY'S ORDINANCES, AND IT'LL SAY THAT IN THERE.

AND SO, MAYOR, WHAT WE'LL DO ON MONDAY MORNING, WE'LL HAVE ONE OF THE BUDGET ANALYSTS CALL ALL OUR TEN PEER CITIES, OKAY, AND FIND OUT EXACTLY WHAT THEIR RESERVE REQUIREMENTS ARE, IF THERE'S ONE, AND WHICH FUNDS ARE THOSE APPLICABLE TO.

OKAY, I APPRECIATE THAT. AND THEN WHEN WE HAVE THAT COMPILED, WE'LL SEND IT BY EMAIL TO THE ENTIRE COUNCIL.

OKAY. EXCELLENT. THANK YOU. THAT'LL AND WE WILL ALSO START POSTING Q AND A FROM COUNCIL ON RELATED TO BUDGET WHERE THE BUDGET IS FILED.

THAT'D BE GREAT. OKAY. CAN I MAY I ASK COUNCIL MEMBER HARRIS, WHAT WOULD YOU DO WITH THAT INFORMATION? SAY, IF FOR SOME REASON THERE WAS JUST A 10% RESERVE IN BUDA WHAT WOULD YOU HOW WOULD YOU LIKE THE CITY OF KYLE TO PROCEED WITH THEIR RESERVE? WELL, I MEAN, THAT'S THE SAME WITH USING OUR CITY'S FOR ANY OF OUR OTHER BUDGET ITEMS LIKE PAYROLL.

I THINK WE'D HAVE TO LOOK AT, YOU KNOW, IS THAT REALISTIC FOR US? AND MAY OR MAY NOT BE, BUT IT SEEMS LIKE IT'S A HIGH AMOUNT.

OKAY, THAT WE'RE SETTING ASIDE. WELL, I THINK IT'S 25% IS HIGH, DEPENDING ON HOW MUCH WE HAVE AS FAR AS A BUDGET, BECAUSE, YOU KNOW, IF WE HAD A $2 MILLION BUDGET, 25% WOULD BE PEANUTS.

SO YEAH, I THINK BECAUSE WE HAVE A HIGH BUDGET.

AND A LOT OF THAT, I THINK IF I REMEMBER CORRECTLY, THAT AMOUNT THAT WE HAVE ALSO INCLUDES NON-TANGIBLE THINGS LIKE WE CAN'T CASH IN LIKE REAL ESTATE AND OTHER THINGS. THE $400 MILLION BUDGET, I DON'T I REMEMBER READING IT SOMEWHERE LIKE WHAT WE OWN IS EVERYTHING WE OWN IS INCLUDED IN THAT. SO MEANING REAL ESTATE OR, YOU KNOW, THINGS THAT WE CAN'T CHANGE INTO FOR CASH.

AM I NOT REMEMBERING THAT? RIGHT? YOU'RE REMEMBERING FROM THE AUDIT DISCUSSION.

YES. OKAY. AND THAT'S FOR RESTRICTED FUNDS. THAT'S A VERY DIFFERENT THING THAN WHAT WE'RE TALKING HERE ABOUT.

THE BUDGET. THE BUDGET RESERVE IS CASH EQUIVALENT, RIGHT.

I UNDERSTAND THE CITY CHARTER WANTS TO MAKE SURE IS IF THE REVENUES DRIED UP, WE WERE AT LEAST COVERING 180 DAYS WORTH OF EXPENDITURES.

OH. SO 25% TYPICALLY EQUALS TO ABOUT 180% OF OUR GENERAL FUND OPERATING EXPENSES.

WITH EVERYTHING DISAPPEARING ALL AT ONCE. IT'S POSSIBLE.

YEAH, WE'RE PRETTY CLOSE. NO WE'RE NOT. I MEAN, AT ONE POINT, WE HAD $9 MILLION IN OUR RESERVE.

THAT'S THAT'S KIND OF SCARY BECAUSE IT'S FOR AN EMERGENCY.

AND FOR EXAMPLE, IF A PIPELINE BUST AND OUR PAYROLL EVERY TWO WEEKS IS $2 MILLION, SO YOU CAN JUDGE FOR EVERY TWO WEEKS, THAT'S FOR THE ENTIRE CITY. I'M JUST SAYING 25% MAY OR MAY NOT BE A REALISTIC AMOUNT FOR US.

AND I WOULD LIKE TO KNOW WHAT OUR CITY'S WE'LL COMPILE THAT INFORMATION FOR YOU.

THANK YOU. OKAY. SORRY WE GOT SIDETRACKED. GO AHEAD.

OH, YEAH. I ASKED YOU, I ASKED YOU FOR THAT. SO JUST TO BE CLEAR, THOSE TWO PROGRAMS ARE LIKE TWO YEARS OLD.

[03:25:02]

YEAH. OKAY. I JUST WANT TO MAKE SURE. THANK YOU. ALL RIGHT.

GOOD EVENING. COUNCIL. FOR THE RECORD, AGAIN, I'M ANDY ALEJANDRO, THE INTERIM DEPUTY DIRECTOR OF FINANCE.

BEFORE REVIEWING THE BUDGET ITSELF, I WOULD LIKE TO SPEND A FEW MINUTES DISCUSSING HOW THE CITY'S FINANCES ARE ORGANIZED.

THE CITY USES A FUND ACCOUNTING STRUCTURE, WHICH IS DESIGNED TO PROVIDE TRANSPARENCY, ACCOUNTABILITY AND PROPER STEWARDSHIP OF PUBLIC FUNDS.

THIS APPROACH ALLOWS US TO TRACK REVENUES AND EXPENDITURES SEPARATELY BASED ON THEIR INTENDED PURPOSE, AND ENSURES COMPLIANCE WITH STATE LAWS, GRANT REQUIREMENTS, CITY CHARTER AND CITY FINANCIAL POLICIES.

AS YOU CAN SEE HERE, THE FUND ACCOUNTABILITY PROVIDES FOR ACCOUNTABILITY, TRANSPARENCY, AND SEPARATION OF FUNDS BASED ON THEIR PURPOSE AND INTENT.

CURRENTLY WE. WE. THIS YEAR, FOR FISCAL YEAR 2627, WE ARE GOING TO BUDGET FOR 60 FUNDS, AND THE TYPE OF FUNDS THAT WE HAVE ARE THE GOVERNMENTAL FUNDS. AND THESE ARE USED TO TRACK USE TO ACCOUNT FOR AND TRACK TAX SUPPORTED FUNCTIONS AND ACTIVITIES.

WE ALSO HAVE ENTERPRISE FUNDS WHICH ARE USED TO UTILIZE TO ACCOUNT FOR AND TRACK CITY'S BUSINESS TYPE ACTIVITIES AND FUNCTIONS.

THESE ARE MAINLY USER FEES AND CHARGES FOR SERVICES SUCH AS THE UTILITIES LIKE WATER, WASTEWATER AND STORM DRAINAGE.

AND THEN OUR THIRD TYPE OF FUND IS FIDUCIARY FUNDS.

AND SO THAT'S OUR TRUST FUNDS. THIS IS THE OUR FUND STRUCTURE WHICH INCLUDES OUR 2627 BUDGETS.

SO WE HAVE ALL THE GOVERNMENTAL FUNDS GROUPED TOGETHER.

AS I PREVIOUSLY STATED, PROPRIETARY FUNDS ARE THE ENTERPRISE FUNDS.

AND THEN OUR FIDUCIARY ARE AND THAT'S ONLY OUR OTHER POST-EMPLOYMENT FUNDS.

WE HAVE THE FOUR MAJOR FUNDS, WHICH IS THE GENERAL FUND, WATER, WASTEWATER AND STORM DRAIN.

THOSE ARE HIGHLIGHTED AND COLORED IN BLUE. THE CIP FUNDS, WHICH IS THE ROAD BONDS, THE GENERAL FUND, CIP, THOSE ARE ALL IN YELLOW. AND THEN EVERYTHING IN GREEN WILL BE THE OTHER FUNDS.

WHICH WE HAVE A LOT OF. SO WHEN WE LOOK AT THE VERSES, THAT'S HOW MUCH MONEY IS IN THE FUND OR THAT'S HOW MUCH MONEY IS EXPENSE.

THAT'S THE EXPENSES THAT WE HAVE IN THOSE FUNDS.

OUTSTANDING EXPENSES IN THE PROPOSED BUDGET. SOME OF THAT'S CASH AND SOME OF IT IS IS DEBT.

IT'D BE DEBT FOR SOME OF THE TERMS. YEAH. TERMS NUMBER TWO IS GOING TO HAVE SOME DEBT EXPENSES IN THERE. OKAY.

THANK YOU. THANK YOU. THANK YOU. THANK YOU VERY MUCH, ANDY.

OKAY. NOW THAT WE'VE DISCUSSED THE ORGANIZATIONAL CHANGES, RECURRING COST CONTAINMENT MEASURES IN THE CITY'S BUDGET AND FUND STRUCTURES AND SPECIFICALLY HOW EACH HAS SHAPED THIS RECOMMENDED BUDGET, I'D LIKE TO TRANSITION INTO THE FIVE YEAR FINANCIAL FORECAST.

NOW, THE FORECAST IS ONE OF THE MOST IMPORTANT FINANCIAL TOOLS BECAUSE IT ALLOWS COUNCIL TO EVALUATE NOT ONLY NEXT YEAR'S BUDGET, BUT ALSO THE LONG TERM FINANCIAL IMPLICATIONS OF TODAY'S DECISIONS.

THE NEXT SEVERAL SLIDES WILL DEMONSTRATE HOW THE COST CONTAINMENT STRATEGIES WE'VE DISCUSSED THIS EVENING SIGNIFICANTLY IMPROVED THE CITY'S FINANCIAL OUTLOOK OVER THE NEXT FIVE FISCAL YEARS, WHILE MAINTAINING STRUCTURAL BALANCE AND PROTECTING THE CITY'S LONG TERM FISCAL SUSTAINABILITY.

THIS PORTION OF THE PRESENTATION LOOKS BEYOND THE UPCOMING FISCAL YEAR AND ASKS A MUCH BROADER QUESTION.

ARE THE FINANCIAL DECISIONS WE ARE MAKING TODAY SUSTAINABLE OVER TIME? ABOUT A BUDGET BALANCE IS ONE FISCAL YEAR, BUT A FINANCIAL FORECAST EVALUATES THE LONG TERM DIRECTION OF THE ORGANIZATION.

IT HELPS US UNDERSTAND EMERGING RISKS BEFORE THEY BECOME FINANCIAL PROBLEMS. IT ALLOWS US TO EVALUATE THE AFFORDABILITY OF FUTURE COMMITMENTS AND PROVIDES TRANSPARENCY REGARDING THE CITY'S ANTICIPATED FINANCIAL CONDITION AS WE MOVE THROUGH THESE NEXT SEVERAL SLIDES. I ENCOURAGE YOU TO FOCUS LESS ON INDIVIDUAL NUMBERS AND MORE ON THE TRENDS THAT THEY REPRESENT.

EVERY ASSUMPTION HAS BEEN DEVELOPED CONSERVATIVELY USING ECONOMIC CONDITIONS, HISTORICAL PERFORMANCE, AND LEADERSHIP'S BEST PROFESSIONAL JUDGMENT. THE FORECAST IS NOT INTENDED TO PREDICT THE FUTURE WITH CERTAINTY.

RATHER, IT IS A DECISION MAKING TOOL THAT HELPS ENSURE THE RECOMMENDED BUDGET SUPPORTS LONG TERM FINANCIAL SUSTAINABILITY WHILE PRESERVING FLEXIBILITY FOR FUTURE COUNCILS.

THE CHARTS YOU WILL SEE COMPARE WHERE THE CITY WAS HEADED BEFORE LEADERSHIP INTERVENTIONS AND WHERE WE PROJECT THE CITY WILL BE AFTER IMPLEMENTING RECOMMENDED ORGANIZATIONAL CHANGES AND COST CONTAINMENT MEASURES. TOGETHER, THEY DEMONSTRATE WHY THE ACTIONS CONTAINED WITHIN THIS BUDGET WERE NECESSARY TO BEGIN IMPLEMENTATION IN FY 26, AND HOW THEY IMPROVE THE CITY'S LONG TERM FINANCIAL OUTLOOK.

BEFORE DISCUSSING THE INDIVIDUAL FUNDS, HOWEVER, I'D LIKE TO BRIEFLY EXPLAIN WHY WE PREPARE A FIVE YEAR FINANCIAL FORECAST EVERY YEAR.

FOR SOME CONTEXT, FORECASTING IS CONSIDERED ONE OF THE MOST IMPORTANT FINANCIAL LEADERSHIP PRACTICES IN LOCAL GOVERNMENT BECAUSE IT ALLOWS US TO LOOK BEYOND A SINGLE BUDGET CYCLE,

[03:30:04]

FORECASTING ALLOWS US TO IDENTIFY STRUCTURAL IMBALANCES EARLY AND MAKE THOUGHTFUL, DELIBERATE POLICY DECISIONS.

OUR FORECAST INCORPORATES HISTORICAL FINANCIAL PERFORMANCE, CURRENT YEAR ESTIMATES, ADOPTED FINANCIAL POLICIES, ANTICIPATED ECONOMIC CONDITIONS, CONTRACTUAL OBLIGATIONS, INFLATIONARY TRENDS, STAFFING ASSUMPTIONS, CAPITAL NEEDS, AND KNOWN OPERATIONAL CHANGES.

THE ASSUMPTIONS ARE INTENTIONALLY CONSERVATIVE WHEN UNCERTAINTY EXISTS.

OUR PHILOSOPHY IS TO AVOID OVERSTATING REVENUES AND TO RECOGNIZE EXPENDITURE PRESSURES AS EARLY AS PRACTICABLE.

THAT APPROACH PROVIDES GREATER CONFIDENCE THAT THE CITY'S FINANCIAL POSITION WILL REMAIN STABLE, EVEN IF ECONOMIC CONDITIONS SOFTEN. THE NEXT SEVERAL SLIDES CONTINUE OUR DISCUSSION OF THE GENERAL FUND BY ILLUSTRATING HOW THE RECOMMENDED BUDGET RESTORES STRUCTURAL BALANCE OVER THE FORECAST PERIOD, WHILE ANNUAL CONDITIONS WILL CONTINUE TO FLUCTUATE AS THE ECONOMY CHANGES.

THE RECOMMENDED ACTIONS SIGNIFICANTLY REDUCE THE LONG TERM GAP BETWEEN RECURRING REVENUES AND RECURRING EXPENDITURES.

THIS GIVES THE CITY GREATER FLEXIBILITY TO RESPOND TO UNFORESEEN EVENTS WHILE CONTINUING TO INVEST IN CORE MUNICIPAL SERVICES.

AS ALWAYS, THIS FORECAST SHOULD BE VIEWED AS STATIC, SHOULD NOT BE VIEWED AS STATIC.

RATHER, PARDON ME, IT WILL BE UPDATED ANNUALLY AS ACTUAL FINANCIAL RESULTS BECOME AVAILABLE AND AS COUNCIL ESTABLISHES FUTURE POLICY PRIORITIES.

OUR COMMITMENT IS TO CONTINUOUSLY MONITOR THESE TRENDS AND RECOMMEND ADJUSTMENTS BEFORE FINANCIAL CHALLENGES BECOME STRUCTURAL PROBLEMS. WE BEGIN, OF COURSE, WITH THE GENERAL FUND BECAUSE IT IS THE CITY'S PRIMARY OPERATING FUND, AS WE'VE STATED SEVERAL TIMES THIS EVENING, AND SUPPORTS NEARLY EVERY CORE MUNICIPAL SERVICE OUR RESIDENTS RELY UPON EACH DAY, INCLUDING PUBLIC SAFETY PARKS, LIBRARY SERVICES, STREETS, PLANNING, CODE ENFORCEMENT, ADMINISTRATION, AND CUSTOMER SERVICE. BECAUSE OF ITS IMPORTANCE, MAINTAINING A STRUCTURALLY BALANCED GENERAL FUND REMAINS ONE OF LEADERSHIP'S HIGHEST PRIORITIES. THE ASSUMPTIONS AND FORECAST YOU WILL SEE REFLECT OUR COMMITMENT TO PROTECTING ESSENTIAL SERVICES WHILE RESTORING LONG TERM FINANCIAL SUSTAINABILITY.

TURNING FIRST TO REVENUES FOR THE GENERAL FUND.

EACH ASSUMPTION SHOWN ON THIS SLIDE REFLECTS LEADERSHIP'S CONSERVATIVE OUTLOOK. AS I'VE STATED, PROPERTY VALUATION GROWTH ASSUMES A SLIGHT DECLINE INITIALLY BEFORE GRADUAL RECOVERY.

RECOGNIZING CURRENT MARKET CONDITIONS, SALES TAX GROWTH REMAINS POSITIVE BUT MODEST.

ACKNOWLEDGING CONTINUED ECONOMIC ACTIVITY WHILE AVOIDING OVERLY OPTIMISTIC EXPECTATIONS.

DEVELOPMENT RELATED REVENUES, THE THIRD LARGEST REMAINED FLAT IN THE NEAR TERM BECAUSE PERMIT ACTIVITY.

AS WE'VE SAID MULTIPLE TIMES IN MULTIPLE PRESENTATIONS HAS REMAINED MODERATE FROM PREVIOUS HIGHS.

INTEREST, EARNINGS AND MISCELLANEOUS REVENUES ARE PROJECTED TO RECOVER GRADUALLY, WHILE SCHEDULED REPAYMENTS TO NUMBER TWO CONTINUE TO STRENGTHEN RECURRING REVENUES.

COLLECTIVELY, THESE ASSUMPTIONS PROVIDE A PRUDENT FOUNDATION FOR LONG TERM PLANNING WITHOUT RELYING UPON REGRESSIVE, AGGRESSIVE REVENUE GROWTH. NOW LET'S DISCUSS EXPENDITURE ASSUMPTIONS FOR THE GENERAL FUND.

ON THE EXPENDITURE SIDE, WE RECOGNIZE THAT INFLATIONARY PRESSURES CONTINUE TO AFFECT NEARLY EVERY ASPECT OF MUNICIPAL OPERATIONS.

WE'VE STATED THAT IN SEVERAL PRESENTATIONS AND MANY TIMES THIS EVENING MEDICAL INSURANCE COSTS, FOR EXAMPLE, RETIREMENT CONTRIBUTIONS, CONTRACTUAL SERVICES, FUEL, UTILITIES, CONSTRUCTION MATERIALS AND COMMODITIES ALL CONTINUE TO INCREASE FASTER THAN HISTORICAL AVERAGES. I DON'T THINK THAT'S A SURPRISE TO ANYONE.

THE FORECAST ALSO RECOGNIZES CONTRACTUAL OBLIGATIONS UNDER THE MEET AND CONFER AGREEMENT FOR SWORN PERSONNEL, WHILE PLANNING FOR FUTURE MERIT ADJUSTMENTS. FUTURE MERIT ADJUSTMENTS FOR CIVILIAN EMPLOYEES BEGINNING IN LATER YEARS SHOULD FINANCIAL CONDITIONS ALLOW.

IMPORTANTLY, WE HAVE NOT ASSUMED SIGNIFICANT NEW ONGOING SPENDING BEYOND WHAT IS NECESSARY TO REMAIN TO MAINTAIN CORE SERVICES.

OKAY. ALL RIGHT, HERE WE GO. GENERAL FUND. THIS CHART ILLUSTRATES WHERE THE GENERAL FUND WAS PROJECTED TO GO BEFORE LEADERSHIP IMPLEMENTED CORRECTIVE ACTIONS.

NOW YOU'VE SEEN THIS SLIDE MULTIPLE TIMES. WE PRESENTED IT MAY 16TH.

I PRESENTED IT SINCE THAT TIME. THIS IS THE SAME SLIDE THAT YOU WILL REMEMBER BROUGHT US DOWN TO THE 10.3 ESTIMATED ENDING FUND BALANCE.

OKAY, SO I WON'T TAKE YOU THROUGH EACH OF THOSE LINES. I'VE DONE THAT COUNTLESS TIMES.

BUT WHAT WE WANT TO SHOW YOU, WHAT'S VERY IMPORTANT TONIGHT, AND WE'LL DO IT FOR ALL FOUR MAJOR FUNDS, IS THIS IS GOING TO ILLUSTRATE, WE WANT TO EMPHASIZE HERE THAT THIS IS THE DIFFERENCE.

SO THIS IS BEFORE COST CONTAINMENT MEASURES. AND I'M GOING TO SHOW YOU IN JUST A SECOND, THE FIVE YEAR FINANCIAL FORECAST AFTER COST CONTAINMENT MEASURES WERE IMPLEMENTED FOR FY 26. AND HOW THAT FAVORABLY IMPACTS THE FIVE YEAR FINANCIAL FORECAST.

I WANT TO EMPHASIZE THAT THIS IS NOT THE RECOMMENDED BUDGET.

AGAIN, AS I STATED, AND INSTEAD THIS REPRESENTS THE FINANCIAL TRAJECTORY THAT WOULD HAVE OCCURRED IF SPENDING CONTINUED ON ITS PREVIOUS PATH.

[03:35:05]

THIS BASELINE ILLUSTRATES WHY ORGANIZATIONAL RESTRUCTURING, EXPENDITURE REDUCTIONS, OPERATIONAL EFFICIENCIES AND OTHER COST CONTAINMENT MEASURES WERE NECESSARY TO BEGIN IN FY 26. AS WE BEGAN AND BROUGHT FORWARD FOR YOU ALL IN A PREVIOUS PRESENTATION IN DETAIL.

ALL RIGHT. LET'S TALK ABOUT AFTER. SAME FORMAT, SAME FORMULA, SAME LAYOUT HERE.

THIS IS AFTER COST CONTAINMENT FOR FY 26 AND HOW IT IMPACTS 27 THROUGH FISCAL YEAR 31.

NOW THIS SLIDE DEMONSTRATES THE IMPACT OF THOSE COST CONTAINMENT ACTIONS THAT WE MENTIONED BY IMPLEMENTING RECURRING COST CONTAINMENT MEASURES RESTRUCTURING OPERATIONS, ELIMINATING REDUNDANCIES, CAREFULLY MANAGING VACANCIES AND REDUCING ONGOING EXPENDITURES.

THE CITY'S LONG TERM OUTLOOK IMPROVES SUBSTANTIALLY.

YOU CAN SEE THE BOTTOM LINE. YOU CAN SEE THE ESTIMATED FUND BALANCE COMPARED TO THE BEFORE SLIDE.

IT'S VERY IMPORTANT TO UNDERSTAND THE DIFFERENCE WHILE CONTINUED DISCIPLINE WILL STILL BE REQUIRED.

THE RECOMMENDED BUDGET PLACES THE GENERAL FUND ON A SIGNIFICANTLY.

DID I JUST. DID IT MOVE. ON A SIGNIFICANTLY MORE SUSTAINABLE PATH? OUR OBJECTIVE IS NOT SIMPLY TO BALANCE FISCAL YEAR 27.

LET ME BE CLEAR. WE'RE NOT JUST LOOKING AT FISCAL YEAR 27, BUT TO ESTABLISH A FINANCIAL FRAMEWORK THAT ALLOWS FUTURE COUNCILS TO CONTINUE PROVIDING ESSENTIAL SERVICES WHILE MAINTAINING HEALTHY RESERVES AND ADAPTING TO CHANGING ECONOMIC CONDITIONS.

AGAIN, I'LL TAKE YOU. YOU'LL SEE THE CURRENT YEAR ESTIMATE.

WE'VE TALKED ABOUT THAT. THAT IS WITH COST CONTAINMENT MEASURES.

YOU CAN THEN SEE HOW THE ENDING FUND BALANCE BECOMES THE BEGINNING FUND BALANCE FOR THE NEXT FISCAL YEAR UP AT THE TOP, AND YOU CAN SEE HOW MUCH MORE FAVORABLY THE FORECAST IS FOR THE NEXT FIVE YEARS GOING FORWARD FOR THE GENERAL FUND.

SO YOU CAN YOU CAN POINT OUT THE FUND BALANCE LINE BEFORE AND AFTER.

RIGHT. SO THE ESTIMATED ENDING FUND BALANCE FOR CURRENT YEAR ESTIMATE IS HERE.

IT'S 10.3. FOR YEAR ONE. IT WOULD HAVE BEEN THE 2.5.

FOR EXAMPLE FOR FY 27. WHEN WE'RE LOOKING AT THE AFTER WITH COST CONTAINMENT MEASURES FOR FY 26, WE'RE ENDING. ESTIMATED ENDING FUND BALANCE IS THE 18 MILLION.

AT YEAR ONE IT'S A 20.4 MILLION. SO IT'S IMPORTANT TO NOTE HERE.

COUNCIL THAT IF WE HAD STAYED ON THE SAME TRAJECTORY WITHOUT ANY COST CONTAINMENT MEASURES IN THE CURRENT FISCAL YEAR THAT WE DID SO AGGRESSIVELY.

IF YOU LOOK AT THE FORECAST YEAR, NUMBER ONE, WE'RE DROPPED DOWN TO 2.5 MILLION FUND BALANCE, AND EVERY YEAR AFTER THAT HAS A NEGATIVE FUND BALANCE THAT COMPOUNDS FROM ALMOST 7 MILLION TO 40 MILLION NEGATIVE IN YEAR NUMBER FIVE. AND NOW LOOK AT THE AFTER FORECAST.

IF YOU WOULD FLIP TO THE NEXT SLIDE. WE HAVE INCREASED THE FUND BALANCE IN THE CURRENT YEAR FROM 10 MILLION TO 18 MILLION.

AND LOOK AT THE FIVE CONSECUTIVE YEARS. IT RANGES ANYWHERE FROM 20 MILLION TO 29 MILLION.

THAT'S THE DIFFERENCE WE'RE TALKING ABOUT AND THE FINANCIAL STABILITY.

AND TO FOLLOW UP ON THIS POINT, IT'S IT IS EXACTLY WHY WE WERE ABLE TO IDENTIFY THESE CHALLENGES.

I'M SORRY, I'M TOO CLOSE TO THE MIC MAY CAUSE CONTAINMENT STRATEGIES PUT THEM IN PLACE FOR FY 26.

IT WAS MOST IMPORTANT TO DO IT IMMEDIATELY, AS SOON AS WE COULD, WHICH IS WHAT WE DID. WAITING UNTIL 27.

WE WOULD NOT, WE WOULDN'T BE HAVING THE SAME INFORMATION, THE SAME TRAJECTORY, THE SAME OUTLOOK.

OKAY. COUNCIL MEMBER ZAPATA. I'M GUESSING THAT BECAUSE YOU SEE IN YEAR FOUR, LIKE THOSE PROJECTIONS, IT STARTS TO DECREASE A LITTLE BIT. WHEN ARE WE ASSUMING THAT WE FUND SOME OF THE FROZEN POSITIONS? BECAUSE I THINK ONE OF THE REASONS WHY YOU ALSO SEE THAT OUR RESERVES GO UP IS BECAUSE OUR OPERATING COSTS SINK, RIGHT? SO THAT MEANS LIKE THE MINIMUM AMOUNT CHANGES, RIGHT? IT'S NOT JUST ONE STANDARD THAT WE HAVE TO MEET. IT'S A FLUCTUATING NUMBER.

SO WHEN ARE WE ASSUMING THAT WE BRING STAFF BACK ONLINE.

OKAY. SO I WOULD TAKE YOU BACK TO THE GROWTH ASSUMPTIONS.

RIGHT. FOR THE EXPENDITURES AND ALSO FOR THE REVENUES.

YEAH. SO THAT YOU CAN SEE HERE SORT OF WHAT WE ASSUME TO BE FOR EACH OF THE YEARS, ONE THROUGH FIVE FOR ALL OF THOSE.

I THINK WHAT YOUR QUESTION THOUGH IS, IS FOR POSITIONS THAT WERE FROZEN OR UNFUNDED, IS THAT WHAT YOU'RE ASKING FOR,

[03:40:02]

RIGHT. I'LL LET INTERIM CITY MANAGER GIVE HIS FULL MORE ROBUST ANSWER.

BUT I WOULD SAY WHAT WE WERE ABLE TO DO IN THIS BUDGET IS REALLY LOOK AT REDUNDANCIES AND FIND EFFICIENCIES, RIGHT? SO DEPENDING ON OPERATIONAL NEEDS, THAT'S HOW THAT WOULD BE BROUGHT BACK IN.

YEAH. WELL SOME WELL A LOT OF THOSE UNFUNDED POSITIONS AREN'T ELIMINATED BECAUSE THEY'RE NOT REDUNDANCIES, RIGHT. LIKE THEY'RE KEPT BECAUSE WE DO NEED THEM.

THEY'RE JUST FROZEN RIGHT NOW SO WE CAN HELP BALANCE THE BUDGET.

SO I'M JUST BECAUSE THAT WAS ABOUT WHAT 2.45 MILLION IN THAT COST.

SO WHEN DOES THAT START REFLECTING IS MY IS WHAT I'M WANTING TO KNOW.

SO WHEN WE DO FINANCIAL FORECASTS COUNCIL MEMBER WE DON'T GO BY SPECIFIC POSITIONS OR AMOUNT OF OFFICE SUPPLIES.

WE USE GENERAL COST ASSUMPTIONS, GROWTH ASSUMPTIONS, REVENUE ASSUMPTIONS, THOSE 24 FROZEN POSITIONS. WE'RE NOT QUITE DONE WITH THOSE. WE DON'T KNOW IF WE NEED THEM NEXT YEAR OR NOT.

WE'RE STILL ANALYZING THOSE. BUT FOR SURE WE'RE NOT GOING TO FUND THEM NEXT YEAR.

IF A CITY DEPARTMENT IDENTIFIES ONE OF THOSE POSITIONS TO BE CRITICAL AND THEY DESPERATELY NEED IT, THEY'RE GOING TO HAVE TO FIND MONEY IN THEIR BUDGET TO PAY FOR IT.

AND IF THEY CAN'T, IT STILL STAYS FROZEN. THEY HAVE TO HAVE A BUSINESS CASE.

WHY THEY NEED THAT POSITION. I KNOW YOU'RE GOING TO THAT LIBRARIES PART TIME POSITION, BUT THAT'S OKAY.

THOSE POSITIONS WILL REMAIN FROZEN NEXT YEAR UNTIL THERE IS A BUSINESS CASE TO FUND THOSE.

I MEAN, BUT I THINK THERE ALREADY IS A BUSINESS CASE.

I THINK THAT THAT'S WHAT I'M TRYING TO SAY, IS THAT SOME OF THOSE POSITIONS ARE LIKE DIRECT SERVICE POSITIONS.

AND SO THOSE ARE THE ONES THAT I'M MOST CONCERNED ABOUT BECAUSE THOSE DO HAVE AN IMPACT BECAUSE ESSENTIALLY, WE'RE REQUIRING OUR STAFF TO BE ABLE TO MAINTAIN OPERATIONS WITH LESS STAFF TO BE ABLE TO SUPPORT SOME OF IT.

SO I JUST WANT TO KNOW, HOW DO WE ACCOUNT FOR THOSE? BECAUSE WE, OUR EXCESS OF MINIMUM REQUIRED INCREASES ENOUGH TO BE ABLE TO UNFREEZE THOSE POSITIONS, YOU KNOW, WITHIN THAT FIVE YEAR FINANCIAL FORECAST.

SO I WOULD JUST LIKE TO HAVE A BETTER UNDERSTANDING OF WHAT THAT PLAN IS.

SO 28 FISCAL YEAR 28 BUDGET WILL IDENTIFY WHICH POSITIONS ARE GOING TO GET FUNDED OR WHICH POSITIONS WILL BE ADDED.

NOT IN THE FIVE YEAR FORECAST. THIS IS JUST A TREND ANALYSIS BASED ON GENERAL ASSUMPTIONS BASED ON IF WE JUST KEPT EVERYTHING THE WAY IT IS RIGHT NOW. NOT REALLY. IF YOU LOOK AT THE GROWTH ASSUMPTIONS WE JUST SHOWED YOU, THERE IS A COMPOUNDING INCREASE BUILT IN. YEAH. BUT THAT'S LIKE NOT THAT'S NOT INCLUDING NEW PROJECTS.

IT'S NOT ANY OF THAT. THAT'S, THAT'S JUST MAINTAINING WHAT WE HAVE NOW.

THAT'S WHAT I'M TRYING TO SAY. SO I'M LOOKING AT THE UNFUNDED POSITIONS AND I SEE LIKE ANIMAL SERVICES DIRECTOR OF ANIMAL SERVICES, LIKE WE CAN'T REALLY SAY WHEN WE'RE GOING TO NEED THAT.

SO I DON'T KNOW IF IT'S FAIR TO BE LIKE, OH, WE'RE GOING TO GET THE ASSISTANT DIRECTOR OF LIBRARY IN TWO YEARS OR IN A YEAR.

I THINK, YOU KNOW, I THINK AS WE GO, BUT SOME OF THOSE ARE DIRECT SERVICE.

I AGREE. AND AS WE GO THROUGH THIS BUDGET, HE'S JUST PRESENTING IT.

AND AS WE SIT DOWN AND TALK ABOUT IT, YOU CAN ALWAYS SAY, HEY, I THINK WE NEED THIS POSITION.

AND COLLECTIVELY AS A COUNCIL, WE CAN DECIDE WHETHER WE MOVE FORWARD WITH THAT OR NOT.

SO IF ONE OF THOSE 24 POSITIONS IS IMPORTANT TO YOU, I WOULD SUGGEST SUGGEST BRINGING IT UP DURING A COUNCIL BUDGET MEETING AND HAVING THAT DISCUSSION WITH THE COUNCIL. WELL, WHAT I'M JUST TRYING TO SAY IS THAT THE FIVE YEAR FORECAST DOESN'T ACCOUNT FOR ANY OF THAT.

IT ONLY ACCOUNTS FOR MAINTAINING WHAT WE HAVE NOW.

OKAY. SO LIKE, I DON'T WANT US TO LOOK AT THIS AND THINK LIKE, OH, THIS IS FOR SURE.

LIKE THE GIVEN ABOUT WHAT, WHAT WILL HAPPEN? BECAUSE IF WE DECIDE THAT THERE ARE CERTAIN POSITIONS THAT ARE NEEDED OR CERTAIN PROJECTS THAT ARE REQUIRED, THAT WE REALLY FEEL STRONGLY ABOUT, THAT IS GOING TO CHANGE.

AND IT DOES LOOK LIKE THERE'S FLEXIBILITY IN SOME OF THAT BEGINNING AT CERTAIN YEARS.

SO I JUST WANT TO MAKE SURE THAT THAT IS ABUNDANTLY CLEAR, THAT IT'S NOT THAT WE HAVE TO KEEP SOLELY WHAT WE HAVE RIGHT NOW.

PREPACKAGED ALREADY SAID AND DONE. SIMPLY ACCOUNT FOR GROWTH.

AND THEN THAT'S, YOU KNOW, NO. AND THAT'S THE BEAUTY OF THESE BUDGET MEETINGS.

LIKE THIS IS MY FOURTH ONE. AND NOTHING IN THE FIRST MEETING IS EVER SET IN STONE.

I'VE SEEN PEOPLE, I'VE SEEN SHANE IRBY. IF ANYBODY EVER GOES BACK AND WATCHES THE VIDEO WITH SHANE IRBY AND TRAVIS MITCHELL AND THE WAY

[03:45:07]

IT WAS AMAZING. AND SO IT WAS THE 11TH HOUR. AND USUALLY AT THE 11TH HOUR, THERE'S ALWAYS GOING TO BE CHANGES MADE.

WE HOPE NOT. WE HOPE COLLECTIVELY AS A COUNCIL, WE CAN DIRECT OUR INTERIM CITY MANAGER TO THE RIGHT DIRECTION.

HOPEFULLY BY, YOU KNOW, THE LAST MEETING, IF NOT PRIOR TO.

BUT YEAH, JUST TO BE VERY CLEAR, THIS IS VERY GREEN.

THIS IS A BUDGET THAT WE'RE LOOKING AT. HE'S PRESENTING.

THEN WE CAN COME BACK AS A COUNCIL, MAKE SOME CHANGES OR HAVE A DISCUSSION OR NOT MAKE CHANGES DEPENDING ON WHICH WAY WE WANT TO GO.

BUT YEAH, SO YEAH, FOR FIVE YEARS. HE'S. I MEAN, MR. MOHIT MAY NOT EVEN BE HERE NEXT YEAR. SO THIS I FEEL LIKE, YOU KNOW, THE FIVE YEARS OUT.

NO, I'M NOT SAYING HE'S GONNA I'M JUST SAYING HE MIGHT HAVE BEEN LIKE, I'M DONE WITH THIS PLACE.

I DON'T KNOW, BUT YOU KNOW, WE'RE GOING TO DISCUSS AN INTERIM CITY MANAGER COMING UP PROBABLY AFTER THE ELECTION.

YOU GUYS WILL HAVE TO MAKE THAT CHOICE OR WILL HAVE TO MAKE THAT CHOICE DEPENDING ON HOW IT GOES. BUT SO FIVE YEARS, I SEE WHAT YOU'RE SAYING. FIVE YEARS ISN'T SET IN STONE. TO BE HONEST, AT THIS POINT, NEXT YEAR IS NOT EVEN SET IN STONE.

THESE ARE RECOMMENDATIONS. WE TAKE THEM OR WE LEAVE THEM OR WE DISCUSS THEM AS A COUNCIL.

AND SO I DON'T WANT ANYONE TO THINK THAT THEIR HANDS ARE TIED. AND IF THERE IS A POSITION THAT YOU WANT TO LOOK AT FOR NEXT YEAR, THAT'S WORTH A DISCUSSION. AS FAR AS LOOKING OUT FOR FIVE YEARS, I DON'T EVEN KNOW WHO'S GOING TO BE ON THE COUNCIL.

AND THEN IT'LL CHANGE. IT'LL CHANGE NEXT YEAR.

IT'LL CHANGE THE YEAR AFTER THAT, AND WE'LL JUST BE IN A DIFFERENT PLACE.

WELL, OKAY. THE ALSO, THE REASON WHY I WAS ASKING THAT BECAUSE I THINK I'VE TALKED ABOUT THIS WITH HOLLY BEFORE.

I'VE MENTIONED IT. I DON'T THINK AND MAYBE I'M JUST LIKE NOT REMEMBERING EVERYTHING THAT COMES IN THE SLIDES COMING AFTER THIS ONE. BUT I KNOW THAT FOR COST CONTAINMENT WISE, WE'VE DONE 11.91 MILLION IN THIS FISCAL YEAR.

I THINK WHAT WOULD BE HELPFUL WOULD ALSO BE ABLE TO SEE WHAT THAT REFLECTS IN A FIVE YEAR FORECAST WITH JUST THE COST CONTAINMENT THAT WE'VE DONE WITH LIKE THE THE DIFFERENT PERSONNEL, OPERATIONAL EMPLOYEE BENEFITS CHANGES, BECAUSE I THINK THAT WOULD ALSO HELP US UNDERSTAND HOW MUCH OF IT IF IF NEARLY 12 MILLION OF THE WHAT, 18 MILLION OR HOW MUCH DID WE BRING IT BACK UP? DO YOU MEAN THE ENDING FUND BALANCE? I'M SORRY. YES.

YEAH. IT WAS ESTIMATED AT 10.3 PRIOR CURRENT YEAR ESTIMATE.

AND THEN WE BROUGHT IT BACK TO 18. OKAY. SO AND THEN AND NEARLY 12 MILLION OF THAT IS JUST ON COST CONTAINMENT THAT WE'VE ALREADY PUT INTO PLACE PURELY FROM THAT PERSONNEL OPERATIONAL EMPLOYEE BENEFIT CHANGES, MEANING THAT THERE'S MAYBE ABOUT WHAT, 7 MILLION OR SO, GIVE OR TAKE, THAT IS KIND OF THOSE CHOICES THEN ON DIFFERENT PROJECTS AND WHATNOT.

SO I THINK IT WOULD BE HELPFUL TO SEE IF WE WERE TO MAINTAIN THE COST CONTAINMENT STRATEGIES OF THAT 11.91 MILLION AND THEN SEE A FIVE YEAR FORECAST FOR THAT. IF WE FUNDED THE OTHER ITEMS THAT WERE THAT WERE CUT IN ORDER TO KEEP OR IN ORDER TO MEET THAT 18 MILLION.

COUNCIL MEMBER HARRIS, I'LL SEND YOU AN EMAIL ON MY QUESTIONS.

YEAH, I UNDERSTAND WHAT COUNCIL MEMBER ZAVADA IS SAYING.

I HAD THE SAME QUESTION ABOUT RAISES FOR THE EMPLOYEES AND THE BENEFITS FOR EMPLOYEES.

ARE THOSE INCLUDED IN ANY OF THE PROJECTIONS OF ONE THROUGH FIVE? THEY ARE. AGAIN, IF YOU LOOK AT I'M SORRY, THE.

YEAH, YOU CAN SEE THE 3.5% THAT COMES IN. IT DOESN'T COME IN UNTIL IT DOESN'T COME IN IN 27.

AM I LOOKING AT I'M SORRY, MERIT COLA COST OF LIVING ADJUSTMENT.

RIGHT. SO OKAY. THAT'S MERIT. THAT'S CORRECT.

OKAY. YEAH. NOW IF NOT FOR 27, BUT FOR 28 AND FORWARD.

OKAY. THANK YOU. OF COURSE. SO MAYBE IF WE HAD SOMETHING LIKE PAGE 14 THAT TALKED ABOUT THE POSITIONS AND THE AMOUNT THAT WE SAVED, FOR EXAMPLE, WE CAN LOOK AT THIS AND SEE THAT WE SAVED $300,000 WHEN WE COST CONTAIN ELIMINATED THE EXECUTIVE DIRECTOR OF STRATEGIC DEVELOPMENT AND CHIEF DEVELOPMENT OFFICER 269,480 FOR A TOTAL SAVINGS OF 500, HALF A MILLION.

OVER HALF A MILLION AND 69,000 FOR TWO POSITIONS.

MAYBE IF YOU GUYS COULD DO SOMETHING LIKE THAT TO SHOW US THE SAVINGS THAT YOU'VE DONE. I APPRECIATE THAT QUESTION.

WE HAVE THAT LEVEL OF DETAIL. IT'S NOT IN THIS PRESENTATION TONIGHT.

IT'S CERTAINLY SOMETHING THAT WE CAN WE CAN PROVIDE.

I WOULD LIKE THAT FIVE YEAR FORECAST WITH JUST THAT 11.91 MILLION THAT WE HAD FOR THIS CURRENT YEAR.

I WOULD LIKE TO SEE HOW THAT PLAYS OUT. 11.9 MILLION IS FOR FY 27.

[03:50:01]

27. CAN I SEE THE FIVE YEAR FORECAST FOR THAT? I JUST WANT TO HAVE A BASE BEFORE THE FIVE YEAR FINANCIAL FORECAST FOR BEFORE THAT'S ON THAT.

WELL, FOR THE AND THAT INCLUDES THE COST CONTAINMENT MEASURES FOR 426 FY 2526.

THAT'S CORRECT. SO THE BEFORE IS IS BEFORE ANY OF THE COST CONTAINMENT MEASURES HAPPEN.

I THINK WHAT YOU'RE SAYING IS THE FIVE YEAR FINANCIAL FORECAST WITH THE COST CONTAINMENT MEASURES FROM 26 BILLION.

I THINK THAT'S WHAT YOU'RE ASKING. YES. OKAY. BUT THAT IS YEAH, THAT IS THE YEAR AFTER BECAUSE THE CURRENT YEAR ESTIMATE ALSO INCLUDES COST CONTAINMENT THAT WE DID FOR 26 AND COST CONTAINMENT FOR 27.

THAT IS THE AFTER. IT IS THE COMBINATION OF THOSE COST CONTAINMENT MEASURES.

WHAT WE BEGAN IN 26 AND REALIZED IS IN THE CURRENT YEAR ESTIMATE, THAT'S HOW IT WAS IMPACTED.

AND THEN THE ROLLOVER INTO 27 CONTINUES THE ADDITIONAL COST CONTAINMENT MEASURES FOR 27.

SO THAT IS THE FIVE YEAR FINANCIAL FORECAST. YEAH. BECAUSE SOME OF IT CARRIED OVER, RIGHT? THAT'S CORRECT. BECAUSE SOME OF IT CARRIED OVER. THAT'S RIGHT. DOES THAT ANSWER YOUR QUESTION. I'LL SEND AN EMAIL. OKAY. THANK YOU.

ALL RIGHT. OF COURSE. MOVE ON. ALL RIGHT. WE WILL NOW TRANSITION TO THE WATER UTILITY FUND.

UNLIKE THE GENERAL FUND, THIS ENTERPRISE FUND OPERATES MORE LIKE A BUSINESS WITH USER FEES SUPPORTING OPERATIONS, MAINTENANCE, DEBT OBLIGATIONS, AND FUTURE INFRASTRUCTURE INVESTMENTS.

THE LONG TERM FINANCIAL HEALTH OF THE UTILITY DEPENDS ON ENSURING THAT REVENUES ARE SUFFICIENT TO SUPPORT THE FULL COST OF PROVIDING RELIABLE WATER SERVICE, WHILE MAINTAINING ADEQUATE RESERVES FOR EMERGENCIES AND CAPITAL REPLACEMENT.

WATER REVENUES ARE INFLUENCED BY CUSTOMER GROWTH, SEASONAL DEMAND, WEATHER CONDITIONS, WHOLESALE WATER COSTS AND FUTURE RATE ASSUMPTIONS.

OUR PROJECTIONS ASSUME CONTINUED CUSTOMER GROWTH WHILE RECOGNIZING THAT ANNUAL CONSUMPTION CAN FLUCTUATE SIGNIFICANTLY DEPENDING ON RAINFALL AND DROUGHT CONDITIONS.

BECAUSE OF THIS VARIABILITY, WE HAVE INTENTIONALLY USED CONSERVATIVE REVENUE ASSUMPTIONS RATHER THAN ASSUMING UNUSUALLY HIGH CONSUMPTION YEARS WILL CONTINUE INDEFINITELY.

ON THE EXPENDITURE SIDE, THE WATER UTILITY CONTINUES TO EXPERIENCE INFLATIONARY PRESSURES AFFECTING CHEMICALS, UTILITIES, MAINTENANCE, CONTRACTUAL SERVICES, EQUIPMENT REPLACEMENT AND PERSONNEL COSTS.

THE FORECAST ALSO RECOGNIZES THAT ONGOING INVESTMENT IS REQUIRED TO MAINTAIN AGING INFRASTRUCTURE AND SUPPORT FUTURE GROWTH.

THESE EXPENDITURES ARE ESSENTIAL TO ENSURING SAFE, RELIABLE WATER SERVICE FOR OUR RESIDENTS AND BUSINESSES.

OKAY, AGAIN, BACK TO WATER UTILITIES BEFORE THE CHART BEFORE YOU ILLUSTRATES THE WATER UTILITIES FINANCIAL POSITION BEFORE LEADERSHIP'S RECOMMENDED OPERATIONAL ADJUSTMENTS SIMILAR TO THE GENERAL FUND. THIS BASELINE DEMONSTRATES WHY PROACTIVE FINANCIAL PLANNING WAS NECESSARY TO BEGIN IN FY 26 IMMEDIATELY.

BY IDENTIFYING LONG TERM EXPENDITURE PRESSURES EARLY, WE HAVE BEEN ABLE TO RECOMMEND OPERATIONAL EFFICIENCIES AND FINANCIAL STRATEGIES THAT STRENGTHEN THE UTILITY WHILE MINIMIZING FUTURE FINANCIAL RISK.

SO YOU'VE SEEN THIS MANY TIMES BEFORE. THIS IS THE WATER UTILITY AGAIN.

CURRENT YEAR ESTIMATE. THIS IS THE. BEFORE THE ESTIMATED ENDING FUND BALANCE IS $13.9 MILLION BEFORE COST CONTAINMENT MEASURES, AND THEN AGAIN AFTER THE ESTIMATED ENDING FUND BALANCE, YOU CAN SEE IS A MUCH HEALTHIER 21.3.

AND THEN ON TO YEARS ONE, TWO, THREE. YOU CAN SEE THAT THAT'S MUCH HEALTHIER FOR SLIDE 91.

THIS SLIDE ILLUSTRATES THE IMPACT OF COST CONTAINMENT ACTIONS ON THE WATER UTILITY FUND THROUGH CAREFUL REVIEW OF OPERATING EXPENDITURES, JUST LIKE THE GENERAL FUND DISCIPLINE, STAFFING PRACTICES, AND ONGOING EVALUATION OF CONTRACTUAL AND OPERATING COSTS, THE FINANCIAL OUTLOOK IMPROVES CONSIDERABLY OVER THE PLANNING HORIZON.

THESE ACTIONS POSITION THE UTILITY TO CONTINUE DELIVERING RELIABLE SERVICE, WHILE PRESERVING THE FINANCIAL CAPACITY NEEDED TO ADDRESS FUTURE INFRASTRUCTURE INVESTMENTS. JUST AS IMPORTANTLY, THEY DEMONSTRATE OUR COMMITMENT TO MAKING OPERATIONAL IMPROVEMENTS BEFORE CONSIDERING ADDITIONAL FINANCIAL BURDENS ON OUR CUSTOMERS, WHILE FUTURE ECONOMIC CONDITIONS AND WHOLESALE WATER COSTS WILL CONTINUE TO INFLUENCE THIS FORECAST. IT'S NOT STATIC.

THE RECOMMENDED BUDGET ESTABLISHES A MUCH STRONGER FOUNDATION THAN THE BASELINE DID THAN THE BEFORE BEFORE COST CONTAINMENT.

WE WILL CONTINUE, OF COURSE, WITH ALL MAJOR FUNDS REVIEWING UTILITY OPERATIONS ANNUALLY TO ENSURE EXPENDITURES REMAIN ALIGNED WITH REVENUES.

WE DO IT EVERY MONTH. I COME BEFORE YOU ALL EVERY MONTH AND PROVIDE A BUDGET UPDATE.

WE WILL CONTINUE TO DO THAT UNTIL FY 27, OF COURSE, AND BEYOND.

WE'LL CONTINUE REVIEWING UTILITY OPERATIONS TO ENSURE EXPENDITURES REMAIN ALIGNED WITH REVENUES WHILE MAINTAINING THE HIGH LEVEL OF SERVICE OUR COMMUNITY EXPECTS.

[03:55:01]

NEXT, WE'RE GOING TO TRANSITION TO OUR THIRD MAJOR FUND WASTEWATER UTILITY FUND.

LIKE THE WATER UTILITY, THIS FUND IS SUPPORTED THROUGH USER CHARGES RATHER THAN PROPERTY OR SALES TAXES.

THE FINANCIAL HEALTH OF THE WASTEWATER SYSTEM IS EQUALLY CRITICAL BECAUSE IT SUPPORTS PUBLIC HEALTH, ENVIRONMENTAL COMPLIANCE AND THE CITY'S CONTINUED ABILITY TO ACCOMMODATE GROWTH.

LONG TERM PLANNING FOR WASTEWATER OPERATIONS REQUIRES BALANCING CUSTOMER AFFORDABILITY WITH THE NEED TO MAINTAIN TREATMENT CAPACITY COLLECTION, INFRASTRUCTURE, REGULATORY COMPLIANCE, AND FUTURE CAPITAL IMPROVEMENTS.

WASTEWATER REVENUES TEND TO BE MORE STABLE THAN WATER REVENUES BECAUSE BILLING IS GENERALLY BASED UPON WINTER AVERAGING AND CUSTOMER BASE GROWTH, PARDON ME, RATHER THAN SEASONAL IRRIGATION DEMAND.

EVEN SO, OUR FORECAST CONTINUES TO USE CONSERVATIVE ASSUMPTIONS REGARDING CUSTOMER GROWTH AND FUTURE RATE ADJUSTMENTS.

AS DEVELOPMENT CONTINUES THROUGHOUT KYLE, WE ANTICIPATE GRADUAL INCREASES IN THE CUSTOMER BASE.

OF COURSE. HOWEVER, WE INTENTIONALLY AVOIDED ASSUMING EXTRAORDINARY GROWTH RATES.

THIS CONSERVATIVE APPROACH HELPS ENSURE THE FINANCIAL FORECAST REMAINS ACHIEVABLE UNDER A VARIETY OF ECONOMIC CONDITIONS.

TURNING TO EXPENDITURES. WASTEWATER OPERATIONS CONTINUE TO EXPERIENCE MANY OF THE SAME INFLATIONARY PRESSURES AFFECTING THE WATER SYSTEM, INCLUDING CHEMICALS, UTILITIES, MAINTENANCE, CONTRACTUAL SERVICES, EQUIPMENT REPLACEMENT AND PERSONNEL COSTS.

IN ADDITION, REGULATORY REQUIREMENTS AND TREATMENT PLAN INFRASTRUCTURE CREATE ONGOING FINANCIAL OBLIGATIONS THAT CANNOT BE DEFERRED INDEFINITELY.

THE RECOMMENDED BUDGET RECOGNIZES THESE OPERATIONAL REALITIES WHILE CONTINUING TO PRIORITIZE EFFICIENT SERVICE DELIVERY AND RESPONSIBLE FINANCIAL STEWARDSHIP.

ALL RIGHT, HERE WE ARE WITH THE BEFORE. THIS CHART, OF COURSE, HERE REFLECTS THE WASTEWATER UTILITIES PROJECTED FINANCIAL POSITION BEFORE IMPLEMENTATION OF THE RECOMMENDED LEADERSHIP STRATEGIES, JUST AS THE OTHER TWO FUNDS WE'VE DISCUSSED, SIMILAR TO THE PREVIOUS FUNDS WE REVIEWED, THIS BASELINE DEMONSTRATES THE VALUE OF PROACTIVE FORECASTING, NOT STATIC PROACTIVE FORECASTING. BY RECOGNIZING FUTURE EXPENDITURE PRESSURES EARLY ON, LEADERSHIP IS ABLE TO RECOMMEND OPERATIONAL CHANGES THAT IMPROVE LONG TERM SUSTAINABILITY BEFORE FINANCIAL CHALLENGES BECOME MORE SIGNIFICANT.

THIS FORWARD LOOKING APPROACH SUPPORTS COUNCIL'S COMMITMENT TO RESPONSIBLE FINANCIAL LEADERSHIP, WHILE PROTECTING THE RELIABILITY OF ONE OF THE CITY'S MOST ESSENTIAL UTILITY SERVICES.

AGAIN, CURRENT YEAR ESTIMATE THIS IS GOING TO BE BEFORE COST CONTAINMENT MEASURES. YOU CAN SEE THE ESTIMATED FUND BALANCE OF 22.5 AND ON THROUGH YEARS ONE TWO.

YOU CAN SEE THAT THEIR DECLINE, AS WE CERTAINLY IT BEGINS IMMEDIATELY.

BUT BY YEAR THREE, WE'RE REALLY. WE'RE REALLY LOOKING AT SOME SOME CHALLENGES.

THIS IS THE. AFTER THIS SLIDE REFLECTS THE POSITIVE IMPACT OF THE RECOMMENDED LEADERSHIP ACTIONS ON WASTEWATER UTILITY FUND THROUGH DISCIPLINED BUDGET DEVELOPMENT, CAREFUL REVIEW OF OPERATING EXPENDITURES, RESPONSIBLE STAFFING STRATEGIES AND CONTINUED MONITORING OF UTILITY OPERATIONS.

THE LONG TERM FINANCIAL OUTLOOK IMPROVES CONSIDERABLY.

YOU CAN SEE THE ESTIMATED FUND BALANCE 25.6 AFTER COST CONTAINMENT MEASURES IN 26, AND ON TO JUST A MUCH MORE HEALTHY FUND BALANCE.

OF COURSE, BY YEAR THREE, WE, WE'RE STILL GOING TO HAVE SOME CHALLENGES, BUT IT'S SO MUCH MORE STABLE THAN IT WAS PRIOR TO.

ALL RIGHT. AS WITH EACH OF OUR FOUR MAJOR OPERATING FUNDS, OUR OBJECTIVE IS TO PROACTIVELY ADDRESS FUTURE FINANCIAL PRESSURES TODAY RATHER THAN DEFER DIFFICULT DECISIONS TO FUTURE BUDGET CYCLES. WE WILL CONTINUE EVALUATING OPERATING PERFORMANCE EACH YEAR FOR ALL FOUR MAJOR FUNDS, AND ACTUALLY ALL OF OUR FUNDS TO ENSURE EXPENDITURES REMAIN ALIGNED WITH REVENUES WHILE MAINTAINING RELIABLE SERVICE FOR OUR CUSTOMERS.

CAN YOU GO BACK? I'M LOOKING AT YEAR 28 TO 29.

WHAT'S GOING ON THERE. SO THIS IS GOING TO BE DEBT SERVICE CHALLENGES.

THERE'S GOING TO BE SOME DEBT SERVICE. I DON'T KNOW IF YOU CAN SEE THAT LINE.

IT'S UNDER EXPENDITURES. SO OPERATIONS CASH FUNDING AND DEBT SERVICE, NEW ESTIMATED PRINCIPAL AND INTEREST.

YOU SEE THAT LINE THERE. IT BECOMES QUITE IMPACTFUL.

YEAR THREE IS YEAR TWO ACTUALLY IS WHAT YOU'RE LOOKING AT.

OKAY. YEAH. I JUST WANT TO SAY, I KNOW WE TALKED ABOUT THE RESERVES BEING HIGH, BUT IT CANNOT BE HIGH ENOUGH, NOT RESERVES. THE BALANCE IS HIGH IN A LOT IN THE WATER AND THE WASTEWATER.

BUT THE TRUTH IS WE CAN'T HAVE ENOUGH MONEY IN THOSE FUNDS BECAUSE THAT'S WHERE MOST OF OUR SIPS ARE GOING TO COME FROM.

AND I THINK AT SOME POINT IT WAS LIKE SIX, 800.

I MEAN, IT'S IT'S INCREDIBLE. SO IT'S SIGNIFICANT.

IT'S EITHER WE TRY TO SAVE UP FOR IT AND BE ABLE TO AT LEAST AFFORD THE BONDS OUT OF THAT, THAT FUND OR WE C O BOND IT AND WE PUT OUR RESIDENTS IN DEEPER DEBT.

YEAH, IT'S SO TRUE. I ALSO THINK IT MAKES SUCH A GOOD POINT.

YOU KNOW, WE'RE NOT OUT OF THE, THIS IS SO MUCH MORE FAVORABLE THAN THE AFTER, RIGHT?

[04:00:03]

IT WASN'T CREATED IN IN ONE YEAR. IT'S GOING TO TAKE, YOU KNOW, MORE THAN ONE YEAR.

RIGHT. AND SO AGAIN, FIVE YEAR FINANCIAL FORECAST ISN'T INTENDED TO BE STATIC.

IT'S NOT SET IN STONE. IT'S SOMETHING WE WE DO THIS EVERY BUDGET CYCLE WITH ALL OF THE FACTORS THAT WE CAN SEE.

NOW, WHAT WE WHAT WE DON'T EVEN KNOW THAT'S COMING.

SO WE'LL ALWAYS CONTINUE TO REVISIT THIS AND BRING THIS BACK.

OKAY. THANK YOU. OF COURSE. OKAY. FINALLY, OUR FINAL MAJOR FUND OPERATING FUND IS A STORM DRAINAGE UTILITY FUND.

ALTHOUGH THIS FUND IS SIGNIFICANTLY SMALLER THAN THE GENERAL FUND, I SAY THIS ALL THE TIME. IT'S SMALLER THAN THE GENERAL FUND, WATER AND WASTEWATER. IT PLAYS AN ESSENTIAL ROLE IN PROTECTING PUBLIC INFRASTRUCTURE, REDUCING FLOOD RISKS, MANAGING DRAINAGE SYSTEMS, AND SUPPORTING CONTINUED DEVELOPMENT THROUGHOUT THE COMMUNITY. BECAUSE REVENUES ARE GENERATED PRIMARILY THROUGH DEDICATED DRAINAGE UTILITY FEES, THIS FUND GENERALLY EXPERIENCES GREATER REVENUE STABILITY THAN FUNDS INFLUENCED BY SEASONAL CONSUMPTION OR SALES ACTIVITY.

EVEN SO, LONG TERM PLANNING REMAINS ESSENTIAL TO ENSURE SUFFICIENT RESOURCES ARE AVAILABLE FOR ONGOING MAINTENANCE, CAPITAL REPLACEMENT AND REGULATORY REQUIREMENTS.

STORM DRAINAGE REVENUES ARE FORECASTED USING CONSERVATIVE ASSUMPTIONS, JUST LIKE THE OTHER THREE MAJOR FUNDS REGARDING CUSTOMER GROWTH AND UTILITY FEE COLLECTIONS. STORM DRAINAGE EXPENDITURES INCLUDE ROUTINE SYSTEM MAINTENANCE, OF COURSE CONTRACTUAL SERVICES, EQUIPMENT REPLACEMENT, AND PERSONNEL NECESSARY TO MAINTAIN THE CITY'S DRAINAGE INFRASTRUCTURE.

INFLATIONARY PRESSURES AFFECTING CONSTRUCTION MATERIALS AND MAINTENANCE ACTIVITIES CONTINUE TO BE RECOGNIZED THROUGHOUT THE FORECAST PERIOD.

WHILE THIS FUND EXPERIENCES FEWER FLUCTUATIONS, AS I'VE SAID THAN SOME OF OUR OTHER OPERATING FUNDS, CONTINUED FINANCIAL DISCIPLINE REMAINS IMPORTANT TO PRESERVE ADEQUATE RESERVES AND MAINTAIN THE CITY STORMWATER ASSETS.

AGAIN, THIS IS THE BEFORE. THE PURPOSE OF THIS SLIDE IS TO ILLUSTRATE THAT WITHOUT COST CONTAINMENT MEASURES TAKEN FOR THE STORM DRAINAGE UTILITY FUND, IT WOULD NOT BE A SUSTAINABLE. OVER THE LONG TERM WITHOUT THAT CORRECTIVE ACTION.

BEGINNING IN 2027, THE FUND EXPERIENCES AN ANNUAL OPERATING DEFICIT BECAUSE PROJECTED EXPENDITURES BEGIN TO OUTPACE REVENUES.

THIS IS AGAIN THE BEFORE COST CONTAINMENT MEASURES. WHILE DRAINAGE FEE REVENUES CONTINUE TO GROW MODESTLY EACH YEAR, THEY'RE NOT SUFFICIENT TO KEEP PACE WITH INCREASED OPERATING COSTS, FUTURE DEBT SERVICE AND ONGOING TRANSFERS.

AS A RESULT, THE FUND BALANCE DECLINES RAPIDLY OVER THE FIVE YEAR FINANCIAL FORECAST.

AS YOU CAN SEE, BY FY 28, THE FUND FALLS BELOW THE CITY'S MINIMUM RESERVE POLICY, AND BY THE END OF THE FORECAST PERIOD, THE FUND BECOMES SIGNIFICANTLY NEGATIVE IN THE BEFORE.

THIS IS THE AFTER. THIS SLIDE REFLECTS THE FORECAST.

AFTER INCORPORATING THE RECOMMENDED OPERATIONAL IMPROVEMENTS.

JUST AS THE OTHER THREE FUNDS. YOU NOTICE AN IMMEDIATE IMPROVEMENT IN THE FUND'S FINANCIAL POSITION.

AGAIN. CURRENT YEAR ESTIMATE. WE ESTIMATED THE ENDING FUND BALANCE TO BE JUST OVER $1 MILLION HERE.

IF YOU GO BACK TO BEFORE IT WAS 895,000, WE WERE NEGATIVE IN YEAR ONE ALREADY.

THIS ESTIMATING ENDING FUND BALANCE FOR YEAR ONE AFTER COST CONTAINMENT MEASURES IS 1.5 MUCH MORE FAVORABLE? CAN I GET A COUPLE EXAMPLES OF WHAT WOULD BE TAKING ON DEBT FOR FOR STORM DRAINAGE? SORRY. IT WOULD BE FOR MAJOR PROJECTS TO IMPROVE DRAINAGE.

SO MAYBE LIKE IN DOWNTOWN IF WE DECIDED TO DO A GIANT PROJECT THERE THERE'S A COUPLE OTHER THAT WE HAVE IDENTIFIED IN OUR DRAINAGE MASTER PLAN THAT ARE QUITE EXPENSIVE. OKAY. IF YOU LOOK ACROSS THE STREET FROM GREG CLARK PARK, THERE'S A WHOLE AREA THAT HAS TERRIBLE DRAINAGE.

LIKE SOME PEOPLE HAVE WATER THAT GO UP TO THEIR DOOR, AND IT'S RIGHT BY WHERE THAT TRICKLE CHANNEL IS.

AND. RIGHT. I THINK THE LIBRARY IS OVER THERE. YES.

YEAH. SO THERE'S A THERE'S A NEED. I REALLY WISH WE WOULD ADDRESS THIS SOONER RATHER THAN LATER.

BECAUSE I SEE THIS STORM, I SEE THE FUN AND I'M LIKE, GOD, I DON'T THINK PEOPLE REALIZE HOW MUCH WE NEED TO MITIGATE OUR DRAINAGE IN THE CITY OF KYLE. I WISH WE'D PUT A FOCUS ON IT. MAYBE REUSE IT.

SELL IT. YEAH. YOU CAN SEE THE STORM DRAINAGE PROJECTS IN THE CIP AND THE AND THE BLUE AND WHITE ALSO.

THIS IS THE DEBT SERVICE ASSOCIATED WITH IT. YEAH.

OKAY. THANK YOU. YEAH. SO ALTHOUGH THESE RECOMMENDATIONS STRENGTHEN THE FUND'S POSITION, THEY DO NOT COMPLETELY ELIMINATE THE LONG TERM STRUCTURAL IMBALANCE. AS YOU CAN SEE, THE ENDING FUND BALANCE AS DEBT SERVICE AND OPERATING COSTS CONTINUE TO INCREASE.

ADDITIONAL STRATEGIES SUCH AS FUTURE DRAINAGE FEE ADJUSTMENTS OR CONTINUED EXPENDITURE.

EXPENDITURE ADJUSTMENTS WILL LIKELY NEED TO BE EVALUATED TO MAINTAIN THE FUND'S LONG TERM FINANCIAL STABILITY AND SUSTAINABILITY.

OKAY, BEFORE I GO ON, LET ME SAY THESE FORECASTS DEMONSTRATE THAT THROUGH CONTINUED OPERATIONAL DISCIPLINE AND CONSERVATIVE FINANCIAL PLANNING.

[04:05:05]

LEADERSHIP WILL ALWAYS CONTINUE REVIEWING THESE ASSUMPTIONS.

WE DO IT ANNUALLY, OF COURSE, AND WILL RECOMMEND ADJUSTMENTS AS ECONOMIC CONDITIONS, DEVELOPMENT ACTIVITY AND OPERATIONAL REQUIREMENTS EVOLVE.

MAINTAINING THIS LONG TERM PERSPECTIVE HELPS ENSURE THE CITY REMAINS PREPARED FOR BOTH EXPECTED AND UNEXPECTED CHALLENGES.

THIS CONCLUDES THE FIVE YEAR FINANCIAL FORECAST PORTION OF TONIGHT'S PRESENTATION. COLLECTIVELY, THESE FORECASTS DEMONSTRATE THAT THE RECOMMENDATIONS INCLUDED WITHIN THE PROPOSED FISCAL YEAR 2627 BUDGET ARE FOCUSED NOT ONLY ON BALANCING THE UPCOMING FISCAL YEAR, BUT ALSO ON STRENGTHENING THE CITY'S LONG TERM FINANCIAL SUSTAINABILITY.

THROUGHOUT THIS PROCESS, LEADERSHIP HAS EMPHASIZED CONSERVATIVE FORECASTING, STRUCTURAL BALANCE, RESPONSIBLE STEWARDSHIP OF PUBLIC RESOURCES, AND PROACTIVE DECISION MAKING.

WITH FUTURE CONDITIONS UNDOUBTEDLY CHANGING, THESE FORECASTS PROVIDE CONFIDENCE THAT THE RECOMMENDED BUDGET PLACES EACH OF OUR FOUR MAJOR OPERATING FUNDS ON A MORE SUSTAINABLE PATH THAN WE WOULD HAVE OTHERWISE RECOGNIZED.

WE REMAIN COMMITTED TO MONITORING FINANCIAL PERFORMANCE THROUGHOUT THE YEAR, UPDATING THESE FORECASTS ANNUALLY, AND BRINGING FORWARD RECOMMENDATIONS WHENEVER ADJUSTMENTS BECOME NECESSARY.

THANK YOU. OKAY. HELLO AGAIN. SO NOW WE'RE GOING TO GET TO WHERE WE ACTUALLY CAME HERE FOR THE PROPOSED BUDGET FOR FISCAL YEAR 2627. I'M GOING TO GO OVER THE FOUR MAJOR OPERATING FUNDS GENERAL FUND, WATER UTILITY FUND, WASTEWATER UTILITY FUND, AND STORM DRAINAGE FUND.

THIS WILL BE A HIGH LEVEL SUMMARY OF ALL FOUR FUNDS.

AND WE'LL DISCUSS, YOU KNOW, THE MAJOR OPERATING FUNDS, THE KEY REVENUE SOURCES, MAJOR EXPENDITURES AND THE OVERALL FINANCIAL CONDITIONS, AS HOLLY SPOKE ABOUT EARLIER. THIS. THIS SLIDE, AS WE'VE SHOWN BEFORE, IS THE ALL FUNDS ALL THE CITY FUNDS SLIDE. SO OUR PROPOSED BUDGET FOR FISCAL YEAR 2627 IS ABOUT $417 MILLION, AS CIP IS THE BIGGEST PORTION OF THAT, 288 MILLION, OR 69.2%, FOLLOWED BY THE GENERAL FUND 60 69,000,016.6%.

WATER UTILITY FUND 27.7 MILLION AT 6.7%, AND THEN DEBT SERVICE AT 14.5 MILLION AT 3.5%. THEN WASTEWATER UTILITY 9.6 2.3%. STORM DRAINAGE 1.5% 1.5 MILLION AT POINT 0.4%. AND THEN ALL OUR OTHER FUNDS AT $5.8 MILLION AT 1.4%.

THE GENERAL FUND IS THE CITY'S PRIMARY OPERATING FUND AND SUPPORTS MOST ESSENTIAL MUNICIPAL SERVICES, INCLUDING PUBLIC SERVICE, PUBLIC SAFETY, PARKS, ADMINISTRATION, PLANNING, CODE ENFORCEMENT, TRANSPORTATION, FINANCE, I.T. LIBRARY. BLAH, BLAH, BLAH.

AND SO THE NEXT, NEXT COUPLE OF SLIDES ARE GOING TO PROVIDE AN OVERVIEW OF THE GENERAL FUND.

SO AS YOU CAN SEE, WE DO HAVE A BALANCED PROPOSED BUDGET FOR FISCAL YEAR 2627 WITH $73.7 MILLION IN TOTAL REVENUES AND TRANSFERS IN AND $71.3 MILLION OF TOTAL EXPENDITURES AND TRANSFERS OUT.

THIS IS GOING TO LEAVE A $20.4 MILLION ESTIMATED FUND BALANCE, AND THIS WILL EXCEED OUR 25% BALANCE BY ABOUT $2.5 MILLION. AS PERVEZ AND HOLLY HAVE BOTH MENTIONED BEFORE, THERE'S NO NEW POSITIONS REQUESTED OR PROPOSED IN THIS BUDGET.

SO FOR THE REVENUES AND TRANSFERS IN FOR THE GENERAL FUND YOU'LL NOTICE THAT PROPERTY TAX IS THE BIGGEST PORTION OF THE OF OUR OUR GENERAL FUND REVENUE $22.2 MILLION OR 30% OF THE OF THE BUDGET, FOLLOWED BY THE SALES, OUR SALES AND BEVERAGE TAX AT $20.4 MILLION OR 28%. NEXT IS THE DEVELOPMENT REVENUES AT $4.9 MILLION, 7%, AND SOLID WASTE SERVICE CHARGES.

AND THAT'S THE TRASH COLLECTION. THAT'S KIND OF A WASH FOR US AT 5.3 MILLION AND ALSO 7%, OUR FRANCHISE FEES ARE 4.3 AND 6%. AND I LEFT OUT THE TRANSFERS IN, WHICH IS 13.9 AT 19%.

AND THEN YOU CAN SEE THE OTHER ONES ON THERE AS WELL.

THIS NEXT SLIDE SHOWS THE EXPENDITURES AND TRANSFERS OUT FOR THE GENERAL FUND FOR THE FISCAL YEAR 2627 PROPOSED BUDGET, IT'S $71.3 MILLION. AS YOU CAN SEE, THE PUBLIC SAFETY IS THE BIGGEST PORTION OF THAT AT $21.9 MILLION, OR 30.8%. THERE'S A LOT OF OTHER PIECES. TRANSPORTATION AND PUBLIC WORKS IS THE NEXT BIGGEST ONE AT 15%.

[04:10:13]

AS YOU CAN SEE, WE HAVE TWO ACTUALS APPROVED BUDGET THE YEAR TO DATE WITH ENCUMBRANCES THROUGH MAY 31ST OF 2026.

OUR CURRENT YEAR ESTIMATES, WHICH MATCH THE NUMBERS THAT HOLLY SHOWED YOU EARLIER.

AND THEN WE HAVE OUR ICM PROPOSED BUDGET FOR 2627, AND THEN OUR INCREASE FROM THE APPROVED BUDGET OF 2526 BY DOLLAR AND PERCENTAGE. OVERALL, YOU WILL SEE THAT OUR REVENUES HAVE DECREASED BY $4.9 MILLION FOR THE GENERAL FUND.

A BIG PORTION OF THAT IS THE SALES TAX. OUR CONSTRUCTION INSPECTION FEES, OUR LAND USE PLANNING REVIEW FEES AND OUR TRANSFERS IN HAS ALSO WENT DOWN BY $1.1 MILLION. THIS NEXT ONE IS GOING TO BE THE SAME SETUP AS THE AS THE REVENUE.

BUT THIS IS JUST ME FOR THE EXPENDITURES. YOU'LL SEE THE TWO ACTUALS, THE APPROVED BUDGET, THE YEAR TO DATE, CURRENT YEAR ESTIMATE AND THE, OF COURSE, THE ICM PROPOSED BUDGET WITH THE INCREASE IN BY DOLLAR AND PERCENTAGE FROM THE APPROVED BUDGET OF 2526. AS YOU CAN SEE, THE TOTAL EXPENDITURES AND TRANSFERS OUT HAS DECREASED BY $7.9 MILLION, OR 9.9%. MOST OF THE MOST OF THE DECREASES WAS COME FROM TRANSPORTATION AND PUBLIC WORKS.

THAT WAS FROM THE REORG RESTRUCTURE. CIP AND ENGINEERING HAD TO DECREASE, AND PARKS AND REC WAS ALSO ANOTHER BIG CHUNK OF DECREASES FOR THIS YEAR. AND NOW THIS IS GOING TO BE JUST THE FUND BALANCE FOR THE GENERAL FUND.

YOU'LL SEE THE BEGINNING FUND BALANCE AS IT GOES ACROSS THE TOTAL REVENUE TRANSFERS OF THE $73.6 MILLION.

OUR TOTAL EXPENDITURES OF THE $71.3 MILLION. AND THAT GIVES US AN EXTRA EXCESS OF $2.3 MILLION, LEAVING US WITH A FUND BALANCE OF $20.3 MILLION.

AND THAT DOES LEAVE US OVER OUR 25% MINIMUM OF 25% OF THE EXPENDITURES OF ABOUT $2.5 MILLION.

SO NOW WE'LL GO INTO OUR PROPERTY TAX RATES. JUST SOME STATISTICS AND HIGHLIGHTS OF THEM.

SO HERE'S THE OVERALL PROPERTY TAX BILL THAT THE CITIZEN OF KYLE WILL SEE.

THE HAYS CISD IS ABOUT $1.15. AND THAT'S GOING TO BE 47% OF THE OF YOUR TAX BILL.

THE CITY OF KYLE IS AS IT IS CURRENTLY IS 0.5957.

AND THAT'S ABOUT 24%, FOLLOWED BY THE HAYS COUNTY, WHICH IS 0.357 $0.03 OR 15%, AND THEN A HAYS ISD NUMBER FIVE, HAYS COUNTY ROAD, HAYS COUNTY ISD NUMBER NINE, AND THE PLUM CREEK CONSERVATION DISTRICT AND THE PLUM CREEK GROUNDWATER DISTRICT. AS YOU CAN SEE, HERE'S OUR PROPERTY TAX RATES FROM 1990 THROUGH 2026.

IT SHOWS OUR CURRENT PROPERTY TAX RATE OF 0.595 $0.07 AND FROM AN ALL TIME HIGH OF 92 IN 1992 TO AN ALL TIME LOW OF 2008. AND HERE'S OUR COMPARISON OF OUR CURRENT PROPERTY TAXES COMPARED TO OUR TEN COMPARABLE CITIES. AS YOU CAN SEE, WE'RE NUMBER TWO RIGHT BELOW SAN MARCOS AND ABOVE THE CITY OF AUSTIN.

WE'RE MORE THAN THE CITY OF AUSTIN. YES, MA'AM.

WE'RE MORE THAN EVERYBODY OTHER THAN SAN MARCOS.

OTHER THAN SAN MARCOS. YES. OH, OKAY. IT'S NOT A RACE I WANT TO WIN.

NO. AND. WE DID THAT PROBABLY ALSO WAS. I'M NOT GOING TO MAKE AN EXCUSE.

I'VE BEEN ON THIS COUNCIL LONG ENOUGH TO KNOW. THANK YOU. YOU'RE WELCOME. AND THIS IS OUR ASSESSED VALUE PER CAPITA.

SO WE'RE AT 107 $107,871, WHICH PUTS US NEAR THE END, A LITTLE ABOVE SAN ANTONIO AND BELOW SAN MARCOS. CAN YOU TELL US WHAT THAT MEANS FOR PEOPLE AT HOME?

[04:15:04]

GIVE A BRIEF EXPLANATION OF. SO WE GET OUR CERTIFIED ASSESSED VALUES FROM THE FROM THE CAD.

AND THEN WE USE THAT AND DIVIDE THAT BY. OR AM I SAYING THAT CORRECTLY BY THE POPULATION.

AND SO THAT'S HOW WE COME UP WITH THOSE NUMBERS. OKAY.

THANK YOU. YOU'RE WELCOME. OH. SO WE BEAT AUSTIN IN THE TAX RATE AND WE BEAT SAN ANTONIO IN THE PER CAPITA CALCULATION.

OKAY. SO LET'S TALK ABOUT WHAT THE CERTIFIED TAX ROLL SHOWS SO FAR.

SO 2026 CERTIFIED TAXABLE ASSESSED VALUATION NOT THE GROSS VALUATION THE PORTION THAT WE CAN APPLY THE TAX RATE. THIS IS NET AND BY NET IF YOU LOOK AT THE FOOTNOTE I HAVE EXCLUDED LIKE I DISCUSSED BEFORE, I'VE EXCLUDED THE VALUES IN ALL OUR SIX TIERS.

SO THE NET VALUE TAXABLE VALUE FOR NEXT YEAR THAT WILL BASE OUR TAX RATE ON IS 6.6 BILLION $148,157,639. IF YOU COMPARE TO THE 2025 CERTIFIED NET TAXABLE VALUATION.

OF 6,227,000,000 671 682. 26. NET TAXABLE VALUATION IS ALMOST $80 MILLION LESS THAN THE YEAR BEFORE, WHICH IS THE 1.28% REDUCTION THAT WE TALKED ABOUT.

SO BASED ON OUR ASSESSED VALUATION, THE AVERAGE HOME VALUE IN 2026 IS $298,621. BASED ON LAST YEAR'S CERTIFIED TAX RULE, THE AVERAGE HOME VALUE IN KYLE WAS $315,017.

SO THERE IS A NET REDUCTION IN THE AVERAGE HOME VALUE OF $16,396.

SINCE WE DON'T HAVE THE TAX RATES, I CAN'T SHOW YOU THE THE TAX LEVY OR THE AVERAGE NET TAX BILL.

I CAN SHOW THAT ON AUGUST 13TH AND SHARE THAT WITH YOU.

BUT LOOKING AT 2025 NUMBERS BASED ON AVERAGE HOME VALUE OF $315,017 AND OUR CURRENT TAX RATE OF 59. 57 THE GROSS TAX LEVY WAS $1,876.56.

THAT'S BEFORE APPLYING THE HOMESTEAD REDUCTION.

AND THE REASON I SEPARATE THE HOMESTEAD REDUCTION FROM THE TAX LEVY, BECAUSE NOT ALL HOMES IN KYLE ARE OCCUPIED BY HOMEOWNERS.

SO THERE ARE SOME RENTAL PROPERTIES, BUT THE PROPERTY OWNER WILL GET THE TAX BILL, BUT THEY WILL NOT RECEIVE THE HOMESTEAD REDUCTION OR EXEMPTION. SO IF A HOMEOWNER RESIDES IN THE AVERAGE VALUE HOME OF 315,000, LAST YEAR WOULD HAVE GOTTEN A BILL. NET TAX BILL AFTER HOMESTEAD REDUCTION WOULD HAVE BEEN $1,638.28.

NOW, ASSUMING. THAT THE TAX RATE STAYED THE SAME JUST FOR DISCUSSION PURPOSES, I'M NOT PROPOSING THAT.

JUST FOR DISCUSSION PURPOSES, SINCE THE AVERAGE HOME VALUE HAS DROPPED BY $16,000 16,400 USING THE SAME TAX RATE. THE TAX LEVY AND THE AVERAGE NET NET TAX BILL WILL BE LESS THAN WHAT IT WAS IN 2025. DID DID EVERYONE FOLLOW THAT? READ THAT. SORRY. WELL, I GUESS I DO HAVE A QUESTION FOR THE 0.59. ISN'T THAT THE MAX THAT. I THINK THAT'S WHAT THEY PROMISED IN THE 2022 BOND.

[04:20:03]

IT'S A FLOATING NUMBER THAT HAS TO DO WITH OUR OUR DEBT.

THERE'S A WHOLE CALCULATION THAT, WELL, WHEN WE WHEN IT WAS ON THE BOND, I THOUGHT IT GAVE A PERCENTAGE LIKE 0.59 SPECIFICALLY NOT TO INCREASE IT MORE THAN 0.59.

AM I MISTAKEN? BECAUSE THAT WOULD BE TECHNICALLY A VOTER APPROVED RATE, AND I DON'T KNOW IF WE CAN.

CAN WE GO OVER THAT? YES, BECAUSE THE WHEN THE BOND DISCUSSIONS WERE HAPPENING AND WE WERE GETTING READY TO GO BEFORE THE VOTERS, IT WAS ESTIMATED THAT IF THE BONDS GOT APPROVED AND WE SPENT THAT MONEY, THE TAX IMPACT WOULD HAVE BEEN UP TO $0.59. RIGHT. BUT IN THE MEANTIME, THERE ARE OTHER THINGS THAT ARE MOVING AROUND.

THERE ARE MORE DEBT SERVICE FOR OTHER THINGS.

OPERATING EXPENSES ARE GOING UP. SO YOU CAN GO ABOVE 59, 57 IF YOU WANTED TO.

BUT I DON'T KNOW IF THE NEED IS GOING TO BE THERE TO GO ABOVE THAT, BECAUSE IN THE CURRENT TAX RATE OF 5957, THERE IS EMBEDDED A DEBT DEFEASANCE THAT COUNCIL APPROVED.

NEXT YEAR. WE'RE NOT DOING IT AT DEFEASANCE. SO THAT GOES AWAY.

SO WE SHOULD SEE A TAX RATE REDUCTION. I'M JUST GENERALLY SPEAKING, I AM NOT GUARANTEEING ANYTHING UNTIL I SEE THE TAX RATE CALCULATIONS. AND WE'LL HAVE SOME GOOD DISCUSSION ON AUGUST 13TH.

OKAY. COUNCIL MEMBER HARRIS WHERE DOES COMMERCIAL PROPERTY COME IN COMMERCIAL PROPERTY TAXES.

THERE ARE THEY ALL HAVE THE SAME DUE DATE. COUNCIL MEMBER.

I MEAN, AS FAR AS REVENUE. SO WE GET ABOUT 97% OF OUR TAX REVENUES BY FEBRUARY.

THAT'S WE'RE TALKING ABOUT HOMES ON THE VALUES, THE VALUES.

ARE YOU TALKING ABOUT VALUES OR ARE YOU TALKING ABOUT REVENUES? I'M TALKING ABOUT THE VALUES. THE VALUES COME IN BY JULY 25TH.

NO. BUT WHERE DO THEY COME UP WITH THE VALUES? WHERE ARE WE AT LIKE, AND WHERE DOES IT GO IN THE BUDGET? IN THE BUDGET, WE ONLY ESTIMATE THE REVENUES, NOT THE VALUES.

WHERE DOES THAT COME IN THE BUDGET THEN? THE REVENUES FROM COMMERCIAL PROPERTY TAX, THEY WILL BE IN THE PROPERTY TAX LINE THAT HOLLY SHOWED YOU.

THAT INCLUDES RESIDENTIAL AND COMMERCIAL. YES.

IT INCLUDES RESIDENTIAL MULTIFAMILY FARMS. OKAY.

THAT ANSWERS MY QUESTION. OKAY. OKAY. SO AS YOU MAY RECALL FROM PREVIOUS DISCUSSIONS, THE PROPERTY TAX RATE HAS TWO COMPONENTS.

WE COMMONLY REFER TO RATE AND THE RATE THE RATE OR THE MAINTENANCE AND OPERATIONS RATE.

THIS IS WHAT PAYS FOR OUR POLICE OFFICERS, PARKS EMPLOYEES, PUBLIC WORKS EMPLOYEES.

OUR CURRENT TAX RATE ADOPTED TAX RATE FOR THAT COMPONENT IS 3212.

THE INS RATE IS 2745. PUT TOGETHER COMBINE THE TOTAL TAX RATE IS 5957 PER $100 OF TAXABLE ASSESSED VALUATION. SO AS SOON AS WE RECEIVE THE TAX RATE CALCULATIONS NEXT WEEK, WE SHOULD BE ABLE TO FILL IN THE LAST THREE COLUMNS AND DISCUSS IN DETAIL WITH YOU ALL ON AUGUST 13TH. HE WAS TALKING SALES TAX. THIS CHART SHOWS THE SALES TAX COLLECTION FROM 2008 TO 2027. SALES TAXES CONTINUES TO PLAY A MAJOR ROLE AS THE SECOND LARGEST REVENUE SOURCE FOR THE GENERAL FUND, AND CURRENTLY WE'VE SHOWN SHOWN IT TO BE ABOUT THE SAME AS THE SIZE FROM 26 TO 27.

WE'RE NOT REALLY SHOWING ANY HUGE INCREASES FOR THAT.

ANDY, IS YOUR MIC ON? NO IT'S NOT. I'LL JUST REWIND REAL QUICK.

[04:25:02]

SO THAT'S WHY WE DIDN'T SHOW ANY INCREASES FOR THAT ONE.

BUT IT'S STILL ABOUT 18% OF THE GENERAL FUND REVENUE.

THIS CHART HERE SHOWS THE SALES TAX PER CAPITA, WHICH.

AGAIN, IT'S THE SALES TAX PER EACH RESIDENT HERE IN THE CITY.

AND IT HAS KIND OF PLATEAUED AND STAYED ABOUT THE SAME.

IT ACTUALLY WENT DOWN IN 2025. AND WE'RE SHOWING A LITTLE BIT OF AN INCREASE IN 26.

HOPEFULLY IT'LL JUST CONTINUE TO INCREASE FROM HERE.

NOW NEXT WE'RE GOING TO TALK ABOUT DEVELOPMENT REVENUES, WHICH IS THE NUMBER 3 OR 4 PIECE LARGEST PIECE OF THE REVENUE FOR THE GENERAL FUND.

SO FOR 2627, $4.9 MILLION IS IS BUDGETED FOR AS REVENUES FROM DEVELOPMENT, 4.1 IS FROM CONSTRUCTION INSPECTION, AND 0.8 MILLION IS FROM LAND USE PLANNING AND REVIEW FEES.

AS YOU CAN SEE HERE, WE HAVE OUR TWO ACTUALS, OUR BUDGET, OUR C, Y, E, AND THEN OUR OUR BUDGET FOR 2627.

AND YOU CAN SEE THAT OUR BUDGET FROM 2526 WAS $6.9 MILLION, AND WE'RE PROJECTING 4.9.

SO IT IS ABOUT A DECREASE OF $2 MILLION. AND THAT MATCHES UP TO WHERE WE'RE SHOWING FOR THE C FOR 2526.

NEXT WE'RE GOING TO TALK ABOUT THE WATER UTILITY FUND. AND WE'LL GO OVER HIGH LEVEL SUMMARY OF THE BUDGET REVENUES AND EXPENDITURES.

SO FOR 2627, WE HAVE $35.1 MILLION IN TOTAL REVENUES AND TRANSFERS IN $32.4 MILLION.

TOTAL EXPENDITURES AND TRANSFERS OUT. THIS THIS DOES INCLUDE A $2.1 MILLION EQUITY TRANSFER TO THE GENERAL FUND AND A $2.2 MILLION INDIRECT SUPPORT COST REIMBURSEMENT TO THE GENERAL FUND.

AND THAT'S AS LEE HARRIS WAS SPEAKING OF EARLIER.

THAT THAT COVERS SOME OF THE EMPLOYEES THAT ARE PAID FROM THE GENERAL FUND THAT THEIR PORTION, THIS IS THEIR PORTION THAT COMES OUT OF THE WATER FUND. SO THIS IS GOING TO HAVE SHOW US A 24 POINT MILLION DOLLAR ESTIMATED ENDING FUND BALANCE, AND THIS IS GOING TO EXCEED OUR REQUIRED MINIMUM OF 15.8 BY ABOUT $9 MILLION.

AS PERVEZ MENTIONED EARLIER, THERE'S NO FEE INCREASES FOR THE WATER SERVICE RATES IN FISCAL YEAR 2627 AND NO NEW POSITIONS.

THIS CHART IS GOING TO SHOW US THE REVENUES FOR THE WATER UTILITY FUND.

CURRENTLY, WE'RE SHOWING A BUDGET OF $35 MILLION AND 33 OR 94.7% OF THAT IS THE WATER SERVICE.

THERE'S OTHER FEES AND CHARGES, WHICH IS ABOUT $1.5 MILLION, OR 4.3%, AND MISCELLANEOUS OF $345,000 OR 1%.

THIS CHART IS GOING TO SHOW THIS PIE CHART IS GOING TO SHOW THE PROPOSED BUDGET FOR THE EXPENDITURES AND TRANSFERS OUT FOR THE WATER FUND.

WE'RE SHOWING A BUDGET OF $32.4 MILLION. THE BIGGEST PORTION OF THAT YOU SEE IS THE WATER SUPPLY.

$16.6 MILLION, OR 51.3% WATER OPERATIONS, IS NEXT AT $4.8 MILLION, OR 14.8%, AND THEN TRANSFERS OUT OF 4.6 OR $4.6 MILLION, OR 14.5%.

WE DO SHOW THE DEBT SERVICE THAT THE WATER FUND HAS TO PAY.

ITS PORTION OF IT IS $3.2 MILLION, OR 10%, AND IT DOES HAVE A SMALL PORTION IN HERE FOR THEIR SOFTWARE THAT COMES DIRECTLY FOR WATER FUND. AS I AS I SPOKE EARLIER.

HERE'S THE SUMMARY FOR THE WATER UTILITY FUND AND LIKE I SAID BEFORE, WE HAVE OUR TWO ACTUALS APPROVED BUDGET FOR 2526, OUR YEAR TO DATE THROUGH MAY 31ST, 2026, OUR CURRENT YEAR ESTIMATES FOR 2526, AND THEN OUR PROPOSED BASE BUDGET AND ICM SUPPLEMENTAL. AND THAT WILL BRING US TO THE TOTAL PROPOSED BUDGET FOR 2627, ALONG WITH THE DOLLAR AND PERCENT INCREASE PERCENT INCREASE FROM THE APPROVED BUDGET OF 2526, YOU'LL SEE THAT THE TOTAL REVENUE AND TRANSFERS IN IS A $35.0 MILLION, AND THAT'S ABOUT 22.4% INCREASE FROM OUR APPROVED BUDGET.

THE TOTAL EXPENDITURES AND TRANSFERS OUT IS 30 POINT.

BLESS YOU. THAT'S A DECREASE OF $1 MILLION OR 3.1%, AS YOU CAN SEE THAT THAT LEAVES OUR FUND BALANCE AT

[04:30:08]

CURRENTLY, RIGHT NOW WE'RE AT 92.0. $92.07. AND THAT PUTS US BELOW PFLUGERVILLE COUNTY LINE S, U, D AND SOUTHWEST WATER. NOW WE'RE GOING TO GO INTO THE WASTEWATER UTILITY FUND AND IT'LL BE THE SAME SUMMARY, SAME SAME PATH I WAS SHOWING YOU EARLIER.

SO FOR THE PROPOSED BUDGET FOR FISCAL YEAR 2627, WE HAVE $17.5 MILLION OF TOTAL REVENUES AND TRANSFERS IN $12.3 MILLION OF TOTAL EXPENDITURES AND TRANSFERS OUT. THIS IS THIS IS THIS INCLUDES $1.2 MILLION OF EQUITY TRANSFERS TO THE GENERAL FUND AND A $1.4 MILLION INDIRECT SUPPORT COSTS REIMBURSEMENT TO THE GENERAL FUND.

THIS LEAVES US WITH A $30.9 MILLION IN ESTIMATED ENDING FUND BALANCE, WHICH EXCEEDS OUR REQUIRED MINIMUM BY $27.8 MILLION. AGAIN, LIKE IN THE WATER FUND, THERE IS NO FEE INCREASE PROPOSED FOR THE WASTEWATER SERVICE RATES, AND ALSO NO NEW POSITIONS ARE PROPOSED. AND YOU HAVE A QUESTION? YES, MA'AM. GO BACK. WOULD YOU EXPLAIN WHAT AN EQUITY TRANSFER IS? 1.2 MILLION EQUITY TRANSFER IN ADDITION TO 1.4 INDIRECT SUPPORT COST.

PLEASE. SO THE EQUITY TRANSFER IN A PUBLICLY OWNED UTILITY SUCH AS OURS, WE DON'T PAY PROPERTY TAXES. SO HAD IT BEEN A INVESTOR OWNED UTILITY, IT WOULD HAVE PAID TO THE GENERAL FUND, THE TAXPAYERS A PROPERTY TAX ON THEIR BUILDING, THEIR EQUIPMENT, THEIR.

INVENTORY BECAUSE THIS IS OWNED BY THE GENERAL FUND, THE TAXPAYERS OWN THIS UTILITY SYSTEM.

SO AS THE OWNERS OF THE SYSTEM, THEY ARE GETTING IN LIEU OF PROPERTY TAXES.

AND WHAT IS REFERRED TO AS AN EQUITY TRANSFER, AS THE OWNER HAVING EQUITY IN THE SYSTEM, THEY'RE GETTING IN LIEU OF PROPERTY TAXES, A PERCENTAGE OF GROSS REVENUES. YOU'LL SEE THAT ON WATER SIDE, AND YOU'LL SEE THAT ON THE WASTEWATER SIDE.

THAT MAKES IT CLEAR. I THINK MOST OF OUR RESIDENTS DON'T HAVE A CLUE WHAT THAT MEANS.

SO THAT REALLY HELPS. THANK YOU PROFESSOR.

SO THIS PIE CHART SHOWS OUR REVENUE AND TRANSFERS IN FOR THE WASTEWATER UTILITY FUND.

RIGHT NOW WE'RE PROPOSING THE BUDGET FOR 2627 OF $17.5 MILLION.

AND THE BIGGEST PORTION OF THAT IS GOING TO BE THE WASTEWATER SERVICE FEES, WHICH IS 16.4 MILLION OR 94%.

AND THEN OUR MISCELLANEOUS IS $711,000 OR 4%, AND OTHERS 348,000 OR 2% OF THE REVENUE.

THIS SLIDE SHOWS THE EXPENDITURES AND TRANSFERS OUT FOR THE WASTEWATER FUND.

THE PROPOSED BUDGET FOR 2627 IS $12.2 MILLION, WITH THE WASTEWATER TREATMENT PLANT BEING THE LARGEST PORTION OF THAT OF $3.2 MILLION, OR 26.6%, FOLLOWED BY THE WASTEWATER O, FOLLOWED BY TRANSFERS OUT OF $2.6 MILLION LIKE WE SPOKE ABOUT EARLIER, OR 21.5%. WASTEWATER OPERATIONS IS $1.8 MILLION, OR 15.1%.

AND THEN OUR DEBT SERVICE, WHICH IS THE DEBT SERVICE FOR THE WASTEWATER TREATMENT PLANT AND OTHER AND OTHER THAT WE'VE TAKEN OUT OF $1.7 MILLION OR 14%.

AND THIS THIS SUMMARY IS GOING TO GO OVER THE WASTEWATER UTILITY FUND.

AS I SAID BEFORE, IT HAS OUR TWO ACTUALS, OUR APPROVED BUDGET FOR FISCAL YEAR 2526, OUR YEAR TO DATE WITH ENCUMBRANCES THROUGH MAY 31ST, 2026. OUR CURRENT YEAR ESTIMATES FOR 2526 ARE.

ICM PROPOSED BASE BUDGET, ICM SUPPLEMENTAL BUDGET, ICM PROPOSED TOTAL BUDGET, AND THEN THE DOLLAR AND PERCENT INCREASE FROM THE APPROVED BUDGET OF 2526. YOU'LL SEE THE TOTAL REVENUES FOR THE PROPOSED BUDGET OF $17.5 MILLION, WHICH IS A $1.8 MILLION $1.7 MILLION AN INCREASE OF 10.5%. THOSE NUMBERS AND THE

[04:35:10]

WE'RE AT $48.10, WHICH PUTS US MORE IN THE MIDDLE THAN WE WERE WITH THE WATER FUND.

AND WE'RE A LITTLE BIT. WELL, WE'RE BEHIND BELOW GEORGETOWN AND ABOVE CEDAR PARK.

AND NOW I'LL BRING US TO THE STORM DRAINAGE UTILITY FUND, WHICH WOULD BE THE SAME SETUP AS IT WAS BEFORE.

SO THE PROPOSED BUDGET FOR FISCAL YEAR 2627, THERE'S $2.3 MILLION OF TOTAL REVENUES AND TRANSFERS IN $1.8 MILLION OF TOTAL EXPENDITURES AND TRANSFERS. OUT OF THIS, $0.24 MILLION IS FOR THE INDIRECT SUPPORT COST REIMBURSEMENT TO THE GENERAL FUND, $1.5 MILLION IN ESTIMATED ENDING FUND BALANCE, WHICH THIS PUTS US WELL, DOES ALSO PUT US OVER OUR 25% REQUIRED THRESHOLD. AND THEN THERE'S NO FEE INCREASE FOR THE PROPOSED STORM DRAINAGE FEES FOR 2627.

THE REVENUES. THIS PIE CHART SHOWS OUR REVENUES AND TRANSFERS IN FOR THE STORM DRAINS FOR FISCAL YEAR 2627.

AS YOU CAN SEE, OUR BIGGEST PORTION OF THE PIE IS THE STORM DRAINAGE FEES FOR COMMERCIAL ACCOUNTS, WHICH IS $1.2 MILLION OR 54% FOR THE RESIDENTIAL, IS ALMOST A LITTLE UNDER $1 MILLION OR 44%.

AND THEN OUR MISCELLANEOUS REVENUE IS 43,000 OR ARE 2%.

THIS PIE CHART SHOWS OUR EXPENDITURES AND TRANSFERS OUT FOR THE STORM DRAINAGE FUND FOR FISCAL YEAR 2627 OF $1.7 MILLION.

AS YOU CAN SEE, THE LARGEST PORTION OF THIS IS OUR OPERATIONS AND MAINTENANCE FOR THE STORM DRAINAGE FUND OF $1.5 MILLION, OR 83%. THE TRANSFERS OUT TO THE GENERAL FUND ARE $2.239 THOUSAND, OR 13%.

THEN WE DO HAVE A SMALL PORTION FOR THE CITY ATTORNEY AND THE.

IT. AGAIN, THIS IS GOING TO BE OUR SUMMARY AGAIN, AS THE SAME AS I SHOWED YOU WITH THE WATER, WASTEWATER AND GENERAL FUNDS. WE'LL HAVE OUR TWO ACTUALS, THE APPROVED BUDGET FOR 2526.

OUR YEAR TO DATE WITH ENCUMBRANCES THROUGH MAY 31ST, 2026.

OUR CURRENT YEAR ESTIMATES FOR 2526. OUR PROPOSED BASE BUDGET, SUPPLEMENTAL BUDGET AND TOTAL PROPOSED BUDGET FOR 2627.

THE PROPOSED INCREASE BY DOLLAR AND PERCENTAGE FROM THE APPROVED BUDGET OF 25.

26. THE TOTAL REVENUES AND TRANSFERS IN IS A $2.2 MILLION, WHICH IS $119,000 PERCENT INCREASE, OR 5.5%. OUR TOTAL EXPENDITURES AND TRANSFERS OUT ARE $1.8 MILLION, AND THIS IS A $1.2 MILLION DECREASE, OR 40% DECREASE. AND MOST OF THAT WAS FROM OUR NON CIP THAT HOLLY SPOKE ABOUT EARLIER.

I'LL TAKE IT. THANK YOU. SPEAKING OF CIP. SO JUST FOR CONTEXT, AS WE AS WE COME TO THE END NEARING THE END, WE'RE GOING TO TALK CIP. WE'RE GOING TO TALK A LITTLE BIT OF DEBT DEBT SERVICE.

WE'RE GOING TO TALK FEES, NEW FEES FOR 27, AND THEN WE'LL TURN IT OVER TO ICM TO WRAP UP FOR THE EVENING.

OKAY. ALL RIGHT. WE'LL NOW TRANSITION FROM OUR DISCUSSION OF THE CITY'S OPERATING BUDGET TO THE PROPOSED FIVE YEAR CAPITAL IMPROVEMENTS PROGRAM, AND WE CALL IT CIP. YOU ALL HAVE. YOU MAY RECALL THE MEETING, I THINK IT WAS JUNE 13TH WHERE WE WENT THROUGH ALL OF THE DIFFERENT CIP PROJECTS AND GAVE COUNCIL AN OPPORTUNITY TO VOTE ON HOW WE WANTED TO PROCEED.

THIS IS REALLY THE SUMMARY OF THAT INFORMATION AND THOSE DECISIONS.

WHILE THE OPERATING BUDGET FOCUSES ON THE DAY TO DAY DELIVERY OF MUNICIPAL SERVICES, THE CAPITAL IMPROVEMENTS PROGRAM FOCUSES ON LONG TERM INFRASTRUCTURE INVESTMENTS THAT SUPPORT THE CITY'S CONTINUED GROWTH AND FUTURE SERVICE DEMANDS.

THESE PROJECTS INCLUDE INVESTMENTS IN TRANSPORTATION INFRASTRUCTURE, WATER AND WASTEWATER SYSTEMS, STORM DRAINAGE IMPROVEMENTS, PUBLIC FACILITIES, PARKS, AND OTHER MAJOR CAPITAL ASSETS THAT TYPICALLY PROVIDE BENEFITS TO THE COMMUNITY FOR DECADES. AS ONE OF THE FASTEST GROWING COMMUNITIES IN TEXAS, KYLE CONTINUES TO EXPERIENCE INCREASING DEMANDS ON ITS INFRASTRUCTURE.

NO SURPRISE, POPULATION GROWTH, COMMERCIAL DEVELOPMENT, AND EXPANSION OF OUR UTILITY SYSTEMS ALL REQUIRE THOUGHTFUL LONG TERM PLANNING AND SIGNIFICANT CAPITAL INVESTMENT. HOWEVER, AS COUNCIL HAS HEARD THROUGHOUT THIS BUDGET PROCESS.

OUR APPROACH THIS YEAR IS INTENTIONALLY DIFFERENT FROM PREVIOUS YEARS.

RATHER THAN SIMPLY ADDING PROJECTS TO THE CAPITAL PROGRAM BASED UPON IDENTIFIED NEEDS.

[04:40:04]

WE BROUGHT THAT BEFORE COUNCIL IN JUNE. THE RECOMMENDED CAPITAL IMPROVEMENTS PROGRAM PRESENTED TODAY.

THIS EVENING, REFLECTS MONTHS OF COLLABORATION BETWEEN DEPARTMENTS, ENGINEERING STAFF, FINANCE, EXECUTIVE LEADERSHIP AND COUNCILS PREVIOUSLY ESTABLISHED PRIORITIES.

IT REPRESENTS AN INFRASTRUCTURE INVESTMENT STRATEGIES THAT ATTEMPTS TO BALANCE THREE EQUALLY IMPORTANT OBJECTIVES MAINTAINING CRITICAL PUBLIC INFRASTRUCTURE, SUPPORTING CONTINUED COMMUNITY GROWTH AND PROTECTING THE CITY'S LONG TERM FINANCIAL STABILITY.

THE NEXT SEVERAL SLIDES SUMMARIZE THE OVERALL INVESTMENT STRATEGY, FUNDING SOURCES, AND FINANCIAL IMPLICATIONS ASSOCIATED WITH THE PROPOSED FIVE YEAR CAPITAL IMPROVEMENT PROGRAM FOR FISCAL YEAR 2020 627.

THIS SLIDE PROVIDES THE OVERALL SUMMARY OF THE RECOMMENDED FIVE YEAR CAPITAL IMPROVEMENTS PROGRAM THAT WE'VE MENTIONED EARLIER THIS EVENING.

AGAIN, WE'RE GOING TO GIVE YOU A SUMMARY. THE PROPOSED CIP COVERS FISCAL YEARS 2027 THROUGH 2031, AND INCLUDES A TOTAL OF 82 CAPITAL IMPROVEMENT PROJECTS ACROSS THE ORGANIZATION.

COLLECTIVELY, THESE PROJECTS REPRESENT APPROXIMATELY $838.8 MILLION IN PLANNED CAPITAL INVESTMENT OVER THE NEXT FIVE FISCAL YEARS.

FOR FISCAL YEAR 2020 627, THE PROPOSED CAPITAL BUDGET TOTALS APPROXIMATELY $288.5 MILLION.

THE ANNUAL SPENDING PLAN IS DISTRIBUTED AS FOLLOWS.

FISCAL YEAR 2027 288.5 MILLION. FISCAL YEAR 2028 APPROXIMATELY 290.1 MILLION.

FISCAL YEAR 2028 152.1 MILLION. APPROXIMATELY.

FISCAL YEAR OR 2030, APPROXIMATELY $60.5 MILLION IN FISCAL YEAR 2031, APPROXIMATELY $47.6 MILLION.

COUNCIL WILL NOTICE THAT THE LARGEST LEVELS OF INVESTMENT OCCUR DURING THE FIRST TWO YEARS OF THE PLANNING PERIOD.

THIS REFLECTS PROJECTS THAT ARE EITHER ALREADY UNDERWAY IN ADVANCED STAGES OF PLANNING, OR CONSIDERED CRITICAL TO MAINTAIN SERVICE CAPACITY FOR OUR RAPIDLY GROWING COMMUNITY.

AS PROJECTS MOVE FURTHER INTO THE PLANNING HORIZON, THE PROPOSED SPENDING LEVELS DECLINE, AS YOU CAN SEE. THIS IS INTENTIONAL. FUTURE PROJECTS WILL CONTINUE TO BE EVALUATED ANNUALLY.

AS I'VE MENTIONED, BASED UPON UPDATED FINANCIAL FORECASTS, AVAILABLE REVENUES, DEBT CAPACITY, GRANT OPPORTUNITIES, PROJECT READINESS, COUNCIL PRIORITIES, AND OF COURSE, CHANGING COMMUNITY NEEDS.

GO AHEAD SIR. I JUST WANT TO MAKE ONE CORRECTION FOR THE RECORD.

THE TABLE AT THE BOTTOM WAS NOT UPDATED. SO THE FIRST COLUMN SHOULD SAY FISCAL YEAR 27 AND IT GOES THROUGH 2031. YES. THANK YOU. THANK YOU FOR THAT CLARIFICATION.

ALL RIGHT. ANOTHER IMPORTANT FEATURE OF THIS SLIDE IS THE BREAKDOWN BETWEEN TAX SUPPORTED AND NON-TAX SUPPORTED PROJECTS.

APPROXIMATELY $379.6 MILLION, OR 45.3% OF THE PROPOSED PROGRAM, IS SUPPORTED THROUGH TAX RELATED FUNDING SOURCES.

THE REMAINING $459.2 MILLION, OR 54.7%, CONSISTS OF UTILITY RELATED PROJECTS FUNDED PRIMARILY THROUGH ENTERPRISE REVENUES, UTILITY FEES, IMPACT FEES, GRANTS, AND OTHER NON PROPERTY TAX FUNDING SOURCES.

YOU CAN SEE THAT LISTED AT THE ON POINT NUMBER FOUR.

BUT THIS DISTINCTION IS IMPORTANT BECAUSE IT DEMONSTRATES THAT MORE THAN HALF THE CITY'S PLANNED CAPITAL INVESTMENT IS EXPECTED TO BE FINANCED WITHOUT DIRECT RELIANCE ON GENERAL FUND PROPERTY TAX REVENUES. FINALLY, I WOULD NOTE THAT THE COMPLETE LISTING OF ALL 82 PROPOSED CAPITAL PROJECTS, INCLUDING PROJECT DESCRIPTIONS, ESTIMATED COSTS, FUNDING SOURCES, AND IMPLEMENTATION SCHEDULES, IS INCLUDED WITHIN THE PROPOSED BUDGET DOCUMENT FOR COUNCIL'S DETAILED REVIEW.

OVERALL, THIS PROPOSED CIP PROVIDES A LONG TERM ROADMAP FOR INFRASTRUCTURE INVESTMENT WHILE RECOGNIZING THAT AFFORDABILITY AND FINANCIAL SUSTAINABILITY MUST REMAIN CENTRAL CONSIDERATIONS THROUGHOUT IMPLEMENTATION. I HAVE A QUICK QUESTION, IF YOU DON'T MIND, JUST REAL QUICK.

AND THIS HAS TO DO WITH THE CONVERSATIONS WE'VE HAD FOR THE PAST YEAR AND A HALF ABOUT EXPANDING OUR WASTEWATER TREATMENT AND HAVING SUBSTATIONS BEING BUILT. IS A LOT OF THESE PROJECTS PART OF THESE PROPOSED PROJECTS OF AYE OF 82? YOU KNOW, THESE ONES THAT HAVE HERE BECAUSE WE'VE BEEN TALKING ABOUT PURCHASING A PROPERTY, POSSIBLY OR EXPANDING OUR OUR TREATMENT PLAN.

CORRECT. OR ANY OF THOSE PART OF THIS FIVE YEAR PLAN? OBVIOUSLY IT IS CORRECT. NO, NO, NO, I'M THINKING I MISSED THE

[04:45:03]

NO, MA'AM. SINCE FOUR THIS MORNING. YOU DIDN'T MISS ANYTHING.

OKAY. SO TOWARDS THE BACK OF THE THE DOCUMENT THAT WE HANDED OUT, THERE IS A LIST OF EVERY SINGLE CIP PROJECT THAT IS BEING PLANNED FOR IN THE FIVE YEAR WINDOW.

SO TO ANSWER YOUR SPECIFIC QUESTION, DID WE INCLUDE THE TEN YEAR, $10 MILLION COST ESTIMATE FOR THE ADMIN BUILDING? IS THAT WHAT. YEAH. WELL, WE'VE BEEN TALKING ABOUT SEVERAL DIFFERENT BUILDINGS AND AND ALSO EXPANDING OUR WASTEWATER, YOU KNOW, WITH TIM AND THE TREATMENT PLAN. TREATMENT PLAN.

THE TREATMENT PLAN EXPANSION IS INCLUDED IN THE FIVE YEAR SPENDING PLAN.

OKAY. ALL RIGHT. IT'S ABOUT $175 MILLION. OKAY.

WOULDN'T THAT BE IN THE WASTEWATER BUDGET INSTEAD OF THE CIP? SO IN THE CIP SPENDING PLAN, WE HAVE CATEGORIES FOR GENERAL FUND TYPE PROJECTS FOR WATER UTILITY TYPE PROJECTS, WASTEWATER UTILITY TYPE PROJECTS. THEY'RE PAID FOR WITH WASTEWATER RIGHT RATES.

OKAY. CAN I DO HAVE A CONCERN? BECAUSE I'VE BEEN WORRIED EVER SINCE MY FIRST TERM ABOUT WHAT WE'RE GOING TO DO WITH OUR WASTEWATER AFTER WE MAX OUT.

SO I KNOW THAT'S GOING TO BE LONGER THAN A FIVE YEAR PLAN, BUT I THINK WE NEED TO GET STARTED ON TRYING TO FIGURE THAT OUT.

TEN YEARS AGO. BECAUSE WE'RE GOING TO NOT BE ABLE TO GROW IF WE DON'T.

I MEAN, WE SAW AT THE LAST MEETING THAT IF ALL OF THE DEVELOPMENT THAT WE HAVE ALREADY APPROVED HAD DECIDED TO MOVE FORWARD, IT WOULD BE 10.9 MILLION GALLONS PER DAY IN WASTEWATER.

WE DON'T EVEN HAVE THAT CAPACITY RIGHT NOW, AND HOPEFULLY THAT DOESN'T HAPPEN.

BUT WE ARE MAXED OUT AT 12 MILLION GALLONS PER DAY.

SO I THINK AT SOME POINT WE NEED TO AT LEAST TRY TO FORMULATE A PLAN.

SO IN OUR WATER MASTER PLAN THAT OUR DIRECTOR SHARED WITH Y'ALL NOT TOO LONG AGO.

THE LONG RANGE PLAN FOR WATER SUPPLY FIRM WATER SUPPLY THAT THEY'RE LOOKING AT IN THE NEXT TEN YEAR, 20 YEAR WINDOW, WHICH IS WHEN WE'RE GOING TO HIT CLOSE TO ON THE WASTEWATER SIDE, ONE OF THE MAJOR FIRM SUPPLY SOURCES OF WATER IN THE FUTURE IS CLEANING THE WASTEWATER EFFLUENT TO A LEVEL THAT IT CAN GO TO OUR WATER TREATMENT PROCESS AND BE PUT BACK INTO THE WATER SUPPLY.

SO THAT WILL HELP GREATLY TO REDUCE THE BURDEN OR PRESSURE ON THE WASTEWATER SIDE.

BUT YOU'RE CORRECT. AFTER 12 MGD, WE HAVE TO FIND ANOTHER BASIN TO DISCHARGE TREATED EFFLUENT.

IT CANNOT GO INTO PLUM CREEK. YEAH. SO MAYBE WE CAN JUST START THAT CONVERSATION.

I MEAN, NOT THIS YEAR, OBVIOUSLY, BUT NEXT YEAR.

OH, THAT THAT DISCUSSION HAS ALREADY STARTED.

THE PLANNING HAS ALREADY STARTED. OKAY. SO WHEN YOU TALK TO MIKE MURPHY AND AMBER, THEY'LL BE ABLE TO SHARE WITH YOU MORE DETAILS.

BUT WE'RE GOING TO BRING MORE REPORTS TO YOU ALL TO GIVE YOU ALL AN UPDATE WHERE WE ARE ON THE THE WATER MASTER PLANNING.

OKAY. THANK YOU. CERTAINLY. THANK YOU SIR. ALL RIGHT.

THE NEXT TWO SLIDES ILLUSTRATE HOW THE PROPOSED CIP PROGRAM WILL BE FINANCED OVER THE NEXT FIVE FISCAL YEARS.

ONE OF THE STRENGTHS OF THIS PROPOSED CIP IS THAT IT DOES NOT RELY ON A SINGLE ANY SINGLE FUNDING SOURCE, AS ICM MENTIONED. INSTEAD, THE PROGRAM IS INTENTIONALLY DIVERSIFIED, ALLOWING THE CITY TO MATCH EACH CAPITAL PROJECT WITH THE MOST APPROPRIATE AND LEGALLY AVAILABLE SOURCE OF FUNDING. AS YOU REVIEW THE CHART, YOU WILL NOTICE THE FUNDING COMES FROM A COMBINATION OF TAX SUPPORTED REVENUES, UTILITY REVENUES, PREVIOUSLY AUTHORIZED BOND PROCEEDS, FUTURE DEBT ISSUANCES WHERE APPROPRIATE, IMPACT FEES, DEVELOPER PARTICIPATION GRANTS, AND AVAILABLE CASH FUNDING WHEN AVAILABLE.

THIS DIVERSIFIED APPROACH IS IMPORTANT FOR SEVERAL REASONS.

FIRST, IT REDUCES OUR DEPENDANCE ON ANYONE REVENUE SOURCE AND PROVIDES GREATER FINANCIAL FLEXIBILITY OF ECONOMIC CONDITIONS CHANGE.

SECOND, IT ENSURES THAT PROJECTS ARE FUNDED BY THE USERS OR BENEFICIARIES WHEREVER LEGALLY APPROPRIATE.

FOR EXAMPLE, UTILITY INFRASTRUCTURE IS PRIMARILY FUNDED THROUGH UTILITY RELATED REVENUES RATHER THAN PROPERTY TAXES, AS I MENTIONED. THIRD, IT ALLOWS THE CITY TO MAXIMIZE OUTSIDE FUNDING OPPORTUNITIES WHENEVER GRANT FUNDING OR DEVELOPER PARTICIPATION IS AVAILABLE.

STAFF PURSUES THOSE OPPORTUNITIES TO REDUCE THE FINANCIAL BURDEN PLACED ON LOCAL TAXPAYERS AND UTILITY CUSTOMERS.

[04:50:06]

THE PROPOSED FUNDING SCHEDULE ALIGNS ANTICIPATED EXPENDITURES WITH PROJECTED FUNDING.

AVAILABILITY PROJECTS MAY BE ACCELERATED OR DELAYED BASED UPON CONSTRUCTION READINESS PERMITTING AVAILABLE FINANCING COUNCIL DIRECTION, OR CHANGING COMMUNITY PRIORITIES. THIS ANNUAL REVIEW PROCESS ALLOWS THE CITY TO REMAIN FINANCIALLY FLEXIBLE WHILE CONTINUING TO ADDRESS OUR HIGHEST PRIORITY INFRASTRUCTURE NEEDS. ULTIMATELY, OUR OBJECTIVE IS TO ENSURE THAT CAPITAL INVESTMENTS ARE NOT ONLY NECESSARY BUT ALSO FINANCIALLY SUSTAINABLE OVER THE LONG TERM.

SO THIS SLIDE CONTINUES. AND YOU'LL SEE THERE AT THE BOTTOM AGAIN, THE NUMBERS ARE PULLED DOWN FOR YOU, TOTALING THE 288.5 ALL THE WAY THROUGH THE TOTAL OF WHAT WE BEGAN WITH THE SUMMARY OF 838.8 FROM FISCAL YEAR 2027 ALL THE WAY THROUGH FISCAL YEAR 2031. AGAIN, THESE REPRESENT THE PROJECTS THAT WE BROUGHT FORWARD TO COUNCIL FOR REVIEW AND YOU ALL'S DIRECTION.

WE'VE, WE'VE SUMMARIZED THESE FUNDING SOURCES HERE.

ALL RIGHT. THE NEXT THREE SLIDES BRING TOGETHER ALL CATEGORIES OF CAPITAL INVESTMENT INTO ONE CONSOLIDATED VIEW ACROSS ALL FUNDING SOURCES.

THE CITY CURRENTLY PROJECTS APPROXIMATELY, AS I SAID, $838.8 MILLION IN TOTAL CAPITAL FUNDING REQUIREMENTS OVER THE NEXT FIVE YEARS.

THAT TOTAL CONSISTS OF FOUR PRIMARY CATEGORIES.

FIRST, APPROXIMATELY $230.3 MILLION OF VOTER APPROVED, TAX SUPPORTED GENERAL OBLIGATION BOND PROJECTS.

SECOND, APPROXIMATELY 26.9 MILLION OF OTHER TAX SUPPORTED CAPITAL IMPROVEMENTS FUNDED PRIMARILY THROUGH GENERAL FUND AND OTHER DEDICATED SOURCES.

THIRD, APPROXIMATELY 122.5 MILLION OF CURRENTLY UNFUNDED CAPITAL NEEDS THAT WILL REQUIRE FUTURE FUNDING DECISIONS, INCLUDING POTENTIAL CERTIFICATES OF OBLIGATION OR FUTURE BOND ELECTIONS.

AND FINALLY, APPROXIMATELY 459.2 MILLION OF NON-TAX SUPPORTED UTILITY CAPITAL IMPROVEMENTS FUNDED THROUGH ENTERPRISE FUND REVENUES AND RELATED FINANCING MECHANISMS. THIS REFLECTS THE CITY'S CURRENT CONSTRUCTION SCHEDULE, CONTINUED IMPLEMENTATION OF EXISTING BOND PROGRAMS, MAJOR UTILITY EXPANSION PROJECTS, AND INFRASTRUCTURE NECESSARY TO SUPPORT CONTINUED GROWTH AS PROJECTS ARE COMPLETED.

ANNUAL FUNDING REQUIREMENTS DECLINE DURING YEARS FOUR AND FIVE UNDER CURRENT ASSUMPTIONS.

OVERALL, THIS FIVE YEAR CAPITAL PLAN PROVIDES COUNCIL WITH A LONG RANGE VIEW OF THE CITY'S INFRASTRUCTURE NEEDS, WHILE ALSO SERVING AS AN IMPORTANT FINANCIAL PLANNING TOOL.

IT ALLOWS US TO COORDINATE CAPITAL INVESTMENTS WITH DEBT ISSUANCE, WHICH WE'LL TALK ABOUT IN JUST A MOMENT UTILITY RATE PLANNING, OPERATIONAL IMPACTS AND FUTURE BUDGET DEVELOPMENT TO ENSURE PROJECTS REMAIN FINANCIALLY SUSTAINABLE.

THAT'S THE THEME FOR TONIGHT. AS FUTURE BUDGETS ARE DEVELOPED, THIS PLAN WILL CONTINUE TO BE UPDATED BASED UPON PROJECT PROGRESS, AVAILABLE FUNDING, CHANGING PRIORITIES, ECONOMIC CONDITIONS AND FUTURE COUNCIL DIRECTION.

OKAY. HELLO AGAIN. THIS IS MY FINAL TIME TO SPEAK WITH YOU ALL, SO I'LL TAKE ADVANTAGE OF IT.

SO NOW I'M GOING TO GO OVER THE OUTSTANDING DEBT THAT WE HAVE THAT'S PAYING FOR THE CIP PROJECTS THAT WE WENT OVER AND THE REQUIREMENTS THAT WE HAVE FOR FISCAL YEAR 2627.

SO OUR TOTAL PRINCIPAL DEBT OUTSTANDING AS OF AUGUST 31ST, AUGUST 1ST.

WE'VE ALREADY MADE OUR PAYMENTS FOR FISCAL YEAR 2526, SO THIS IS WHAT'S GOING TO BE OUTSTANDING FOR NEXT YEAR.

IT'S GOING TO BE A TOTAL BOND DEBT OUTSTANDING OF $248 MILLION.

AS YOU CAN SEE, WE HAVE THE BREAKDOWN OF THE DIFFERENT SERIES THAT WE'VE ISSUED OVER THE PAST FOREVER.

AND WITH OUR NEWEST DEBT, THE GOALS THAT WE ISSUED IN 2025 OF $40.4 MILLION, AND CEOS FOR 2025 OF $75.5 MILLION. OUR TOTAL BOND DEBT OUTSTANDING BY THE SOURCE GENERAL FUND, IS $144 MILLION, OR 58% OF THAT WATER, OR WHICH IS PAID THROUGH THE WATER RATES, IS $39.8 MILLION, OR 16%. THE WASTEWATER, WHICH IS PAID THROUGH THE WASTEWATER RATES, IS 39 MILLION, OR SEVEN 4%. AND THEN WE DO HAVE A LITTLE FURTHER TOURS.

TOURS NUMBER ONE OF $8.1 MILLION, OR 3.28%, AND TOURS NUMBER TWO, WHICH IS A LITTLE OVER $17 MILLION OR 6.85%.

SO THAT BRINGS US TO THE $248 MILLION THAT WE HAVE FOR NEXT YEAR, OR FOR THE LIFE OF THE.

YES, MA'AM. SO THIS IS WHAT WE'VE DRAWN ON OUR BONDS.

THAT IS NOT WHAT'S AVAILABLE THAT WE MIGHT DRAW ON.

THIS IS WHAT WE CURRENTLY HAVE. OUTSTANDING. THANKS.

THEY'VE BEEN ISSUED. RIGHT. THEY'VE BEEN ISSUED. YES. YES. THIS IS EVERYTHING THAT'S BEEN ISSUED AND THAT WE'RE WE ARE CURRENTLY MAKING PAYMENTS ON THESE DEBT ISSUES RIGHT NOW.

[04:55:05]

ISSUED. YES. OKAY. YES. SO THERE'S A DIFFERENT NUMBER THAT'S APPROVED, THAT'S STILL OUT THERE AND AVAILABLE TO US LIKE THE GEO BONDS FOR ROADS.

YES, YES. THERE ARE STILL MORE OUT THERE. YEAH.

THAT'S MORE DEBT. YES. YEAH. THIS IS ONLY WHAT'S ON OUR BOOKS RIGHT NOW.

AND SO NOW THIS. IF WE HOLD EVERYTHING THROUGH MATURITY, WE'LL HAVE.

WE'LL. OH, $418 MILLION FOR THE TOTAL DEBT. THAT INCLUDES THE PRINCIPAL OF $248 MILLION AND OUR INTEREST OF $155 MILLION. MOST OF THESE, THE 2025, I BELIEVE THOSE ARE 30 YEAR BONDS.

SO WE'LL BE FINISHED WITH THOSE AROUND 2055. SO WE GOT A LITTLE WAYS TO GO WITH THOSE, BUT WE'RE WORKING OUR WAY DOWN.

WE'RE GETTING THERE FOR FISCAL YEAR 2627. THIS IS THIS IS THE PAYMENTS THAT WE'RE GOING TO BE MAKING NEXT YEAR IN FEBRUARY AND AUGUST.

OUR OUR GENERAL FUND, THE INS PORTION OF THAT IS GOING TO BE $14 MILLION OR 63.4% WATER.

THE WATER DEBT IS GOING TO BE $2.9 MILLION, OR 13.25% WASTEWATER $2.6 MILLION, OR 11.82%. AND THEN AGAIN, WE HAVE OUR TUTORS. THIS IS NUMBER ONE AT 1.4 MILLION OR 6.3%.

AND HERE'S NUMBER TWO OF 1.1 MILLION OR 5.25% BRINGS US TO A TOTAL.

WE'RE GOING TO PAY OF $10.6 MILLION IN PRINCIPAL, $11.5 MILLION IN INTEREST, AND THE TOTAL WILL BE $22.2 MILLION.

ARE YOU KIDDING? ANY MORE QUESTIONS? SO I WOULD LIKE TO INTERJECT, IN ADDITION TO WHAT ANDY COVERED SO FAR THIS, IT'S IMPORTANT TO NOTE HERE THAT THIS IS ONLY WHAT WE OWE.

TODAY. WE WILL ISSUE CLOSE TO 100 250 MILLION NEXT YEAR FOR WATER, WASTEWATER, ROAD BONDS, TIRES, ALL OF THAT TOGETHER.

SO IF YOU LOOK AT THE SLIDE.

SO NEXT YEAR IN 26, 27, IF YOU LOOK AT LINE NUMBER FOUR IS ESTIMATED FOR THE AUTHORIZED GEO BONDS THAT THE VOTERS HAVE AUTHORIZED.

WE WILL BE SPENDING ABOUT $102 MILLION. THAT'S THE ENGINEER'S ESTIMATE.

I DON'T THINK IT'S GOING TO BE THAT HIGH, BUT LET'S ASSUME THEY'RE RIGHT ON THE MARK.

IT'S GOING TO BE $102 MILLION FOR THAT. THEN MOVING ON DOWN, WE HAVE OTHER PROJECTS THAT WE WILL BE ISSUING CEOS FOR. THERE ARE GENERAL FUND CIP PROJECTS, PARK DEVELOPMENT PROJECTS.

THAT WILL BE ANOTHER 8 MILLION. SO FOR TAX SUPPORTED, THE CIP PLAN IS PROJECTED THAT WE WILL NEED $110 MILLION CASH NEXT YEAR. HOWEVER, YOU'LL RECALL THAT I EXPLAINED EARLY ON THAT WE WILL NOT ISSUE ANY NEW BONDS UNTIL WE HAVE SPENT THE MONEY. SO EVEN THOUGH THEY'RE PREDICTING 110 MILLION FOR GIO SUPPORTED OR TAX SUPPORTED DEBT, WE MAY NOT NEED ALL 110. SO LET'S SAY. AND I KNOW LEON IS IN THE ROOM.

SO LEON, CLOSE YOUR EYES. I HAVE ALWAYS DISCOUNTED WHAT THE ENGINEERS TELL ME FOR BOND PRICE SIZING.

SO IF THEY TELL ME $10, I USE $6. I DISCOUNTED BY 40% BASED ON OUR ACTUAL HISTORICAL EXPERIENCE. SO IF I USE THAT SAME FACTOR, THAT'S 60 MILLION RIGHT HERE FOR TAX SUPPORTED DEBT NEXT YEAR THAT WE WOULD HAVE TO ISSUE DEBT.

SO THAT'S THE TAX SUPPORTED PIECE. YES, SIR. THAT BRINGS UP A GOOD QUESTION BECAUSE OF WHAT WE HAD OUR CONVERSATION WITH THURSDAY ABOUT A POSSIBLE ANIMAL SHELTER. THAT WOULD BE IF WE DID DO A SEAL BOND, WHICH SOME PEOPLE HAVE SUGGESTED

[05:00:05]

WE HAVE A PLACEHOLDER IN THE CIP PLAN. IF YOU LOOK AT PROJECT NUMBER 80, THE LAST ONE, VERY LAST ONE.

THANK YOU. THANK YOU MELISSA. I KNEW YOU WERE THERE SOMEWHERE ALL NIGHT.

WE HAVE $2 MILLION AS A PLACEHOLDER IN NEXT YEAR.

IF THE COUNCIL VOTED TO GO IN THAT ROUTE, WHETHER WE GO THE THREE PARTY PARTNERSHIP OR WE GO ALONE.

WE HAVE A PLACEHOLDER ABOUT 2 MILLION, AND THE FOLLOWING YEAR IS ABOUT 8 MILLION.

SO TOTAL 10 MILLION IS IN THE PLAN. YES, SIR.

SO THIS 110 MILLION INCLUDES THAT 2 MILLION THAT WE ARE PERFECT SETTING ASIDE.

SO LET'S ASSUME WE WE USE MY BOND SIZING FORMULA.

IF I USE DISCOUNTED IT BY 40% I'M STILL LOOKING AT $60 MILLION BALLPARK ON ON THE GENERAL FUND SIDE, TAX SUPPORTED. NOW LOOK AT THE NON-TAX SUPPORTED.

LINE 19 IS SAYING THAT WE NEED ABOUT 150 MILLION.

SO, ANDY, SINCE YOU ARE OUR CALCULATOR GUY, IF YOU COULD TAKE 60% OF THAT.

IS ABOUT 80. YEAH. 88 MILLION ON THE NON TAX SUPPORTED DEBT. ROUGH BALLPARK ESTIMATE.

SO 80 ON THE 88 LET'S SAY 90 ON THE NON TAX SUPPORTED SIDE AND 60 ON THE TAX SUPPORTED. THAT'S ABOUT 140.

THE OTHER THING I WANT TO TALK ABOUT, I KNOW IT'S 1030.

I HAVE ALREADY HIT UP MY FIVE HOUR ESTIMATE IS THAT WE'RE GOING TO NEED A BOND ELECTION, AND WE NEED TO START PLANNING FOR IT, BECAUSE WE'VE ALREADY BRIEFED YOU. MIKE TRIMBLE, BEFORE HIS GOING AWAY PRESENT TO US WAS HIS FINAL ESTIMATE THAT HE SHARED WITH COUNCIL. AND AT THAT POINT, WE WERE LOOKING AT $55 MILLION DEFICIT IN THEIR OWN BOND PROGRAM.

SO IF WE'RE GOING TO DO ALL THE ROADS, THAT MONEY HAS TO COME FROM SOMEWHERE.

THE CHAVO PASTRANO SENIOR PARKWAY THAT HAS TO BE BUILT HAS THREE BRIDGES ON IT, AND THAT'S GOING TO BE PRETTY CLOSE TO $100 MILLION.

SORRY, I DIDN'T MEAN TO CHOKE YOU THERE. THEN WE HAVE OTHER PROJECTS THAT WE'LL HAVE TO PLAN FOR, RIGHT? SO IT TAKES 18 MONTHS TO 24 MONTHS IF WE DO IT RIGHT AND NOT RUSH IT.

IT TAKES 18 MONTHS TO GET THROUGH THIS PROCESS.

SO THE EARLIEST WE CAN DO WOULD BE NOVEMBER OF 2028.

WE CAN ALSO INCLUDE IN IT THE TRAILS WITH TRAILS THAT WE DON'T HAVE MONEY FOR THAT NEEDS TO BE VOTED ON BY THE VOTERS.

THAT NEEDS TO BE DECIDED BY THE VOTERS. SO COME MONDAY, I'M GOING TO ASK OUR CITY ATTORNEY. TO PREPARE A RESOLUTION FOR COUNCIL TO FORMALLY ADOPT OUR BOND ELECTION PROCESS. YOU ALL REMEMBER MIKE TRIMBLE WENT THROUGH HIS FLOWCHART.

WHAT IT TAKES THE VARIOUS STEPS. I'M GOING TO ASK OUR CITY ATTORNEY TO TAKE THAT FLOWCHART, TRANSLATE THAT INTO A RESOLUTION, BRING FORWARD TO THE CITY COUNCIL FOR ADOPTION.

THAT WILL SET THE THE ROADMAP FOR CITY COUNCIL TO WORK ON A BOND ELECTION FOR 2028. WE'RE GOING TO HAVE TO START WITH A BOND COMMITTEE IF THAT'S THE ROUTE YOU ALL WANT TO GO.

WE HAVE TO IDENTIFY THE TYPES OF PROJECTS, THE PROPOSITION.

THEN THE FINANCE TEAM HAS TO FIGURE OUT FOR EACH ONE OF THOSE PROJECTS OR PROPOSITIONS, WHAT IS THE TAX RATE IMPACT THAT THE VOTERS HAVE TO DECIDE BASED ON? SO IT TAKES QUITE A BIT. SO BUT WE HAVE TO START THAT PROCESS NOW, JUST LIKE WE WERE TALKING

[05:05:07]

WE NEED TO START NOW IF WE'RE GOING TO MAKE THE NOVEMBER 28TH BOND ELECTION.

SO THOSE TWO THINGS I WANTED TO TALK AND SHARE WITH YOU ALL AND LET YOU ALL KNOW THAT WE'RE GOING TO HAVE TO ISSUE BONDS NEXT YEAR.

IT'S GOING TO BE SOMEWHERE BETWEEN 100 AND $150 MILLION.

AND WE NEED TO START THE BOND ELECTION PROCESS.

SORRY. OKAY. ALL RIGHT. THIS IS MY MY LAST TIME WITH YOU GUYS. SO LET'S TALK RATES, FEES AND CHANGES.

AND THEN I WILL LET ICM BRING IT HOME FOR THE EVENING.

ALL RIGHT. HAVING COMPLETED OUR REVIEW OF THE PROPOSED OPERATING BUDGET AND CAPITAL IMPROVEMENT PROGRAM, I'D NOW LIKE TO MOVE TO THE CITY'S RECOMMENDED RATES, FEES AND CHARGES FOR FISCAL YEAR 2020 627. ONE OF THE GUIDING PRINCIPLES ESTABLISHED AT THE BEGINNING OF THIS BUDGET PROCESS WAS TO MINIMIZE THE FINANCIAL IMPACT ON OUR RESIDENTS WHENEVER POSSIBLE, WHILE STILL MAINTAINING THE CITY'S LONG TERM FINANCIAL STABILITY.

AS STAFF DEVELOPED THE PROPOSED BUDGET, EVERY EFFORT WAS MADE TO AVOID INCREASING COSTS TO OUR RESIDENTS UNLESS ABSOLUTELY NECESSARY.

AS WE'VE DISCUSSED THROUGHOUT THIS EVENING'S PRESENTATION, THE RECOMMENDED BUDGET INCORPORATES NEARLY $11.9 MILLION IN RECURRING COST CONTAINMENT MEASURES ACROSS THE ORGANIZATION. THOSE EFFORTS SIGNIFICANTLY REDUCED EXPENDITURE GROWTH AND IMPROVED THE CITY'S FINANCIAL OUTLOOK.

BECAUSE OF THOSE RECURRING SAVINGS, STAFF IS ABLE TO RECOMMEND NO INCREASE IN WATER UTILITY RATES FOR FISCAL YEAR 20 2027 2627.

LIKEWISE, NO INCREASE IS RECOMMENDED FOR WASTEWATER UTILITY RATES AND NO INCREASE IS PROPOSED FOR STORM DRAINAGE UTILITY FEES.

THESE RECOMMENDATIONS ARE PARTICULARLY NOTEWORTHY GIVEN THE INFLATIONARY PRESSURES AFFECTING LOCAL GOVERNMENTS ACROSS THE STATE.

YET, THROUGH DISCIPLINED FINANCIAL LEADERSHIP AND ORGANIZATIONAL EFFICIENCIES, THE CITY IS ABLE TO ABSORB MANY OF THOSE PRESSURES WITHOUT IMMEDIATELY TRANSFERRING ADDITIONAL COSTS TO OUR CUSTOMERS. THERE ARE A FEW NOTABLE EXCEPTIONS, HOWEVER.

THE PROPOSED BUDGET INCLUDES THE CONTRACTUAL ADJUSTMENTS ASSOCIATED WITH THE CITY SOLID WASTE AGREEMENT THAT WE TALKED ABOUT EARLIER IN THE EVENING.

THIS INCREASE IS DRIVEN BY THE TERMS OF THE EXISTING SERVICE CONTRACT RATHER THAN DISCRETIONARY POLICY DECISIONS BY THE CITY.

THERE'S AN INCREASE OF 2.5%. WE TALKED ABOUT THAT EARLIER IN THE EVENING FOR 27.

ADDITIONALLY, STAFF RECOMMENDS ONE NEW WASTEWATER RELATED COST RECOVERY FEE ASSOCIATED WITH INDUSTRIAL PRETREATMENT SAMPLING.

THIS FEE IS DESIGNED TO RECOVER THE DIRECT COST OF PROVIDING A SPECIALIZED REGULATORY SERVICE, RATHER THAN SUBSIDIZING THOSE COSTS WITH OTHER UTILITY REVENUES.

SECOND, THERE IS A PROPOSED REDUCTION OF THE BACKFLOW PREVENTION ASSEMBLY TESTER FEE FROM $250 TO $150.

AND FINALLY, I WANT TO MENTION KYLE FIRE HAS PROPOSED FIVE NEW FEES AND 19 FEE CHANGES FOR FISCAL YEAR 2020 627.

ALTHOUGH IT'S VERY IMPORTANT TO NOTE THAT THESE ARE PASS THROUGH FEES THAT DO NOT IMPACT THE CITY'S BUDGET.

WITH THAT, I WILL CONCLUDE THE DISCUSSION OF A FOUR MAJOR OPERATING FUNDS AND TRANSITION INTO THE REMAINING CITY FUNDS INCLUDED IN THE PROPOSED BUDGET.

WHILE THE GENERAL FUND, WATER FUND, WASTEWATER FUND AND STORM DRAINAGE UTILITY FUND ACCOUNT FOR THE CITY'S DAY TO DAY OPERATIONS AND CORE SERVICES, THE CITY ALSO MANAGES 56 ADDITIONAL OTHER FUNDS THAT SUPPORT SPECIFIC LEGAL, FINANCIAL, CAPITAL AND STRATEGIC PURPOSES.

THESE FUNDS ARE GENERALLY RESTRICTED BY LAW DEBT COVENANTS.

VOTER AUTHORIZATION. DEVELOPMENT AGREEMENTS. GRANT REQUIREMENTS, OR CITY POLICY.

BECAUSE OF THOSE RESTRICTIONS, THEY CANNOT SIMPLY BE USED TO SUPPORT GENERAL FUND OPERATIONS OR OFFSET OPERATING DEFICITS.

MANY OF THESE FUNDS ARE DEDICATED TO CAPITAL CONSTRUCTION, DEBT REPAYMENT, TAX INCREMENT REINVESTMENT ZONES, GRANTS, PARK DEVELOPMENT, AND OTHER SPECIAL REVENUE ACTIVITIES.

THE NEXT SLIDE PROVIDES A SUMMARY OF SOME OF THOSE LARGER FUNDS INCLUDED WITHIN THIS CATEGORY, AND ILLUSTRATES A SIGNIFICANT INVESTMENT OCCURRING ACROSS THE CITY OUTSIDE OF OUR FOUR MAJOR OPERATING FUNDS THAT WE'VE COVERED THIS EVENING IN DETAIL. COLLECTIVELY, THE CITY'S 56 OTHER FUNDS REPRESENT APPROXIMATELY $301.2 MILLION IN PROPOSED EXPENDITURES FOR FISCAL YEAR 2020 627.

THESE FUNDS VARY SIGNIFICANTLY IN PURPOSE, BUT MANY SUPPORT THE CITY'S LONG TERM INFRASTRUCTURE PROGRAM, DEBT OBLIGATIONS, ECONOMIC DEVELOPMENT INITIATIVES, AND LEGALLY RESTRICTED ACTIVITIES.

THE LARGEST EXPENDITURES WITHIN THESE REMAINING FUNDS ARE ASSOCIATED WITH MAJOR CAPITAL CONSTRUCTION PROJECTS, AS YOU MIGHT IMAGINE. WASTEWATER CAPITAL IMPROVEMENT FUND INCLUDES APPROXIMATELY $20.3 MILLION FOR WASTEWATER INFRASTRUCTURE EXPANSION AND REHABILITATION.

[05:10:08]

AND FINALLY, THE 2022 ROAD BOND FUND REPRESENTS THE SINGLE LARGEST INDIVIDUAL FUND LISTED HERE AT APPROXIMATELY $99.7 MILLION, SUPPORTING THE VOTER APPROVED TRANSPORTATION IMPROVEMENTS THAT CONTINUE TO BE IMPLEMENTED THROUGHOUT THE COMMUNITY.

TOGETHER, THESE FUNDS DEMONSTRATE THAT WHILE OUR OPERATING BUDGET FOCUSES ON DELIVERING DAILY CITY SERVICES, THE CITY IS SIMULTANEOUSLY MANAGING HUNDREDS OF MILLIONS OF DOLLARS IN LONG TERM INVESTMENTS THAT IMPROVE INFRASTRUCTURE, EXPAND CAPACITY, MAINTAIN FINANCIAL COMMITMENTS, AND POSITION KYLE FOR CONTINUED GROWTH.

AS ALWAYS, A COMPLETE LISTING OF THESE INDIVIDUAL FUNDS, ALONG WITH DETAILED EXPENDITURE INFORMATION, IS INCLUDED WITHIN THE PROPOSED BUDGET DOCUMENT FOR COUNCIL'S REVIEW. OF COURSE. SO HERE WE ARE. EVERYTHING THAT NEEDED TO BE SHARED. WE DID SHARE ON THE PROPOSED BUDGET WITH CITY COUNCIL IN MY OPENING STATEMENT FROM THE PODIUM. I BELIEVE I'VE COVERED THE ESSENCE OF OUR PROPOSED BUDGET AND WHAT IT MEANS TO US IN THE CITY ORGANIZATION, AND HOW WE MOVE FORWARD, THAT IT HAS ALWAYS BEEN A TWO YEAR TARGET FOR US IN OUR FINANCIAL PLANNING FOR THIS BUDGET. WE WEREN'T JUST LOOKING AT NEXT YEAR, BUT WE WERE ALSO LOOKING AT FY 28, HOW IT WOULD IMPACT AND HOW WE COULD ABSORB THOSE STICKER SHOCKS THAT ARE COMING OUR WAY IN 28.

AND BY STICKER SHOCK, I MEAN, IF WE'RE GOING TO ISSUE $150 MILLION NEXT YEAR ABOUT LATE SPRING MID SUMMER, IT WILL IMPACT 28. WE KNOW THAT FOR SURE BECAUSE THE TAX RATES WILL ALREADY BE SET FOR. 27. SO WE'LL HAVE TO TIME THE BOND SALES SUCH THAT IT DOES NOT IMPACT 27 BUT IT WILL DEFINITELY IMPACT 28 AND BEYOND.

SO THAT'S ONE THING THAT WE NEED TO KEEP IN MIND THAT AS WE WERE PLANNING FOR 27.

WE WERE ALSO PLANNING FOR 28. NOW WE HAVE 2 OR 3 BUDGET MEETINGS REMAINING. SO ON AUGUST 13TH WE'RE GOING TO TALK ABOUT PROPERTY TAX RATES.

WE'RE GOING TO TALK ABOUT THE COST OF SERVICE STUDY.

THE RESULTS OF THAT. I WANT COUNCIL TO BE BRIEFED BY OUR CONSULTANT DIRECTLY AS TO WHAT THAT LOOKS LIKE.

I WILL ALSO GO OVER MY RECOMMENDATION ONE MORE TIME ON THE WATER AND WASTEWATER RATES ON THAT DAY AS WELL.

THE PROPOSED BUDGET CLEARLY LAYS OUT I AM NOT RECOMMENDING A RATE INCREASE FOR WATER OR WASTEWATER, WHETHER IT'S FOR INSIDE OR OUTSIDE CITY CUSTOMERS.

ZERO RATE INCREASE. THE OTHER THING WE'RE GOING TO TALK ABOUT ON AUGUST 13TH IS.

WE ARE NOT REQUIRED TO DO A COST TO SERVICE STUDY UPDATE EVERY YEAR.

IT IS CITY THAT DECIDED TO DO THAT. MOST CITIES AND WE'LL TALK ABOUT THIS IN DETAIL ON 13TH.

MOST CITIES WILL BASE THEIR WATER AND SEWER RATES BASED ON THEIR FINANCIAL PLAN, WHICH IS THE BUDGET SUMMARIES THAT WE JUST WENT OVER. AND IF YOU NOTICED, THE WATER AND WASTEWATER FUNDS ARE DOING QUITE WELL.

THEY'RE HEALTHY. SO MY RECOMMENDATION IS WE BASE OUR RATES FOR NEXT YEAR AND THE YEAR AFTER THAT BASED ON OUR FINANCIAL PLAN RATHER THAN COST OF SERVICE STUDY.

MOST CITIES WILL DO A COST OF SERVICE STUDY AT THE EARLIEST.

EVERY THIRD YEAR OR EVERY FIFTH YEAR TO. BASICALLY RECONCILE THE DIFFERENCES BETWEEN FINANCIAL PLAN AND THE COST OF SERVICE STUDY. BASICALLY, THEY'RE TRUING UP THEIR RATES.

[05:15:05]

WE DO NOT NEED A RATE INCREASE TO BRING IN MORE REVENUES.

WE CAN DEFER AND SEE WHAT HAPPENS IN YEAR NUMBER THREE WHEN THE PLANT EXPANSION BILLS COME DUE, WHEN OTHER LARGER WATER PROJECTS COME DUE, BECAUSE THOSE THINGS WILL WILL COME OUR WAY, BUT THEY'RE NOT IN THE NEAR TERM FUTURE. SO UNTIL THEN, I THINK WE CAN RELY ON OUR FINANCIAL PLAN, WHAT IT SHOWS, AND NOT HAVE A RATE INCREASE UNTIL WE ABSOLUTELY NEED IT. SO THAT'S ON THE WATER AND WASTEWATER SIDE.

WE'RE NOT DOING ANYTHING ON THE STORM DRAINAGE SIDE.

NO FEE INCREASES, BUT WE DO NEED TO HAVE A COST OF SERVICE STUDY DONE FOR OUR STORM DRAINAGE FEE.

IT HASN'T BEEN ADJUSTED SINCE IT WAS IMPLEMENTED.

AND WHEN IT WAS IMPLEMENTED, THE FEE WAS MUCH HIGHER.

BUT BECAUSE OF INTERNAL DISCUSSIONS, IT WAS ADJUSTED BY 50%.

IT WAS FOR RESIDENTIAL CUSTOMERS. I BELIEVE IT WAS $10 A MONTH.

CITY COUNCIL AT THE TIME FELT IT WAS TOO HIGH.

SO STAFF WENT BACK AND LOOKED AT OTHER OPTIONS.

BUT WE DO NEED TO DO A COST OF SERVICE THAT IS DUE.

ON THE GENERAL FUND SIDE, WE'LL TALK ABOUT PROPERTY TAX RATES.

YES, SIR. WILL THAT BE PART OF THAT AUGUST 13TH DISCUSSION? NO, SIR. THAT'S AN ADDITIONAL STUDY. THAT'S AN ADDITIONAL STUDY OUTSIDE OF THE WATER AND WASTEWATER SYSTEM.

BUT IT IS IT IS NEEDED AND WE COULD INCLUDE THAT IN OUR 28 BUDGET.

SO ON 13TH WE'RE GOING TO TALK ABOUT THE COST OF SERVICE STUDY WHAT IT SHOWS.

WE'RE GOING TO TALK ABOUT THE PROPERTY TAX RATES AND THE DIFFERENT OPTIONS WE MAY HAVE TO CHOOSE FROM.

AND WE'LL SHOW YOU CLEARLY, SHOW YOU IF YOU PICK THIS TAX RATE, WHAT THE TAX REVENUE WILL BE COMPARED TO WHAT WE HAVE IN THE BUDGET.

SO IT MAY GIVE US MORE OR LESS, AND WE CAN GO THROUGH THOSE OPTIONS.

AND WE'LL HAVE THREE RATE OPTIONS. WELL, WE CAN ALWAYS HAVE FOURTH, BUT THREE FOR SURE.

WE'LL SHOW YOU THAT ON THE 13TH. SO NOW THAT'S THE NEXT BUDGET MEETING THAT WE HAVE PLANNED UNTIL WE GET INTO THE FIRST SET OF PUBLIC HEARINGS AND SECOND SET OF PUBLIC HEARINGS.

SO IF AND THIS IS JUST AN OPTION, IF COUNCIL WANTS MORE OR PREFERS MORE IN-DEPTH DISCUSSION, COUNCIL COULD DIRECT US TO ADD AN ADDITIONAL MEETING IN BETWEEN.

BUT IF YOU DO ADD THAT MEETING, I WOULD RECOMMEND THAT WE DO IT BEFORE SEPTEMBER 5TH.

SO BY THE TIME WE GET TO SEPTEMBER 5TH AND WE HAVE OUR PUBLIC HEARINGS, EVERYTHING HAS BEEN QUEUED UP.

COUNCIL IS OKAY WITH IT. AND THE PROPOSED BUDGET THAT YOU'RE VOTING ON, IT IS WHAT YOU WANT AT THAT POINT.

SO THAT'S WHAT I WANTED TO CLOSE WITH. THE TIMING OF OUR BUDGET PROCESS AND YOUR DESIRE.

HOW MUCH IN DEPTH DISCUSSION YOU WOULD LIKE TO HAVE TO CONSIDER ANY AMENDMENTS THAT YOU MAY WANT TO.

SO IF I COULD JUST ADD FOR SOME OF THE NEWER COUNCIL MEMBERS, WHAT HE'S, I'M SURE YOU WOULD KNOW IS IF THERE'S ANYTHING THAT YOU SEE WITHIN THE BUDGET THAT YOU WOULD LIKE TO AMEND OR ADD OR SUBTRACT TO TRY TO LOOK AT IT NOW AND THEN, THAT WAY YOU CAN BRING IT BACK AND SAY, MAYBE WE CAN REDUCE THIS. HOW DO WE GO ABOUT THAT? OR ADDING THIS? BECAUSE AGAIN, IF WE WANT TO ADD SOMETHING TO A SPECIFIC LINE ITEM, WE'RE GOING TO HAVE TO TAKE AWAY FROM SOMETHING ELSE, LIKE LIBRARY OR PARKS OR SOMETHING LIKE THAT.

BECAUSE I KNOW IN THE PAST WE WOULD ALWAYS THROW SOMETHING AT THE LAST MINUTE AND THEN IT'S LIKE RIGHT BEFORE THE VOTES, AND THEN WE WOULD HAVE THE CITY MANAGER SCRAMBLING TO TRY TO FIGURE OUT HOW TO BALANCE THAT BUDGET WHEN WE'RE JUST COMING UP WITH STUFF, BECAUSE WE'RE SAYING, I WANT TO ADD $30,000 FOR THIS, OR I WANT TO ADD $500,000 FOR, YOU KNOW, WHATEVER THE WHATEVER THE PROJECT WOULD BE, THEN YOU'RE GOING TO HAVE TO FIND IT AT THE LAST MINUTE BECAUSE WE'RE ON THE CLOCK ACTUALLY AS OF THE 13TH.

[05:20:03]

YEAH, I REMEMBER THAT WAS AN ANSWER A LOT OF TIMES LIKE, WHERE IS THIS GOING TO COME FROM? AND IT WAS PEREZ WILL FIND IT. AND I WAS LIKE YEAH, YEAH.

WE COULDN'T DO THAT TO THEM AGAIN. NO. SO YEAH, I THINK THIS TIME AROUND MAYOR, BOTH MY POCKETS ARE INSIDE OUT.

YES. MY ASK OF THE COUNCIL WOULD BE THE SAME AS MAYOR PRO TEM IS IF YOU WANT TO ADD SOMETHING, BRING SOMETHING THAT YOU'RE WILLING TO, TO SACRIFICE. AND THEN WE'LL TALK ABOUT IT AS A COUNCIL. AND THEN WE'LL TECHNICALLY DON'T WE HAVE LIKE A 2.5 OR SO CUSHION BECAUSE WE CREATE A 2.5 OVER THE EXCESS? YEAH.

AND THE NEXT. SO IF WE BRING SOMETHING BACK THAT AT LEAST DOESN'T TOTAL THAT AMOUNT, THEN WE SHOULD BE OKAY.

WELL, YEAH. AND JUST SAY THAT'S WHERE YOU WANT TO TAKE IT FROM. AND THEN THE COUNCIL CAN DECIDE IF THEY WANT TO DIMINISH THAT OR NOT. IT'LL BE A CONVERSATION FOR SURE. I MEAN, BUT IT'LL STILL BE ABOVE THE RESERVES. NO, IT'LL BE ABOVE.

ABSOLUTELY. SO I'M JUST SAYING THAT IT'S NOT NECESSARILY OH TICK FOR TACK.

IT'S NOT THAT SIMPLE. I THINK THAT WAS JUST TOO SIMPLISTIC.

NO, I THINK MY POINT WAS IF YOU'RE GOING TO ASK FOR SOMETHING, AT LEAST SAY WHERE THE FUNDING IS GOING TO COME FROM.

WE HAVE ALL THE INFORMATION RIGHT HERE. SO LOOK THROUGH IT.

AND IF YOU SAY, HEY, I WANT TO USE THE $2.5 MILLION THAT WE WERE TRYING TO BUILD UP IN OUR RESERVE, THEN THAT'S OKAY. JUST SAY THAT. ALL RIGHT. ANY OTHER QUESTIONS? COMMENTS? YEAH. WHEN WE GET TO THE QUESTIONS, THEN I HAVE QUESTIONS.

I WAITED THE WHOLE TIME. YOU DID? ALL RIGHT, WELL GO AHEAD.

WE'RE NOT THERE YET. HE'S NOT DONE. DO YOU HAVE FLIPPED THAT? SHE NEEDS TO. SHE NEEDS TO SEE THAT THERE'S QUESTION TIME WHICH LIKE THE LAST ONE.

FINISH YOUR PRESENTATION. AND THEN THAT WAS IT.

I JUST LEFT ALL WITH THE THOUGHT. IF YOU WANTED TO ADD A MEETING FOR IN-DEPTH DISCUSSION TO.

PLEASE CONSIDER DOING IT BETWEEN AUGUST 30TH AND SEPTEMBER 5TH.

OKAY. FAIR ENOUGH. OKAY, SO A COUPLE OF QUESTIONS.

JUST GOING THROUGH THE PRESENTATION AND THEN GOING THROUGH OUR LOVELY ALMOST 300 PAGE BOOK HERE FOR, YOU KNOW, OUR NEIGHBORS THAT GOT TIRED AT LIKE PAGE 70 SOMETHING AND DECIDED TO QUIT READING.

THE FIVE YEAR CIP PLAN HAS THE 80 PROJECTS INCLUDED.

NUMBER 74 IS THE LANGLEY ROAD RECONSTRUCTION.

SO WE CAN SEE THAT IN 2027 WE HAVE THAT 2.5 MILLION BUDGETED FOR THAT.

THE REST OF THOSE FOUR YEARS. THERE'S NOTHING ELSE THAT I SEE BUDGETED FOR THE REST OF POST OAK, FOR THE RECONSTRUCTION OF THOSE ROADS THAT ARE AS BAD AS LANGLEY.

WHAT IS THE. THE THOUGHT PROCESS OF WHERE AND WHEN WE'RE ADDRESSING THOSE.

IS THAT GOING TO BE SOMETHING THAT WE MAYBE TIE INTO THE POSSIBLE BOND FOR 2028? YES. SO THAT WAS OUR THOUGHT. SINCE LANGLEY WAS THE WORST OF OF THE NEIGHBORHOOD, WE WANTED TO TAKE CARE OF THAT IMMEDIATELY WITH CEOS. THAT WAS THE PLAN ALL ALONG. AND FOR THE REST OF THE POST OAK SUBDIVISION, WE WERE THINKING THE AMOUNT IS GOING TO BE SUCH A LARGE AMOUNT THAT WE SHOULD ADD IT TO THE.

AND THAT'S REALLY A COUNCIL POLICY DECISION. DO YOU WANT US TO CONTINUE USING CEOS, OR DO YOU WANT TO ADD IT TO THE LIST OF VOTER.

RIGHT. OKAY. YEAH. JUST SO I CAN ANSWER THOSE QUESTIONS.

WHEN I GO HOME. AND THEN ALSO I KNOW WE TALKED ABOUT THE VIBE TRAIL HAS NO MONEY.

IT'S KIND OF PAUSED RIGHT NOW. WHAT ABOUT THE AREAS THAT WERE WITHIN THE ROADS THAT WERE APPROVED ON THE 2022 ROAD BOND? ARE THOSE STILL BEING FINISHED OUT OR IS THAT BEING SET ASIDE RIGHT NOW TO FOCUS JUST ON THE ROAD BONDS THEMSELVES THE BOND.

OKAY. SO WHEN IT COMES TO TRAILS, THERE ARE THREE DIFFERENT WAYS IT'S GETTING FUNDED, ACTUALLY.

FOUR. SO THE PORTION THAT IS BEING FUNDED THROUGH THE DEVELOPERS THAT CONTINUES.

NOTHING IS CHANGING. IF A NEW DEVELOPER OR DEVELOPMENT COMES THROUGH, THEY'RE REQUIRED CERTAIN LIVE TRAIL INVESTMENTS.

THAT IS ONE WAY OF GETTING FUNDED. THE TRAIL SEGMENTS THAT ARE INCLUDED IN THE ROAD BOND PROGRAM THAT CONTINUES. NOTHING IS CHANGING THERE EXCEPT FOR THE DOWNTOWN, RIGHT? THEN THE THIRD COMPONENT, WHICH IS FROM THE 2020 BOND, THERE IS A PLUM CREEK TRAIL SEGMENT THAT IS IN THE CIP BUDGET. OKAY. LET ME FIND THAT REAL QUICK.

MAYBE YOU CAN HELP ME. HOLLY. IT'S ON. IT'S IN THE CIP BUDGET.

YEAH, I REMEMBER SEEING 220. PROJECT NUMBER. 11.

[05:25:03]

SO I DON'T KNOW IF THAT ANSWERED YOUR QUESTION.

IT HELPS SOME. BUT MY RECOMMENDATION TO COUNCIL IS FOR THE REST OF THE SEGMENT THAT IS, THE CITY OR CITY WANTS TO BUILD THAT. WE PLACE IT ON THE VOTER REFERENDUM IN 2028.

OKAY. OKAY. COUNCIL MEMBER HARRIS. I WASN'T DONE YET.

COULD WE GET AN ESTIMATE? COUNCILMEMBER MEDINA WASN'T DONE.

SORRY. I THOUGHT YOU WERE. DO WE HAVE AN IDEA OF WHAT THE SHORTFALL IS FOR THOSE OTHER SEGMENTS THAT AREN'T ALREADY FUNDED IN THOSE THAT YOU MENTIONED? NO. I HAVE TO SIT DOWN WITH OUR ENGINEERING GROUP AND PLANNING GROUP TOGETHER TO FIGURE THAT OUT, BECAUSE THERE ARE A LOT OF NUMBERS BEING TOSSED AROUND.

DEPENDS ON WHO YOU LISTEN TO. IT RANGES ANYWHERE FROM $1.5 MILLION PER MILE TO $3 MILLION A MILE.

BUT I NEED TO SIT DOWN WITH OUR EXPERTS AND FIGURE THAT OUT.

OKAY. THIS IS THE ENTIRE TRAIL SYSTEM. WHO'S BUILDING WHAT? WHICH PART IS DEVELOPERS? WHICH PART IS ROAD BONDS? WHICH PART IS GENERAL FUND. OKAY? YES, SIR. OKAY.

AND THEN THE LAST QUESTION I DIDN'T WRITE DOWN, BUT HAD TO DO WITH THE ANIMAL SHELTER.

RIGHT NOW WE'RE LOOKING AT THE 2 MILLION FOR 27 AND THE 8 MILLION POSSIBLE FOR 28.

IF ONCE WE GO THROUGH THIS PROCESS AND THE VOTES HERE IN THE FUTURE, IF WE DECIDE THAT WE'RE WE DON'T WANT TO BE RESPONSIBLE FOR ANY OF THEM.

WE WANT TO PUT IT ALL IN THE COUNTY DOES THAT TO THIS 2 MILLION THAT YEAR, AND THE 8 MILLION THE OTHER YEAR GET TO ROLL OVER TO SOMETHING ELSE THAT MIGHT BE IMPORTANT THAT WE CAN BUILD IN THE CIP TO TAKE PLACE OF THAT.

SO WE'RE ASSUMING, AT LEAST IN THE FIVE YEAR SPENDING PLAN, THAT IF WE WERE TO SPEND THAT MONEY, IT WOULD BE FROM CEOS, NEW CEOS WE WOULD ISSUE IF THE COUNCIL DECIDES THAT WE'RE NOT DOING ANIMAL SHELTER.

THAT APPROPRIATION CAN BE REPROGRAMED REPURPOSED BY COUNCIL IF YOU SO DESIRE.

HOWEVER, WILL HAVE TO BRING IT BACK AS A BUDGET AMENDMENT TO CHANGE THIS PLAN.

AND HOW LONG AFTER A BUDGET IS APPROVED? IS THERE A CERTAIN TIME FRAME THAT YOU'RE ALLOWED TO DO BUDGET AMENDMENTS? SINCE I REMEMBER EARLIER IN THE SEGMENT, YOU DIDN'T CHANGE THOSE NUMBERS ON THAT ONE SLIDE BECAUSE OF THE BUDGET BUDGET NOT BEING AMENDED.

SO THAT WAS A A POLICY OF OUR FORMER CITY MANAGER.

YOU CAN AMEND THE BUDGET THE NEXT DAY IF YOU WANTED TO.

SIX MONTHS LATER, SIX MONTHS LATER, SEVEN MONTHS LATER.

OKAY. THAT'S ALL THE QUESTIONS I HAD. OKAY. COUNCIL MEMBER HARRIS.

COULD WE FIND OUT HOW MUCH IT WOULD COST TO RAISE TO GIVE RAISES TO OUR CURRENT EMPLOYEES? 3%. EVERY 1% IS HALF 1 MILLION TO 1 MILLION AND A HALF OR 3%.

OKAY. EVERY 1% IS OKAY. AND THAT WOULD INCLUDE BENEFITS AND EVERYTHING AND TAXES AND EVERYTHING.

YES. OKAY. AND THEN THE OTHER. THING THAT I WOULD LIKE TO MAKE A NOTE OF, YOU MENTIONED THE VIBE ALONG CENTER STREET. I DON'T THINK WE'VE APPROVED MOVING THAT TO BLANCO.

SO THAT MAY STILL BE. I'M NOT MOVING EITHER. NOTHING IS BEING MOVED.

OH, I MISUNDERSTOOD WHAT YOU SAID. THEN YOU SAID THE VIBE WOULD NOT GO DOWN CENTER STREET.

IT WILL GO DOWN, BUT IT WON'T BE 12 FOOT WIDE.

WE'RE NOT GOING TO TAKE PROPERTIES FROM EXISTING PROPERTY LANDOWNERS, PROPERTY OWNERS IN DOWNTOWN.

SO TEN FOOT. I DON'T KNOW WHAT THAT FOOTAGE IS.

I THINK IT WOULD BE TEN. OKAY. BUT I DO HAVE A QUESTION BECAUSE CENTER STREET IS OWNED BY TEX DOT.

AND SO IF WE GO EVEN TEN FEET OUT, FIRST OF ALL, IT'S GOING TO TAKE OUT ALL OF OUR PARKING OVER HERE.

BUT AT SOME POINT I ALSO FEEL LIKE IT'S GOING TO BE IN TEX DOT TERRITORY.

SO MY QUESTION IS, HAVE WE TALKED TO TEX DOT ABOUT WHAT WE CAN AND CAN'T DO ON THEIR ROAD? SO LET ME ASK LEAH OR LOU IF THEY'RE IN THE ROOM TO COME UP.

ANSWER THAT QUESTION. IT WOULD ALSO TAKE THE METHODIST CHURCH PARKING THE BAPTIST.

SORRY. THE BAPTIST. YES. FIRST BAPTIST. OKAY.

SORRY. BAPTIST. RIGHT NOW. COUNCILMAN. BARBARA CITY ENGINEER.

[05:30:01]

SO THEY'RE TRYING TO REDUCE THAT WIDTH IN THAT SECTION.

HAVE WE TALKED TO TEX DOT ABOUT ANY OF THAT? YES. WE'VE HAD TO TALK TO TEX DOT. THEY OBVIOUSLY THEY OWN THE ROAD.

SO WE HAVE WE WE HAVE HAD CONVERSATIONS WITH THAT.

SO I DO KNOW THAT. AND DO WE KNOW WHAT THEY SAID ABOUT DOING THE 12FT.

THEY WERE. THEY DID. I DON'T KNOW WHAT THEY SAID ABOUT THAT. I KNOW THE BIGGEST ISSUE WE HAD WITH WITH THE CENTER STREETS WAS THE DRAINAGE. THAT'S BEEN A BIGGER ISSUE. SO WE THINK WE MIGHT HAVE A SOLUTION BY WRITING THAT, BY REDUCING THE WIDTH OF THAT SIDE, THAT TRAIL OR SIDEWALK, WHATEVER YOU WANT TO CALL IT. WE'RE ALSO REDUCING THE AMOUNT OF DRAINAGE.

SO THERE'S SOMETHING THAT WE'RE GOING TO PLAN TO DO ON THAT DRAINAGE SYSTEM THAT WE WEREN'T PLEASED WITH AND THE DESIGNERS.

SO WE THINK WE'RE GOING TO BE ABLE TO GET GET AWAY FROM WHAT THEY PLAN TO DO.

AND THEN WITH, WITH THE REDUCTION OF THAT SIDEWALK.

OKAY. WE HAVE BEEN IN CONVERSATIONS WITH TXDOT.

YES. OKAY. AND HAVE THEY APPROVED THE 12FT? LIKE, YES, THEY, THEY PRETTY MUCH LET US DO WHAT WE WANT TO DO, BUT WITH THE UNDERSTANDING THAT WE'RE GOING TO MAINTAIN IT. OKAY.

YEAH. COUNCILMEMBER HARRIS YEAH, I'M CONCERNED THAT WE'RE THINKING ABOUT REDUCING THAT TO SIX FEET FOR THE TRAIL.

THAT'S IT'S INAPPROPRIATE. YOU CANNOT TAKE BICYCLES AND PEDESTRIANS TOGETHER.

AND MAYBE THE GOLF CARTS, WHICH WOULD DEFINITELY BE ON THE TRAIL ON A SIX FOOT TRAIL THAT'S JUST UNSAFE, ESPECIALLY RIGHT DOWN CENTER STREET. IT REALLY NEEDS TO BE A MINIMUM OF TEN, PREFERABLY 12.

I THINK THE ISSUE RIGHT NOW IS THE AMOUNT OF PROPERTY THAT WE'RE TAKING.

VERY LITTLE. YOU KNOW, I'VE SEEN THE DESIGN ON THAT.

THERE'S VERY LITTLE THAT'S NEEDED TO TO DO THAT.

WE STARTED WITH THE 12 FOOT, I THINK, IN THE ORIGINAL PLANS.

SO I THINK THAT WE, YOU KNOW, IT'S A DISSERVICE TO THE COMMUNITY TO GO DOWN TO.

SIX. WELL, I THINK OUR ORDINANCE STATES THAT WE CAN USE EXISTING ROADS AND SIDEWALKS.

AND SO MAYBE THAT'S SOMETHING THAT WE CAN LOOK INTO.

BUT MY CONCERN IS AS I LOOKED OUT THE WINDOW AND I SAW ALL THE PARKING ON THE SIDE FOR CITY HALL, THAT'S ALL GONE. AND THE PARKING AT THE CHURCH, THAT'S GOING TO BE THAT THAT'S GOING TO BE ALL GONE.

AND THEN WE'RE GOING TO HAVE TO ASSUME SOME KIND OF RIGHT OF WAY FROM VAQUEROS.

DOES THAT MEAN THEIR PARKING LOT IS GOING TO BE GONE AS WELL? THERE'S SOME CHANGES TO THE PARKING LOT. AND THAT'S I MEAN, WE'RE GOING TO HAVE TO BUY THAT FROM THEM.

I'M NOT SURE WHAT THE STATUS IS ON THAT. DO WE KNOW HOW MUCH.

I MEAN WE ALREADY DID. I THINK WE PURCHASED IT JUST BEEN PURCHASED.

SO YEAH, I THINK THE RIGHT OF WAY IS, IS NOT A BIG PROBLEM.

I THINK THE CHURCH IS EXPECTING THAT THAT PARKING WILL GO.

THIS PARKING ALONG CENTER STREET IS CENTER BECOMES LARGER AND MORE BUSY.

THAT'S SO UNSAFE. I WATCH PEOPLE TRY TO BACK OUT OF THERE ALL THE TIME.

WELL, HOPEFULLY THE 150 BYPASS TAKES CARE OF THAT.

IT WILL NOT COUNCIL NOT IF THEY'RE GOING THAT WAY, THAT NOBODY'S GOING TO TAKE IT THAT BYPASS IF THEY'RE COMING THIS WAY.

SO WE'RE GOING TO MAKE THAT ROAD SMALLER. SO MAYOR AND COUNCIL RATHER THAN TRYING TO SOLVE THIS TONIGHT.

YES. LET ME MAKE A SUGGESTION THAT WE BRING THE EXPERTS BEFORE YOU AND TALK TO YOU ABOUT CENTER STREET, ON SYSTEM CENTER STREET, OFF SYSTEM, AND HOW THAT IS BEING PLANNED AND WHAT IS THE IMPACT ON THE SIDEWALKS, MEDIANS, TREES, PARKING, WHATEVER IT IS? WHAT WILL IT DO WITH THE 12 FOOT WIDE? WHAT WILL IT DO WITH WHAT'S THERE? CONSIDERING NOW, I WOULD NOT, I WOULD PREFER THAT WE DON'T SPECULATE.

LET'S HEAR THE EXPERTS AND GO FROM THERE. OKAY.

IF Y'ALL DON'T LIKE WHAT YOU HEAR, YOU CAN TAKE A VOTE AND CHANGE IT.

PERFECT. OKAY, I HAVE A MEETING WITH TEXDOT ANYWAYS, SO I'LL BE SURE TO FOLLOW UP WITH THEM TO SEE WHERE WE'RE AT ON ALL THAT.

SO, AMBER, COULD WE SCHEDULE THAT? YES. THANK YOU.

ALL RIGHT. THANK YOU. SO WE'LL DO THAT. ANY OTHER QUESTIONS? MY CO-COUNSEL DOWN HERE IN NO MAN'S LAND WOULD LIKE TO MAKE SOME COMMENTS.

COUNCIL MEMBER. GOSA. I JUST WANTED TO COMMENT THAT DURING THE PRESENTATION, I WAS LOOKING UP WHAT OTHER PEER CITIES ARE DOING FOR THEIR RESERVE FUNDS.

THE VAST MAJORITY ARE 3.5 MONTHS, 25% TO 50%, 25%, 25%, 25%, 30%, 30%.

THAT WAS VERY COMMON. THE TWO THAT DID NOT MEET THAT WERE.

AUSTIN HAS A 10% PLUS A 7% STABILIZATION RESERVE, AND THEN SAN ANTONIO KEEPS A 15% RESERVE, BUT EVERYBODY ELSE WAS AT LEAST 25% OR 3.5 MONTHS.

OKAY. SO IT SOUNDS LIKE WE'RE KIND OF ON TARGET WITH THAT.

OKAY. BUT STILL LOOK IT UP ANYWAYS, JUST IN CASE.

THANK YOU. ANY OTHER QUESTIONS? OKAY. COUNCILMEMBER MCKINNEY.

AS I'M COMBING THROUGH THIS CAN YOU CLARIFY THE DEBT SERVICE FUND? IS THAT A DEBIT OR CREDIT FUND? IF YOU WOULD, PLEASE REPEAT THAT QUESTION.

[05:35:01]

CAN YOU CAN YOU CAN GO BACK TO IT WASN'T IN THE SLIDE.

IT WAS IN THE, THE, THE PROPOSED BUDGET BECAUSE RIGHT NOW IT WILL SHOW DEFICIT BECAUSE WE'RE JUST PAYING OUR PAYMENTS AND THERE IS SOME FUNDS THAT NEED TO BE TRANSFERRED INTO THAT.

SO DEFICIT WILL GO AWAY. AND NEXT YEAR WE'RE GOING TO HAVE NEW TAX REVENUES COMING INTO IT FOR THE NEXT YEAR'S DEBT SERVICE.

SO TO ANSWER YOUR QUESTIONS, IT SHOULD HAVE A GOOD DEBIT BALANCE, NOT A CREDIT BALANCE.

OKAY. THANK YOU. YES, SIR. OKAY. COUNCIL MEMBER ZAPATA IF I REMEMBER CORRECTLY, THERE IS A LINE ABOUT LIKE 4.5 MILLION REIMBURSEMENT. TEX DOT. I DON'T KNOW IF THAT WAS MONEY THAT THEY'RE PAYING FOR LIKE A SIDEWALK STUFF THAT WE DID.

I THINK IT'S LIKE 2770. IS THAT FOR STUFF THAT WE'VE ALREADY PAID FOR? OR ARE THEY LIKE GIVING IT TO US UPFRONT? BUT IT WAS, IT WAS A TOTAL OF 4.5 MILLION.

CAN YOU HELP US POINT TO THE PAGE NUMBER? OKAY.

YEAH. LET ME PLEASE. YES.

PLEASE. JUST TELL HIM. I'M LOOKING AT PAGE ONE. 160 UNDER REVENUE. IT SAYS TEX.FM 2770 ARM 150 REIMBURSE SIDEWALK.

AND THEN IT SAYS IN THE PROPOSED BUDGET COLUMN 4.85.

AND I WAS JUST WONDERING IF THAT'S IF IT'S UNDER REVENUE, IF THAT HAS ANY LIMITS UNTIL LIKE WHAT WE CAN SPEND IT ON, LIKE IF IT'S BEING ACCOUNTED FOR OR USED IN A CERTAIN WAY.

WE'LL RESEARCH THAT COUNCIL MEMBER AND RESPOND TO YOU BY EMAIL.

OKAY. ALL RIGHT. THANK YOU. ALL RIGHT. YEAH, WE FORWARDED TO ALL OF US.

YES, DEFINITELY. THANK YOU. ALL RIGHT. AND WE ARE ADJOURNED.

WE'RE ADJOURNED. GO HOME.

* This transcript was compiled from uncorrected Closed Captioning.