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[00:00:02]

GOOD MORNING EVERYBODY.

I, UH, AM GOING TO CALL TO ORDER THE AUSTIN CITY COUNCIL WORK SESSION.

UH, TODAY IS MAY 2ND, 2023.

IT'S NINE O'CLOCK IN THE MORNING.

WE ARE MEETING IN THE BOARDS AND COMMISSIONS ROOM OF, UH, THE CITY HALL, AUSTIN CITY HALL, WHICH IS LOCATED AT 3 0 1 WEST SECOND STREET.

UM, MEMBERS AND AUDIENCE.

THE THE WAY WE'LL PROCEED TODAY IN THIS WORK SESSION IS WE WILL FIRST HAVE THE BRIEFING ON AUSTIN'S FIVE YEAR FINANCIAL FORECAST AT 11 O'CLOCK TIME CERTAIN, BECAUSE THE CITY MANAGER HAS, HAS ASSURED ME THAT, THAT THIS FORECAST WILL BE ABOUT TWO HOURS.

RIGHT.

UH, , WELL SAID.

AND, AND AT, UH, 11 O'CLOCK, WE WILL HAVE A TWO O'CLOCK TIME CERTAIN, UH, REGARDING THE A P D D P S PARTNERSHIP AT THAT POINT IN TIME, I AN, WHEN THAT IS COMPLETED, I ANTICIPATE THAT WE WILL GO INTO EXECUTIVE SESSION TO TAKE UP AN ITEM IN, IN, IN CLOSE SESSION.

WE WILL RETURN AFTER THE CLOSED SESSION AND HAVE A DISCUSSION ON THE 2023 CITY COUNCIL MEETING DATES.

WITH THAT, I'LL, UH, TURN IT OVER TO OUR CITY MANAGER.

LET AM I ON? YEAH, I GUESS I AM.

ALL RIGHT.

WELL, TODAY, UH,

[B1. Briefing on Austin's Five-Year Financial Forecast. (Part 1 of 2)]

WE'RE GONNA PRESENT THE FINANCIAL FORECAST FOR OUR FISCAL YEAR 2024.

UH, THIS INFORMATION HAS BEEN SHARED WITH COUNSEL IN PREVIOUS, UH, FISCAL YEAR VIA MEMO.

UH, BUT I FELT IT'S IMPORTANT THAT YOU RECEIVED THIS REPORT, UH, BY US IN PERSON, IN A PUBLIC SETTING, SO THAT THE COUNCIL CAN DISCUSS AMONG THEMSELVES WHAT THEIR, UH, HOW THEY WANT TO PROCEED WITH RESPECT TO, TO, TO THE BUDGET.

AND THIS DIALOGUE IS GONNA BE IMPORTANT FOR US AND THE FINANCIAL STAFF, SO WE CAN HEAR FROM COUNCIL IN TERMS OF WHAT YOUR IDEAS ARE.

THIS FORECAST INCLUDES THE ASSUMPTIONS THAT WILL SHAPE THE DEVELOPMENT OF THIS YEAR'S BUDGET, AND WE WANTED TO START EARLY, AND IT'S ALLOWS, UH, A THOUGHTFUL DISCUSSION, UH, FOR DETAILED CONVERSATIONS CENTERED ON CRITICAL POLICY ISSUES THAT ARE NECESSARY AND PART OF THE BUDGET PROCESS.

I WANNA RECOGNIZE ED VAN NINO, CARRIE LANG, AND THE FINANCIAL, AND THE, AND ALL THE FINANCIAL SERVICES DEPARTMENT FOR DELIVERING THIS FORECAST TO YOU AND THIS, AND THIS INFORMATION.

AND THEY'LL BE THE, THE, THE, THE, I GUESS, THE WORKHORSES AS WE GO FORWARD WITH THE ADOPTION OF THE BUDGET.

UH, WE BELIEVE THAT WE'RE PRESENTING A FORECAST THAT PRI PRIORITIZES COMMUNITY AFFORDABILITY.

AND, UH, AS YOU WILL SEE FROM OUR PRELIMINARY PROJECTIONS OF TAX RATES, UTILITY RATES, AND OTHER FEES, WE TRY TO BE SENSITIVE TO THAT.

MY DIRECTION TO THE STAFF, UH, BEGAN WITH A CONVERSATION THAT WE, THAT WE BEGAN THIS CONVERSATION WITH COUNCIL WITH NO NEW TAX, UH, RATE, AND, UH, AND WHILE STILL MAKING APPROPRIATE INVESTMENTS IN OUR STAFF INFRASTRUCTURE AND ESSENTIAL PUBLIC SERVICES.

WHILE IT APPEARS THAT IT'S ATTAINABLE IN FISCAL YEAR 24, IT'S IMPORTANT TO KEEP IN MIND THAT MAKING THE APPROPRIATE INVESTMENTS ON OUR, ON OUR, UH, MAKING THE APPROPRIATE INVESTMENTS FOR OUR STAFF AND INFRASTRUCTURE AND ESSENTIAL PUBLIC SERVICES, UH, IT, IT'S GONNA BE MEANING, UH, MEANING, YOU KNOW, WHEN YOU HAVE BIFOCAL AT THIS AGE, IT'S YOU GET, YOU LOSE YOUR SIGHT.

UH, MEANING THAT IT'S CRITICAL THAT WE MAINTAIN THE, THE LONG-TERM FISCAL DISCIPLINE AND, UH, FOR OUR LONG TERM FINANCIAL HEALTH AS A CITY.

A FEW INCREASES, YOU'LL SEE, UH, IN THE UTILITY RATES ARE DIRECTLY TIED TO INFRASTRUCTURE AND INVESTMENTS THAT ARE NEEDED TO PROVIDE HIGHEST POSSIBLE RELIABILITY AND COMPLY WITH REGULATORY REQUIREMENTS AND IMPACT ON OUR UTILITIES.

OTHER ASSUMPTIONS THAT ARE IMPORTANT ALSO INCLUDE A 3% PAY INCREASE FOR CITY EMPLOYEES.

AT AN EARLY STAGE OF THIS BUDGET PROCESS.

THE INCREASE SHOULD BE VIEWED AS A PLACEHOLDER, AND THE STAFF WILL CONTINUE TO EVALUATE THE TIGHT LABOR MARKET AND MAKE ACTIONS TO ADDRESS CITYWIDE CHALLENGES.

WITH RESPECT TO STAFFING, WE, WE ALSO HAVE ASSUMED TO STAY WITHIN BUDGET FOR OUR PUBLIC, UH, LABOR NEGOTIATIONS.

WE BELIEVE NEGOTIATION WITH LABOR, LABOR CONTRACTS FOR OUR THREE PUBLIC SAFETY DEPARTMENTS, AND THE FORECAST INCLUDES ASSUMPTIONS ABOUT THE LONG-TERM COST OF THESE CONTRACTS.

THE CITY OF AUSTIN, LIKE, UH, MOST EMPLOYERS, IS ALSO EXPERIENCING THE RISING COST OF HEALTH INSURANCE WITH PROJECTED 10% INCREASE OF CITY CONTRIBUTIONS FOR THIS FISCAL FOR THE NEXT FISCAL YEAR.

AND AT THIS TIME, IT'S UNKNOWN WHETHER THAT INCREASE WILL BE NECE WILL BE NECESSARY FOR EMPLOYEES IN TERMS OF, UH, PREMIUMS WITH THE, THE HUMAN RESOURCES DEPARTMENT IS EVALUATING A SERIES, UH, SERIES OF PLAN DESIGN CHANGES THAT MAY MITIGATE THE NEED FOR PREMIUM INCREASES FOR OUR CITY EMPLOYEES.

AND FINALLY, IT IS, UH, IT IS NOT IN THE FORECAST.

UH, UH, FINALLY, WHAT IS NOT IN THE FORECAST IS ALSO EQUALLY IMPORTANT.

THIS IS A BASELINE FORECAST.

COST INCREASES ARE PROJECTED, UH, BASED ON CURRENT STAFFING LEVELS AND CURRENT SERVICE LEVELS.

FUNDING FOR NEW INITIATIVES, PROGRAM ENHANCEMENTS, STAFF INCREASES, WILL BE VIEWED AND CONSIDERED AS PART OF THE BUDGET DEVELOPMENT.

THE COST OF THESE NEW ITEMS WILL BE ADDED TO THE BUDGET AND WILL BE CAREFULLY EVALUATED AGAINST TAX, UH, UH, THE TAX AND FEE INCREASES NEEDED TO SUPPORT THOSE, UH, THOSE ADDITIONS.

[00:05:01]

THIS, UH, WORK WILL TAKE PLACE OVER THE NEXT TWO MONTHS LEADING UP TO THE PRESENTATION OF THE PROPOSED BUDGET BY, UH, ADOPTION OF THE PRO BUDGET, LEADING UP THE PROPOSED BUDGET ON JULY THE 19TH.

AND SO WITH THAT, WE'LL, WE'LL BEGIN THE PROCESS.

GOOD MORNING, MAYOR, MAYOR, UH, MAYOR PROTE, MEMBERS OF THE COUNCIL, ED VINO, CHIEF FINANCIAL OFFICER, AND IS GREAT TO SEE YOU ALL IN PERSON AS A MANAGER, UH, MENTIONED, WE HAVE DONE THIS FINANCIAL FORECAST AS A WRITTEN REPORT FOR THE LAST SEVERAL YEARS.

PRIOR TO THAT, WE WERE ALWAYS IN THIS ROOM.

I'M DOING IT IN PERSON, AND IT'S, IT'S GOOD TO BE BACK.

THESE ARE IMPORTANT TOPICS.

IT REALLY SETS THE FOUNDATION THE STARTING POINT FOR OUR ENTIRE BUDGET PROCESS.

SO BEING ABLE TO DO THIS LIVE PUBLICLY AND TO GET DIRECT FEEDBACK FROM YOU, I THINK IS A REALLY, REALLY IMPORTANT THING.

UM, I DO WANT TO DO QUICK INTRODUCTIONS.

TO MY RIGHT IS BUDGET OFFICER CARRIE LANG.

TO HER RIGHT IS DIVISION CHIEF ERIC NELSON.

UM, I ALWAYS LIKE TO INTRODUCE ERIC AS OUR REVENUE GURU FOR THE CITY.

HE IS TRULY ONE OF THE REVENUE EXPERTS FOR THE ENTIRE STATE OF TEXAS.

HE'S THE ONLY PERSON I KNOW WHO'S BEEN ABLE TO CONVINCE THE, UH, STATE COMPTROLLER THAT THEIR PROPERTY TAX CALCULATION WORKSHEETS WERE INCORRECT AND GOT THEM TO CHANGE THEM.

SO HE IS A GREAT ASSET TO US IN TERMS OF WHAT HE BRINGS WITH, UH, REVENUE KNOWLEDGE AND, AND, UH, AND FORECASTING.

UM, I DID WANNA START OFF, SINCE IT'S BEEN A LITTLE WHILE, WE HAVE SOME NEW COUNCIL MEMBERS, AND IT'S BEEN A WHILE SINCE WE'VE DONE THIS FOR ALL OF OUR COUNCIL MEMBERS.

I WANTED TO TALK A LITTLE BIT ABOUT WHAT THIS FORECAST IS INTENDED TO DO.

AND, AND VERY SIMPLY, IT'S JUST A PROJECTION OF OUR EXPENDITURES AND REVENUES OVER THE NEXT FIVE YEARS.

AND HOW DO THOSE THINGS COMPARE? ARE THEY IN, IN BALANCE? ARE THEY IN ALIGNMENT, UM, OR ARE THEY NOT? UM, I ALWAYS LIKE TO TELL FOLKS WHEN WE DO OUR REVENUE PROJECTIONS, UM, AND OUR EXPENDITURE PROJECTIONS FOR THAT MATTER, WE WANT THEM TO BE REASONABLY CONSERVATIVE.

WE'RE, WE'RE NOT TRYING TO BE AGGRESSIVE AND BE, YOU KNOW, ROSE COLORED GLASSES IN TERMS OF WHAT THE FINANCIAL FUTURE LOOKS LIKE ON REVENUES.

BUT WE'RE ALSO NOT TRYING TO BE HYPER CONSERVATIVE WHERE YOU DON'T GET A REAL PICTURE OF WHAT THINGS MIGHT LOOK LIKE.

SO I THINK IT'S IMPORTANT FOR FINANCIAL PLANNING FOR US TO BE CONSERVATIVE, BUT NOT ABSURDLY SO REASONABLY CONSERVATIVE.

UM, THIS REALLY IS A STARTING POINT FOR OUR BUDGET DISCUSSION.

SO I JUST WANT TO DRIVE THAT HOME.

THIS IS NOT THE BUDGET.

THIS IS NOT EVEN A TIP OF THE HAND OF WHAT THE BUDGET'S GONNA LOOK LIKE.

THIS IS JUST A STARTING POINT FOR THE CONVERSATIONS, GIVING YOU THAT BIG PICTURE, 50,000 VIEW OF WHAT A, WHAT, WHAT ARE THE NEXT FIVE YEARS POTENTIALLY LOOK LIKE UNDER A NUMBER OF DIFFERENT REVENUE SCENARIOS AND OUR BASE BUDGET PROJECTIONS, UM, FOR BUILT-IN COST DRIVERS ONLY.

SO WHEN WE GET INTO THE EXPENDITURE SIDE, THAT'S WHAT YOU'RE GOING TO SEE IS FOR WHAT WE HAVE IN PLACE RIGHT NOW, THE REC CENTERS WE OPERATE RIGHT NOW, THE, THE, THE PARKS WE HAVE TO MAINTAIN, THE SERVICES WE PROVIDE, THE LIBRARIES WE OPERATE, THERE'S A CERTAIN COST TO THAT RIGHT NOW.

AND WHAT DO WE PROJECT THAT COST TO BE INTO THE FUTURE? TAKING INTO ACCOUNT WAGES, HEALTH INSURANCE, RETIREMENT COST INCREASES, BUT NOT, UH, UH, YOU KNOW, AN, AN ARRAY OF NEW INITIATIVES.

UM, THE NEW INITIATIVES DISCUSSION LOOKING WILL BE PART OF WHAT WE DO BETWEEN HERE AND BUDGET.

WE'LL BE LOOKING AT, UH, THE DIFFERENT COUNCIL RESOLUTIONS AND PRIORITIES THAT YOU'VE ESTABLISHED.

COMMUNITY INPUT THAT WE RECEIVED.

THAT'LL ALL BE PART OF CRAFTING THE CITY MANAGER'S, UM, BUDGET PROPOSAL.

UM, ALL THE PRESENTATIONS WE'RE GOING THROUGH TODAY HAVE BEEN POSTED TO THE AGENDA SYSTEM.

UM, ONCE WE GET THROUGH TODAY'S EVENTS, THERE WILL BE A WRITTEN REPORT, THAT WRITTEN REPORT THAT WE'VE DONE FOR THE LAST SEVERAL YEARS.

YOU'LL STILL GET IT.

THERE'S NO NEW INFORMATION IN IT, BUT IT'LL GIVE YOU A NARRATIVE OF WHAT YOU'RE GOING TO HEAR TODAY, A WRITTEN NARRATIVE OF THE SAME, UH, TOPICS AND THE SAME, UM, MESSAGES YOU'RE GOING TO HEAR TODAY.

SO WITH THAT, LET ME JUMP IN REAL QUICK TO THE AGENDA.

UM, AND WE DO HAVE A PACKED AGENDA.

WE'RE GONNA GET THROUGH IT IN, UM, IN, IN, IN THE TWO HOURS WE'VE BEEN ALLOCATED.

BUT THERE ARE IS A LOT TO COVER, AND WE CERTAINLY WANNA MAKE SURE THERE'S TIME, TIME FOR DISCUSSION AND, AND QUESTIONS.

I'M GONNA START OFF WITH THESE FIRST HANDFUL OF SLIDES, WHICH IS JUST, JUST BE A LOOK BACK.

HOW DO WE END FISCAL YEAR 22 COMPARED TO HOW WE THOUGHT WE WERE GOING TO END IT? WE HAVE TO MAKE PROJECTIONS ABOUT HOW WE'RE GONNA END FISCAL YEAR 22, WHEN WE'RE DEVELOPING THE FISCAL YEAR 23 BUDGET.

HOW DO WE DO COMPARED TO THOSE PROJECTIONS? UM, AND THEN THE BUDGET WE'RE CURRENTLY IN.

HOW ARE WE CURRENTLY TRENDING COMPARED TO WHAT OUR, UM, BUDGET IS? ARE WE DOING BETTER THAN WHAT WE THOUGHT OR WORSE THAN WHAT WE THOUGHT? UM, AT THAT POINT, I'LL TURN IT OVER TO, UM, CARRIE.

SHE'LL GO THROUGH CITYWIDE COST DRIVERS, OUR GENERAL FUND FORECAST, BOTH REVENUES AND, AND EXPENDITURES.

UM, SHE WILL TALK ABOUT SOME OF THOSE COUNCIL PRIORITIES, AGAIN, THAT AT THIS POINT AREN'T INCORPORATED INTO OUR FORECAST, BUT THAT'S NOT TO SAY THAT THEY WON'T ULTIMATELY BE.

AS WE MOVE FORWARD, UH, TO PREPARING OUR BUDGET PROPOSAL, UM, WE DO HAVE SHORT SUMMARIES FOR EACH OF OUR ENTERPRISE, OUR MAJOR ENTERPRISE FUNDS.

AND THEN FOR AUSTIN ENERGY AND AUSTIN WATER, WE HAVE INVITED THEM HERE TODAY SINCE THEY'RE SUCH A LARGE PART OF OUR BUDGET, UM, TO DO SHORT PRESENTATIONS ON, ON THEIR FINANCIALS.

[00:10:01]

UM, AUSTIN ENERGY WATER AND THE GENERAL FUND COMBINED ARE ABOUT THREE QUARTERS OF OUR TOTAL CITY BUDGET.

SO THAT'S WHY WE WANTED TO AT LEAST FOCUS A LITTLE BIT MORE IN DEPTH ON THOSE THREE FUNDS.

UM, AND THEN I'LL TALK A LITTLE BIT AT THE END ABOUT OUR CAPITAL IMPROVEMENT PROGRAM HIGHLIGHTS.

I DO WANNA NOTE THAT THERE'S A PRESENTATION FROM JOHN HAWKINS, WHO'S A LOCAL ECONOMIST, DOES A GREAT JOB TAKING IT, MAKE, GIVING AN ECONOMIC OUTLOOK FOR THE, FOR THE NATION AND THE CITY.

HIS REPORT IS POSTED IN BACKUP.

HE'S GOING TO BE HERE IN A LITTLE BIT.

HE HAD A CONFLICT, BUT HE'LL BE HERE BY THE TIME WE'RE DONE TALKING.

IF YOU HAVE QUESTIONS, I DON'T ANTICIPATE AT THIS TIME, WE'LL HAVE TIME TO SEE HI, HEAR HIS PRESENTATION BECAUSE OF THE 11, 11 O'CLOCK STOP.

BUT IF WE MOVE THROUGH THIS QUICKLY AND YOU DON'T HAVE A LOT OF QUESTIONS FOR US, MAYBE WE CAN GET JOHN UP HERE AND TALK ABOUT OUR LOCAL ECONOMY AND GET QUESTIONS FROM YOU ALL FOR HIM.

MAYOR, I HAVE A QUICK QUESTION.

PLEASE.

WHERE CAN WE, UM, FIND THIS PRESENTATION? WAS IT EMAILED TO US OR IS IT IN BACKUP? IT'S IN THE, IN, IN THE BACKUP FOR THE AGENDA ITEM.

OKAY, THANK YOU.

THERE SHOULD BE FOUR.

THERE'S THIS ONE, THERE'S ONE FOR AUSTIN ENERGY, ONE FOR AUSTIN WATER, AND ONE FOR JOHN HAWKINS.

YES, MA'AM.

THANK YOU.

WANTED TO START WITH THE END IN MIND.

UM, AND SO THIS IS REALLY JUST, THIS IS THE SHORT VERSION OF WHAT I THINK YOU'RE GOING TO HEAR.

GENERAL FUND REVENUE SOURCES CONTINUE THEIR RECENT STRONG PERFORMANCE IN FISCAL YEAR 22 AND 23 SALES TAXES.

AND FOR THE FIRST TIME IN A LONG TIME, WE'RE ACTUALLY EARNING SOME INTEREST, OR OUR INTEREST EARNINGS ARE, UM, MUCH HIGHER THAN WHAT WE HAD ANTICIPATED.

UM, AS A RESULT OF THAT STRONG PERFORMANCE IN FISCAL YEAR 22 AND OUR CURRENT FISCAL YEAR, UM, STAFF IS GOING TO BE RECOMMENDING, THIS IS THE FIRST TIME YOU HEAR HEARING IT, BUT STAFF WILL BE RECOMMENDING TO YOU ALL THAT WE, UM, ADJUST OUR RESERVE POLICY TO THE GOVERNMENT FINANCE OFFICERS ASSOCIATION INDUSTRY STANDARD OF 60 DAYS.

THAT'S ABOUT 16%.

OUR CURRENT POLICY IS 14%.

UM, ALL OF OUR OTHER ENTERPRISES DO IT AS A NUMBER OF DAYS.

AND THE, UH, THE G F O A RECOMMENDATION IS 60 DAYS.

WE'LL TALK A LITTLE BIT MORE ABOUT WHY WE THINK THAT'S IMPORTANT LATER ON.

UM, BUT AS WE LOOK AT THE LONGER TERM, WHEN WE LOOK OUT OVER FIVE YEARS, WE DO ANTICIPATE THAT LONGER TERM FISCAL CHALLENGES WILL CONTINUE AS A RESULT OF OUR RISING COST DRIVERS.

AND HOW THAT STACKS UP AGAINST THE STATE IMPOSED THREE AND A HALF PERCENT REVENUE CAP.

IF YOU LOOK AT ALL OF OUR EXPENDITURES ALL IN, TYPICALLY AROUND THREE AND A HALF TO 4% IS WHAT THEY GROW JUST FOR THAT BASE COST DRIVER SCENARIO, RIGHT? WAGES, HEALTH INSURANCE, RETIREMENT, THOSE TYPES OF THINGS.

INFLATIONARY COST INCREASES FOR OUR CONTRACTS, UM, TYPICALLY AROUND A THREE OR 4% INCREASE.

SO THAT CAN BECOME A CHALLENGE TO BALANCE YOUR BUDGET AGAINST THOSE BASE COST DRIVERS WHEN HALF OF YOUR REVENUE IS CAPPED AT THREE AND A HALF PERCENT AND 25% OF YOUR REVENUE, WHICH COMES FROM THE UTILITIES AND, AND VARIOUS FEES WE CHARGE TYPICALLY GROW, GROW LESS THAN THAT.

IT PUTS A LOT OF PRESSURE ON SALES TAXES TO PERFORM STRONGLY IN ORDER TO BALANCE YOUR BASE BUDGET UNDER THOSE, UNDER THOSE CONSTRAINTS.

SO THAT CONTINUES TO BE A CH CHALLENGE.

UM, WE'VE BEEN TELLING THIS STORY.

I, I WAS DOWN AT THE LEGISLATURE WHEN SB TWO WAS BEING PASSED, TELLING THIS STORY.

WE CONTINUE TO TELL THIS STORY.

IT'S REALLY BEEN MASS THOUGH THE LAST SEVERAL YEARS BECAUSE OF THE, UM, SUBSTANTIAL FEDERAL STIMULUS DOLLARS WE'VE SEEN PUMPED INTO THE CITY, PUMPED INTO OUR LOCAL ECONOMY, AND THE, UM, UM, REAL STRONG SALES TAX GROWTH WE'VE HAD OVER THE LAST COUPLE YEARS HAS MASSED THESE CHALLENGES.

BUT WE CONTINUE TO PREDICT IT'S COMING.

EVENTUALLY WHEN OUR SALES TAXES COME DOWN TO MORE OF HISTORICAL NORMS. WE ARE GONNA SEE CHALLENGES IN THE FUTURE TO KEEP OUR BUDGET IN BALANCE, UM, LOOKING, UM, UM, ONTO FISCAL YEAR 24.

AGAIN, JUST WANNA HIGHLIGHT THAT IT IS A BASE FORECAST AND, AND THE MANAGER SET OUT DIRECTION TO STAFF TO SEE WHAT WOULD IT LOOK LIKE IF WE TRIED TO BRING UP BASE FY 24 BUDGET TO COUNCIL THAT WAS BALANCED AT THE EFFECTIVE TAX RATE, OR AT THE VERY LEAST, WITH A VERY MINIMAL TAX RATE.

AND SO WE'VE DONE THAT.

YOU'RE GONNA SEE THAT IN THIS FORECAST THAT WE DO PROJECT.

WE'LL BE ABLE TO BRING A FISCAL YEAR 24 BASE BUDGET TO YOU THAT'S BALANCED AT THE EFFECTIVE TAX RATE OR VARY NEAR TO IT.

THAT'LL BE A STARTING POINT FOR, UM, HOW THIS BODY DECIDES THEY MIGHT WANT TO ADD TO THE BUDGET TO ADDRESS VARIOUS OTHER PRIORITIES.

UM, AND JUST ONE LAST TIME, SERVICE ENHANCEMENTS AND NEW INITIATIVES, UM, LIKELY WILL WE DO PROJECT IT TO DO SOME NEW THINGS THAT COUNCIL MIGHT WANT TO DO.

PROBABLY WILL BE LOOKING AT, UM, SOME DEGREE OF TAX INCREASE.

ALL RIGHT, THAT'S KIND OF THE BEGINNING WITH THE END IN MIND.

DRILLING DOWN A LITTLE BIT MORE ONTO OUR, UH, FISCAL YEAR 22.

THAT'S THE LAST FISCAL YEAR.

HOW DID WE END UP, YOU KNOW, THE PROJECTIONS ARE ALWAYS REALLY IMPORTANT WHEN WE'RE BRINGING THE FISCAL YEAR 23 BUDGET TO COUNCIL.

A BIG PART OF IT IS HOW ARE WE, HOW ARE WE TRENDING IN FY 22? ARE WE GOING TO HAVE SOME SAVINGS THAT CAN BE FLOAT CARRIED FORWARD INTO FY 23 TO HELP BALANCE OUR BUDGET? UM, THIS SLIDE IS TALKING ABOUT HOW DO WE DO RELATIVE TO THAT ESTIMATE.

UM, SO YOU CAN SEE IN TERMS OF REVENUE, WE ENDED FISCAL

[00:15:01]

YEAR 22, 17 0.3 MILLION ABOVE OUR ESTIMATE, LARGELY COMING FROM, UH, SALES TAXES, UH, A FEDERAL GRANT THAT WAS A COVID REIMBURSEMENT.

UM, UM, ACTUALLY THAT WAS A, THAT WAS A FEDERAL REIMBURSEMENT.

THAT WAS A FEMA REIMBURSEMENT RELATED TO COVID OF $3 MILLION THAT CAME IN.

AND, UH, INTEREST EARNINGS, AS I MENTIONED, WERE, WERE, ARE, WERE STARTING TO GO UP LAST YEAR.

THEY'RE, THEY'RE SUBSTANTIALLY HIGHER THIS YEAR.

UM, WE ALSO HAD A, UH, INSURANCE SETTLEMENT, UM, THAT WAS IN OUR FAVOR THAT WE, THAT WE HAD NOT ANTICIPATED.

UM, FLIP INTO THE NEXT SLIDE.

LOOKING AT HOW WE DID RELATIVE TO EXPENDITURES.

I THINK YOU WENT ONE TOO FAR, CARRIE, ON EXPENDITURES.

OUR DEPARTMENTS ENDED THE YEAR AT 99.15% OF THEIR BUDGET.

AND THIS IS PRETTY TYPICAL, RIGHT? WHEN YOU LOOK AT OUR BIG GENERAL FUND BUDGET, ABOUT 1.3 BILLION, UM, WE ENDED THE YEAR AND WE TYPICALLY END THE YEAR SOMEWHERE AROUND 99 TO A HUNDRED PERCENT OF THAT BUDGET FUNDED.

SO WHEN YOU THINK ABOUT IT, BIG PICTURE, IS THERE A LOT OF FLUFF AND CUSHION IN OUR BUDGET? I GENERALLY SAY THERE'S, THERE'S NOT, IT DEPENDS ON HOW YOU DEFINE FLUFF AND CUSHION, BUT JUST IN TERMS OF WHAT THE BUDGETARY NEEDS OF OUR DEPARTMENT ARE IN ORDER TO OPERATE THAT THEY CURRENTLY ARE OPERATING, THEY'RE COMING IN RIGHT ABOUT WHAT WE BUDGET THEM.

WE DON'T LEAVE THEM A LOT OF WIGGLE ROOM, BUT YOU KNOW, WE DO LEAVE THEM A LITTLE BIT.

UM, SO THAT ACTUALLY WAS A, A LITTLE BIT LESS SAVING.

THAT WAS A LITTLE BIT, UM, UM, MORE EXPENDITURES THAN WE EXPECTED.

SO THAT'S A NEGATIVE IN TERMS OF OUR BOTTOM LINE, ALL IN, UM, INCLUDING THIS ADJUSTMENT TO GAP.

GAP STANDS FOR GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.

ESSENTIALLY, WHEN IN THE BUDGET WORLD, WE WORK ON ONE, UM, ON, UM, ACCOUNTING STANDARD, THE BUDGET BASIS IN OUR ACT FOR WORLD.

THEY WORK ON A, AN ACCRUAL BASIS IN ORDER TO KEEP THOSE THINGS THINGS SYNCED UP.

WE DO THIS GEN THIS, UH, GAP ADJUSTMENT IN ORDER TO, AT THE END OF THE YEAR, WE ALWAYS HAVE TO DO AN ADJUSTMENT TO ADJUST FOR THOSE TIMING DIFFERENCES BETWEEN THE ACCRUAL BASIS AND THE BUDGET BASIS SO THAT OUR FUND SUMMARY STAYS IN SYNC.

LONG STORY SHORT, 25.9 MILLION IN TOTAL, UM, FLOWING INTO OUR RESERVES MORE THAN WHAT WE HAD ANTICIPATED WHEN WE PUT THE FY 23 BUDGET PROPOSAL TOGETHER AND COUNCIL ADOPTED IT.

OKAY? NOW, TRANSITIONING TO THIS FISCAL YEAR, FISCAL YEAR 23, OUR GENERAL FUND, UM, IS, IS 1.31 BILLION, UM, IN TOTAL REVENUE IS PROJECTED.

THAT'S CURRENTLY 32.7 MILLION ABOVE OUR BUDGETED LEVEL.

SIMILAR STORIES, BUT EVEN MORE SO THAN WHAT WE SAW IN FISCAL YEAR 22.

SALES TAXES CONTINUING TO COME IN VERY STRONG AND STRONGER THAN ANTICIPATED.

I HAVE TO HIGHLIGHT THESE AREN'T THESE LEVELS.

THEY'RE NOT SUSTAINABLE, RIGHT? WE SAW, I THINK WE GOT SLIDES IN HERE, BUT DOUBLE DIGIT SALES TAX GROWTH LAST YEAR, CURRENTLY TRACKING DOUBLE DIGIT SALES TAX GROWTH.

WE'VE NOT SEEN THIS KIND OF GROWTH IN, IN OUR HISTORY, AT LEAST NOT DURING MY HISTORY WITH THE CITY.

AND, UM, THOSE JUST AREN'T SUSTAINABLE NUMBERS.

SO WE HAVE TO BE CAUTIONARY ABOUT THAT.

INTEREST EARNINGS, UH, I, I THINK LESS THAN A YEAR AGO, WE WERE EARNING, UM, MAYBE 0.3% WAS THE, THE FEDERAL WAS THE TREASURY RATE.

NOW WE'RE AT ABOUT FOUR AND A HALF PERCENT.

SO LOTS MORE INTEREST EARNINGS THAN WHAT WE COULD HAVE, UH, ANTICIPATED WHEN WE PUT THE BUDGET TOGETHER.

UM, 13.9 MILLION ADDITIONAL REVENUE THERE ON THE EXPENDITURE SIDE, STILL PRETTY EARLY, RIGHT? UM, YOU KNOW, WE'RE ABOUT SIX MONTHS INTO THE FISCAL YEAR WHEN WE'RE PUTTING THESE NUMBERS TOGETHER.

UM, OUR DEPARTMENTS, AGAIN, ARE PROJECTING THAT THEY ARE GOING TO EXPEND THE VAST MAJORITY OF THEIR ALLOCATED BUDGETS.

THEY'RE ALL PROJECTING, THEY'LL STAY WITHIN THEIR BUDGETS, BUT UNTIL THEY GET A LITTLE BIT FURTHER INTO THE FISCAL YEAR, UM, THERE IS, THERE'S A, A NEED TO BE CONSERVATIVE IN REGARDS TO THESE ESTIMATES.

BUT I, I DO ANTICIPATE, THIS IS JUST ME TALKING.

I ANTICIPATE BY THE TIME WE GET TO THE BUDGET AND BY THE TIME WE CLOSE OUT THE FISCAL YEAR, WE'LL SEE OUR DEPARTMENTS, YOU KNOW, COMING IN WITH MORE SAVINGS THAN WHAT'S REFLECTED ON THAT FIRST BULLET.

YOU KNOW, THEY'LL PROBABLY END UP AROUND THAT 99.1, 99.2% EXPENDED, BUT IT'S A LITTLE EARLY IN THE YEAR FOR US TO BE, UM, MAKING THAT DETERMINATION.

SO WE'RE BEING CONSERVATIVE HERE.

UM, AS A RESULT OF THAT 25 MILLION TO THE GOOD IN FY 22, AND THE FACT THAT WE'RE CURRENTLY TRENDING OVER 30 MILLION TO THE GOOD IN FISCAL YEAR 23 STAFF IS RECOMMENDING THAT WE TAKE AN OPPORTUNITY TO REVISIT OUR RESERVE POLICY AND TO INCREASE THAT TO THE, UM, G F O A GOVERNMENT FINANCE OFFICERS ASSOCIATION RECOMMENDED 60 DAYS.

IF WE DID THAT, WE STILL ARE PROJECTING WE WOULD END THIS YEAR ABOVE EVEN THAT POLICY LEVEL.

WE WOULD END THIS YEAR AT 68 DAYS.

YOU KNOW, JUST A LITTLE BIT OF ADVOCACY FOR THAT RESERVE.

WHY IS IT IMPORTANT? WELL, LIQUIDITY DURING AN EMERGENCY, IT'S

[00:20:01]

CRITICALLY IMPORTANT DURING, DURING THE PANDEMIC WHEN OTHER CITIES MAYBE HAD CASH FLOW ISSUES AND HAD TO WAIT FOR THOSE, UM, UM, CARES ACT AND ARPA MONIES TO COME IN BEFORE THEY COULD ACT.

WE WERE ACTING DAY ONE BECAUSE WE HAD VERY STRONG RESERVES THAT ALLOWED US TO, TO DO SO, AND THEN WE WERE ABLE TO PAY OURSELVES BACK AS THE FEDERAL MONEY STARTED FLOWING IN.

WE HAVE A MEMO THAT'S GONNA BE COMING OUT, UM, SOMETIME THIS WEEK ON WINTER STORM.

MARA AND STAFF'S RESPONSE TO THAT, DEPARTMENTAL RESPONSES TO THAT.

IT'S A SIMILAR SITUATION.

WE'RE OUT THERE TAKING CARE OF WHAT NEEDS TO BE TAKEN CARE OF, UM, BECAUSE, UM, OF THE EMERGENCY, BUT IT'S GOING TO BE A YEAR PLUS BEFORE WE GET THOSE FEMA DOLLARS BACK.

SO HAVING THOSE STRONG RESERVES GIVES US THE, UH, THE ABILITY TO DO THAT.

ECONOMIC FLUCTUATIONS IS ANOTHER REASON WE WANT RESERVES.

ONE OF OUR RESERVES IS IN FACT CALLED A BUDGET STABILIZATION RESERVE BECAUSE A QUARTER OF OUR REVENUE COMES FROM SALES TAXES.

SALES TAXES GO UP FAST AND THEY COME DOWN FAST.

AND SO TO ADDRESS THOSE FLUCTUATIONS AND TO GIVE US SOME STABILITY, UM, THE RESERVES ARE, UM, ARE, ARE AN IMPORTANT CONSIDERATION THERE.

THE LAST TIME WE INCREASED RESERVES, IN FACT, WAS WHEN WE WERE CAPPED BY THE LEGISLATURE AT 3.5% INSTEAD OF AN 8% INCREASE, BECAUSE WHEN WE HAD AN 8% TAX INCREASE, WE HAD MORE LATITUDE TO ADJUST PROPERTY TAXES.

WHEN SALES TAXES WERE DOWN THAN WE CURRENTLY DO.

WE'VE REALLY LOST, UM, THAT LATITUDE UNDER THE THREE AND A HALF PERCENT CAP.

SO HAVING A LARGER STABILIZATION RESERVE HELPS US THERE.

AND THEN FINALLY, OUR RESERVES ARE REALLY IMPORTANT TO OUR CREDIT RATINGS.

YOU'RE GONNA HEAR FROM CARRIE LATER ABOUT SOME OF THE UN SOME OF THE COUNCIL PRIORITIES THAT ARE, UM, CURRENTLY NOT INCLUDED IN THE FORECAST.

THEY'RE UNFUNDED FROM A FORECAST PERSPECTIVE.

AGAIN, WE WILL LOOK AT THOSE AS WE MOVE FORWARD.

BUT WE WANTED TO TALK AND SPEND A LITTLE BIT OF TIME JUST ABOUT THE FY 23 BUDGET YOU APPROVED, AND, UM, UM, JUST SOME OF THE PRIORITIES FROM COUNCIL THAT WERE INCORPORATED INTO THAT FISCAL YEAR 23 BUDGET.

MOST SIGNIFICANTLY, UH, 33% INCREASE IN THE LIVING WAGE FROM $15 AN HOUR TO $20 AN HOUR.

UM, ADDITIONAL FUNDING FOR EMERGENCY RENTAL ASSISTANCE, UH, FUNDING FOR THE AUSTIN CIVILIAN CONSERVATION CORPS AND ET CETERA.

JUST TO SAY, WE DO GET A LOT OF, UM, PRIORITIES COMING FORWARD FROM COUNCIL.

AND WE, WE, UM, HAVE AND CONTINUE TO LOOK FOR WAYS TO FUND THOSE PRIORITIES.

AND THAT THESE PROGRAMS, AT LEAST TO THE EXTENT THESE PROGRAMS WERE ONGOING IN NATURE, THAT FUNDING IS FLOWING THROUGH INTO THE FISCAL YEAR 24 FORECAST.

UH, YOU KNOW, ANOTHER ONE THAT COMES TO MIND IS, IS NOT ON THIS LIST CUZ IT'S OLDER, BUT THE HOUSING TRUST FUND, WE TRANSFER MORE THAN 10 MILLION A YEAR FROM THE HOUSING TRUST FUND.

THAT IS A COUNCIL INITIATIVE THAT WAS APPROVED.

THAT PROGRAM IS GONNA CONTINUE ON.

UM, AND AGAIN, WE'LL LOOK FOR WAYS AS WE MOVE FORWARD WITH OUR BUDGET PROCESS ABOUT HOW WE MIGHT BE ABLE TO FUND, UM, UM, OTHER COUNCIL PRIORITIES THAT ARE STILL, UM, OUT THERE.

WE MOVE ON TO THE TIMELINE REAL QUICK, AND I'M, I'M GONNA START OFF WITH ALL THOSE DAYS.

IT'S JUST SAID, RIGHT? IT'S A, IT'S A BIG BUDGET AND IT TAKES A LONG TIME TO DEVELOP IT.

UM, UM, WE HAVE THIS STARTING IN JANUARY, BUT I KNOW WE STARTED BEFORE THAT.

WE WERE ACTUALLY IN SOME WORK SESSIONS WITH BOARDS AND COMMISSIONS EVEN IN DECEMBER.

SO, UM, WE START OFF, UM, THIS IS A CHANGE WE MADE SEVERAL YEARS AGO TO PUT INPUT FROM OUR ADVISORY BOARDS AND COMMISSIONS, RIGHT AT THE VERY FOREFRONT OF THE BOD BUDGET PROCESS.

AND WE ACTUALLY PAY SPECIAL ATTENTION TO OUR EQUITY BASED, UH, COMMISSIONS, UM, CENTERED AROUND THE JOINT INCLUSION COMMISSION.

SO, UM, UM, THAT HAPPENS ALL OVER, OVER, UH, JANUARY TO MARCH.

WE GET THAT FEEDBACK THAT WILL INFORM, UM, BUDGET DECISIONS AS WE MOVE FORWARD.

WE'RE HERE ON MAY 2ND PRESENTING YOU THE FINANCIAL FORECAST, WHICH IS REALLY KIND OF THE TRADITIONAL KICKOFF STARTING POINT, AT LEAST FOR THE DIALOGUE BETWEEN STAFF AND COUNCIL.

THE TIME BEFORE THAT IS REALLY US JUST WORKING WITH THE DEPARTMENTS, UM, SHARPENING OUR PENCILS, PUTTING OUR NUMBERS TOGETHER.

BUT THIS IS OUR PRESENTATION TO YOU OF WHAT THE FINANCIAL FUTURE IS, IS LOOKING LIKE.

JULY AND AUGUST ARE REALLY BUSY.

UM, THIS IS A LITTLE BIT MORE COMPRESSED THAN WHAT IT USED TO BE, UM, BECAUSE WITH SB TWO, WE MADE THE DECISION THAT WE WANTED TO START ADOPTING THE BUDGET IN MID-AUGUST INSTEAD OF MID-SEPTEMBER, SO THAT IF THIS BODY DECIDED THEY DID WANT TO DO A TAX RATE ELECTION TO FUND VARIOUS OTHER INITIATIVES, YOU HAVE THE TIMEFRAME UNDER THE ELECTION LAWS TO DO SO.

BUT THEN JULY AND AUGUST DO BECOME PRETTY, PRETTY ACTIVE ON A BUDGET PERSPECTIVE.

UM, YOU'LL GET THE BUDGET FROM THE CITY MANAGER ON THE 14TH.

THAT'LL BE THE ACTUAL BUDGET DOCUMENT, THE WRITTEN REPORT, WE'LL PUBLISH IT.

WE WILL GO AROUND AND DO ONE-ON-ONES WITH YOU IN ADVANCE OF THAT, JUST SO THAT YOU'RE NOT SURPRISED BY ANYTHING YOU MIGHT SEE IN THAT BUDGET DOCUMENT.

UM, AND THEN ON THE 19TH, WE'LL BE BACK PROBABLY IN THIS ROOM IN THIS SAME SETTING TO DO STAFF PRESENTATIONS ON THE BUDGET, UM, STARTING ON JULY 26TH, BUT THEN CONTINUING INTO AUGUST, WE HAVE MULTIPLE COMMUNITY INPUT SESSIONS, MULTIPLE BUDGET WORK SESSIONS FOR COUNSEL TO WRANGLE WITH THE BUDGET AND PROVIDE FEEDBACK.

AND THEN WE'LL BE IN FRONT OF YOU AUGUST 16TH, 17TH AND 18TH

[00:25:01]

IF NECESSARY.

IT DOESN'T HAVE TO GO THREE DAYS, BUT IT COULD GO THREE DAYS, UM, FOR COUNSEL TO DELIBERATE AND ULTIMATELY APPROVE THE BUDGET.

I'M GONNA NOW PASS IT ON TO CARRIE LANG, THAT THAT WAS ALL ABOUT THE PAST AND THE CURRENT CARRIE'S GONNA TALK ABOUT WHAT THE FUTURE LOOKS LIKE.

THANKS, ED.

UM, AND THANK YOU COUNSEL FOR HAVING US TODAY.

AGAIN, I'M CARRIE LANG.

I'M THE BUDGET OFFICER IN THE FINANCIAL SERVICES DEPARTMENT, AND I'M GOING TO TALK ABOUT SOME OF THE THINGS THAT WE ARE LOOKING AT, THE ASSUMPTIONS THAT WE MADE AS WE ARE BUILDING OUR FORECAST FOR THE NEXT FIVE YEARS.

UM, AND WE START WITH CITYWIDE COST DRIVERS, THINGS LIKE HEALTH INSURANCE.

AS WE CONTINUE TO SEE THE RISING COSTS IN HEALTH INSURANCE, WE ANTICIPATE A PROJECTED, UM, 10% ANNUAL INCREASE YEAR OVER YEAR FOR THOSE COSTS WAGES.

UM, WE'RE ALSO LOOKING AT A 3% ANNUAL INCREASE FOR WAGES FOR, FOR EMPLOYEE WAGES OVER THE NEXT FIVE YEARS.

AND WE CONTINUE TO DO MARKET STUDIES FOR OUR EMPLOYEES.

AND SO IN FISCAL YEAR 24, WE ARE ANTICIPATING, UM, HR, UH, OUR HUMAN RESOURCES DEPARTMENT COMPLETING A CITYWIDE MARKET STUDY.

UM, WHEN WE LOOK AT OUR EMPLOYEE RETIREMENT SYSTEM, YOU KNOW, WE ARE ASSUMING THAT THE STATE LEGISLATOR WILL, WILL APPROVE THE JOINT, UM, BILL THAT WE, WE PUT FORWARD IN FRONT OF THEM WITH THE, UM, BOARD TO, UM, UPDATE OUR, OUR EMPLOYEE RETIREMENT SYSTEM.

AND THAT IS ANTICIPATED OUR, UM, OUR CONTRIBUTION TO INCREASE TO 19.84%.

AND THEN AGAIN, WITH LIVING WAGE, AS ED MENTIONED, WE ARE SEEK KEEPING OUR COST DRIVERS AT LEVEL WHEN WE LOOK AT THIS FORECAST.

SO LIVING WAGE IN THE FORECAST, IT'S, IT REMAINS AT $20 PER HOUR.

AND THEN ONE THING THAT WE DID A LITTLE BIT DIFFERENTLY THIS YEAR IS THAT WE REALLY TOOK A HARD LOOK AT OUR LONG-TERM VACANCIES.

AND SO ANY VACANCY THAT WE HAD THAT WAS TWO YEARS OR OLDER, WE WERE ELIMINATED IN FISCAL YEAR 24.

UM, WE WORKED WITH DEPARTMENTS TO IDENTIFY THOSE POSITIONS AND TO WORK THROUGH THAT ELIMINATION PROCESS.

IN ADDITION TO THAT, IF A DEPARTMENT HAS A 15% OR HIGHER VACANCY RATE, THEY WILL NOT BE GETTING NEW POSITIONS IN FISCAL YEAR 24.

WE'RE ASKING DEPARTMENTS TO REALLY LOOK AT THEIR RESOURCES THAT THEY CURRENTLY HAVE AND MAKES THOSE ADJUSTMENTS TO ADDRESS ANY, UM, ANY SERVICE NEEDS OR PROGRAM NEEDS THEY, THEY HAVE WITH THEIR CURRENT RESOURCES OR CURRENT, UH, VACANT POSITIONS.

LOOKING AT SOME OF THE OTHER COST DRIVERS THAT WE ARE ANTICIPATING, OUR INTERNAL SERVICES DEPARTMENTS CONTINUE TO, UM, WORK ALONG WITH THESE BASE COST DRIVERS.

SO WE WILL SEE MINIMUM INCREASES FOR OUR, FOR OUR INTERNAL SERVICES DEPARTMENT SUPPORT SERVICES.

OF COURSE, THAT INCLUDES HUMAN RESOURCES, FINANCIAL SERVICES, SOME OF OUR SMALLER OFFICES, UM, THE MANAGER'S OFFICE, THINGS LIKE THAT.

THAT'S A 3% INCREASE.

OUR, UM, CTM DEPARTMENT IS AGAIN, A 3% INCREASE OVER THE FORECAST PERIOD.

AND THEN FLEET MAINTENANCE MAINTENANCE IS, WE ARE SHOWING A 5% INCREASE FOR THOSE COSTS.

FUEL IS SHOWING A 10% INCREASE FOR FISCAL YEAR 24, BUT THEN WE'RE REDUCING THAT TO 3% FOR THE OUT YEARS.

SO THINKING ABOUT THOSE OVERALL COST DRIVERS AND LOOKING AT THE GENERAL FUND AND THE FORECAST IN PARTICULAR FOR THE GENERAL FUND, I WANNA START BY TALKING ABOUT THE GENERAL FUND BUDGET FOR FISCAL YEAR 23.

UM, AS YOU KNOW, OR EXCUSE ME, THE REVENUE FOR FISCAL YEAR 23, WE HAVE FOUR MAJOR REVENUE SOURCES FOR THE GENERAL FUND PROPERTY TAX REVENUE ACCOUNTS FOR RIGHT UNDER 50% OF OUR REVENUE.

UM, IT IS ONE OF MY, OUR MOST STABLE REVENUE SOURCES SALES TAX AS ED MENTIONED, UM, IS ANOTH THE NEXT LARGEST BUT IS MORE VOLATILE.

AND WE HAVE TO REALLY LOOK AT HOW THAT IS IMPACTED BY THE ECONOMY.

AND THEN UTILITY TRANSFERS, OUR TRANSFERS FROM OUR WATER AND, UH, ENERGY UTILITY, WE, THAT IS 12.7% OF OUR OVERALL REVENUE.

AND THEN FINALLY, OTHER REVENUE, AND WE'LL TALK ABOUT THESE MORE IN DETAIL, INCLUDE OUR REVENUE FOR SERVICES, OUR FEES FOR SERVICES, UM, CHARGES FOR THINGS LIKE, UM, EMS TRANSPORTS, PARKS AND RECREATION PROGRAMS, UM, OUR INTERESTS, THINGS LIKE THAT ARE INCLUDED IN OUR OTHER REVENUE.

SO I'M GONNA START OUT TALKING A LITTLE BIT MORE ABOUT OUR OTHER REVENUE FOR THE GENERAL FUND.

YOU'LL SEE THAT, UM, THAT REVENUE IS VERY SLOW GROWING.

WHEN YOU LOOK OVER THE NEXT FIVE YEARS, WE'RE LOOKING AT A 0.5% INCREASE OVER THE, UH, FIVE YEAR FORECAST.

IT INCLUDES AS IT'S LISTED THERE, I'M NOT GONNA NAME 'EM ALL, BUT THE INTEREST INCOME, UH, PUBLIC HEALTH AND SAFETY LICENSES AND INSPECTIONS.

UM, ANY FINES OR FEES THAT WE HAVE IS INCLUDED IN OUR OTHER REVENUE.

THIS, UH, GRAPH ALSO MENTIONS THE CAGR.

WE, UH, TRIED TO INCLUDE ALL THE DEFINITIONS.

THAT IS JUST THE ANNUAL COMPOUND GROWTH THAT YOU'LL SEE, AND WE'LL TALK ABOUT THAT OVER, UM, THE NEXT SEVERAL SLIDES AND DIFFERENT ITERATIONS.

BUT THAT'S JUST SHOWING

[00:30:01]

HOW THE, THE, UH, REVENUE OR THE EXPENDITURES ARE GROWING YEAR OVER YEAR.

UM, WHEN WE LOOK AT THE TRENDS THAT WE'RE SEEING, OUR NEXT, UH, DISCUSSION POINT IS OUR UTILITY TRANSFERS.

UM, COUNCIL APPROVED THE RATES FOR OUR UTILITY TRANSFERS.

THE ENERGY TRANSFERS 11.6% OF THEIR GROSS NON-FUEL REVENUE.

AND THEN WATERS TRANSFERS 8.2% FOR THEIR AVERAGE GROWTH REVENUE.

THIS SHOW, THIS CHART RIGHT HERE IS REALLY SHOWING THE, THE RELEVANCE AND THE, THE PORTION OF THE GENERAL FUND REVENUE THAT WE'VE RELIED ON FOR THE, UH, UTILITY TRANSFERS OVER THE YEARS.

AS YOU, AS YOU CAN SEE BACK IN 2010, IT WAS 20.7% OF OUR TOTAL REVENUE.

WE REDUCED THAT RELIANCE ON THE GENERAL ON THE, UH, UTILITY TRANSFERS OVER THE YEARS.

BUT WE ARE ANTICIPATING A SLIGHT INCREASE OVER THE FORECAST PERIOD, WHICH IS PRIMARILY DUE TO THEIR INCREASED, UM, OR THEIR PROJECTED INCREASED RATES.

UM, THE RECENT RATE THAT THAT, UM, AUSTIN ENERGY HAS JUST HAD AND THEIR PROJECTIONS OVER THE NEXT FIVE YEARS FOR SMALL INCREASES TO THEIR UTILITY RATES.

AND THEN AS WE LOOK AT SALES TAX, UM, WE, WE CONTINUE TO TALK ABOUT HOW SALES TAX FLUCTUATES OVER, UM, TIME AND IN RESPONSE TO THE ECONOMY.

UM, IT IS OUR SECOND LARGEST REVENUE SOURCE, BUT IT IS THE MOST VOLATILE AND IT, AND WE WILL SEE THAT AS WE LOOK AT THIS CHART.

WHEN YOU SEE THE PRE C O V ANNUAL GROWTH, IT IS 5.9%.

THAT ORANGE PART OF THAT OF THIS CHART SHOWS THE FLUCTUATION THAT WE SAW WITH THE STIMULUS THAT WE HAD AND THE DISTORTIONS FROM COVID FROM THE SHUTDOWN TO US, US THEN GETTING THE STIMULUS DOLLARS.

UM, WE DO ANTICIPATE THAT IT WILL, UM, OUR SALES TAX GROWTH WILL GO BACK TO PRE COVID, UH, GROWTH LEVELS.

AND SO THAT'S WHY YOU SEE US GOING DOWN TO 7.7% IN OUR ESTIMATE.

AND THEN AS WE LOOK AT THE OUT YEARS, WE'RE MORE CONSERVATIVE AT THE 4%, UM, BECAUSE WE WANNA MAKE SURE THAT WE ARE NOT CHASING THE SALES TAX GROWTH THAT WE ARE BEING REALLY, UM, MINDFUL OF HOW THAT, THAT WILL IMPACT US OVER THE NEXT SEVERAL YEARS.

AND THEN FINALLY, WHEN WE TALK ABOUT REVENUE, I WANT US TO LOOK AT OUR PROPERTY TAX.

UM, AS, AS ED SAID, WE STARTED THIS CONVERSATION LOOKING AT OUR NO NEW REVENUE RATE, UM, HAVING THE CONVERSATION ON WHAT WOULD IT LOOK LIKE FOR US TO CREATE A BUDGET OR CREATE A FORECAST BEGINNING AT THE NO NEW REVENUE RATE.

WHEN WE LOOK AT THIS, WE, UM, WE SEE THAT THE NO NEW REVENUE RATE GENERATES 594.9 MILLION OF REVENUE.

UM, WE ARE, UM, ANTICIPATING THAT IF WE GO WITH THE, UH, VOTER APPROVAL RATE, WE WOULD GET THE 628.3 MILLION.

AGAIN, THE SALES, UH, REVENUE CAP THAT WE HAVE IN IMPLIES THAT WE CAN, UM, IT ONLY APPLIES TO M AND M AND O, WHICH IS MAINTENANCE AND OPERATIONS, PROPERTY TAX REVENUE.

WE STILL HAVE TO LOOK AT WHAT OUR DEBT RATES ARE AND THE, UM, RATE THAT WE HAVE AGREED TO FOR THE, UM, ATP AUSTIN TRANSPORTATION PARTNERSHIP, UM, PROJECT FOR, FOR THEIR RATE FOR, UH, PROPERTY TAXES.

ONE THING THAT THIS REALLY, UM, WE WANTED TO REALLY HONE IN ON THIS SLIDE IS THE IMPACT OF THE TAX BILL, THE PROJECTED TAX BILL BASED ON THESE DIFFERENT RATES.

I WILL NOTE THAT, UM, WE NOTICE THAT THERE IS A CHANGE IN THE SENIOR EXEMPTION AND, UM, WE ARE, WE ARE ANTICIPATING AS WE CONTINUE TO LOOK AT THE IMPACTS OF, OF OUR PROJECTED OR OUR PROPOSED RATES, WE ARE PARTICIPATING, ANTICIPATING COMING BACK TO COUNCIL PROBABLY IN JUNE, UM, TO RESPOND TO THE, UM, IFFC THAT WE RECEIVED THIS PAST FALL TO LOOK AT OUR HOMESTEAD EXEMPTION FOR OUR SENIORS AND DISABLED TO MAKE SURE WE MAKE ADJUSTMENTS TO THAT TO HOLD THEM HARMLESS AS WE LOOK AT THE DIFFERENT POTENTIAL TAX RATES GOING FORWARD.

SO THIS SLIDE HERE REALLY LOOKS AT THOSE DIFFERENT REVENUE PROJECTIONS BASED ON THE DIFFERENT, UM, TAX RATE PO POSSIBILITIES THAT WE ARE CONSIDERING.

IF YOU'LL NOTICE THE, THE, UM, NO NEW REVENUE RATE KEEPING THAT AT, AT THE NO NEW REVENUE RATE FOR THE FORECAST PERIOD, RE RESULTS IN THEIR VERY FLAT REVENUE GROWTH FOR, FOR THE, UH, CITY, FOR THE GENERAL FUND.

AND THEN, UM, THE SECOND PART, THE SECOND SCENARIO LOOKS AT THE NO NEW REVENUE RATE IN FISCAL YEAR 24 AND THEN RETURNING TO THE VOTER APPROVED RATE IN SUBSEQUENT YEARS.

AND THEN FINALLY LOOKING AT THE VOTER APPROVED RATE FOR ALL FIVE YEARS OF THE FORECAST PERIOD.

AND A LITTLE BIT LATER WE'LL SEE HOW THE, THIS REVENUE SCENARIO, UM, COMPARES TO THE PROJECTED EXPENSES THAT WE ARE ANTICIPATING OVER THE FORECAST PERIOD.

YES, VOTER RATE,

[00:35:01]

I VOTER IT'S DIFFERENT RATE RIGHT NOW IS WHAT YOU COULD GO TO.

MAYOR, YOUR MICROPHONE.

I'M SORRY, I THOUGHT I'D PUNCH THAT BUTTON.

I'M, LET ME LET BE CLEAR, I SHOULD, IT'S VOTER APPROVAL RATE AND SO THAT'S RIGHT.

I MAY BE TALKING A LITTLE BIT TOO FAST.

UM, BUT IT'S VOTER APPROVAL RATE, NOT A RATE THAT THE VOTERS HAVE ALREADY APPROVED.

THAT'S RIGHT.

SO IF THE 3.5%, WHAT WHAT SB TWO DID WAS IT SAID IF YOU GO ABOVE 3.5%, THERE'S AN AUTOMATIC ELECTION AND VOTERS CAN APPROVE THAT.

CORRECT.

AND THAT'S THE RATE YOU'RE REFERRING TO WHEN YOU'RE TALKING ABOUT THE COMPARISONS? NO, I'M REFERRING TO THE VOTER APPROVAL RATE, THE 3.5% CAP.

SO JUST, JUST THE THREE SO YOU NOT ABOVE IT, BUT THE 3.5% IS THE HIGH AS YOU CAN GO, BUT THAT WITHOUT AN ELECTION IS WHAT YOU'RE SAYING.

CORRECT.

IT USED TO BE CALLED THE ROLLBACK RATE.

RIGHT.

AND NOW WE'RE THE NEW NAME COURT IS, WE'RE TRYING TO USE THE NEW WORDS.

RIGHT.

BUT I WANNA MAKE SURE WHEN YOU SAY YOU'RE SAYING VOTER APPROVAL, NOT VOTER APPROVED AS THOUGH THERE'S ALREADY BEEN AN AMOUNT THAT'S APPROVED.

CORRECT.

OKAY, THANK YOU.

CARRIE, I WONDER IF YOU COULD ALSO, UH, INDICATE THAT IF YOU DID ADOPT THE BUDGET AT THE NO NEW REVENUE RATE, THERE'S A PERIOD OF TIME IN WHICH THE COUNCIL COULD MAKE ADJUSTMENTS TO THE TAX RATE IN FUTURE YEARS THAT WOULD CAPTURE RECAPTURE SOME OF THAT THAT YOU DIDN'T TAKE IN, IN THE, IN THE FISCAL YEAR THAT YOU HAVE ADOPTED THE BUDGET.

THAT IS AB ABSOLUTELY CORRECT.

WE HAVE UP TO THREE YEARS TO, UM, GO BACK AND, AND USE THOSE, UM, DOLLARS THAT WE DID NOT.

IF WE GO TO THE, UM, ROB OR THE EFFECTIVE RATE, THEN WE HAVE THREE YEARS TO RE UM, RECAPTURE THOSE DOLLARS THAT WE DID NOT RECEIVE IN THAT, IN THAT YEAR THAT WE WENT TO THE EFFECTIVE RATE.

THANK YOU.

MM-HMM.

ARE THE NO NEW REVENUE RATE.

MAYOR, JUST TO BE CLEAR ABOUT THAT.

SO IF WE DID A NO NEW REVENUE RATE THIS YEAR, LET'S SAY NEXT YEAR, WE COULD DO 5% OR SOMETHING.

IS, IS THAT HOW IT'S LIKE THREE, THREE AND A HALF PERCENT ACCUMULATES OVER THE THREE YEARS SO THAT THE CITY HAS WIGGLE ROOM WITHIN THOSE THREE YEARS TO CAPTURE SOME OF THE REVENUE THAT IT MAY BE LEFT ON THE TABLE CORRECT.

WITHOUT GOING TO VOTER APPROVAL? THANK YOU.

IF I COULD JUST ADD REALLY QUICK, IT'S NOT ALL OR NOTHING EITHER.

YOU KNOW, IT'S NOT LIKE WE HAVE TO GO TO THE EFFECTIVE WHEN WE GET TO BANK THAT THREE AND A HALF.

IF WE APPROVE A BUDGET AT TWO AND A HALF, WE GET TO BANK THAT 1% TO USE IN THE NEXT THREE YEARS IF, IF WE NEEDED TO.

SO AS WE TRANSITION TO OUR EXPENDITURES FOR THE GENERAL FUND, UM, PUBLIC SAFETY CONTINUES FOR FISCAL YEAR 23 TO BE OUR LARGEST, UM, EXPENDITURES FOR THE GENERAL FUND.

THAT'S POLICE, FIRE, EMS, AND OUR FORENSIC SCIENCE, THEY'RE ABOUT 63% OF THE GENERAL FUND.

AND THEN OUR COMMUNITY SERVICES DEPARTMENTS ARE 29%, THAT'S OUR PARKS AND RECREATIONS, LIBRARIES, PUBLIC HEALTH, UM, OUR, UH, MUNICIPAL COURT HOUSING AND ANIMAL SERVICES.

SO WHEN WE THINK ABOUT THE COST DRIVERS THAT WE MENTIONED EARLIER, THE CITYWIDE COST DRIVERS, OUR CORPORATE COST DRIVERS, THIS IS, THIS SLIDE REALLY TALKS ABOUT AND SHOWS THE IMPACT OF THOSE COST DRIVERS TO THE GENERAL FUND.

SO WHEN YOU SEE, UH, SALARY AND BENEFIT INCREASES, THAT 47 MILLION THAT INCLUDES AND IS NOTED ON THE SLIDE, ALL WAGE INCREASES, UM, POTENTIAL INCREASES TO THE PENSION AS WELL AS ANTICIPATED COST RELATED TO THE LABOR NEGOTIATIONS WITH THE PUBLIC SAFETY ASSOCIATIONS AND THEN THE POLICE VEHICLES AND, UM, EQUIPMENT.

I DO WANNA POINT OUT THAT THAT IS US TRANSITIONING BACK TO CASH FUNDING THESE SHORT TERM, UM, REPLACEMENT, UM, VEHICLES AND EQUIPMENT.

SO WHEN WE THINK ABOUT WHAT WE'VE DONE OVER THE PAST FEW YEARS, WE MOVE THAT TO DEBT AND WE'RE, WE'RE PROPOSING MOVING THAT TO CASH FUNDED BECAUSE OF THE LIFE CYCLE OF THESE, UM, OF, OF THESE VEHICLES AND THE EQUIPMENT.

IT MAKES MORE SENSE TO NOT HAVE THE SHORT TERM DEBT COSTS, UM, FOR THAT, FOR THOSE LIFE CYCLES.

AND THEN WHEN YOU THINK ABOUT THE SUPPORT SERVICES, FUEL AND FLEET MAINTENANCE THAT I MENTIONED EARLIER, THAT'S 7.6.

AND UM, ALSO IT INCLUDES THE, THE OPENING OF THE GOODNIGHT RANCH STATION, UM, THE OPENING OF THE, UH, DOVE SPRINGS PUBLIC HEALTH FACILITY AND, UM, THE OPERATIONS OF SOUTHBRIDGE SHELTER.

I WILL SAY THAT, UM, THERE ARE A FEW THINGS THAT ARE INCLUDED IN, IN THE OUT YEARS THAT OUR ENHANCEMENTS ARE, UM, ALREADY APPROVED ENHANCEMENTS FROM, FROM THE COUNCIL THAT IS THE, UM, OPENING OF CANYON CREEK AND THEN THE 22.8 MILLION FOR THE P UH, POLICE SWORN, UM, UM, EMPLOYMENT OR, UH, POSITIONS TO BE, UH, INCLUDED INTO THE BUDGET IN THE OUT YEARS.

AND THAT WAS PART OF THE, UM, POLICE, UM, STAFFING PLAN THAT WAS, THAT WAS DISCUSSED SEVERAL YEARS AGO AND, AND DIS APPROVED BY UM, COUNSEL

[00:40:01]

IN THE CONVERS IN CONVERSATIONS.

AND THEN FINALLY THE IMPLEMENTATION OF THE G F O A GOVERNMENT FINANCE OFFICERS ASSOCIATION RECOMMENDED GENERAL, GENERAL FUND RESERVES.

WE DO HAVE THAT BEGINNING IN FISCAL YEAR 24.

SO THIS IS JUST THE OVERVIEW OF OUR EXPENDITURES OVER THE NEXT FIVE YEARS TALKING ABOUT ALL THOSE, UM, COST DRIVERS AND INCREASES IN WHAT THESE BASE COST DRIVERS WILL DO TO THE GENERAL FUND BUDGET EXPENDITURES OVER THE NEXT FIVE YEARS.

WE SEE THAT 3.8%, UM, GROWTH THAT WE ARE ANTICIPATING.

AND THIS DOES NOT INCLUDE ANY ENHANCED PROGRAMS THAT AS WE DISCUSSED A LITTLE BIT EARLIER WHEN WE COMPARE, OKAY, WHEN WE COMPARE THOSE EXPENSES TO THE REVENUE, WE SEE THAT AT THE NO NEW REVENUE RATE, UM, THAT DOES RE RE UM, RE END UP WITH A VERY LARGE DEFICIT FOR FISCAL YEAR.

BY THE TIME WE GET TO FISCAL YEAR 28, WHEN WE LOOK AT THE, UM, GOING TO THE VOTER APPROVAL RATE IN FISCAL YEAR, OR EXCUSE ME, GOING INTO THE NO NEW REVENUE RATE IN FISCAL YEAR 24 AND THEN TRANSITIONING TO THE VOTER APPROVAL RATE IN THE OUT YEARS, THAT STILL RESULTS IN A 37.2 MILLION DEFICIT.

IF WE GO TO THE VOTER APPROVAL RATE IN FISCAL YEAR 24, WE GET ABOUT 30 MILLION IN SURPLUS IN FISCAL YEAR 24.

BUT BY THE TIME YOU GET TO FISCAL YEAR 28, WE'RE LOOKING AT A BALANCED BUDGET.

AND SO WHAT THIS REALLY SHOWS IS HOW THE DIFFERENT, UH, RATE SCENARIOS SHOW THEMSELVES ONCE WE GET THROUGH THE FORECAST PERIOD.

EITHER A 30 MILLION SURPLUS NOW, UM, WITH THE VOTER APPROVAL RATE OR GOING, UM, WITH THE SECOND SCENARIO AND HAVING A DEFICIT IN FISCAL YEAR 28.

MAYOR.

THANK YOU MAYOR.

SO ESSENTIALLY, IF I'M UNDERSTANDING THIS CHART CORRECTLY, WE HAVE TO HAVE REVENUE COME IN AT THAT VOTER APPROVAL RATE TO MATCH EXPENDITURES OVER THE FIVE YEAR FORECAST.

YES.

THAT, THAT IS OUR, UM, STAFF LOOK IN LOOKING AT THIS.

WE RECOGNIZE THAT IF WE DON'T GO TO THE VOTER APPROVAL RATE, WE ARE ANTICIPATING A DEC A DEFICIT.

NOW WHEN WE LOOK OUT INTO THE OUT YEARS, OF COURSE THERE ARE SO MANY VARIABLES THAT CAN CHANGE THAT, BUT WITH THE INFORMATION THAT WE HAVE TODAY, WE DO ANTICIPATE A DEFICIT IN FISCAL YEAR 28.

UM, AND AGAIN, THERE ARE THINGS THAT WE CAN DO TO MAKE ADJUSTMENTS TO TRY TO ADDRESS THO THAT DEFICIT BEFORE WE GET TO THAT POINT AND STAFF WILL DO EVERYTHING WE CAN TO MAKE THAT ADJUSTMENT.

BUT THIS IS WHAT OUR REVENUE AND AND EXPENDITURES ARE SHOWING AT THE MOMENT.

AND COUNCIL MEMBER, YOU KNOW, AND, AND THE, WITH THE REFRAIN OF NOY NEEDLE, UH, WHAT YOU WOULD BE FORCED TO DO IS HAVE FISCAL DISCIPLINE, SHARPEN YOUR PENCIL, FIGURE OUT A WAY TO DELIVER THOSE SERVICES WITHIN THE RESOURCES.

IF WE DON'T EVER CHALLENGE OURSELVES MM-HMM.

, I PROMISE YOU WE'LL JUST, WE'LL ALLOW THE EXPENDITURE SIDE TO JUST GROW AT WHATEVER RATE WE, SO WE CAN KIND OF KEEP THOSE THINGS IN BALANCE.

PART OF THIS IS TO MAKE SURE THAT WE'VE GOT THE, THE WHEREWITHAL TO, TO SHARPEN OUR PENCILS, ACTUALLY MANAGED TO THE EXPENSES THAT ARE REQUIRE OR THAT WOULD BE DELIVERED UNDER THE NEW, THE NO, UH, THE NO NEW REVENUE RATE SO THAT WE CAN BE, BE, WHAT WE'RE PAID TO DO IS TO MAKE SURE THAT WE'RE, WE HAVE A OUR HOUSE IN ORDER.

AND I WILL SAY THAT EVEN WITH THE SURPLUS THAT WE ARE ANTICIPATING AT THE, UH, VOTER APPROVAL RATE, THE RECOMMENDATION WOULD BE TO, IF, IF THAT WAS A CHOICE TO DO ONLY ONE TIME, CUZ ANY NEW SERVICES THAT WE ADD THAT ARE ONGOING SERVICES WILL ONLY INCREASE THAT DEFICIT IN THE OUT YEARS.

MM-HMM.

.

SO ESSENTIALLY THAT REVENUE CAP AT 3.5%, THAT IS OUR, UH, EXPENDITURE GROWTH.

I MEAN IN TERMS OF INFLATION, IN TERMS OF JUST KIND OF THE ADDITIONAL COST WE CAN CAPTURE THREE AND A 5% ADDITIONAL REVENUE PER YEAR.

BUT IN THAT PRIOR SLIDE, YOU'RE SAYING THAT EXPENDITURES ARE GONNA GROW AT ABOUT 3.8%.

SO I MEAN WE'RE, EVEN IF WE'RE MAXING OUT OUR, UH, REVENUE, WE'RE LOOKING AT A LONG TERM STABILITY, REALLY NOT ANY KIND OF ADDITIONAL SERVICES AS, AS, AS YOU'RE MENTIONING.

UH, COUNCIL MEMBER FUENTES AND THEN COUNCIL MEMBER RYAN AL ALTER.

THANK YOU AND THANK YOU, UM, STAFF FOR, FOR SHARING, UH, WITH US THIS INFORMATION.

AND I THANK CITY MANAGER TO GET TO WHAT YOU'RE SPEAKING TO.

UM, IF WE KNOW THAT OUR STAFF IS RECOMMENDING AND BUILDING OUT A FORECAST THAT ASSUMES A 3.5%, UH, INCREASE TO ME HAVING THIS, FOR US TO CONSIDER A BUDGET WITH A, WITH A, WITH A BASE PROPOSAL OF ASSUMING NO NEW INCREASE, UM, IS MISLEADING, YOU KNOW, WE HAVE TO ENSURE THE STABILITY OF OUR CITY.

AND WHILE, YES, I THINK WE WOULD ALL LOVE TO SAY WE DID NOT INCREASE THE, THE TAX RATE ON, UH, ON NEW BUILDINGS, UH, FOR, AND THAT WOULD BE GREAT FOR POLITICAL PURPOSES.

I DON'T THINK THAT WOULD

[00:45:01]

BE IN THE BEST INTEREST OF, UH, FINANCIAL MAN MANAGEMENT OF THIS CITY.

AND ALSO WEIGHING THE CONTINUED LABOR SHORTAGES THAT WE SEE WITHIN OUR, UH, DEPARTMENTS AND WHAT WE'RE HEARING FROM OUR CITY DEPARTMENTS.

AND SO I, I KNOW THAT THIS IS THE BEGINNING OF MANY CONVERSATIONS THAT WE WILL HAVE AS A COUNCIL, BUT I DO WANT TO, TO JUST, YOU KNOW, ADD THAT LENS IS THAT WE ARE RECEIVING A PRESENTATION THAT IS SAYING THAT WE NEED A 3.5% INCREASE AS PART OF OUR FINANCIAL FORECAST FOR THE NEXT FIVE YEARS, OR WE'RE LOOKING AT A DEFICIT OF OVER 35 MILLION.

ALL, ALL I WOULD SAY IS A FORMER DEPARTMENT HEAD.

I ALWAYS WANTED MORE MONEY .

AND IF I, AND IF I DIDN'T GET CHALLENGED, I WOULD, I WOULD, I, I WOULD BUDGET AT A HIGHER LEVEL WHETHER I NEEDED IT OR NOT.

AND THE, THE, THE, THE JOB OF MANAGEMENT IS TO, IS TO HAVE A FORCING MECHANISM TO EVALUATE WHETHER THOSE EXPENDITURE REQUIREMENTS ARE REAL.

AND I DON'T THINK WE'VE HAD THAT EXERCISE IN A LONG TIME IN THIS ORGANIZATION.

SO WE WANT TO DO THAT.

AND YES, WE'RE TRYING TO SHOW WHAT HAPPENS IF YOU WERE TO, IN EVERY SUBSEQUENT YEAR, KEEP IT AT NO NEW REVENUE TO SEE WHAT THOSE DEFICITS ARE.

SO THIS ISN'T, UH, WE'RE NOT TRYING TO PLAY ANY KIND OF SMOKE AND MIRRORS HERE.

WE REALIZE THAT THERE ARE ISSUES THAT WE'RE GONNA NEED IN THE OUT YEARS NO MATTER.

AND SO, BUT IT, BUT IT IS AS TO HOW YOU START THIS YEAR SO THAT WHEN WE DO ADD, IF WE WERE TO ADD HOW CAN WE BE THE MOST PRUDENT AND HOW CAN WE ENSURE WE CHALLENGE THE DEPARTMENTS TO HAVE THE FISCAL DISCIPLINE NECESSARY.

JUST, YOU KNOW, WE BUDGETED THE, WE SWEPT THE 24, YOU KNOW, POSITIONS THAT BEEN VACANT FOR 24 MONTHS.

THOSE WERE OSTENSIBLY POSITIONS THAT EVERYBODY NEEDED FOR TWO YEARS.

THEY WEREN'T FILLED.

UH, SO THAT LEADS ME TO BELIEVE THAT THERE'S SOME FLEXIBILITY THERE AND THAT'S ALL WE'RE TRYING TO DO IS CHALLENGE THE DEPARTMENTS TO ENSURE THAT WE GET RID RID OF SOME OF THAT FLEX.

WE HAVE REAL, REAL NEEDS FOR THE DEPARTMENTS COUNCIL.

RYAN AL ALTER, TO YOUR POINT EARLIER ABOUT THE CARRY OF ANY UNUSED CAP, IF YOU, IF YOU WENT 0%, 0% IN YEAR THREE, WHATEVER INCREASE YOU DO USE, DOES THAT START COUNTING AGAINST YEAR ONE AND, AND ESSENTIALLY YOU BANK THEN YEAR THREE GOING FORWARD OR YOU SEE WHAT I'M SAYING? IT, IT'S LIKE A ROLLING BANK.

SO WHENEVER YOU BANK THE, DO THE, THE PERCENT CAP, IT'S THREE YEARS BEFORE IT EXPIRES.

AND SO THAT FIRST CAP, IF WE, IF WE, YOU KNOW, FOR FISCAL YEAR 24, IT WOULD EXPIRE IN 27.

IF YOU WERE BELOW IN FISCAL YEAR 25, THAT BANK WOULD EXPIRE IN FISCAL YEAR 28.

GOT IT.

SO, SO WHAT, I'M TRYING TO THINK IF IT, IF WE KEPT IT AT ZERO THIS YEAR AND THEN IN YEAR TWO WE WENT UP THREE AND A HALF PERCENT, ESSENTIALLY, CAN WE CARRY THAT THREE AND A HALF PERCENT FOR MORE THAN THREE YEARS? IF YOU, BECAUSE YOU'RE ALWAYS COUNTING FOR THE YEAR PRIOR.

SO YOU'RE IN YEAR TWO, WE'RE USING YEAR ONE IN YEAR THREE, WE'RE USING YEAR TWO IN YEAR FOUR WE'RE, YOU KNOW, SEE WHAT I'M SAYING? YEAH.

I DON'T THINK IT, I DON'T, THE CALCULATIONS DON'T WORK THAT WAY.

SO IF YOU USE THAT, IF YOU USE ANY, IF YOU USE A PORTION OF THAT BANK AND IT PUTS YOU ABOVE THE THREE AND A HALF PERCENT, THEN YOU WOULDN'T BANK ANYTHING IN THE SECOND YEAR.

BUT IF YOU'RE, IF YOU'RE A YEAR ONE, YEAR ZERO AND THEN IN YEAR TWO YOU GO UP THREE AND A HALF PERCENT, DID YOU USE YOUR ZEROES THREE AND A HALF PERCENT OR DID YOU, I MEAN YOUR ONE THREE AND HALF PERCENT OR YOUR TWO IS THREE AND HALF NO, YOUR BANK AT THAT POINT AND THAT'S, THAT WOULD BE AT YOUR BANK WOULD NOW BE AT 7%.

OKAY, SO TO THIS GRAPH THEN, WELL, I'M SORRY.

NO, IT'D STILL BE AT THREE AND A HALF PERCENT IF YOU WENT UP TO YOUR THREE AND HALF.

YES, YES.

THEN WE COULD, YOU KNOW, THE CHOICE OF EITHER DOING NOTHING OR DOING EVERYTHING.

IF, IF, IF WE DIDN'T WANT TO CARRY THIS SURPLUS BECAUSE WE KNEW IN YEAR FIVE WE NEED IT ALL, THERE IS A WAY TO CARRY ENOUGH CUSHION THROUGHOUT SO THAT BY YEAR FIVE WE WOULD HAVE THE ABILITY TO GO UP AND MEET THE NEED BUT NOT ALWAYS HAVING FOUR YEARS OF SURPLUS.

COOL.

WE, WE DO HAVE FLEXIBILITY IN, IN, IN DOING THAT.

AND, AND WE'RE ASSUMING 3% EMPLOY OR WAGE GROWTH ANNUALLY.

YES.

OKAY.

COUNCIL MEMBER POOL.

AND, AND THEN JUST TO ADD ON TO WHAT COUNCIL MEMBER RYAN AL ALTER WAS SAYING THAT YOU HAD ALREADY DISCUSSED THE IMPORTANCE OF ENSURING THAT THAT WOULD BE ONE TIME ONLY TYPE SPENDING.

SO WE'VE, IF YOU WERE LOOKING TO BANK SOMETHING, IF YOU KNEW THAT TWO YEARS OUT YOU NEEDED TO HAVE A LARGE EXPENDITURE, THAT WOULD NEED TO BE SOMETHING THAT IS NOT A CONTINUOUS EXPENDITURE, WHICH IS SOMETHING TO KEEP IN MIND.

AND THAT'S SOMETHING WE'VE DONE THAT I MENTIONED EARLIER THAT THE FEDERAL STIMULUS HAS BEEN A BIG PART OF WHY WE HAVEN'T BEEN BIT BY THIS CAP YET AND THE STRONG SALES TAX COLLECTIONS THAT,

[00:50:01]

THAT ARE ANOTHER REASON.

BUT WE HAVE USED THAT STRATEGY THAT COUNCIL MEMBER POOL JUST TALKED ABOUT FOR THE LAST THREE YEARS WHERE WE'RE SEEING A SIMILAR DYNAMIC TO THIS.

THERE IS SOME FLEXIBILITY IN THE FIRST YEAR, BUT NOT LONG TERM.

WE'LL ALLOCATE SOME OF THAT ADDITIONAL REVENUE TO ONE TIME THINGS NOT ONGOING.

CUZ ANYTHING THAT INCREASES THE, THE SIZE OF THE PURPLE BARS JUST INCREASES THE GAP IN FUTURE YEARS.

PLEASE GO AHEAD.

NOPE.

COUNCIL MEMBER ALLISON TER.

SO I DON'T KNOW IF THIS IS THE TIME YOU WANNA DO, BUT BEFORE WE GET TO ENTERPRISE FUNDS, I DO HAVE SOME QUESTIONS FOR, UM, WHAT YOU'RE SAYING IS ALREADY, UM, IN THE BASE COST DRIVERS MM-HMM , UM, SO ONE OF THE THINGS COLLEAGUES THAT I'VE NOTICED OVER THE LAST FEW YEARS AND I'VE STARTED TALKING WITH UM, THE BUDGET OFFICER AND, AND THE CITY MANAGER ABOUT IS WE PLAN FOR THE O AND M FOR OUR FIRE STATIONS WHEN WE BUILD THE FIRE STATION.

UM, WE DO NOT PLAN FOR THE O AND M FOR OUR PARK SYSTEM WHEN WE ADD CAPITAL IMPROVEMENTS TO OUR PARK SYSTEM.

SO WHEN WE ADDED THE LOVELY PARK OVER THE ALLIANCE CHILDREN'S GARDEN, WE DIDN'T ADD ANY MAINTENANCE POSITIONS TO MAINTAIN IT.

UM, THERE'S SOMETHING THAT IS OFF IN THE WAY THAT WE ARE DOING OUR PLANNING FOR THE PARKS DEPARTMENT WITH THE O AND M, UM, GIVEN THE CAPITAL, I DON'T SEE THOSE INCREASES ON HERE.

THEY HAVEN'T BEEN IN THERE FOR SEVERAL YEARS.

UM, WE SEE THE, THE, THE IMPACT OF THE LACK OF MAINTENANCE ON OUR PARKS AT THE SAME TIME THAT WE HAVE OVER USAGE.

UM, SO I WOULD REALLY ASK THAT WE TAKE ANOTHER LOOK AT THAT AND SEE HOW WE ARE HANDLING, UM, THOSE O AND M NEEDS THAT COME WITH THE CAPITAL INVESTMENTS THAT WE'RE MAKING, WHETHER IT'S FROM OUR BOND FUNDS OR FROM OUR PARKLAND DEDICATION FUNDS.

UM, CUZ EVERY YEAR WE KEEP GETTING ASKED FOR THESE ADDITIONAL MAINTENANCE IN THE LAST FEW YEARS, THE, THAT THOSE MAINTENANCE ADDITIONAL MONIES HAVE GONE TO THE CEMETERIES, NOT TO THE PARKS WHERE OUR FAMILIES AND OUR CHILDREN ARE PLAYING.

AND NOT THAT WE DON'T NEED TO MAINTAIN OUR CEMETERIES, BUT WE ARE ACTUALLY PULLING MAINTENANCE PEOPLE FROM OUR PARKS AND PUTTING THEM INTO OUR CEMETERIES AND NOT ADDING THEM, UM, TO OUR PARKS AND THESE NEW INVESTMENTS.

SO I WANNA UM, US TO BE SURE THAT WE'RE LOOKING AT THAT AND THAT AS WE'RE, WE'RE CALCULATING THINGS WE ARE INCLUDING THAT, UM, WE'VE HAD SOME DISCUSSIONS ABOUT FIRE AND EMS OVER THE YEARS AND THE NEED TO ADD MORE POSITIONS WHETHER OR NOT THEY'RE WITH STATIONS.

UM, THOSE ARE ALSO PART OF THE STAFFING MEMO.

UM, NOT SEEING THOSE REFLECTED HERE OTHER THAN THE NEW FIRE STATIONS.

UM, YOU KNOW, ONE OF THE THINGS THAT WAS BROUGHT UP WHEN COUNCIL MEMBER KELLY BROUGHT FORWARD THE LADDER WAS, UM, YOU KNOW, THAT, THAT THERE'S A NEED FOR OTHER FIREFIGHTERS.

WE HAD A DISCUSSION THE OTHER DAY AT OTTEN FINANCE ABOUT OVERTIME.

UM, WE ARE NOW SEEING 21 MILLION OF OVERTIME FOR OUR FIRE DEPARTMENT.

UM, AND IN THEORY YOU WOULD SAY THAT WAS A VACANCY FUNCTION, BUT WE, BACK IN 2017, WE HAD, YOU KNOW, SLIGHTLY LESS OVERTIME AT THAT POINT IN TIME AND WE HAD DOUBLE THE VACANCIES WE HAVE NOW WITH FEWER STATIONS.

WE WERE ABLE TO BRING THAT DOWN TO 13 MILLION, UM, THROUGH FIXING THE VACANCIES AND SHORT TERM THINGS THAT WE DID.

UM, BUT WE MAY BE BETTER OFF HIRING NEW FIREFIGHTERS THAN WE ARE DOING PAYING OVERTIME AND WE REALLY, REALLY NEED TO LOOK AT THAT.

UM, IT HAS A TOLL AS WE'VE BEEN TALKING ABOUT FOR THE POLICE DEPARTMENT ON THE FIRE DEPARTMENT.

SIMILAR THINGS CAN BE SAID FOR EMS. WE HAVE ALSO, YOU KNOW, I DON'T KNOW WHAT THE OVERTIME LEVELS ARE FOR EMS, BUT, UM, WE HAVE AGAIN AND AGAIN SEEN THE NEED FOR ADDITIONAL, UM, STAFFING THERE.

UM, AND, AND I WOULD LIKE TO SEE AND UNDERSTAND HOW, HOW THAT'S PLAYING OUT IN THE BUDGET.

UM, GOING BACK TO THE OVERTIME, THOSE OVERTIME EXPENDITURES, WE REALLY NEED TO LOOK AT HOW WE ARE MANAGING THAT OVERTIME.

UM, AND I UNDERSTAND THAT THERE'S BALLOONING NUMBERS FOR POLICE, BUT WE NEED A BETTER HANDLE ON WHAT IS FROM THE VACANCIES AND SO THAT THERE'S THE VACANCY MONEY THAT'S, THAT'S OFFSETTING THAT VERSUS WHAT IS JUST THE BUDGET, YOU KNOW, GOING UP AND UP.

AND I DO HAVE SOME VERY SERIOUS QUESTIONS THAT REMAIN FOR FIRE.

UM, IN PARTICULAR HAVING KNOWN THAT HISTORY AND LOOKING WHERE THOSE VACANCIES LEVELS ARE.

UM, AND WE NEED TO GET THAT STAFFING RIGHT AND WE CAN BRING THAT, BRING THAT MONEY DOWN UM, ALSO WANNA KNOW FOR THE FEES.

UM, ONE