August 12, 2022 — Meeting Transcript

Welcome, everybody. Well, we don't have to do any formalities of Robert's Rules, so we'll just open it up for our amazing operating budget and five-year capital improvement plan discussion. Take it away.

Okay, thank you, Mayor. Zoom all settled here. I will bring up the budget presentation. Okay, so today's

purpose is to go over the fiscal year 2023 budget. This was sent out to the board last Friday, and I know it was posted online as well for anybody that is interested. There's a PDF file that can be found on the city's website. So what we'll do today is kind of have a high-level overview of our various funds. We'll speak in more detail on the general fund. We did cover the capital fund in quite a bit of detail at the meeting we had on July 26th. So just to give everybody that really high level view with the general fund. These are some trend lines that we have as far as our operational activity. revenue versus expenditures. And so this is something we were talking about quite a bit last year and the year before, really ever since the pandemic. There are three lines that you see here. There's a solid blue line that represents the city's revenue within the general fund. The dashed line that you see there in blue, that is our revenue without the operational transfer that comes from the capital fund every year. So for the fiscal year 23 budget, it's $654,000 that'll move from the capital fund to the general fund. So the reason we have the dash blue line on there is to give you a true picture of what's actually coming into the general fund from the traditional general fund sources of revenue, things like property tax, sales tax, utility taxes, that sort of thing. So you can see that that operational transfer does help the situation quite a bit. What you'll notice here between 22 and 23 is that these lines certainly cross, the green line being expenditures, and you can see that gap opening up and even starting to widen. The reason that didn't happen so much during the pandemic years is we had the federal dollars that were coming in under ARPA and before that under the CARES Act that we received in 2020. And so that inflow of revenue, just about $1.7 million each of those years, really was helping us balance the budget. And so now that we're moving into 2023, you'll see as we move through this, we do project an operating deficit of about $1.9 million. That number is actually going to be a little bit higher, as it was mentioned by Alderman Lentz at the last meeting. the uniformed pension plan decision was made to change our, interest expectations or return expectations over the next 10 years from 7% down to 6.75%. As a result, we have to contribute more money to that pension plan than we would have otherwise had we held the rate at 7%. So that decision was made after the proposed budget was put together. So once we verify that number with Buck who's our list, then we'll go ahead and update that but we will cross that $2 million number for an annual operating deficit by the time that's entered in here. So again, when we look at revenue, we're calculating these projections based on the best information that we have right now. So we've got estimates really through, you know, we're mid August right now, we have sales tax numbers through June. So we use those numbers and then we try to project out through the rest of the year where we estimate we're gonna be at year end fiscal year 22. And then we apply a multiplier to that for fiscal year 23. making the assumption, of course, that all of our revenues will go up year over year. And that's certainly been the trend here with inflation. But that's also a pressure that's hitting us on the expenditure side as well. The greatest increase that you see in expenditures this year is under contractual services. That's caused by inflation, but also one-time expenses. So there are two pretty big expenses in the general fund that weren't in there last year, one being the comprehensive plan. We'll talk about that when we get to the planning budget that's at $300,000 and then $45,000 in there for a compensation classification study that HR would undertake. We want to do that in fiscal year 23 and then look to implement those salary recommendations in fiscal year 24, which is just going to put more pressure on the general fund. The last time we did that was in 2019, I believe, for fiscal year 2019. And since that time, As you all know, there's been a lot of turnover, especially within municipal governments. Cities have been doing compensation studies quite a few this year. Everybody seems to be escalating their salaries at a rapid pace. So you're seeing a lot of movement from city to city with municipal workers in all of the various professions we have. So it's time for us to get caught up and that's included in the budget as well. Expenditures by category, we always like to show where the money's going. You can see personnel and benefits, that's 68% of the general fund. Contractual services, 27%, with the waste contract making up a large portion. Over a quarter of that contractual service cost is related to our waste contract. And then just 5% of the general funds towards commodities. So again, we'll go into that in a little more detail when we get to expenditures. But first want to talk about revenue and remind everybody of our sources of revenue and how that's sliced up. So you can see here property tax, 27% of the revenue that we get. Utility taxes at 20%. Sales tax, 21. Licenses, permits, and fees. Those are building permit fees are a large portion of that. And we have various other things, business licenses that are collected on an annual basis. That's captured there as well. Parking at 7%. Parks and recreation fees. These are outdoor recreation activities. So anything within the Center of Clayton is going to be separate in that CRSWC budget. But outdoor parks and rec is 3% of our revenue. And then fines and forfeitures 2%. So that's both your You're typical when you think about fines, moving violations and that sort of thing from the police department. But the lion's share of this is from parking, related to parking. So parking tickets in particular makes up a very large percentage of that 2%. And then intergovernmental and grants, we see this fluctuate quite a bit year to year. As I said, the last three years, that was a big chunk because of the federal money that was coming in. Now it's backed off quite a bit down to 6%. We still have some grant revenue in there for different things. The tree inventory is a good example of one of those where we'll go out and perform it. You see that on the expenditure side as an increase in the public works budget, but then there's a revenue to offset that particular activity that comes in from Department of Conservation to essentially pay for that service to happen. So grants and intergovernmental agreements, that's 6%, and then miscellaneous one. So that's the overall breakdown of revenues. Expenditure categories, as I mentioned, personnel, 68% of the general fund. That's salaries, overtime, Social Security, Medicare, all the various benefits the city offers. And we have seen increases on the benefit side. Health insurance is up 8%. Our other insurance lines related to personnel are up about 10%. So some pretty significant increases there. Contractual services, again, waste collection, by far the largest one. But also our utility bills are there. All of the licensing that we have for the various software that we use, a lot of it being cloud hosted falls under contractual services lifeguards for the outdoor pools. That's a contractual service those aren't our employees that are out there on the stand right now we contract for that service. Our general liability falls under contractual Services those types of insurance lines that are non personnel. John Potter, related legal fees training all the mowing contracts tree maintenance contracts those types of things fall under here. John Potter, And then generalized professional services so things like the comprehensive plan or we'll go out and get a consultant that's captured as a contractual service as well. John Potter, Then finally commodities that smaller number at 5% uniform supplies fuel salt construction materials that's asphalt concrete those types of things we buy. for our general operations really makes up a very small portion of our budget at just 5%. So personnel is always going to be your biggest line. And that's certainly the case here in Clayton. We're at 68%. And I'm sure after we do that compensation study, that number could go up a little bit as well. Because again, we're seeing big increases and other municipalities for salaries at the moment. So for our personnel in fiscal year 23, we do have a little bit of change in staffing, not a whole lot. We didn't add any full-time positions to this budget. We're going to roll along with what we have. We run pretty lean in our departments, but we're certainly getting by and we have an extremely talented staff, which makes this work for us. So in our HR department, we do have part-time hr project manager our hr generalist is leaving we've hired a new one so our outgoing generalist is helping the new generalist that's here and then our outgoing generalist uh is going to help us in a part-time capacity next year especially during the compensation study and provide some some additional help there we have two intern positions One is going to be in IT or technology services to help with help desk tickets and some network activity. The other one will be in the city manager's office, helping with communications events, that sort of thing. And as we talked about quite a bit, we have a lot of community engagement that's upcoming and maybe a little bit of HR help potentially there as well. And then we did have one reclassification. That's a building inspector one position that's changed to a multidisciplinary inspector. So basically somebody that's capable of doing residential inspections, commercial inspections, which are more complicated, and they do code enforcement work as well. So that's the proposed staffing changes. So not a whole lot there as far as additional headcount or anything. For compensation, we did include a 3% range adjustment and then a 3% merit pool. So what that means is we have an open range system for our non-uniformed employees, which means you have a minimum salary, you have a midpoint, and a maximum salary. So that's your range. What we're going to do is we're going to move all of those ranges up 3%, again, to keep up with the market. And then within those ranges, in order for employees to get a pay increase, because you would only get a pay increase with that range increase if you're on the minimum or you're on the max. Everybody else, you know, you're just kind of somewhere in between. So if it moves 3%, your salary doesn't move. That's why we need to do 3% merit pool. So that's been included in here. We also have a 3% range adjustment in here for our step employees and our represented employees as well. Do you have a question?

Yeah, I have a question. You mentioned a compensation study as an upcoming activity.

Correct.

So I'm curious about the decision to make a range adjustment in the absence of that study and data.

Two reasons for that. One, we know that everybody has updated their ranges and pretty significantly. There are a large number of July 1 cities. So everybody's fiscal year is a little bit different. So we watch those July 1 cities to see what they end up doing. Richmond Heights was, I think, 3.5% for their range adjustment and then a 3.5% step. They use a different program than we do. We're seeing a lot of, again, increases in that range. The other thing we do know is those cities that have gone out and done the compensation studies, they're seeing significant recommended increases to their salary ranges. We know that that's coming. And so rather than bite off a really big chunk in 24, we'd like to go ahead and move those ranges 3% now. And the final reason is really Over the last couple of years here, especially with inflation and everything, things are getting more and more expensive for our employees. We've given a 1%, we've given a 2% over the past two years. So really trying to recognize that we haven't given much in the way of increases and trying to accelerate that a little bit this year.

So just, I think what I'm hearing is you feel confident enough that there is a significant upward adjustment to be made. and you wanna go ahead and do 3% this year, and you anticipate the compensation study which we would pay for provides more kind of granular information by position probably, and then there'll be further adjustments.

That's exactly right. So they're gonna look at every position that we have, and they're gonna find comparable positions in our market. So we have a list of cities, Chesterfield, Creepcore, Kirkwood, Webster Groves, they've got this whole list. So they'll look at those cities, see how they pay workers in those particular positions and then make a recommendation based on where we wanna be relative to the market. So that's a conversation we'll have as a group before we do the compensation study is where do we wanna be? Do we wanna be 60% of the market, 75% of the market? We'll find where we wanna be and then they'll make a recommendation in order for us to get there for each one of those positions. And the reason we know it's going to be higher is we've had a lot of turnover as a lot of municipalities have. We've been running most of the year where 15% or more of our positions are open, they're vacant. If you go on our website right now, we've got vacancies. When we're hiring new people in, it's very rare at the moment that we can hire somebody in at the lower part of the range or at the minimum salary everybody it seems is coming in somewhere between the minimum and the midpoint. And I think that's a reflection of that market moving upward, especially individuals that are coming from other municipalities. That minimum range in the salary, the minimum side of the salary range just isn't attracting employees at this point.

So David, the timing of the study would really mean that the outcome of that The result of this study would probably be next year's

budget. That's correct. It'll be for fiscal year 24. So we'll go ahead and put an RFP together. We'll get this out to all the consultants that would typically do this type of thing just after the fiscal year starts or maybe even a little bit before sign a contract after October 1st. get the study going. And what we really want to get is that report back by the time we get to union negotiations with both police and fire in the spring. So we're due for the full CBA review with both police and that way we'll have all of the latest salary information when we go into those bargaining sessions.

David, and just one more question on that. The compensation study, I mean, you said it was 2019 was the last time we did one?

That's correct.

Is that generally like we do them about? I mean, has there been a pattern of as to how many years? I mean, I know we do them regularly. Is it usually about three to four years?

Best practice is a three to five year interval.

Okay.

And we're right at that. We're getting close to the five year mark.

I'm sure we'll talk about the actual proposal or the scope of the study beforehand, but we will be differentiating between fire districts and cities that have fire departments. That'll

be part of that conversation. And right now, the way we have it drawn up is it reflects our conversations with the board as far as comparing the municipalities. The big question that we'll have for the board is where do we want to set ourselves relative to our comparator cities? That's the big part of this. Do you want to be Middle of the pack, do you want to be upper part of the pack? That's going to dictate where those numbers end up.

Question. I don't know if this is the place to bring this up, but if we're looking at a 3% rate adjustment now given strain on employees and everything else, we've mentioned before trying to have a base salary for part-time. We talked about 15. Livable wage is now a little bit higher than that, but if we are adjusting now, given that, is this a time that we can address 15 right at the lower

looking towards tony i'm trying to remember how many positions we have left that are under

any

15

it wouldn't be a big hit but it seems that it would be something

so for fiscal year 23 um yeah it looks like we have 11 or 12 here on the list and quite a few of those are actually contractual type or positions we would typically contract for, lifeguards, cashiers. Okay. Okay. I would hope a good look at that,

even as it's just a matter of who we are as a city, the welcome and everything else. If you pay every employee a livable wage, it doesn't seem out of our ability, especially because it's a very, very small

number. Okay. I'll make a note of that. Any other questions on personnel here for the proposed increase?

Yes. So I know we're down some employees just because we can't find the people, like in Public Works, for example. I don't know what the current status is. But so have we budgeted for hiring those people?

Yes. So we budget every year as if every position is going to be full and that they're going to have family insurance. So we always budget that it's going to come out that way. This year, what we've seen is, as I've said, we've had turnover savings because you have vacancies. But as we hire people in, we can't hire people. We haven't been able to hire people at that minimum salary. So they've been coming in higher in the range, somewhere between minimum and midpoint. So some of those savings are actually negated when the new employee comes in because the rate of pay has increased since they were here. And that's really why it's time to do this because we have existing employees and we're getting to the point where employees have been in New Jeffery Yorg for some time within that pay system, you know, trying to advance. And now the market has caught up to them with a place where somebody may be coming in that's a brand new employee that's almost catching them as far as their salary is concerned. So we want to address compression

Yes. So we budget every year as if every position is going to be full and that they're going to have family insurance. So we always budget that it's going to come out that way. This year, what we've seen is, as I've said, we've had turnover savings because you have vacancies. But as we hire people in, we can't hire people. We haven't been able to hire people at that minimum salary. So they've been coming in higher in the range, somewhere between minimum and midpoint. So some of those savings are actually negated when the new employee comes in because the rate of pay has increased since they were here. And that's really why it's time to do this because we have existing employees and we're getting to the point where employees have been in New York for some time within that pay system, you know, trying to advance. And now the market has caught up to them with a place where somebody may be coming in that's a brand new employee that's almost catching them as far as their salary is concerned. So we want to address compression

at the same time. Okay. Next slide

here. This is where we'll go through our various revenue lines and expenditure lines within the general fund feel free to ask questions along the way. And I can toggle between this and the budget document that you all have if you have specific questions. So just so you understand the columns that we have, this is 2021 actual. So this is where the numbers came in in fiscal year 21. 22 adopted is the adopted budget that we had this time last year. 22 estimate is where we think we're going to end up at the end of the year for each one of these lines. And then 23 proposed is the proposed budget. And then here's a couple of comparisons. This first one is the comparison to the 2022 estimated. The final one is the comparison, to the 2022 adopted budget. So going through these property taxes, we, estimate an increase here. So in comparison to the 2022 budget, we expect an increase of 5% overall for property taxes, 3% over the estimated amount. Sales tax, this is where we've seen just a considerable increase, 25% over the 2022 budgeted amount is what we would anticipate for fiscal year 23, which is a 5% increase over the 22 estimate that we have. So As I stated, we've got sales tax figures going into the summer here, at least one, maybe two months of summer. These latest numbers, do they count July? I think it's just through

June. Is that correct? Okay. Sure. Give me just a moment here.

So this particular slide that you're looking at is not a page within the book, but if you want to look at the individual revenues.

No, you're

fine. Ben? Okay. Great. Thank you. Okay, so property taxes, again, 5% over 2022 budget. Sales tax, that's the big increase, 25%. Year-over-year budget, 5% over the 2022 estimated. Utilities... We are seeing an increase overall in utilities. So we're taking a hit on some things like, you know, telephone's a great example that's been going down for years. People don't have landlines anymore. And even within the office buildings here, everybody's going to voice over internet rather than the analog lines that are very expensive now at this point. So we are seeing some go down. Others have been going up here lately. Electric is one where we will see an increase as people occupy buildings again, and they run more waters in these towers. So as people go back to the office, you do see some increases there in utilities. And of course, when utility rates go up, we see increases there as well with our revenue. Intergovernmental money, this is really pretty even here year over year where we're taking the big reduction. And this is where you can see the federal dollars go away. is right here under grants and donations. So 87% down from the previous year's estimate, and that should be a negative 95% there when compared to the 2022 budget. Licenses, permits, and fees, about a 3% increase is what we have in there over the estimated down 8% from the budgeted number. A lot of this is dependent upon how the projects fall. So the larger buildings that are going up downtown, when those permit fees are received, that's what skews these numbers a little bit. So in fiscal year 23, we do anticipate some larger building permits coming in. The Forsyth Curve project should get underway. Hopefully Forsyth and Central is underway as well. And then we'll see what other projects come down the road here. But This past year, we certainly received the revenue for Bemis in Place, AC Hotel, some of those larger projects that are underway downtown right now. Parks and Recreation, we do have an increase here. The percentage increase looks like it's pretty sizable. If you look at it in real dollars, it's not quite as much. A lot of this is related to the tennis center, where we do anticipate quite a big increase over the previous year just with some of the activities there. So the revenue is going up, but you also see the expenditure for the tennis center going up as well. to offset that um fines uh this we're seeing a little bit of an increase again a lot of that's related to um parking downtown at least in metered spaces where you uh issue tickets uh which is kind of counter to the line before it which is uh a parking decrease what we're seeing is street parking is going up quite a bit um but a lot of our garage parking revenue is actually down at the It's kind of strange to see those two work against each other, but it is a different type of parking. A lot of times the garage parking are people going to offices and that sort of thing where a lot of the street parking is people stopping into restaurants or And they're just running into a place real quick so parking we do see a little bit of a decrease 23 versus 22. Transfer from the special business district, so this is booked as revenue, but as that taxes collected within the downtown area for things like events and economic development, we then transfer that money to the general fund. where we then spend it for those particular items. So while you see the revenue coming in here, again, on the expenditure side, it goes out under economic development and under events. And then finally, that operational transfer from the Capital Improvement Fund, you can see in 2023, $654,000 is the transfer amount coming in. That is an increase, pretty significant increase over the previous year. And if you remember the IRF discussion we had on July 26th, I talked about the fact that we used to reduce this amount by the amount that the general fund was putting into the equipment replacement fund. Now that we've changed that threshold from 5,000 to 20,000, there are fewer items that the general fund is contributing money to. Therefore, its offset is lower, so the transfer is higher. I know that sounds really confusing, but that's how it works. When the general fund puts less into the IRF, the capital fund has to give the general fund more. is ultimately what happens. So that's about a $200,000 swing right there, more money coming from capital. So overall, compared to our estimate, down 2%, but it's misleading. This is really encouraging. Our regular year over year, our standard revenue lines are showing strength and increased strength due to both activity and inflation. We're showing a little bit of a decrease, but that's because that federal money that you see under grants and donations has stopped now that we don't receive any money for ARPA.

Yes. I just have one question. The line item for the utilities? Yes. You've gotten it down to like the dollar in terms of what's proposed for 2023. And I guess I'm just wondering, how you arrived at that. You know, the offices, I assume you seem to be projecting the offices coming back a lot slower than I guess I was thinking they would. How did you figure those numbers for, you know, because really those utilities do have a lot to do with lighting and water and everything in those office buildings. And there doesn't seem to be much of an increase that you've put on that line item. So... And it helped me with how you

really. Yeah, really quickly here. I'm going to get to the actual breakdown. General fund revenue. All right, so here's the detailed breakdown for these tax revenues. And also, so you can see property tax, sales tax broken out into its different components and then utility tax as well. Utility is what you had asked specifically about. So you can see the increase here in electric an increase in gas and an increase in water. And again, that has to do with the increased activity that we have downtown and increased office occupancy for what we've seen over the last few years. So to answer your question about how we come up with these numbers is we look at what we've been receiving through this point of the year. So our latest tax revenue would be through June, and then we try to project out through the end of September where we think we're going to end up with our utility tax. So that will give us a number. Then we apply a multiplier to it, in this case 5%. And so we anticipate that we're going to go up 5% over that previous year's number, and that's how we end up with our 2,828,236. And that's how it gets so exact. But that estimated number that you see in this column here, that is put together as just, again, a projection over where we are to this date and where we think we're going to end up at the end of the year. There is fluctuation with electric and gas depending on the season. So we look at that historically to try to figure out where we're going to be by year's end. So That's the method behind it. And again, you can see the lines where we see a decrease. Telephone, we've seen this decrease over time and that's going to continue. Cable franchise fees, another one that's going down. And this is a programmatic decrease and you're gonna continue to see this. If you remember when we talked about Wayfair and we passed everything for Wayfair to try to get that online sales tax, When they passed that in Jefferson City, they said, okay, you can start to collect online sales tax. But in order to do that, because they wanted to be revenue neutral, they started backing them out the amount over time incrementally that cities can receive in cable franchise fees. So you're seeing us start to draw that number back. I don't have that. in front of me at the moment, but it was a three-year unwinding, I believe, where the cable franchise fee is going to be reduced by 50% over three years. And that's to offset what the state thinks we're going to get an increased revenue from the online sales tax through Wayfair. Yes.

Does that answer your question, Ira, before I ask another question?

Well, I guess if I have a follow-up, it would be just where did the 5% come from? I mean, I just didn't know if you had some basis. Is there some trend that we're following to say, hey, this is trended before, this is the trend that will be in the future, and therefore we're coming up with these projections? I just was wondering how.

No, I wish I could tell you that that was an exact number. It's not. There's going to be some amount of guesswork in there, although it's educated guesswork by looking at occupancy rates in the downtown area here. So really that's what's driving this number and we know that we're going to continue to see some increased occupancy. We don't think it's going back to full occupancy right away or anything like that, but there is going to be an incremental increase and that's how we set that amount.

Okay, you answered my question. Thanks.

Right. Do we get any benefit or taxes from the cell phone operators? And I'm particularly thinking about all the 5G towers that got stuck on all our property around the town.

We do. And so we capture... cell phone tax on here, and that's what's really keeping that number up with all the landlines going away. The landlines going away is significant. This year we took out probably 80% of our copper lines because they were incredibly expensive. I don't have it in front of me as far as what they were costing per month, but it was something like $3,000, $4,000 a year, it seemed, per copper line that we had. And where you see that most of the time is in elevators. Elevators still run just a regular analog line to it, and everybody's trying to get away from that because the cost is just outrageous to keep those things.

By the way, you know what the actual phone company calls those lines? POTS. P-O-T-S for plain old telephone system.

There you go. Interesting

fact. Learned that when I was a consultant.

Oh, wow. I have a question. So is there a way to illustrate these trends in sales tax, in particular, in all types of sales tax and utility tax in real dollars. In other words, before the pandemic, we were at a place. And I know we've got percent increases going on here. Sure. And we've lost 2019 in our charts, which I think in my mind was pre-pandemic year. Not really sure that the whole year was pre-pANDEMIC. But I would really like to see that because I think it really puts all of our numbers in perspective. And we can have a, whatever, 20% increase in utility tax, but what does that really mean? I think our general public would benefit from knowing that. Yeah,

that's something that's easily done. We've got the actual numbers, so we can actually go back. We'll go back to 2018, and then we can show that trend over time.

That would be great.

Okay. Any other questions on any of these tax lines here or any other revenue?

I have a question back on the slide you were on before Ira asked his question. So when you get back to that.

I'll do that right now.

Yeah, so what I wanted to be... I wanted to understand is how you get to the $654,609 transfer from capital. Is that like, what is that based on? Is that based on a number that you think you need to get to a certain level of revenue into the general fund?

Karen or Kayla, could you give the exact

background on how you If you could use the mic, please.

Yeah, just hit the button. The green light will come on. I just want to make sure I get it right. I know there's the offset there with

the

general

funder,

but go right

ahead.

This may not be eloquent. Okay, so there are capital expenditures within the general fund, and when... When the decision was made to have the option operational transfer from capital to general fund part of that was also some of the road and bridge money or capital. Maybe the parks and stormwater sales tax on the sales taxes that are received and recorded in the capital improvement fund because it could also be used for some of the public works or parks operational costs. So there's an operational transfer that freed up some more of the money in the general fund. And what he was explaining about the changes in the IRF this year, now that only items of $20,000 or more are included in the equipment replacement fund, that means anything less than that is paid for out of the general fund. So instead of reducing, so when you see those $400,000 numbers, instead of that level of operational transfer, now there's a little bit more. And in my mind, that kind of makes up that now those capital items are being purchased out of the general fund. Instead

of the

IRP.

Yes. And that original amount was set in 2019 when we added the additional firefighters, correct? That's

correct. And that

was a direct offset at that point in time?

Yes. And I think we were very careful to say that the transfer wasn't to pay for the firefighters, but rather it was repurposing some of the sales tax revenue in the capital improvement fund for some of the other operational costs in the general fund. But the amounts pretty much equated because now the general fund resources were being used to pay for the

So I think, thank you. I understood that, I think. So just to be clear, it sounds like it is actually based on a calculation of expenditures that we are making from the general fund that could be that we can make the case of funding with capital dollars. Correct. Right? It's not just like we need $650,000 so we're going to take it. A great example

would be if we have a road project going on and we have an engineering tech within the public works department that's going out and performing inspections and that sort of thing. we can take some of the capital dollars to go towards that road project fund and transfer those to the general fund to account for the hours that that person is paid out of the general fund, the time that they're spending on that particular project. Same thing with Parks and Rec as well. Those are the two places we see it the most is Public Works and Parks and Rec.

Thank you. And now that we're back on page 10, I was just going to ask about the center. I know you mentioned some other parks and rec, like some other pieces of parks and rec, but we didn't say anything about the center of Clayton and how are those trends in terms of memberships coming back?

So as Tony walks to the podium here, the transfer or the funding for the center comes out of the capitol. I just wanted to make sure that point was clear, that it doesn't come out of general. It comes out of capital. But Tony can talk about the trend there.

Actually, we are starting to trend up now. We were having slow, steady progress up until the Omicron variant in late December, early January. That kind of set us back a little bit. But we have seen increased membership revenues every month since April. So the numbers are starting to come back. Yeah, some categories slower than others. In particular, our family memberships are really, really struggling. But the adults and the seniors are coming back as of right now. But yeah. Thank you. Dorn,

anticipated

transfers $400,000 this year. Okay, any other questions on general fund revenue? Okay, well, we'll go through these expenditures here down below.

Okay, so legislative, and this is the mayor and board of alderman, there is an increase here you can see that it's a smaller amount in the budget. So a little change can make a big difference. That's some money for conferences but then an additional $10,000 in that account for the mayor's commemorative landscape task force. for markers and other things that might come out of that. So there was that recommendation at the last meeting. So we expect more recommendations to come out of that particular group. We wanted to put some funds in the budget to pay for those items that may arise. Under administration, and this covers multiple functions. This is the city manager's office, human resources and IT. You can see here, we do have an increase in the budget A few things that are driving that, one under the city manager's budget, travel and training are up 34%. And that happens every other year. The way the ICMA or city management conference falls is they hold it in September one year and then October the next year. And what ends up happening is both of the conferences fall in the same fiscal year every other year. So 2023 just happens to be on the odd number of years. That's when we end up paying for two conferences in a year. So between Andrea and myself, that's four conferences. We'll actually only attend two during the calendar year or one apiece, but we get booked for four. So that's gone up. We also have communications, a little increase in training there as well with the communications manager being on board now.

Yes. That one did catch my eye because since 2021, it's up a million dollars.

So in administration, again, there have been some changes here. So when Janet Watson, our former director of finance and administration left, she previously was over IT and HR and some other functions. So that shuffled over to the assistant city manager and then that changed the range there. So some of that's personnel related. Again, we have a communications manager now So that's captured in here, but there are some one time expenses that are driving it to surveys and engagement is a big one in the upcoming year. We have $37,000 in there for the surveys that will undertake so that's the regular citizen survey plus the additional one related to service levels and revenue. Plus direct mailings we put money in there in case we need to send out postcards at any point during the year we anticipate that we're going to spend quite a bit on engagement also additional legal fees for. the collective bargaining that will be undertaken during the calendar year. So we do have our labor council that attends those particular sessions. So in a CBA year, our legal fees increase. Under HR, we have that part-time assistance, even though that's a smaller amount, I will point that out. But recruitment is getting more expensive with the turnover that I was talking about earlier. that leads to more advertising, more background checks, more screens, just the entire process, their fees associated with that. And then the $45,000 for the compensation study. In IT, we had increases there. A lot of that is just the increases that come along with those tech subscriptions. So as I said, we have a lot of cloud-based systems now. We still have some server-based systems, but a lot of it's cloud-based. Those costs are increasing over time We also have some training and some cybersecurity things in there that we need to do this year. So that's in the budget as well. So that's what's driving the increase in administration. But again, the compensation study, those additional surveys and engagement and the additional legal fees for negotiations, that's what's really driving the numbers up on that particular line. On planning and development, you can see the really big increase here, and that's the comprehensive plan that you're looking at. So $300,000 was put into the budget. Outside of that, their budget is relatively flat within the planning department. We got that number from the previous RFP that went out in 2020 when we put the project on hold. If you remember, we backed out the Parks Master Plan and the Bike Ped Plan. Those are funded out of the capital fund. We anticipated that it would be a half million dollars for that entire project. There's about 180,000 in the capital fund. We've got $300,000 in planning, and we think that'll more than cover that comprehensive planning effort. That also includes the market analysis portion of it. So that's the increase under planning and development. Police, you can see a very minimal increase here. They've had some reductions in some lines, but you're picking up salary increases a little bit. Some of their materials are more expensive. And then dispatching went up 16% this year. ECDC, which is our dispatching partnership, had a city drop out. Shrewsbury ended up going with St. Louis County for police and Central County for their fire dispatching. So when a city drops out, then we have to pick up more of the shares. So that's something that ECDC is talking about right now. On the current chairman of that board of directors, And we are going to have a strategic planning session here in a little bit and one of the items we're going to really be focusing on is future growth potentially that agency or what it looks like going forward, whether or not we go out and recruit other cities to come in member cities. And there are some additional costs there because we've upgraded updated their CAD system or computer aided dispatch. The system that's in place that they're using right now to dispatch police and fire has been in place since the inception of ECDC in 2006. It's old, it's antiquated, it's a slow system, it doesn't work well between agencies, not the way a modern system should. So that upgrade or that implementation is going on right now, and there are some additional expenses with that, but that's an investment that our cities collectively are making to increase the efficiency of dispatching. So a little bit of an increase within PD. The fire department, we do have some known anticipated retirements here. So that's driving up some of that cost turnover within fire department in particular is very expensive. You've got to buy new turnout gear and all new equipment for the new firefighter that comes in. We also need to recognize those outgoing firefighters. So we actually have about $40,000 in there related to retirements and that turnover within the department. So again, big expense when we have one just because of the cost to train and outfit a new firefighter that comes in. Their training budget also went up as well. A lot of the training opportunities that they had in the fire department the last couple of years We're actually switched to a virtual setting. So we didn't do quite as much and there were discounts there. This year, there will be an increase because we need to get back to some hands-on training for our folks.

Yes. My gut reaction is that if you have retirements, you have new people coming in at lower salaries. So there should have been some offset. For that

you'll have you'll certainly have some and that was captured within the salary line the 40,000 is the actual outfitting for the turnover thanks. Any other questions to this point.

Yeah, so I appreciate the point about like the planning and development jump by over $300,000 is largely the comprehensive plan, which is about $300,000. That's what's been budgeted for that. Yes. When you were talking through the cost for administration, I mean, that's over $500,000 increase over like what we're actually estimated to spend this year. And I didn't hear like any big budget items. So is there more detail? The big one is coming

actually out of IT. And again, it's going to be for those technology items.

Let me see here. We don't have Larry here this afternoon. Oh, yeah.

So our service contracts within IT, there's 111,000 just in service contracts alone for the increase. We've got Larry, Larry's got his

hand up. Can you hear me? Yes, Larry. Yes, Larry.

Okay. As far as the service contracts go, it's in a couple of different areas. And if I heard you right, David, some of the training aspect was in that as well?

Correct. We do have an increase within your training budget for IT, but the service contracts would be the biggest jump

there. You know, just looking down my list of different service contracts here, there's some new contracts. A couple of them are related to the... the new cybersecurity insurance that we had to get and some of the stipulations they put upon us. We had to implement some new security features, multi-factor authentication and endpoint detection and response. Those were unbudgeted that had to get added to our budget to meet the stipulations to get that insurance. Other than that, Most of it, I'm just looking down the line here real quick.

Yeah, it appears besides

those two and our training is definitely increasing if that's captured here as well. Due to the pandemic, there was pretty much none. Um, there was no traveling. There was, uh, very little offered other than virtual conferences, which a lot of those were free. Uh, during that time, I know our training has really ramped up this year. Uh, we are finally fully staffed. We were about 25% down in our staff for three months, four months out of this year. Um, so I know that that would cause some of the increase as well. I don't see anything else jumping out at me, though, as far as our normal software contractual services other than the new line items due to the cybersecurity insurance policy.

And is it so it does administration includes. A number of different departments. Yes,

again, that's the city manager's office. That's human resources, and that's where that compensation classification study is at for $45,000, that increase in recruitment cost that they have there as well. I can break out those expenses. I can send that out separately in an email if you'd like. So you've got the city manager's The finance department is in there as well. So you're picking up the salary increases that go along with those departments in addition to those one-time or new expenses.

It could break out that administration jump. Happy

to. Thanks. Absolutely. Thank you, Larry. Yeah. Okay. We will continue on

here. So we talked about police and fire public works, we are seeing an increase there as well. Big part of that is contractual services so again the tree inventory is one expense that we have had the exact amount in front of me I can get it in just a second here. Again, that's going to be offset by grant revenue that comes in from the Department of Conservation to pay for it. We did have increases to our mowing contract, our hauling contracts. The hauling is all the leaves that we collect. We have to get those hauled away. That went up probably due to the diesel that they use for the hauling and then tree maintenance as well. So that's tree planting and tree removal that we do every year. So I know every spring everybody sees the green dots on trees and We get some calls generated about that, but most of those tree removals that you see are actually, it's actually part of a contractual service. We're not doing those in-house. So we saw increases in those particular areas. The crack sealing contract looks like it's going to have a 40% increase. Fuel will be up 37% in this budget over the last budget. We have $4 diesel and $3.25 for unleaded per gallon is what we have in the budget. I know we've already spent our entire annual budget for fuel at this point. Here we are in August, we got two months to go and we've certainly blown that away. Asphalt is going up 25%. Again, it's petroleum based. So that's an increase everybody's seeing at this point. And then road salt will be up considerably this year. Cost increase of 28% plus our level is pretty low. We've got to get that salt dome filled up. So the road salt expense year over year is up almost 80% because the previous year, it was nice. We had a full salt dome for the most part because we had fewer snow events this last year. We had some big ones at the end that took a lot of salt. So you have to replenish that. And again, we're looking at big increases in the cost of that particular commodity. So that's what's driving the public works expense up this year. Parks and recreation, you're seeing an increase there, 9%. There are a few of those smaller capital items that typically would have been in the earth that we're going to buy as a one-time expense, an ADA lift for the pool that needs to be replaced and also a vacuum system for our pool. Chemical costs are going up 10%. For sports programs, uniform and equipment there are going up 15%. We were fortunate coming out of the pandemic and that we didn't have to buy uniforms and equipment because we had all that stuff ready to go. The pandemic came, we shut down all the programs. So we didn't have to budget for it for the next year because we had this big back stock. Now we've gone through that because outdoor sports are booming again. So we need to up our supply purchase this next year in those areas and operations service contracts are going up 15%. This includes lifeguards. If you drive by any municipal pool or any pool anywhere in the metro, you'll see hiring lifeguard signs out front. So they're difficult to get and they continue to increase our costs as they have to pay more to get people to be lifeguards. Also, again, the tennis center, that's going up almost 81% on the expense side. but there's a correlated increase on the revenue side, and that's all related to the services through what was Frontenac, and now we've changed the contract to the individual. So they're going to be doing more programming there, which will increase both, again, the revenue and the expense that goes along with that to pay for that particular service.

What's the net going to be on the tennis?

The net's still an increase, but it's... on the expense side, it just, it shows up and you look at it and it looks like a big increase at 81%, but it nets out at probably what a 20% increase if I recall somewhere in that area. So yes. And so that's parks and rec. And then again, as I mentioned, insurance costs are going up really across the board. In our insurance here, year over year, we're expecting that to go up 7%. That insurance line here is really capturing general liability and those sorts of things. Health benefits are scattered throughout those various departments along with their personnel costs. So when you get to the bottom line at the end of the year, our deficit projected again is $1.9 million. That does not include that uniformed pension plan additional costs that we're going to have with changing that return assumption going out over the next 10 years. So I will get the more detailed information for that administration line and send that out to the board. Are there any other questions on expenditures before we move on to the next slide?

Just for some perspective, my recollection, if I essentially, well, you've got the numbers there, but we would have been almost in the same place last year without the federal money. That's correct. So in a sense, we're kind of holding, in spite of all the increases, we're sort of holding steady.

We're holding steady with the deficit number. Yes. And so this is going to be interesting to watch play out over the next decade six months, nine months here. Inflation again, and I know we keep talking about it when we have financial discussions, but it's just really having an interesting impact, especially on the sales tax line, which you can see is up significantly, but also expenses across the board. So when we're talking about those commodities and service contracts and things going up, we'll see how long this inflationary pressure keeps up and what it does to our budget overall. But we're consistently running deficits if you take that federal money away in that $1.5 to $2 million range.

Right. And the only other question I have, which always eludes me, has eluded me for the eight years I've been on the board, is what happens to all this new development and the property taxes that I kept thinking we were going to, you know, this windfall we were going to get that never shows up? And I know it's been explained to me many times, so I know it's all rational. But it just doesn't... My gut feeling is that there should be something coming down the pipe. But... That said, my real question is what is in there for 2020, for the next year? What new buildings do we expect to hit the tax rolls?

So the new buildings hitting the tax rolls will be Forsyth Point and the Residence Inn as far as the sizable buildings. They both plan to occupy those by the end of the year. So those would be complete on January 1st and then we would receive the full amount. But as you said, there's this lag where those projects were approved in March of 2020. And here's the money finally showing up in fiscal year 23 and really doesn't show up until December of 2023, which is three and a half years after the project was initially approved by the city. But those are the two new projects that will be coming online. Thanks.

But do you count their revenue in FY23 if we don't get it until December of 23? So the

Yes, we will not. It's the money that comes in. Coming in next year. Correct. After the fiscal year. Yes.

Yeah. So did we have any projects come online in the past year where we are getting additional property tax revenue? Would have been the Clarendale.

Yeah, the Clarendal. And

that's it as far as large buildings. That's why you're seeing a minimal increase in this particular budget here. In the short term, absolutely.

Across the street's a great example There's not much of an assessment there right now because those buildings that were previously there on Central are gone. So you're going to take a hit on those for a couple years before you end up getting the Bemis in place revenue when that building is complete.

Thanks. Okay, any other questions on this slide?

All right, moving on. John Potter, On to the fund balance, so we did change the reserve policy this year, and so the minimum fund balance that was established by the board is 25%. John Potter, We have an action threshold at 40% that's where we hit the number will take immediate action. John Potter, To alleviate that that issue, so that we don't hit 25% and then we have an operational goal of 50%, which is our desired fund balance. at the end of each fiscal year. And when we're talking about these, we're talking about the unassigned fund balance. So what is that? That's the amount remaining in a single fund at the end of the fiscal year, less commitments and restrictions. So we'll always have some fees that are encumbered. We could have pension payments, other things. that haven't hit the books just yet. And so typically your unassigned fund balance is about 5% or so lower than your total fund balance appears in the budget. And I'll show you that in a minute. How are the reserves used? Those are used when expenditures exceed revenues on an annual basis. That's what we're doing right now. So if we have a $2.1 million deficit, we'll see where it comes in. We're gonna go into our fund balance to use some of those reserves we'll pull 2.1 million out and we'll balance the budget that way. So reserves can be used for that particular purpose, maintain adequate level of financial resources to guard against disruption. This is something that we saw during the pandemic and certainly before the federal money came in, we were scrambling to look at our fund balance and how quickly that was gonna dwindle. Thankfully, again, the feds jumped in and we're providing about $1.7 million a year that helped us balance things. It allows for cash flow, seasonality of revenues and expenses. Just like we mentioned, property taxes come in December. So that's a really big check that you end up getting. But you could have cash flow issues if you don't have money in the bank before that big check hits. There's also a lag in sales tax that's a couple of months from when that money is actually collected to when we get it from the Department of Revenue. So it's good to have the cash on hand. And then, of course, it buys you time to evaluate and plan. And that's what we're doing right now. uh, with our deficit and trying to figure out how to reduce that over time. So again, the unassigned fund balance is what we use, uh, in our fund balance policy. We are predicting at the end of fiscal year 23 that our fund balance will be at 57%. So still, uh, within the, the, the good area, so to speak, 40% is that action threshold, 25% is the floor. Uh, but we know we're on a downward trend, uh, as Alderman Lentz just pointed out, um, Without the federal money coming in, we're consistently running deficits. And there's nothing to indicate that that's going to change as costs keep increasing. And revenues, well, again, inflation and increased economic activity are helping. Expenditures are just simply outpacing revenues at this point. So this trend will continue. And that's why we're trying to figure out how to solve this issue. this decline that you see year over year. Again, thankfully we got the federal money. Otherwise this dot, this dot and this dot all would have been lower and we would have been in a pretty bad spot by this point in time. This thankfully bought us some time to figure out some things going forward. So here's that fund balance projection. This is not the unassigned. This is just the total fund balance as a percent of expenditures. That's how we calculate it. We anticipate at the beginning of the year, we're going to be at $20.5 million for fund balance. Then we're going to have that deficit. You can see we're down to 18.5. That'll actually be about 18.3 or so, we're guessing. We get those new numbers. That's a 61% fund balance, but the side number will be a 57%. Just a couple things to note here. As Alderwoman Patel was pointing out with that transfer, that's an important number to look at because you want to look at the general fund as a standalone thing. How much money comes into the general fund for operations? How much do we spend on operations? This 654 really kind of muddies it up because it's money that's coming from another source. It's coming from the capital fund. Those are dollars we could put to use for projects, equipment, other things that the city needs, but we need to transfer that over to the operating fund to help out the general fund. So this doesn't take into account this extra 650,000 that we get from the capital fund and the big thing that's kind of looming here and the big reason we need to have that level of service conversation is 2024 is a waste contract renewal that's coming up. Our contract ends in September of 2023. We anticipate an increase of 25% to 40% if we keep our current level of service. So if we were to change our service somewhat, we could realize some savings. But just to roll out what we have and then get some bids on our current service, This is a really consistent number with what everybody's seeing on their waste contract increases. We fully anticipate we get this as well, and our reps from the waste contractor are already kind of telling us this is what to expect coming down the road, a pretty big increase. So if we've got a 25% to 40% increase of a contract that's $2.3 million, that's going to be a significant jump to where that contract could be in the range of $3 million or so. and that's just going to increase that deficit amount pretty rapidly. So I just want everybody to realize that that's coming up, and that's the conversation we're going to be having over the next few months here is what's that scope of service when we go out to bid on January 1st, 2023? What's that request going to look like? What's that RFP look like? Because we've got a big increase looming here. Yes, Mayor.

A comment or a question maybe? So if I go back to the beginning, we said, you know, we're projecting a $1.9 million deficit. But then we need to add in the extra pension contributions that we're going to be making.

So you're

2.1? 2.1. And now then we're going to add, if we added in the transfer from the capital, we'd be almost.

You're about 2.8.

2.8. So we're almost 3 million now that we are really, that's the real number that we're looking at.

Correct. And then we know with this renewal that's coming up, if that's a $600,000 increase, then you're at a $3.4 million deficit, just pure general fund revenue to general fund expenditure.

So a significant amount. So that's the general fund fund balance. Any questions

about that? And we will continue discussions on that over the next few months here and have those talks with the community as well. So the sewer lateral fund, and I've got page numbers at the top if you want to look at that particular portion of your budget book, but the sewer lateral fund that's on page 82. This is a program that that's offered to our residents it's collected actually through their annual real estate. property tax. So property owners with six or fewer units, they pay $28 a year into this pot that comes out of their property tax. And then if their sewer lateral line fails, we do a reimbursement of $2,000 towards that repair. Typically those repairs about eight to $10,000. It's really expensive if you've ever had it happen to you, but we offset that a little bit. It's essentially a citywide insurance program that was voter approved years ago. And the city in our decrease that amount over time, We were actually in a position where we were spending much more than we were taking in when the reimbursement amount was higher. In order to build that reserve back up a little bit, that maximum reimbursement was dropped to $2,000. And you can see annually, year over year, we do take in more money than goes out on the expenditure side for those repairs. So we're building that balance back up. But we were getting into a spot years ago, as I understand it, where we were about to go upside down within the sewer lateral fund. So a nice insurance policy to have though. We have a special business district fund, as I pointed out, this is a special property tax within the downtown area used to promote the area. We have marketing events and improvements that benefit downtown. So a lot of those economic development expenses, especially as it relates to events, that all comes out of the special business district fund. That revenue is collected Again, through that tax. And then it's transferred into the general fund to pay for those services. And you can see, again, this is one that basically balances out year over year. We look at how much money is going to be coming in on the special business district fund. And then we try to plan our expenses accordingly the other way. Equipment replacement.

Yes. That slide. What is total other financing uses? I thought that was going to say expenditures. Well, it

would say that because a transfer falls under other financing uses. Okay. We could just change that to say transfer.

Okay. That

would be the best way to do it. That's the transfer to the general fund.

Thanks.

All right. Equipment replacement fund. This can be found on page 88. We talked about this just a couple of weeks ago. Again, this is our sinking fund, our plan replacement for vehicles, equipment, and facility components. We used to, in order to put something in the IRF, as we call it, require that it be at least $5,000 with a life expectancy of two to three years. We changed that to $20,000 to help with cash flow within that particular fund. And we just found that it was very difficult to track a large number of very small items over time. So the funding criteria items over 20,000, but under 25,000 come from the general fund now that used to be between 5,000 and 25. So when we were talking about that, that increase in the capital fund contribution to the general fund, that's offset by what the general fund's putting in right here. That's why you're seeing the big decrease because there aren't that many items between 20,000 and 25 anymore. So the general fund contribution to the IRF has really been greatly reduced. The rest all comes from the capital fund. And then here's a schedule just so you know how many items we're going to be buying here over the next few years. You can see it fluctuates year to year as does the amount down at the bottom. 2023 is a higher number than what we've seen the last couple of years at just under $2.4 million. Some of that was unanticipated. The ambulance that was approved the other night, the replacement ambulance, almost $400,000 right there, which is that unit. That's captured here in this number. Also, replacement radios are a big item within the equipment replacement fund this year. That's over $400,000. The radio system that was implemented several years back countywide, they actually provided radios at a deep discount, in some cases for free. At that point in time, those radios have all reached end of life. And my understanding is there's some frequency changes. Also, they go along with this but we have to buy new radios, as does basically everybody else in St. Louis County and they're very, very expensive. So that expenditure we plan for and we plan to make those purchases in 23. So here's the equipment replacement fund snapshot and we talked about that fund balance the other day that's in really great shape. But as you look out into the future you're going to have big you're going to be yours where you make multiple big purchases and draw it very, very quickly. especially in years when you have something like a ladder truck, or you got to put a new roof on a building in addition to something else, or a solar array comes up, the police building, that sort of thing. Those are very large expenses that will draw it very quickly. We do have that gap. So when we look at every item that's within the earth and how much money we're contributing versus the money we'll actually spend on that item when it comes due, we've got that gap of just over a million dollars that we're going to pay back 100,000 at a time at a time over the next 12 years or so in order to make that whole. And we've projected that that's not going to cause any cash flow issues in the meantime. So that's what we had talked about on the 26th, and that has been built into this budget here. The capital improvement plan, we went over this on the 26th and the work session we had a few months before that. These are the expenditures that we had talked about for the upcoming year. Just to give you an idea of how that breaks down and where that money's going, here's all the various uses. The huge portion, most of it's going towards public works types of functions, pavement ceilings, street lighting, street resurfacing. Here's street resurfacing that's being paid for by really the remainder of that street lighting and street replacement bond revenue that we got back in 2014, I believe it was. Curbs and sidewalks. facility improvements, microsurfacing. So you can see the lion's share here is going to public works purchases. And then we do have parks and rec, a big portion of that being the Maryland Park project that we talked about with the grant funding. And so here's the funded capital project list again. The biggest item by far is phase one of that central business district resurfacing at one point, just under $1.4 million. $450,000 was added in for the municipal garage renovation design We've got microsurfacing projects in excess of a hundred or a half a million dollars. That's Clayton Gardens this year, Clayshire, Parkside Polo and Carondelet will all be microsurfaced. Then there's that Maryland Park project up here at 477,000. So just wanted to highlight a few of those bigger ones again.

The header here be 23 or 22?

It should be 23. I apologize.

Okay.

And I didn't get a chance to switch this over to the city's white and green. I'm off brand with this, but

yes. So Maryland Park, as we, I think discussed recently is all being funded, right? That's correct. So that will, that, that revenue, so to speak shows up somewhere else.

That's correct. We're simply looking at expenditures right here, but there is a revenue line that's coming in under grants and donations for it.

Just want to confirm that. Yes, it is.

It is. All right. So page 96, we start to get into our debt service funds. And so we have three outstanding funds. payments that we're still making on various bonds. The years look new and that's because we refunded these over the last few years, realized quite a bit of savings. We took advantage of the really low interest rates and went in and refinanced those bonds as their call dates came up. So we had the 2019 refunding improvement bond issue. So this was a property tax levy for the police building and a parks and stormwater sales tax that went towards the center renovation. We've got the 2021 special obligation. It's called now that's a transfer from the capital improvement fund. This went towards the police building and then those parks and street improvements that I talked about just a little, a little while ago. And then we have the additional street lighting and street improvements. That's the 2022 general obligation bond. That was the last one that we refunded. And again, I think that was initially done in 2014. That was a property tax levy as well. So here's what's outstanding on our debt at the moment. So the first one, that 2019 special obligation, you can see we have $10.6 million outstanding there, 5 million in the 2021. And then 22, that last refunding we did, our balance there is about 10.1 million. So about $26 million in outstanding debt. And as we talked about looking out in the future and how we might be able to finance the municipal garage project, the maturity dates are 2032 for the first two bonds and then 2034 for the third. So we've got just about 10 years to go on everything. And so here's where those payment sources come from. Again, we've got a mix. We've got some general obligation bonds that are paid with a property tax. Then we have some that are paid with sales tax, and these are dedicated sales taxes. Parks and stormwater is the first thing that comes to mind with those. And then capital improvement bonds the capital improvement fund, primarily the capital improvement tax goes to pay for these. But you can see every year, right now in 2023, we've got about $3 million in debt payments that we're going to make. And you can see the sources about 1.9 from property tax, and then 500,000 from sales, 574 from capital improvements. And you can schedule until maturity down here at the bottom. And then this just breaks down the payments for these individual issuances over time. So 2019, again, this one's kind of weird. It's a mix of a property tax levy and a sales tax line. That's why you see four instead of three. But again, when you total them all up, $3 million a year is what we're paying right now in debt service. And then finally, that takes us through all the different funds that we have, the budget approval schedule. So today's the budget work session. We do have public hearing and first reading for the annual property tax levy. That will be on September 13th. And then we'll have the public hearing and first meeting for the annual budget that night as well. And approval of the 2023 CRSWC budget for the center of Clayton. Our meeting on the budget will be 19th, correct? Next Friday morning. So CRSWC will meet and approve their annual budget, make their recommendations. And then on September 27th, we have second reading and final approval of both the tax levy and the annual budget. We have to have the budget approved by October 1st. So this is in line with that. And then October 1 starts off the new fiscal year. So we'll be off and running and we'll go ahead and pretty quickly put together our RFP packages for those larger items, the compensation classification study and also the comprehensive plans so that we can get those up and going during the fiscal year. And then, of course, start all of those conversations about deficit reduction and service levels, really trying to tee up everything to try to stop this downward trend we have with our fund balance. So that's my presentation. And I do want to thank all of our department heads in the back here and all of our staff that works on the budget every year Karen, Kayla, and everybody in finance just did a terrific job putting all this stuff together and making projections. And there's a ton that goes on behind the scenes. And we've been incredibly thorough with this budget. As long as I've been here with the city, I can tell you the last three years, we've gone through every line item within every department. And we look at every purchase all the way down to the, you know, the boots on our work feet that are outside. How many boots are we buying? How many jackets are we buying? And how much everything are we buying? We look at all those numbers and we've been keeping this absolutely as lean as we can. And that's why those big year-over-year increases that you see, they're typically one-time expenses that are attributed to major purchases. So I want to thank them certainly for everything they do. And that's my presentation. I'll take any additional questions you have. I do have a note here to break out that sales tax information and also send out to the board detailed information on the increases attributed to administration in those various departments that fall under that category.

Well, first of all, great job. Excellent job. And also, I just want to say, having been working on this budget for about 15 years, I think this is the most clear and transparent version that I've seen. And I know you've worked on this since you've been here. The transfers used to be wild and crazy, and it was very confusing to try to follow it. Gary's laughing because he remembers that. um so little by little we've eliminated those and now they're almost gone but i also want to compliment you and your team for unearthing kind of the sort of the real the realities around uh trash and also around you know this for from the operating budget or from the capital improvement budget and trying to coming up with a new system for accounting for that, that really takes some pressure off of the general fund. So that is awesome. So I don't have any further questions, but I wanted to say all that.

Thank

you

very much. David, one thing if you can comment on, I was not on the board during the last election, but it's something I heard in the community and I think we'll go through this theme again in the next year or two is we have a big operating budget deficit, but we have reserves and we use the reserves and they offset the operating budget. And so at least there's sometimes a sense in the community like, well, that kind of solves the problem. You know, you got the reserves, you use them and you come out even. And I have a feeling that that's an issue that we're going to have to continue to address. I mean, with the public is what's the importance of the reserve and what does it mean to be at 57% or 61%. So I don't know. I'm not looking for a long discussion, but just seems to me that's something we need to continue to comment on and why that is a big deal that we're at that number or would be at that number?

I think as we move forward and we start to talk about community engagement, there are really two areas where I think we need to do a better job communicating the situation. And one is, like you said, fund balance and how that works and why it's important and what those numbers really mean and what's a healthy fund balance and what isn't. I think the board changing that fund balance policy adds a lot of clarity to that, that at 50%, it means we're good. At 40%, we're going to have to take some kind of action and you never want to go below 25. I think if we show the trend, certainly if you strip away the federal money that came in and you take that revenue out and you say this is what would have happened absent that and this is how quickly it would have gone down. I think would help tell that story a little bit. But I think we need to take a look at how we talk about that, but also property tax because you hear all the time, my home values keeps going up and it keeps going up and my tax bill keeps going up and keeps going up. What are you doing with all the money? And I still think that there's a disconnect to the fact that the city only gets nine and a half percent of that total bill. We haven't raised that rate over time. In fact, we have to reduce it when valuations go up and really find a way to get that message out there and simplify that message because some other jurisdictions have done really well with increases and different things. But here, you know, the property tax doesn't move much year to year. And if you look at that slide that we put up before, You can kind of see that over time our property tax doesn't jump by a million dollars every year. It's nothing like that at all. And it certainly can't keep up with the pace of expenditure increases so the fund balance point is well taken as some I think we need to work on.

And the other part of that too is what Rich brought up is that there is that assumption that we all feel that we have all this new development, we must be doing well, when it actually comes to the budget. more education and understanding of what we actually increase in the timing of that. I think it's pretty critical for everybody.

I

agree.

And I think too, it's interesting with like the fund balance, the way that money moves in and out, you know, I'm sure the fund balance or our savings account, you know, goes up, up, up. But at times during the year, before we get our property tax, like we're pretty low and we got to have a sum of money to be able to like run the city. So, you know, seeing that number, I think just like Gary said, people think, man, we still got, we got a lot of money there, but you know, I think the way it ebbs and flows throughout the year, we've got to be able to account and have that money safe just in case.

Correct. That's why that 25% number is absolute hard floor. You never want to go below that.

I mean, we just did it. I mean, we went through a pandemic and needed the reserves. I mean, I don't – I think it's going to be very easy – well, it's never easy to explain to everybody. But the story is very simple. We just had this pandemic. We needed reserves to get through it because of the decline in sales tax. You know, it seems obvious to me, but I know it's not so –

Yeah, I think the difficulty is more the long-term structural problem. And that's what's hard to understand. I mean, I feel like I've just been understanding it over the past few years. So because taxes are so complicated, it's the fact because of the Hancock Act, we can never catch up. We're not allowed to catch up. And so when we get hit with something like a pandemic, it really kills us. Other municipalities that had different kinds of sales tax coming in, some things that boomed during the pandemic are doing just fine, thanks. I mean, their revenues were up because they had Home Depot and whatnot. So again, we got to look for those counter cyclical revenue generators as we move forward with commercial development. But also, yeah, we've got this structural problem that we have to find a way to have people help them understand that this is a long-term issue that we can't just make go away with throwing $5 million worth of reserves at it.

Do, can you remind me or all of us the what we know right now about the CPI or. Like, I forget when we know it for each year.

It's been set for this coming year,

right? In March, we got an email from the Municipal League that they had set it at 7%. I know Karen was looking to find that verification as well. That's something we're trying to figure out at the moment. So when we got that from the Municipal Week, we started to pencil everything in at 7%. And we're trying to make sure that never holds. That's the

assumption that this was based on relative to like how that impacts our property tax. That's

correct. Yes. And so if you look under property tax, it says property tax, but underneath that there are other items, the railroad, those types of things. So that offsets some of that increase, some of those that are more stagnant. Last year, what really, really hurt was they set that rate in March at 1.9%. And by the time we got around to our budget conversations, at this point in the year, inflation was about 7%, but we were already locked into 1.9. And that was something that was very difficult to communicate to the public because everybody kept saying inflation is 7% and 7%. Well, the state set our rate at 1.9% back in March, and that's all we can capture for an increase. And that definitely hurt us. That set us back quite a bit last year. It might've been, I don't know why 1.9 sticks in my head. It could have been lower than that, but it was just, it was so far off. You know, it was just...

There's a giant lag time.

It hurt. It hurt. Because this year and next year and the year after that, that all builds upon what that increase would have been so we would have gotten a seven instead of a 1.4 or 1.9. Then this year, that increases on top of last year's increase and you know it's it's a compounding. It's a compounding increase and we lost out on that for a year. So that's that's unfortunate.

We can never make that up.

Right.

Yeah.

Okay. Any other questions or comments? Bruce, do you have any questions? We're going to help you with that. Yeah. Thank you. That's everything I have for today.

Okay, well then I guess we're done. Thank you, Ira. Thank you, David. Goodbye, Ira. Yes, meeting adjourned. We didn't really call it in session, so we're done.

No motion necessary.

All right. Well, everybody have a great weekend. Thank you. Thank you.