>> GOOD AFTERNOON. MY NAME'S EMILY KOSKI, AND I WILL BE THE CHAIR OF THE BUDGET C COMMITTEE TODAY. I'M GOING TO CALL TO ORDER THE BUDGET COMMITTEE MEETING FOR MONDAY, JULY 7th, 2025. BEFORE WE BEGIN THE MEETING I WANT TO OFFER A PHRENLY REMIND -- FRIENDLY REMINDER TO ALL MEMBERS, STAFF, AND THE PUBLIC
THAT THESE MEETINGS ARE BROADCAST LIVE TO ENABLE GREATER PUBLIC PARTICIPATION. THESE BROADCASTS INCLUDE REALTIME CAPTIONING AS A FURTHER METHOD TO INCREASE THE ACCESSIBILITY OF OUR PROCEEDINGS TO THE COMMUNITY. THEREFORE, ALL SPEAKERS NEED TO BE MINDFUL OF THE RATE OF THEIR SPEECH SO THAT OUR CAPTIONERS CAN FULLY CAPTURE
AND TRANSCRIBE ALL COMMENTS FOR THE BROADCAST. WE ASK ALL SPEAKERS TO MODERATE THE SPEED AND CLARITY OF THEIR COMMENTS. AT THIS TIME, I'LL ASK THE CLERK TO CALL THE ROLL TO VERIFY THE PRESENCE OF A QUORUM. >> COUNCILMEMBER PAYNE. >> PRESENT.
>> WONSLEY IS ABSENT. RAINVILLE. >> PRESENT. >> VETAW. >> PRESENT. >> ELLISON IS ABSENT. OSMAN IS ABSENT. CASHMAN IS ABSENT. JENKINS. >> PRESENT. >> CHAVEZ. >> PRESENT. >> CHOWDHURY IS ABSENT.
PALMISANO. >> PRESENT. >> AND VICE CHAIR KOSKI. >> PRESENT. >> ALL RIGHT, THERE ARE SEVEN MEMBERS PRESENT. >> LET THE RECORD REFLECT THAT WE HAVE A QUORUM. I'LL ALSO REMIND MY COLLEAGUES THAT WE'RE -- I'LL ALSO REMIND MY COLLEAGUES THAT WE'RE USING SPEAKER MANAGEMENT TODAY, SO PLEASE MAKE SURE TO SIGN IN.
THE SINGLE ITEM ON OUR AGENDA TODAY IS A REPORT REGARDING THE ESTIMATED REVENUES AND EXPE PENDITURES FOR THE 2026 SUPPLEMENTAL BUDGET AND I WILL WELCOME JAYNE DISCENZA TO SPEAK ON THIS ITEM. WELCOME. >> GOOD AFTERNOON, VICE CHAIR KOSKI, MEMBERS OF THE BUDGET
COMMITTEE. MY NAME'S JAYNE DISCENZA AND I'M HERE TODAY TO DISCUSS THE 2026 CURRENT SEVERAL LEVEL BUDGET CALCULATIONS. SO THESE ARE THE ESTIMATED REVENUES AND EXPENSES FOR NEXT YEAR'S SUPPLEMENTAL BUDGET. WERE WE TO TAKE NO ACTION TO INCREASE OR DECREASE THE BUDGET.
DIFFERENTLY THAN IN PRIOR YEARS, THE CURRENT SERVICE LEVEL THIS YEAR IS NOT REALLY THE STARTING POINT FOR BUDGET DECISION MAKING, BUT RATHER A REFERENCE POINT. IN DEFERENCE TO THE PROPERTY TAX PROJECTIONS THAT WE'LL BE TALKING ABOUT THROUGHOUT THIS PRESENTATION OUR BUDGET PROCESS THIS YEAR DID NOT
INVITE NEW SPENDING PROPOSALS AND INSTEAD WE FOCUSED ON CONSTRAINING GROWTH. NEVER THE CURRENT SERVICE LEVEL IS AN IMPORTANT REFERENCE POINT. THIS INFORMATION WAS ALSO PRINTED TO THE BOARD OF ESTIMATE AND TAXITATION ON JUNE 11th, SO IF YOU HAVE ANY INTEREST IN FURTHER HEARING FURTHER CONVERSATION
ABOUT THIS TOPIC, YOU'RE WELCOME TO TUNE INTO THAT MEETING AS WELL. INFORMATION IN THESE SLEDS IS THE RESULT OF MANY -- SLIDES IS THE RESULTS OF MANY WORK BY THE ENTIRE BUDGET TEAM AS WELL AS PARTNERS THROUGHOUT FINANCE AND THE REST OF THE CITY. THE BUDGET DIVISION IS NOT ALL REPRESENTED HERE IN
PERSON TODAY. A FEW ARE, BUT THIS PRESENTATION DEMONSTRATES THEIR WORK AND THEIR SERVICE, AND WE'RE VERY GRATEFUL TO HAVE THEM ALL. YOU'LL NOTE THAT THIS IS A TECHNICAL PRESENTATION. WE ARE REALLY FOCUSED HERE ON FUTURE REVENUES AND EXPENSES, AND PURSUANT TO THE BUDGET COMMITTEE'S PLANS, YOU CAN
EXPECT TO HEAR MORE ABOUT DEPARTMENT PROGRAMS AND POLICY AND THE FALL BUDGET PRESENTATIONS. THIS IS A BRIEF WALKTHROUGH OF OUR PLAN TODAY. SO WE'LL BE REVIEWING THE BUDGET
FRAMEWORK, ESTIMATING THOSE COSTS OF EXISTING CITY OPERATIONS THAT WERE APPROVED ON AN ONGOING BASIS LAST YEAR. THROUGHOUT WE'LL BE COMPARING TO THE 2025 ADOPTED BUDGET. WE'LL TALK ABOUT EXPENSE DRIVERS AND WHY WE'RE SEEING THE NUMBERS
WE'RE SEEING, AND WE'LL ALSO SPEND SOME TIME TALKING ABOUT REVENUES. THE FOCUS THROUGHOUT WILL BE MOSTLY ON THE GENERAL FUND. AND WE WILL CLOSE THINGS OUT LOOKING AT HOW THE REVENUES AND THE EXPENSES IN THE GENERAL
FUND COMPARE. SO MOVING US INTO SOME FINANCIAL OVERVIEW AND SOME GROUNDING ABOUT OUR BUDGET OVERALL, I WANT TO EMPHASIZE THAT THIS IS A SNAPSHOT IN OUR BUDGET PROCESS. IT'S CERTAINLY NOT A RECOMMENDATIONMENT YOU
WILL HEAR IN JUST OVER A MONTH A BALANCE BUDGET COMING OUT OF THE MAYOR'S SHOP, AND THEN WE WILL OF COURSE TURN THINGS OVER TO THE COUNCIL FOR THE FINAL PHASE OF THE BUDGET. SO FAR THOUGH WE ARE SEEING THAT EXPENSES ARE INCREASING AT A FASTER CLIP THAN REVENUES ARE. SO IN THE GENERAL
FUND THAT LOOKS LIKE 3.89% INCREASE. ON THE EXPENSE SIDE AND THE REVENUE SIDE, 3.64% INCREASE. THERE ARE MANY FUNDS THAT ARE NOT YET BALANCED, BUT WE ARE SEEING A SIMILAR SITUATION AT PLAY IN THE BROADER BUDGET WHEN ALL FUNDS ARE
CONSIDERED. THERE IS A MODEST GAP AS IS TYPICAL AT THIS TIME OF YEAR BETWEEN REVENUE AND EXPENSES, AND THAT IS LARGELY DUE TO INCREASING COSTS AND MORE MODEST REVENUE GROWTH, AND WE'LL CONTINUE TO TALK ABOUT THAT THROUGHOUT THIS PRESENTATION. THE LEVY PICTURE I DO WANT TO
NOTE IS SIGNIFICANTLY IMPROVED AS A RESULT OF THE FORECASTING REVENUE FORECASTING PROCESS THAT OUR TEAM DOES WITH CITY DEPARTMENTS AND THROUGH SOME REVISED PERSONNEL ASSUMPTIONS AROUND VACANCIES. SO WHILE LAST YEAR WE HAD A MUCH MORE DIRE GAP
BETWEEN REVENUES AND EXPENSES, IT'S MUCH MORE MODEST THIS YEAR SO WE'RE IN A MUCH MORE STABLE POSITION. AS WE TALK ABOUT THE GENERAL FUND, I WANT TO MAKE SURE WE ALL KNOW WHERE THAT SITS IN REGARD TO OTHER FUNDS, SO LOOKING AT THIS SLIDE, YOU CAN
SEE THE LARGEST SECTION, THE DARKER GREEN IS THE GENERAL FUND. AND THEN WE HAVE SPECIAL REVENUE FUNDS WHICH IS WHERE GRANTS ROLL UP. WE HAVE DEBT SERVICE, WE HAVE CAPITAL PROJECTS. THE GENERAL FUND IS WHERE WE USUALLY HAVE MOST OF OUR DISCUSSION BECAUSE IT IS PROPERTY PREDOMINANTLY PROPERTY
TAX SUPPORTED, AND IS THE MORE FLEXIBLE FUND FOR USE. WE'LL BE TALKING ON THE NEXT SLIDE ABOUT THE PROPORTIONAL GROWTH OF PROPERTY TAX REVENUE. I DO WANT TO NOTE THAT FUND DESCRIPTIONS ARE LOCATED IN THE BUDGET BOOK IF YOU HAVE QUESTIONS ABOUT ANY
OF THESE CATEGORIES THAT ARE CURRENTLY SHOWN ON THE SCREEN. YOU CAN ACCESS THAT IN THE FUND DESCRIPTION SECTION OF THE BUDGET BOOK, AND YOU CAN ALWAYS SEND US YOUR QUESTIONS AS WELL. THIS SLIDE IS A BIT COMPLICATED,
BUT IT TELLS A STORY OF A GRADUAL SHIFT TOWARDS THE CITY'S RELIANCE MORE ON PROPERTY TAXES RATHER THAN THOSE NONPROFIT TAX REVENUES. SO WE GOT A QUESTION LAST YEAR WHICH PROMPTED US TO DO SOME RESEARCH ON THIS TOPIC,
SO IN PRIOR YEARS, BRIER TO COVID ESPECIALLY -- PRIOR TO COVID ESPECIALLY, THE NONPROFIT TAX LEVY WAS THE MAJORITY OF THE GENERAL FUND REVENUE. WE ARE SEEING A SHOW SHIFT TO PROPERTY TAXES BEING THE MAJORITY OF THE
REVENUE IN THE GENERAL FUND. AND THAT IS PROBABLY DUE TO A NUMBER OF FACTORS, COVID BEING ONE OF THEM, SORT OF NOT INCREASING LICENSE FEES AND THINGS DURING THOSE YEARS, PROBABLY PLAYS A ROLE HERE, BUT IT ALSO JUST ILLUSTRATES THAT WE ARE PUTTING MORE OF A BURDEN ON
PROPERTY TAXES THAN OUR OTHER REVENUE SOURCES. SO GOING BACK TO OUR LONG RANGE FINANCIAL PLAN HERE, THIS IS WHAT WAS ADOPTED IN DECEMBER OF 2024 FOR OUR 25-26 BIENNIAL BUDGET PROCESS.
SO THE RED BOX SHOWS YOU THE 2025 AND 26 LEVY PERCENTAGES AND DOLLAR AMOUNTS. SO A COUPLE THINGS TO NOTE HERE. AS YOU ALL RECALL THERE WERE A NUMBER OF ONE-TIME REDUCTIONS TO THE EXPENDITURE BUDGET IN DECEMBER, AND THAT DROPPED THE
LEVY DOWN TO 6.8% THAT'S A PERCENT CHANGE CALCULATION FROM THE PRIOR YEAR. BECAUSE MOST OF THOSE REDUCTIONS WERE ONE-TIME IN NATURE, YOU ARE SEEING A BIGGER SWING GOING INTO 2026 AS OUR STARTING POINT, SO A 10.8%
CHANGE INCREASE IN 2026 WAS THE STARTING POINT OF THIS BUDGET PROCESS. SO SINCE THEN, WE'VE WORKED ON REFORECASTING OUR NONLEVY REVENUES AND RECALCULATING PERSONNEL AND INTERNAL SERVICE CHANGES. AND THIS NEXT SLIDE SHOWS A
PRELIMINARY UPDATED LEVY SO WERE WE TO MAKE NO CHANGES TO THE PROGRAMS AND PERSONNEL THAT WE'VE COMMITTED TO IN THE LAST BUDGET PROCESS, OUR STARTING POINT WOULD BE AN 11.2% LEVY. SO THAT CHANGE BETWEEN DECEMBER
TO THIS FIGURE IS PRIMARILY DUE TO INCREASED COSTS. THERE IS STILL A LOT OUT THERE THAT WE'RE FINALIZING IN THIS LAST MONTH, SO I WOULD NOT ANTICIPATE THAT WE'LL SEE THAT FIGURE, BUT SOME THINGS TO NOTE ABOUT WHAT WE ASSUME IN THIS VISUAL. SO WE
HAVE NORMAL INFLATION BAKED IN FOR PERSONNEL IN THE OUT YEARS AS WELL AS FOR INTERNAL SERVICE CHARGES. WE DO NOT PLAN THOUGH FOR NEW SPENDING, SO ANY NEW SPENDING OR PILOTS OR NEW INITIATIVES THAT COME ONLINE ARE
NOT SHOWN IN THESE FIGURES. WE ALSO ASSUME THAT FEDERAL FUNDING WILL CONTINUE. AND THIS VIEW ALSO HOLDS ALL THE OTHER LEVIES FLAT, WHICH IS, WHICH IS ALSO SUBJECT TO BUDGET DECISION MAKING. SO YOU'LL NOTE THAT THE
PERMANENT IMPROVEMENT LEVY LINE HAS A LOT OF SWINGS IN IT. MANY OF THE PROJECTS WERE CAUGHT ON A ONE-TIME PROSOR DELAYED A YEAR, SO YOU'RE SEEING A BIGGER INCREASE IN '26 AND SOME CONGESTION FOR THAT LEVY IN 2027. WE ALSO HAVE A NUMBER OF PENSION LEVIES THAT ARE BEING
HELD FLAT. THOSE ARE COMMITMENTS THAT THE CITY IS IN UNTIL 2031 IN MOST CASES. WE CONTINUE TO ASSESS THOSE EVERY YEAR. WORKING WITH THE CONTROLLER TO MAKE SURE WE HAVE ENOUGH REVENUE TO COVER THOSE COMMITMENTS. AND I THINK YOU
KNOW 11.2% IS WELL BEYOND THE BOUNDS OF WHAT A NORMAL BUDGET PROCESS IS, SO WHAT WE'VE HEARD I THINK CONSISTENTLY FROM THE MAYOR AND ALSO FROM THE COUNCIL IS THAT IS NOT AN ACCEPTABLE LEVEL, SO LOT OF OUR WORK THIS YEAR HAS BEEN FOCUSED ON BRINGING THAT DOWN, SO THAT'S SOMETHING THAT WE WILL TALK
ABOUT IN AUGUST AND SEPTEMBER. THIS SHOWS OUR CAPITAL IMPROVEMENT PROGRAM PLAN AS ADOPTED IN DECEMBER, SO NO CHANGES YET. YOU CAN ANTICIPATE A CLICK -- THE CAPTUAL LONG RANGE IMPROVEMENT COMMITTEE'S REPORT COMING ONLINE THIS WEEK. THEY'RE JUST FINALIZING THE
CHAIR'S LETTER TODAY. SO WE WILL SEND OUT A NOTICE TO ALL OF YOU ABOUT THAT. BUT CAPITAL IS ONE PLACE WHERE WE HAVE REALLY ROBUST PUBLIC ENGAGEMENT, AND ILLINOIS ALSO WHERE PEOPLE ARE -- IT'S ALSO WHERE PEOPLE ARE INTERACTING WITH THE CITY ON A REALLY PERSONAL LEVEL. PEOPLE ARE EXPERIENCING OUR ROADS AND BRIDGES. THEY'RE EXPERIENCING
PUBLIC ART. THEY'RE EXPERIENCING OUR BUILDINGS. SO WE'RE VERY HAPPY TO SUPPORT THAT CLICK PROCESS, WHICH IS A ROBUST ONE. THAT COMMITTEE IS JUST FINISHING REVIEWING ABOUT 130 OR SO CAPITAL BUDGET REQUESTS FOR
THIS YEAR. THEIR THEIR RECOMMENDATION WILL INFORM THE MAYOR'S BUDGET, AND OF COURSE WILL BE DISTRIBUTED TO YOU. IF ANY OF YOU ARE INTERESTED IN A MORE THOROUGH EXPLANATION OF THE CAPITAL BUDGET REQUEST, YOU CAN FIND THOSE ON THE FINANCE WEB SITE, THE CBRs ARE ALL THERE SO YOU CAN GET A FULL NARRATIVE OF ALL OF THEM. FOR THE CURRENT
SERVICE LEVEL, YOU CAN CONSIDER THAT $267.8 MILLION AS THE CAPITAL CURRENT SERVICE LEVEL FOR 2026. WE WILL CONTINUE TO KEEP AN EYE ON CAPITAL, ESPECIALLY WITH THE IMPACT OF TARIFFS AND FEDERAL FUNDING.
YOU KNOW, WE ARE MINDFUL THAT COSTS COULD INCREASE, AND SO WE'RE JUST KEEPING A CLOSE EYE ON THAT. SO WE'LL TRANSITION NOW INTO SOME DETAILS OF THE CURRENT SERVICE LEVELS, SO WHAT IS, WHAT DO WE MEAN WHEN WE SAY CSL? HOW DO WE CALCULATE IT?
WHAT ARE THE COMPONENT PARTS, AND THE MAIN TAKEAWAYS THAT YOU ALL CAN UNDERSTAND FROM EACH CATEGORY ABOUT WHY NUMBERS ARE GOING UP OR DOWN. THROUGHOUT SOME OF THESE SLIDES, YOU'LL SEE REFERENCES TO OUR CITY'S FINANCIAL POLICIES. THOSE WERE ADOPTED IN DECEMBER, AND WE PROVIDE THOSE REFERENCES SO THAT
YOU CAN DIG INTO THEM FURTHER IF YOU LIKE. AS A REMINDER THOSE POLICIES ARE INFORMED BY OUR INDUSTRY BEST PRACTICE SO WE LOOK TO GAP AND GFOA AS WELL AS OUR CITY AND STATE ORDINANCES TO DEVELOP THOSE. SO WHAT IS A
CURRENT SERVICE LEVEL? SO A CURRENT SEVERAL LEVEL FIRST OF ALL IS NOT BINDING TO THE COUNCIL. THIS IS AN EXPLANATION OF WHERE THE BUDGET WOULD SIT IF WE MADE NO CHANGES FOR 2026. SO THE CURRENT SERVILE LEVEL
FUNCTIONS AS KIND OF A REALITY CHECK AND A TRANSPARENCY MARKER IN THE BUDGET PROCESS BECAUSE IT TELLS ALL OF US AND THE PUBLIC WHAT HAPPENS BEFORE COUNCIL OR THE MAYOR MAKE ANY POLICY DECISIONS. SO IT IS A
CALCULATION, AND BUDGETING METHODOLOGY. IT'S NOT REALLY A GREAT TOOL FOR RETROACTIVE ANALYSIS, BUT WHAT IT IS IS PROVIDES THE FRAMEWORK FOR WHAT EVENTUALLY BECOMES THE ADOPTED
BUDGET. WITHOUT THIS BASELINE OF THE CURRENT SERVICE LEVEL, IT CAN BE HARD TO TRACE THE IMPACT OF THE DECISIONS THAT YOU ALL MAKE, SO AGAIN, SNAPSHOT IN TIME, THESE FIGURES TODAY, BUT THEY DO HELP US UNDERSTAND THE IMPACT OF POLICY CHOICES, ESPECIALLY AROUND THE PROPERTY
TAX LEVY. SO THIS SLIDE SHOWS YOU A BIT OF A ROAD MAP OF HOW WE DEVELOP THE CSL. SO THE POINT OF THE CSL IS REALLY TO ESTABLISH THE COST OF CONTINUITY
OF SERVICES. THERE ARE THREE EXPENSE COMPONENTS THAT WE LOOK AT AS WELL AS REVENUE OF COURSE. SO YOU CAN SEE ON THE FAR LEFT OF THE SCREEN THERE'S PERSONNEL EXPENSES ARE ONE CATEGORY OF SPENDING, THAT INFLATES YEAR TO YEAR BECAUSE AS WE KNOW,
PERSONNEL COSTS DO TEND TO INCREASE. WE HAVE BASE EXPENSES WHICH ARE THE NONPERSONNEL CATEGORIES, MOST DEPARTMENTS HAVE BUDGETS FOR THINGS LIKE TRAVEL AND TRAINING AND OFFICE SUPPLIES, AND THOSE ARE HELD FLAT YEAR TO YEAR. AND THEN WE HAVE INTERNAL SERVICE CHARGES, WHICH ARE THE COST OF, YOU KNOW, I.T. AND
RENTS, AND THOSE CUSTOMER DRIVEN NEEDS FOR OTHER CITY DEPARTMENTS. THOSE ARE ADJUSTED YEAR OVER YEAR BASED ON THE ANTICIPATED COSTS OF PROVIDING THOSE SERVICES. SO IN ORDER TO DEVELOP THE CSL, WE ARE RUNNING
MANY PROCESSES CONCURRENTLY. WE PLACE A LOT OF DEMANDS ON CITY DEPARTMENTS, AND SO WE'RE OF COURSE REALLY GRATEFUL FOR THEIR PARTNERSHIP AND THE TIME THAT IT TAKES TO DEVELOP THE BUDGET. THE PROCESSES ARE GUIDED BY FINANCIAL POLICIES, WHICH OF
COURSE YOU ALL GET TO REVIEW AND ADOPTT. AT THE START OF EACH BIENNIAL BUDGET, SO WE'RE IN A SUPPLEMENTAL YEAR IN A BIENNIAL BUDGET YEAR WE'RE TYPICALLY DOING A LARGE BUDGET KICKOFF FOR DEPARTMENTS. DEPARTMENT HEADS AND BUDGET CONTACTS WITHIN THE DEPARTMENTS WHERE WE'RE GIVING A TRAINING ABOUT THE SPECIFICS OF
THAT PROCESS, WHAT BUDGET CAPACITY LOOKS LIKE, AND WHAT THE POLICY PRIORITIES MIGHT BE. WE GAVE AN ABBREVIATED VERSION OF THAT TO DEPARTMENT HEADS THIS YEAR. THEN WE'RE ALSO REMOVING ONE-TIME SPENDING. SO WE MAKE SURE THAT ONLY THE THINGS THAT HAVE BEEN COMMITTED TO ONGOING
ARE FACTORING INTO OUR FIGURES GOING FORWARD. AND THEN WE'RE ALSO UPDATING OUR PERSONNEL EXPENSES, SO IT'S A KIND OF A M MANUAL PROCESS OF WORKING CLOSELY WITH HR'S DATA AND DEPARTMENT DATA TO MAKE SURE WE HAVE A COMPREHENSIVE POSITION BY
POSITION REPORT, WHICH IS ACCURATE AS OF MARCH OF THE YEAR. AND THEN WITH INTERNAL SERVICE FUNDS, THAT'S REALLY ONE OF THE MORE INTENSIVE PROCESSES THAT BEGINS IN JANUARY. WE ARE WORKING WITH ALL OF THE PROVIDER DEPARTMENTS TO ESTIMATE THEIR
EXPENSES FOR PROVIDING THE SAME LEVEL OF GOODS AND SERVICES TO THEIR CUSTOMER DEPARTMENTS. AND THEN WE WORK WITH THEM TO ALLOCATE THOSE COSTS OUT ACCORDING TO ALLOCATION MODELS, AND THEN LASTLY, THE CUSTOMER DEPARTMENTS ARE REVIEWING THOSE CHARGES TO MAKE SURE THAT THEY MAKE SENSE. THEY UNDERSTAND WHAT THEY'RE BEING CHARGED FOR, AND THAT IT'S BEING BILLED TO
THE RIGHT PLACE. ON THE REVENUE SIDE, WE'RE MEETING WITH SUBJECT MATTER EXPERTS THROUGHOUT THE CITY TO UPDATE OUR REVENUE ASSUMPTIONS, SO THE CONVERSATIONS ARE TYPICALLY AROUND HOW SENSITIVE OR STABLE THAT REVENUE IS OR HAVE THERE BEEN ANY RECENT TRENDS IN GROWTH
OR DECLINE, ARE THERE NEW REVENUE SOURCES THE CITY NEEDS TO CONSIDER, AND THEN WHAT SORT OF INTERNAL AND EXTERNAL DRIVERS MIGHT BE IMPACTING THESE GOING FORWARD. SO EACH OF THESE PROCESS HAS NOW BEEN -- PROCESSES HAS NOW BEEN COMPLETED AND THE NEXT SEVERAL SLIDES WE'LL BE GOING THROUGH THE
CATEGORIES IN MORE DETAIL. THIS SLIDE SHOWS YOU THE GENERAL FUND CURRENT SERVICE LEVEL EXPENSE BUDGET. IT'S THE GENERAL FUND ONLY. IT'S REMOVING TRANSFERS. THE EXPENSE BUDGET IS ONE SIDE OF THE EQUATION. GUT WE LIKE TO LOOK AT THE CURRENT COST -- BUT
WE LIKE TO LOOK AT THE CURRENT COST OF CLS, THE 2025 ROLLED FORWARD BEFORE WE TURN TO HOW TO FUND THOSE EXPENSES. SO MOST OF THIS SLIDE IS FOCUSED ON THE GENERAL FUND. MOST OF OUR PROGRAMS ARE FUNDED THERE. THAT'S WHERE THE POLICY DECISIONS ARE HAPPENING, AND IT IS IMPORTANT TO NOTE HERE THAT
THIS IS THE COST OF LAST YEAR'S BUDGET TODAY. IT DOES NOT INCLUDE ANY INCREASES OR DECREASES TO EXISTING PROGRAMMING. SO ACROSS ALL CITY FUNDS, AS PART OF OUR TECHNICAL REVIEW, WE WENT THROUGH AND REMOVED $12 MILLION OF ONE-TIME OR EXPIRING PROGRAMS ON THE MAP
TO BUILDING THE CSL. SO THOSE ARE THOSE ONE-TIME THINGS THAT WERE ADOPTED FOR 25 ONLY. THAT REMOVAL IS IN LINE WITH THE ADOPTED PLAN OF LAST YEAR'S BUDGET, AND COLLECTIVELY, WE ALSO SAW THAT SALARY PAYROLL AND
FRINGE COSTS INCREASED ABOUT $30 MILLION FROM THE 2025 ADOPTED BUDGET. INTERNAL SERVICE CHARGES ARE INCREASING ABOUT $6 MILLION. THE $30 MILLION WAS DECREASED DUE TO SOME MODIFICATIONS IN HOW WE BUDGET FOR VACANCIES WHICH IMPACTS THEN SALARIES AND HEALTH
CARE ESTIMATED COSTS. SO POLICY ALLOWS FOR COST ESCALATION IN THE PERSONNEL AND INTERNAL SERVICE SIDE OF THE CSL, THE DISCRETIONARY AMOUNT IS HELD FLAT YEAR OVER YEAR, AND THAT IS IN PART SO THAT THE EXECUTIVE
AND THE LEGISLATIVE BODY HAVE SOME TRANSPARENCY ABOUT HOW THOSE THINGS ARE CHANGING YEAR TO YEAR. MOVE FLING TO PERSONNEL, WITH OVER 4,000 BUDGETED FULL-TIME EQUIVALENT POSITIONS IN THE CITY, THIS IS A
SIGNIFICANT PORTI PORTION OF OUR TOTAL CITY OPERATING COSTS SOWE CONTINUE TO WORK CLOSELY WITH HUMAN RESOURCES AND WITH DEPARTMENTS TO COMPLETE THAT ANNUAL REVIEW AND MAKE SURE WE UNDERSTAND WHICH POSITIONS AND AT WHAT STEP AND AT WHAT HEALTH INSURANCE ARE THEY BUDGETED. WE HAVE THEN A
COMPREHENSIVE POSITION BY POSITION WORKFORCE PLAN THAT DERIVES THAT BUDGET AMOUNT FOR THE FOLLOWING YEAR, SO SALARY AND FRINGE EXPENSES BOTH HAVE INCREASED OVER WHAT WE PLAN FOR IN THE 2025 ADOPTED. GROWTH IN
SALARIES IS OUTPACING GROWTH IN FRINGE EXPENSES LARGELY ATTRIBTABLE TO AGREEMENTS, JOB MARKET STUDIES, IMPACT WITH THE STEPS AND COST OF LIVING ADJUSTMENTS FOR POSITIONS THAT ARE REPRESENTED BY THOSE BARGAINING UNITS. SO WE DO
ALWAYS PLAN FOR INCREASES TO PERSONNEL COSTS BASED ON GROWTH ASSUMPTIONS WE LOOK AT ANNUALLY WORKING WITH HUMAN RESOURCES, LABOR RELATIONS. THE 2026 GENERAL FUND BUDGET FOR PERSONNEL IS ABOUT $4 MILLION HIGHER THAN WE PLANNED FOR IN DECEMBER. SO THAT'S A
REFLECTION OF LARGER THAN BUDGETED COLAs IN THOSE CONTRACTS THAT HAVE BEEN SETTLED. WE CONTINUE OF COURSE TO WORK COLLABORATIVELY WITH LABOR RELATIONS TO MAKE SURE WEAR PLANNING AS BEST WE CAN FOR THOSE INCREASES IN FUTURE YEARS. YOU MAY NOTE BECAUSE THIS SLIDE SHOWS TWO YEARS OF ACTUALS AND
THREE YEARS OF BUDGET THAT THERE ARE SOME DIFFERENCES BETWEEN THE ACTUAL SPEND AND THE BUDGETED AMOUNT. PRIMARILY THIS IS DUE TO SOME ACCOUNTING DISTINCTIONS WHERE SOMETIMES WHERE WE BUDGET IS A LITTLE BIT DIFFERENT THAN WHERE WE SPEND, SO THIS GRAPH ONLY SHOWS THE ACCOUNTS WHERE WE
BUDGET SALARY AND FRINGE. AND THAT WOULD EXCLUDE SOME PORTIONS OF ACTUAL PERSONNEL SPENDING. FTE GROWTH IS OF COURSE A MAJOR COMPONENT OF ANY BUDGET GROWTH
OVERALL, AND SO THIS SLIDE SHOWS YOU THE FTE GROWTH THROUGH 2023 THROUGH WHAT'S PLANNED FOR 2026. SO YOU CAN SEE THAT THERE ARE ALREADY CLOSE TO 16 POSITIONS THAT ARE PLANNED DO COME ONTO THE GENERAL FUND IN 2026. MOSTLY THESE ARE FIREFIGHTER
POSITIONS THAT ARE COMING TO THE GENERAL FUND AFTER THE EXPIRATION OF A FEDERAL SAFE SAFER GRANT IN MID-2026. THIS ONLY CAPTURES POSITION ADDITIONS AS OF MARCH, SO NEW POSITIONS THAT ARE ADDED THROUGH THE COUNCIL PROCESS OR THROUGH
ADMINISTRATIVE ADDITIONS WOULD NOT BE SHOWN IN OUR PERSONNEL BUDGET UNTIL 27 AT THE EARLIEST. AND I'LL TURN NOW TO INTERNAL SERVICE CHARGES. SO INTERNAL
SERVICE CHARGES INCLUDE FLEET, I.T., REPRESENT, SELF-INSURANCE, AND ALSO OUR GENERAL FUND OVERHEAD. GENERAL FUND OVERHEAD IS A CHARGEBACK TO OUR NONGENERAL FUND DEPARTMENTS FOR THE SERVICES THAT GENERAL FUND DEPARTMENTS DO. SO WE ASK THE
DEPARTMENTS WHO PROVIDE ALL THESE SERVICES TO GENERATE AN EXPENSE BUDGET TO MAINTAIN CURRENT SERVICE LEVELS. WE THEN REVIEW THOSE EXPENSE PROPOSALS ALONGSIDE THE CONTROLLER AND THE CFO, AND WE MAKE A DETERMINATION ABOUT WHAT IS A CURRENT SERVICE LEVEL THAT'S APPROPRIATE TO FUND
FOR THE FOLLOWING YEAR, SO THIS IS THE SAME PROCESS WE FOLLOWED AS LAST YEAR. NO MAJOR CHANGES TO METHODOLOGY. THESE CHARGES ARE ABOUT 17% OF OUR TOTAL OPERATING EXPENSES. SO BEGINNING IN JANUARY, THOSE
DEPARTMENTS ARE ESTIMATING THEIR EXPENSE COSTS FOR PROVIDING THEIR SERVICES. WE DO A REASONABLENESS TEST OF THOSE, AND THEN THOSE BUDGETS ARE ALLOCATED OUT TO DEPARTMENTS ACCORDING TO EACH INTERNAL
SERVICE DEPARTMENT'S ALLOCATION MODEL. SO SOME OF THE DISTRIBUTION FACTORS ARE CUSTOMER DEPARTMENT FTE COUNT, HISTORICAL ACTUALS, SOME DEPARTMENTS SPECIFIC PROJECTS, AND FOR WORKERS, FOR WORKERS COMP AND LIABILITY, WE GET SOME
INPUT FROM AN ACTUARIAL CONSULTANT PINNACLE WHO SUBMITS A REPORT ANNUALLY THAT HELPS INFORM OUR NUMBERS THERE. SO THIS CHART IS AN ENTERPRISE WIDE VIEW. SO IT'S ALSO IMPORTANT TO NOTE THAT CHANGES IN PERSONNEL
COSTS FEED INTO GROWTH IN INTERNAL SERVICE CHARGES. SO AS WE ADD POSITIONS WE PROBABLY NEED TO ADD WORK SPACE OR LABTOPS OR MAYBE A VEHICLE, AND SO INTERNAL SERVICE CHARGES ARE A DEMAND DRIVEN IN THAT WAY. ANOTHER EXAMPLE WOULD BE
BUILDINGS COMING ONLINE THAT THEN NEED CUSTODIAL SERVICES. SO THESE ARE INCREASES THAT ARE SOMEWHAT MORE OPAQUE BUT ARE STILL REALLY IMPORTANT AND HAVE AN IMPACT ON PROPERTY TAXES. SO AFTER ALL OF THESE COST DRIVERS ARE TAKEN INTO ACCOUNT, INTERNAL SERVICE CHARGES ARE INCREASING
BY A NET AMOUNT OF ABOUT $6.5 MILLION BETWEEN '25 ADOPTED AND '26 CURRENT SERVICE LEVEL. SO GENERAL FUND DEPARTMENTS ARE PROVIDED THE BUDGET TO PAY FOR THEIR INTERNAL SERVICE CHARGES EACH YEAR, SO THERE'S NO IMPACT ON THEIR OPERATIONS, ALTHOUGH THERE IS THAT REAL IMPACT TO
EXPENDITURE GROWTH WITHIN THE GENERAL FUND. SO TO THIS POINT IN THE PRESENTATION, WE'VE MOSTLY TALKED ABOUT EXPENSES, AND WE'LL NOW SHIFT OVER TO TALK ABOUT REVENUES, HOW WE'RE PAYING
FOR THOSE THINGS. SO THE ROAD MAP HERE IS TO TALK A LITTLE BIT ABOUT AN ALL FUNDS VIEW, BUT WE WILL FOCUS MOSTLY ON THE GENERAL FUND AND SOME KEY REVENUE SOURCES THERE. AND AGAIN, A THANK YOU TO THE DOZENS OF PEOPLE WHO WORKED WITH BEN
ZIMMERMAN ON DEVELOPING THIS REVENUE OUTLOOK FOR THIS YEAR. SO THIS IS A VIEW OF THE ENTERPRISE WIDE ALL FUNDS REVENUE. SO THIS INCLUDES THE GENERAL FUND AS WELL AS GRANTS,
SPECIAL REVENUE, DEBT FUNDS, CAPITAL, ET CETERA. MANY OF THOSE FUNDS ARE STILLED IF DEVELOPMENT, AND THERE ARE SOME -- UNDER DEVELOPMENT, AND THERE ARE SOME FINAL PIECES THAT WE NEED TO LOCK DOWN, SO THIS IS JUST AGAIN A SNAPSHOT. THESE WILL ALL BE FINALIZED BY THE
TIME THE BUDGET IS RELEASED NEXT MONTH. MOVING TO LOCAL OPTIONS SALES TAXES. SO THIS IS THE PRIMARY REVENUE STREAM OF THE DOWNTOWN ASSETS FUND, AND THE VISUAL HERE SHOWS NET LOST REVENUES BUT WE WILL BE TALKING
MORE ABOUT GROSS REVENUES. SO THE DIFFERENCE THERE IS THAT THERE ARE WITHHOLDINGS FROM THE STATE FOR THINGS LIKE OUR STADIUM DEBT AND ALSO AN ADMINISTRATIVE FEE FROM THE MINNESOTA DEPARTMENT OF REVENUE. SO IN TERMS OF GROSS REVENUES, WE SURPASSED OUR PRE-COVID
NUMBERS IN 2023. THAT WAS SOMETHING LIKE A 10% YEAR OVER YEAR GROWTH. WE'RE NOW AT THIS PRESENT MOMENT PROJECTING SOMETHING CLOSER TO 7.1% GROWTH, ALTHOUGH THAT MAY, MAY BE COOLING OFF DUE TO SOME OF THE ECONOMIC UNCERTAINTY THAT WE'RE
CURRENTLY REASSESSING. SO OUR LOWEST POINT IN 2020 WE WERE COLLECTING $51 MILLION HERE. WE'RE LOOKING AT SOMETHING LIKE $115 MILLION FOR NEXT YEAR, BUT AGAIN, I DO WANT TO EMPHASIZE WE'RE CONTINUING TO TALK TO DEVELOPMENT FINANCE AND OUR COLLEAGUES AT THE CONVENTION
CENTER TO MAKE SURE WE'RE UNDERSTANDING THE ECONOMIC UNCERTAINTY AND SORT OF THE CONSUMER PICTURE THAT'S HAPPENING RIGHT NOW BECAUSE THAT IS SHIFTING. AND WHILE WE DO NOT HAVE UPDATED FINANCE PLANS YET WE WANTED TO SHOW YOU A
VISUAL OF THE DOWNTOWN ASSETS FUND BALANCE OUTLOOK. AND AGAIN, THIS IS MAYBE A MORE OPTIMISTIC VIEW GIVEN THAT WE'RE STILL SORT OF ASSESSING THE IMPACT OF TARIFFS AND ECONOMIC UNCERTAINTY, BUT WHAT YOU CAN SEE HERE IS THAT WE'RE SHOWING CURRENTLY A S SIX-YEAR OUTLOOK
FROM THE ADOPTED BUDGET LAST YEAR OF THE FUND BALANCE IF THE DOWNTOWN ASSETS DROPPING FROM $83 MILLION DOWN TO $57 MILLION IN 2030. THE DRAFT SIX-YEAR PLAN LOOKING FORWARD IN THE CSL SHOWS ABOUT $85 MILLION IN 2026
AS A FUND BALANCE DOWN TO $29 MILLION IN 2031. SO THAT ALL ASSUMES THAT THERE'S NO DEBT ISSUANCE FOR THE CONVENTION CENTER IN THE FIVE-YEAR PLAN, AND THAT OUR OTHER SALES TAXES ARE NONENTERTAINMENT TAX REVENUES ARE PERFORMING STRONG.
SO WHAT COULD CHANGE FROM THIS POINT? SO WE WILL CONTINUE TO MONITOR GROSS AND NET RECEIPTS ALONGSIDE DEBT FINANCE AND CONVENTION CENTER. WE KNOW THE TOURISM IMPROVEMENT DISTRICT COULD HAVE AN IMPACT, AND SO WE'RE LOOKING FORWARD TO THAT. THE CAUTION HERE IS THAT WHILE
WE CAN FUND ECONOMIC DEVELOPMENT WORK FROM DOWNTOWN ASSETS, THE MAY COME A TIME -- THERE MAY COME A TIME IF WE CONTINUE AT THIS CLIP WHERE THAT'S NO LONGER SUSTAINABLE BECAUSE WE HAVE GONE BELOW FUND BALANCE REQUIREMENTS.
SO HERE WE ARE AGAIN AT THE GENERAL FUND EXCLUDING ALL OF OUR TRANSFERS AND USE OF FUND BALANCE TO FOCUS ON THOSE EXTERNAL REVENUES. THE GENERAL FUND AGAIN IS THE PRIMARY FOCUS BECAUSE IT HAS THE MOST FLEXIBILITY AND IS WHERE MOST POLICY DECISION MAKING OCCURS.
SO OUR OUTLOOK FOR NEXT YEAR REMAINS SLIGHTLY POSITIVE, FORECASTING ABOUT 7% YEAR OVER YEAR GROWTH FROM $615 MILLION TO $659 MILLION OR SO. THIS IS A LITTLE DIFFERENT THAN THE RAST TWO YEARS WHERE THERE WAS -- LAST TWO YEARS WHERE THERE WAS A MORE CONSISTENT OUTLOOK OF
REVENUES INCREASING SO WE ARE SEEING A COUPLE NOTABLE INCREASES, PAIRED WITH A COUPLE OF NOTABLE DECREASES SO THAT'S NETTING OUT TO PRETTY MODEST GROWTH. SO SOME NOTABLE INCREASES. CHARGES FOR SERVICES AND SALES. THE MAIN DRIVER HERE AND THIS HAS BEEN A TOPIC OF
CONVERSATION IN BET AS WELL IS THE REVENUE THAT WE RECEIVE AS AN OFFSET FOR THE PARK BOARD'S USE OF OVERHEAD COSTS. SO HISTORICALLY WE'VE ELIMITTED THAT GROWTH SO THAT THEY HAVE A MORE STEADY CONSISTENT INCREASE
MENTD WE DECIDED THIS YEAR TO REVISIT THE PLAN THERE, SO THERE HAVE BEEN A LOT OF ONGOING CONVERSATIONS, BUT WE ARE PLANNING ON A MORE SIGNIFICANT INCREASE PAID BY THE PARK BOARD. AND THEN IN FINES AND FORFEITS THERE'S ALSO SOME NOTABLE
INCREASES THERE, SO THERE IS NEW SPEEDING CITATION REVENUE, WHICH SHOULD BE IMPLEMENTED IN AUGUST OR SEPTEMBER OF THIS YEAR. THOSE FUNDS ARE RESTRICTED SO THEY CAN ONLY BE USED FOR TRAFFIC SAFETY FUNCTIONS. ON THE NOTABLE DECREASES SIDE, SO FRANCHISE FEES CAME IN ABOUT
$3 MILLION BELOW WHAT WE HAD HOPED FOR. IN 2024. AND THAT'S THE SORT OF MARGINAL INCREASE THAT IS ASSOCIATED WITH THE CLIMATE LEGACY INITIATIVE. AND THEN IN THE LICENSES AND PERMITS CATEGORY, SO OUR CONSTRUCTION
CODE SERVICES REVENUE, WHICH IS RELATED TO MAJOR DEVELOPMENT ACTIVITY IN THE CITY, HAS SEEN DECREASES, SO IN 2023, THEY HAD A REALLY LOW YEAR OF ONLY SEEING ABOUT 29 PROJECTS COME THROUGH PLANNING COMMISSION. LAST YEAR IT WAS EVEN LOWER, IT WAS ONLY
12 PROJECTS THAT CAME THROUGH PLANNING COMMISSION. THE RATE OF THOSE APPROVALS IS SORT OF A PROXY IN HOW WE CAN SORT OF FORECAST WHAT DEVELOPMENT ACTIVITY MIGHT BE COMING OUR WAY. SO WE'RE PROJECTING REDUCED REVENUE IN THAT AREA.
AND THE TAXES CATEGORYISH, SO THIS IS OUR LARGEST REVENUE STREAM, SO YOU CAN SEE PROPERTY TAXES, FRANCHISE FEES, LOCAL SALES TAX AND OTHER TAXES ARE ALL ROLLED UP INTO THIS CATEGORY. PROPERTY TAXES ARE 53% OF OUR GENERAL FUND REVENUE,
AND NEARLY 88% OF THIS CATEGORY. WHAT WE'RE SHOWING HERE ALIGNS WITH THE FIVE-YEAR FINANCIAL DIRECTION, SO A 6.8% PROPERTY TAX INCREASE IN 2025, AND 10.8% IN 2026. SO THESE FIGURES DON'T SHOW ANY NEW SPENDING OR ANY
EFFICIENCIES THAT MAY BE IDENTIFIED IN THOSE, THIS YEAR'S BUDGET PROCESS. INTERGOVERNMENTAL REVENUES ARE THE SECOND LARGEST REVENUE STREAM IN THE GENERAL FUND, AND
LGA, LOCAL GOVERNMENT AID, IS THE MAJORITY OF THIS CATEGORY. WE ARE EXPECTING THAT THE 2026 LOCAL GOVERNMENT AID AWARD WILL HOLD FLAT FROM 2025. SO $71.7 MILLION THE TOTAL EXPECTED
RECEIPT. WE SHARE THIS AWARD OR THIS LGA AMOUNT WITH THE PARK BOARD AS WELL AS THE MUNICIPAL BUILDING COMMISSION. MUNICIPAL BUILDING COMMISSION'S PORTION IS DESIGNATED IN ORDINANCE AS 11-POINT SPHOIP% OF OUR TOTAL
AWARD. LGA IS APPROXIMATELY AT THE LEVEL THAT IT WAS PRE-PANDEMIC, SO FOR A COUPLE OF YEARS DURING COVID IT DIPPED DOWN INTO THE MID-60s BEFORE GETTING BACK ROUGHLY TO THAT CLOSE TO $72 MILLION IN 2024. THIS REVENUE GETS CERTIFIED IN LATE JULY OR AUGUST, SO WE WORK
WITH OUR IGR TEAM TO UNDERSTAND WHAT TO PLAN FOR THERE. PUTTING EVERYTHING TOGETHER, SO WE STARTED TODAY LOOKING AT THE DIFFERENT EXPENSE CATEGORY TRENDS AND PERSONNEL AND INTERNAL SERVICE CHARGES. WE TALKED A BIT ABOUT THE BASE
BUDGET, HOW THAT'S HELD FLAT AND THEN WE SHIFTED OVER TO THE REVENUE DISCUSSION. AND ON THIS SLIDE WE'RE LOOKING AT BOTH OF THOSE EXPENSES IN RED AND REVENUES IN GREEN NEXT TO EACH OTHER. SO THIS VIEW INCLUDES PLAN TRANSFERS IN AND OUT, AND
PLANNED USE OF CASH FOR ONE-TIME EXPENSES THAT WERE ADOPTED IN THE DECEMBER BUDGET VOTE, SO THIS SHOWS 2025'S ADOPTED AS WELL AS THE PLAN FOR '26 THROUGH '31. YOU KNOW, WE HAD SEVERAL
YEARS OF INFLUX OF RESOURCES DUE TO FEDERAL AND STATE DOLLARS, AND NOW WE ARE FACING A DIFFERENT ECONOMIC PICTURE WHERE WE HAVE A LOT OF UNCERTAINTY AROUND INFLATION, TARIFFS, AND POTENTIAL LOSS OF FEDERAL FUNDING. AND SO WE ARE APPROACHING OUR PLANS WITH
PERHAPS MORE CONSERVATISM, AND THE PRIMARY TASK OF OUR OFFICE OVER THE REMAINDER OF THE YEAR IS WORKING WITH THE MAYOR FIRST TO PRESENT A BALANCED BUDGET IN AUGUST AND THEN WITH ALL OF YOU TO PRESENT AND ADOPT A BALANCED BUDGET IN DECEMBER. AGAIN, WE
ARE USING THAT CURRENT SERVICE LEVEL NOT SO MUCH AS THE DECISION MAKING STARTING POINT BUT AS A REFERENCE POINT WITH MOVING TO A REAL FOCUS ON CONSTRAINING GROWTH FROM THE '25 ADOPTED BUDGET WHILE ALSO MAINING SURE WE'RE BEING -- MAKING SURE WE'RE BEING CLEAR ABOUT OUR CITY GOALS. WE DIDN'T
HAVE AN OPEN CALL FOR NEW SPENDING PROPOSALS THIS YEAR, SO WE ARE CLEAR ABOUT OUR CHARGE, WHICH IS TO LIMIT RISK AND MAKE SURE THAT MINNEAPOLIS REMAINS AN AFFORDABLE PLACE TO LIVE IN THE YEARS TO COME. AND SO I'LL JUST CONCLUDE WITH A BRIEF TIMELINE
OF WHAT'S JUST HAPPENED AND WHAT'S ABOUT TO HAPPEN. SO WE'RE TALKING TODAY ABOUT THE CSL. IN JUNE AND JULY WE'VE BEEN TALKING ABOUT BUDGET SCENARIOS THE DEPARTMENTS HAVE SUBMITTED TO THE MAYOR AND ENGAGING IN BUDGET DECISION MAKING AROUND THOSE. OF COURSE WE'LL HAVE THE MAYOR'S BUDGET
RELEASE IN MID-AUGUST. WE WILL THEN YOU KNOW PURSUANT TO THE BUDGET COMMITTEES PLAN WE'LL RETURN IN SEPTEMBER, WITH AN OVERVIEW OF THE MAYOR'S RECOMMENDED BUDGET. AND THEN THE BUDGET COMMITTEE WILL SET A
PLAN FOR THE FALL. TYPICALLY 23459 MEANS BUDGET PRESENTATIONS BEGIN IN SEPTEMBER AND OCTOBER THAT WE ALSO START HAVING PUBLIC HEARINGS ON THE BUDGET IN THE FALL MONTHS FINALLY WRAPPING UP IN DECEMBER WITH MARKUP AND ADOPTION. AND WITH THAT, THANK YOU FOR YOUR TIME. BE HAPPY TO
STAND FOR ANY QUESTIONS. >> THANK YOU SO MUCH FOR THE PRESENTATION. ANY QUESTIONS FROM THE COMMITTEE? I SEE COUNCILMEMBER CASHMAN HAS JOINED US AND ALSO COUNCILMEMBER CHOWDHURY AS WELL. COUNCILMEMBER CASHMAN. >> THANK YOU, CHAIR KOSKI, VICE CHAIR KOSKI, THANK YOU DIRECTOR
DISCENZA FOR THE PRESENTATION. MY QUESTIONS REALLY CENTER AROUND THE DOWNTOWN ASSETS FUND. I AM VERY CONFUSED AS TO WHY THE FIVE-YEAR LOOKBACK HAS IT DROPPING WHEN OVER THE LAST FIVE YEARS, IT HAS CONSISTENTLY GONE UP. CAN YOU HELP EXPLAIN THAT A LITTLE BIT TO ME, AND YOU KNOW,
FROM LIKE WE ENDED THE YEAR AT $85 MILLION, SORRY, WE ENDED 2024 AT $97 MILLION, AND THEN THE BUDGET FORECASTED $85 MILLION TO END THIS YEAR.
HOWEVER, I THOUGHT I HEARD YOU SAY IT WAS GOING TO END THE YEAR AT $115 MILLION SO CAN YOU HELP CORRECT THAT F FOR ME? >> SURE. THROUGH THE VICE CHAIR, COUNCILMEMBER CASHMAN, COUPLE DIFFERENT THINGS HAPPENING THERE. SO IN LAST YEAR'S BUDGET PROCESS, WE
DECIDED TO TRANSFER A LOT MORE MONEY FROM THE DOWNTOWN ASSETS FUND INTO THE GENERAL FUND THAN WE HAVE IN PREVIOUS YEARS. DURING COVID, WE REDUCED THAT TRANSFER, THERE'S ALWAYS BEEN SOME LEVEL OF TRANSFER. WE REDUCED IT QUITE A BIT DURING COVID BECAUSE DOWNTOWN ACTIVITY WAS SO LOW. WE RETURNED TO SORT
OF A NORMAL AMOUNT OF TRANSFER LAST YEAR, AND THEN ALSO DID A CALCULATION TO SEE WHAT IS ALL THE ECONOMIC DEVELOPMENT WORK IN THE CITY THAT WE COULD REASONABLY JUSTIFY TRANSFERRING DOWNTOWN ASSETS DOLLARS INTO THE GENERAL FUND TO SORT OF HELP OFFSET THAT WORK. ECONOMIC
DEVELOPMENT IS ONE OF THE, IS HOW THE STATE, IS WHAT THE STATE ALLOWS US TO SPEND THOSE DOLLARS ON. SO WE KIND OF TOOK A MAXIMAL APPROACH LAST YEAR, BOTH IN THE MAYOR'S REC AND THEN I BELIEVE THE COUNCIL DID AN ADDITIONAL TRANSFER TOO. SO
THAT IS DRAWING DOWN THE FUND BALANCE. AND SO WE PLAN EVERY YEAR TO REVISIT THAT TRANSFER AMOUNT AND MAKE SURE THAT WE ARE TRANSFERRING A RESPONSIBLE AMOUNT AND ALSO OFFSETTING A LOT OF THAT ECONOMIC DEVELOPMENT ACTIVITY THAT THE CITY IS
UNDERTAKING. THE $115 MILLION NUMBER IS THE LOCAL OPTION SALES TAXES THAT'S AN EARLY PROJECTION OF WHAT WE MIGHT SEE IN LOCAL OPTION SALES TAX REVENUE NINETY SIX YEAR. SO THOSE REVENUES, YES, FLOW INTO THE DOWNTOWN
ASSETS FUND, AND THEN THE DOWNTOWN ASSETS FUND IS SUPPORTING THE CONVENTION CENTER WE ALSO ADDED THE KOHL'S CENTER AS PART OF THE DOWNTOWN ASSET SUITE SO THERE ARE INCREASES EXPENSES IN THE DOWNTOWN ASSETS FUND, AND WE WORK WITH THE
CONVENTION CENTER AND DEVELOPMENT FINANCE TO HELP UNDERSTAND WHAT THE FINANCE PLAN IS FOR DOWNTOWN ASSETS, BUT THERE ARE REVENUES COMING IN, REVENUES ALSO GOING OUT THE DOOR TO MAINTAIN THE BUILDING. >> OKAY SO THE REVENUES ARE EXPECTED TO BE $115 MILLION THIS YEAR. THE FUND BALANCE IS
EXPECTED TO BE $85 MILLION? >> SO I WANT TO BE CAUTIOUS THROUGH THE CHAIR, COUNCILMEMBER CASHMAN, ABOUT SPECIFIC NUMBERS BECAUSE THIS AGAIN S.N.A.P. SHOT SO I DON'T WANT TO WED UGTO THE FIGURE. THE $85 MILLION IS
PROBABLY OPTIMISTIC BUT WE ARE SHOWING IF WE WERE TO CONTINUE SPENDING AS PLANNED, IT'D BE SOMETHING LIKE AN $85 MILLION FUND BALANCE IN 26, AND I'LL LET BEN ZIMMERMAN ADD THE
$115 MILLION IS THE GROSS REVENUE SO WE HAVE TO TAKE STATE WITHHOLDINGS FROM THE FIGURE. >> HOW MUCH DO WE HAVE TO TAKE OUT? >> WE HAVE .9% ADMIN FEE WITH THE STATE DEPARTMENT OF REVENUE.
SO THAT WAS ABOUT ALMOST HALF A MILLION LAST YEAR. AND THEN FOR THE STADIUM, $18.4 MILLION. ABOUT $20 MILLION PROJECTED. >> ANNUAL OR TOTAL OVER THE
COURSE OF -- >> ANNUAL. >> ANNUAL. >>> OKAY. SO JUST A COUPLE FOLLOW-UP QUESTIONS ON THAT. WHAT IS THE RECOMMENDED LEVEL OF RESERVES IN THE FUND? >> THROUGH THE CHAIR,
COUNCILMEMBER CASHMAN, I DON'T HAVE THE FUND BALANCE REQUIREMENTS FOR THAT FUND OFF-TOP OF MY HEAD. I DON'T KNOW IF -- OFF THE TOP OF MY HEAD. I DON'T KNOW IF YOU KNOW KNOW. WE CAN CERTAINLY FOLLOW UP WITH YOU ON THAT. IT WILL BE IN THE QUARTERLY FINANCIAL REPORTS. >> I HAVE A COUPLE OF QUESTIONS.
MAYBE I WILL GET THROUGH THEM AND I CAN SEND THEM THROUGH THE CHAIR TO THE CLERK. WHAT IS THE LEVEL OF RESERVES ACROSS THE FUND PROJECTED TO CHANGE OVER THE NEXT FIVE YEARS? >> THROUGH THE CHAIR, I THINK WHEN WE HAVE AN UPDATED BUDGET RECOMMENDATION, AND AN UPDATED FINANCE PLAN, THAT'S WHEN YOU'RE
GOING TO GET BETTER INFORMATION ON THAT RATHER THAN THE CURRENT SERVICE LEVEL. >> OKAY. AND WHEN WILL WE EXPECT THAT? >> IN THE FALL ONCE THE MAYOR'S BUDGET IS OUT, WE HAVE BUDGET DECISIONS, THEN WE'D BE ABLE TO UPDATE THAT PLAN. IT WOULDN'T
BE SAME RELEASE DATE AS THE MAYOR'S BECAUSE IT IT'LL TAKE SOME TIME FOR US TO WORK THROUGH IF THERE ARE POLICY DECISIONS IN THERE. >> HOW MUCH OF THE DOWNTOWN ASSETS FUND WAS TRANSFERRED INTO THE GENERAL FUND IN THE LAST FIVE YEARS? >> SURE. IN THE LAST FIVE
YEARS, THAT'S -- >> LIKE EACH YEAR. BECAUSE YOU SAID IT WENT, IT WAS A LOT MORE WAS TRANSFERRED INTO THE GENERAL FUND LAST YEAR THAN USUAL. >> I'M SURE THAT'S IN MY NOTES.
ONE MOMENT. >> WE'LL LET BEN TAKE A ROUGH GUESS AND THEN WE'LL FOLLOW UP WITH SOME EXACT FIGURES. >> VICE CHAIR, BEN ZIMMERMAN,
BUDGET ANALYST, VICE CHAIR KOSKI, COUNCILMEMBER CASHMAN. PRIOR TO COVID, FOR A FEW YEARS THE ROUGH ANNUAL TRANSFER WAS ABOUT $30 MILLION. IN THE DEPTHS OF COVID I BELIEVE THAT DROPPED DOWN TO ABOUT 10 TO $12 MILLION TO HELP STABILIZE THE FUND. AND SLOWLY IT HAS
CLIMBED BACK. I THINK THE MOST RECENT YEAR WAS IN THE LOW 40s, LIKE THE CURRENT BUDGET YEAR 2025 WAS IN THE LOW $40 MILLION RANGE IS MY UNDERSTANDING. >> OKAY. AND THEN DO WE HAVE LIKE A FIVE-YEAR PROJECTION OF HOW MUCH TO FANSFER INTO THE GENERAL FUND? BECAUSE I SEE THE
SLIDE RIGHT AFTER THIS IT DOES HAVE IT DROPPING, SO THAT'S WHAT I'M REALLY TRYING TO G GET AT IS WHY IS IT DROPPING. >> YES, COUNCILMAN CASHMAN WE DO PLAN FOR INCREASED TRANSFER TO ACCOUNT FOR BECAUSE WE ARE OFFSETTING ECONOMIC DEVELOPMENT WORK, WHICH IS, YOU KNOW, A LOT
OF CPED AND ARTS AND CULTURAL AFFAIRS TYPE WORK, THOSE COSTS ARE INCREASING YEAR TO YEAR SO WE BLAN FOR SOME LEVEL OF INCREASE TO THAT TRANSFER ANNUALLY BUT OF COURSE WE WOULD REVISIT IT TO MAKE SURE WE'RE ACCURATELY RECOMMENDING AN APPROPRIATE TRANSFER. >> OKAY, THANKS. I'M GOING TO
SEND THESE FOLLOW-UP QUESTIONS BECAUSE I WOULD LIKE TO AT LEAST SEE THEM IN WRITING IF YOU HAVE MORE SPECIFICS TOO. JUST TO MAKE SURE I UNDERSTAND. THE SLIDE BEFORE US IS THE REVENUE PROJECTIONS AND THE FUND BALANCE
OUTLOOK. THERE'S MONEY COMING OUT EVERY YEAR, IT'S PLANNING TO GO UP IN REVENUES BUT DOWN IN BALANCE FUND, SO THE AMOUNT THAT WE'RE PLANNING TO TAKE OUT INCREASES OVER THE NEXT FIVE YEARS. >> THROUGH THE, THROUGH VICE CHAIR KOSKI, COUNCILMEMBER CASHMAN, YES. THE DOWNTOWN
ASSETS FUND HAS REVENUES GOING IN AND EXPENSES GOING OUT TO MAINTAIN ALL OF OUR DOWNTOWN ASSETS, AND ALSO TRANSFERS THAT ARE OF INCREASING MAGNITUDE TO SUPPORT ECONOMIC DEVELOPMENT WORK. >> OKAY, THANK YOU. >> THANK YOU. AND COUNCILMEMBER CASHMAN, TO THE CLERKS WE'LL JUST HAVE YOU EMAIL THOSE IF
THAT'S EASY ENOUGH FOR THE MEMO. OKAY. THANK YOU. AND I JUST HAD ONE FOLLOW-UP QUESTION ON SLIDE 13 I BELIEVE WHEN YOU TALKED ABOUT THE $12 MILLION REMOVAL OF ONE-TIME EXPENSES. COULD YOU JUST GO INTO DEEPER
DETAIL OF THAT OF WHAT THAT MEANS AND IS THERE A LIST OF THAT $12 MILLION, LIKE WHAT THOSE EXPENSES ARE? >> VICE CHAIR KOSKI, SO THE, THAT IS REALLY A TECHNICAL CLEAN-UP. SO IN THE '25 ADOPTED BUDGET, SOME OF THEM WOULD'VE BEEN MAYOR INITIATED PROPOSALS, SOME OF THEM WERE CERTAINLY
COUNCIL INITIATED PROPOSAL OF ONE-TIME SPENDING THAT IS ONLY A FACTOR FOR 2025. SO IF THERE WAS A PILOT PROJECT OR SOMETHING OF THAT NATURE, WE WOULDN'T COUNT THAT IN OUR 2026 BUDGET PROJECTION BECAUSE IT IS
ONE-TIME IN NATURE. >> OH, I GOT IT. >> SO IT'S NOT SAVINGS. IT'S JUST CLEANING IT UP. >> OKAY. THANK YOU. I JUST NEEDED THAT EXTRA CLARITY. I APPRECIATE IT. AND THEN JUST TO THE COMMITTEE YOU TALKED ABOUT THE CLIC BEING PREPARED WITH THEIR NEXT ITERATION OF THEIR PROPOSAL, AND
THEY ARE COMING ON AUGUST 4th TO THIS COMMITTEE TO DO A PRESENTATION AS WELL JUST FOR YOUR NOTICE. SO ALL RIGHT. WELL, I AM -- OH, I SEE COUNCILMEMBER CASHMAN BACK IN QUEUE HERE. >> THANK YOU, VICE CHAIR. I HAVE ANOTHER QUESTION THAT I FORGOT TO ASK BEFORE. SO THIS
IS ABOUT THE FRANCHISE FEE. WHERE IS THAT CATEGORIZED UNDER OUR REVENUES? DID I SEE IT? DID I MISS IT IN THE PRESENTATION, THE FRANCHISE FEES AND THE CLIMATE LEGACY INITIATIVE EXPENSES? >> THROUGH THE CHAIR,
COUNCILMEMBER CASHMAN, IT ROLLS UP INTO THE TAXES CATEGORY. >> OKAY, DO WE HAVE LIKE A FIVE-YEAR OUTLOOK FOR THAT AS WELL? >> WE CERTAINLY PLAN FOR BECAUSE WE HAVE A, A SIX-YEAR BUDGET, WE CERTAINLY PLAN. WE CAN GET YOU SOME FOLLOW-UP ON WHAT WE'RE
ANTICIPATING. WE'VE HAD YOU KNOW CREDIT TO THE HEALTH DEPARTMENT, SUSTAINABILITY TEAM THEY HAVE BEEN GOING BACK AND FORTH WITH THE UTILITIES TO CLARIFY AND REFINE THE NUMBERS. AND THE DATA THAT WE'RE GETTING. WORKING CLOSELY WITH OUR DEPUTY CONTROLLER TO FIND THAT SO I
THINK WE KNOW A LOT MORE. WHAT WE HOPED FOR 2024, WE GOT CLOSER TO $8.05, WE WERE EXPECTING $10 MILLION. SO THAT'S SOMETHING THAT WE'LL CONTINUE TO LOOK AT. >> OKAY, THANKS, I WILL ASK THAT IN THE FOLLOW-UP AS WELL. >> GREAT. THANKS. >> ALL RIGHT. I AM NOT SEEING ANY FURTHER QUESTIONS, AND SO
I'LL ASK THE CLERK TO RECEIVE AND FILE THIS REPORT. THANK YOU SO MUCH FOR BEING HERE. WITH THAT WE'VE CONCLUDED ALL BUSINESS TO COME BEFORE THE COMMITTEE TODAY, AND IF THERE IS NO OBJECTION, WE STAND ADJOURNED. THANK YOU.