This hybrid meeting of the Bend City Council included a work session on the 2023-2025 biennial budget and council goal framework, a legislative update, and a regular business session covering multiple annexations, sewer project contracts, right-of-way vacations, a behavioral health grant, and a city manager's report on the new camping code.
Okay. All right, we're ready to begin our work session. Start with the budget review. Hi, hello, Janet Townsend, um, the finance director here at the city, and my pronouns are she and her. I'm gonna give you an update on our 2023-2025 biannual budget development process. Um, gonna give you uh just a brief update of kind of where we're at in the process, um, then cover some revenue and expenditure trends that we're seeing that are um uh impacting the upcoming biennium, uh, and then uh do a little bit of an overview on our general fund. See it moved again. Sorry, my presentation keeps keeps moving, and I swear I'm not touching it. Um and then um uh uh hand it off um to Eric who's gonna cover the council goal portion of the presentation. So where we're at uh in the process uh is uh our our process for our biennial budget development, so every two years really starts in the November time frame, goes all the way to June, and um really starts with the beginning that kind of budget process of of what we call our baseline budget, moves into council goal setting, which is the part that we are in right now. Um and um and then uh where we are at is uh really in that February March, that third box down, which I think optimistically has some tulips possibly. Um again, my presentation's jumping, I'm not sure how. But um uh but uh tulips, which we I think we're more like the picture up above right now, so I'm really hoping we actually get those tulips um to come up soon. But um the uh February March time frame is really when we incorporate council goals and priorities into our baseline budget. Um we do some review um as well uh and prepare the budget document uh and begin deliberations in the May and June with approval in the June time frame. So uh pivoting at this point to revenue and expenditure trends, giving you a brief update of where we're at in fiscal year 2023. So remember our fiscal year runs from July of every year to June. So this would be the period from July of 2022 uh through what we're projecting uh to be in June of 2023. Um so we are we've got about um these projections are based upon uh the January numbers and are um then essentially have actuals in here uh for seven of the months um and five of the months are a projection. The way that this graph is set up is um the zero line um is kind of the fourth or fifth line over. You can see um that uh items on the right-hand side, um, bars that are on the right hand side of the graph are are uh where we uh expect or project to come in ahead of budget, and the bars on the left hand side of the graph are where we expect to come in less than our budget or our forecast. Um so just kind of giving you a bit of the highlights which are in the bullets on the right hand side. Um our uh total assessed value, which is that top line of property taxes is coming in in line with our assumption. So it's um certainly uh the bulk of the revenue from a dollar standpoint is really that top line. Um and and most of that is on track and in line with our assumption. Room tax is coming in stronger. It was it was it was actually quite a bit stronger for the first five months of the year, but we did see lower collections in December and January and thus have adjusted our forecast out for the rest of the month to be consistent with that little bit of a lower trend. Gas tax has remained strong and um and and we do expect that to end ahead of the year. Starting with water SDC, sewer STC, transportation SDC, and then our in the kind of in the middle of our graph is the building planning and engineering. Each of those are highly dependent upon our development, you know, kind of community and activity in the city because each of those are fees that are assessed when houses or or other developments are built. And we are seeing some lower development activity, which is I think in line with a lot of what we're seeing and hearing around the kind of broader economic trends, particularly around interest rates and some other things that are causing some headwinds in that particular environment. And we're seeing the results of that. So overall, um, we're really seeing quite a bit of revenue pressures, um, modest kind of revenue growth forecast. I'm gonna have a slide a little bit later that goes through a bit more of these around kind of property taxes, but even population for the Bend area. Um, we use some uh state forecasts and and other figures that are really projecting something in kind of the modest growth range of uh, you know, kind of 2% range or so from a population standpoint, um uh property taxes and and the like are also uh projected to be fairly modest kind of year over year. We also are seeing some possible headwinds, um, like I just talked about with the housing and development uh activity slowing down, um, and it's really difficult to predict how those trends are going to translate to Benz. Benz sometimes can be in a bubble uh and um and and and trends that are in the larger even state kind of economic environment don't always translate to um to to exactly what we see. So it makes it really interesting to forecast revenue for two years out, which is really at this point kind of two and a half years out, if you think about it, right? I'm projecting all the way through to June of 2025 at this point. So you know, I think what what we tend to do is is really take what we think is an appropriate line on the trends, uh you know, something that is um you know not too aggressive, not too conservative. It's the it's the um, you know, it's the it's the middle version and uh the Goldilocks zone a bit, and uh and um it but you know each of those things come they are predictions in and of themselves uh and come with uh quite a bit of um estimation to them. I think this is also a helpful graph. Um it's it's one that you may remember seeing as part of the conversation around the transportation utility and the transportation funding conversation that happened at the work session two weeks ago. Um, and I think it's a really helpful one because the the kind of green line or the line that's on the top here is really the market value or kind of the price of your home if you want to think about it that way, or the price of any kind of developments, really that market value, what you could sell it for theoretically, right, is really that kind of green line. But our property taxes are assessed really on that kind of purple line down below. So you can see that really that green line is where we all live, right? It's where the people who work for the city live, it's where the city's kind of expenditures largely live, right? Um, if you think about the inflation and the and the things that we've been seeing, not just on housing, but in our larger kind of economic environment, particularly with the kind of the uptick that you're seeing in that 2021-2022 and that sharp kind of increase from 2022 to 2023, that's really uh indicative of where our expense line is going and where all of us in our personal pocketbooks are expense line is going, right? No different than it is for the city. Whereas our property tax revenue, which is a significant portion of our funding source, um, particularly for the general fund, um, it lives on that on that line that doesn't increase.