review I did want to briefly discuss a budget framework and then um the remainder of the time be taken without the ACUF uh in regards to um the the budget analysis uh that he did for us so first we'll start out with West then uh this is um the general policies that we all looked at there were four policies started back I think last February madam chair when we um did the amendment to the FY26 budget and so as we were looking at taking from uh taking funds from reserves we thought well maybe we need to put some policies in place because there's a reminder China Newton's only been this form of government for about what 30 years maybe or something like that.

So we're still working out the Kings as all cities do.

And so this is what um this is what uh we had discussed uh we discussed it in a previous budget committee and so at this juncture wanted you all to look at the revised policies uh councilman Henderson has um had questions and recommendations and so wanted to go uh wanted Weston to go over those updated recommendations and see if you all are ready to move this forward to legislation and uh I have notes from uh madam vice chair no she is on her way um um madam sorry councilwoman burrs is uh watching online she's at a memorial service for uh Chuck this morning so that's that's fantastic and prandy that goes well well I hope she's not watching this online yeah well I mean she's not watching online but she's gonna go back and watch I'm sorry okay yeah bless her heart yeah so she's gonna be doing that and then um councilman illy also is watching us online as well so welcome to our virtual colleagues and for those who are in route it's like we're famous hey all right everybody's watching this morning um and so um lesson if you go ahead and give us update on each other policies and then council at the end of this I would just like a recommendation uh what you would like to do next sure uh so we'll start with the volatile revenue policy councilman Henderson had some questions on uh specifically the the scope on that one it had um originally we had I think four we had four bullet points on there that were kind of high level and uh your recommendation was to add a more kind of exhaustive list to that and so what I did is I took our detailed revenue projection that we do that has every revenue account line item and anything that changed going back five years and anything that changed increased or decreased 10% in between any given year considered that's volatile and so that's what the list that's now on the policy is reflective of kind of that exercise if anything that's changed 10% in any one given year we'll consider volatile um and so it's a I forget how many points it is now it's it's considerably more than it was before some of them we have like permits there may be 40 or 50 different permit revenue streams so we just kind of left those high level building you know as permits and licenses and didn't go into each individual one but for the most part they all had those fluctuations so I think just an overall permits are for volatile is is fair enough almost um and then your other comment on that one was related to setting baselines and so added a points in um it was in trying to think of uh number three or four it's I think it was maybe a number four I have a point second page top point on the second page the last point uh setting the baselines um based on a historic five year average or the lowest in section two section two thank you um in section two point three um kind of a rule of thumb to set the baselines with a caveat that allows us if there's just something really strange that's skewing it to allow us to kind of pivot a little bit if it makes sense to not use one of those if there's just some anomaly that's really throwing things off to kind of re rethink how we set a baseline in any given year for for that but it allows us to kind of you use that five year historical average which is kind of best practice for a phone on something like that.

So you're looking at a base average for that for that particular year.

Not necessarily a baseline going forward it's just for that particular year.

That's right.

So it would sort of be like a sliding scale correct yeah every kind of with that five year average sliding up yeah yeah I think that makes sense okay so that was the volume volatile revenue policy yes that was that one any other questions about that policy okay but I do have one more would that be I mean when you're doing that I guess that will be reported to the council what you used as the baseline how you got the baseline or is that just something you're gonna do internally.

What you used as the baseline, how you got the baseline, or is that just something you're gonna do internally?

My thought is it would be more or less internal.

If there were any weird things we needed to point out, but again, there's 40 or 50 permit lines, and I don't know that you want us to go through the baseline for each one of those, as opposed to saying we you maybe we could just say this is the methodology we use, and if there were anything, we didn't use it for this one or this one because of this reason, something like that.

Um then obviously if you wanted to know a particular line or something, we could give you a report on that, but it would again it'd be a hundred plus lines of okay, yeah.

All right, any other questions, counsel about the volatile revenue policy?

Let's see.

Uh the one time revenue policy.

Uh Sherman Hill had a question.

There was a there was a reference to routine maintenance in number 4.1, and I think it muddied the water a little bit.

I think really what we're getting at.

I think salaries and benefits is the best example of just not using one-time revenues for something that's gonna encumber us moving forward.

Right.

And so I just removed the routine maintenance piece of it and left it as salaries and benefits is that's kind of the bright example of of what we're really talking about in that line.

So um so I think that was the only question we had on that coming out of last time.

Okay, any other questions about what's our revenue policy for general fund?

Okay, structurally balanced budget.

I didn't have any questions on that out of the last discussion, so unless anybody has anything today, if we can pass that one.

Okay.

And then fund balance stabilization, this is the fun fund balance reserve policy.

Um the only question we have was around potentially investing in in certain commodities gold or whatever, and and I think there are some logistical and some technical issues with doing that at the state limits our our ability to say we can't do that.

The state has opened that up to allow them to do that, so maybe at some point they'll push that down to municipalities.

Um kind of preclude us from doing that.

And also, there's just the the logistical, where do we put it, how do we secure it, okay, stuff like that.

How do we trade it and sell it and buy it?

And I think so I think it's there's some hurdles there to try and do that.

Um, but I think that was the only kind of question or comment that came up in that discussion on that policy.

Well, so then here and then a taxman here.

So for the working group, just a brief discussion I'd love to have would be the fund balance target range.

You know, the thought with this policy is that um it will aid us in discussion and decision making when it comes to um budget amendments or pulling from the fund balance, right?

Because uh periodically the mayor um of any administration will say we want to make a capital investment or we want to top off the pension fund, right?

And so what we've noticed in the five years that budget chairwoman and I have been serving, and and then councilman Henderson and his esteemed tenure, that those conversations then tend to go back to how much is enough and how much is too much.

And so uh I'd just like us as a working group to just briefly discuss.

We're talking about having 20% of our um to be our minimum level of reserves, and that's 20% of our general operating fund in our rainy day fund, right?

Saved up 20% with a max of 30%.

And so is that something that this body can stand confidently behind um as uh thinking toward the future.

And just real quick on how we got to that range, yeah.

Yeah, remind everybody back early, really late 244, early 25, the city engaged uh GFOA to come in and do kind of a detailed analysis of our fund balance that said, hey, 10 years looking out, taking into account uh economic downturns, significant weather events, all sorts of things.

They they did this analysis and came back and provided this tool, and this is really where the policy recommendations came from was at their work.

And in their dis in discussing with them and also taking account this the state's recommendations and and general best policies, fund balance reserve should be around 17% of your revenue.

And so working with GFOA, if we set it at 17 and we hit one of these economic downturns, it's gonna go below that.

So based on the analysis they did, we came up, I think it was around 24%.

If we had it at 24%, it would give us an 80% confidence that even if we hit one of these things, we would not go below 17%.

You're never gonna get to 100% confidence.

You'd have to have way too much in reserves.

And so we kind of targeted that 80 to 90% confidence level.

Um and so that's really where the 20 to 30% came.

It gets us right in that 80 to 90 percent confidence based on the analysis that they did.

Um and so yes, that the rule of thumb is 17, so you you may hear that, you'll probably hear that.

Um, but the idea is you overshoot it a little bit in case you hit a COVID or uh or a tornado situation or something that's or a mass flood event or something that would take some reserves.

Um it'll keep you keep you above the line.

So that's that's where these these recommendations came from.

The number was from GFOA was kind of right in the middle, so we said, well, let's just do 20 to 30, and then obviously if you guys have thoughts on it.

Thank you.