Today is Tuesday, July 21st.

We're here for the finance strategy session number two of the Copwell City Council.

We do have a forum present, so I'm going to call the meeting to order.

Our first item is citizens' appearance.

We did not have anybody signed up to speak.

So we will move on to item three, which is an introduction and overview by Ms.

T and

Thank you, Mayor.

Good evening, Mayor and Council.

So this evening is our, as the mayor mentioned, our second financial strategy session.

Last week we provided you with information and you shared feedback for the special revenue funds and the water sewer fund.

And tonight we'll share information and seek feedback for the general fund and the debt service fund.

We will also share some very preliminary information concerning assessed valuations.

But before we dive into those topics, I'd like to share a few highlights that you're going to hear this evening.

So the first is that the financial information you'll see this evening does provide a balanced budget or a balanced forecast.

So the operating revenues and the operating expenditures due balance.

Tonight we will also share how services will look different based on some data analysis that shows a change in service demands.

Next, the information provided this evening includes the direction provided by council during the February council retreats.

Specifically, the direction provided was to continue to assume that the sales tax rule 3.334 is in effect since litigation continues.

And you're going to hear more on this as we walk through the general fund forecasted expenditures.

So

based on the direction and the use of revenues and expenditure strategies, staff is providing you with general fund operating expenditures that are 3.33% over the current year operating expenditures.

And as we cover expenditures, please remember that operating expenditures exclude the one-time transfers and the one-time uses of fund balance for items funded from the assigned fund balance of the general fund.

For example, you're going to hear about a one-time transfer of almost $5 million from the general fund to a proposed new public safety replacement fund.

You will also see the inclusion of the cost of the 20 some 2040 initiatives that are shown in the council's vision 2440 work plan for fiscal year 27.

But before we move on from this topic, I would like to take a moment or to make a couple of additional comments.

And the first is that the increase in CPI from May of 2025 to May of 26 was 4.2%.

And the general funds forecasted operating expenditures that you're going to see this evening are only increasing 3.33%.

So that's less than inflation.

And this modest increase demonstrates the fiscal stewardship and the use of strategies mentioned during the five-year forecast presentation that was made in May by the assistant directors to council.

And so specifically,

you

might recall seeing this slide.

This limitation that doesn't even cover uh inflation causes the gap between revenues and expenditures that's shown in this slide.

And

so if you recall when it was presented, um we shared that the red the red bar is the anticipated expenditures over the next five years.

The blue bar is revenues based on property tax revenues increasing by 3.499%, and then the the gray bar is just maintaining uh property tax revenue flat, so no increase.

Now the yellow is the gap that's identified.

That's the gap that is uh created by some legislation in Austin that is the difference between the expenditures that we're forecasting and the revenues that were forecasting.

And

what I'd like to point out is this slide was shown to you during the five-year forecast, so it did show that we still had a gap.

The assistant directors did work through some uh some strategies and they were able to limit the gap to here.

But tonight you will the revenues and expenditures that are forecasted, that gap has been closed, and it's been closed by using the strategies that are shown on the other side of the screen.

So that really concludes my introductory comments, and I'm happy to answer any questions regarding what I've covered.

But if you have specific questions related to revenues or expense uh or expenditures, um we'll cover those when we do those presentations.

And

if you have no questions for me, I'm gonna turn it over to Kent.

Uh

Kim, hang on a minute.

Thank you, Mayor.

Um, the very last bullet uh you have the um so starting this year, we're going to recognize actual sales tax over budget budget.

And it so this is um going to have the 3.324 assumption in place.

So um so let me clarify so it's not real clear.

So the revenue strategies are the consultants, right?

And then the other is that revenues used for one-time costs, and so that is the one-time cost is the actual sales tax over budget.

We are still budgeting, or we would still forecast based on the the change in the rule.

This is just telling you that anything that's over budget would be used for one-time cap cost, and that means that we're not building that into programs and services for revenue that could likely go away.

Okay.

I'm trying to decide if I want to ask a question now or later.

When we've done our five-year forecast in the past, we typically show an increase in the well, this was before the 3.5% limit.