We have a short agenda.

We're gonna have our labor market analysis.

I know there was some questions we had for HR last week, and they weren't they weren't here.

So if you have any more further questions, they're in the room that can assist.

And then we're gonna have the our financial people go over our 27th preliminary general fund budget.

And it's just to give a status of where the city stands, and then we'll pass it on to you, and then we'll set up a date for our next meeting.

With that, I'll pass it on to Monica.

Thank you.

Um good morning.

I apologize for missing last uh the last meeting, but I'm here to answer some of the questions that arose in that meeting.

So we'll get um my goodness, excuse me.

Okay, we'll start off with um acknowledging that there are regional differences in the labor market.

So this uh slide shows uh El Paso's overall cost of living.

Um it shows that it is the lowest of the market cities listed, and the market cities that are listed are the ones that we're using for our compensation benchmarking.

Um so El Paso when you look at housing costs, consumer expenses, regional labor costs, they're generally more affordable in El Paso compared to the larger metroplex cities that you see listed.

And the data is sorted by median household income, um, highlight that the data that is being represented here is of 2024.

Um geographic adjustments help create a more equitable apples to apples comparison.

Um then the objective is to understand the competitive positioning while recognizing El Paso's local economic conditions.

So how do we get to the to the data and adjusting the data?

So we use the Economic Research Institute and the ERI platform, and we use the data there to calculate our average local index for each city listed.

And so you see here on this screen, I'll take for example Austin, Texas, is the first one listed.

Um the average local index for Austin is 1.21%, or 1.210.

What that means is that the compensation or the compensation is 21% higher in Austin than it is here in El Paso.

And so if you go down the list of that local index, you can see that we're benchmarking with El Paso.

El Paso's one, so El Paso is 100%.

We're basically um comparing the costs to El Paso.

So the geographic adjustment allows compensation data from different cities to be evaluated on a more equal basis.

The process accounts for differences in cost of labor, cost of living, and purchasing power.

Um rather than comparing Phoenix or Austin salaries to El Paso salaries, the data is adjusted to reflect what those salaries would be would equate to within the intent to better understand the market competitiveness.

So here's an example of the market data collected.

You've seen this, probably ad nauseum.

Uh, but this is our the current fiscal year 2026 data, and you see here El Paso uh the geographic factor or the index if you want to refer to it that way is one.

So we're we're comparing all the other cities to El Paso, and what I want to say here is that adjusting the salaries is a more balanced and defensible compensation strategy that aligns with both the fiscal stewardship and labor market competitiveness, which is what we want to achieve.

There was another question that was asked in the last meeting with where else is ERI used across the city, and so currently, as of right now, it is being used for the police union data or information, but we don't use it for non-uniformed positions, and I'm gonna try to explain the differences.

Uniformed positions often or they do operate traditionally on a step plan, and where the employees progress through the plan, the compensation plan, through determined salary steps.

So you the step plan represents actual salaries of the uh uniform uh personnel, and um, so in essence, the progression of the steps or the market analysis of the steps focuses on actual salaries, what these ranks are being paid out by these other cities, actual salaries in non-uniformed positions, we typically or we do evaluate um in a different way.

We look at internal alignment, we look at grade placement, where that position slots in what grade, and we also look at compression because that's very important here at the city of El Paso.

We don't want new hires earning more than established or seasoned employees.

So when we look at, and I'll flip over, no, that's not what I want.

So when we do a market analysis on non-uniform positions, we traditionally look at the minimum of the grade.

We don't look at salaries, we look at the minimum of that position's grade, and then we also is important to know we lag market, we don't match market, we lag it, and it's to um reflect the lower cost of living of El Paso and our market conditions.

So when we do the analysis, we look at the minimum of the grade, and um then we slot that position into our current established um pay scale, which is not a step plan.

It's it's a more of a grade plan, and lastly, I do want to highlight that um that there are positions where we do match market, and that's because the supply and demand pressures influence our compensation strategy, obviously.

So if we have fewer qualified candidates available, and multiple employers are looking for that candidate, then the market compensation increases so that we're able to remain competitive and fill our positions.

So if that makes sense, hopefully I've explained certain things.

I see, Chief, you're gonna jump in.

If I can add like on that specific uh example right there, she was talking about veterinarians.

We've been we've been looking for veterinarians for years, and the so is the entire country.

And so we can't be competitive enough with the private sector.

And you've got these big national chains that that have veterans in their stores now, and they're they're giving them sign-on bonuses, they're paying their and so it's that thing is we're always constantly looking on how do we, you know, we have some of those we have to push up.

There's no compression issue because we don't have multiple veterinarians, you know, on staff, but that's some of the examples.

I'd say at this point in time, if you have any questions before we move on to the financial side with HR, feel free to ask your questions now.

Good morning, Jesse Eschline, Vice President.

Can you go back to the first slide for me?

Oh, I'm using the right.

Yeah, Skyway.

Uh one more, I'm sorry.

The one that shows that one perfect.

Uh first, uh, if you guys find a house for 180,000, uh, today's market, please let me know.

That's a median.

Let's so it it does look, it does look really low, but I will tell you it's data from 2024, and it's not the average, it's the median.

That's a statistic that is being replaced.

So I'm just I want to be fully transparent.

Well, just you know, point of personal clarification on this.

Uh we have the average of one percent, 100, however you want to say it.

On that list, we are the lowest.

Yes.

So we're ranked number three on there, but we are the lowest, correct?

We are the lowest cost of living.

Okay.

Yes.

All right.

And then uh just want to get clarification on that.

Uh you say ERI, uh, I believe it's NPD's contract, correct?

That's in the agreement with them that they will use it.

It is, it is.

Okay, so it's required through PD CBA, not required through ours, because it's obviously the first time we've ever seen it.

And then my last question for personal clarification is high demand jobs.

Are we saying that we're not a high demand job?

I guess my question would be do we have issues in recruitment?

So we can, I mean, we can go back and forth that all day.

Um we always fill our applicants, right?

I believe what was the Randy can probably give me a better number on this, but let's just say we get 500 applicants.

Out of that 500 applicants, we might get 70 people that are qualified.

Out of the 70 people that are qualified to go through academy, we might graduate 50.

We have some updated numbers.

Um we're starting to see an increase of people leaving for higher paid departments.

Now it's not massive numbers, but it is starting to happen.

So that's why I'm starting to ask.

Are we not considered a high demand job?

You know what I mean?

I think it would be.

I don't think it's that.

I and so we I kind of anticipated that was gonna be the point that you all made it, and that's not the point at all.

We all highly value, we know the the things that we're trying to do to recruit and retain firefighters, just to be clear.

The point of that last slide was that we want to be very clear is that one, we very rarely do those market studies.

Very rarely do those market studies for our non-uniformed employees, but uh there are situations we want to be very clear.

There are situations when we have hard to fill positions.

Veterinarians are the perfect example.

We've got a few others, they're very few and far between that we had those type of situations, and you're talking about maybe a handful versus almost a thousand, big difference in the in the volume of positions we're addressing.

So I don't want you all to take that as as the point of that slide.

The point of that slide is to be very clear.

Is this one market studies are very rarely ever done, but when they are done, it's on those very, very hard to fill we'll put out a slow recruitment for a position and we get no applicants.

That's assigned to us that we need to do something to change to be more competitive.

I think that came about from a question last meeting where you specify someone specifically asked, are we doing those types?

And so we want to explain when we do do it.

It's not that we don't, but it's very specific times.

Right, fully transparent, right?

I don't want to stand here and say something that is incorrect, so that I felt that I needed to communicate that there are instances, though far and fewer between, they do exist.

Alright, and then I have a few slides here, so I'm sure you all know it.

Fortunately, you may have seen some of us on the news.

So we did budget presentations all week to the city council.

We spent a day and a half going through every city department talking about some of the challenges and some of the things that we're facing for next year.

So next year's budget is very, very challenging, a little bit different and unique than what we faced in the past.

Decrease in revenue is really really impacting not only the city of El Paso but just statewide, based on some changes from what was approved by the voters back in November to provide some additional tax relief for businesses.

You add on top of that, the second point there on the reduced revenue availability or authority, and so one of the challenges from the city side is in 2019.

So we have a cap on how much we can raise property taxes by.

One of the concerns that we have as we look to the next few years, we have another legislative session coming up next year.

We've already seen the governor putting out comments on five-point plans on things they want to do, not only on property tax uh limitations, but also looking at other revenue authority that the city has currently available.

So a big big challenge in front of us for the next few years.

So in 2019 and going back to 2015, 2017, all those years when they were trying to pass these property tax caps, every city's argument was our largest expense is our police and fire.

If we need to invest in those departments, state basically took that, ignored it.

Did so there's nothing in any of those property tax caps that excludes costs related to police and fire.

There's no credit, there's no nothing built into those calculations on those tax caps.

So you had on top of that, less revenue, and then on top of that increasing cost.

And so we know costs continue to go up every year, not only on labor for uniform, but also our non-uniform employees, and then everything else.

Our contracts, our materials, our supplies, everything's going up.

So just some of the things that we've done, one of the many things is we basically have unfunded just about every vacant position that we have for our non-uniform uh vacancies, and so basically 25% of our vacant positions will be able to be filled next year.

Again, based on preliminary budget, so we've got a whole other couple of rounds of budget workshops we'll go through with the council.

Nothing will be approved until August 18th, but it's kind of the position that we're in right now.

So I talked about the loss of essentially property tax revenue.

It's about an additional eleven million dollars of property tax revenue that we'll have next year.

So the voters approved a property tax exemption increase for businesses' personal property, and so businesses now get additional tax relief.

So the personal property and their business, the exemption of the discount used to be up to $2,500.

Now it's $125,000 up to.

And so that's based on every location.

So the example that we gave the council was, it's not for each business, it's for each of their locations.

So the example we gave was a McDonald's.

McDonald's doesn't get one exemption for up to 125,000, it's every McDonald's, and the city of El Paso gets up to 125,000 discount on their taxable value.

So that combined with our disabled veteran exemption that's provided, it's fantastic benefit for disabled veterans.

But that we continue to see less and less property tax revenue coming into the city.

Um increasing costs, and so we've got a slide I'll show you here in just a minute, but we know police and fire are the two largest departments where we see a majority of the increase in the annual budget.

Uh we're issuing debt next year, and so that's causing the tax rate to go up next year as well.

Um, I talked about the loss of revenue in addition to that loss of revenue from those exemptions.

We're also backing out the use of fund balance.

So the city in the past three years has been budgeting essentially using our reserves to balance the budget every year.

So that's not best practice, and that's not something that is sustainable, and so the budget for next year essentially backs out that one-time revenue.

Um, additionally, ARPA was fantastic while we had it because it let us do a lot of important things, including with uh the fire department, we did the CBA replacement and quite a few other things, but uh now that that funding is gone, we're having to shift police officers that were being funded through ARPRA back into the general fund, which has an impact on the amount of money that we have available.

Basically, property tax and sales tax are the two sources of revenue that we have to fund where we see the incremental growth.

Basically, all of our other revenue categories are either decreasing or basically flat.

So a lot of discussion.

If you saw media coverage, everything is about oh, the city's increase in taxes, average homeowner, 105 increase, and so our take has been: well, let's talk about where that money is going, the investment that we're making.

So this slide illustrates two things.

So one on the left-hand side, you see the breakdown of the available revenue, so property taxes for next year, about 328 million, police and fire, and then a small portion of code enforcement that's in the general funds, about 300,000 from code, but you'll see those uh costs for public safety at 371 million.

So when we go out and do community presentations, which we're gonna start this coming Monday, because we hear every time I do a meeting, even when I talk to family members, they're like property taxes pays for everything, and I'm like, Well, actually, it doesn't.

You know, property taxes is one source, it's the largest source, but it doesn't even cover our two largest departments in the city, and then you'll see the all of the other departments that we have.

So we do have in the budget for next year right now a tax rate increase.

Um, a lot of it due to what I just mentioned about that loss of revenue.

You'll see on the right-hand side, kind of the simplified list of some of the things that are impacting the available revenue for next year.

So we've got a loss of seven million from that business exemption I talked about, an additional loss of $3.6 million from our disabled veterans, which essentially all that means is they're paying less taxes, so that means less tax revenue that we're collecting next year.

Uh backing out that use of fund balance, as I mentioned, we had some additional one-time revenue, and then an increase in cost in our debt service.

So it's about $21 million impact that we're trying to absorb for next year.

While at the same time, the big challenge for us is so that left-hand little table there, basically it means we're going from $76 cents on the tax rate per $100 evaluation up to $78.3.

And so our concern in our approach is is that again we're limited by the state and how much we can raise property taxes by.

So it's a three and a half percent cap.

So that creates a challenge because again, as I mentioned, it doesn't say three and a half, but that doesn't include police and fire, so we have to look at it holistically as far as all of our city departments that we have for next year.

So that does create again some challenges that we're dealing with, and the cost it continues to compound, right?

And so it's been a few years now since that's been in place, but as obviously compensation has increased, the cost of firefighters has now gone up for not just firefighters, but the cost for all of our employees has gone up.

Those costs compounded.

So you're as you're giving pay increases every year, those impacts you know continue to compound every year.

This we just provided them to show them what that impact is by doing that increase on the tax rate.

This also reflects the change in the average value back to your point.

So the average value home next year's average value.

So this is again current data.

Whereas she was showing 2024, average value home is right now projected to be about 233,000.

And so the average uh tax bill is about 105.39 cents.

If you have one of those exemptions there on the second or third row, so if you're a senior, it's your homestead or if you're a disabled individual and you have that exemption, your impact's a little bit less, and then on average the disabled veteran.

Again, it's based on their disability ranking, and so I just took the average, and so their impact is obviously much less because the value of those exemptions has gone up from last year.

And then finally, obviously, nobody's thrilled that there's a tax increase, including us, city council, and so the city council did take an action yesterday at the end of the meeting.

Basically wants us to go back and find ways to find efficiencies or basically reduce cost, and so I mean, not surprised.

Uh, they got to hear from every department.

Every department presented four or five slides.

They got to talk about what's driving their budget for next year.

Uh, but the city council basically said we want you to go back and look and see what you can cut on top of what you already presented.

And so we'll do that over the next few weeks.

We'll come back on June 22nd, do another round with the city council and then kind of take it from there and see how the next couple of months play out.

So happy to answer any questions I mean I know we went through it pretty quickly but so we'd appreciate any assistance you all can provide at the next legislative session I mean I know that we've utilized Joe in the past and I know that you know watching every session you'll see mayors get up and they're talking about the cost of not just staffing but just the cost of equipment you know fire equipment we know is not not getting any cheaper and so that's that's something that we've been continuing to work with our we have a strategic and legislative affairs team in house to try to figure out how how can we build something in so that we do have more flexibility to be able to fund city services.

Did you all have anything you wanted to add today or any further questions?

No we didn't have any further questions uh for today.

No additions so if there was anything else that you have very good we're going through through all your requests and we're going through and I'm talking with Fire admin as well about it and uh doing some of the the what the language changes going to look like to make what you're asked for possible.

And so they're looking at the uniform policy and how we word that and you know the policy that's in there is an old policy so I completely get the confusion and we can we can change that we can clean that up so they're working on those things there's the committees we're working through those as well we'll have that back for you next meeting we'll come back and we'll give you those so you can look them over and make sure we're all on the same page as far as that and we can start going through those items one by one we've got you guys put in an excellent format for us so you you you titled it well health and safety one through five whatever and so we'll just bring it out in that same format and we'll start going through them thinking about a meeting next couple of weeks is tight we said the 15th it's a Monday that'd be possible to set our next meeting for the 15th at that time we'll bring forth like I said our responses to those those language cleanups and all the items you brought forth and so this way we can start going through them and then start moving some stuff to the completed sounds good.

Just one question on the healthcare information that we uh requested I know that we're still kind of waiting on that do we have any any further info there that's what I was just asking them.

So I did hear from I don't remember I think my consultant this week I think they're getting close it's just a lot of data for etna to pull through they're also looking at the method they're they're going to be able to transmit it because of the you know so much information and PHI.

One of the things they had gotten me the other day you know and it had like names so I sent it back and I'm like no it's gonna have to the names have to come off.

So they're they're working on it.

So I do believe that they're getting to the end so that that's coming okay thank you.

And if I can add to that I mean we we we looked at it we we looked at your proposal and what you're looking for you not it's just not just the data we want to agree to let's set up a committee and look at it over the next four years.

Correct so with that we'll be we'll be we can work through on how that information gets transferred over with without violating HIPAA as we're going progressing through that.

So we're also working on the language of what that committee would look like and you know we we talked earlier and it's like how often would we need to meet well depends you know once we get the data might need a few months and then there's other times where you not even more so we'll be we'll be leaning on how we set up that committee but we want to at least set the the basis to it so we know what we're all doing.

Sounds good.

So without any further questions any further comments then we will move to the 15th.

All right thank you.