Good evening and welcome to the force of the city board of directors study session on this May 12th of 2026.

These meetings are being televised for the benefit of our residents who can't be with us in person.

And with that, we will go to the first item on the agenda, Mr.

Damon, you're recognized.

Thank you, Mayor.

The first item tonight is the continued review of the city's fiscal performance policies.

The board discussed the general fiscal policies at the February 24th study session and then asked that an item be placed on a future study session agenda to review options to include a requirement for spending when reserve funds are in excess.

That is the discussion this evening.

Chief Financial Officer Andy Richards will introduce this item, review the parameters of the suggested policy, and address questions from the board.

Mr.

Richards, thank you.

In the packet, we included the fiscal policy as it stands, which doesn't have uh specific cap on what the contingency reserve could be.

Uh just sets it at 20 percent and below.

Um, I also attach the best practice document that was issued by the Government Finances officer Association.

That is the um that is the policy that our contingency reserve percentage is based upon.

Uh it's just set the best practice just addresses the general fund, but the city uses this percentage for all four of its operating funds, which I think is a good measure.

Um, it doesn't specifically discuss setting a cap.

It does this policy or this best practice from the GFOA does talk about um cases where there's a structural trend where we are accumulating more funds, and that uh you know a formal policy could address situations where structurally we're collecting more funds than we need, and so that's pretty the extent of what is discussed in the best practice document.

So, you know, just as a starting point, you know, in our in the memo, you know, I put out there to the board that um just as a beginning discussion point, you know, possibly setting an 80% cap um at two consecutive years or for the board uh needs to take action.

Um other thing I would mention is um, you know, having a capital or equipment replacement reserve in the general fund, which we don't we haven't currently been setting aside funds in that um in a reserve as our policy suggests, but I think that's because of the budgetary constraints that we've had um you know in the past.

So uh that wouldn't definitely be something that we would want to address if we continue to have uh excess funds above the uh required percentage.

I'll stop there and let the board discuss or ask questions.

Okay, thank you.

Director Christina Cassavage, you recognize.

Andy, forgive me, but I've never been under the impression that the city suffered from being overfunded.

That wasn't my impression either.

Okay, um, you know, what I worry about is that we're gonna get into a situation like we had where we had a really comfortable cushion in the general fund, and then it became this idea of we have to spend this money, and that led to the water slides, and that was the that was the argument for the water slides.

And then we spent all last year making budget cuts, talking about layoffs, trying to keep our head above water.

The only thing that I would consider if we get into a position where we've got excess funds, the only thing I would consider is for debt reduction.

So I know there were a couple different items offered, you know, maintenance and capital expenses, which capital expenses can be really broad.

I mean, the water slides were considered a capital expense.

The only thing I would consider would be using that money for debt reduction because you know, like I always say there's no future if we're drowning in debt.

I want to make sure we're on a really good financial footing because um, you know, we're at a really crucial point in our uh in our history and our time here with infrastructure and and a lot of things going on.

I want to make sure that um you know we're on a good financial footing before we move forward.

Thank you.

Uh Director Kevin Settle.

Thank you, Mayor.

Uh thanks, Andy.

Appreciate the thing.

This is something I brought up at the the idea.

And the idea was we collect sales tax, property tax, we collect taxes from the citizens.

Those citizens expect services from the city.

If we're not going to choose those services and we're gonna hold hold hold, then let's follow some other examples throughout the US.

Recently, Florida just passed where they're going to get rid of property tax.

To me, there's a limit that we should hold keep, and then where's a point where we got to give the money back to the people?

We talk about certain rates, certain taxes, property tax is one of those things that when your property gets valued higher, your taxes go up.

And so I mean this is discussion really about the general fund.

You know, water and sewer, you got you got all we got projects to do there, gasoline tax does a street department, and then you got the sanitation does the uh sanitation department.

To me, it's all about what I did want to happen is we get higher and higher hold hold hold and we don't spend it.

And so if we're not going to spend a certain threshold and use it for what the citizens ask to do, if it's police, fire, parks, whatever those general fund options are, then let's give it back to the people.

And that's the reason I want to put this in here.

Is because I think it should be a trigger point that says if we're above a certain level, we should reduce our property tax to get back to the people because there's no reason to keep collecting if all we're gonna do is sit on it.

And that was the purpose of this discussion.

So thank you, Andy.

Thank you, Director Neil Martin.

Yeah, so uh Director Settle brought up in that meeting, he brought up uh property tax reduction, and I feel like this is a way that we can get there if we can establish a threshold where if we're over that um we rebate that back to the citizens.

You know, we've our our citizens, the residents of Fort Smith have have had water rate increases, sewer rate increases significantly over the last 10 years from a sewer sewer standpoint.

If we can give the residents of Fort Smith some kind of break, I think that's helpful while those outside of the city um pay uh help pay for water transmission lines and things like that.

Um and I think this goes back to what Director George Kat Savis was saying a couple weeks ago regarding giving senior citizens a break on their sewer bill.

Even though this isn't sewer, can we give a rebate out of general fund dollars to every citizen, every homeowner in the city of Fort Smith.