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Sunshine Line.

He is has an excused absence today to help his daughter get moved in.

And uh Commissioner Wussel is joining us uh via Zoom.

Before introducing our county administrator for opening remarks, I would like to remind everyone that this is a budget workshop, and as such, there will be no public comment today.

The public will be able to comment during our July and September budget public hearings.

Also, as this is a workshop, we will not be taking any votes today.

With that, I will turn it over to Ms.

Bonnie Wise, our county administrator for opening remarks.

Thank you.

And I will keep my comments brief today because Kevin does have an extensive presentation for you all.

We're going to um talk about the delivery of the fiscal year 2027 recommended budget.

That budget will be presented to you at your July 15th regular board meeting.

And you also may schedule other workshops if you'd like, and if you could um provide some topics if you would like anything in particular discussed.

Because those are the two where the board has the most discretion in your spending.

So with that, I'm going to turn it over to Kevin to go through the overview.

Good afternoon, Commissioners.

Kevin Brickie Management Budget.

Uh, today we'll uh do an overview of the budget, look and look forward.

Uh our budget and our budget process continues to be uh monitored and reviewed by a number of different uh entities and agencies, including the uh government finance officers association of America, where we've received the uh Distinguished Budget Award since 1986, as well as the three credit rating agencies, uh, where we have had uh a triple-A rating from all three agencies uh for a number of years now.

We also have uh oversight and transparency uh uh requirements from various local, state, and federal agencies.

And as a matter of fact, the state legislature passed legislation to increase some of our oversight and transparency requirements that will be effective January 1 and mainly impacting our FY28 budget process among some of the things that this new legislation does.

It increases the amount of time that we'll need to have our final public hearings in September advertised to the public to give them more notice, increases the time from two to five days before that period, increases the amount of time we need to keep budgets posted on our website, which we already do.

Increases the number of schedules or information on the budget that we need to uh post, which we we do.

We just may need to highlight it some more.

One thing that is different that this legislation will require is that uh the county must hold a budget workshop at least 14 days prior to the final adoption of the budget to perform a budget reduction exercise to identify a potential 10% uh reduction in the upcoming budget.

That would uh begin again for FY28, and we would need to uh uh comply with that and uh determine how to move forward with that.

Uh we need to have our budget calendar on the web.

We do have a budget calendar, we'll be highlighting that more, and uh some other changes as I said as to the information, the budget information that would be on the website, as well as some changes that were in that uh statute regarding uh planning and impact fees.

Looking at our current budget, we continue to uh focus on a number of budget guiding principles.

Of course, uh the board must adopt a budget balanced budget, but we strive to adopt a structurally balanced budget where our ongoing expenditures are funded by ongoing revenues, not by uh one current not by one-time revenues.

We look to use restricted funds before general funds when possible.

Maintaining uh general fund reserves at the board policy of 20 to 25 percent, which also uh supports the uh triple A ratings from our credit rating agencies, prioritizing public safety, maintaining assets and current service levels, uh investing in our employees, and identifying deficiencies in the budget process.

In FY26, the total adopted budget is just over 12 billion dollars.

Uh 3.3 of that is in the capital program, uh, and 2.

Uh six of that uh is reserves.

Uh we see transfers, which are accounting uh mechanisms, our general funds uh 1.6 billion dollars.

Our total operating is about 4.1 billion dollars or 34 percent of the budget.

And this slide looks at that operating, that 4.14 billion dollars.

Uh in this, one can see that uh sheriff enterprise funds, which is uh our water and solid waste operations, our health care services, uh, fire rescue, uh, that's 51% of the total 4.1 billion dollar operating fund.

Uh sheriff and fire rescue, so broadly speaking, uh public safety is 24% for public safety.

Turning to those areas where Bonnie mentioned where the board has the most discretion, our two general funds, our countywide general fund and our unincorporated area general fund.

I'll remind you that our countywide general fund funds services that are provided by you to all uh citizens and businesses in the county, whether they're in the unincorporated area or within the city.

Uh the op the operating millage for FY26 is 5.4608 mills, which is about $1,638 on an assessed home value of $350,000.

Human services are included, economic development, medical examiner, pet resources.

Those services are provided across the county, including within the cities.

And when one looks at the countywide general fund at 1.6 billion dollars, reserves are about 324 million dollars.

One looks at the operating functions, about 56% of the countywide general fund is to constitutional officers and outside agencies.

Turning to the unincorporated area general fund, this is where you fund services in the unincorporated area only, similar services to what a city would provide within its own borders to its own residents.

The operating millage in the unincorporated area is 4.6163 mills, which is about 1385, 1,385 on a home assessed at 350,000.

That millage continues to be less than the three cities, which ranges from 5.7 to 6.45 mills.

The types of services, again, these are the types of services a city provides on its own boundaries, fire rescue services, sheriff, which means primarily patrol law enforcement type of operations, public works, parks and recreation.

And when we look at that unincorporated area general fund, it's about 900 million dollars, and about 66% of that fund funds fire rescue and sheriff public safety again.

Turning towards our capital improvement program in FY26, again, it's about $3.3 billion.

Half of that is in the water enterprise.

As you know, uh the one water project and projects, I should say, uh, are uh coming on uh line and very important and very large.

Transportation is second at about 22 percent.

Speaking of transportation, uh the board has increased its investment from the general funds in CIT and transportation in recent years.

Uh in FY24, it was 50 million dollars, and FY25 119, and in FY26 increase to 137 million dollars from the general funds in the CIT.

Uh within the CIT that was approved uh the the renewal, the extension, uh that future CIT has identified about 1.3 billion dollars in transportation projects as well over that 15-year lifespan.

Another area uh that's not included in that table is the $28 million in road resurfacing projects associated with uh the dollars from the invalidated transportation surtex in FY26 that $137 million was uh in a number of places, resurfacing, intersection improvements, sidewalks, bridges, and guardrails, uh looking at those assets, preserving those assets, as well as Lithia Pinecrest and Van Dyke improvements.

Looking at uh county administrator positions in FY07 there were about 6,600 uh county administrator positions in FY26, that number is 627, uh still down about uh 5% or down 326 positions at a time when the population over that period grew about 32 percent.

And in the the fire rescue is the area where in recent years there has been increases in county administrator positions.

Uh we have had uh 393 in positions added since FY07, a 42 percent increase.

That's indicative of the board's investment in in new fire stations and public safety.

So netting out uh fire rescue positions, uh the county administrator uh positions are still down about 719 or nearly 13 percent since FY07.

The county administrator positions are still down about 719 or nearly 13% since FY07.

Looking at general fund reserves, again, this is the area where the board has a policy that the combined general fund reserves will be between 20 and 25%.

That certainly helps us with being able to respond to unexpected items, but also to support that triple A bond rating, where our credit rating agencies do look at or look for reserves in that area.

In the past couple of years, we have our percentage race ratio peaked at about 24% in FY06, FY26.

We're at about 23.8 uh 23.5%.

Countywide does uh shoulder a little more of the burden, 25.3%, unincorporated 20.6 percent.

Uh revenues.

Revenues in FY26, adopted revenues are 4.5 billion dollars.

Uh ad valoran property taxes are one nearly 1.6 billion dollars or 35% of that total.

So property taxes are a very important and large revenue.

The others are relatively uh small.

Which brings us into looking a little bit at taxable values, which uh uh taxable values combined with your millage rate uh sets uh property taxes.

Um we did have some relatively rapid growth a few years ago, about 23 and 24, where we had 11 to 15 percent growth.

It has been declining in recent years.

We've been at about 6.8, 6.9 for the past two years, as interest rates, mortgage rates had been high, the economy slowed prices were a little bit high on uh houses, and that reflects in that slower growth in our taxable values, which translates into slower growth in property tax revenue.

We expect that uh downward trend to continue uh perhaps in the round the four and a half percent range, and I'll talk a little more about that in a few moments.

In FY26, uh looking at our general funds, uh property tax revenues about 1.47 billion dollars.

Uh, when we look at the general funds and look at public safety and other elected officials, um that budget is about 1.1 billion dollars or about 75 percent of the total property tax revenue uh for those two funds.

In the past few years, the board has uh uh adopted uh and enacted um a millage slot between the countywide fund and the unincorporated fund.

You'll recall that uh our unincorporated fund is where we were having more difficulty uh and challenges uh with uh the budget, uh balancing the budget and looking at rapid growth in that area and the rapid increase in service demands.

Um last year uh the board uh the recommended budget included a 0.1 millage swap.

The board uh actually did a 0.1418 millage swap, and that has shored up the uh uh financial uh confidence within within the unincorporated fund.

And those millage swaps uh result in uh a decrease in uh revenue in the unincorpor in the countywide fund and an increase in revenue in the unincorporated fund.

Uh for about a dollar uh decrease in the countywide fund, it's about 60 cents increase in the unincorporated fund.

So it is essentially a reduction in millage within the cities and a net zero change within the unincorporated area because the unincorporated area, countywide millage goes down by say 0.1, and the unincorporated millage goes up by 0.1.

That's about a $30 uh difference uh for a city homestead assessed at $350,000.

So looking ahead at uh FY27, that is the second year of the biennial budget.

You'll recall last September you adopted the FY26 budget and a planned FY27 budget.

Our two-year process.

And so the intensity of the process is a little bit less in the second year, as you already have a planned budget, and we build upon that.

As we look towards FY27, realizing that there are challenges out there.

There's the possibility of property tax reform still out there.

We are looking at limiting new positions funded by the general funds, strengthening the general fund reserves, investing our additional revenue and one-time uses as opposed to ongoing uses, which would be could perhaps be impacted by some form of property tax reform.

Implementing a third millage swap, we do believe that the countywide general fund could absorb another millage swap.

We'll continue to reduce nonprofit funding as per the board's policy.

We look at capital improvement projects to see where there's potentially no longer fit with board priorities.

And you've been seeing agenda items come fairly regularly on that topic.

So let's take a look at the FY26-31 Proforma.

The Proforma is built in such a way that it doesn't assume too many changes.

It looks at where we are now, what our practices are now, what uh policies are now, it doesn't presume too many uh new decisions.

Again, uh we are looking at property tax uh values uh continuing to grow at a slower rate, uh perhaps 4.5%.

Um that could prove to be uh uh a little optimistic this year.

We'll see.

Um we would uh look at uh slightly higher uh rates of growth in the later years, looking at fairly flat sales tax-based revenues, and again uh keeping in mind the possibility of uh property tax reform.

If the legislature were to pass a joint uh resolution uh at a special session now, uh the referendum would occur at the November 2026 general election.

It would need 60 percent to pass.

It would be effective January 1, which means that it would impact our FY28 budget.

But as we look at that, we know that we need to uh be prepared for that even as we look at the FY27 budget.

Uh expenditures in the Proforma are modeled to generally rise at uh the 20-year long-run average annual uh rate of combined population growth and inflation.

We're modeling personnel costs similar to recent years, and we're modeling uh transfers to capital and disaster funds at slightly more modest paces as we expected in the last couple of years.

So when we look at these numbers, uh we're looking at uh cumulative uh uh surplus or deficit over five years.

Um in this case, uh the baseline, uh the un the countywide fund over five years is in surplus, the unincorporated fund is in deficit.

I think the actual numbers are not necessarily the most important thing, it's the direction, it's the indication.

It's uh gives us some sense of where we are.

And the sense here is that yes, the unincorporated fund still is our more challenged fund.

If we were to, and as we planned in the recommended budget to have an additional 0.1 millage swap, uh we see here that does indeed again shore up the unincorporated fund while showing that uh uh the countywide fund can absorb that uh over that time period.

If we were to, and as we planned in the recommended budget to have an additional 0.1 millage swap, uh we see here that it that does indeed again shore up the unincorporated fund while showing that uh uh the countywide fund can uh absorb that uh over that time period as far as property tax reform uh if it uh comes this year or perhaps in a future year uh this slide looks at the possible impact uh during the regular session House Bill 209 uh attracted quite a bit of attention where it would be an additional where it's it started out as an additional 200,000 dollar exemption that would have a a large impact uh in beginning in FY28, uh countywide it'd be a loss of 217 million dollars, and unincorporated would be a loss of about 143 million dollars.

So, of course, over uh that five years without some changes, it would be a deficit.

So that certainly indicates that we would have to make adjustments, uh some rather significant adjustments under that scenario.

But looking at another scenario that's uh perhaps uh uh a smaller impact if there were uh a property tax reform that were to increase the homestead exemption another $50,000, that would be a more moderate uh uh type of impact, uh about $79 million impact on the general fund, uh $49 million impact on the unincorporated fund.

And you see that yes, while those two are in deficit, the deficits are much smaller, indicating we would uh uh still need to deal with it, but it would be uh uh not as uh severe of an impact.

And then finally, the budget calendar, which uh many of you, all of you are pretty well familiar with with the flow.

Uh uh we have our budget uh workshops in April 28th, I mean April 22nd today, of course, our budget overview um and uh looking at the various uh aspects of the budget, including capital.

And as Bonnie mentioned, the board uh can certainly have additional workshops if desired.

Uh as we move into uh June and July, we'll look for the property appraisers ad velorum estimates, taxable value estimates, the early estimates come at June 1, the preliminary certification comes at July 1.

Those are the ones that actually go into the adopted budget.

We'll have a better idea of uh of where we stand with uh taxable values.

Uh budget delivery will be uh July 15th at the regular board meeting, followed on July 29th by the budget reconciliation public hearing where we'll look at uh uh the truth and millage, the those initial actions uh with a millage rate, the flagging process, and our final public hearings are in September.

September 10th will be the uh tentative budget and millages, and on September 24th, two weeks later, uh you will adopt the uh final budget and final millages.

And with that, I thank you for your attention.

Thank you very much for that presentation.

Um we will go into board discussion at this time.

And I see Commissioner Bulls, you recognize thank you, Madam Vice Chair.

Uh couple questions for you, Kevin.

Uh we'll stick with the last part because we just finished that.

When we're looking at the pro forma for the expected um losses, let's call it because it looks like there's a lot of blue below the zero line.

Do those anticipate the uh the swap as well in that so or is that do they stand alone?

Very good question.

Those stand alone.

Okay.

So uh within those two examples of of possible scenarios of property tax reform, that does not include that initial millage smaller.

Okay, so there could be uh a gain of sorts, yeah.

The the blue could get smaller below yes, sir.

Okay, in that and when these as well, I know that some of the the bills have carved out, and I'll just call it public safety, police fire, EMS, that kind of stuff.

Do any of these is that carve out kind of off the top?

And is the numbers affect that millage that changes it?

Do you see you don't talk about you?

Yes, uh some of the proposed uh tax reform bills uh did include the expectation that a local government would need to uh reduce their budget and that uh public safety items would be excluded from that reduction.

Uh within the pro forma here, uh the pro forma doesn't directly address that, but we know that uh uh if that were to be included, then any any reductions that might be necessary would have to fall disproportionately on other types of operations.

Yeah, okay.

So speaking kind of generally, you could there still would be some type of millage, more or less associated just with the public safety factor.

Uh because you you got to collect the tax somehow.

Right.

Not not not directly.

Um I suppose one could back into that, but it's it's not a direct correlation, but but but those do those bills often do include that exemption.

Yeah, yeah.

And I was just curious if this any of the numbers here reflected you know the zero line, if it those were reflected in that not directly.

Okay.

And this is just a semantic thing.

I was just curious.

At what point do we stop looking at 2003 or 2007?

When when we're looking at our timelines, why not go back to 1974?

I I don't know, I'm just picking up a random why are we using those?

Is it because of the Great Recession that we're using it as a benchmark for this huge dip?

Yes.

And that but when we stop using that, you know, because it looks like I don't want to say excuse it, but it certainly looks like oh my, it's an oh my G, you know, moment, and then but we we are growing, so when you go past that, we certainly are growing.

Right.

Regardless.

I I would imagine when we had 30 years on there, we might want to be moving the posts a little bit.

But yes, I think what it is is it makes sure that uh uh we recall that um there was that dip, it can happen, it's rare.

Right, okay.

All right, thank you.

I appreciate it.

Commissioner Myers.

Okay.

Thank you, Madam Chair.

Okay, I'm just a couple of uh questions.

And it's a if uh, okay.

If property taxes were to pass, what services would we look at to be cut?

Do we have any idea?

I mean, Bonnie, you can maybe help us with that.

Sure.

Um I I generally it would have to be things from the general fund and going to Commissioner Bowles' question.

If public safety is protected from that, but yet we have to cut a certain amount, it has to come from the other areas that are not public safety.

So whether that's parks or transportation or other areas, um human services, they would be cut disproportionately if that should happen.

Now we um you know from what we're hearing, we are hopeful that it won't be quite a 200,000 dollar additional homestead exemption, maybe something more moderate.

Um, but we would have to analyze that accordingly.

And I appreciate you answering that question just for the viewers or the people that always ask me what is going to happen.

So I know they're listening to the workshop um today.

And then the uh because I have a couple of more.

Regarding our CIT, which we know takes effect on December 1.

Do we have any idea of the dollar amount we are projecting and the new projects that we are hoping to be able to provide to our constituents since in 2024?

We ran on that and uh we told them we were going to do improvements in our infrastructure roads and all of that good stuff.

Do we have any idea of a dollar amount?

Um that would take a coming effect next year funds raise the CIT.

The the tax in in that year will will likely garner somewhere upwards towards uh 200 million dollars.

We that would be shared out.

Uh the school board gets five percent, then it's shared with the cities.

Uh the uh county gets approximately 72 percent of that.

Uh it would be for 10 months.

Uh and then uh the board has approved a eligible list, and some decisions would need to be made uh at an appropriate time.

Okay, so in other words, we'll come back to this this board to make those decisions on the revenue that would be projected and that we will receive.

Okay, and then my final question, it's on from page seven.

When we say uh invest in county employees, uh what do we mean?

How are we going to invest in the county employees?

I think in investing in county employees is is recognizing that uh there are other opportunities and that uh we do uh uh want to retain our county employees who we have uh trained to uh serve the public and that we recognize that uh uh wages are rising and that we would uh continue to um pay attention to such issues so that we can retain workforce.

Do we have a raise in the budget going in next year for our employees to receive a raise, the salary increase?

Right.

So that would uh be part of it too.

Um coincidentally, we were just over at the sheriff's office this week, and we were speaking about this too, especially in the sheriff's office, because where they are seeing some losses of employees at their early stages because they want to have you know good wages for their sheriff's deputies, because what they were finding is that people were staying for just a few years, we were training them and they were leaving, and that's very expensive.

And it would be the same thing for our own county employees.

We want to make sure that if we're investing in them, that they stay with us.

So it would be um their wages, their other benefits as well.

Okay, thank you.

Uh Commissioner Wistel, you're recognized.

Thank you.

I just um I wanted to thank you guys for highlighting that our growth is staying relatively flat, um, not only in the property taxes, but also in the sales taxes, um, sales taxes perhaps not even meeting previous years, and I think that's a that's an important um variable as the word excess continues to get thrown around about that sales tax.

I also want to um I saw a bullet point in there about how you guys are focused on spending um growth, quote unquote, on one-time dollars rather than um prematurely permanently increasing our bottom line.

Um I think that that's um I think that that's very astute for the potential future that um we're we're gonna be facing in in my opinion about a potential some type of depression.

So I um I would also like to see what Commissioner Myers brought up, particularly with Lithia Pinecrest.

I would I would like to know when we're gonna start talking about the necessary bonding for that very large project that was advertised to everybody.

I think the sooner that we get on top of that the better.

Um I I believe I I heard of uh another um delay in that project that I'm still researching as to why.

So I think that um it was a good presentation though, and I think that everybody needs to be cognizant of the fact that growth is flat um and potentially declining, and that we are facing the looming um uh constitutional referendum in November about property taxes.

So thank you.

Anyone else?

Seeing no one else in the queue, we are adjourned.

Thank you, and we have to do that.