Let me open tonight's town council work session of March 9th, 2026.

Our first uh item for discussion tonight is the proposed budget for fiscal year twenty twenty-seven.

Good evening, Madam Mayor and members of council.

I'm Samara Keyseker.

I'm your management and budget officer.

A number of different topics on the agenda for tonight.

Um we did want to lead off with a just a quick recap of some of the discussion from a couple weeks ago on general fund unassigned fund balance.

Um, and then Doug Wagner is here to go over the capital improvements program, Amy Wex for the utilities fund, and then we'll circle back to me uh for the initial budget markup.

So as I mentioned, we just wanted to have a quick recap of the discussion of general fund unassigned fund balance, given some of the council questions as well as questions from the community.

Um we did want to just highlight again 30 point six million dollars of unassigned fund balance as of June 30, 2025.

Um that was about eight or nine months ago.

So when we talk about unassigned fund balance, we do want to just keep in mind that that is um rear view facing from a budget since we are talking about fiscal twenty-seven, we do try to look forward and understand what the balances will be at the end of the proposed fiscal year.

This table, again, it was included in your FY or your February 27th packet.

It just summarizes some of the uses that are before you as part of this process.

Um, we also wanted to acknowledge that the council typically uses between one and two and a half million dollars of unassigned fund balance in the budget each year for various one-time purposes.

When you consider that, there's about five million dollars in unassigned fund balance that could be programmed this year and next budget year.

The same decisions you'll be making about a year from now.

Um, and if you consider that your unassigned fund balance would be forecasted at about 25.7 million dollars by June of 2027, so at the end of fiscal 27.

We often talk about the 20 percent.

That 20% is recalculated every year based on the general fund expenditures for that particular fiscal year.

So when we think about June 2027's unassigned fund balance, that will be based on that 20% threshold will be based on 2027's expenditures.

So that that line kind of keeps moving.

So if we think about that 25.7 million in the context of your fiscal 27 proposed expenditure budget, which is about ninety-four million, that equates to about 27%.

So we talked a lot about um unassigned fund balance a couple weeks ago and it being 30 million dollars equal to 39%.

But if you take that forward-looking approach, it suddenly looks very different.

When you take off that 20% policy minimum, you're actually only looking at about six to seven million dollars in quote unquote excess unassigned fund balance.

Um, a couple weeks ago about why do we have that excess?

Why do we stay above the policy minimum?

The question packet from the 27th did go into this a little bit, but I wanted to highlight a couple of different things.

Um again, that 20% minimum is the is that it's a minimum.

It's what we expect to need to meet the day-to-day cash flow needs of the town.

As you know, we have two big tax revenues that come in not evenly throughout the year, but in two big tranches during the year.

So having an unassigned fund balance of 20% really just helps you from a cash flow perspective.

Um, it also really just grants you the flexibility.

We often talk about that triple triple A rating as one of the reasons to keep it at 20% or potentially even increase it.

Um that triple triple A rating does kind of guarantee us those uh the best borrowing costs possible.

Lower borrowing costs means less pressure on the tax rate, less pressure on our community members to pay their real estate taxes.

Again, flexibility.

Just wanted to give you a couple examples of how you could or have used unassigned fund balance in the recent past.

So we've talked about stormwater a couple of times.

You did use one and a half million dollars of unassigned fund balance for for stormwater a couple of years ago.

We've also talked about the need to have a fee by July 1, 2027.

That's what's in your long-term sustainability plan.

Recognizing that's only 16 or so months from now, council may not be ready to do that by that time.

Unassigned fund balance could give you flexibility to bridge the gap until you're ready to have those kinds of conversations.

We also used it a couple times in recent years, including for the landfill fee waivers or landfill tip fees.

If you'll recall last spring, the contras and recycling contract came in significantly higher than anticipated in the 26th adopted budget, was about $300,000.

Instead of having to reduce expenses or identify other revenues, you were able to use unassigned fund balance to cover that unexpected cost.

You also used $100,000 of it for the Leaseburg Customer Assistance Program.

Things that you may have otherwise had to reduce services or raise additional revenues.

Again, thinking about that flexibility, it's there for the unexpected.

We're talking about the fiscal 27 budget, which is four to sixteen months from now.

I wish I could tell you everything that was gonna happen in the next 16 months.

So much has changed just since we proposed the budget.

Um it's for the unexpected, it could be weather.

We do have a snow contingency, but we could have a more severe winter than we anticipated.

You could have summer storms that create excess costs.

Um more recently, the tennis bubble collapse.

We were very fortunate that that bubble is back up, minimal loss in revenue, minimal disruption to services, but it could have been worse.

Unassigned fund balance gives you the flexibility in those unexpected situations.