You know what I'd be really interested in?

I'm sure you have it is the year over year percent change.

It makes sense.

We can get yeah.

So I'm so sorry.

So it's station.

Oh okay, okay.

Okay.

But there's also like 27 million in the T million cash.

Can you hear me?

Okay, we're there.

Can you hear me in the back?

You can Matt, you can hear me?

Okay, it's 1230, so let's go ahead and get started.

Welcome uh staff, all of our council members, we're all accounted for today.

Uh welcome to our 1A of our budget retreats.

So we'll start today.

I'm gonna you guys have a calendar in front of you or a schedule in front of you.

Um kind of rock and roll.

So I think the Dean, are you ready to go?

Okay, council members, just so you're aware, this is a recorded meeting.

So if you have questions, please you have to speak into the microphone.

So don't ask your question without not speaking into the microphones so that this can be okay with that.

Um Jason, I know has a microphone that'll be passed around the back in the case um that there's comments from the back.

So any questions?

There's plenty of food in the back.

There's drinks.

Uh there are planned breaks in here, so um we should have a successful session here as we work.

So Dean, with that, I'll turn it over to you.

Is the mic work in?

Okay.

All right, thank you.

Um what the main question on everybody's mind is what in the world hours, right?

In fact, I was trying to put together slides and I'm like, four hours.

So I actually broke them up like seven little sessions and we'll um put this together a little bit quicker.

So you see typos like five up there.

And I've got a lot, there's a lot of things in here, but if we want to talk more deep into anything, that's fine too.

This was just hard to put together just because it's so much, and I just trying to get what I can and we'll um go.

So our first presentation, we're just gonna talk about government accounting, which is like the most boring worst topic.

Mel's had my class.

Cameron's had my class.

Not necessarily the most riveting stuff, but Armin Allison, yeah, Carmen Allison are here to answer questions that I'm not I'm unable to ask or unable to answer.

So um Emily brought her ACFER.

All this an ACFR.

It's actually really what it's called.

Annual comprehensive financial report.

Um not that you need to memorize it or go in and highlight things, even if you but if you want to, you sure can't.

Yeah, not at all.

Um I just tell her I always joke that um my main job is to produce long complicated documents that no one reads.

So but I'm glad that I'm glad we have someone who's reading it.

Um but it is there's a lot of information, there's a lot of good information.

It's kind of duplicate information in some ways.

It's not just like we talk about different funds in different places and in different ways and um but if you're looking at this and just looking at the financial statements, and I'm just gonna pull these up so I have it as a reference as I talk.

Often we refer to government accounting as fund accounting.

And the main thing is is governments tend to do things for certain reasons, right?

We do uh water police, not because they're related.

Like if I own a business and I own a I don't even know, I'm building parts of something, and it might make sense for me to buy the business that sells the raw materials for those parts because it there's some cohesion there.

But governments, we do police, fire, water, parks, like we do all these things that have really no relation together.

If we put those all put all of those into one statement, it could be like maybe not very useful, right?

Because the way it's combined.

So when we refer to fund accounting, really it's just a matter of saying we have different functions that we do as a government, we put those in different funds.

We we accumulate them together in our statements as well.

But um, really we're segregating these uh activities into different things and making statements real uh directly related for them.

In fact, we even use different accounting standards for uh different areas of our financial statements.

So I'm gonna talk about two main categories we have.

We talk about governmental activities or business type activities.

If you look in your financial statements, going to reference those those terms a lot, and we treat those differently and we budget for those differently as well.

So let's talk about governmental activities first.

Um the question is I would ask is why do we have different accounting regulations for governmental activities or for governments than you would for a private business?

And the main thing I would say is up here.

So when they're publicly owned, right?

There's not a lot of times when we're putting together financial statements for private businesses, we're really interested in saying who owns what, and we have our equity portion of our balance sheet, and it kind of determines uh ownership and if the business went out of or if the business ceased to exist, who would get that equity, things like that.

But for governments, we don't have that, right?

They're publicly owned.

If and really a city's never gonna go out of business, so the equity portion is a lot different.

Um we also have non-revenue producing capital assets.

If I own a private company, I buy a machine or a building or a piece of property because I'm gonna use it to make money, right?

I'm gonna use it for my business.

Um governments, especially in our governmental activities, a road is a capital asset, it's an asset that has a life over many years, but it doesn't really produce revenue for us, right?

I guess unless you have a toll road.

Utilities are a little different because we have water infrastructure, but we charge for that.

But there's a lot of assets that we have roads, parks, uh civic center, things like that that they're assets to us, but they don't really produce revenue.

Um, the other one is is there's really no connection, no nexus between the revenues that we receive.

Well, well, I said that wrong, between who pays us the revenues and the services they receive in our governmental activities.

So you say we all use our police department, right?

But how many people have the police department come to their home during the year?

My fire may even be a better example.

I I'm very happy that we have a good fire department.

I live in Pleasant Grove, we have a good fire department there too, and I'm glad they're professional and know what they're doing.

But fortunately they've never come to my house, and I hope they never do.

And so there's drill, but there's no way to really have a private business that does police, right?

Because for two reasons, one is how would you bill that?

Because I can't like as a government, we can tax people and get money that way.

As a police department, would I send somebody a $50,000 bill if they if we come to the house, right?

I guess that's possible.

The other thing you have with police is they have the ability from the state to arrest people, which we probably wouldn't want to give to a private company.

Um then the last one is just the role of the budget in the whole thing.

So by and large, if I'm looking at an income statement, it is trying to get down to a profit number.

In other words, did I make money this quarter or this period or not?

That's really the main focus of those statements.

For a government, that's not the case.

If we brought in a whole bunch of money and didn't spend it, so we had this huge profit at the bottom, that probably doesn't indicate that we did a good job, right?

It means we're not doing the services that we said we would do, or we're taxing people too much or doing something.

So, what's maybe more important in these statements is that we can tell we budgeted things for in a certain way, have we followed that budget and and done the things that we we anticipated?

Um, so the services governmental, again, I'm still talking about governmental activities provide the term they use that GASB uses, the governmental accounting standards board is non-exchange, which simply means that if I go to a store and buy a candy bar, there's an exchange.

I give them two dollars and I get a Reese's or Snickers, right?

But with governmental activities, that just doesn't exist.

The money, the money we get isn't really related to the services that we receive.

And the example I always use is I should have mentioned I teach this with uh in the EMPA program at the BIU center, and so I've been through this a number of times, and so I get kind of interested in certain articles when they come through in the Desert News, and there's an article about property taxes, and the comment at the I read I was reading the comment at the bottom, and try not to read the comments at the bottom because I don't always like the comments at the bottom.

But um, this person said, I've you know, I'm being treated unfairly.

I live in Heber.

I have well, well, I don't live in Hebrew, I live somewhere else, but I have a second home in Hebrew, and it's not fair that I have to pay property taxes to pay for schools in Hebrew, and not only that, I pay a higher rate because it's a secondary, it's a second home.

So I pay more in taxes to Washington's county school district than my neighbor does who actually lives there, and that's not fair, and he's probably right, but that's just not the way taxes work.

The taxes are are put together by the state code, and it says we need to look at the value of your property, and it's gonna be assessed based on the value of your property.

No one has no one at the county has discretion to say, Oh, you're right, that's not fair.

We're gonna charge you less.

Isn't the uh division between a primary and secondary residence like in state constitution?

So this is the huge change.

Yeah, yeah.

So there's no discretion.

So even though he doesn't, this person didn't feel it was fair, and maybe they're right, it's just that's not how it works.

You get taxed based on a formula, and that money goes over here and provides services, there's not a connection.

Um, and then I would just say the lack of a general business model that works.

I mentioned police or for fire, maybe there's a way to make that work, but you know, think of like a public park, you know, you charge people to go to a public park.

I guess you could.

Um, even like the the community outdoor swimming pool.

So I grew up in Pleasant Grove, right across the street from our little swimming pool that was much smaller than it is today, and it was great.

And as like a lot of kids, you get this annual pool pass, and when your mom's sick of you, she tells you to get out of my house and go to the pool, right?

Um, but if I were to say, if I were to start a business and say, I'm gonna build a swimming pool, it's gonna be open for three months.

I'm gonna get this many people, how much would I have to charge to make it make it pay for itself?

And if I added all those people up, I said, okay, well, it's $30 a person.

Well, no one would go, right?

So the community pool does have revenue, but really communities do it because we want to provide it as a amenity for the city.

So I don't see many outdoor swimming pools, private outdoor swimming pools out there.

So for Lehigh City, we have three, four, five governmental funds.

This is this is might be boring, but you just this is just what it is.

So we have one general fund.

You will always only have one general fund.

That's that's uh what GASB tell us.

General fund is really how you account for your property taxes, sales taxes, all of your general revenues that come into the city, and for any services that's not gonna be kept in another fund.

So police fire parks, all of that is gonna be in your general fund.

And I will say you have a little flexibility, and maybe I'll talk about that with special revenue funds.

We have two special revenue funds.

So you probably know this.

You're not only members of the city Lehigh City Council, you also are members of the Lehigh Redevelopment Agency Board and members of the Lehigh Local Building Authority Board.

So those are actually legally separate entities, but they're part of the city, they have the same board, but we want to keep them separate.

So we have those as our special revenue funds, and that's all we have.

Other examples that I've seen of special revenues, sometimes a city might have its uh recreation center in a special revenue fund.

All that means is we have a dedicated revenue that comes in for this source that is that provides a significant portion of that service.

We have one capital project fund in our ACFER, which is really an amalgamation of several activities.

So capital projects is just what it means.

It means just what it says.

It's a place that we accumulate resources to do large projects, often projects that take over multiple years.

In our capital projects fund, we have what I call just general capital projects.

In other words, it could be anything.

We also have specific capital projects, things like impact fees.

So if you look in there, a fire impact fee, road impact fee, police impact fee.

Might have missed one, but um are in there.

Those monies need to come in there and only be used for a specific purpose, and they can only be capital type of expenditures.

Um debt service fund is just what it means.

It's a place you accumulate resources to pay debt.

A lot of times cities will have maybe you have a bond that's being paid, and the funding from it is coming from multiple funds or multiple areas, and so it makes sense to accumulate those into one fund and pay them out of that fund.

We as a city have some discretion on how many funds we use and utilize, and there's you're gonna look out there if you look at a lot of different financial statements from different cities and different states, you'll see different people do things a little differently.

It's just kind of what makes sense to you and like what makes sense to your budget.

When we do our budget this year, you're gonna see more than five governmental funds because sometimes we take the legacy center and the general fund and put those together when we report in our book, but we budget for them separately just because it makes more sense to do that.

Uh permanent funds, the city doesn't have any permanent funds.

You don't see a lot of cities with permanent funds.

Permanent funds is just like an endowment type of fund.

So you'd see that with state financial statements.

The only ones that I really see very much with cities are cemeteries.

When I was at South Jordan, we had a cemetery perpetual fund or permanent fund.

And so the and so up there, if you when you bought your plot, you paid also paid like $2,000 on top of that.

And that was supposed to go into a fund that never was spent, but it was gonna earn interest to help maintain the cemetery.

So we don't have any, we don't have any of those.

Um we also don't use, I don't know if you've taken accounting before, um, but when we talk about accounting, we talk about accrual accounting, meaning that I want to make this goes back to the concept of trying to get uh uh net income, net profit number, and so depreciation is a good example.

When I if I were to buy a piece of machinery for a hundred thousand dollars and it's gonna last 10 years on my income statement, I'm gonna show 10,000 dollars every year for 10 years instead of 100,000 in the first year.

But for governmental funds, we don't really care about necessarily because we're just trying to say we accumulated resources to buy this hundred thousand dollar machine, and we want to show that we purchased it at the same time.

So when you look on governmental fund balance sheets, you don't see fixed assets, you don't see land, you don't see long-term debt, those things that uh are related to multiple years in the future.

You you won't see those.

There's lots of information in our ACFAR on those items, but it's not on the face of the financial statements.

Um yeah, when we have when we borrow money, it comes into that fund just like an income or like a revenue would come into it, and then it sits in there until we spend it.

And when we make the debt service payments on it, we treat those just as period expenses, not as not like we would for an income statement.

And I I look at the example, it's more like you would for your family budget, right?

I don't when I budget, when I put our budget together, we don't say I have this mortgage liability and I'm paying some interest and I'm paying some principal, we just say my house payments $2,000 a month.

I just budget what that is, and so we're we're really matching budgets more.

Fund balance.

You'll see on the um governmental fund balance sheet, the fund balance.

So that's the equity portion of our balance sheet, and it can be in five, there's five different categories of fund balance that you'll see on there.

And I think we have four.

We well, we I can't remember if we have non-spendable or not.

So basically you take your fund balance and you divide it in those four things.

Non-spendable is just simply what it sounds like.

So an example of non-spendable would be inventory.

If I were to buy inventory and not use it and keep it on my balance sheet as an asset, I couldn't liquidate it and spend it.

Because all this is really getting into is saying if you if your fund balance 30 million dollars, how much of that is really available to be used for whatever you want?

So if it's sitting in the form of inventory, then it's it's not available really to liquidate and spend.

Restricted has to do with if it's restricted by an outside source.

So some examples of that would be Class C road funds.

We get Class C road funds, which is just gas tax money.

So when you pay at the pump, you pay, I don't know what I can't remember what it is 70 cents a gallon.

I think is no, it's probably not that much.

42 cents is the state or all of it, I can't remember.

So you're paying this gas tax.

70% of it goes to UDOT through their projects.

The other 30% is distributed to cities and counties based on road miles and population to do local projects.

We get that money.

If we for some reason don't spend it all in one year, we don't have to give it back.

We can roll it forward to the next year, but it's restricted.

I can't spend it for anything else.

So we need to show it as restricted fund balance.

The other thing you'll see in there is like impact fees would be the same thing.

If I have impact fees that I collected that I haven't spent yet, it's restricted by use.

If we borrowed money for a project and that money's still sitting there to be spent, that would be restricted also because it's restricted externally.

It's restricted by the DOM, the bet the debt covenants and the trustee.

Yeah.

Yeah.

So I've got a slide on that somewhere.

I actually have no idea where.

But the state pools all of its resources.

So any money we have a checking account here with central bank.

The idea is we don't keep a lot of money in that checking account.

Most of the money is with the state.

They have a state, the state treasurer has a public PTIF public treasurer's investment fund.

That's a very liquid form.

So they'll invest it, but they can only invest it in short term things.

I think it's just 90 day things.

And you put it up there, so it's gonna get more interest than we would get down here.

And it's it's been years ago that the it was paying like point, I think the lowest got was it was under 0.5%, right?

Maybe even under 0.4%.

And but lately it's been paying a lot more, like five between four and five and a half percent.

Does Leehide see that?

Do they get it?

They do.

Yeah, yeah, yeah.

No.

No, they treat it as it's like we have a bank account with the state investment flow.

We have another about 20 million dollars that we have with uh it's Fred Morton group, if you're familiar with them, they have a liquid investment team that takes money and invests it in uh products that you still have short term, but they can invest up to five years.

So we have a you it's called the Utah Money Management Act.

We have anything we do has to be strict compliance with that, and it's pretty conservative.

And so actually have to, in order for them to do work for us, they have to be certified with the state and all of that.

So with that, we can get a little more interest because it's invested a little longer term, but it's still liquid, we could get it if we need it.

So we do have some strategies.

There's actually another company we're looking at that might do a little more too.

But so yeah, we do any money that we have, we have invested and it's earning interest.

Uh committed and assigned are similar.

Committed and signed is when we internally as a city have set aside resources for a certain project.

Um, those of you on the council last December might remember Jeremy had a proposal to Jeremy Kraft Chief Kraft had a proposal to take our wildland fire money that we get and try to set that aside to be used to fund uh equipment and obviously pay for the cost of the fighting the fire, but even to be reserved and set aside for other things.

So we pass that by resolution, which makes it committed, and then assigned as similar, and it really depends city to city.

I don't know that we really have any assigned, can't remember, but usually it's just a less formal process.

We set aside money for a less formal process.

The example I use a lot, I don't even know if that's the case in the city because it's in the eight years I've been here, it's never come up.

But sometimes a city council might authorize a city administrator to say, hey, if you want to set aside certain monies for certain things, you can do that.

Or it's just anything less, anything that's set aside by a less formal action than like a resolution of the city council would be assigned.

So they're really kind of the same thing.

And then everything else is unassigned, meaning that's the money that's available to be used.

When you look at our general fund and our unassigned fund balance, we think of rainy day funds, emergency funds, things like that, that's where that is.

And maybe the 35% number by state law, we can have 35% of one year's revenue in our general fund as a reserve.

That's the maximum we can do.

We don't have to have 35%.

We have to have at least 5%.

It can't be more than 35%.

We went through a process last year to kind of identify what that money would be used for.

The percentage that that worked out to was a little over 30%.

So that's kind of where we're at now, but that's that's council discretion, but it can't be over 35%.

But when we talk about that, I'm really talking about our unassigned fund balance.

Okay, governmental funds.

What I think is interesting when you're budgeting those, they're first of all, personnel generally very heavy, not necessarily equipment very heavy.

Meaning, if I looked at our police department, what percentage of the police department's budget do you think is spent on people?

Yeah, I don't even, I'm not even sure.

Allison would probably know.

85%, probably, right?

Something like that.

Because that's really the service you're providing, is these people's people services, right?

Um, some departments may vary a little bit more, but by and large, when you're looking at our governmental funds, the cost is really people.

Um the governmental funds have interactions with other funds in ways such as um.

I put this up there just so I have the chance to say this.

There's a lot, there's a difference between a transfer and administrative allocation.

I hear sometimes those used interchangeably and they're not interchangeable.

A transfer, if I transfer money out of the general fund or a governmental fund to another fund, it's really there's nothing necessarily getting in return for it.

And we really don't transfer very often.

In fact, we really don't transfer Lehigh between our governmental activities and our business type activities at all, because there's transfers in between the governmental funds.

So when we had a have a surplus in our general fund and we've transferred it to the capital projects fund, it just means we're moving it kind of the designation of that money to a different designation.

Um, if I were to transfer money from the general fund over to the water fund, I would probably only do that if like water fund is having problems and we were transferring money to a we've never done that, or maybe sometimes you might see where one set of bonds is issued and it has different purposes, so you might transfer money to do something like that.

But really, when I say when it's transfers, we don't transfers are more like subsidies, and we really don't do that.

We transfer them for purpose inside of our governmental funds.

But administrative allocations, some type sometimes people use the term transfer that, and it's not a transfer.

Administrative allocation is the fact that the power department or the police department, they don't have an accounting staff or an administrative staff or a council.

So we have it's just like any a lot of businesses would have this.

I used to work for the Larry Miller group up uh Jordan Commons there in Sandy, and we had a kind of an office tower unit and a restaurants unit and uh a theater unit, but it was one custodial staff.

So every month we'd have the custodial staff that'd tell us how much time did you spend on the different things, and so that's really all this is the fact that we have certain expenses that need to be allocated out to these other departments, and so those show up as revenues in the general fund because that's where they're paid from, show up as expenses in the other funds.

Yeah, okay.

Um the enterprise funds, and you can allocate them to the general fund if you get public notice, and you would that be considered an allocation or a transfer?

That would be a transfer.

Okay.

So I think let me make sure I'm answering the right question.

If we wanted to say, hey, we're bringing in so much money in our power fund, we don't do this.

I won't name cities that do, but there's several that do.

We have this all this extra money in our power fund rather than raise property taxes or whatever, let's just transfer money from the power fund over into the general fund.

You can do that, that's not illegal, you just have to notice.

We would have to send a notice to every ratepayer saying that in the in our budget, we have a transfer from the power department.

I can't remember the exact term, but it's like a it's says that it's it's a transfer subsidy, something like that from the power department to the general fund of this amount, and if you're interested, come to the public hearing on it.

So, yeah, you can.

Um, we don't we don't do that as of as of right now.

Um, I think that's what I just said.

So payroll accounting legal administration, even city council, city recorder, things that all department that touch all departments, but they don't have uh internally.

Okay.

Any questions on governmental funds?

We'll move on to business type activities.

Um, and there's really we have two types of business type activities fee-based services, which by and large are utilities.

So when I pay a water bill, the intent of that water bill, it's gonna cover the full cost of that service.

There's no subsidy from taxes or anything like that.

Um, utilities as opposed to our governmental funds are very much infrastructure heavy, right?

If you looked in our financial statements and said, How much do we have in fixed assets in our sewer fund?

It's $80 million, 100 million dollars, maybe more than that.

Power department might be 170 million dollars.

A lot of money has gone into this infrastructure.

Um they have their general generally speaking, their personnel costs are a lot lower, right?

So they have if you if I think of the power department, say 65, 70 percent of their cost is just the cost to either produce or buy power that we resell and sell through our system.

Um just not so heavy on personnel.

When we're putting budgets together, what we give for raises for the power department doesn't have a huge impact on how we put their budget together, what we give for raises for the fire department has an enormous impact on how their budget works.

Um we also have what are called internal service funds, those are included with business type activities, and those are I talked about we talked about allocating administrative allocations.

This is you know, in some ways is a different different way to do the same thing.

So we have four internal service funds fleet, IT, risk management, and uh buildings.

So fleet would be a good example.

Fleet buys the cars, owns the cars, the the police department lease pays a lease payment to the fleet department to use the cars.

Um cities use internal service funds, some don't.

You have it's really up to your discretion.

It's more of a budgeting tool than anything because it helps our fleet manager say, okay, the cost of one police car a year is whatever, eight thousand dollars, and it helps manage those costs and helps the police department do that.

But if we chose not to use an internal service fund and have the police just like you could have you could have the police have a fleet department, like they could have a fleet manager inside the police.

There's different ways you could do it.

But for us, we have those four departments.

So how those departments run is all of their revenue comes from other funds.

So if you look in the water fund or the power fund, they've got a charge to the fleet department and a charge to IT and a charge to risk.

That money goes and shows up as a revenue in those funds and is used in those funds.

But like I said, I think it's more of a it's a way to help us run it, it makes sense how the money flows more so than what you have to do, or it's not necessarily a cost savings, it's just I think it helps budget it.

Are we are we governed?

So let's say on a utility, are we governed to be a zero?

Meaning, can we collect more than what we're spending out?

Does the does the auditor or whoever's above that come in and go, hey, you're collecting too much?

Yeah, there's no state law about reserves in a util in an enterprise fund.

Now, someone could bring it up, right?

It might be an issue, and you folks might be interested in that.

Like, why do we have why are we building excess reserves in a certain fund?

But the only state law related to fund balances for the general fund, that 35%.

So we wouldn't get we wouldn't get uh a finding in an audit because we had too much money in an enterprise fund.

Okay, enterprise funds, business type activities, internal service funds.

I just use three terms for kind of the same thing.

They use full accrual accounting.

So if you look on a balance sheet for the water fund, you're gonna see fixed assets, you're gonna see depreciation.

When we have debt payments, you're only gonna see the interest on there as an expense, not the whole, not the whole payment.

And really, those financial statements look very similar to private financial statements, they're not that different.

Um our utilities, our enterprise funds do have some what I would call non-business type transactions because they do collect impact fees.

So if we collect a water impact fee, it goes into the water fund, not into that capital projects fund that I referred to earlier.

That needs to stay in that fund.

Um, but that's kind of a like there's not they use is is exchange like revenue because you have to pay it to get a building permit, but there's not necessarily a direct correlation between what I'm paying as an impact fee and what I get out of it.

As well as contributed infrastructure.

So you know, as a city, we really don't build very many roads or put in new water lines or put in sidewalks or put in city infrastructure, those are put in by the developer.

Developer comes in, builds a subdivision, they have to build all of that stuff, right?

And then when it's done, they contribute it over to the city.

We it I've always chuckled at that a little bit because it shows as a contribution, but there's not really money exchanging.

We we show it as a revenue.

So if we put a value to it, if it's five million dollars, we'll show five million dollars as a revenue on our income statement, but it's not money we can spend, obviously, right?

Um so we do see things on there that aren't similar to what a private business would have, but but by and large, those financial statements look similar to what you'd see on any private business.

Mention that we have those internal service funds.

So this is I I have to be honest, and I stole this uh chart from somewhere.

I can't even, it's been so long I don't even remember where, but I thought it was really good.

When you look at our ACFER, it has all of this stuff in it.

It has a set of government-wide statements where they take all of the informations for all of the funds and put it into one statement.

Um it's a big project and it's really hard to do, it's like a big huge puzzle.

I think it has not a lot of value personally, so I don't really look at it that much, but there is one statement that puts the whole city together into one thing.

And then we have a section on governmental funds with each of those types of funds, and a section on proprietary funds for each of those for our enterprise funds and our internal service funds.

Uh, some governments have fiduciary funds.

You don't see that with cities very often.

We don't have any fiduciary funds.

Uh, if you're curious, what I use an example of a fiduciary fund when you pay your property taxes, you don't write a check to the city and a check to the school district and a check to the county, right?

You just write a check to the county.

The county holds those monies for a time and distributes those back out to the taxing entities, they have to account for that in an agency fund, meaning I'm an agent for that money at that time.

So fiduciary is just like you do insurance, so I'm holding this money on behalf of another entity.

Okay, so I'm gonna we'll take a break after I get through these.

But we do this every year, and it just has to do with our utility fund.

I didn't know the best place to bring this up, so I thought I'd just do it right here.

So when we're looking at rates every year, I try to look at a number of data points and show what happened last year, what their balances are, what their revenues were, things like that, as we look into say what should their rate be the next year.

Um, so I've thrown in a preliminary rate.

It doesn't mean that's necessarily what it's gonna be because we don't really have much data yet, but I think it'll make sense as I go through this one by one.

So this is our sewer fund.

Revenue in the sewer fund, fit just over 15 million dollars.

Operating expenses was 19.6.

That sounds really bad because it's our operating expenses are much more than our revenue, but that's a full accrual expense, so it includes depreciation.

If I take out depreciation, which is a non-cash expense, it's still at a negative, but it's 1.7 million dollars.

The challenge with the sewer fund that we have over the past few years is probably 70% of the money that's collected by the city goes directly to Timpanoga's special services district for treatment.

Um two years ago.

Let's see, I think it was in December.

I got a letter that said, hey, in three weeks, your rates are gonna go up 50%.

So that wasn't that wasn't a great letter to get.

Um, because we really didn't have time to implement, like make changes on our end.

Luckily, the sewer to fund had some reserves, but um, in fact, it said so.

On January 1st, 2024, 25, it's gonna go up 50 per 24, it's gonna go up 50 percent, and then 25 and 26 is gonna go up 15 percent, both of those, both of those years.

So we didn't change it that day.

We like to do our utility rate changes on July 1st just because it's the fiscal, this is it's the first day of the fiscal year.

And we said, well, since we have reserves, we could kind of lose take a bit of a loss over this time and use up those reserves, and then we raised it 25% two years ago, we raised it 15% last year.

Um, and again, we're still losing money.

Like I look at it as in the long long run, this number can't be negative forever.

The fact that most of our utilities show a negative operating income doesn't concern me that much just because we depreciate things, it goes back to the depreciation number.

We depreciate things over 30 years.

A lot of infrastructure has been in the ground for more than 30 years.

And so the fact that we're maybe recovering it faster than we're you then where it's being uh used up is probably okay.

I kind of look more at cash balance than I do at uh the operating income.

But in I think um what are the top expenses for the when you're talking about that deficit, right?

What are what are the most expensive aspects?

Yeah, the sewer fund, like I said, 75% of it's just we get the money and then we write a check to TSSD.

That's really the driver of this.

And other than that, sort of fund doesn't have a lot of complexity beyond that.

We have people, we have uh equipment and fleet and stuff like that.

Um, but we're doing just fine up until about two and a half years ago.

So yeah.

Why do we use um Timbanoga special service district?

Yeah, so the cost.

I've got I'm gonna this gonna sound gonna stand up for TSSD here just a little bit.

The cost to do these things is enormously expensive.

There's new environmental regulations all the time.

Dave Norman's not here that serves on the board and would understand that better than I would.

But there's new things they have to treat, like the federal government could issue uh law saying you need to have, I think I hear the term phosphorus out of treatment plants.

You need to have that at a reduced to a certain level because really they're cleaning the water and then put it back in Utah Lake, right?

And so Tason not too long ago built a sewer treatment plant, and it was like their sewer, their monthly sewer rate's like 90, 95 dollars a month.

And so it's just really really really expensive.

We have a lot of growth, so they're trying to plan for the future and expansions and new technologies and new federal regulations, and so it's just getting more and more expensive.

So we would not probably as a city one, we don't have a we can't treat it ourselves.

We'd have to build a facility, which would be might be hundreds of millions of dollars, right?

So all the cities in our area have gone together with this one.

I don't know, it's it's set up by the county.

I can't know if it's an interlocal or whatever, but all the cities in Linden, well, Orham, no, not Orem.

Pleasant Grove North, and you go into the front half of Ego Mountain, all participate in this one district.

So we we own all the infrastructure in the city, but once the flows get to there, they treat it and they monitor it and bill everybody based on their meter.

So why do we have to use them?

There's not another option really, unless we wanted to do something ourselves, and the cost of that would we'd look at that and say that we just can't do it.

So yeah, Rachel.

Well, and we we have to clean the wall, clean it, put it in Utah Lake so that it can go to the Great Salt Lake.

We can't reuse it, like the state will not let us reuse our water.

That's a good question.

I don't know if I have a conversation with Norman about this because I was like, why why can't we park like clean it enough so it can be pressurized irrigation water?

But we're not allowed to at this point.

Marlon has a comment.

Do you want to?

Yeah, it's right behind you.

It's right behind you.

I'll make it.

Is it working now?

Can you hear me?

We gotcha.

How about now?

Is it good?

Okay.

Um, I'm gonna slaughter this a little bit, but we're considered a uh Ulitarian water loss state, which basically says any water that falls from the sky that lands on the ground has to be diverted to our culvert system, Great Salt Lake, Utah Lake, Jordan Canal, out to the Great Salt Lake.

Um, we've had numerous businesses that have tried to capture water just using cisterns to clean cars like car dealerships, and they had to get an exception from the state of Utah.

So we cannot, and yes, that would be a great option if we could capture the water, create it as gray water, and then utilize it in industry-based businesses.

Um, but because of our state law, uh, they do not allow that.

Now I do know that we were exempt uh as part of a program with uh Texas instruments, and so we are trying to work with Texas Instruments to see if there's an opportunity to gather their uh affluent and then utilize it in a pressurized irrigation system.

Microsoft did not want to give us that affluent because it was too high in fluoride, and they were worried about uh lawsuits and stuff like that.

But Texas Instruments, as far as I know, have been a little more open to the discussion.

Uh, but ultimately at the end of the day, it will be up to their discretion if they allow us to divert their affluent into our pressurized irrigation.

And I think Lauren was taking a look at uh the new uh reservoir that's over by Smith's as the outlet point for that water to come in.

So that's but again, per state law, we cannot capture that water.

Okay.

Um other data on the sewer fund.

We still have 5.6 million in cash.

So there's still money there.

Like we're not panicked.

We need to get this better.

But I guess my philosophy, or if I was a resident, I would rather instead of have a if my rate was going to be raised $30.

I think I'd rather have it do it four or five times over five years instead of raise it at dollars in the first date.

So that's all really we're trying to do is saying we we got this big hit from TSSD.

We're we have to pass that on to our cost to our residents.

Um we're gonna do that a little more gradually.

So this this rate, again, I just said preliminary.

I haven't put a ton of thought into this.

I just it's 15% higher than than last year.

So this was I think a 25%.

This is 15%, and that would be 15%.

Yeah, Michelle.

So do you to increase rates in the enterprise funds?

We don't have to do a rate study.

We don't have to do a rate study, it has to be adopted by the city council.

You do not have to do a rate study.

We could do a rate study.

We could, but we don't have to do that.

Yeah, okay.

Yeah.

And how do you monitor if it maybe residents are being overcharged for the service?

Do you just look at the the reserve?

For me, I would look at reserves.

Like I would look at this number.

If we're bringing, you know, if we're spending more money than we're bringing in, that's then we're not, and I'd look at this reserves.

Because again, you could we could go through a few years, like this, and we have where we're spending more money than we're bringing in, but we've got reserves that can make up that difference, bridge that difference.

We talked a little bit, you know, with the power fund about having a rate stabilization fund.

This kind of is the same thing.

We've got some money there, it lets us raise rates more gradually than trying to but the reserves are good to have for big charges.

For lots of things, yeah.

Yeah.

So the reserves in this fund would be used.

I mean, if you had a big capital project that came up.

The problem with a lot of our infrastructure, right?

It's underneath our roads.

We assume it's doing what it's supposed to do, and you don't get to look at it every day.

And so sometimes you don't know you have a problem with the water line until it starts coming out of the top of the road and whatnot.

So um, but yeah, having reserves is good.

We're gonna talk about what level of reserves and different funds is a good level.

180 days is probably not a bad one to use.

It's one that if we go get uh bond ratings from the rating agencies, they like to see that.

180 days just means I could pay for my operating expenses for 180 days with what I have in reserves.

So sewer would 123, which is a little low.

We also haven't had tons and tons of capital projects in there.

Um, so anyways, my first blush on that is 15% in the sewer fund.

Culinary water fund is very healthy right now.

We still show an operating loss, okay.

And again, in the long long term, we can't have operating losses because it all it just has to do with depreciation, right?

If I'm depreciating things eventually, if I'm not um paying for my depreciation, if you will, putting money back into infrastructure, I'm gonna run into a problem.

But in the short term, the fact that we have an operating loss here doesn't concern me that much.

We still have positive cash flow in the fund, they have a large cash balance.

We haven't raised the culinary fund in several years just because we haven't needed to.

They haven't had as many capital projects.

PI fund has had a lot more capital projects than the culinary fund.

And so I guess sewer, I didn't mention this on sewer because they don't have any bonds, they don't have any debt.

Water has some debt, debt service coverage just has to do with are we bringing enough money to make sure we pay for our debt.

This one, this money, this money, this number should be at least 120 1.25.

If it's over two, that makes me feel pretty good.

5.5 is really strong coverage.

Um, so that one looks a lot better than the next one.

So our pressurized irrigation fund.

Pressurized irrigation fund, we have had a lot of capital projects in the past four or five years, um, to the point that our impact fee fund, we've really paid ahead.

So it's negative, if you will, as what that really means is we collect these pressurized irrigation impact fees, they'll go to kind of reimburse ourselves for projects we've already done.

That's why it has negative cash.

It is producing cash, it's doing okay.

It has a never negative operating income, but we're paying ourselves back for projects that we've already.

Again, you we could say, well, we have no cash, maybe it should be more, but I I think we're fine with it.

Is we're gonna have a big change in our pressurized irrigation fund in the next four or five years, and I know that's talked about from time to time.

Hopefully, everybody understands.

So we have to have all of our meters installed by the end of the beginning of 2030.

So and when that first came out, we had 14 and a half thousand meters to install, and I would say Dave and Greg were nervous.

Like, I don't know if we can meet that.

They're gonna have it all done this calendar year.

Like it's gone surprisingly fast.

So we'll get all those meters installed, and then it's gonna change how we bill it, right?

So we're gonna build, we'll have a base rate with usage.

We've hired a consultant to help us put rates together, but right now we don't really have good data to give them to to analyze because we don't we've got we're getting more and more meters installed.

I don't Alison's seeing some reads come through, right?

Most of them look okay.

Is that fair to say?

When I say okay, they look accurate, they're not saying a billion gallons or zero gallons or whatever.

Um so what I'm hopeful is this year we can at least get a subset of data in the city that will give us some decent reads that we can give to our consultant that's doing the rate study and say how would we structure this?

Because there's most simple example is we could we could charge a really low base rate, charge a high usage rate, really encourage people to conserve and they'd conserve so much money or conserve so much water that their rates that we wouldn't be able to pay our bills because most of the costs in both of these funds are fairly fixed, they don't fluctuate very much, and so to have a rate that's all based on usage is gonna could cause us some problems.

Um but at the same time we want to encourage conservation, and so there's just a balance.

Different cities have done some different things.

I think we looked at what Saratoga Springs and Alpine have done, and we kind of like that, where they have it's like if you have a certain have a quarter acre lot, you're kind of expected to use X amount of water.

If you use more than that, you get the rates start getting high fast.

And but that's gets kind of complicated, right?

Because everybody kind of has a different base that they go off of, but um, they're doing that, and I think it works okay.

So I think we'll do something like that, but we need to get some better data first.

So question that have you determined an app that we're gonna be able to have for residents so they can keep track of their usage?

Yeah daily.

Um I don't know the answer to that.

We Allison knows the answer to that.

You need a microphone.

Marlon could show you how to use a micro.

Um yeah, we just figured out I know we just are in the process of working with the company that is working with Central Utah Water to have a customer portal, they can see their water, their power and everything.

But no other cities that have residents talking about because they can detect like if there's a leak or something quickly, yeah, and it will help us because we can notify customers through the app.

Nice to if they have like yeah, and I think that's actually part of the law.

We need to have something like that available.

So we will, but that's coming.

Um yeah, and and the the challenge with that is so you know for Lehigh, our PI system is if it wasn't new, it was the old culinary system, right?

So we converted current what was current culinary lines in and put the PI water through them and then built a new culinary system.

And so some of those, I think we're gonna see a lot of leaks and things like that, just because we haven't been we haven't monitored usage.

A lot of those pipes are older.

It'll be once we get those running, it'll be it'll be a challenge.

So but a good it's not like it's a challenge, it's like information we wish we had now, we could do something about it.

And now that we have information, we can we can hopefully just a quick comment for the rest of the council.

We there was a presentation on the water rate structure, and I don't remember the date, but if we can find that date, that might be useful for everybody to that came to the city council.

Is that what we ours?

Yeah, yeah.

Yeah, we could find that for sure.

I'm sure it's recorded.

I know Rachel listened to it already.

It was helpful.

There we go.

Okay, um, so I did one combined.

If you look in our financial statements, it just has one water fund, it doesn't have PI and colon.

We come kind of combined those for reporting not too long ago, just because the truth is our PI like they're not so separate that it's not like the PI guys never work on culinary projects and vice versa, and the debt is shared.

There's so much interaction between the two, it just made more sense to combine them.

Quick question on that.

Do you but you still look at them uh obviously you look at them separately now?

Yeah, we budget them separately, they're separate internally.

We have them separate.

Okay, but when we on if you look in these statements, they're combined.

And is it council can we see the the separate two?

Because culinary, you know, the cash operating cash on hand was really high.

Yeah, and so that maybe oh, are we overcharging for culinary?

I don't know, but yeah, yeah.

Um, I can it's in our budget separately.

You could always could ask me for a separate report, but um in this report they're combined, but I'm happy to.

I mean, we're tracking them separate all along and combine them at the end, so it's not hard to have separate numbers for them.

Uh the garbage fund, garbage fund really we don't have really a need for reserves in the garbage fund, right?

Waste management comes by, collects the garbage, residents pay us, we pay waste management.

It's really more of a pass-through.

Um so the two components to here is what we pay to waste management and what we pay to the landfill.

Both those costs just keep going up every year.

So I've been raising we've raised this like a dollar the past couple of years.

I think I've got here a dollar fifty because it's not quite keeping up.

Um in the long run, we need to we need to have what comes in cover the cost of it.

So and they don't have any debt, obviously.

There's we don't really have reserves, there's not a need for reserves, we don't have debt or capital expenditures and it's fun, but um it's just it's been hard to keep up.

So every January we have a like a CPI inflator with waste management, and then North Point has raised their rates past three or four years in a row.

So I'm trying to keep up without going too fast, but um and other places I've seen this privatized, but is waste management the only option we have.

They're not the only option.

Now they might so there's really there's like three callers that work in Utah County, right?

Um we have a contract with waste management.

If that contract is up and we wanted to explore this, we did this a few years ago, but even the other companies were bidding, and they're saying you need to realize for us to take on your city, there'd be like a 12-month ramp-up period because they would have to buy trucks, they would have to buy cans.

We would have to swap waste management owns all the cans, so we would have to swap out every can in the city.

And it's not that we should never look at it, but it's it's not just a matter of having a different truck come by.

It would be a it would be a huge undertaking because the companies that there's no company waste management is huge, they're all over the country.

The other companies that services are more local, and you know, so they don't have the resources to take on a city like our size, just in a whim.

It would take them.

I think he said probably nine to twelve months to ramp up to it.

So question.

Um, in regards to the services that waste management provides.

Uh-huh.

Like more types of like a recycled, like a glass recycling, yeah, that kind of thing.

Or you know, times like any phone can.

Um, so I'm just curious to know we're negotiating with waste.

Oh, I can answer um a landscaping.

Alison knows this probably better than I do, so she can correct me if I miss we used to have a green waste recycling can that was offered about three or four years ago.

Uh so waste manager was taking it somewhere.

I don't even know.

Wherever they were, do you know?

I guess it doesn't matter.

negotiating with waste oh I can answer um a landscaping Alison knows this probably better than I do so she can correct me if I miss we used to have a green waste recycling can that was offered about three or four years ago uh so waste manager was taking it somewhere I don't even know wherever they were do you know I guess it doesn't matter wherever they were taking it was no longer an option so they came to us and said we we don't have a place to take it and so we ramp that program down over a couple years just because if we canceled it cold turkey we were afraid we'd have to swap out four or five thousand cans in a winter which would just be logistically a nightmare and so it's just actually this winter this winter that we discontinued green waste totally so waste management can only offer a service that they like they don't have a place to take it so that's that glass recycling that comes up every now and again and oh please momentum is doing it now it's 975 or they have a curbside they you uh buy the container for 25 and then it's 975 a month and they'll come do glass and they bill yeah they bill okay so glass recycling is available I should have known that right okay so but they would contract with just their own they would call momentum themselves into it right well and how do we like compared to the other cities is waste management offering all of us the same rates or is it based on population do we know is like one of our neighbors getting a better deal great question and it's a little bit a question that we have to we look at that every now and again one thing I look at is what we charge because really if another city's charging a lot less than us the only reason the only way they're gonna do that is if they're getting better rates right and so we're gonna look at utility rates in a little bit how we compare with other cities and I don't see the other cities are like significantly less than us.

So that's my hint as well as the fact Jason Well I'm just gonna chime in to that point um they factor in like miles traveled so distance to and from the the dump and different things like that.

So we've explored different things like direct hauling so rather than taking it to the transfer station first and then to the landfill you can just go straight to the landfill so so we do monitor those things but like Dean said generally speaking they are pretty competitive so yeah they have to be and the one thing that is good with cities is it's not too hard for Jason or I to get information from Orim or somebody else on what they're paying so so they know that.

So I short answer is I think we're getting a competitive deal a fair deal um but it's just it's it's gone up and the the the transfer station's gone up every year too it also recyclables right yes so we pay one most cities don't do it this way we pay one fee and it covers one garbage can and one recycling can for 17 or for 1594 today.

Most cities will have those separate for that was up a while ago and I for voting or the outcome but options one was based on markets rate for the recyclables and the other was a fixed yeah so a few years ago they gave us an option and said rather than just pay a flat fee for recycling you can pay basically a hauling fee that's not very that's a lower amount and then pay for the uh the recycling cost meaning that that part of the bill and that's how it still is fluctuates a little bit with the market like if there's a demand for cardboard and whatnot it saves us money when that but it fluctuates a bit as well as they look at they call it contamination rate meaning people putting things in their recycled uh that are not really recyclable so some I think most of the time that happens because they don't know so like you're not supposed to put a pizza box in there right it's gar it's cardboard but once it's got the grease and the whatever else in it it it doesn't do good.

Sorry to interject those are recyclable now they are confirmation yep I didn't know that.

Mare and I went to a meeting and they are now recyclable.

That's a that's like a game changer one small step for man right?

There's still a lot of things that are not recyclable so don't get lost on a pizza box.

Or putting taking a garbage bag filling it full of recyclable bottles and putting it in there.

So these are automated processes when stuff goes in there that they can't use it actually ends up getting hauled back to a landfill somewhere and so they they have ways to kind of monitor that and if we do better we get a little bit better rate yeah just channel that it's I think you said but I think only 15 to 20% of what's in your recycle industry recycled so they automate the system it pulls through uh what is not recycled goes back in the truck and gets right back out to the land so um they want clean cardboard they want they want bottom bottles they want it back so anyway we uh the the problem with it if you're asking me because I thought I was a good recycler I'm terrible faculty members it's a lot of education in our residents have every good intention of buying a quote unquote recyclable

What is not recycled goes back in the truck and gets calls right back out to the planet.

So they want clean cardboard.

They want bottles.

They want it kind of.

So anyway, we uh the problem with it, if you're asking me, because I thought I was a good recycler.

I'm terrible.

Fact of the matter is it's a lot of education in our residents.

Have every good intention of buying a quote unquote recyclable garbage bag to put in the recyclables, put all the recyclables in.

Once they tie it, throw it in the recycle band, it's no longer recycling.

It's not gonna get recycled.

There's I mean, but the box, the glad box, the grocery store said it's recycled.

That's not the case.

And so there's there's a lot of questions and a lot of education that has to be done to make recycling even better or more efficient.

So that and and the cost associated with it is part of the issue that we think.

Well, and I'll I'll say this now because at some point we'll probably come up.

Uh I'll just be Blake Leonelli for just a minute here.

So they bring this up every now and again, and it's never gone very well, and so we've never really stuck with it.

But waste management has ability to have cameras on the trucks, and they'll look and see what's in people's recycling cans, and they'll send them a little note saying, hey, do better, or even a fine.

They talked about us, we didn't really want to impose a fine on people.

People, we got some not very nice emails saying why are you looking at my garbage and stuff like that.

So that's they come back, waste management comes and brings that up every now and again.

And I'm not saying it's a bad thing, because they're just he's gonna say, we're just trying to use this to educate people.

Hey, you had this item in your recycle, it's not really recycling.

Can you please do better?

But it leads to, yeah, some people it it uh it really triggers them to some degree.

And one to Dean's point, they may or may not have asked to come visit you with you guys.

So but that's coming soon.

Yeah, they're saying they have cameras, they can look in the truck, look in the bin as it's being dumped, and they save those pictures so they could show the resident that hey, this stuff was in there, it's not really recyclable, but they bring that up every now and again.

We tried it for a little while, and really didn't go, it really caused some heartburn, and that's just out there just so you know.

I saw the building.

I would love to know more about like what is supposed to go in, though, or not.

Like, you know, I'm always telling my kids.

I think that's great.

I would love to know.

Yeah, and so some people like I back in the day you get like your Christmas stuff, and there'd be little teeny pieces of plastic that anything that's plastic, that's not what want that stuff.

But to get information out on how we can do better, and it would save us money.

That's part of our weight, our recycling bill every month is how well we do the dump for the sewer plant, right?

So I went through, I took everybody's all the cities, these are all the cities that are within TSSD's footprint.

It should be easy to compare utility bills, but it's not always easy.

So we have an unmetered pressurized irrigation utility.

Saratoga Springs is metered, so it's hard to compare the two.

Eagle Mountain doesn't have a pressurized irrigation system, it's all culinary, so you have to kind of guess how much water they're using.

So I'm doing my best.

I think I'm conservative on how I do it.

I've taken their current rates and compared to what I put in there that you just saw as our proposed rates to see where we fit in.

Um so water were generally lower than the others.

Alpine's kind of an outlier, their their rates are lower than ours.

Um, our sewer rate and 55 dollars is a little higher than some, a little lower than some.

Um our storm drain fee.

We're getting by with six dollars, and we have a surplus in our storm drain fund.

I don't even I thought I had one on storm rein.

Oh, yeah, storm drain, I didn't even mention that.

We have a we have significant cash there again.

We have an operating loss, we have positive cash flow.

There were some environmental regulations that came out three or four years ago that required a lot more inspections and things like that.

And I need to make sure we're compliant with all of those things.

It's a small, it's a much smaller fee than the others, but we do have high reserves in the storm drain fund.

There we go.

And so but you look at storm drain fees, like some pleasant grove is $23.

Or ours is six.

So recycling, we it shows zero.

So our our garbage here is $16.94, where if you look at other cities, you'd take the $1250 plus the 1050 or the $1283 plus the $1150.

So that goes back to the question on is waste management charging us fairly.

I think so because our rates aren't out of line with others, but I do have a question about I'm still learning.

Yeah, but my and I maybe it doesn't, but I feel so much better to have an elected official in that room.

Like why?

Why is Alpine?

Do they have more votes than us on the board?

Obviously not, but why are they getting so rates are based on flows?

They meter the flows that come in.

And if uh Richard Mickelson would hear he could describe it, there's three components to it.

I don't understand what they are.

Um but how are so again?

How are they charging lower is your question, which is fair.

Um, but it's not it's nothing to do with the board because every city is charged the same rate.

It would just mean that their flows.

Well, yeah.

I'm sure what's that more vacant properties that don't use the sewer as much?

I don't know.

They do have a council member on the TSSD board.

Yeah, Alpine does.

Yeah, but like I said, everybody pays the same rates, there's not different rates, and it's based on flows.

The one thing Alpine has that I think makes their rates a little lower is they have not grown at the rate we have.

They haven't had huge expansion in capital projects like other cities have had.

It is, but I would say probably their TSSD portion isn't necessarily more than R TSS D portion.

You know, it might be called I don't have that.

Yeah, and I don't I don't I'm not gonna say I know either, other than everybody pays the same rate.

Now we've had some issues and we've discussed this over years.

It seems really straightforward to meter, and it's not.

This is an extremely complicated system that crosses many, many cities.

Alpines flows start there, but they come through Lehigh pipes eventually, all of that stuff, right?

And it's we've had a lot of discussions with them on metering and being fair, and I feel better than where we were, but it's not perfect.

Don't know enough.

Yeah, that's fair.

It's a fair question.

Now, what the probably a better question, a better question to know would be hey, what if we compared their TSSD portion to their population or something like that?

Yeah, yeah.

So Lyndon's on a hill, and so there are parts of their city.

I assume I don't Pleasant Grove had this for a while.

Is in because I live in Pleasant Grove, I used to work for Pleasant Grove.

If you were above the canal, you'd have a higher degree of difficulty to get your PI water to you, right?

So if I'm below the canal, I just it flows down into reservoirs and pipes and just comes down through gravity.

That's one thing that's nice about being on a hill.

But if you're above the canal, now I've got to get the water, water doesn't flow uphill, right?

So I've got to get the water uphill to get it back down, and so there's a different rate.

So I think when it says high, middle, and low, I think it's the high part of the city.

Has to pay a higher rate because they have to get the water up there.

Which is interesting because I would assume we'd have that here too, like Traverse Mountain, but it's hard to do.

We could choose to just average it all together.

Yeah, okay.

Yeah.

Yeah.

There we go.

Yeah.

Um, so we do watch, we do monitor this.

I think it's interesting.

Uh a few cities charge this road fee.

Pleasant Grove does.

Highland charges an $18.50 road fee.

That would be it.

That's a great public record.

That was a joke.

That's a toll if you don't live in the time.

That's right.

Um Dean, quick question on that.

Why do they charge that?

And I I I've heard something about some kind of user fee that they want to charge to like nonprofit like churches or something.

Yeah.

So I think I have a lot of information on that because I was at Pleasant Grove when we did a study.

Okay.

So Provo started it, probably has a challenge in that they have a large portion of their city that doesn't pay property taxes, right?

So if it's Utah Valley Hospital or BYU or the MTC, they use a lot of the roads, right?

They cause wear and tear on the roads, but aren't paying any property taxes.

So Provo was I think the first one that started this.

They implemented implemented a road fee and they negotiated a little bit with church and with Utah Valley hospital to kind of say why they're doing it and it got negotiated a little bit on what a reasonable rate would be.

But um the idea behind a fee, it has to be proportional.

We talked about property taxes, are not there's not a necessarily a connection between how much I pay and how much services I receive.

If it's a fee, it needs to be that.

So we had so there needs to be a study take place, and it would measure how many trips would be generated by a McDonald's versus an office building versus the insurance office or or whatever.

And you could be really specific and detailed with it, or you could do general groups, and so you really had to do a study.

But part of the a lot of the reason it was initiated through provo is because of that.

They have customers in their city who cause wear and tear on their roads and infrastructure, and those are generally paid with property taxes, but they're not paying property taxes.

So I think that's what really started it.

Um you also have we're a little bit fortunate here in some ways with infrastructure and roads, just that so much of ours has been built in the past 20 years.

It's fairly new and in good shape.

I worked for work for Cottonwood Heights.

I worked for Pleasant Grove.

It's kind of the other end where the city's mostly been about built out and been out for a while, and you have a lot of failing roads and and so you have a bigger problem, if that makes sense.

So I think uh roads was a huge issue in Pleasant Grove years ago, and it was but now Pleasant Grove's done a whole bunch of road projects with this money.

So we but we point out we have Thanksgiving Point and primary children's and IHC that do not pay property taxes.

Yeah.

So Thanksgiving Point, some of it pays property taxes.

Yeah, just not Thanksgiving Point Foundation area, which is significant.

Yeah, so that comes out to the whole road fee thing, went to court.

Let's go back.

It was Pleasant Grove that it was some people that sued Pleasant Grove's road fee that took it to court.

It failed.

The city lost the first time, ended up winning, I think at the Supreme Court.

So the state uh they actually made this into code, I think a couple of years ago, that a road fee is okay.

A public safety fee is not okay, like Highland charges unless you already had one in place.

So they charge Highland is kind of rather than raise property taxes, they've done they said people they're comfortable with user fees.

But I think if we're gonna compare what people are paying, we should compare what um so quick question the street lighting fee that I guess Saratoga's only one who has that.

Yeah.

Is that in certain areas or like resin?

I don't know.

Do you know Jason?

Alison looks like she knows.

Not my idea, but I was actually at Saratoga when they implemented it.

So it's a special improvement district that they created.

To install street lights?

Uh-huh.

And so I don't know because I've been there, been gone for a long time.

So I don't know if they add developments to it as it goes along, or if it was the original special improvement district as a whole.

Yeah, but it was an improvement district that everyone has it on their um proper like on their property, it's a lien against their property.

So um, so this is just a bar chart showing this is six thousand gallons of water usage and a quarter acre lot, doesn't include power where everybody fits in.

This is this is my theory.

This is present growth.

Because this is for culinary, it's culinary and sewer, like water, right?

So if we're not thinking butt power.

If we have a large lot in alpine, like a giant house and stuff, they're not gonna have as much culinary and sewer because there's just a lot of land and not as much because they do have larger lots of things.

Yeah, they just have like this huge that's my theory.

So maybe they're if we looked at going back to what Emily was saying, if we looked at Alpine usage based on property, they probably size of the city, they probably might have less sewer just because bigger homes and fewer people or something.

I think sewer would know.

I think sewer is measured by the culinary water use.

Like they don't measure.

Yeah, we we do that because we don't have you don't have a meter going out of your house.

Yeah, you only have a meter coming in, so we assume that the water comes in, goes out of your house.

So that's the only way you could.

You know, fewer people.

Maybe this case.

Yeah.

There's probably a way to study that and get a really good answer, but um, I just always looked at Alpine as a bit of an outlier, and honestly, it goes back to I don't think they ever had to go borrow 30 million dollars because they had so much growth going on really fast that they had to build a whole bunch of infrastructure really fast.

I think that's a lot of it.

All those alpine people.

They're trying to not, they're trying to not septic.

They're trying to save their city money so they make a stop on the way home.

Is that what you're saying?

Check driver's licenses.

Okay, moving on.

Uh the power fund.

Um we looked at this two years ago.

It looked really bad.

This number, cash flow for depreciation was like negative 18 million dollars.

We had power is an interesting uh fund.

I haven't worked for a city that's on power before, so I've learned a lot over the past eight years.

But most years it's good, but you can have a really really bad year.

So we have resources to get power through UAMPS.

We will buy some of our power just on the open market.

We will buy natural gas.

So we Krista, who works for, I think you'll meet her next week, does a great job for us.

Almost like a stock trader because she's buying and selling futures of natural gas and power and doing things to help us get lock-in rates at a certain point.

But you obviously don't want to buy so much power that you're buying power you don't use, right?

So there's always gonna be some of this market risk and volatility.

And there was a couple winters ago, I think it was the year Texas froze to death, if you remember that.

And it just power, which our target, I think for power cost is around 72 per 100 kilowatt hours, something like that.

Whatever, 72 is the number that's in my mind, but it was like 1200 was the cost for a period of time.

And so a UMP a power bill that would normally be two or three million dollars.

We had to go get the AED for Allison because it was like seven million dollars, like two months in a row.

And so it was just really uh really a challenge.

Um we have but the past couple years have been really good.

So you have good years and you have bad years.

Our unrestricted cash is 27 million dollars, that's 188 days.

Debt service coverage is good.

They're gonna talk about this next week, but we're in the middle of updating our rate study for that.

And then the idea is that we'd have this rate study, it would be adopted by council and implemented starting July 1st.

So I didn't even put rates there because what we did before is we had no base charge, and so we implemented a gradual ramp up in a base charge up to $10 a month, and then lowered the usage fee.

And so I'm not really sure how this new rate studies shaking out.

He's in the middle of it, he's getting close to being done.

You're gonna see that at a council meeting in the near future, but um so power's looking good after kind of a scary time for a little bit.

Okay.

Let's take a let's take 10 minutes.

That took longer than I thought.

We might not get through everything I had, but we'll be okay.

Go go to Alpine, go to the gas station in Alpine.

Just hit it on all the balls.

See, James, you'd know this place, right?

National Palace Museum?

But like Sun Moon Lake or Yeah.

I don't know the name of the temple, but we don't just I I we didn't go this last time I was there, but I've been up to Sun Lake.

Oh really?

Gorgeous, yeah.

Yeah, that one's a pretty place.

Okay.

In increase.

They had a big increase.

Like I think they just have as many people.

So they're like, why would it necessarily their fees are based on population?

Perhaps.

Yeah.

What are they producing?

Okay.

And so not having as many presidents not having as many customers not having problems.

Right.

They just need her to say whatever comes into your head.

Sure what I'm saying.

I'm not sure how about it's going to make that it's based on the basement.

And I wonder if C S D take city.

I mean it could be it could be that Peter Hills.

Like the number thing.

Because Alpine's city.

Yeah, I mean that's it.

They can't consider uh they know they're trying to make it faster.

Right.

I guess that's possible.

Although that's um pretty much they're talking about TSS.

But maybe there's a yeah.

Yeah, I'd be curious to know.

And I mean it's kind of weird like just interesting because yeah, they are an outlier.

If that's why yeah, well, and like we were carrying it, but allowed us to take that hit.

We were carrying them back.

You would have had to increase by 50%.

Like one of the battle still we did at 25%.

Yeah.

But the reason why we have to raise the rate is the template of the special service district.

Just so there's this is my perspective.

And I know everyone's saying T S and C to staff everything.

I get that, and like I fully support that, right?

That gets held in increasing costs.

Right.

Right?

The residents get mad at us.

Right.

And so if it even if we have an elected visual in the room, that's just people to like oh you guys are gonna do this massive picture that will force all the trades to go up.

I love the message that's just so they so they didn't need in my opinion.

But I but I don't but I don't like study it.

I think there's five things.

And then that rate it's this and I know it's a fee, but it's essentially right.

Hold again.

That gets the headset.

Sure.

And then just I was just thinking about the question.

I don't think it's altered.

Are we pushing too many costs on the rest of it?

No, because the developers can't be asked.

Yeah.

What's yeah.

Like who's running the same point?

All right, should we get back at it?

Well, I don't think that's gonna happen, but yeah.

So I put together Yeah.

Like I said, I put together like I go, there's no way I can do four hours.

So I go, well, I can do like seven small ones.

Got through the first small one.

But so we're and it's fine.

I'm gonna try to get through the next maybe three, and then we may have some next week or something too.

Um that's right.

We need that.

And and the truth is some of what's on these other slides we talked a little bit about with our other things.

So that's not gonna work.

Okay, this next set is really, I think about what's in the general fund, what type of taxes we charge, things like that.

You may know a lot of this already, and so if you get if I'm saying stuff that everybody knows when you want me to move along, I'll just look for the mayor to give me the yeah, something like that.

Okay, so that I think everything in here is related to general fund, just what taxes we collect, how we collect them, what the rules are.

So I stole this graphic from out of our budget book.

Um if you buy something in Lehigh, you're gonna pay seven point four five percent sales tax when you do that.

The city portion, so the state portion is four point eight five percent, that goes to the state.

The city portion is one percent.

So as a city, we can we can charge a one percent sales tax.

Many years ago, before I even got into this business, I'm trying to, I don't know how long ago it was.

They changed and said, okay, we're a little bit tired of cities competing for retail businesses or encouraging retail business to locate on the border so you can take get people from the other city to come over and shop and stuff like that.

So they said we're gonna alter the formula.

It's not gonna just be based on where the uh sale occurred.

We're gonna take half of that.

So if you collect a dollar, 50% of it goes directly to the city where the sale occurred.

So if it's the lows here, you go spend $100, $1 city sales tax, 50 cents goes directly to Lehigh City.

The other 50 cents goes into a statewide pool that's distributed based on population.

So that's why city like Eagle Mountain that doesn't have very many retail businesses, still gets they get a lot more than one percent if you think about it compared to their sales.

I I look at that from time to time.

In other words, if we were just if we were if it was 100% based on point of sale, what would we get versus the current distribution formula?

And it's actually pretty probably a little bit of um if you're curious.

So if I go to Amazon and buy things, it's based on the delivery point.

So if it's an Amazon sale, um gets delivered to an address in Lehigh, it would be counted as a Lehigh sale.

If you go to like Walmart.com, depends.

If it's delivered from the American Fork Walmart, even though it's on Walmart.com, it's gonna be counted as American fork sale.

If it's delivered from their central distribution or however that works, it would be our sale.

So they actually look at that because sometimes you go online and order and it gets delivered from the local store.

Um other taxes that we excuse me, we charge.

Uh so the county charges a this county's 0.75% is actually three things, I believe.

One is a 25% uh sales tax charge that the county gets, and there's also some probably not gonna go into details.

One, I don't remember them all, and I'm not sure it's that important, but there's mass transit taxes, there's transportation taxes.

What we get as a city is this 50% plus our per our population share of this 50%.

And if you remember last year, the state changed how they there was a state law that changed how they calculated population, which actually hurt us probably $50,000 a month because they are population instead of being used by the census, is by something called the state population committee, and it had a lower amount.

Um we also get a 0.1% uh there's two of them.1% and a 0.05% that we get for transportation money.

So it's part of your sales tax.

It comes to the city.

We can only use it for road maintenance, road projects, I should say.

Um there's the class.

I mentioned before about the class C money, the gas tax, that has a more broad use than this money.

The class C money I could use to pay people, I could use to pay for my streets department.

We pay for a small portion of our streets department with that.

Most of it we use for projects, but this sales tax money has to be for used for projects.

It can't be used for just to fund your streets department, and then we charge the 0.1% park tax.

That money comes directly to us.

Um, it's it's restricted.

We have to use it for park uh facilities or programs.

We as a city have decided that we're gonna use 70% of it for park projects, and 30% is given out in grants for programs.

Um, the reason we can't use that money for city programs is because the state is saying we don't want you to implement this tax and then just use it to pay for your parks department that you were paying for other money anyways.

That makes sense.

So it has to be for programs.

Yeah.

Okay.

Not I don't know.

You're dead already.

Or it didn't like your comment.

Yeah, for the Yeah, just so I I think there's proposal legislation that the speaker mentioned about okay.

No, we should watch that, but I don't I don't about it.

The point six five percent mass transit tax.

Yes.

Is that being pulled by the I think that all goes to UTI understand so Utah County was really upset with me in covered budget cycle.

Probably because we're paying that money.

Yeah, yeah.

Yeah, that's a that's I'm gonna say something that I think is right.

I'm not 100% sure, but I think areas in rural areas don't even pay that because they don't have tax areas, or even like I know Logan has their own transit system, so I think little city charges it.

I'm branching off to things that don't matter that I think I know, but yeah.

Okay.

Sales tax.

Now the one thing about sales tax revenues in general is they tend to be a little more volatile than property taxes would be for obvious reasons.

There's boom and bust years, right?

There's years where retail sales grow faster, and there's years where they don't grow as fast.

And so I just put these on a bar graph over the past uh since 2019.

You can see 20 uh 21, 22, 23, retail sales grew really, really fast here.

Sometimes double digits growth year over year.

They've slowed down a little bit over the past couple of years.

Um, but but but strong growth, very much strong growth.

Um I thought this was interesting.

I just went and pulled sales tax numbers from these cities, credit to population just to see where we fit in.

Because sometimes the question is, you know, are we a city that has really strong sales tax, or I think we're kind of average.

Um there's cities that do have very strong sales tax.

You would think, and I was mostly don't surprise me.

Murray doesn't surprise me, right?

Everybody knows Murray's has a ton of sales tax.

Sandy probably doesn't surprise me.

Oram certainly doesn't surprise me.

Uh now Linden, that's kind of a unique case, right?

We have a very small city with a few really large retailers there.

And so they yeah, so they have a super Walmart, they got a home depot, they got several car dealerships.

Um their per capita number is really really high.

But it wouldn't surprise me that Eagle Mountain would be lower.

And this when I'm look you looking at this number number, I just took their sales tax collection.

The the amount of sales tax that they received, so they're 50% plus the population portion of their money and compared it to per capita.

I don't know that it means much other than um I was surprised West Jordan was so low.

That was one that surprised me.

And I didn't look at every city, this wasn't data I could just go download.

I had to go like month by month, city by city, and put them on a spreadsheet.

So I pulled a bunch that I thought would be interesting.

This is I think it's last fiscal year.

I think it's July 24 to June 25.

Um we look you'll see this graph periodically.

I'll send it out in the weekly report from time to time when we get it.

Um this is just how I look at sales tax and we budget it.

Uh and it's been a little difficult to manage month by month.

In other words, I've tried to say to try to look and say, okay, we're two or three months into it.

You can't just say we're it's three months out of 12, so that's 25% because the sales tax doesn't come in, you know, right?

We would expect more in December than other months.

We would expect probably less in maybe January and February.

And so I kind of put this green line is kind of a normal distribution month, month by month distribution is how I was expected.

The past two or three years, it just really hasn't, it really hasn't followed.

Now there's a few reasons for that.

One is when we look at a month sales tax, it's not necessarily when the sales tax gives us the number, it's not necessarily they don't say okay, this is all the collections or that were related to say November of 2025.

They're saying this is all the number, all the money that was paid to us.

So you could have uh retailer pay early one month and late one month, and so there's two included on one distribution that happens not that infrequently.

Also remember that the quarterly ones would be typically higher because some companies only pay quarterly.

Um I think I'm wondering if sometimes the sales tax is not always super consistent in their kind of cycle on collection and payments, so maybe there's an extra weekend or things like that.

But you can see if we were to compare what I think my our budget trend line versus what we actually received.

In September, it was way below budget in November, it was way above budget.

November number was really, really high, which is great.

But often when that happens, you'll see the next month be kind of low to make up for it.

So we'll just see.

I was more worried before I got this last number because that actually puts us kind of ahead of where a budget uh for the year where I thought we were uh I had budgeted, so that that felt good.

But um something we watch, and it's obviously really important, but um I've it's been harder to forecast the past couple years than it was before that.

Um the governor releases his budget just a week or so ago, and I I look at that, I think that's interesting.

Well, I obviously don't not an economist, I don't forecast sales tax growth and things like that.

So I get their information.

They're forecasting three and a half percent growth in taxable sales, 3.6% growth in retail sales.

If you're asking what's the difference between those two, there are some sales that are taxable that are not retail sales, right?

I buy a ticket to a jazz game, that's a taxable sale, it's not really a retail sale.

Our city growth from July through November is 9.15% over the previous year, which is good.

If I looked at this before I got that last distribution, I think it would have been negative.

So far, so good.

But three and a half percent growth is really if you look at the long-term trend, that's probably really pretty average.

So they're not saying it's a boom kind of a year, but they're not forecasting any um any anything slowing either.

There's an article on KSL yesterday that population growth in the state and most other places is not what it was earlier, it's a little bit less.

So Utah is still relatively high, but it's lower than it was property taxes.

Talk about that just a little bit.

I think you know that most of your property taxes go to Alpine School District, which is now the other school district, I can't remember what it's called, but Aspen Peak School District.

Um, they'll go through a process of setting a tax rate and whatnot.

Of everything you pay, about 14% comes to the city.

Uh the other money goes to other things like Utah County, Central Utah Water Conservancy District, Utah County Water Conservancy District, Lehigh Metro cost charges a very, very small property tax.

I have a question.

Again, I I just don't know, Penny question, but um central Utah water is connected to our culinary is like why do we pay a fee and then our property tax also goes there?

So that's a question that is asked from time to time statewide, right?

Why are these why do some of these water districts charge a property tax?

And they're probably enterprise funds.

Now, if I look at central Utah, so what is central Utah?

They do Deer Creek Reservoir, Jordan L, Strawberry, right?

So they're doing these large projects that benefit a large footprint, right?

And so they're not necessarily water companies in the same way that maybe Lehigh Water Companies, they're like a wholesaler, if you will, and work.

I don't know if that's the best way to say it, because we get water from places other than central Utah.

But um, but you know, if I was if I'm Central Utah, I would just say, you know, I don't charge a property tax, I would charge a higher rate to the cities who would then charge a higher rate to the to the customers, right?

So is there a good way to do it?

Is that is that fair or right?

I don't know that I have a strong opinion on that, other than that's just how it's always been that they have a good portion of their funding comes through property taxes.

Okay, ask the central equality's not like the point.

Water comes from central at this point.

It didn't used to like 10 10 years ago, we hardly had any coming from there.

So they're wondering the sentence rate negotiated with them is the state has okay.

Central Utah is its own governmental entity, if you will, they have their own board, so they have taxing power.

They set it however they just like they go, they would any process that they would go through to raise their taxes would be the same process we would go through to raise our taxes that have a truth and taxation process and hearing, and they have a board that works just like a city council, like they're a governmental entity, if you will.

Dean, really quick back to sales tax.

We can't publicly disclose that that would be we would get in really big trouble.

But it so for us to use that to verify to say hey is Costco really paying every month we get that information for that reason so we can use it internally but we could never just we could never disclose that information okay if that makes sense.

Yeah I I'm just interested in what types of business generate what level of sales tax revenue.

Yes okay so I it's it's available it's just not publicly available.

We have it um okay so property tax just over time if you were going to go back 10 years 10 12 15 years especially our property tax and sales tax were about the same and now we now we get quite a bit more sales tax that we property tax grows slower but it's also less volatile right you don't have big when in 2009 when the great recession hit and a lot of states had problems because values were going down Utah didn't have that problem so as much as and I realized with property taxes I have a different opinion maybe as a homeowner or property tax power than I would as a finance director.

As a finance director I'm like I want to get money to fund our things and that's that's a method we use as a homeowner I may not enjoy paying it but either way the fact that it held its revenue levels during a time of recession was very beneficial financially for cities.

So property tax laws they vary a lot from state to state um back in the 70s property values grew really high a lot of states passed laws to keep so the idea is okay my property value went up 20% that's doesn't seem fair that my property taxes should go up 20% right that was really what they're trying to battle.

So a lot of states did different things Prop 13 in California is fairly famous where they said your valuation can only I think your valuation's locked in or can only go up one or two percent a year until you sell the property and then you get some disparaging things too because you could have two houses next door to each other one was sold last year and they're paying a much higher property tax than their neighbor who's paying a much lower property tax that's lived there for a long time.

Texas has laws and I think theirs has to do with you it the the taxes can't go up more than a certain percentage every year.

Some are based on the actual property looking saying hey your specific property taxes can't go up where some are based on the overall level that the state gets the way the idea the whole idea behind Utah's property taxes is that back in the 80s they put in refer to as truth and taxation laws slide yeah so it came up with what they call the certified tax rate.

So every year the state's going to calculate a certified tax rate the purpose of or the the goal of that tax rate is to say what tax rate should this taxing entity charge that would eliminate all inflation out of it so as a as a taxing entity we could get more money if more things are built in the city but if this if nothing was built in the city we would get the same dollars as last year.

So it takes out inflation for that it but that again that's just the certified tax rate as a city we can charge a rate higher than that but we have to go through the truth and taxation process as a to as a tax increase.

So any inflation that we want to recapture as a city we have to do through truth and taxation.

And you can kind of see that this purple line here is our tax rate over time as you can see it's gone down.

The city did a tax increase in 2023 and that's an interesting example because it still went down quite a bit maybe more than any other year but we did a tax increase that year.

That was just a year that taxes went up I think it was like 20 like residential property taxes went up like not taxes values went up I think 26% that year we did a tax increase for this year as well you can see the rate went up a little bit I thought this was interesting I just put in the gray bar is what our actual tax valuation or our tax revenues were year by year.

I just put in the gray bar is what our actual tax valuation or our tax revenues were year by year.

The blue bar would just say if we had an element in our property tax rate that just raised it for inflation every year, how much how much difference would that be?

Plus CPI.

We would never go through truth in taxation because you keep current.

Yeah.

Dean, I I know you've heard me make this pretty many times, ad nauseum.

Just for the new council.

You have to be aware we have two revenue sources, sales tax, which adjusts to inflation, property tax, which remains stable even in downturns, right?

So we have the stable that does adjust with inflation.

Um, so you just have to be aware of that.

And truth in taxation, the intent was to keep property taxes stable for the the property owner, so they don't have a sudden increase in the amount they have to pay, even though their income doesn't increase.

So just bear that in mind that there's two mechanisms there that I think work well together.

Um I know this was discussed recently in the late meeting because they are their bills looking at property tax and caps and that kind of thing.

And it was pointed out by I can't remember his name, but one of the person that this is his thing, truth and taxation.

He just reiterated the point that I always make that you know, property tax is not designed to adjust with inflation.

Yeah, so really the yeah, I think no, and my intent is not to sell a point necessarily necessary, just to make sure we all understand.

Which I mean works for like Lee High, but then you go to bedroom communities and that is a little bit different too.

Yeah, so when they, you know, especially those cities were pretty concerned about the bill.

Which means they could even hire a police officer with highlights.

So like it's it's hard when you start to have these one size fits all when all cities are not one-size-scale.

Yeah, when I was at Cottonwood Heights, like we get so that's a city that's mostly built out, right?

It's not really growing.

Like their new property tax in a year might be like sixty thousand dollars, like it was very low.

So part of this issue is growing cities have different dynamics than built-out cities, right?

Like built-out growing cities, you have a lot of challenges because we have new infrastructure, but the growth is helpful.

Every city's different, yeah.

Yeah, and if that comes with choices, I mean one sizes and fit all, one community can decide to be a breadroom community.

But I think to me, this is shows.

Well, this is why I'm concerned that we have a good um commercial base, tax base, so that you know it's not always on our residents, but um do you have a question?

So it's um the revenue is constant with truth in taxation, right?

The value and the rate changes, but revenues constant plus new growth.

So uh can we is there a way to separate out um that well, I guess we just look at the previous year and then minus the next year and find what the growth was, right?

Is that how kind of that works?

Yeah, I mean I think the idea is I make this sound, I make the comp the calculation sound simple.

It's can get a little complicated, but the idea is if nothing was built in your city, you'd get the same exact dollars.

So whatever you get in revenue based on the certified tax rate compared to last year's taxes would be your growth.

Buyers and up to people on who are retired.

Do we have that type of data?

Yeah, it's a good question though.

I will say, I'm gonna make now the county does have programs for seniors that can uh lower probe certain property taxes or for very low income.

There's two or three programs, but you have to be low income.

I think it's the whole thing.

I think so.

And so they fac when they're doing this calculation, like I said, it sounds simple, but they're they're calculating things like that, how much is abated, how much is revalu, how much is changed due to uh somebody challenging their valuation and they how much is changed, how much is not collected.

So they factor they try to factor all of those things in there than getting the rate.

There we go.

I thought this was interesting.

If you look at just total taxable valuation for all of these cities were pretty high.

Um now this is taxable valuation.

This doesn't include properties that are within a RDA.

Obviously, like for Provo, it wouldn't include BYU or Utah Valley Hospital, things like that, or for us, prep uh primary children's hospital, but we have the highest taxable valuation of any city in county, higher than Provo, higher than Orem.

That surprised me a little bit.

Um our base is good.

What's that?

A lot of it, yeah.

I mean, the off so remember that commercial so as a finance director, I love commercial office, they're high value, there's no exemption to it.

But you know, we had a lot of growth in class A office space for a number of years.

COVID really hurt that.

Marlin's given me a little bit of hope that there's a light at the end of this tunnel.

Maybe there might be some more commercial office that it's just with everybody, everybody's working at home, so all those projects stopped, and people are maybe coming back now.

Maybe there's nationwide just a little more interest in class A office than there was two years ago.

Um, and you know, there's a lot of areas in this town that have pretty expensive homes too.

So yeah.

Yeah.

I have a loud enough voice, I don't know why I'm doing this.

Um anyway, uh urban renewal or the redevelopment agencies are taken out of this.

Yeah.

Um last year or is it two years ago, we closed out Thanksgiving point.

That's true.

That would be probably 150 million dollars, maybe 200 million dollars worth of assessed value that came back on to the tax rolls.

So that does count as new growth to us.

Correct.

Yeah.

So even though it didn't count, like when they built it and it went into an RDA, it doesn't come to us at growth, it does at the end.

Yeah, so the reason I make it the comment is is we continue to let some of these come to their end of life and allow them to start rolling back onto the tax rolls.

Uh, we'll be able to see that number continue to increase as well.

Yeah.

I let's see.

So I just took, I think it's the same cities.

And I just took what was their property tax revenues compared to population per capita.

Um obviously there's there's a lot of things that factor into this, right?

So we look at taxable valuation, we look at their tax rate.

Um how much do they get per capita, as well as per capita is not number of homes, it's number of people.

So cities with larger families would this number would be lower.

I don't know that anything really surprised me here, but uh the one thing we're gonna see in a sec one challenge we have is that we are competing with especially when it comes to police, and that's it's really pushed up police and fire wages is we're we border on cities in Utah and Salt Lake County that charge a higher property tax rate than we do.

So this I went through and took every city in Utah County and the cities in the south southern part of Salt Lake County, and just to compare what our rate is.

Um you may know this already, but a city like Eagle Mountain, they have a very low city property tax rate.

But if you live in Eagle Mountain, you pay a property tax to uh unified fire authority who does their fire services.

If you live in Riverton, like Karma lives in Riverton, is Karma pays zero city property tax, right?

Zero.

But she pays, yeah.

She pays a property tax to the Riverton Fire District and a property tax to the Riverton Law Enforcement District.

Um as well as if you live in Salt Lake County, you pay a library tax.

So cities in Salt Lake County don't have to do libraries, they the county does them.

And I tried to put an estimate for county recreation.

So if if you're in Salt Lake County, they do rec centers, they do parks, and so a lot of that burden is lifted off of cities where in Utah County you have to do that.

So I was trying to do something comparative.

I tried to throw in those things where the cities that charge fees instead of property taxes just to be comparable.

But Dean, sorry, quick kind of policy question.

So how does that so those fees would be dedicated funds?

So if you had a police fee or whatever, it would only go towards the police.

So yeah, it would have to be police.

So policy wise, how does that I mean is that more effective or well it's really evolved.

So what where that really came from is I'm in Riverton and I was paying a tax to unified police, which they were, and they were saying I don't want to speak for karma, but if I say something she disagrees with, she'll she'll uh I'll give her a rebuttal minute.

But might be saying, hey, I'm paying this, I'm paying this fee to unified police.

I don't think I'm getting very good service.

Why don't we just make our own police district in the city?

We'll take the same money we were already paying and just put it for police in Riverton is really what happened.

Is that fair?

And so they they said we're gonna get better money if we keep the money here.

So they they had kind of that pro that tax was they were already paying, it was going to the county, and now so they made their own police district and they did the same thing with unified fire and made their own fire district.

And so um, but yeah, that property tax is has to be for police and it has to be for fire.

I'm just saying there wouldn't be competition for the funds, you know, like the with the general fund, it's okay.

We're gonna but can we do market people or do police for them?

It's not, and that's where it's kind of nice for them if you're a Harriman police.

I mean, Darren's not here, but I think when those districts were first created, it caused problems for us because all of a sudden they're saying, hey, we can hire whatever hiring bonuses or higher pay or do all this because uh they had more money than we did.

So Dean, with that, does that mean it's easy?

Do they still have to go through truth and taxation if they want to raise one of these fees?

So they do the same thing, but at least I don't know, it might be easier with the sell of the public saying, hey, we're gonna raise fees for police.

Yeah, so it doesn't just look like hey, we're raising your taxes.

Yeah, we don't really have the option to say we're gonna raise a tax that can only be used for police.

We have that option.

We could raise a tax and say we're gonna use it for police.

Just make it restricted.

I'd and I I don't I'd have to think about that.

I don't know, maybe I don't know if you're not gonna.

I mean, I'm not the person who's be saying any of that.

No, I'm just saying I don't know that we can off the record that is not for me.

But I'm saying we could we can PR, like if you're saying we we need to raise taxes because of this reason, and it's not necessarily designated because we don't have the fees, but if we're like as long as the council tells us to, we yeah, yeah, I mean because I guess that's the difference of being internally restricted versus an external restriction.

I think it's the same.

Kind of like you're the yeah, kind of like you're the redevelopment agency board, they're I think am I wrong?

The council is also the fire district board and the police law enforcement district board.

I mean it would help with transparency, right?

Because people know we raise taxes in 2022 and 2024, they don't know that that was for compare, you know, competitive wages for fire and police, which is a much easier thing to sell to the public than to say, especially when you're then saying, hey, we want more money for this, like you know, it's easier.

I think it's a transparency thing that helps and know where it's going.

Yeah.

But Dean, sorry to interrupt.

Um the 2022 tax increase wasn't specifically for police and fire, it was just for personnel and I believe the state law changed where when you're doing truth and taxation, you have to specify where it goes.

So you we can look at the budget and see you know what will be funded if we get the tax increase where it will record.

Yeah, I'm trying to remember, and I think what I said the other night, which I think is right, is so you're right, they changed the law a couple years ago, so you can't just say we're doing a tax increase, you have to say what you're gonna use it for before that, and you could because people are probably interested and you still probably make sense to do that, but you weren't required to do that.

I think we hired a couple of police and a parks employees.

Does that sound right?

Okay, but we didn't necessarily I guess either way it's not necessarily restricted.

I'm kind of thinking just out loud at the time.

use it for before that and you could because people are probably interested and you still probably make sense to do that but you weren't required to do that I think we hired a couple police and a parks employees does that sound right okay but we didn't necessarily I guess either way it's not necessarily restricted I'm kind of thinking just out loud at at the time and so but to say hey we're gonna do a tax increase and it's gonna hire five officers and these five officers are always going to be there because of the I mean we can say that but there's nothing externally that or there's nothing that would take a council five years from now changing that I think restrictive the taxpayer I would I feel more comfortable kind of like the whole social security like or other federal government right it's like well this is what it's for but actually no right like chime in real quick and I I don't want this to sound like I'm disagreeing with the comments there.

Just a caution if we look at the cities that have police and fire districts those fees are greater than or equal to our entire city property tax deed yeah I think what you're saying is this this here and this here is I think a little bit more than our entire property.

Yes and and and the caution is and again I'm not saying it's a bad idea I'm just saying we need to be aware of this it it's really hard to keep and chiefs in the room so I'll be careful how I say this but when when the fire department says hey we need a tax increase or or kids are gonna die that's how sometimes you can get those those um artificially large in my opinion um tax rates and and it can get out of hand quicker perhaps than the normal so just a caution for them it was easier because they were already paying it and they said yeah well oh go ahead I was gonna say I I worked in Eagle Mountain when we we went to unified um I I helped run the numbers for that if you could see Eagle Mountain the fee that they pay to unify it again is larger than our entire than our entire property tax bill.

So again I'm not saying it's a bad idea I'm just saying if we do this we need to go into it with our eyes wide open um I I yes well taken and I think there's always trade-offs you lose flexibility you know do you want to lose flexibility to make sure that it it's dedicated money um one question maybe Carmen so like we build a new police station and I believe it was sales tax revenue bond so in this kind of setup in Riverton would that so bonding for that much would be so that might be probably yeah you'd probably bond out of the district or buy or pay for it out of the city and have the police district pay the general fund a lease payment or something like that.

Okay.

Access to other city yeah you couldn't use sales tax for the police because they're being funded through tax yeah so I mean you could make an argument that it would push taxes higher because I have to pay for this at a sales tax and now the sales tax that was part of that was going to this is now yeah so I think that's a good point.

Um I kind of like the dedicated fund for Belize but yeah if we do a fee it will essentially be property tax.

Yeah because it's the residents only would pay for that yeah which I mean I guess you could force the city to pay I don't I just never really thought this all through I haven't been through one but I you know our it they don't just service our residents people pass it through coming or whatever so having a percepts tax I think would I don't know that it would be illegal to transfer money from the general fund to the district maybe it would I don't know but another thing to consider another thing you consider if we did form a district council you would be then giving up that oversight authority you'd be giving it to the board of that district so um again just some things to consider.

Well like I said I think Riverton I think the city council is the board of those districts too but I could be wrong.

There's other problems if you formed a district, and that there's some federal funding.

Uh like COVID is a really great example.

Um the city got a lot of money.

Oh, I got a lot of money for COVID to do all the protections, but as a district, the districts didn't get that money.

So there are a lot of restrictions, at least federally that districts can't get the same money that municipalities can.

So uh yin and yin, right?

Uh looks good, but there's always a bad side as well.

Yeah, something I wanted to point out, because I've been looking at park cities, just a radically different cities budget.

Um they pay a lot of district stuff, right?

Because they're small and they're just up there.

Uh so like I like the idea of having the county library system, but uh again, like we just pay them a fee, we don't have as much oversight or control of that.

And I and I still would consider that, but then I look at UTA where we're paying our residents are paying, and then one year they decide to stick it to northern Utah County or something, right?

We get our it's it's just uh yeah, it's interesting if you can keep the decisions closest to the people.

Uh sometimes it's sometimes it's best, sometimes it's not.

Yeah, that's where some of the kind of things you know, I always mention money when I talk about Riverton inheritment, but I think some of it was they're near they didn't get to control how many officers were in their city at a time.

And I don't know if it's that's what yeah, so but I might feel hey, if Karma was in favor of moving to a district from no great comments.

I appreciate all that.

Like moving to something like that is it's just there's a lot to it.

No, and I think there's there's other ways we can be transparent about it, especially that.

But I think it goes back to the you know what Michelle's saying earlier about the fact that our sales tax revenue is really well be able to keep our property tax balancing the fact that we have a lot of commercial that has not pre-sales tax and that we get so I think it's it's that whole balance of just yeah, I always look at a lot a lot of these, there's all these different parts, and some come in a little better than you think, and some worse, and there's just a lot of there's not always just a one this is better, this is worse.

There's just different things diversity, it does help us.

Franchise taxes.

So that's the our last taxes.

Franchise taxes.

I use the term franchise taxes.

I think that term it has different meanings for different people depending on how they use it.

A long time ago, franchise tax, I think just related to a tax cities would charge to utilities to use the public right-of-way.

So if I am Rocky Mountain Power or Enbridge gas, and I have one the fact that they're gonna use city right-away to run their business, gives us kind of the ability to tax them.

Now they pass that tax on to their ratepayers.

I understand that, but that's kind of the nexus.

That's the reason we're able to do that.

There's been lot there were laws passed, and these go back 12-15 years to kind of like just set some some better guidelines.

So right now, I'm gonna put it put them all under the umbrella of franchise taxes, but what we pay on your electric and natural gas bill is really an energy sales and use tax, and it's six percent.

You also pay something on your cable TV if you have Comcast that's five percent.

And I've tried to take my I don't have Comcast anymore, but I tried to take my Comcast bill and back into the five percent, and I was never able to do it because their bills are really confusing.

But it's not the whole Comcast bill.

So you don't pay, you don't pay this on the internet, you wouldn't pay it on phone if you have phone through Comcast.

It's only the cable TV portion.

And then there's a three percent uh telecom tax that's on selling that line.

So that's general fund rent revenue, tax revenue.

We can use it for police fire parks, admin, whatever else.

So there is a federal law that prohibits charging a tax for the fiber network.

So if you remember there was a what was the phrase back in the day?

No, no tax on the internet or something like that.

But so we're not something like something like no, there was a phrase that you used to hear all the time.

I think but federal operatives from charging taxes on other things that you'll see in the general fund.

That's like ambulance fees, legacy center fees, inspection fees, plan review fees.

We have an area called licenses and fees, building permits and building licenses and interest.

We mentioned interest earlier.

Probably for 10 years, I just stopped budgeting interest because it was so low.

And over the past few years it's much higher.

So we started budgeting interest.

I'm a little nervous to budget as much as we got last year, just because if it if interest rates fall and I don't get that, that puts us in a hole.

So we've budgeted maybe like before we were budgeting like $50,000 a year.

And then I think we were starting getting like a million dollars a year.

And so now we're budgeting like five or six hundred thousand dollars a year.

Um that's something we we look at every year.

Like I don't think interest rates are gonna stay at five percent.

Well, they're not at five percent.

They're four, and I don't know that they're gonna stay at four, but they're probably not gonna go back to under one because I just don't see I don't see that happening.

This is our revenue mix in our general fund for our last fiscal year.

So 32% sales tax, 20% property tax, 12% charges for services, and I thought that was interesting.

Just compare.

I went back to 2018.

Um so sales taxes a bit less, property taxes kind of the same proportion, but charges for services was higher back then.

We've had there's a few years our boom in building permit inspection fees was explosive, and it's not as much as it was before.

It's still healthy, but it's just not like it was back then.

That's a good question.

So our franchise tax is like five to six million a year, something like that.

That's what it shows in the budget.

Saratoga Springs is like 200.

Why are we hundred?

200,000.

They don't calculate it the same way.

Is it are they just putting it into general fund differently?

Why is it?

Oh, is that what well they'd still get power though?

Because it's it's more like conference.

My guess is they're putting that with another tax.

Okay.

Yeah, but maybe it's just like we're collecting a different way than they do it.

And yeah.

Not yet.

Um, I didn't change that.

Okay, other things from the governor's budget.

They just talk about moderate expansion, basically at normal rates, nothing to jump up and down about, but nothing to be concerned about.

And that obviously meant to say low unemployment, not owl unemployment.

Um, a certain amount of uncertainty uncertainty.

The national GDP is around two percent, which is probably not great, but maybe a little low.

Um, the CPIO inflation rate over the past three years is going down a bit.

The Fed's target is two percent.

I don't know that we're gonna get to two percent for a while.

At least I'm again, I am not an economist.

I don't have an opinion other than what I hear other people say, so I don't think they see inflation being down to two percent for a few years, just like you may not see mortgage rates down at whatever five percent for a while, or maybe ever.

I mean, they weren't five percent for many, many multiple decades, right?

Legacy center, I know that I think I saw that somewhere, and I thought it would be good to talk about this.

Might be the best place since we're talking about general fund.

So the legacy center, I think the general fund transfers a couple million dollars to the legacy center every year.

And I think I just I guess with this, I'm happy to answer questions, but also just talk about what we mean when we say the legacy center.

It's not just the facility.

So when we say legacy center, it's really our entire recreation programs.

So it's the facility, yes, but it's also junior jazz basketball and five-year-old soccer and things like that.

And it's also the swimming pool.

The swimming pools are expensive.

They really are.

And I don't know what to say other than they are really expensive.

Heating a swimming pool in the winter is really expensive.

So yeah, that's the indoor pool and the and when I say indoor outdoor, I'm not just talking here.

I'm talking about our outdoor pool we have over here.

So a few ways to look at that.

I mean if you think if you think of recreation as a service that we provide for the city, you know, we have a parks budget of six and a half million dollars, I think.

The recreation budget is the two million dollars or whatnot.

So you can look at it multiple ways.

You can look at it and say, hey, here's a service we're providing for the city, at least we're recouping some of those costs, or you can talk about whether or not those costs are well spent.

That's that's all fair to discuss.

Um Matt helped us do a kind of a cost segregation study with the legacy center a couple of years ago, and it was really good.

And the challenge you have is there's direct cost, you know, it's easy to look at the fees, say how much am I bringing in fees for per youth recreation or adult recreation or swimming pool or memberships.

Sometimes it's hard to allocate costs.

Anytime you allocate costs, there's some subjectivity to it, right?

Because Dan Harrison's salary, how much of that should go to memberships or how much should go to youth sports or and so I think we did it the best way we could, but but that's kind of what you're talking about, James, is when we took direct revenues, subjected direct costs, allocated those costs.

Yeah, most of the loss was a swimming pool.

Number two.

Okay, let's just do want to break or should we just move to number three?

We're tough here, right?

You should.

I should give a test and you could test out at something.

It should be.

This three hours should count as three entire semester hours.