2026.

I'm Alder Woman Marina Dmitrievich, the chairperson of the committee.

I'm joined by my vice chair, Alderman Peter Bergellis.

We had Alderman Scott Spiker.

I'm sure he'll flow back in.

Alder Woman Melee Lake Hoggs is with us virtually.

And Alder Woman Charlotte Moore is on her way to the room.

That does provide us a quorum to begin our business with item number one.

26001.

Communication from the mayor relating to the proposed 2027 budget.

I truly want to thank Mayor Johnson as well as our budget leadership with Nick Kovac for starting this discussion earlier than ever.

So we really appreciate it.

This is a communication file.

And I think the way that I've been framing it is we may have different decisions along the way, and certainly that's how democracy works.

But it would be great if we can at least try to share the same assessment of our fiscal situation.

And that's what we're hoping to accomplish today.

So this is not meant to be like a pre-budget deliberation, but it is available for knowledge, especially as the department goes into the community for additional feedback on to a peek into what will be pretty much informing likely the 2027 budget choices in the administration.

So we're happy to get the same glance.

So with that, thank you so much, Director Kovac, and the floor is yours.

Thank you, Madam Chair and Committee members.

It's good to be here this morning.

And uh, like the chair said, this is an this was done at the request of the common council uh but also done uh somewhat of our own volition and that we agree that alignment, how I like your phrase, the alignment getting the assessment aligned will allow decisions to be um to be to be better informed decisions to be made by everyone involved.

So it if you know if before communication between the budget office and the common council about the proposed executive budget while it was in deliberation between May and September was mostly informal.

Uh I in the last I think three years we have formalized it a bit in that in late July or early August, about midway through our development of the budget.

I've been sending a letter, I think titled Big Picture Budget Prior uh big picture budget issues and request for a common council priorities.

So that that remains, but we're kind of we're jump starting that a bit early, about a month earlier, uh, and we're doing it to the council and also to the public, and we're we're enhancing the mayor's public meetings so that it'll now be two meetings uh at two different uh libraries on July twenty-ninth and july thirtieth, rather than one meeting uh in the city hall rotunda as it's been the last couple of years.

Going way back that meeting used to be in the fishbowl over on Broadway.

So we're trying to enhance our communication with the common council, but frankly, we're also trying to enhance both the mayor and the common council's communication with the public.

So I would say there's a couple different goals here.

And then the slides, I think I've shown it to three of the five committee members already.

Uh and I've also shown this to a few different community meetings.

Uh these slides sort of begin with a structural analysis or maybe analysis too strong a word, uh, pictoral description of the structure of the 2026 budget, and then we talk about the 2027 budget gap and and what's likely ahead for that.

So with that, I'll begin.

The 26 budget is 2,075,687,722.

We have that in words and in numbers, different people learn differently.

Uh, and also keep in mind throughout all of this, and I apologize to the committee who probably knows this already, but I do think it's important to underline some key concepts.

Every dollar spent must also be received.

So there's expenditures and there's revenues, and they have to completely tie out.

Most of the conversation on these slides will be about um expenditures, but then I will describe um the revenues as well on one slide, and keep in mind they have to they have to tie out, and that's per state law for every city, town, and village in the state of Wisconsin every year.

Different rules for state and federal government sometimes, certainly for the federal government.

Uh, and then most people don't think in words or numbers, they like to think in pictures, especially when you're talking about big numbers, it's hard to visualize.

So here's the big pie.

This is the entire, I'm now starting to round the entire two point two billion seventy five million dollar uh city budget.

But let's put that up into the the parts that the public, the mayor, and the council have the most control over.

I mean, the mayor and the council and the public control the entire budget, but there's quite a few rest some some of the funds are are restricted in various ways.

So the first we're gonna peel off nearly a quarter of it, about 23%, $484 million is self-supporting, uh, which means that that ties out separately.

Revenues and expenditures equal here, and um the bulk of this is the um uh enterprise funds like sewer, water, and transportation.

It also includes grant aids and settlements and county delinquent tax fund.

But that's money that's sort of in and out and doesn't interact for the most part with the rest of the 1.59% or from now on I'll probably be saying $1.6 billion budget, which is the general fund, also known in a lot of our city-facing documents as the levy supported budget.

So the property tax levy does not support this $484.

If when I say the mayor and the council have control over the budget, so the sewer and water is the primary example of the majority of this.

In theory, could there be a budget amendment to do less water pipes or less sewer pipes?

Yes, but then that would just ultimately either increase cash reserves or lower in long term lower the sewer and water fees.

It would not make money available for the rest of the budget and vice versa.

Your prop the property taxes do not support the sewer and water fund, and vice versa.

So this 1.6 billion dollars has to separately tie out.

And then when you get into that 1.6 billion, I've just sort of removed the self-supporting as not part of at least the leading edge of this conversation.

Only about a third of that total two billion is what remains for day-to-day costs of most city departments.

So the big the four big categories I've I've split off here.

Three of them are actual different sections of the budget.