Good evening.

Welcome to the special call meeting of the Olatha City Council for Tuesday, September 8th, 2026.

We're here tonight to hear public comment on our 2027 budget and on the exceeding the revenue neutral rate.

This budget reflects a commitment to fiscal stewardship.

It is mindful of rising costs our residents face while addressing the rising costs we as an organization face as well.

We're balancing the needs of today with our responsibilities to our residents for the future.

The budget is the most important thing this council does.

So thank you for to our staff for the all the work that you've put in the past several months.

Thank you to our residents for the input that we've received from all of you through our public workshops this summer and those of you who are here tonight, and also if you've uh written in or emailed us, uh your feedback is a critical piece of this process.

So before we begin our public hearing tonight, we'd like to ask our budget analyst Ashley Wooten to come up and give us a presentation.

Welcome, Ashley.

Okay.

Sorry, my computer is not cooperating.

All right.

Uh good evening, Mayor and Council, Ashley Wooten budget analyst, and I'm here to present on the 2027 public hearing on proposed budget and exceeding revenue neutral rate.

Before we get started, just want to go over a brief agenda.

Um we'll start with a high-level overview of the 2027 budget process, then we'll talk a little bit about revenue neutral rate, and then we'll go through some budget highlights and then I will pass it back to council for the public hearings on proposed budget and revenue neutral rate.

All right, so let's start with the budget process.

Um we can start with where we are in the 2027 budget calendar.

As you all can recall, we kicked off the budget meetings with the city manager's presentation back in July, and then we moved into a series of workshops reviewing the proposed budgets for the various funds and the proposed capital improvement plan.

Um so we're utilizing this special call this evening to summarize the 2027 budget and open the floor at the end for public comment.

Council will then vote on the proposed resolution to exceed revenue neutral rate.

Um these meetings lead us up to the September 15th meeting where council will consider adoption of the 2027 budget, CIP and schedule of fees.

Each year when building the city's proposed budget, um, city staff take these factors into consideration.

They play a foundational role in how staff approach the budget process.

So starting with the city council priorities, they remind staff to be good stewards of the city's finances while also prioritizing community needs and services.

Budget principles establish what it means for the city to be financially stable so that the city meets all legal obligations and continues to maintain a competitive credit rating.

It's also imperative that city staff keep a constant eye on economic trends and how they affect the city's long-term financial outlook.

So some of those trends that have been discussed in previous budget workshops are things such as unemployment rates, inflation rates, and consumer sentiment.

Staff also monitor the city's financial outlook.

Revenue and expenditure trends are updated throughout the year, and those um forecasts are utilized throughout our budget process.

And lastly, public policy can also have a direct impact on the city's budget, and I'll provide a few examples of that in the next few slides.

Next is an overview of the budget challenges and solutions that we've reviewed throughout budget meetings this year.

Um, just as residents are feeling a strain on their household budgets due to inflation, so is the city and personnel expenses, contract services, and commodities.

Inflation is a contributing factor to the structural imbalance we're seeing where expenditures are outpacing revenue.

Also, due to the continued economic uncertainty, staff are continuing to see sales tax volatility and are continuing to remain conservative in sales tax projections.

And lastly, due to the revenue loss that is anticipated over the next five years from property tax legislation and courthouse sales tax retiring in 2027, the proposed CIP required reductions and delay of some projects.

Because the city knows and understands how these challenges are affecting city budgets and its residents, it was important to address those challenges with some solutions.

And that's starting with providing some relief to the general fund by having no additional general fund positions for 2027 and being strategic with vacancy freezes or delaying the backfilling of vacant positions.

The city is also ensuring that only essential expenditure increases are being prioritized in the budget proposal process.

This is to keep down costs, but to also maintain a great level of service to residents.

CIP reductions may also continue to be a cost savings measure that is done in a fiscally responsible way that continues to maintain current infrastructure and tends to residents' future needs.

And lastly, the city will continue identifying other cost saving measures and increased revenue opportunities as we continue to navigate this economic uncertainty.

Next, let's talk a bit about revenue neutral rate.

To provide some background on the origins of revenue neutral rate, back in 2021, a truth and taxation bill was passed through the state legislature, requiring cities and counties to provide notice, hold a public hearing, and conduct a vote by elected officials on the intent to exceed revenue neutral rate.

And as you all may recall in workshop one, Clara Bernard, our budget manager presented on the intent to exceed revenue neutral rate, and city council passed the resolution on the intent to exceed revenue neutral rate.

So what is revenue neutral rate?

The revenue neutral rate is the tax rate that would generate the same property tax as levied the previous year using the current tax year's total assessed valuation.

So that means that the city of Olatha would not be able to collect a dollar more than what was collected in 2026, and that presents challenges.

Although the city continues to identify cost savings measures and increased revenue opportunities, exceeding revenue neutral rate is necessary in 2027 to continue meeting the needs of residents and to prepare for the expansion of city services as the city continues to grow and develop.

The pie chart on the right shows the breakout of the various taxing jurisdictions that receive a portion of a resident's property tax each year.

As a reminder, the city only has the authority to set the city's property tax levy, which makes up about 19% of a resident's property tax bill.

Next is an overview of the 2027 proposed budget starting with general fund.

As you can see in the 2027 proposed column, general fund operational revenues total around 188 million, and that's a 0.5% increase over the 2026 projected revenue.

On the operational expenditure side, it's totaling around 185 million with a 4.8% increase over projected expenditures.

The next slide is a more detailed breakout of the general fund overall budget.

The majority of general fund revenues come from sales tax at 42% and property tax at 34%.

Other sources of revenue make up the remaining 24%.

As for the general fund expenditures, our awesome employees are remain our largest expense at 64%, with contractual services falling behind at 16%.

Next, I'm going to talk a bit about utility funds in CIP.