Good evening and welcome to the Tuesday, October 14th, 2025 study session of the Olympia City Council.

For the record, we have a quorum with Councilmember Cooper.

Excuse tonight.

So we'll begin with our first item on our agenda, which is 2A, which is a discussion of the 2026 operating budget.

And we have our city manager, Jay Burney and Mike Givens, our finance director presenting tonight.

Jay.

Thank you, Mr.

Mayor.

Council members, again for the record, Jay Burney City Manager.

As you mentioned, I'm joined by Mike Gibbs, Finance Director.

Mike going in and out.

Yep.

I also want to point out that all the department directors are here as well to help with any QA as we get through this evening.

Our goal here tonight is to make is to come to some agreement around revenues and reduct and reductions to get us to a point of a balanced budget for 2026.

We still have public hearings ahead and work on rates and fees in the CFP.

We also have some agenda time plugged in for any other adjustments needed around the operating budget once we get through this evening.

The PowerPoint that you're going to see tonight is going to look a little bit different than the one I sent you on Friday.

Myself and the finance team, we worked on it all throughout the weekend, all the way up to today, and then we fine-tuned some things.

So you'll see a couple things that might be a little bit different than what we sent you on Friday and a couple extra slides as we kind of talked about all the things that you needed to kind of make some decisions tonight.

This is a slide that I shared with you last year.

It's it's really just reminding all of ourselves what a sustainable budget is.

And a sustainable budget is one that uses ongoing revenues to pay for ongoing expenses.

And when we get unsustainable is when we fall into using one-time monies for one for ongoing uses.

So we've been working towards a more sustainable budget for the past few years.

We identified a $10 million gap as we got into balancing last year, and we've worked last year to begin closing that.

And our work this year is to is to fully close that gap.

In terms of our agenda for tonight, um, I'm gonna just talk for the first slide, just kind of what I need for tonight out of tonight's discussions from the council.

We'll talk a bit about what guides our budget.

Um I want to go over some of the assumptions and enhancements requests that we've received from departments, and I'll talk about which ones are included, which ones need some discussion for tonight.

Um we've got a revenue update that I'll provide, um, and then we'll talk about reductions and then also again, we need to make some come to some agreement around revenues.

So, in terms of there's there's three significant things that I'm hoping to get out of this discussion.

One is um the agreement on a one-time use of real estate excise tax that will cover the first six months of public safety sales tax.

And I'll cover this later in the presentation, but this is just up front, just so you know kind of where we're going for tonight.

Um, I'm hoping to get some agreement on a B and O increase scenario and then agreement on reductions.

One of the other things that we'll talk about tonight is enhancement requests, um, things that departments have asked for in their budget that didn't have in their budgets last year to help them do their work.

We'll talk about that tonight.

Some of those need your discussion to see where you might be.

As all of you know, um, our work is continues to be rooted in the comprehensive plan.

It's the community's plan, it's the community's vision for our city.

It's a big document, and we've broken it down into these focus areas to help better communicate how the work of the city is moving forward.

And over time, as we get in, as we finalize this budget, what the community will see is our budget allocated into our priority areas.

So it's much more transparent and easy for them to track.

We here we are in October, but we work on the budget all year long.

We work on our priorities early in the year, we measure how we're doing with tools like surveys, and then when we get in the fall, we start more formal budget discussions leading to a formal budget proposal for November, December.

And this year in particular, we started our budget work at your council retreat in January.

And we checked in again at your semi-annual retreat.

We've had some additional study sessions along the way to dig into budget.

And I just want to comment comment about how much easier for me as a city manager those earlier discussions have been.

So as we continue to look at future budget calendars, um, it's likely that we'll try to program in some more earlier time together, like we did this year.

And this is just a reminder that when we when we last launched our community survey in 2023, the community told us that our top five priorities should continue to be housing homeless services, public safety, economic development, transportation, and work on climate.

These are a few just a couple slides I used to show you on the 30th as well that our general fund revenue for those um watching at home totals 116 million dollars.

That our general fund revenue for those watching at home totals 116 million dollars.

And 36% of those revenues are what we call protected revenues.

They come from things like grants, past ballot measures.

So what we really have is $74 million in revenues and $74 million of general fund budget that have more flexibility that in terms of how you spend them and where you can take reductions.

And then as I've shared before, all of you know, but it's again it's just good context that any time we have this discussion is that our general fund is comprised mostly of people at 70%.

So when we think about taking reductions, it's really difficult to do that without without touching people.

Our current balancing position is the need to close a $6.3 million gap.

It's about $200,000 different than I shared with you on uh September 30th.

Um again, one of the things I mentioned is we continue through our budget process.