Great to have staff here, guests and media who so faithfully report uh council and city work.

This is the first of three study sessions on the budget, the next of which will be nine days from today, Wednesday, September 3rd at RPU.

So not in this uh room, but uh oh a little ways north and uh much closer to ward three.

We're grateful to Administrator Zelms for her wonderful work uh that she has sent out prior to, and I turn this study session on the budget over to administration administrator Zelm.

Uh thank you for happy to help us here and it's budget season, so I'm excited to be here.

Um, I really can't take much credit for this other than it does take a lot of people to put the budget together.

Um, so special thanks before I get started to all the departments for um they've been working on this actually probably since October or November of last year, um, as we uh tried to bring a budget to you that is less than what we had anticipated, and then of course, going through all the regular process of their baseline adjustments and decision packages, and um the people who do a whole lot of work are uh Rachel Hodick in the finance department as well as Josh Doer, um Erin Parish, Brian Anderson.

Um, so it is a labor of many people in order to bring you a budget, and they are still working on getting the flipping book version working for you, but you do have the detail um within the PDF that went out.

So today we are setting sort of a high level, trying to go through this with you.

Please feel free free to stop me if you have questions about something.

Um, for some of you, it's your first city budget doing this from the dais.

So um if you have questions or need clarifications, happy to do that.

Um, and the intent as um acting president Wall pointed out is um that we would based on some of your questions, information that you would like a deeper dive on, um, be able to come to you over the next few study sessions and uh be able to do that for you.

Your strategic priorities made uh in appearance here, and uh obviously you adopted those um midstream of us working on the budget.

Um they are different than the prior strategic priorities, but not drastically different.

Um they are a little bit more focused than the prior strategic priorities, and so we did um adjust uh mid-budget process to try to identify how some of the decision packages are fitting in with your strategic priorities and foundational principles that um this body has uh acted upon.

So you can see it does say that we really start going in February or March, but um the team is sort of always working on the budget, so appreciate that.

Um, also always managing to their budget and trying to make sure that where they can, they don't spend every dime.

Um they try to actually always bring this in under every year, um, and very happy to see that most of the time we're able to do that in most areas, but sometimes we can't.

Um so we're here in August and September.

We're at the the bottom uh step steps of this with the uh recommended budget, and then your next really important um vote will be the preliminary levy on September 22nd.

And so I like to point that out because that is the levy amount over you that you cannot go higher than after that public hearing, or excuse me, after that date.

So um you have the option between September 22nd and December to lower um the levy portion of the budget, but not increase.

Um so just important contacts there uh for the city council as we're moving through the process.

So something to be thinking of is do you have questions or feedback for us about the recommended operating budget?

I would know it's a two-year budget, but we do a supplemental budget in two in 2027.

So we don't try to make significant changes then, but as things adjust, we still will come back to you with adjusted budgets if fuel prices increase significantly or something changes, um, and we need to make an adjustment for that future year.

Um, does this effectively balance your foundational principles and strategic priorities?

Sometimes those are a little bit in conflict with each other, depending on what we're looking to accomplish.

So dynamic tension there and sometimes trade-offs.

Is there anything specific in any of these decision packages that you want us to bring back a lot more detail on?

We're happy to do that.

And then is this where you want to be sitting as far as the preliminary tax levy for adoption on September 22nd?

And the key there is if you would like it to be higher, we need definitely would need to know that now.

It's rarely happened in my career, but there's an opportunity for anything.

And of course, if you are looking for it to be less, it's helpful for us to have an understanding of where you would be interested in cutting, but you don't have to accomplish that by September 22nd in order to accomplish it by the public hearing in December.

So without further ado, um, we did start looking at how can we reduce what was sitting at one point at over 11% levy adjustment year over year increase.

Um, and then with the changes that the city council made last year to the budget, which carried forward, we were sitting down at that about 10.68% levy adjustment.

Um, and we looked at the budget, both the baseline and the decision packages with sort of this financial eye.

We try to use a financial eye when we're looking at the budget.

Um, is there any strategic value?

We don't really have ROI per se in local government, but we do have the value on investment that can be returned to the community.

And sometimes there are revenue sources associated with an item.

Um, does it present financial sustainability?

Am I gonna be worried that I'm coming to you the following year to say actually this costs more than we anticipated, or 10 years from now and say, you know, we should have been working on this all along and now we can't afford to buy vehicles, something of that nature.

Is there efficiency included here?

Are we being adaptable in how we provide our services and not just looking to add new, but think about how we are doing our work?

Um, can we collaborate across departments in order to accomplish something or partner with another group?

Um are we going to be having community impact and organizational impact?

Um, there are parts of our organization that have some pressing capacity challenges, um, and then um what kind of accountability and performance are we gonna have to ensure that as these investments are made that we're continuing to provide all of that value.

So uh the property tax rate slide, important slide, you can see that the estimated 2026 property tax net tax capacity or the local tax rate is hovering right around that 49.7 percent.

So for the last uh 10 years, we have been between about 46 percent and 52 percent in the levy rate.

Um, and part of why that is something we can achieve is because we have growth in our property tax base, both new construction and value.

People tend to want their value to go up, but not necessarily want the value to impact their property tax, but um, that's not how that works here.

So this is still the preliminary estimates.

You saw this earlier in the year.

Um we will get refined estimates from the county.

Unfortunately, it's a little farther into your budget process when we get that.

But we do have new construction at 1.77% that's estimated as as of their most recent estimates, um, and then valuation adjustments depending on the category of property that you have.

So that total growth in the estimated market value is sitting just above 6.5%, but a fair amount of that is coming from new construction.