Eight weeks is it approximately.

And as the council chamber is uh is being renovated with state-of-the-art equipment.

So we're excited to be here and excited about uh things to come there.

So uh this uh setup just for my colleagues, this is the setup that we will use for our regular council meetings.

Uh if uh we have future study sessions, we uh may have a little more informal uh setup, but we wanted folks to kind of get used to the uh the council regular council meetings set up.

So uh if you have any suggestions for tweaking it, let our city administrator know or or Aaron.

Uh uh with that, uh we are here today to continue our discussion of our 2026, 2027 budget presentation.

So uh administrator Zelms, uh take it away.

All right, thank you, Council President, Council members Mayor Norton, members of mostly uh staff of the organization and community.

Um, I am just gonna kick off with a little bit of a brief reminder of um what we started with in the initial study session, as there might be people watching that um weren't part of that.

And for anyone that's presenting after me, you need to point the clicker this way.

So a little dancer.

Um so it's moved twice.

Um, so just starting off with this.

Um, we have adopted the new strategic priorities and um adjusted foundational principles.

And so when I'm thinking about the budget, um, first those foundational principles, we do a lot of things at the city that are continuation, and then how we layer on top of that the strategic priorities and balance the foundational principles becomes a little bit of dynamic tension when we're in the budget process because there are things that we need to continue to do year after year, and then there are ways that we can layer on top of that.

But of course, we also have this foundational principle of fiscal responsibility and sustainability.

Um, and that's probably where most of the dynamic tension comes in when we're looking at the budget.

Um, obviously, we've been working on this, and um the team here in the audience has been and and at tables have been working on this for quite a long time to bring you a two-year budget.

Um, and we are in this September phase of answering questions, and that's really what we're here to do today is to respond to some of um more deeper questions that had come up on the first uh study session conversation, and so be thinking about um if there's additional questions, we do have some things scheduled for you at your next study session as well, um, in order to be able to make good use of the time.

So, as a reminder, we're still sitting um with this uh tax rate um below 50% of our net tax capacity rate.

Um, that's been true for most of the last 10 years.

There's a few years there in the 2018 to 20 uh 20 time frame where we were bumping a little bit above the 50% net tax capacity rate level.

Um, but again, with some of the growth, both in valuation and new construction happening in the city, um, we are able to absorb some of these increases in cost and investment in uh community services through both the new construction growth and valuation adjustment.

And that's the biggest way that someone's tax bill is going to change year over year is based on the proportionality of the value of their home or the value of their commercial retail business versus all of the rest of the uh properties that are in that category, and then the larger piece of all of the property that is within the city limits of Rochester.

So just important to point out um as you can see, the increase in total levy year over year is just shy of 6.6 million dollars.

That's a pretty low number as um as the tax levy goes year over year over the last few years.

Um, and the team worked really hard to keep that as low as possible, um, bringing it down from about 10.68% in your final um levy that was projected at the end of 2024.

Uh, we also have some rate adjustments in sewer, electric, and water that we discussed, and as you can see, the total budget adds up to um just about six hundred and sixty-four million dollars in 2026 and 630, about 636 million in 2027.

There's some vacillations in the debt service in the capital improvement program when we're finishing a very large capital project and all of those expenses are hitting in one year, that can make some pretty um large changes in the total budget overall operations, as you can see in the gray um square uh to the left of that chart does uh increase, but it decreases again when you get into that 2027 year.

So some changes happening there across the entire book of business of the city of Rochester.

So uh council member Keene.

Just on that chart, I am interested, like just in the operations box.

It struck me that uh like that's the more stable part of the budget compared, but I noticed that we're doing like a nominal increase over 2025 into 26, but then we have a drop going into 27.

Can you talk about that?

So a lot of that is related to how the debt service is showing up and the power purchase agreements are showing up in the Rochester Park utilities budget.

So with all of the vacillation happening there, that's atypical to what you would normally see.

And um that explains the power.

No, I didn't expect to see that in the every 30 years or so, you see something like that.

And so it's just a bit different than how we would normally carry some of those numbers.

Thank you.

I understand it better now.

Sure.

Um, and you can see um decision packages are a portion of that.

We made some significant reductions in order to be able to bring that tax levy down almost in half.

Um, we are in our final year and absorbing um the holistic budget stability funds that the council wisely put towards um reducing what the tax levy would need to absorb as we were climbing back out of some of those pandemic changes, and then um just being able to really stabilize our equipment revolving fund.

We've been working on that for a few years and help get our budget in order and make sure that we have structural integrity to our operation and being able to provide services.

And the levy supported employee services costs, those are typically the lion's share of the increase of the levy.

Um, we do have contractual obligations to our labor units, and a number of those are levy funded positions, but not all of them.

So you can see that the general fund um is the lot the largest supported fund with uh with the tax levy.

That is where your 24-7 services of police, fire, and sometimes public works is a 24-7 service, are located.

Um, some administration, um uh some some of those typical departments that you see, but we also do have um parks and recreation and the library um receiving funds, about eight million dollars, eight to ten million dollars a year of our capital improvement program in the tax levy, and then a tiny sliver there to fund the utilities and customs at the Rochester International Airport.

The rest of those funds are paper with airport related revenue.

Um, and as you can see, what we're projecting out into the future years, and sometimes we're able to mitigate those as we were in this year.

Um, you're seeing uh on average about a seven and a half percent adjustment year over year in the levy, a significant amount of that is regular personnel costs.

We typically expect that to be about 5.5% adjustment year over year for personnel costs, which isn't just the actual salary, those are things like salary, health insurance, those types of things.

And of course, we're also absorbing uh some other impacts this year with the paid family medical leave and things of that nature.

And despite all of those things, um, the team did a great job of trying to bring this budget in um lower than had been anticipated.

So, with that, I'm only going to be part of the talking heads this evening, uh, this afternoon.

And so I'm gonna turn it over to Brian Anderson to talk a little bit about debt service.