session we have three agenda items today a the 2027 supplemental recommended operating budget and we have the payment card processing fee analysis and then we have uh the 2026 mid-year action plan so we'll start off with the supplemental recommended operating budget miss sounds uh thank you council president council members mayor norton members of the public many of our teammates are also here today um this really is a follow-up to the discussion that you had this isn't clicking um the the discussion that you had on August 24th and there we go um that is how I knew it was August 24th thank you to deputy administrator parrish for having this up on his screen so I could guess um I uh did just want to say the primary purpose of this is to follow up from the discussion that was on August 24th um but we do generally try to run through the baseline of the budget as well maybe the first time that someone is tuning in and checking this out um as always we do try to uh resource the city surrounding strategic priorities and foundational principles so how we focus our resources and initiatives and how we approach the actions that we take in delivering service um the supplemental budget timeline um for teammates here they have been working on this since February um and really they started working on it last February because we're in the second year of a two year budget um we've reviewed this a few times um and you will have an action on September 21st which is authorizing the preliminary tax levy uh so that is an important um milestone in the process after that time period the levy can stay the same or go down but it cannot be increased in the process so just uh a table setting here again um the 2027 um million dollar uh 799.3 million dollar budget um that is inclusive of Rochester public utility so electric and water um that is approximately a five uh six point eight million dollar increase year over year um from the prior year so the amount of resources necessary um to provide the services that are in the budget um is a levy increase of that dollar amount um we also have a percentage on the page but that percentage is not the rate that people's taxes will change um that will really mostly be uh decided based on their assessed valuation and whether or not they're moving out of the homestead tax credit for those that are in residential property that they own and live in um for those in commercial property obviously it will depend on how they change relative to other commercial classes and apartment classes um we are still anticipating a one percent adjustment in sewer rates for 2027 uh four percent um for electric and nine percent for water um we do have some cost of service um studies coming up for all three of those utilities um forthcoming in 27 and 28 that is how the updates are established um you can see that the recommended supplemental tax levy and budget is a levy of 124 million nine hundred and one thousand thirty three hundred and thirty eight dollars down to the penny there um and that is a decrease from what we were showing in the trend line uh primarily related to some changes in health insurance and some other positive development uh the recommended supplemental total budget again um just shy of 800 million dollars um about 16 percent of the budget comes from tax levy a lot of other rate paying and other um revenue sources go into being able to provide um the services those numbers don't reflect um the different items that came up um during the August 24th study session um both any path home funding and um uh request of what amount of levy reduction would be needed to match the preliminary established market value of 5.21% but we will discuss that today as you can see the estimated market value um that we have from Wolmstead County

A lot of other rate paying and other revenue sources go into being able to provide the services.

Those numbers don't reflect the different items that came up during the August 24th study session on both AnyPath home funding and a request of what amount of levy reduction would be needed to match the preliminary established market value of 5.21%.

But we will discuss that today.

As you can see, the estimated market value that we have from Wolmstead County is an increase in valuation.

A piece of that, about a quarter of that is new construction.

And so that means that any adjust any property tax levy will first be absorbed by that new construction and then be absorbed by a by the valuation adjustment, which is all other crosses, classes of property increasing in value year over year.

Again, the tax rate though remains pretty steady since 2018.

We've vacillated between about 4.7% total net tax capacity rate and about five point or a 52%.

So here we're down below 15% for the 2027 recommended.

And we have been breaking down the levy increase in a couple of different ways.

You'll recall that this was last year was the last year of having holistic budget stability funds available to be able to mitigate the levy adjustment coming out of COVID.

We have some capital improvement increase and the equipment revolving stabilization is important for us to be able to continue to invest in the vehicles that help us provide service.

We had some other reductions there of 0.64%, and then some decision packages making up the remainder of the levy adjustment.

Those are the decision packages for discussion.

And I'm gonna hand it over to Mr.

Parrish for a focused conversation.

All right, um, mayor president of the council, good evening.

Uh gonna cover a few slides here that are more conversation-based.

So shared services.

We left off with this at a previous meeting and uh forwarded it to this one.

Thank you.

Appreciate that.

Uh forwarded it to this one.

Uh, as you recall when we did our financial policy development, this was an element we said we'd periodically report back to you on.

Uh, this is also an element within our action plan.

And so uh from that perspective, you'll hear about that later this evening.

Um, I would say there's pockets of uh opportunity and encouragement here as well as uh some challenge and some areas where we're not making the kind of progress that we might want to see.

So uh this is really just an itemization of all of our organizational shared services.

Um, as you can see, uh, I think we you have gone a number of areas uh where we have uh done further integration in this space, but we still have many areas where we have well called redundant directors and supervisory structures.

So to the extent that we uh elect to um you know have uh, and I'll just use IT as an example because we went through a fairly substantial conversation in that space this year and really couldn't come to any kind of new alignment on that.

Um, you know, we'll continue to have two directors there that are both you know fairly highly compensated employees, you know, for both RPU and the city.

Each of those directors has supervisors in some cases they have supervisees as well.

Um fairly large departments uh within both sides, but there's opportunities here.

I would say with the uh ERP project, uh that is an area where uh bringing us into common systems in the future uh will help.

Uh right now we don't even use the same chart of accounts for financial reporting.

Uh, that is something that the team has put a great amount of work into.

Um, it's not you know inexpensive.

There's some history things we have to navigate there, but that chart of accounts then will at least be able to forward you know common financial reporting and create a common framework for that.

We likely will have a common team of people that support the ERP project once it's implemented.

Um, and right now that's not the case.

We'll give to you more of an update on the ERP project uh with the action plan as well.

But I'll just say that this is never a static area.

So you all approve a two-year budget.

Um, in between there and some of the notes, you can see we've had position transition.

So, you know, GIS is an example.

We have two GIS managers or you know leads.

Um, we've had transition in that space, uh, but without a common framework, you know, we're not realigning.

Um, in some cases, it doesn't make sense.

Uh, there are business purposes for having distinct features uh and and functions, but I would argue that we have room and opportunity here to think more about uh this work.

So with that, Mr.

Parrish, uh question on the ERP project.

When is the implementation completion date?

Yeah.

Um so the team is actively working on the project.

Uh the end of 27 is when we'd expect to be fully implemented there.

Uh but there's a bunch of what we'll call it micro implementations happening where it will roll out on a phase basis.

But our big go live is in fall of 27.

So will we then uh uh a year from now be in a place to uh look at uh more shared services in that space.

I think it's something that you're you manage on an ongoing basis, but I think it will help that conversation, and I think like any of these organizational changes, it could be like your first opportunity to see how can this really work?