And then the public speakers are all questioning.

All right.

I know I'm gonna mess it up.

Um yeah, just a few.

That's what I had to do.

I'm a human life.

Sure.

I do feel like we do.

I just like I'll be like, hey man, copy um I'm not gonna do that.

It's not an omission.

Everybody would buy like uh we can do that.

This is what it's been like last year.

That's why we're like we need to come back.

Hello, thank you.

All right, welcome.

Before we uh have city council, we have a special meeting of the finance and personnel committee.

Uh sir, do you please take a roll?

Here.

Here.

Here.

So that present.

All right, thank you.

Uh under information only, we have a 2026 budget update and a 2027 budget preview.

I see we have Ms.

Hagerty here on there.

So uh we revise our 2027 budget uh process a little bit to add in a sort of year review for City Council uh to sort of bring together all the information financial information that's been communicated so far this year, kind of give you an update over as we move into the 2027 budget process.

Um so just a recap 2025 year end uh resulted in a general punch for call nine point four million, very high revenue performance between ambulance revenue and PPRT as we uh discussed with the 2025 supplemental appropriation ordinance.

Um at the end of 2025, our general fund balance is six point six million under the policy.

That policy is uh to maintain a fund balance of twenty percent of our operating budget.

That is for a number of reasons.

Um to prepare us to to be able to have resources to respond to emergency situations, to weather uh economic changes, um, and make um sound and reasonable budget decisions uh when we have an economic downturn.

Um and also for cash flow purposes, it's important to maintain that general fund balance policy of 20 percent.

So we're currently 6.6 million under that policy.

Uh year-to-date revenue, you can see the the bars are budget, the line is actual, you can see um we are underperforming in replacement tax and in other revenue in total, but through June, uh we are under budget on revenue by 2.7 million dollars or about 2.6%.

Uh if we were, and again, I just want to to make a really general statement here that this these numbers are very, very preliminary, and they're based on only four months of several of our major revenue sources.

So to call something after four months is is a it's really early in the process to do that.

But uh if we assume that current revenue trends continue through to year end, uh we estimate that revenue will fall short, $6.8 million or approximately 3% of the total.

Uh that would put us at about $6.8 million under budget on revenue in total.

Uh year-to-date expense here.

I know the scale's a little off because police and fire such uh are uh such large operating departments in comparison to others.

Uh but every operating department except the fire department is currently under budget.

Um through June in total, uh the general fund is 2.0 under budget or about 1.8%.

If we were uh if we assume that all departments and the fiscal year on budget, um and should current fire staffing practices continue, we estimate the general fund will be 4.4 million over budget for the year.

Um you can see there budget versus projection.

So if you take uh revenue underperformance and expense overperformance, uh you can see here the net of that is uh 11.1 million dollar shortfall for the year.

Um specifically some deficit challenges for 2026.

Uh the the general fund balance is not sufficient.

As I mentioned, we're already underneath our our general fund balance policy.

That general fund balance isn't sufficient to continue to absorb operating losses.

Uh 2026 needs to end in a positive position to begin to restore that fund balance to policy.

And uh finance staff will closely monitor department staffing vacancies and overtime use as the fiscal year continues to ensure that our departments stay at or below uh budget numbers for the year.

Uh revenue challenges that we've seen so far that we anticipate will continue into 2027.

Um as I mentioned, PPRT has continued um underperforming, not only in 2025, in 2026 year to date, but we anticipate we don't anticipate a recovery, so to speak, of those uh revenue numbers into 2027.

Uh ambulance revenue is currently under review and discussion with our billing partner to recommend a path forward that may include changes in our billing structure, um, other billing um updates to help make sure that we're collecting as much per transport as we are eligible to collect.

And our sales tax is currently lagging slightly as of and we'll have the full June year to date at next week.

But our as of the the fourth disbursement, we're about two and a half percent under budget.

I will say that's moving in the right direction.

After three disbursements, we were four percent under budget.

So we're hoping that that is an indication that we'll see some recovery there.

Uh this is just a general fund revenue uh graph to kind of show how our that bottom bar there is property tax, and that has remained flat since 2017.

Um just the the spike you see there is related to um ARPA uh COVID recovery funds.

Um but to show how we have we have attempted to diversify or expand our revenue collection outside of property taxes while we hold the line flat on that to keep up with expense growth.

Um expense challenges going into 2027.

We have unknown wage adjustments under um outstanding collective bargaining agreements.

The health fund is currently in a deficit position, um, and so increases in premiums paid into the health fund will be necessary to restore balance to that fund.

And our 2027 pension contributions, uh, our plan increase of 7% or $2.6 million.

Uh the actuary will be here on August 3rd to present uh that final report to City Council.

Um and a similar graph here for general fund expense.

Again, that spike there is related to um ARPA funding and the associated expense there.

Um the blue bar at the bottom is our pension contribution.

So you can see just from 2017 to 2026 how much pensions have become a larger uh component of our overall general fund budget.

And that is the end of my prepared uh presentation.

I'm happy to take any questions anyone has.

Thank you.

Are there any questions?

Alderman Beach.

Thank you, Mr.

Chairman.

Thank you, Kerry, for your continued uh work in the area of these budgets.

But sooner or later we have to really take a serious look at not very long now.

Every single dollar that's collected from our property taxes.

Which we've held for nearly 13 years.

Every single dollar plus will go to pay the pensions.

The unfunded mandated pensions from the city.

And we're at about 50% now, it seems.

That number is about 400 million, roughly between two.

That makes a serious problem that you're pointing out to us as we look here as the committee is going to discussion on how to restructure and come up with ways in which we can turn this thing around and head it a different direction.

It's very concerning to me, personally.

And I think we need to say those things out loud enough time so we can really have an adjust to us to we understand it.

It's the reality.

What's current?

Thank you for letting me speak, and thank you for your hard work.

Thank you.

Thank you so much for allowing me to speak.

Hi, Carrie.

Thank you so much for putting this together.

Sure.

I'm just curious because I am thinking of those big dollar amount police and fire.

And I am kind of understanding some of the recent information related to the number of firefighters on duty, so on and so forth.

So if we were to implement the word is to codify the ordinance, if we were to do something like that and get to a number of like 60 or 62, what would that shortfall look like?

Well, it would be the budget that was approved for 2027 assumed that the 36 staff that we hired in addition to prepare for Viva based retirements starting this year would leave, would retire and not those positions would not be filled.

So we I don't have an exact number on what that cost would be in addition to what we're looking at today, but we can certainly share that.

Um if you're talking about making a permanent change to require 62 staff every day.

That's again, it's not just 60 or 62.

60 or 62.

We will be happy to put those numbers together and share them with city council.

Okay, yeah, that that's what I would just kind of want to understand what that shortfall number could be.

Um what was the other question that I had?

I know I asked a lot of questions all the time.

Um we we focus when we talk about the budget, we focus a lot on you know, capital improvements.

There was a long time where we invested a lot into capital improvements, vehicles, um, just anything to improve the life of the items that we have.

Sure.

Is that is there an area or room to kind of pause some of those capital purchases to make some of these changes that we're possibly gonna need to make before the end of the year?

Uh so certainly uh council could make a decision to forego capital investment um in place of uh staffing, but I would recommend you know we use um for a long stretch of time.

We had we did not replace capital equipment at all.

And um spent a significant amount of funds on maintenance related expenses.

Our fleet grew to um at least 30 percent larger than it needed to be because the backup equipment needed a backup because nothing was reliable.

We had vehicles in our fleet that we could have replaced two to three times based on the amount of money we spent keeping them running.

So I would caution against doing something like that and committing to an operational change that doesn't have a permanent funding source to pay for.

Um capital, whether we regardless of our staff staffing level, the personnel heavy operation that we have requires a significant amount of capital equipment, certainly, um, to get the job done.

And we're not talking about you know small SUVs.

We're talking about million plus dollar pieces of fire equipment.

We're talking about you know 200 to 350,000 dump trucks.

The equipment we use is expensive, but it's absolutely necessary for the people to do their job.

So a budget that doesn't fund the entire operation, both personnel and capital, um, is not a fair representation of the cost of services, and using one-time revenue to pay for operating expenses really just kicks the can down the road for our funding challenges because now we've added operational cost that we don't have an ongoing revenue source to pay for.

Yeah, and I I do I do understand that it's just like I'm gonna give a for instance.

We're gonna be discussing the command vehicles and upfitting the command vehicles.

And I believe I I don't know what the upfitting actually like what that means, like what that describes, but it came to I think ninety plus thousand dollars.

And we know that one additional officer for just I mean, and and I am just focused on this year and and really kind of getting through this year best way that we can, and if there are ways to just say pause on that, not to say forever, because we learned our lesson before with not continuing on capital investment, but I just you know, I just I haven't seen us really take those kinds of measures.

Oh we make those kinds of cuts.

Yeah, I just haven't seen it in my time here.

Sure.

So we have we have revisited um the useful life uh um schedules that we use for our vehicles that determine how often they get replaced, which determines how much we pay a year to use that vehicle, basically.

Um and we've made revisions to um essentially every fleet type across our platform because once we started replacing them and replacing them on a regular basis, not only did we see that they were functioning reliably for longer, but we also identified a point where they still had value left.

We could sell them in a secondary market and apply the proceeds from that sale to the purchase of a replacement piece of equipment.

Um we also continue to maintain a smaller fleet because of that.

So we it is something that we look at.

Again, I wouldn't uh any individual capital purchase certainly we could review, and that's at council's discretion.

Um but again to say that we're not going to outfit um command vehicles to help pay for a portion of this, we have command vehicles coming that would then not be ready for use in the field, which would be a problem.

But also, how do we pay for those staff after the $90,000 is gone?

Is the the question?

Yeah, as we work that out.

But yeah, I got you.

Thank you so much.

Yeah.

All the weeks log.

Thank you, Chairman.

Um I have a couple questions.

Uh they're uh related to each other on slide two, if you wouldn't mind going back.

Um the statement there at the end of 2025 general fund balance is six point six million under the policy.

Yes.

Is that under the 20% or 25%?

20%, yes.

So currently that's where we're at right now?

Yes.

So if I were to go um to your projections for 2026, you're saying 11.1 million is under?

Correct.

So it would be essentially 17, 18 million?

Correct.

Under our policy.

Correct.

All right.

Um we know is there a way that we could get, and I I do appreciate Frank's uh uh question about five-year projection.

Is there a way that we could maybe get that um based on assumptions that we may know?

Things change all the time.

Sure.

Based on our trends, something yeah, we provided a five-year projection with the 2026 budget.

Correct.

Um I would be reluctant to project the next five years based on four months of this year.

I I you know, I don't feel great projecting the end of 2026 on only four months.

So we would normally update that projection once we have final budget numbers.

So when 2027 revenue and expense are calculated, then we project out from that point.

So I'd be happy to share the projection we completed for 2026, what that looks like.

We can take you know, 2026 performance year to date and kind of tweak that a little bit and kind of carry those impacts forward.

But yeah, I can share um at least a rough estimate with council.

Off top of the head, do you remember what that 2027 projection was?

I do not off the top of my head, no.

Um based on that policy, is that something that would be an audit finding based on or just a recommendation that's saying, hey, you guys are under I don't think uh in the first year it would be a finding.

It would it would be certainly be if it's not addressed in a timely manner, then it would be all right.

So yeah, a lot of thinking there.

Um thank you.

That's those word of my two questions.

All right.

Uh thank you.

Thank you.

All right, moving on to resolutions.

Oh, I'm sorry.

Uh Alder Woman Neil.

Alderman, I'm sorry, I didn't see your hand up.

Thanks for allowing me.

I understand that there are certain pockets of money that you might be considering to handle this deficit for the coming year.

Um are you able to send over to us an email with those possible uh resolutions that you have to handle this deficit?

Certainly.

Thank you.

All right.

Seeing no further questions, we'll move on to resolutions.

Uh number one is an award bid for the South Pierpont Avenue resurfacing uh to TCI concrete amount of 503,000 uh 372.43 cents.

The contract creations through October 9, 2026, and the funding source is the Lincoln Wood TIF funds.

Is there a motion to approve?

So moved.

Okay.

Any questions or comments for staff?

Seeing none is in favor indicated by aye.

Aye.

Aye.

Opposed, matter passes.

Item two is approval of the Department of HUD grant funded sub-recipient agreement with Rose Grants for an amount not to exceed 193,320.

This agreement is from June 1, 2026 to May 31, 2027.

The funds will be used to provide eligible plans with housing and supportive services and admin costs.

Their motion to approve.

So moved.

Second.

Any questions or comments for staff?

Seeing none all is a favorite indicated by aye.

Aye.

Opposed?

Matter passes.

Item three is approval of a HUD sub-recipient agreement with Rose Grants consolidated amount not to exceed $1,049,712.

The agreement is from May 1, 2026 through April 30, 2027.

The funds be used to provide eligible clients with housing and supportive services and admin costs.

So motion to approve.

So moved.

Second.

Any questions or comments for staff?

Seeing none, all is a favor Nicky bye.

Aye.

Opposed.

Matter passes.

Item four is acceptance of a HUD continuum care roast grants consolidated grant award in the amount of $1,074,080.

The grant does require a cost match in the amount of $268,520, which will be provided by Rose Grants.

The grant term was from May 1, 2026 to April 30, 2027.

Is there a motion to accept?

Second.

Any questions or comments for staff?

Seeing none, all is a favorite indicated by aye.

Aye.

Opposed.

Matter passes.

Item five is the acceptance of a HUD continuum of care Rose Grant's 2003 grant award in the amount of 201,379.

The grant does require a cost match in the amount of $50,344 and 75 cents, which will be provided by Rose Crants.

The grant term is from May 1, 2026 to April 30, 2027.

So motion to accept.

So moved.

Any questions or comments for staff?

Seeing none all is a favorite indicate by aye.

Aye.

Opposed?

Matter passes.

Is there a motion to adjourn?

So moved.

No.

Not yet.

We're not there yet, sir.

We're not yet, sir.

It'll be later in the meeting, okay?

This meeting is adjourned.