Telling you we have some B.

I believe it's really in the source.

I sit with sales.

I'm here with his voice.

Telling me that it is going to be what it's still.

Telling you believe in spraying.

We believe in the source.

I sit with still.

I'm hearing his voice.

Telling me that's going to be okay.

Good afternoon.

The time is now 2.03 p.m.

on Wednesday, May 6th, and the City of San Antonio B session is now called to order.

Madam Clerk, please call roll.

Councilmember Corps.

Councilmember McKee Rodriguez.

Councilmember Viegran.

Councilmember here.

Councilmember Castillo.

President.

Councilmember Galvan.

Councilmember Aldareta Gavito.

Councilmember Mesa Gonzalez.

Councilmember Spears.

Councilmember White.

Mayor Jones.

Here.

Mayor, we have a quorum.

Great.

Thank you.

This meeting will hear a briefing on the FY2026.

Eric, over to you.

Thank you, Mayor.

Good afternoon, Mayor and Council.

So, yes, we are this afternoon.

We'll be walking the council through the five-year financial forecast, as well as an update on where we where we sit right now financially, halfway through fiscal year 26th.

Freddie's also going to talk a little bit about some of the prep that we will be doing with you all in advance of the May 22nd goal setting session.

And then finally, Freddie will also talk about the taxpayer impact statement.

I know there have been several conversations at governance as well as the full council.

So over to uh Freddie to begin.

Thank you.

My name is Fred Alfredo Freddy Martinez.

I'm the interim director, uh budget director for the city of San Antonio.

And today we'll cover the FY26 second quarter financial status report as well as projections for revenues and expenses for the remainder of the fiscal year.

We'll also provide an overview of the five-year financial forecasts for the general fund, the hotel accuracy tax fund, the development services fund, and the solid waste management fund.

As Eric mentioned, we'll also have a brief update on comprehensive budget reviews and the next steps in the budget process.

But before getting to the presentation, I do want to call your attention to the binder that you have that provides hard copies of the materials that were sent to you this week, which includes the presentations, the six plus six financial report, a March status report on budget initiatives, and the 24-7 performance report, as well as a for financial forecast document.

First, we'll start off with an economic update of what's going on around the uh around the country and as well as um what's going on locally.

Um for the US, um we're seeing moderate growth, however, there's still high uncertainty as U.S.

economy growth has slowed to about half a percent during the first quarter, with US unemployment at about 4.3%, which is slightly higher as compared to March of last year's uh 4.2%.

As you're probably aware, there are also geopolitical tensions, such as the conflict with Iran, which is uh pushing oil and gas prices higher.

And um we still have uh inflationary factors or inflationary issues with higher energy prices and tariffs as being the major contributors.

On a local level, local unemployment for March is for 4.0%, which is slightly higher than last year.

Um, but we are still seeing a slightly uh a slight increase in the labor market growth of about 0.3% as compared to March of last year.

Um we are seeing some uh continued downturns in some of our housing uh markets, such as our residential permitting with our development services department, which we'll talk about later in the presentation.

But we're anticipating that to be down about 23 and a half percent this year, median home prices in San Antonio are slightly lower that last year, and homes are on the market longer, so these are some of the the themes that when we talk about some of the things in the coming slides that we'll refer back to.

Up first will be the six plus six budget update.

Most major revenues are seeing um slower growth than projected through March of 2026.

Sales tax is growing, but at a slower pace.

We are seeing a uh decline in airport passengers at the airport compared to FY25 and also compared to the budget.

But we'll have a slide later where we talk about the airport and their revenues.

There's not a material effect on their revenues.

There's discussion with airlines on how to make the airport whole in terms of their revenues.

The hotel occupancy tax revenues lower, especially in the first quarter, as we saw lower occupancy rates and average daily rates.

Building permanent activity, especially in residential, as I just mentioned, continues to slow, and we'll talk about that when we get to the development services department.

As a reminder, this is our FY26 adopted budget for the city of for a little over 4 billion, 4.06 to be exact.

And you'll recall that this is made up of three major components, the largest being the general fund at 1.69 billion, which fine which funds our most of our core city services.

We also have 1.2 billion in restricted funds such as the airport development services and hotel occupancy tax.

And finally, our capital budget is a little over 1 billion at 1.16, which funds our FY20 or excuse me, our 2022 bond program as well as airport projects.

For the general fund for the first six months, revenues are over by about 21.5 million dollars above budget, and we're projected to end the year about 50.9 million above budget or 3.1%, primarily due to CPS energy revenues, which is anticipated to be about 54.5 million dollars above the budget due to additional off system sales that we've seen throughout this fiscal year and that we expect to continue throughout the summer.

Property tax is slightly above budget by about a million.

However, our sales tax is uh is gonna be about 2.6 million below the adopted budget.

We're still seeing growth in our sales tax, but it's not meeting the uh the budget expectation.

Other revenues are projected to be about two million below budget, and overall our general fund departments, their expenditures are projected to end the year slightly below budget, a little over two million dollars in savings in the general fund on the expense side.

So this next slide illustrates the overall impact of our revenues to the general fund.

For the general fund, total revenues are about 1.65 billion.

Of that amount, we had planned to receive a little over 1 billion through the second quarter.

And as I mentioned, due to stronger CPS revenue, our total collection is 21.5 million dollars more.

For the year, we project to be above budget by 50.9 million, and that's driven primarily by more CPS revenues.

Most of that would be off-system sales, about 38.8 million dollars of that number.

As I mentioned, sales tax is still growing but at a slower pace.

Our projection for the end of the year anticipates being about 1.7% higher than last year.

And you may recall that the budget assumed a growth rate of 2% over last year's uh estimate.

Other revenues are projected to be $2 million below budget due to less river barge ticket revenue and less impounded vehicle auction revenues.

So for FY26, overall, the general fund financial position is $62.3 million more than anticipated.

This is primarily due to a better beginning balance of $8.9 million that we ended FY25 with, $15.9 million more in revenue driven by CPS energy revenues, and slightly lower expenditures.

As part of our financial management practices, we continue to monitor on a monthly basis revenue and expenses, and we'll update projections as additional data and information is received.

We'll provide more unupdated revenue and expense estimate for 26 with the FY27 trial budget, which will present to the council on June 17th.

Now on to the uh FY26 budget update for some of our restricted funds.

Hotel occupancy tax through six months.

We're under budget by about 1.8 million, and that's due to slightly lower occupancy rates and average daily rates.

For the airports, revenues are below budget at the end of the year due to the anticipation of Southwest Airlines becoming a signatory airline, as well as less airline revenues because of the lower passenger accounts that we're seeing at the airport.

Um, because of that, there's less need for operating expenses, and the airport's on a cost recovery model, so there'll be less airline revenues because of that.

For development services for the first six months, we've collected more revenues because of permit activity related to the airport development, terminal development project, but due to lower commercial evaluation and residential permit activity, that favorable variance is anticipated to decline to about 500,000 by year end.

Then solid waste as a percent is very close to budget, but overall we're anticipating to be about 1 million dollars under the revenue budget, and that's primarily due to recycling revenues that the solid waste fund receives.

The revenue that we receive per ton for recycling products is about $20 less than we had anticipated in the budget.

And overall in these departments, their expenditures are within the adopted budget, so no issues on the appropriation side.

I wanted to highlight the employee benefits fund.

As you may recall, during the three plus nine presentation back in February, we discussed that we're beginning to have challenges in the health care or the employee benefits cost, the employee benefits fund, and that continues through the second quarter.

Medical and pharmacy claims are the cost drivers.

For the second quarter, we're about 19.4 million dollars over budget, and our final FY26 projection, we're estimating to be 45.4 million dollars over budget.

As you can see there, it's driven by uniform claims and also civilian claims being over not only the 26 budget but over 25 actuals, which are higher than we had anticipated.

So, mayor counsel, let me jump in here on this one.

So, this is something that as Freddie mentioned, we highlighted in the three plus nine financial presentation.

Um we are actively working this issue, and and we are seeing a tremendous amount of pressure from specifically freestanding emergency rooms.

Um of the 51 emergency rooms uh in our city, uh four of them make up over half of the claims that we are seeing.

Um, and many of those claims are not for emergency care.

So as we've as we've spoken with you all, we are initiating a targeted focus, as well as a conversation with employees to understand the impact that this has on us as an employer, and uh will be something that we will be continuing to to press down on over the next couple of weeks, um, but uh we will keep you updated.

Obviously, this is employee benefits is an important aspect.

We we cover 27,000, almost 28,000 lives with our employee benefits system with all employees and dependents, so this is critical.

So making sure that employees have the right information and that um providers are charging correctly is a very targeted focus of ours right now.

So, next we'll move on to the five-year financial forecast.

And so, just a couple things about the forecast.

The forecast is an early financial outlook for the city's major funds, and it is not a budget.

It sets a framework for upcoming discussions on the annual budget development.

You'll see in the preceding slides that the forecast is not structurally balanced and has deficits in FY28 through FY31, as revenue growth is not keeping up with projected expenses.

Property tax revenues have declined from union elected legislation and work and the worsening housing market, and then to balance FY28 through 31, we'll have to make some revenue changes and spending cuts as those are needed to align expense growth with revenue growth.

So, starting with our revenue assumptions included in the five-year forecast, this next slide illustrates the change in our major revenue sources as compared to the FY26 estimate.

Overall, revenues are declining by about 9.9 million or 0.6% over the FY26 estimate.

Looking at property taxes based on current information from the appraisal district, we are projecting that our base property values would decline, resulting in an $8.2 million or $1.7 reduction in property tax revenue.

Keep in mind this projection assumes no change to the property tax rate.

For sales tax, we were projecting that growth remains at 2% as compared to the FY26 budget, and we'll have a slide here in a second about the five-year growth on sales tax.

For CPS, the forecast projects an 11.2 million or two percent reduction in revenue as compared to the 26 estimate.

This is due to anticipation the anticipation of having less off-system sales.

However, the base revenue does grow about 2.5% compared to the FY26 estimate.

For our other revenues, we're anticipating this slight increase of 0.4% or about 1.1 million, which is due primarily to implementing $3.1 million in new revenues as part of the FY27 budget that we introduced in the 26 budget as part of the plan.

And as I mentioned, we'll continue to update these revenues as additional information and data is received.

And we'll provide updated reject projections to be provide to during the butt trial budget in June.

Moving on to our property tax forecast.

This slide illustrates the impact of the taxable value in FY26 and our current assumptions for FY27.

For FY26, our base value declined by about 0.9% with new values rising by 1.76% for an overall growth rate of about 0.86%.

For FY27, based on the information we have today from the Bear Central Appraisal District, we're assuming a 3.54% reduction in base values and a growth of 1.41% on new values for an overall decline of 2.13%.

The preliminary roles indicates a decline in base valuation, and we're still seeing protest appeals and exemptions to remain at high levels.

We also had the impact by the worst housing market and also the implementation of SB9, which is exempts 125,000 in business personal property.

Again, this is preliminary data, and we will receive additional information over the coming months and provide updates and an updated estimate during the trial budget in June.

One thing I'll point out here, Mayor and Council, is that the last time the city of San Antonio had negative taxable value growth was in 2011 after recession.

So we've not been in this position for some time.

As Freddie mentioned, this is preliminary information that works its way through the process to eventually a certified role that we receive from the appraisal district at the end of July, us and every other tax entity so that so that entities can set their budgets.

We're going to continue to work with the appraisal district, and either at the goal setting session or as part of the trial budget, show you a little bit more information that we hope to get from the appraisal district around what's happening for residential, multifamily, industrial, commercial, and what's really driving the negative growth.

As Freddie mentioned at the very beginning, the housing market isn't any better or worse than it was this time last year.

We're still continuing to grow as a city, but to see taxable values, base values decline at that much of a clip is uh we need to we need to better understand that and then likewise share that information with you all as we move forward.

This slide shows the historical data for property values.

Senate Bill 2 effective in 2021 caps annual property tax revenue increases for cities and counties at 3.5% on base values without voter approval down from the previous 8% cap.

For the years before passage, the average growth was about 8.2%.

Since it became effective, that average growth has been about 4.9%.

However, with the decline in base value that I just spoke about, the FY27 total valuation is anticipated to decline by 2.1% overall.

For the forecast period, there's only modest growth of about 1.5% on average from FY28 through FY31.

Keep in mind that the city does have the capacity, the council does have the capacity to adjust its property tax rate to the state allowed revenue growth to maintain our operations of 3.5%.

So that's property values.

This is what our property tax historical and outlook looks like.

It illustrates the total property tax collected from FY20 through FY25, and then the amount we were projecting from FY26 through FY31.

For the period of FY20 through FY25, that growth in revenue averaged about 4.6%.

For the forecast between FY27 and FY31, we're assuming an average growth rate of 0.7%.

And you can see for FY27, we also have a decline of 1.7%.

And just keep in mind with the implementation of SB2, property tax revenues on base values cannot grow more than 3.5%.

We could adjust the property tax rate to the state allowed tax rate by up to 3.5%.

And as mentioned, as we receive more info from the appraisal district, we'll be prepared to share with share this with city council during the trial budget in June.

On to our sales tax.

In terms of sales tax, this graph illustrates sales tax actual collections from FY20 through 25.

Estimates for FY26, as well as the projected collections for the five-year forecasts.

Between FY20 and 25, sales tax grew on average about 5.3%.

However, that included significant increases in 21-22 as we recover from the COVID pandemic.

We started to see much more moderate growth or slowing of the growth in 23 and 24, where we average about 2.5% for those two years.

This growth has continued to slow in FY2025 and for the 26 estimate for those two years to have an average of about 1.8%.

With the continued uncertainty in the economy, we anticipate that sales tax growth will continue to show moderate growth, and we're projecting that to remain at about 2% growth for FY27 and grow between 2% and 3.5% between FY28 and FY31.

Next is CPS energy.

For the FY27 projection, we're estimating the CPS payment to be about 2% below the 26 estimate, and that's driven by less off system sales.

Also keep in mind that the forecast, when we do this forecast, we anticipate moderate growth, and you can see that in the outer years with higher growth in 30 and 31.

The higher growth in 30 and 31, that 3.7 and the 2.4% are due to some large load projects that we're expecting to come online in those years.

And as you can see by the graph, how it kind of goes up and down, you can tell that CPS is one of the most volatile revenues, and it's difficult to forecast, and it varies widely.

So as we continue to look at this, we'll factor in things such as weather, fuel prices, and we'll also bring back another projection during the trial budget in June.

This kind of tells you the story on the split between base revenues and off-system sales for CPS revenue.

As I mentioned, the decrease in FY27 overall is due to the off system sales.

Just a reminder that off system sales are not paid by the city of San Antonio residents.

And as I mentioned, the base grows in outer years from the large load projects, load projects coming online.

So as far as general fund expenditures that we use to make our assumptions for the forecast, so we fully fund initiatives that are added in FY26.

And the forecast reflects today's level of city services.

We also remove any one-time expenses and add any operational operating cost for completed capital projects.

The forecast includes projected increase for contracts, health care benefits, and inflation.

There's also funding for employee compensation and benefits for civilian police and fire.

However, the forecast does not include any new improvements or changes to existing services.

And as a reminder, for the 27 budget plan, we included a 10.7 million dollar reduction as far as as part of that plan, and that continues with the forecast we're presenting today.

And finally, we maintain the general fund ending balance with a minimum of at least 15%.

So to show the increase from FY the FY26 adopted budget of 1.696 million to our projected 27 forecast number of a little over 1.8 billion.

You can see that the main drivers here are going to be the compensation and employee benefit costs.

We also have about 10.8 million dollars in mandated costs, and these are going to be mandated costs that we do that we that were mandated to do for completed bond projects, our parks and linear creek expansion that are coming online in the future, as well as uh grant matches that we have out of the general fund.

There's about 20.4 million in uh increases for support services such as technology, equipment, as well as some contractual and inflationary increases.

We do have a small amount for the net increase for removing one times and adding the second year costs for FY26 improvements, and then as I mentioned, we're still holding the plan reductions for 27.

Amongst this 10.7 million, the FY27 plan includes about four million dollars to be identified as part of this year's comprehensive budget reviews, which we'll talk about later in the presentation.

There's about 2.8 million dollars in potential civilian positions that could be reduced across several general fund departments.

There's also a proposal in this plan to reduce uh spending for the inner to fund the inner city incentive fund and minor home repair by two million, two and a half million dollars, and the other small uh adjustments that are included in this 10.7 million.

So to sum up the general fund forecasts, based off our assumptions, you can see our projected revenues and expenses included in the five-year forecasts.

The slide on the left maintains our property tax rate of 54.159 cents per 100 of dollars of valuation.

The slide on the right assumes property tax growth to the state allowed property tax revenue growth rate to maintain our operations.

For both slides, I wanted to mention that this is just a summary, and the actual schedule is included in the forecast book that's included in your binder.

So you can see some of the details behind these numbers.

And as you can see, we're not structurally balanced in these scenarios.

When you combine total revenues and resources and expenditures, we're facing about $130 million deficit in FY28, which grows over the next three years to $264 million.

If we grow the property tax revenue by the state allowed property tax growth rate, the general fund is still not structurally balanced, but the deficit in FY28 reduces to 70.3 million and grows to about 196 million in FY31.

Here's the table that shows those numbers.

You can see beginning in FY28 that the projected expenses and financial reserves are higher than the projected resources for each year going forward.

In the maintained current property tax scenario, the average revenue growth over the forecast is about 1.5%, while the average expense growth is about 4.3%.

Under the state allowed revenue growth rate, the revenue growth would increase from 1.5% to 2.3% on average.

So we must align and begin the work to align our expenses to our revenues.

So for the term of the forecast, this general fund is not structurally balanced.

We'll need to reduce spending in FY27 and FY28 to align revenue and expense growth.

As I mentioned earlier, revenues for the 27 are projected to decline by 0.6% in 27 and grow on average by 2.1% over the outer years, while expenses are expected to grow by 6.3% in 27 and 3.8% in the outer years.

So we do have some strategies for discussions, and among those can be or are to set the property tax rate to the state allowed property tax revenue growth rate to maintain our operations.

We can adjust fees and charges, and we can also reduce expenditures through targeted reductions to non-core non-mandated services to ensure that we minimize impact to our vulnerable populations.

On June 17th, we'll present the FY27 trial budget, which will include updated revenue assumptions based on additional data that we receive over the next couple months, and we'll provide another update at that time.

So here are two scenarios to structurally balance the general fund.

So you see scenario on the one on number one on the left of the slide.

Um we would have to reduce about 137 million in recurring expenditures or reductions over the next two years.

But however, the scenario two, which is our recommended scenario, we would use the state allowed revenue growth to maintain our operations of 3.5%, and that would generate 24.7 million in FY27 and another 42 million in 28.

And by doing that, we would only have to reduce our expenditures by about 70 million over the two years to achieve a balanced uh two-year plan for FY28.

Next, I'd like to move on to some of our restricted funds.

So this slide shows a hotel property tax five-year forecast.

The current hotel occupancy tax rate is uh 17%, and it's lived on eligible wholesale room nights.

Of that seventeen percent, nine percent goes to this fund, of which seven percent supports the convention center in Alamo Dome, visit San Antonio, arts and culture, and history and preservation.

The other 2% is a restricted source of revenue for the convention center expansion debt and future convention center projects.

For FY26, the estimate assumes a 2.1% growth rate from the FY25 actuals.

And then for the forecast period, we're assuming another 2.1% increase in FY27, and then 2.6% in the outer years from FY28 through FY31.

So this shows the forecast for the hotel occupancy tax fund.

I just want to mention that this is slide is just a summary, and there's an actual doc uh schedule in the document that you have in front of you in the binder, the forecast document.

The hotel occupancy tax fund is structurally balanced in FY27.

However, smog deficits exist over the remaining years of the forecast, growing to 3.1 million in FY31.

We'll continue to work in the coming months to identify measures to align our spenses to resources to ensure a balanced budget in the future years.

On to development services.

And this slide shows the revenue and expense history of the inner of this enterprise fund since FY2020.

Beginning in FY23, revenue growth started to slow and since then has declined, making this fund unstructurally balanced.

There have been no fee adjustments since FY20 2008, and expenses have grown by 10.4 million dollars over that over the past few years due to employee compensation, technology, building and equipment costs.

So we're at a point now with the development services fund where we're no longer structurally balanced.

And so here are a couple slides or a couple exhibits to show you why we're not that way.

So the slide on the left illustrates the permit activity over the past six years and an estimate for FY26.

For FY25, residential permits declined by about 19% compared to FY24.

And the FY26 estimate assumes these permits will decline by about 23.5% compared to FY25.

Commercial permits are doing a bit better, but they're still declining about 9.5% or 9.9% compared to 25%.

This is the 9.9% is FY25 compared to FY24, and we're projecting a slight 2% increase in the FY26 estimate.

For FY27, the forecast assumes that permit activity declined slightly from this year.

But for the remaining years, we're anticipating that building permits will increase, but at a slower growth rate.

So there's a small growth rate that you can see in this slide.

So to the fund, the impacts of the declining revenue and the increased expenditures are leaving these funds as structurally unbalanced or in a deficit.

So as I mentioned, revenues are expected to grow or decline in 27, but they'll grow throughout the modestly throughout the rest of the forecast.

The average expense growth is about 3.8% over the life of the forecast.

We don't assume any fee increases in this in this exhibit.

So you would see that the budget deficit or the fund deficit would be $6.4 million in FY27 and grow to about 17.6 million dollars in FY31.

So there are a couple things that we can do to address this deficit.

So here's a couple potential strategies.

We could do targeted fee adjustments to development services fees.

And actually, the development services department has started discussion with stakeholder groups this past month, and those things are continuing to go on through the next through the next couple months, and we'll be prepared prepared to come back with a recommendation during the proposed budget on how to what to do with the fees.

We could also do targeted reductions, which could impact services to customers.

As you're aware, the development services department does turn around their permits, they have very good performance metrics.

The developers are very happy with their performance, but if we were to do some targeted reductions, it could impact those metrics and uh lead to a delay in some of those performances that we provide to our developers.

The forecast I should also mention that because of the decline in permitting activity, we're holding about 40 vacant positions as kind of a freeze until we see those revenues come back up and the demand is there to justify filling those positions.

For the solid waste management fund, this is what their forecast looks like.

This forecast does in assume fee increases annually, and that's due to the rising expense growth of 3.7% that we average over the life of the forecast, and that's due to increases in personnel and health care costs, disposable cost disposal costs, equipment and fuel for the trucks that we have in this fund, as well as improvements to keep up with the customer growth in our city.

The forecast assumes rate increases each year for the following ranges.

So it's 56 50 cents to a dollar on all carts from FY27 through 31, and it assumes a 25 cent increase to the environmental fee for FY27 and then another 25 cents in FY28.

By accomplishing those items, you can see here that the fund would become structurally balanced and we would also have about a 5% financial stabilization reserve.

So at the end of the five-year forecast, that would be about 9.8 million.

We'll continue to monitor the expenses and the revenues in this fund.

And if we don't have to do revenue or fee increases, then we can certainly hold off on those or not recommend them depending on the state of the fund as we move along.

So to summarize the uh 27 and 31 forecasts, the general fund is not structurally balanced.

Although we show a positive ending balance in FY27, we still need to reduce spending in 27 and 28 so that we can better align our revenue and expense growth, solve for the deficit in FY28.

On June 17th, we'll present the 27 trial budget and we'll include updated revenue assumptions based on additional data that we receive over the coming weeks.

And then we'll also talk about in the trial budget some targeted reductions for 27 and 28.

During next year, excuse me, next week's uh council agenda on May the 14th.

Um, the city will council will consider the FY26 mid-year budget adjustment.

And what that does, it adjusts the right or right sizes the revenues and expenses that are included in the six plus six financial report that you have in your binder.

We'll also have an ordinance um to adopt the taxpayer impact statement, and that'll also be considered on the on the 14th, and a little bit more on the taxpayer impact statement.

Um, so you may be you may recall um that this is uh originally uh a CCR that was introduced uh last year.

We've gone to governance committee, we talked about it in the 3 plus 9 presentation, and it was recommended to bring it back on May the 14th, which we're doing now.

Um the taxpayer impact statement will show the average property tax bill for our uh community as well as some of our fees, such as the solidal waste fee, our environmental services fees, and our stormwater fee.

And you can also see there on the slide that it lists the exemptions that are available to our homeowners in our community.

We wanted to provide an update on the Medicaid 115 waiver.

This waiver started in FY13, and it funds services such as oral health, violence prevention, disease prevention and control programs and diabetes.

And over the past uh months, the health department and the budget office and finance department have taken a deep dive into programs funded through through these uh funds, and as a result, additional reserves have been identified to allow certain 115 waivers programs to continue without moving to the general fund.

We're going to develop a recommendation and we'll present that as part of the FY27 proposed budget.

Some of our next steps in the budget process, as I mentioned, the mid-year adjustment and taxpayer impact statement will be on the May 14th agenda.

We'll return on the 22nd and meet at the convention center to go over the uh to conduct the budget goal setting session where there'll be a presentation on the results of the community budget survey, which closed at the beginning of this month.

Um, we'll also come back for the trial budget on the 17th, and we'll incorporate some of the feedback that we get from the goal setting session and input from the community survey for the trial budget and also um to include that input into the proposed budget, which should be considered or be presented to the city council on August the 13th.

Once the budget is proposed, we'll host again we'll hold several budget work sessions with council, and we'll also gather additional committee input through conducting a budget town hall in each of your council districts.

And finally, the 27 budget is scheduled to be adopted on September 17th.

Next, wanted to give you a little update on comprehensive budget reviews.

So, as a reminder, the city manager reinstated the comprehensive budget review process in FY25, in which a total of 17.1 million dollars over two years in reduced spending was identified and included in the FY26 adopted budget.

The CBR structure is systematic, data-driven, and collaborative, and the goals are for to identify cost savings, time savings, and performance involvement improvements.

Excuse me.

The innovative this is led by the innovation and budget office and in collaboration with the city departments.

And for FY26, uh comprehensive budget reviews are currently taking place with police, fire, library, municipal court, and human resources.

The goal of the comprehensive budget reviews is to um look at the overall department budget or personnel growth, organizational structure analysis, and also compare their operations with other cities and do resource research to compare.

We also review departments program services to determine what is required by city charter, state or federal law, constitution, or voter approved bond or referendum.

During these reviews, the team will select in conjunction with the departments a set of uh programs to review, and those are presented on the next slide.

These are the programs that are being reviewed in the five departments during this fiscal year.

The reviews have identified 23 areas for deeper analysis, of which 13 are anticipated to be completed by each year.

You can see them on the slide.

I won't go through each one.

Um but these will be completed.

There'll be 13 that'll be completed by the end of FY26, and the remainders will be done in FY27.

Mayor and City Council, that concludes my presentation.

Happy to answer any questions, and we also have representatives from departments presented today to assist as well.

Thank you, Mayor.

Just one, just two parts.

Um we have uh at least the staff has been closely watching what other particular particular uh Texas cities are going through in terms of the current financial climate.

And and one of the things, you know, try to end this presentation on a good note.

One of the things that I think when I look at uh what other major Texas cities are dealing with that helps us is that we balance our budget over two years, and so we've got we've got a little bit of legroom as we plan appropriately, and I think that helps us manage uh not only in the short term but over the long term.

So that's a good thing for us, and I think if we didn't have that, we'd be in a much a different position, uh, like some of the other cities.

Um secondly, it is not lost upon me uh as city manager, the recommendation that we laid out in the forecast, it's not the budget, right?

With there we we're dealing with preliminary value, taxable value information, but it's not lost upon me that uh the city has an increase the tax rate in 33 years.

Um as Freddie laid out, um, if the values don't change as we get closer to the um certified role at the end of July, then um a three and a half percent adjustment would generate about 25 million dollars.

And given the growth in our budget, um, and you saw on one of the slides, um, just the normal growth we have in our budget for employees or labor expenses or CPI, um, all those dollar amounts are more than 25 million dollars.

And so the three and a half percent as laid out under state law is for cities and counties to sustain uh municipal operations, and so that's how I view it.

Um, and I know that's something we'll probably you all will probably have.

We'll a lot of conversation today and in the future budget sessions, but um we felt like I felt like we needed to be able to lay out that option given the position we're in and where we're we're where we think we're headed.

Thanks, Mayor.

Thanks, Eric.

Uh thanks, Freddie, for the uh very comprehensive uh briefing.

Um, what jumped out at me uh is I remember the five-year outlook that we had last year.

If we looked out five years, that year then being 2030.

Our gap, if we did not help ourselves was 224 million, right?

And now, if we do our five-year gap, our few our five-year outlook going out to 2031, that gap is now 264 million.

So 17% growth in just one year if we don't take significant steps to help ourselves.

Um, and 2030, as mentioned, last when we go five years from last year, 2030 gets us to two 24.

2030 now still only gets us to uh 237 million.

So all that to say, while we are trying to solve for this every two years, we're not helping ourselves in in the long term, it's only growing.

And um, as mentioned by 17 percent uh just over over the five-year outlook last year.

I think we're also all of us are cognizant of um the potential rate increases, right?

With SAWs and uh with CPS as well as what may also be needed to increase capacity on the bond on the bond side.

So it's very helpful to understand um kind of what we understand now, uh, how critical frankly CPS's uh off-system sales have been to ensuring that we have uh the position that we're in, but clearly uh uh I don't know how many times it's on your slide deck, we are structurally unsound, right?

So we need to take some significant steps to to help ourselves.

Um good news and bad news story, it sounds like on the public health piece.

So if I I'd like to just revisit that because they do jump out, um, and for those listening, um want to help further elaborate what what may be going on there.

Um so if we're anticipating the 45 million dollars, um uh this is on the the uh healthcare piece, Eric.

Can you help us understand how we might solve for that?

I know that's the full year, but kind of how are we already thinking about if that's worst case scenario, and if you want to take it the six month at a time, that's that's that's fine.

Um but if we're looking at kind of worst case scenario that that goes to 45, how do we how are we thinking about solving for that?

Sure, and good afternoon, Mayor and Council.

As the city manager mentioned, we have been doing a lot of analysis on the medical claims and the cost drivers associated with that cost, and one of the largest cost drivers is freestanding emergency rooms.

So over the next couple of weeks, we're gonna continue to focus and target those particular uh providers of um that particular service, also educating our employees and working with them to make sure that we are being good users of the healthcare system.

So that's what we plan to do immediately.

We hope to change that curve um pretty pretty in short order to ensure that we don't grow to those numbers that we show in the in the projections for the end of the fiscal year.

But for the first six months, we're already at 20 million dollars over our budgeted amount, which is uh a pretty uh big concern of ours.

And I think, Mayor, the um the you know, I'm gonna I'm gonna host the town hall with the employees, and and we've had some conversations with um some of the employee associations, but you know uh the the majority of claims that we're seeing from the from a a handful of freestanding emergency rooms are not emergency room claims.

Now they may be urgent, maybe they're medical in nature, obviously, but they're not emergency room claims, and so uh making sure that the employees understand certainly we want them to get the care that they or their families want, but there are ramifications about going to some places and as as Maria just mentioned.

There's a there's a very targeted approach we're gonna take with with those providers to be able to stop that immediately.

And and um, and and frankly, I think probably the larger conversation with with all thirteen and a half thousand employees who we have a uh generally for the at least over the last five or six years, especially during COVID and the aftermath, uh we were all of our employees uh were really good users of our system, and so making sure they have the right information um and understand the impact of that.

We cannot withstand that.

Um that that has impacts on other things, and certainly could impact the compensation at some point.

So we've got to look at it in a full bucket, and I I intend on having that pretty direct conversation with the employees so that they know they know uh how we how best to help us ourselves.

Yeah.

Thanks, Eric.

Um, and for those that may be listening and just kind of similarly wondering, just given the significant growth in that over the short amount of time.

Um, is there anything that we can do to kind of help ourselves, i.e.

um encourage employees to potentially use another provider.

Um Andy, if you want to speak to the legality of that.

I guess we just want to help people understand how we're trying to avoid a potentially 40 million dollar bill if we can.

We talked a little bit about uh that in the exec last last time, Mayor, and uh probably uh if we want to get into more details, I recommend we do that, but certainly uh we're one of the options that's being looked at is is how that we can guide employees given the the health care that's required, whether it be urgent medical or or more routine, that we provide the education so that they can readily identify where they they ought to be going.

Yeah, and I appreciate the uh uh of course the conversation in exec and as we're trying to again help the public understand where we are, how we got here, but how we're trying to solve for it, appreciate your sharing um what is legally uh available to share.

Okay.

The good news piece, though, was the deep dive uh on the Medicaid 1115 waiver.

So um 20 million dollars that was found is not insignificant, um, and that's a nice chunk of change.

And so I I'd welcome anything that might be able to be shared here about how we can um one uh are there other deep dives that we're looking at that can similarly identify 20 million dollars.

But how are we given such a given that's such a critical um segment, uh the public health space, how are we um accounting for that uh now that we have kind of this windfall?

Thank you, Justina Tate, interim assistant city manager.

So we did a uh full analysis of our uh Medicaid waiver.

Uh we are still finalizing that.

Um so that's why we as part of the presentation, we are um continuing that analysis.

We will have a final recommendation to city council as part of the fiscal year 2027 budget, but those numbers are still fluctuating and and could change.

Yeah.

The 1115 program when it was created is a reimbursement mechanism that is hugely complicated, and so um it's not as simple as our annual budget and current year spend.

And so part of what the budget office and the finance department and the health department did was go back in there and make sure we are properly mapping out in the future the spend and the reimbursement possibility, and so what that means is and and the slide Freddie talked about it, that the 1115 programs um uh are at risk at some point.

And so I think what uh Claude with Dr.

Jacob and and his team will be working on this summer is how do we maintain those core functions?

Because the as we talked about in last year's budget presentation, 1115 does does a lot of important things for our community, and we want to make sure that we are uh properly for forecasting those reimbursements and those available funds to be able to target.

And I think you know, I think it's it's um it's a very complicated process.

Um, and um I I'm I'm thankful that that the health department and Justina and Troy and his team kind of really went out and forecasted that amount because as we were talking about it as part of the budget last year, it was we got nine million dollars left, right?

And and it's gonna go away.

But things are in arrears.

I do think that, and this will be helpful for us maybe during the goal setting session from you all, we are gonna have to have I I think uh the health department will will be look for some assistance and guidance on what are those core functions because we may be able to stretch and fund things longer than anticipated if we if we get focused, and there are and and we're prepared to we'll prepare a small part of that as part of the May 22nd conversation to get some feedback from you all.

That'll be helpful for us as we do the twenty seven budget.

Well, it sounds like we're also lucky that all of our accounts are interest bearing.

So thankfully, uh, you know, 20 million dollars is uh is a nice chunk of change that we were able to find.

Um I do I I would ask as we're thinking about what that um menu or those options are in terms of how we fund that that we do use as a source of input uh the tabletop results, which helped us understand, again, we're seeing the cuts at the federal level, we now have this windfall.

Um, how are we best um shoring up uh where we think we may see some risk based on cuts at the federal level?

Okay, on the development services piece, Freddie.

Um help me understand.

For example, when we we just had this conversation, right, about market square and fiesta, and how we subsidize one Fiesta event with $600,000, right?

Um, between cops and trash, where where is that budgeted into the development services plan?

So the development services fund is an enterprise fund, so it does not cover anything related to Market Square.

Um Market Square is an enterprise fund as well, it's its own enterprise fund.

There are some costs that are covered in there, but it's to your question about Fiesta.

The general fund does cover a lot of the costs, like police overtime, solid waste fund will cover the cost for the trash pickup.

So it's a variety of funding sources for the TST events.

Okay, thank you.

In particular for the fire department, and so I want to make sure as we are I recognize in the um in the six by six some of the challenges with our costs have to do with certainly um the cost of fuel.

When we anticipated the budget, that has increased.

Um, I do though want to make sure, and maybe Maria, you can speak to this, that the findings and the recommendations from some of these audit results are also have sufficiently been been implemented.

Um I mean, when we uh look at, for example, the the fleet audit, right, or the inventory audit.

Um, when I read something like on the inventory audit, a lack of policies and procedures for the inventory management process may risk the sit the may increase the risk from misappropriation of inventory and may risk may result in a financial loss to the city.

And then on the fuel card stuff, um, similarly problematic findings about um lack of policies and controls uh that may foster an environment susceptible to waste and abuse.

So when we're talking about increasing costs and potentially making some significant cuts, I want to make sure that those that are the biggest chunks of our budget were not needlessly um expending resources uh and that we have sufficiently accounted for all the corrections that need to be made uh so that we're good stewards of the people's money.

Is there any way that we can have that verified as part of the recommendation, the trial budget?

Um yes, mayor.

So the recommendations made by the city auditor's office related to the fire audits are either been implemented or in the process of being implemented and um with the respective monitoring processes in place to ensure that those changes are being uh uh carried out by by the department.

Okay, thank you.

Let me go to my colleagues here.

Um council member Alderte Gavito.

Thank you.

Uh thank you, Freddie, for for this presentation.

Uh I think it's a a stark reminder that we as council need to start prioritizing our core services with our fixed dollars, um, core services, core functions of the city.

They need to be at the forefront of where we of what we spend.

To me, residents are expecting that their taxpayer dollars go to their streets.

They're expecting their taxpayer dollars to go to police officers responding.

They're expecting their tax dollars to go to firefighters responding to animal care services responding, um, to their trash being collected, and their right to expect that.

They don't necessarily expect all the other things that we spend our money on.

Um I think Councilman White probably said it best.

When was it last year or the year before?

It's not that we have a revenue problem, we have a spending problem.

And so I do think that these times call for us to tighten our belt.

Um, I'd also really like for us to look at which programs we're getting our biggest wing for our buck on, um, and which one aren't providing as much benefit as we'd like to see.

I I know that it's never easy to make cuts, but you know, all of us up here were elected to do hard things, and so we just need to make those tough decisions.

I'd I'd also say that I think it's important that we prioritize city employee job retention um while creating efficiencies where possible.

Uh Eric, I know you mentioned the Bear County appraisal district.

Uh to me it seems odd that we're considering raising taxes on our end because of the revenue loss on the BCAT side.

So it kind of defeats the purpose.

Uh is is there an opportunity for BCAD to take the lessons learned from from recent change from the recent changes and and potentially course correct or or how are we handling those conversations?

Um I'll start, Troy.

Why don't you make yourself to the way to the podium uh but um that that appraisal process already began for the year, notices if you were over a thousand dollars change in value, those individuals, those property owners are already receiving.

I think uh and and Troy and his team have had several conversations with Roy and and the appraisal district staff, but in advance of the next two conversations with the council on on this preliminary information, I'd like to be able to show you how that 3.54 is broken out between industrial, commercial, multifamily, residential.

Um, and there is something has there's something adjusting it.

The housing market isn't any worse or better than it was this time last year.

Um mortgage rates are still over six.

Um, and so uh it's still a buyer's market, right?

There's the inventory has gone up, and and so um I'm not sure I'm not sure they could stop the process they're under.

They do have to follow their own portions of the state law, but um I don't know if you want to add to to that, Troy.

Your your conversations with Roy.

No, I think Eric's exactly on point.

I mean, they appraised values on January 1st.

Notices went out in April.

So that process has already started and begun.

We have that first piece of information.

Now me and my team or the course of now between now and July 25th, and we certify values.

We need to dig down and kind of dissect that information and get an understanding of what some of the root causes are.

And now take several conversations between us and BCAD between now and then.

Yeah.

And let me let me just also echo that that uh every you you all may have seen the reporting Bear County had a similar presentation last week.

I think every tax identity right now in Bear County is trying is going through the same process to understand why these are moving in the direction they're moving.

Yeah, and and that's that's what makes me, you know, also, you know, I think all of our Spidey Sense needs to go up about this because if we're all kind of facing this same negative impact and we know something's changed, you know, um, yes, I I understand uh what you're saying, Troy, like the process is already started for the year, but I I do think it's worth us pushing back on them a little bit and saying, you know, let's review this process again to see um what we're feeling negative impacts from it, right?

And us and others, and so we we have to do something differently about that.

But thank thank you for that insight.

I had a quick question on slide number three.

Um how much money does the projected 23 and a half percent decrease in residential permits equate to are you talking about the revenue impact to that?

Yes.

Where it says um residential permits projected to be down 23.5%.

Yeah.

We could.

I think we'll have to get that number for you, councilwoman.

But it means here he can talk about why it's going down.

Yes.

Okay.

Okay.

Yeah.

I'm looking forward to that number.

Sorry, I know sometimes percentages can be deceiving.

Actually, I mean, or I'm not sure if it's for you or Freddie, but also on slide 33, when we're looking at potent uh potential fee increases, what has the feedback from stakeholder groups been about DSD fee adjustments?

I'll let Amin chime in, but um the feedback has been positive.

They want to maintain the services that we provide today, and they're agreeable to doing um some fee adjustments, but I'll let Amin talk about the discussions that he's had with them.

Hi, Mayor Council.

Uh we started talking with the stakeholders and uh we presented to them our stand with the money, and they were totally open-minded about it.

They understand that the fees did not increase since 2008, and I guess they were expecting that.

I mean, throughout the last couple of years, we did mention it in every meeting that uh we are short on money, but we want to see what happens.

Hopefully, the economy changes and we get back to normal.

So they totally understand we are working with them right now.

Um we're gonna start next week meeting with their board of directors, uh to discuss it further and come up with a game plan that works for them and for us.

But one of the things they mentioned is they are happy with our performance and uh they don't want to reduce any of our activity, so they will work with us to get us back to uh financially balanced and maintain our services.

Thank you, and I'm glad that y'all are meeting with the stakeholders.

I I really my intent with asking that question is I just want to make sure that we're not going to have any unintended negative impact on our local economy by raising prices for our builders.

So, yeah, again, we're gonna work with them to make sure that doesn't happen.

I mean, uh, they mentioned to us that throughout the years from 2008 to now, they did increase their fees throughout their, I guess, uh fees to do the work, right?

Material increased, uh, labor increased and all that.

Uh, and again, as I said, they understand we did not increase our fees at all.

And we are still one of the lowest fees uh in the state of Texas.

That actually that was my next question.

Um, yeah, it'd be interesting to see where we rank in terms of the fees that we charge compared to the other major cities in Texas too.

Yeah, yes.

On residential, we are almost the lowest one.

Uh on commercial, we are uh about 30 percent on the bottom.

So we are not the lowest, but we are one of the lowest.

Okay, thank you.

Yes, sir.

Um, really quick on um slide 25, the core services.

I'm on board with the targeted reductions for non-mandated programs.

Um obviously we need to do this with an equity lens and make sure that again that we avoid layoffs, uh, but we really need to focus our spending if we're if we're gonna be balancing our budget, and we need to balance our budget.

Um, during the trial budget, I'd like to see clear information on where the cuts are gonna happen or where the proposed cuts are gonna happen, um, so that that way um it's it's crystal clear for my colleagues and I.

Um, my my priority departments to avoid cuts, to avoid cuts, obviously would be um for our police officers, firefighters, animal care services, public works, um, because again, uh a lot of our calls are questions about police response, firefighters, streets.

I mean, again, residents expect their taxpayer dollars to go towards sidewalks and roads and police responding and firefighters responding and loose dogs getting picked up.

Um, that's their expectation, and and I think that they have every right to expect that.

And we need to meet that.

Um, and and unfortunately have to cut some of the the nice to have and focus on the need to have.

Um I also think that we need to be bullish about looking for grants, you know, especially animal care services.

We we need to start diversifying our portfolio.

I mean, the city budget um, you know, it looks bleak for the next coming years, and so we need to start uh thinking out of the box and seeing how we can um secure additional funding sources to help ease the burden.

On slide uh 26 on the different scenarios, um I'm supportive of scenario one.

To me, I I cannot be supportive of raising taxes until we've done everything in our power to tighten our belt and reduce spending on non-core areas.

Um to me, if we're not doing our part to make reductions, it's not fair to ask the taxpayers to help to take the hit to support our overspending.

And I hate to classify it that way, but but again, we this is this is where the rubber meets the road, and we have to focus on our core service core services.

Um it's also a really tough sell to raise property taxes when people are also looking at you know, it was mentioned earlier, a potential SAWS increase, CPS uh rate increase, and so everyone everyone is really feeling the pinch right now.

If I may, I just wanted to answer your question on the 22.5% for development services.

That equates to about a million dollars in revenue.

Got it, got it.

Mayor.

Before you go on the next one, can we can we pull up slide 46, which is a backup slide?

And this maybe to your appraisal question, and maybe other council members may um find this interesting.

This is the average residential sales price by county uh back to 2014.

And um the source of this information was collected through the appraisal district, and and so uh of particular interest to me is that both Bear County and Tarrent Um seem to be in a much different position in terms of change in price from Dallas, Harris, and Travis County.

It didn't it doesn't help us figure out the what's happening here, but um Fort Worth is in a similar position in terms of appraisals, and so um you know we'll be talking to them, I'll be talking to them uh in what they're seeing as well.

But I thought this information was interesting and that it shows that generally speaking, Texas is a growth state.

Um all those cities are seeing increases in population.

Um, but uh us in Terrant County seem to be in a different position than the other three.

Yeah, and really quick, I I know that uh some of the time was spent on answers.

I'll just close out by saying this.

I mean, yes, it's really tough times, but this is actually the times where innovation and innovative thinking really happens.

So we have to think differently and creatively about um solving these challenges, and uh and it is an opportunity for us collectively as a city uh to be innovative and to think of new ways uh to to check um to face opportunity ahead of us.

So, thank you.

Councilman Galva.

Thank you, Mary.

Thank you for the presentation.

Um couple quick questions.

I guess on the large overarching um points here, looking at slide 17.

Um for the increase in property tax revenue uh past 2028.

What's the um what are you anticipating there?

What's the assumption there given that this is not looking at a property tax rate increase?

I guess what's driving that what is it, two percent and then the 0.5% going forward.

So just as a reminder that this this graph does not, this is at maintaining the current property tax rate.

Right.

So this is just the uh the growth of the base values and the new values.

So it goes, we talked about the negative growth, and then no growth in 28, and then there's some modest growth in 20 uh 29 to 31.

Understood, but I guess what's what's driving that growth, or what's the assumptions of the where that growth is coming from?

Is it if we're seeing residential permitting drop down and commercial has been pretty stagnant?

What are we anticipating with it?

I'll let Troy chime in, but it could change as we as we as we go forward.

But yeah, that's right.

As far as the specifics for the residential industrial commercial, we don't have those details yet, and that's some of the things that we'll be digging down into.

As terms as far as the growth that was presented on that slide.

We basically, I mean, we're basically next January 1st, it's just around the corner in terms of what um the next appraisal is going to be.

So we don't expect much change in the market from that from now to then.

So zero percent growth.

In terms of the future growth, I went back and looked back to you know, Eric's talking about 2011, looking at kind of the similar similar historical trends, and this is a similar historical trend that we experienced coming out of 2008.

So we basically modeled that to predict the future.

Okay.

Cause I think it leads into a lot of my other questions around sales tax and hot as well, is just like understanding a little bit of where that bump would come from.

Um, but so you're saying just the kind of two years, three years out from a recession can look similar to what we're currently in today.

Not that you're saying it's a recession, but yeah, I'm not saying we're in recession, but um we model that currently based on how we think this will rebound based on past history.

Got it, okay.

Thank you.

Um, I guess a little bit more into that too.

Um I know we're talking about DSD in terms of the targeted fee adjustments.

This may be a little bit outside the scope, but thinking about um any unproductive land or buildings that we have.

Do we have any data on the amount of foregone property tax revenue that we would normally be receiving uh if not for vacant lots or vacant buildings, particularly within our our urban core and thing like that?

Uh to break it out in the way you ask, and we'll have to follow up on that.

Okay.

Well, we just have the total of what we forego, but to answer your question, we'll we'll follow up.

Got it.

And I guess my my go ahead, Justina.

I don't think we can break it out like that.

Okay.

But just to give you a little bit of context, the exemptions that we have implemented, I know this isn't your question, but we we forego about 150 million dollars because of because of those exemptions.

Got it.

And that doesn't uh account for the vacant.

Okay.

Well, I appreciate that.

Uh I can follow up a little bit later too.

I know I've seen some other cities, and there's usually smaller, maybe a bit different there, um, who look at what the type of land use can be done and type of properties uh that are already vacant, have long been vacant, or buildings are particular to, and what kind of strategies and incentives are are possible for those particular sites to become active and therefore kind of compare the cost benefit analysis of doing what we're currently doing versus doing something a little bit different to then hopefully encourage some kind of development site there to better understand that uh and hopefully see the kind of property tax revenue we could get from that as well.

Um I think similarly for parking lots as well, standalone parking lots, particularly downtown, thinking about their quote unquote productive use and not productive use, um, and how it could impact the general fund would be helpful to understand a little bit.

I don't know if we could get that off for this budget, but overall, I think if we're able to look at some kind of analysis like that, I think it'd be helpful to help kind of shape some of our strategies for not only downtown but overall development here in our city.

Um for let me see for slide 25.

Uh can we get a breakdown of what the what services are considered non-core, non-manitive, sorry, non-mandated category uh as well as the services that um do directly impact uh vulnerable populations?

Uh, we have a recessing session.

Well, we'll be providing that breakdown of the public facing general fund departments of what are their core services and what other non-core services.

Okay, great.

Um, and I guess similar to that one with slide 26, we're looking, I think there was a let me make sure I have it right here.

For slide 26, I know there's a department reductions listed here.

Um, and there's a dollar amount there.

What are we looking at specifically within those?

What it's we don't have those ones yet.

No, councilman.

We th these are we've not gone through any sort of program reduction.

Okay, just a general number.

Yeah, no, we these are these are amounts and targets to balance our budget over two years.

Got it.

Yeah.

Thank you.

That's helpful.

Um I guess similar, well, I'll move to the Medicaid 1115 waiver.

Um really appreciate the work done there.

I know it's not easy to kind of deep dive in a little bit about what things can be done there.

Um, but I did want to kind of ask a bit more.

I'm trying to look at for the exact language here on it.

Um it sounded to me like there was some programs already being funded by the reserves, and you can correct me if I'm wrong on that one.

Um sorry, I'm trying to find the slide for it.

But I guess I wanted to know what normally, thank you.

Um, taking a deep dive into programs funded through reserves.

Are there other programs that have normally been funded through reserves, or is this?

So this was this is part of the Medicaid waiver program, and it's part of that program.

Oh, for the reimbursement, I see.

Right.

So we've um have done our violence prevention stand-up SA.

Um our oral health is one of our bigger programs that is funded out of the um out of this program.

Got it.

Thank you for that.

Um and this, of course, I'm assuming is a one-term or one year solution, not a long-term solution looking at using the project.

So this has been in place for about 20 uh since 2013.

Um, so we will be developing a plan to come back to you and as as part of the fiscal year 2027 budget to see what programs um would continue through this Medicaid waiver.

I see.

And the plan would be a multi-year plan.

Yes.

Right.

Okay.

Thank you.

That's helpful.

Within the performance measure report on page 38 talks a little bit about the energy cost savings from our energy conservation programs or projects for our municipal buildings over the past several years.

I think it equivalent it to about 1.9 million um year over year.

Do we have a list of upcoming projects or how many buildings can still use that kind of energy conservation uh renovations and what that not only costs would look like, but then of course what savings would look like year over year?

Yes, we can get you that list.

Okay, thank you.

Um, something else within the budget initiatives document there is the sidewalking gap analysis.

I know public works have been working really hard on getting that one uh completed.

Uh I know it's supposed to be completed this month.

Uh but I think I mentioned something being not being released uh till the fall.

Is that going to be before budget or after budget?

Councilman Art Reinhardt Public Works.

So our uh if you recall our sidewalk assessment was a three-phase process.

We've completed collecting all the data citywide now uh as of April, and we're processing the last hundred miles or so finalizing the overall condition index, and our plan was during our budget process to present the findings from that and then potential next steps.

Perfect.

Thank you so much.

I just wanted to make sure.

Well, great.

Well, thank you for the that information that's really helpful.

Um I mean, I think a couple different things overall uh as we're looking at our budget.

I mean, we're gonna talk more about this during our trial budget overall.

Um, but I it's of course gonna be tough as we're looking at this.

I think uh I'm eager to see what uh kind of innovation we can do to continue our service levels um at the pace that our residents are asking for without having to raise taxes and without having to make major uh cuts to significant departments here.

Um so I'm looking forward to seeing what that looks like.

Uh, I appreciate of course the specific focus focus on health, um, and excited to see what's comes on there.

But I I would like to see I guess a bit more um from what the department structures are gonna look like.

I know there's some conversation there about the shifting of the organizational structure a little bit with the comprehensive review budget reviews as well.

I know that'll come around later on um to kind of showcase, but uh I'm hopeful we'll we'll see some of the good things there and happy to be helpful wherever I can.

Thank you, Mayor.

Thank you.

Uh Councilman Monkey.

Thank you, can you go to the slide 15, please?

Uh and Eric, I know we talked about this briefly yesterday, but you know, I just don't quite understand this, and I know it has to probably do with the valuation and policies that BCAT has passed in the prior years.

Um, but I just don't understand the negative growth when we're building so much in the city, you know, especially on our sides of town.

There's so much development happening.

And obviously, with the affordable housing market, you know that's gonna typically have a waiver on property tax, so we obviously know that that tax is not coming in.

But there is a lot of you know, single family and and market rate development happening, so I welcome you know further conversations on that, maybe some Texas economists and then kind of understand how um that why that's happening, and I think you said that there are other cities are not dealing with the same issue, correct, in in Texas, uh, even some of them on comparable sizes.

So with the growth that's happening here, everyone can see it.

I just don't understand why we're we're having a negative growth.

Um do you know when the last time that happened in San Antonio Bear County?

2011.

So that's okay, yeah.

And but that was kind of an anomaly because of the the market and the economy at the time, right?

Um was there a time before 2011 that that was happening?

We'll find out.

That's the last one that that's the last one we've experienced.

But we'll we'll go we'll go further back.

Yeah, and I realize that might have been like the housing market nationally and all that, how that happened, but just wondering if it's if it's uh a product of the current national and global economic situation we have, or if it's telling of something locally that's happening that's preventing us from from growing and getting uh greater tax space.

So on the topic of the tax increase, I mean, I don't support a tax increase at this time, but question, um, could you in approving the tax increase that we're able to do, could you dedicate that extra growth into something in particular?

Yes, yeah, absolutely.

That that's it's uh maybe I didn't do a good job of saying that towards the end, but the that if the values stick where they're at towards a certified role, um it's about 25 million dollars.

And um, you know, Freddie had a slide on there that said that just the um some of our normal uh public safety expenses are gonna go up by more than that next year.

So you could we could definitely as we structure this say that increment is to pay for that thing, it's not just going into the general pot, um, but but certainly we could associate with that.

Perpetuity if we had to make that so you could have a three percent increase on tax and just simply dedicate that to fire and police departments.

Yes, sir.

For for as long as we want to do that, yes, sir.

Okay, good to know that.

And another question, this is um related to CPS, but um, if they do get increases on their um rate adjustments, does that necessarily mean down the line greater revenues to the city based on that?

It it could, councilman, but we don't um we don't assume in either SAS or CPS that the council ever approves a rate increase.

Um so the forecast does not include any assumption in the next five years on any additional revenue uh because of any rate adjustments.

Sure, okay.

The real impact is yes, it does have an impact on us.

Okay.

Um and I think I'm not sure if you're gonna have this for our uh next budget meeting, but I think um having a line graph or bar graph of the um expenses over time with the revenue over time would be helpful for us because you know, I'm hearing a couple times already, and I imagine we'll hear more of it today and then the coming future that the city has a spending problem.

And I worry about that rhetoric when we've passed by law, you know, um budgets rights that are that are balanced.

So I don't know why you'd have a spending problem when you're not overspending money, uh, and when you're spending money that you're getting in through tax base.

So, you know, I just worry about what that means for folks to say that we have a spending problem.

And for you, could you tell me right now what you consider what a department that you consider to be, you know, a non-core service without us getting into that discussion.

Are you able to tell me which department of programs are non-core services?

Yeah, I can.

I mean, you may give you an example, yeah.

So um uh the city clerk's office is a core service because it's required under the city charter.

Um our economic development department, and and uh you know uh it's not an is a non-core issue under the under the definitions of the constitution state law or the charter, it doesn't mean it's not important to accomplish the things that we need to accomplish as a community, and and frankly, we had at the last department head meeting a conversation as a group.

I mean, we're we're all we're all the departments are going through this effort to help with the preparation for May 22nd, and I told the department heads like that doesn't mean anybody's less important of what we do.

Um we're just trying to categorize it to frame up a conversation for you all to have.

Um there are um, so that's one one way to look at it, but those are those are two examples for you.

Subjective.

Well, it's not subjective in that we're bouncing up against state law and the charter, it's subjective in terms of I suspect the conversation that you all will have as policymakers is that some of those things are really important, whether they're core or not, or non-core or not, they're really important, they're needed in the community.

Between what's core service and what's important service, yeah.

And so I think for the next activity, for the next budget meeting, you should tell us what is by law, by state statute, by the federal government required, which is core.

Uh, and I imagine that you know, a lot of what we do at the city is not core.

It's still important, but not core.

So I think we need to start having using the same definitions that we're having this discussion up here.

I think you could help us with that by showing, you know, sure, uh, maybe 50% of the departments we have are not technically core, but we consider them important.

So I think that would be helpful.

That's exactly what we're preparing for you guys on the 22nd.

Yeah, some clarity between all of us up here.

22, please.

So are these the highest drivers in spending at the city?

Yes, in comparison to where we're at for the FY26 adopted to what we're projecting for next year.

Yeah, you see the the top three at the top there, along with the inflationary increases.

So for all the line items that we have, these are the ones that are driving expenses higher.

Okay.

In our next exercise, could you please do the same charge for the past several years?

As far as what have been the greater drivers of our expenses for past several years?

Again, when we talk about spending problems and we say we have a spending problem, we have to look at what's been driving the cost, and some of it is fine, right?

I mean, the number one thing, that's that's the number one thing in our city, right?

Is making sure we have police and firefighters, so that makes sense why that's a high driver of cost.

We we all get that.

You know, employee pension compensation, we get that.

Civilian compensation, we get that.

Um, but if we want to talk about what what is what we're spending more and more on, we need to be honest with ourselves about what that is, and so much of our budget is is personnel.

So, how much of the budget um the general fund budget goes to pay people, whether that's um CBA or civilian?

I'll have to get that exact percentage, or we can get that for you.

I think Justina knows.

Sorry.

Councilman, it's right around 70 percent.

Okay, so 70% of the general fund pays people.

Correct.

Okay.

So again, when we look at core and not core and important and non-important, 70% of the general fund is paying people's salaries.

So I think that's a very important context when we're trying to cut out of departments and programs.

So those are the questions I have for now.

Thank you.

Uh Brenda and her team do a really good job, and I just happen to be the example.

So I just wanted to be known to uh Brenda and what they do is really important.

Um, and that uh my example wasn't meant to minimize it, but I think we're gonna have that conversation on May 22nd about non core.

And Brenda, you do a great job.

Thank you.

I just want to say, Brenda, I didn't say that, right?

Everyone said that.

I think you do a very important job.

Uh thank you.

Well, I mean, it's not also lost on me.

When we look at the cuts from FY26, those like two EDD positions, right?

Um, so I say all that because it's not the point that you make is is uh is really important.

Kind of what is core, what is not core, but how much of the core do you need at the expense of everything else?

Like that's really the discussion that we're going to we're gonna have here in light of as well the cumulative cuts that we have made.

114 million, was it just last year at FY26?

Was that the the cut from 26?

If I remember correctly, yes.

So the four 114 million is over three years, so it was 25, 26, and and assumed the 10 million dollars in 27.

Thank you.

You would when you and I were speaking yesterday with Justina, uh, it'll be helpful when we'll do this for the 22nd to categorize that looking back over three years so that you all can see kind of what we've done uh up to this point.

Yep, good.

Thank you.

Councilman Mesa Gonzalez.

Thank you, Mayor.

Thank you, uh Freddie, and um everyone on the presentation getting us here today.

Um I had a couple of questions on I just wanted to reiterate the point on slide 15 on the the breakdown of um those values on commercial industrial and residential.

I think you said you were gonna present that at the goal setting.

Is that correct?

That's information that we're gonna ask for the appraisal district to give us so we can share with that.

Okay.

Um and then on on slide 20, um, this is probably at least the second year in a row that we've seen the surplus over the budgeted estimate.

So I just wanted to understand more.

Those dollars are being used to um not in are they not in the reserve, correct?

No ma'am, they're they're being utilized towards the operations of the of the general fund.

Okay.

Thank you.

And then I think just based on the prior discussion we had on our our debt capacity, kind of want to, and we talked about an increase on uh on the tax side there as well.

And so if there's a distinction that can be shared or explained more on the OM side versus the bond capacity side, I'm sorry.

And what that increase meant, the conversation we had, I don't know, this was maybe two, three months ago on our bond capacity.

We talked about an increase there, and then on this slide, we're talking about on scenario two an increase.

If you can just distinguish between those two or certainly.

So the tax rate, current tax rate is 54 cents.

54 cents per 100 evaluation.

So the 54 cents is broken into two components.

One is gonna be our maintenance and operations debt service tax or tax rate, which is 33 cents, that's going to support our general fund operations.

You also have the debt service tax rate, which is 22 cents, which is going to support our bond programs and the capacity analysis that we talked about.

And I think the mayor led off with this.

So today what we're talking about is fee on the tax rate for the 33 cents on our general fund M and O.

If you also wanted to consider a tax rate increase on the debt service side, that would be separate and distinct above and beyond the 3.5, that would increase the overall tax rate.

So two separate tax rates, two separate discussions that we're having, and is uh does the state have a restriction on the increase on the debt service side?

No, ma'am.

The state regulates the maintenance and operation side to the 3.5.

On the debt service side, there is no, I guess, ceiling or cap in place.

Um, also that discretion or raising the tax rate is left to you and the council on the debt service side.

Okay.

Thank you for that.

Um I think I want to kind of reiterate the points too that uh my colleague made, Councilmember Mungia on just really defining what those core services are and those important services within the core services.

So I'd appreciate a breakdown of those as well.

Um I'm not comfortable at the moment on slide 26 with anything past scenario one, but I really think we need a that goal setting conversation is important, so um, but at the moment, right now, I I don't think that that's an option uh for me.

But uh thank you again for all the work you've done to get us here.

Uh, these are difficult times, but um I'm confident in the in the team that we have um in leading us, so thank you so much.

Thank you, Councilman McKee Rodriguez.

So there is a level of honesty I expect when I come up here, and it's frustrating that I don't think that by the end of this we're going to solve this problem in a way that is both long-term and just and we're asked to answer, and uh, I think some of what I heard, especially uh early at the beginning of this discussion, we're asked to answer questions from varying points of view.

And I expect that, and it's it's sad that instead, rather than do basic math, we regurgitate MAGA talking points about big government spending too much money helping poor people.

And you hear questions like, why are you incentivizing private corporations to move here?

But why don't we have as many headquarters as other Texas cities?

Why is how housing so affordable?

I can't find a place to stay, and why is the city incentivizing affordable housing development?

Why do we have homeless people on the street?

And why are we spending so much money on assistance programs to prevent people from becoming homeless?

I hate to hear MAGA talking points about the city having a spending problem without sharing which departments we are overspending on.

So I would ask my colleagues which departments are the frivolous ones, which programs are the frivolous ones.

Because any department that comes before us when they're coming to B session to or to our committees, we are praising their work and we're asking them to do much, much more, but then get here and say we expect you to spend less.

You want us to save money and say the city has a spending problem, but when an organization in your district comes before us at public comment, you're gonna propose a million-dollar budget amendment to give your buddies some money.

You want to whine and complain about homeless people sleeping in drainage ditches as though it's a luxury, as though it's luxury housing, and you want to whine and complain about little old ladies not mowing their grass, but hate to see us fund programs to help them mow it.

Earlier this year, I heard some of my colleagues talk about how our utilities need rate increases because previous councils kicked the can down the road.

And so right now, as we're talking about this issue, we are going to be kicking the can down the road and leaving a multi-hundred million dollar budget deficit for a council five, ten, fifteen years from now, while they may also be navigating a housing cross housing crisis, poverty and human need that is uh unmatchable, a pandemic, natural disasters, or any other emergency that they won't be able to afford because of the hundred million dollars we're leaving behind, and we aren't going to simultaneously not raise the property tax rate and also not significantly reduce the services our community relies on.

We're also not going to do it if we incre if we don't increase wages for our employees, and then they end up quitting and we can't find people to do those services.

And so I would ask my colleagues to be real for a little moment, and I I'm gonna give an example, and it's just gonna be the two uh police and fire.

If we raise our police and fire budgets by an average of three percent from this year, that's an increase of 32 million dollars next fiscal year.

We're going to be doing that likely because of CBAs and whatnot, just on average, that's at 3%.

Let's use a small amount.

I know that uh it could change, but where are we gonna cut that from?

And then we're gonna add more because our community is asking for it, but then we can't because we don't have money because we have a spending problem, right?

The budget deficit is not because we have a spending problem when sixty-four percent of that budget is police and fire.

We want police and fire to be funded, right?

You work your way from people from police and fire, public works, parks, libraries, health, human services, animal care services, neighborhood and housing services, still listing a bunch of services we need, right?

And code enforcement.

That's 86% of our budget.

Go down the list, open the budget document, go down the list of departments, tell me who's overspending?

Which one of these departments?

And you're not going to you're not going to tell me that.

And so, unless we're gonna do something like every department cut their budget by 2%, 2.5%, and just leave it at that.

Every department, no exceptions.

If every department were to cut their budget by 2.5%, and we just leave it like that for several years, is that gonna solve our problem?

I'll leave y'all with that.

So I'm not gonna, I don't think we I you're not gonna hear a real solution here today.

I don't think you will, and I don't think you're gonna hear anything that's this is political.

It's gonna be political.

People don't want to pay higher property taxes, they don't want us to cut their services, and so where do we go from here?

Thank you.

Thank you, council councilman Spears.

Thank you, Mayor.

Uh, can we go to slide eleven, please?

Thank you.

Oh, thank you for the briefing very much.

So no, that was a lot of hard work.

Um, I'm I just wanted to ask um, you know, we talked about how they need for general practitioners, and I've mentioned this to before, and possibly looking at us having someone on within in-house to to help our employees, because we had that at the county, and that may be a cost savings that would be a way to bring in cost savings.

So if we could look at what that would look like so that employees can go real quick, see the doctor, get their antibiotic, and reduce use of urgent care.

Um, it helped us a lot at the county.

So that was just one little thing I wanted I wanted to bring up.

And it and it should produce a cost benefit.

Okay, slide 15.

Oh no, wait, slide 17.

What if this isn't right?

What if this doesn't if we don't see the housing market come up?

Have we talked?

I mean, do we have other models here?

Or this one's from 2008, right?

The projections.

Yes.

Well, as Troy mentioned, we're we're utilizing some historical data to project, but they are just projections in out of years, and if that doesn't happen, or it's it they are um if if what's happening in 27 happens for the next three years, then our problem is bigger than we're projecting today.

So I mean, but again, we're we're based on a historical um perspective and um and the information that we have from the appraisal district.

So we have to see our property values increase to make any of this work, right?

Well, yeah, we do, but but but um market values and the housing, the current housing conditions um are in a cycle, and at some point they'll recover.

And and and and the trick is every city that's in this position is trying to estimate and project where the recovery's at, um, but it will recover at some point.

Um there's no doubt about that.

Okay on 21.

Can y'all provide again and and maybe I just you can direct me to it, the breakdown of the reductions from our 2027 plan?

And see if that was yes, council member, that is part of our 2026 budget.

We included all the reductions or the planned reductions uh listed out in our 27 or 26 adoptive budget.

Is it can you all just send that over?

We can get that over.

We'll email you the pages of uh that are in the budget document.

Okay.

I just want to point out on twenty on slide twenty five, it does say we will need to look at our non-core non-mandated services.

I'm ready to cut back on things.

I'm real ready.

I've already looked at other cities and who where they cut back on, and there's some dangerous places you just can't cut two percent across the board.

Um, and I'll show and I'll get into that in just a second.

On slide 26, I had a I wanted to see just a scenario if we don't use our reserve and just cut what that looks like, and then also if we use our reserve, a plan to replenish that reserve.

Um that's something I just want to see.

I know you don't have that today.

What's the first scenario, Councilman?

If we how what are we looking at?

So we're just looking at cutting 130 million dollars from our our budget if we don't use our reserves, right?

Correct.

Okay.

And then how do we replenish our our reserves if we use the reserves?

Or do you already have a plan for that?

I just wanted to clarify one thing.

So throughout the forecast, our reserves are maintained at 15%.

So we're not dipping into that 15%.

What this is is to balance the two-year budget.

We actually have more than that 15% required.

So that's help balance 2028.

So we don't need to be concerned about replenishing that if we use it.

We are not dipping into that 15% reserves.

This is part of our budget strategy that helps us balance over the two years.

Okay, well, as presented right now, I'm looking at scenario one as being the most viable option on 31 here.

So are we seeing this decline in the permit activity because of reduced development, or are we needing to also streamline our permitting process?

It's due to the number of permits coming in, the reduced amount of development.

It's both.

Okay.

It's just basically due to the number of uh permits coming in, not due to the process or anything.

Okay.

Do you feel good about our streamline our process?

Or do you have suggestions?

As I stated, when we talked to the development community, they stated that they're really happy with the performance we have.

And their main question was we want to maintain that performance, and we don't want to reduce it, and that's why they are open to increasing the fees.

The reason why we our uh numbers went down or our budgets going down, decreasing is due to the number of permits coming in.

So the developers are not producing or developing as much as before.

Okay, thank you.

Thank you.

I think overall, to just one point I'd like to say is that I think it's time we do seriously look at how we're going to collaborate with other suburban cities in our county and our county and use the dollars together, combine effort, reduce or eliminate redundancies, and uh, you know, save our taxpayers on the and really stretch the taxpayer dollar.

Um, this is gonna be painful, it is gonna hurt.

I'm ready to look and cut back, and we have examples of that.

I will remind you all that um Dallas is just where do you have that residential uh housing prices slide?

Slide 40 the slide 46 one, so I see that number there, but if you've been looking at headlines, Dallas is in trouble, they can't balance their budget, they've had to stop hiring, they've had to only spend money on police and fire, but that's because that's the core service you can't cut.

That's the one.

You can't cut back on police and fire and dispatch because then it's you don't have public safety, and then people leave, and then you don't have development.

It's not that we don't want to provide all these things.

It is absolutely true that we want to do as much for our community.

We all do, we all have big hearts, we all care about everyone in our community.

We wouldn't be sitting in these seats if we didn't, because this is this is a monumental task, but um, you have to look at core services, and I agree with Councilman Mungia about how we're spending in those core services.

That's a big big important part of that.

But um I wanted to ask on slide 15 in 2011.

What did you do when we hit that deficit?

Was anybody here in 2011?

You I'm sorry, you count your question again, councilwoman.

What did we do in 2011 when we hit that deficit?

We cut.

Okay, yeah, negative.

She said, yeah.

Yeah, what we reduced.

You cut.

Um what do we do on the tax rate?

Well, we didn't increase it.

No, we did not.

We cut, we reduced.

What about projects and hiring?

We'll have to go back and see what the the components of what we reduced in 2011.

When I went back and looked, it said that we were looking at core services, police fire and infrastructure, and operational efficiencies across all departments.

But we were magically able, I want to give to credit here that we didn't have a lot of furloughs and layoffs, and that's amazing.

And I I really applaud that.

I think that's wonderful, but I think that we can move forward here.

But one important thing we have to do is improve our property values, and in order to do that, you have to uh stimulate property values, collect all of our our property taxes, and have economic expansion.

You also have to have good schools, public safety and infrastructure, but don't miss that economic growth piece.

That's the key piece there.

And to do that, you have to have a safe community and infrastructure and stable governance, stability in your governance.

So we also need to look at things like smart investment, smart redevelopment, revitalize what we've got, invest in in what we're good at.

And we're doing those things, which is very exciting.

We are revitalizing our airport, and we're also entering into the project Marvel and creating more attractive public spaces.

We can come back on the second hand.

Okay, thank you.

Councilman Um Castillo.

Thank you, and thank you, Alfred, for the presentation.

In terms of the development services and potential strategies to balance the budget, uh, I'm pleased to hear that the development community is looking and willing to participate in terms of what those increased fees can look like.

Uh, because a priority for us is also ensuring the stability with development services, but also ensuring that the workload uh for city employees is balanced and folks aren't taking on additional roles and responsibilities.

Um so I'm curious to uh see what those discussions uh as they evolve, rather.

Um, but in addition to that, I'd like an offline briefing in terms of what are some of those fines and fees that are being proposed.

Uh for example, uh I would like for staff to explore if there's opportunity and or if it's preempted to extore uh absentee landlord for break-in and vacant and nuisance properties.

I'm pleased to see in terms of the budget initiatives and the status report that the initiative for the vacant voting program is is well on its way, and we're seeing those increase of citations, and then of course the court cases as well.

Um but again, right?

Uh, I'd like to understand in terms of like how many of these vacant buildings andor properties are owned by out of state property owners, and is there opportunity for potentially us to increase the fee to recoup the cost of enforcement?

Um, uh I will definitely brief you on uh the outcome of the discussion with the development community.

I'll be happy to do that.

Now, in regards to the vacant building program and absentee program, those two programs are in code enforcement, which is general fund, it's not the development side.

So that increase will not affect the budget and the restricted fund that we just talked about.

Yeah, and I believe overall, right, in terms of if we can increase those fees, there would be value in terms of the general fund.

In addition to that, right, I'd like for us to explore with auto metal recyclers, uh increasing those permitted fees as well as for uh citations that are issued.

What are the current um the amount for uh issued citation and is there opportunity for us to increase those fines to ensure there's accountability with bad actors?

Uh you know, I'm thinking about um, and this is also related to the lightment services.

Um I'm thinking about the conversation that we had with visit SA and um the hotel occupancy, and knowing that the city of San Antonio has one of the lowest uh rates for short-term rentals type two.

Uh, is there value in us exploring potentially increasing those fees as well because then it ripples into housing uh affordability and accessible uh units that are being removed off the market for short-term use.

Uh so those are a couple of examples that I'd like for us to explore.

Again, I understand um a general fund, uh it would potentially increase there, but I think the overall goal is how can we potentially get accountability where we're seeing bad actors, where it's having a negative impact with overall housing ecosystem, and of course, increasing revenue.

Um, those are all my comments for development services.

Thank you.

We will review all that and bring that back to you.

Thank you.

Wonderful, thank you.

And then, let's see.

Those were primarily my comments, um, similar to my colleagues.

Uh, I think right now we're having conversations about um SAWS rate adjustments, CPS energy rate adjustments, a potential telecom tax to support via, um, and I think we continue to nickel and dime, San Antonio and Bear County residents.

Uh again, my concern is the cost associated with that.

Um, but also what I'd like to close with is any recommendation in terms of I I understand that there's uh laid out to like freeze positions, but again, I don't want that to unintentionally uh impact the workload of a city employee where they're taking on additional roles and responsibilities, and then we have burnout, uh impact of services, so on and so forth.

Uh, but those are all my comments.

Thank you.

Councilman White.

Um, yeah, I I'm gonna just say straight off off the jump that property tax hike should be absolutely off the table.

What should be on the table is a line by line examination of how this city spends its 1.8 billion dollars and whether every program, every position, and every contract has earned its place in this budget.

As Councilwoman Castillo just said, we're gonna be talking about SAWS rate hikes, CPS energy rate hikes, telecom taxes, uh, and now a property tax hike.

It is just not right to continue to put the cost for this government to operate on the backs of the people.

It's wrong.

And I guess that's why we're up here because somebody has to stand up for the people and say enough is enough, and we need to do the hard work in this body with this staff to discover where we can make these cuts.

And there are places to do it.

Just in the comprehensive budget reviews that we did last year, we found millions of dollars that we could redirect towards council priorities.

The hybrid zero-based budgeting model that we're gonna put into place will allow us to do even more of that.

I mean, again, we found we gave a hundred thousand dollars to a museum in Mexico, five hundred thousand dollars to maintain 13 pieces of art, over a hundred thousand dollars on Zumba classes in parks that not one single person attended.

There is money there, we must do the work within ourselves to find redundancies, to find money that's not being spent efficiently, and redirect that money to the council's priorities.

And then, yes, we are going to have to cut from some other areas, and it's going to be difficult, but that's what we are called to do to make those tough decisions.

In terms of what's core and what's not, I would say you look at the city charter, you look at what is required by state and federal law, and you look at what has been voter approved.

Those are what is core to this city government, and that's where our dollars should be going.

Slide 13 was the most interesting slide in the deck, and by the way, I very much appreciate the presentation.

A lot of a lot of hard work went into that, so thank you.

But again, slide 13.

We've got revenue growth 2.1%, but our expenses 3.8%.

What's driving that?

Why are we having to spend so much money?

I don't believe we have a revenue problem as it's been said.

This is a spending problem that we have to get a handle on and get a handle on it now.

I'm pleased we're gonna be doing the taxpayer impact statement.

Uh I appreciate my colleagues' uh support on that, getting it, getting it onto the dias next week.

Uh I will say I uh in what it looked like, it didn't look like CPS or SAWS rates were gonna be on there.

We had talked about if we could put those rates on the uh the taxpayer impact statement as well.

Did we decide we couldn't do that for some reason?

No, we can't include those.

We just need to get those rates from CPS and also, but that's the intention is to include those as well.

Yeah, as we often talk about up here, you know, I think the public views SAWs, CPS, and us sort of as one one um big big government, and so I think to the extent we can put SAWs and CPS on the taxpayer impact statement.

Um we certainly should.

I had the same question on the 65 million dollars in reductions.

Where where would that where would that come from?

Um and I guess as we move along in budget talks, we can talk about where staff thinks we can best um make those make those reductions.

I want to echo a couple things my my colleague councilwoman Spears said in terms of um county collaboration, collaboration with other municipalities.

I actually just recently talked with some folks over at the county, and they are definitely interested in doing that as well.

I mean that is another area uh where again libraries, ACS services, where we can, I think there's overlap and we can combine resources to save the taxpayers' money.

I also agreed with what the councilwoman said in terms of economic development.

We're not going to, we're not going to solve the problem long term without sustained economic development for our community.

Um bringing more jobs here, bringing better paying jobs here, uh, so that people can then go out, spend more money in the community, uh become homeowners, etc.

All of that is important to the long-term health of our city, and so that we're not having these budget um problems year after year, a decade into the future.

Uh so I'm glad that she said that.

Um, on the permitting fees that councilwoman uh Aldrette Gavito brought up.

Um, you know, I'm glad to hear Amin that our fees are are somewhere um near the low end.

Uh I do think we need to look at uh potentially which fees um may be outdated that that we don't need anymore.

I also think we need to look at when the fees are assessed, because I've heard from a lot of developers in the community that to the extent some of these fees could be um assessed later in the process so that the money isn't out of pocket at the very beginning of a project, that would certainly help them, and then of course, how long it takes to get some of these permits because time is definitely money when you're when you're in the development business, and you know, the more expensive um building is for contractors and developers, the more expensive the end product is.

And so when we talk about affordable housing, um we want of course um these these homes and and things to be to be as affordable as possible, and I think there are things we can do on the city side um to help that.

So that's all I've got.

Thanks, Mayor.

Councilman Viegeron.

Thank you, Mayor.

Responsible fiscal policy is a top priority of mine.

I believe it's been a top priority of district three uh since uh probably Councilman Gutierrez, Councilwoman Um Jennifer Ramos, uh Councilwoman Leticia Zuna, and of course my predecessor, Councilwoman Rebecca Viagran.

My staff has been working diligently on what budget priorities the residents of my district think they are important.

But again, today what we what we sit and we have here is something that I'm not surprised at.

I believe Maria, it was shortly after the pandemic uh 2022 or 2023 that we knew this day would come.

And some of us have sit here sat here year after year and understood that we would have to um make decisions that my predecessors, including councilwoman Rebecca Viegron, uh push down to other councils.

I believe this is the council that makes the tough decisions because of where we are in this current environment.

You can call it military conflict, you can call it war, but what I've seen, and if you've traveled overseas, is this has a global impact on the global economy.

So, of course, we would face it here in the United States and in the city of San Antonio.

And I'm in agreement with my council colleague McKee Rodriguez that any any terms, any euphemisms throwing away about overspending and things like this is just rhetoric at best.

If you're not.

And I appreciate all the directors that are here, the assistant directors and those that are working.

I know you are working diligently to make and continue to move this city forward.

And before we go on and we continue to wax on nostalgically about what we did in 2011, I was an employee with the city of San Antonio in 2011.

And I can tell you that city manager had no problem laying people off.

So if we are going to talk about where budget cuts come, you better be prepared to lay staff off.

And I don't think any of us have that appetite.

So when it comes to slide 26 and scenario one and scenario two, I think it should be on the table.

I think we need to have deeper conversations.

The other thing I want to address is that in Andy, is core part of the Texas Constitution or the city constitution when it comes to services.

That's something that I think the council came up as a framework to help uh the council uh manage the budget.

So, as we continue in our discussion, I am going to take the stance of uh my council colleague, uh Councilman Mungia, in terms of really being detailed in what I talk about what we cut, what we prioritize, what services and departments we need.

Because if we are using terms like core, and your core is basic, that's not who San Antonio is.

It's artistic, it's diverse, it's community-oriented, it is there and it shows up to your for your neighbor, and that is what I think is at the core of who we are.

So I I really want to challenge my council colleagues to really be specific when they're talking at this point in time.

I know that that we need to tighten up the budget, but any conversation about collaborating at this point with any other government entity is something we should not do or count on because each of those face a budget deficit just like we do.

So we need to understand that San Antonio is gonna need to do for San Antonio at this time.

We're gonna need to look at the cause and effects of what we have when we decide to cut in certain departments, and we need to find out where we really want to be in five years.

We knew in the pandemic, if the ARPA dollars didn't come, that we would be facing severe cuts.

Nobody would be getting raises, we don't know what our public safety would have looked like.

ARPA came through.

This is life after ARPA.

San Antonio does continues to do a good job to try and attract new businesses, new development, new growth, but as was reported by development services and the lack of permitting, it it is slowing down because of the current economic status.

So I think as we move forward, we need to look at Councilman Castillo's ideas of looking at more ordinances, more permitting, see how we can do this.

And I'm not gonna, I'm not gonna debate while we're in negotiations, but there is an ability to reduce our public safety, but I want to get through negotiations and I believe our union is in support of moving this city forward and getting us there to where we need to be without saying that human services or programs in the park are less than.

So as we move forward, I do think I do want there are some questions I want uh answered.

Um, one is um if before the budget we can get the percentage of completed projects related to the 2022 bond projects and what that anticipated cost looks like.

The other thing is if we could look at um the current ordinances we have and what we could best practices in other cities that we can possibly look at reducing what we um we set in the vacant buildings, and then I do I I do applaud the efforts because I think it was helpful to look at the uh traffic tickets and um and try and collect those and see how we are we are moving forward with that because any extra work in terms of um ordinances or CDCs would mean more work for our legal department.

So I want to see if we were actually to pursue some of these dangerous properties or some of these landlords that we need we have outstanding debt.

What what would that mean to the to the workload for our uh our city attorney office?

So I want to thank you for the presentation.

It is just a forecast.

Um I think the real work begins when we when you bring us the um the projected budget.

Uh I do think a lot of this could be an email or one-on-one presentations, but thank you for the opportunity to share, and I really want to thank you for your continued work.

So I appreciate that.

Thank you, Mayor.

Thank you, Councilman Corps.

Thank you, Mayor.

Thank you so much for this presentation and for all of you all who are sitting here spending your afternoon with us on Wednesday.

I know there's a lot that you could be tackling, but we appreciate you being here and the work that you do day in, day out for our residents.

Um, I think it's important that we think about how the city government is funded in general.

When we talk about not wanting to put this burden on the backs of our residents, we do put our entire every single one of us in this room is funded by our residents.

So our general fund is funded by property tax and sales tax.

Those are that's what our residents pay us.

So we we are being paid to provide a service, and it's important for us to determine what level of service that we want to provide and which services are are we willing to put more emphasis and support on to make sure that we are addressing the issues that our residents are facing.

And I will say our most underserved residents, because that is.

So last year when we presented the trial budget in June, over two years was about 170 million dollars.

And how much did we actually cut though last year?

So it was 114 million dollars over three years.

And I'm asking how much did we we'd reduce apartment cuts last year?

So of that, it was about 27 million dollars in that.

That's what I was remembering.

So we cut 27 million dollars last year, and I felt like that was the most painful process that we'd ever been through.

I remember the department chairs were tasked with like figuring out where your dead weight is.

And I I talked to so many people, like I keep asking folks for more employees.

I've asked Art to raise his uh salaries for traffic engineers.

I've asked Alana to go get more folks at C and E.

And I'm like, where are those people gonna come from if we're asking them to cut their budgets?

They're not gonna be able to say we want more employees.

Just last week we saw pre-K for SA's budget, and they didn't have any increase because sales tax is not increasing.

So of course they're not going to be able to increase teachers or support services for kids.

So all that to be said, looking at scenario one and trying to cut 65 million dollars, I don't know where that's coming from.

And I have not heard an idea yet today that would cover sixty-five million dollars.

Um I'm having flashbacks to these conversations, and then if I saying too much about exec, you cut me off, Andy.

But we used to discuss what um for for the fire department when they are trying to negotiate what they wanted to be able to get paid.

We had a budget already set and they were asking for a significant amount of raise.

And then we had to sit there and debate what do we cut, what do we cut, and no one really came up with ideas.

But you know what got cut?

Reese funding, which is our environmental sustainability funding.

And so when I was talking to some folks at the sustainability department the other day, I'm like, why don't we have money to uh fund our community-based sustain resiliency programs anymore?

It got cut with Reese.

And so if you think about when we do make those decisions, what are the things that are getting cut is the things that we want 10 years from now to create impact for our kids to make this community safer, healthier for them.

So all that to be said, cutting is easier said than done, and it's definitely easier said for us because we're not having the ones to make those decisions on a day-to-day basis.

And yeah, it is political cover.

Of course, my residents are gonna be pissed at me when I'm like, yeah, we we have to increase your tax rate.

Like whose resident is gonna say, Yay, thank you.

I'm so excited to pay.

I guess the average is 17 more dollars for a typical median household.

Like, yeah, I want to pay 17 dollars more so that we can maybe not see my sidewalk done for another 20 years.

Like no one's gonna say that to me.

But if we don't increase that, the likelihood that they're gonna get their sidewalk repaired goes down even more.

Councilmember Galvan brought up the sidewalk assessment index, and I'm so y'all know I talk about this a lot, but I'm so excited to see the results from the dashboard that are to come out because I think it's gonna show us that we have a lot more areas of uh challenges than we previously thought because there are so many barriers to sidewalks, and previously we've been focusing the majority of our efforts on just fills, and so I think there's so there we continuously see more and more work that we need to do yesterday at transportation and infrastructure.

We're talking about speed limits and what holistic solutions look like for preventing folks that are speeding in neighborhoods, and those holistic improvements included infrastructure, and those things cost money, so all of that to say I I just don't see a way in which we move forward without being able to with being able to cover a hundred and whatever it is, like 30 million dollars of cuts in the next two years without seeing a real tangible loss to even core services because I truly believe that sidewalks is a core service, even though it's the responsibility of the homeowner.

I don't think anyone should have to walk on the street uh and in a dangerous intersection, particularly not our students or our elderly.

So, all of that to be said, I don't know how we move forward without scenario two, and so I will go ahead and be bold and say, I will explain to my residents why this is necessary and why we'll continue fighting for their sidewalk to be done, continue fighting for them to get more safe officers, and continuing to make sure that there's art in their district, whether that whatever that looks like to them, and hope that they will see that the justification of the average of 17 dollars is worth it.

So I I will support scenario two.

Thanks, Mayor.

Thank you.

Councilwoman Gavito.

Uh thank you.

Uh, just a couple of quick things to add.

I mean, I do think that the the conversation of what's core services and what's what's important services is um is a good one, but again, you know, I go back to what residents are calling us about and their expectations of what their taxpayer dollars are being spent on.

Their taxpayer dollars, you know, I think residents should have the expectation that their taxpayer dollars be spent on their streets, so that we're not all driving on bumpy streets, that their expectations are that when there is a car accident, police are responding, that firefighters are responding, that they're not getting attacked by loose and dangerous stocks.

Those are basic expectations that our residents call us about all the time.

But I am looking forward to continuing that conversation so that all of us have a very clear mandate of where um our residents' uh expectations of our dollars should go.

I did want to just quickly add on to a couple of items of what I mentioned earlier.

On slide 43, I am glad that we're doing continuing a comprehensive comprehensive budget reviews.

Um I would love to see an analysis of how many additional police officers would create with uh would create a cost savings in overtime.

Because we know that police overtime is high, and while I think some of that is unavoid unavoidable, I do think we should dig in there and see how could we better balance that with additional staffing.

So I'm looking forward to looking into that.

I also am glad that y'all uh noted that we're gonna be looking at the magistration process.

You know, I I think it's it's very, it's probably all of it, maybe it's something we can all agree on that that double magistration process needs to go.

Uh Eric, do we have any solid data on how much cutting the double magistration process would save us?

No, ma'am, and we do not double magistrate, but I'm happy to share larger conversation, but no, I I don't know.

Um, we do not double magistrate.

Okay.

Well, I you know, I definitely want to um it'd be interesting to see the uh what efficiencies could be gained there.

I do agree with my colleagues.

I think that this is time for partnership with the county.

It's also time for a partnership with private sector, because you know, um, as was mentioned by several colleagues.

I mean, all of us have hearts up here, all of us want to help our most vulnerable residents.

Um, but we have our uh our our services that we need to provide to residents all over the city.

Um, our vulnerable residents and our not vulnerable residents.

Everybody expects safe streets.

Everybody expects police to respond, everybody expects firefighters to respond.

So I know that this is bleak and the conversations are hard, but again, I do want to just close out and say, in hard times this is where innovation happens.

And uh this is where uh we have to think creatively.

We have to do things differently.

Um, and we we could we could potentially surprise ourselves.

And so um, so you know, I I just challenge all of us to think differently, creatively, and and and uh put our innovation hat on to solve this problem in front of us.

Thank you.

Thank you, Councilman McKee Rodriguez.

I guess it got quiet.

Uh I guess one point I'll start off with in response to Councilwoman Spears is I'm not going to be then supporting across the board uh budget cuts if any departments are exempt from that.

I did see that coming, but no deal.

Um in response to Councilman White's remarks, you can penny pinch and shake our city department piggy banks and find a hundred K here and a hundred K there if you want to cut entire programs, but you're not gonna find much more than a few million dollars in savings across these departments.

You're not gonna find a hundred and thirty million dollars in cuts within departments whose budgets are 10 million dollars.

We have a revenue problem because we've abated millions and millions of dollars in taxes to attract businesses and to build market rate and luxury housing that remains vacant and they somehow haven't gotten our community out of poverty to everyone's surprise and shock.

So I can't wait to hear my colleagues explain how we're going to attract businesses here without us spending millions of dollars and abating taxes for those same companies.

And I'll give an example of a department related expense that does cost us millions of dollars that is completely unnecessary and unhelpful and ineffective.

We've asked, not I, but we as a body have asked to increase encampment abatements.

And we know that when you do an abatement two days later, folk are right back there.

Let's cut it, let's cut abatements.

Because you're gonna hear people complain again and again about, oh, there's homeless people over here, and rather than rather than fun of the supportive services that are going to prevent them from being homeless or get them off the street into permanent supportive housing or a temporary shelter or low barrier shelter, we're going to sweep them away because that's a core service, right?

On the point of revenue, there is a glaring example right now of us dropping the ball for our community.

We're going to own a billion dollar arena, and there will be annual profits from the naming rights of the arena that will benefit from city-owned land and city development downtown as a part of the scope of Project Marvel.

There will be public safety needs in a new downtown that won't be met by our existing budget.

So I would love for one of my colleagues to explain why we can't ask for revenue sharing for an agreement that we are spending almost half a billion dollars on.

We need to increase our revenue, and one of the many ways we can do so is through one of our largest incentive deals.

And so since we're being creative and we're putting our thinking caps on, I would love to hear one, you know, where are you gonna find the 130 million dollars within these our very underfunded city departments?

Where are we going to how are we going to be attracting businesses and growing our our uh our sales tax our sales uh sales taxes?

How are we gonna be doing all these things without spending the money to make our city vibrant and beautiful and without helping people who need it the most?

It's just we're not here.

Thank you, Mayor.

Thank you, Councilman Galvan.

Thank you, Mayor.

Um just a couple quick things.

I think just for context, as we go into this next budget season.

Of course, I know I mean we're gonna have to get into this policy conversation and overall just what our what our perspective is here.

I think just a couple of uh things that I think would be important for context.

I heard a lot about economic development being crucial to this whole conversation, right?

It's still uh somewhat core service to make sure that we're able to continue to do things that we need to do here and get more revenue.

And I can agree for that for sure, because I think it's how we look at actually building our city a bit a bit more beyond uh just the kind of basic services.

But I guess I want to ask a little bit or just kind of pose the question to folks about what company wants to come to a city when their retirees can't go to a senior center nearby them.

What company wants to go to a new city where there's not a quality park for the kids to go at or a library to go to?

Because the city near the city there had to cut so much services that now it's not enjoyable to be at.

It's not a quality of life, there's no quality of life there beyond the basic services.

Absolutely, it's a we gotta do infrastructure, we gotta do public safety, no question about it.

The other pieces are there too, and it's easy to say, well, we won't cut those.

Those will stay.

Okay, well, let's do some quick math here.

All the other departments uh in our general fund of last year are 428 million dollars.

And if you want to just cut all of them out, right, or you want to cut just the minimum to get to the deficit we're seeing in 2030, 264 million ish, okay.

We can do that by cutting all the libraries, all the health, all animal care services, all human services, all homeless services, all neighborhood housing services.

Uh the city manager's office, city attorney's office, uh I don't think it's gonna happen.

So, okay, let's go, let's go to let's go to some core, right?

What do we need by the charter?

Uh city manager, city attorney, elections, I would assume.

Um, probably some code enforcement there too, even by state law, mayor and council, again, I would assume.

Um, some finance here, so we can have these conversations, HR so we can pay our employees, clerk, obviously, so we can keep our records and have these meetings, 301, so people can answer the phone.

Uh, so then people hear concerns from the community, municipal court, so we can actually, again, state law have those processes there.

Okay, that's a hundred and six million dollars that are removed from that big chunk there uh if you're just looking at what we need.

Okay, so now we need another several hundred more million dollars.

That means we're gonna have to cut into libraries, health, animal care services, human services, homeless services, public works, and parks in some form.

Plain and simple.

And I think it's easy to just continue to say, oh, we gotta cut it, we gotta cut it, we'll make something happen, it'll all work out together.

Uh it's just not true.

And so I think we're just gonna have to have to say it out loud, right?

What's gonna happen here?

And I think when we talk about two, right, okay, we're gonna figure out to make these these cuts here and there.

Okay, I wonder, you know, if we saw one of our largest companies here in our city suddenly shrink in size significantly.

Would we think that's true economic development, or that we think it's gonna be good, or poverty's gonna be uh any better from that?

No, probably not.

But we say it's okay for one of the largest uh employees in our city, us.

We're one of the largest employers.

How many people are gonna be on struggling to afford housing and struggling to provide our sales tax revenue towards us because now they don't have a job here?

It's just a little bit of perspective I think we need to have.

Um that's not to say we can't do it, we can't accomplish this in some form.

It's just to say that it's easy to kind of quickly say, Oh, some departments just we can't, we don't, we'll be fine.

Some things we can trim here and there.

There's no there's no room for that.

So I wish we would just be honest with each other about which ones are we okay to lose.

What residents are we okay to tell?

Sorry, you can't get a library, sorry you can't get a new park, sorry your park can't get a new shade structure, sorry, you can't get a sidewalk, um, even though you've been waiting forever because I can only fund these two services in one of the largest cities of America.

We can't do any of those things uh because we're only focused on economic development, and we're still not getting these white whale companies to come this direction.

It just it just seems disingenuous.

And one last thing I just want to note with, right?

It's also the the focal point of we should only focus on what's in the charter.

Only what's specifically said in there.

Okay, first sentence here within the powers of our city.

Charter shall be needed for the government interest, welfare, and good order of the city and the interest, welfare, health, morals, comfort, safety, and convenience of its inhabitants.

I think there's a lot of loaded things in there, for one.

And two, I think when we talk about, oh, it's only safety and it's only infrastructure.

I didn't see infrastructure in here.

I saw welfare, I saw health, I saw comfort, and I saw convenience.

And so I think it's just again, I'd rather hear the specifics of what you're looking to do, not just kind of quick statements to make here.

Um it's gonna be a tough summer.

It's gonna be a tough year when we go to this conversation.

It's gonna be tough several next years as we go through this conversation, but I don't want us to be dishonest with not only each other, but with the public too.

When we say, oh, we we trend some services here and there, um, and then we also fail our organization several times too when they call us and ask for something.

I just want us to be honest with the residents say, no, we're not gonna do that anymore for y'all.

We're okay with not doing that anymore for the community that's paying these taxes anyway.

Thank you, Mayor.

Thank you, Councilwoman Spears.

Oh, thank you, Mayor.

Um I think it's important to remember to also talk about how the country club tennis player is also donating money to nonprofits, creating scholarships and foundations, donating to their churches and volunteering all over this city.

I know everyone up here cares about every single person in this city.

I know I certainly do.

Every single one, the vulnerable, those who are able to help the vulnerable, all of us, all of us matter.

I think we need to think about too that what we do today is not a forever move.

We can make decisions today, and then when we recover, add back the things that we have to cut with lessons learned and efficiencies added.

I think of this as a household.

Maybe it's the mom and me, but I think of it like my household.

So we meet our basic need.

Let's pretend we are we we got it, we we got lost our job or got demoted, something horrible happens in your household.

What do you do?

You meet your basic needs, you collect on any debts that may be outstanding, you maintain what you've got, which we have a lot of things here, a lot in this city.

We have a beautiful city, and then you also try to look and see where you can improve, gain more income, get a better job, and those are the things that we need to do here.

Um I want to say that when we talk about public safety, when you decrease investment in public safety, it does a lot of things, and I brought this up at budget last year about overtime.

When you and it's here also in our 6-6 on uh page six, and it talks about the parks police, the unfavorable variance is due to additional overtime as a result of vacancies to provide consistent public safety services throughout our city parks.

So this is creating overtime costs when we aren't adequately covering our police and fire needs.

It creates problems with retention, recruiting, it increases burnout, and it will reduce investment in our community and economic development.

As far as collaborating, I think we absolutely have to continue talking about collaboration with the county.

We are inextricably aligned on so many things.

Our jail system needs it.

Not to mention, I forgot to mention that the strain on our jails.

Our jail is in bad shape, y'all.

We can't live in a silo thinking that this doesn't affect us.

What happens at the county totally affects us?

So we have to be talking to them, and we have to be working on how we can because they have reduced budgets.

How do we work better together on the things that we should have in common?

I would I would ask, the mayor brought up a good point about subsidies.

I can we put on a slide, please, or maybe it's two or three of all the subsidies, every single subsidy.

I want to see every subsidy we use we do in the city for anything.

I would ask if we could do that, please.

Yeah.

Okay.

Thank y'all so much.

Okay.

Has everyone um spoken who'd like to speak on this issue?

You have one more okay.

Uh, Councilman McCormick.

Thanks, Mary.

Just one more thing on the comprehensive budget review process.

We said that we were gonna have 13 completed by the end of this year.

Do you know when we're gonna be able to know what the results of those are and how much money we could be able to save from those?

Yes, councilman, those will be part of the 2027 proposed budget.

Okay.

Um, so we won't see them until we see the proposed budget correct.

Okay.

And then are we also looking at when are we gonna be able to see if um to Councilman Castillo's point on like increasing fines for vacant homeowners or um or escapee residents or other things like that with code enforcement that could be used for revenue increases?

We'll do that initial potentially roll it into the trial budget in June, we bring to you guys.

Okay, great.

Thanks.

Thanks, Mayor.

Okay.

The um certainly appreciate the uh the willingness by my colleagues to think differently about some of these things.

Um, and I also would like to make sure that we understand what we are what we are subsidizing.

Um, and Eric, to the extent we can also understand.

Um, I think all of us read the article about, for example, unfortunately, the continued um leak issue when Carson Street, um, how we unfortunately had to subsidize that uh potentially by 300,000, a developer that um received TURS money and uh unfortunately was um dropping money into our system uh without permission to do so.

300,000 dollars the city had to um to cough up to do that.

In my mind, that is a subsidy.

Uh so I want to make sure that when we are um identifying those kinds of things that we um are capturing those and um and and identifying it as such.

Does the um does the 6-6 um does this account for or maybe the the year-end number?

Does that also account for what assumptions do we make about uh the outstanding debts owed to us by private entities?

Does it assume we collect all of those by the end of the year?

I'm talking about the MLS deal.

I'm talking about um other planning assumptions we might have, for example, around civil fines.

Yeah, if you recall, no, it does not because that's the general fund we just showed you.

The uh the MLS issue that that we've discussed uh impacts the city and the county's PFC for the soccer stadium, the other one that that we've had some conversations about, um, and it would probably be included some assumptions on hotel occupancy tax delinquency, and then generally speaking, in the general fund, we would have delinquent property tax assumptions built in.

Those the details around delinquent property taxes, we would nail down as part of the certified rule in July.

Okay, that's helpful.

Um, I know in our discussion, we um we uh there is an opportunity uh for some of these funds to come into the general fund if we so decided.

Understanding we're in dire straits, and so we want to consider where all of our options might be, even if it is only 2.1 million, 2.1 million helps us not cut someplace else that we would rather not.

Additionally, I look forward to the conversation.

We've talked about it a couple of times, and it's been brought up by some of my colleagues.

Um, the appreciate appreciating an understanding of again where we are foregoing, and a key part of that uh equation are the tours, um understanding where we might be able to um sunset some of those or at least look at it side by side, right?

When we look at again guerrilla project or general fund, we as a council need to have a strategic conversation about what's in the best interest of the community.

So welcome uh how we're going to tee up that that conversation so we can look at again what we're foregoing or what we may decide needs to actually come back into the general fund.

For the edification of everybody, um Eric, what how do you uh anticipate teeing that part up as a part of the budget conversation?

I'll have to give us some thought, Mary.

We had a conversation with the council or you all uh at the end, uh as part of the budget last year in August, where we laid out um all the city initiated tours.

Um we'll give that some thought.

Um there are a couple of moving pieces on some of those city tours, so I think we would uh maybe update that analysis and um and bring it back to the to the group to the entire group uh for some feedback.

Um frankly, that might be helpful because I think uh there are a number of of uh potential developments that have approached aspects of the city, and um so having a consolidated conversation about the use of those funds uh would be helpful.

My last my last memory 24 million is that about annually what we forgo in tours on the city side.

No, I'm not remembering that either.

Yeah.

I don't remember.

Okay, thank you.

Okay.

Um yeah, appreciate as I have shared with some of you.

I've had conversations with um with uh the judge, Judge Sakai, about where we may be able to identify um some efficiencies, frankly, efficiencies that are good at all times, not not only when we are uh experiencing um budget difficulties like we are now, but just in the interest of being good stewards, so look forward to uh to sharing more about that conversation.

And um, and yes, of course, uh as Councilman McKee Rodriguez, we have an opportunity to ask for more uh based on what our community needs and deserves, so more to follow there as well.

Okay, um any other additional comments?

Okay, thank you.

Um we do have public comment this afternoon.

Uh the time is now 4:34, and this meeting is adjourned.