Committee of the Whole City Council Budget Workshop - May 22, 2025
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Committee of the Whole City Council Budget Workshop - May 22, 2025
The City Council met as a Committee of the Whole on Wednesday, May 21, 2025, at 4:00 p.m. (minutes indicate May 21; instruction provided date of May 22, 2025) to discuss the proposed Fiscal Year 2025-2026 budget. Mayor Joines called the meeting to order and turned it over to Finance Committee Chair Robert Clark. Scott Tesh, Director of Budget and Performance Management, presented detailed information on the budget, revaluation, tax rates, and enterprise funds. Council members asked questions and raised concerns, but no formal votes were taken.
Discussion Items
- Budget Context & Priorities: Scott Tesh provided an overview of the proposed 2025-2026 budget, emphasizing a maintenance-level budget with no service cuts. Key priorities included investing in employee compensation (6% combined merit and COLA), moving away from debt for vehicle and equipment purchases, and using cash for capital maintenance. The proposed total budget is $728 million, up $69 million from the prior year.
- Revaluation & Tax Rate: The city saw a 51% increase in real property values. The revenue-neutral tax rate is 52.66 cents; the proposed rate is 57.5 cents (a 15-cent reduction from the current 72.5 cents, but 4.8 cents above revenue neutral). Of that 4.8 cents, 1.3 cents is for general fund operations, 1.3 cents for capital maintenance, and 2.2 cents for transit. The average residential homeowner would see a 27% increase in property taxes due to revaluation and the proposed rate.
- General Fund Details: Property taxes in the general fund are 2.6 cents above revenue neutral, bringing in about $13 million. Sales tax growth is projected at 4.3%, mostly from a larger share of county distributions due to last year's tax increase. Personnel costs are up 6%, driven by retirement and health care benefits. Supplies and services increased 3.2%, reflecting inflation.
- Enterprise Funds:
- Transit Fund: The proposed 2.2 cents above revenue neutral is needed to keep the fund solvent; without it, the transit fund would be out of cash by year-end. Operating expenses are up $1.4 million, mostly from contract inflation. No fare increases or ridership growth are projected. Federal funds cover 80% of capital costs.
- Parking Fund: Implementation of new mobile parking fees and elimination of attendant positions reduced the net cost from $830,000 to $200,000, a 75% decrease.
- Fairgrounds & Convention Center: Accounting changes (recognizing revenues and expenses) increased budgeted amounts but do not reflect real operational growth. Property insurance continues to rise 25-50% annually.
- Stormwater Fund: A 4% rate increase effective January 2026 is proposed. The fund faces a potential cash flow issue in a few years without further rate hikes or debt issuance.
- Unfunded Requests: Nearly $28 million in requests were not included in the proposed budget, including $8 million in additional personnel and $7 million in operating requests. Affordable housing funding is set at $5 million, but continued funding will need to be addressed in FY27.
Key Outcomes
- No Votes Taken: The meeting was a workshop for discussion and questions. Council members will have additional opportunities to provide input at upcoming sessions: May 28 budget workshop, public hearing on June 2, and budget adoption on June 16.
- Next Steps: Council members were encouraged to submit additional questions to staff. The next scheduled meeting is a Committee of the Whole on Thursday, May 22, 2025, at 4:00 p.m., followed by another workshop on May 28.
- Concerns Raised: Council member Clark questioned the necessity of separate enterprise funds that do not break even, calling them "phantom funds." Mayor Joines noted the 27% average property tax increase and challenged staff to reduce it. Council member Scippio requested data on workers' compensation claims and lawsuit costs.
Meeting Transcript
You were also expecting I couldn't make it. Good afternoon. I call to order this meeting of the city council, meeting as a committee of the whole to discuss the 2026 budget. And ask City Clerk to call the role, please. Councilmember Joyner. Present. Councilmember Clark. Councilmember Andrew Bowen. Here. Councilmember Scipio here. Mayor Peritim Adams. Councilmember Taylor. Present. Councilmember Hall. And Councilmember Burke. Thank you very much. For the remainder of the meeting, I turned the meeting over to the Chairman of the Finance Committee, Councilmember Clark. Thank you, sir. We will begin today to discuss the budget. We have another meeting tomorrow, I believe, at the same time. That'll be it for the week. Next week, I know Tuesday, we have a neighborhood or community gathering at Little Creek, I believe. And so those are the next three meetings. With that, uh City Manager, do you have some opening comments for Mr. Tash takes over? Uh no, not really. Well, I'll take it just a cut just a moment and have uh Scott come on come on up. Um we we gave you the the budget presentation on Monday with the document, so hopefully you've had a chance to at least glance through those and and start putting up uh figuring out what questions that you have for us. Um Scott's going to spend some time going over in more detail the things that we talked about on Monday, and uh we're we'll stand ready to answer your questions as we go along. Oh, I'm sorry. Scott I'm gonna have to roll you out of order. I don't know if y'all it was one of the coaches I heard speak the other day, said he named his dog uh coach, so he could say coach. I mean uh yeah, sit down. So uh give them a little power, get a dog naming mayor. Um I would suggest we let Scott go through his presentation in its entirety, write down any questions you have, and then we'll answer questions at that point. You got it. Thank you, Chairman Clark, uh Mayor, Mayor Pro Tem, and members of the City Council. Uh first thing I want to do before we get started today is turn around uh and say thank you and recognize the members of the budget staff who are all. I think they were doing their best to stay off camera in the back corner out there. Um but I I get to present the details uh that amount to months of their hard work and so wanted to say thank you publicly. Uh the applause is absolutely appreciated and necessary for their their output. Uh as the city manager said, my intent today is to provide additional details to what he presented on Monday evening. I would encourage people who are watching this either now or in the future on the city's uh website or on YouTube to go back and watch the city manager's comments. I will do my best not to regurgitate exactly what he said, but we're gonna hit the same themes uh just at a higher level of granularity. Uh the intent today uh from an agenda perspective of thinking about flying an airplane is to start at the 30,000 foot level, talk about the context of this budget, uh budget priorities overall. We will spend a few slides talking about uh revaluation and the proposed tax rate, the effect of that on uh various types of properties, and then kind of bring that plane down out of the clouds, begin to talk about the budget overall, um a little bit further down, talking specifically about the general fund, where which is where we will spend a majority of our time. The general fund accounts for most of our general government activities, police, fire, sanitation, recreation, and the like, and then we will spend some time also talking about selected enterprise funds, uh specifically those that have major policy decisions associated with them in the FY26 budget. Uh so we did at the retreat in January spend a considerable amount of time going through um resident survey data. But at a high level, the last time that we did this, we were uh scored higher in 30 of the 52 benchmark areas than the national average, and overall city residents provided that crime prevention, streets and sidewalks maintenance and housing programs were amongst some of their top priorities. Again, just kind of flying at that high level with respect to the city as a place to live, as a place to work, and as a place to raise children.
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