Good afternoon, everyone.

I'm Alan Joyce, Mayor of Winston.

It's my pleasure to call to order this meeting of the Western City Council meeting as a committee of the whole to commence the discussion of our annual budget and take some actions.

We're also happy to have with us representatives of UNC School of Government.

Glad to have you with us today as well.

Would you call the role, please, Madam Clark?

Councilmember Joyner.

Present.

Councilmember Clark.

Here.

Councilmember Andrew Bowen.

Here.

Councilmember Scipio.

Present.

Mayor Pro Tim Adams.

Councilmember Taylor.

Present.

Councilmember Hall.

President.

And Councilmember Burke.

Thank you very much.

Mr.

Clark's chairman of the finance committee.

Do you want to take it and run with it now?

Or yeah, I just have one question for the mayor, though, before we start.

Do you know where your rubber signature stamp is?

I got it.

That's how Pollett Mountain lost all their money.

Oh.

You didn't see that in the paper.

I don't really think the mayor's stamp and was stamping checks with.

Well, we signed everything by hand here.

Mr.

City Manager, you want any introductions?

I know uh Scott's coming up here in a minute.

Uh uh, yes.

Uh before we get into the budget side, um, as I've mentioned to all of you, uh this the uh UFC School of Government has uh reached out and asked us to participate uh with them in a in a project they're doing looking at measuring board effectiveness.

And um uh uh uh Colt uh Jensen and um Becca Fisher Gilbert Gabbard are here that are they're leading that effort, and so they they're going to do uh just a quick brief presentation to you of what they're doing, and uh then ask you to do a quick survey as a first part of the meeting before we head into the real budget items uh today.

But this is um as I mentioned to you, I I think it's uh I was very appreciative that they reach out to us, one of the looking for best practices and ways to improve the training that they're doing for folks at the school of government, and so I think it's uh it's an honor for them to ask us to be that, and I know they're appreciative that you're willing to participate and do this as well.

So I think as Colt, I'll I'll introduce Colt first.

Uh, I think he's gonna get through the presentation.

Sir, you have the floor.

Thank you, Mayor and Council.

It is a great honor, and I'm very grateful to be here today.

My name is Cole Jensen.

I'm here with Becca Fisher Gabbard from the School of Government.

And the School of Government has three guiding values.

First, we are nonpartisan, policy neutral, and responsive.

And it is the responsiveness piece of our message or our mission that brings us here today.

So we are working to be responsive to the ever-evolving dynamics of board relations and staff relations, and we want to better understand how we can serve both our elected officials and our administrative officials.

And as a council that does a lot of ambitious things and does them well, we wanted to reach out to Winston Salem first.

So within North Carolina and across the country, we are seeing heightened polarization and conflict as there's more and more gridlock at the state and federal level, both within parties and between parties.

We're seeing more contentious issues filter down to the local level.

We're also seeing differences in personality that make it difficult to have a positive working relationship between council members but also between staff.

Um so what we want to do is to be able to better help and be responsive to our elected and administrative officials as they face uh communication breakdowns and be able to better assist them by pinpointing the areas of friction that are occurring.

So, what we want to do is better develop a diagnostic tool for workplace dysfunction.

Um, and it's quite the opposite that brings us here today.

You all are doing really good work, so we want to have a positive comparison group so that we can know what things should look like.

So my presentation today is going to be very short.

This is going to be less than five minutes, and then you're gonna get a survey, and this survey we've conservatively estimated that it will take 15 minutes to complete, but in reality it'll likely be far less than 10 minutes.

So, what we want to do is better understand again how we can serve elected and administrative officials through improving 360 evaluation of elected officials.

So at the School of Government, many folks come to us to understand how they are doing good, but they want to do better.

So this survey that we are working on would allow for 360 evaluation to get feedback from peer council members, staff members, as well as key stakeholders in the community.

So this qu this survey will have four questions, and all you are doing is assessing your agreement or disagreement with the items on this survey participation is completely voluntary.

So if you do not feel comfortable participating, you are under no obligation to do so.

The risk is very minimal.

It will be just asking about um relationships that you have both with staff and with elected officials.

Please don't write your names on there.

We don't want any anything that can be traced back to you.

You all are doing good work.

The last thing we want to do is collect any personal information.

So this is just to learn more sort of about how you all work so well together.

Um and the results of this survey will be reported in the aggregate rather than individually.

Um information about the institutional review board process that went through at the University of North Carolina, which means that it's been screened to make sure that all of our procedures are ethical and that we are using fully informed consent before collecting any data.

And then although there are potentially minimal risk, we want to highlight some of the benefits or what we plan to deliver as a part of this survey process.

So we will send a one to two page report of uh findings to you.

They'll be action-oriented.

So again, the school of government is policy neutral, so these won't be recommendations suggesting what you should do, but potential considerations that may or may not be helpful that you all can consider within the Winston-Salem jurisdiction.

And then we will also use this, these survey results to create some of our um board builder booklets that will help other communities understand how they can build positive relationships between council members and between staff and council.

We'll also continue to develop a 360 tool that will be used at the School of Government for those who enroll in our courses.

And in front of you, you now have the survey, and you also have a schedule of our course listings.

And again, Becca and I will talk more about these points that we're talking about in terms of roles and relationships between council and staff in a top 10 primer, which is listed on the upcoming course schedule, as well as developing a one-day intensive course where we talk more about how to work better together, regardless of where you are in the organization.

So this is a little bit of what you'll see in the presentation or in the summary of findings that we'll send.

Again, this will be very digestible, one to two pages looking at some of these things that you all are already familiar with and working on in terms of shared value, common vision.

You all have already documented a lot of this in the documents that exist here in Winston Salem that you have adopted, and you're gonna talk more about another one, which is the budget, which solidifies how you function as a team and your shared values.

So this is a little bit about what that report will look like.

I want to open it up now to questions.

Since you all have this survey in front of you, um you all can take the survey, or you can ask any questions that you all have before beginning the survey.

Okay.

So after we do it, if we can all turn our surveys into the city clerk, and she'll get them back to you.

Yes.

Any questions, comments?

Yes, Mrs.

Scipio.

Just had a quick question.

How many cities, towns, and villages are involved in your in this effort.

Yeah, that's a great question.

So we are beginning, and we are will be in Knightdale, and we've been will be in a couple of other cities upcoming, and then this will go uh almost into all of North Carolina counties and then some of the municipalities as well.

So this is in the early phases, but eventually this will go to all counties in North Carolina and most of the municipalities, especially those that have a population above 5,000.

Yeah, just to echo that point, this is really um first phase pilot phase of this project.

Let me introduce myself formally.

I'm Fisher.

Please give your name and address.

Yes, of course, and and physical address.

Uh, my name is Becca Fisher Gabbard.

I am so glad to be with y'all today.

Thank you for lending some of your time to us and to this effort.

One other point I wanted to make is that because you are our first uh municipality that's going through this exercise that's contributing to this research project.

We'd love to hear too either um comments during your uh survey administration, or if you note in sort of the margins if a question is confusing to you, or if you're not sure what we're getting at, or it seems redundant.

Um, we are really trying to hone this tool so that it can be as effective as possible.

Any other questions that y'all have before we we give you your homework assignment for the next 10 to 15 minutes?

Okay.

No, we're not gonna do it, we'll do it later.

We're not gonna do that.

I'm hopeless that you would do it now, but we can work with whatever the the board would provide.

We've got a committee meeting that needs to take place.

Uh so y'all we will get them to you.

Okay.

Any issues there, Colt?

Okay.

Perfect.

Well, thank you all so much.

We really appreciate your your effort and time and energy around this project.

Um, don't hesitate to reach out with questions.

Okay, thank you very much.

Thanks again.

Okay.

I mean, if it's a 20-minute survey, I I think it would be better if we did it's a when we have time to do it.

It's only about a 10, it's uh we're hopeful it's only about a 10-minute survey.

If um I'm chairing a manate committee, we're gonna talk about the budget.

You are the chair.

Can I can I make one more point?

If you're if this is gonna be a take-home exercise, um, don't overthink it.

Your sort of first instinct about each question is probably best.

Don't don't sort of waffle about, well, maybe it's a four, maybe it's a two.

Maybe that's like it's a take yes, a little bit truly our first instincts are typically our best.

This is the first budget made we we've got a full agenda and I need to get through that.

Uh most of us will be here for the rest of the afternoon.

We can probably get them to you for you.

Completely understand and respect your time.

Thank you all very much.

Okay.

Mr.

Tesh, are you up?

I mean, tell you you got 80 slides, that's why if you were told 80, you're a few short.

You're short, okay.

So uh two things.

Uh one, the agenda does include both operating and capital on it.

Generally speaking, we would do the operating budget one day and capital another.

Usually we are short or end early with operating.

So the intent here is we have a chance, we're gonna get through all of it at once.

Uh that way you can ask questions in future workshops and move forward to that.

I believe we may need to take a quick break between them if we have time.

Also, the agenda for Thursday includes continuing capital if we don't make it through.

So before I get started, I do want to say uh one thing, and that is a healthy thank you to staff who is trying to hide from the TV on the back row.

I do get to work with an amazing group of people uh each and every day, and they are the ones who put together these documents, do all the entries and make it that way.

I did not tell them I was going to do it, but I am quickly going to call out two people.

I'd like to say a special thank you to Sarah Coffey, who is our deputy director.

We were short and analysts this year.

She kept us on pace uh and made sure that we were where we were supposed to be, and also has the job of wrangling me, which is probably the most difficult job in the city.

And I would also like to say thank you to Mike Que Visto, who is our capital budget manager.

He will be retiring after nearly two and a half decades of service to the city here after this budget season.

Uh he has been just a one.

From an operating perspective, uh, we are gonna look at several things today.

We're gonna talk about budget priorities.

Uh, for those who are watching this meeting, I would encourage you to go back to last Monday.

Watch uh where city manager Pat Pate gave about a 25 or 30 minute presentation of the overall budget priorities as well as talked about our achievements and goals and objectives within each one of our focus areas.

I am going to do my best not to regurgitate that half an hour worth of information, uh, but to add to it uh and to add the details.

We're gonna talk about some benefits recommendations.

Dr.

Tina from our human resources department is here, so she will hop in in a few and talk about health benefits.

We will talk about the total budget overall for the city, but as we normally do, we'll spend the vast majority of our time talking about the general fund, which is our general government annual operating budget where things like police, fire, recreation, saw the waste collections, and the like take place.

And then at the end, we will talk about enterprise funds.

Uh we are providing more and more information each year, so this is a little longer than it was previously, uh, but there is a lot of need in the community and throughout the state.

We've heard a lot about providing more information, and we are trying to do so.

So having said that, we will hop uh right in.

These should look very familiar.

They are the same priorities that the city manager showed you on Monday.

I'm gonna add a few details to a couple of them.

So, in terms of strategic investments, this budget does include the WISTA routing changes that you approved last month.

So there are fixed route changes uh that include the crosstown connectors as well as uh two microtransit zones that will be effective in January.

Uh most of that is covered by uh additions and grants.

So on the fixed route side, we have additional formulaic uh money that is going to be uh in the operating budget going forward.

The um microtransit zones are done with CMAC funding or congestion mitigation and air quality, and that is time limited.

So after those programs have been incepted, and after about two years, we're gonna need to do a program evaluation and determine whether or not we want to continue with that funding, and if so, it will require additional local resources at that time.

This budget does include a lot of technology enhancements.

Um we have talked about the axon contract in police multiple times.

We began that discussion in January at your retreat, and there was a um presentation at the public safety committee as well by the police department.

Uh so we will talk about the axon contract, there are enhanced uh IT security uh initiatives.

There are things that you have already adopted in terms of our Microsoft Enterprise Agreement uh to get in place.

Obviously, we had a cyber event and we have learned from that, and we are putting um uh processes in place to ensure that we are secure as we can be.

Uh, and also there are some system replacements.

We'll get to the IT part of the budget, but there are uh the human resources information system that you budgeted for last year is coming online this year, uh, as well as our uh work order and permitting through inspections, uh, those are being required to be replaced because the vendor is no longer supporting them uh at the end of next year.

Again, we're making some strategic investments into equipment replacement.

We've talked about those, but I will have a full list of of those as well.

Um we will talk more in the capital section uh about uh debt funding and uh how capital improvements are are funded for what's in the six-year planning window.

Uh but a note that you all know we have the facility condition assessments that are coming back in the fall, and so there will be a lot of staff work on prioritizing which assets we are going to maintain at what levels, replacements, renovations, and those things going forward.

And that last bullet point on the bottom right, there has been a lot going on.

Again, we'll talk in the capital section.

Uh there have been a lot of projects out there.

Uh this slide last year said that there is more than 220 million dollars worth of remaining unspent projects in these areas.

That number is actually below 150 million.

Uh so we have done, it's actually about 70 million dollars worth of projects that have been completed.

I will show you some of those.

So staff has done a good job at trying to get through some of the capital improvement backlog.

There is uh in this uh budget a three percent raise for all full-time employees who receive a satisfactory performance appraisal.

We will discuss that.

Retirement costs are included in this budget as well.

So as we look at trying to continue to be an employer choice in the region, we are looking at the things that are affecting us from a compensation and benefit side.

Uh the LGRs or local government employment retirement system has increases of 75 and 88 basis points respectively for non-law enforcement officer positions and then for law enforcement officer positions.

You can see that's essentially a five percent increase for those.

What I will say is that we also have some offsetting decreases in some of our other retirement plans, uh, particularly the WISPers.

We have had some good investment returns, and so the arc on those or the annual required contribution has gone down.

So, although we are paying more to the state uh system for benefits, there are some offsets to that for pension as well.

On the health care side, uh, we are gonna talk about this again.

We started this discussion in January.

Um, health care costs have been increasing precipitously, and over the course of the last two years, we have used some fund balance to keep those costs down, particularly hoping that some of the larger claims that we've seen were a spike and would regress back to the mean.

We have not seen that.

So we're going to be talking to you about $8 million worth of additional health care costs.

About $2 million of that is gonna be an employee cost share, and as you see in that bottom right bullet point, what that means is just for the health care increase in fiscal year 27, it's gonna be about a 75-25 cost share between the city uh and the employee.

Dr.

Keena is gonna talk about that.

Number is a little different when we look at the entire plan and where it's at, and then there are probably some longer term discussions coming uh from the city manager and staff about where we want to be in terms of that cost share with an employee ployer split.

Having said that, I am going to allow Dr.

Kina, our human resources director, to come up and provide you with some of the recommendations related to the health care.

Good afternoon.

I'll be going over the 2027 plan, the benefit plan recommendations.

Um, just from a historical perspective, the city has not had any plan changes or design changes or updates since 2016.

There also have been no rate or contribution changes since 2018, and as Scott previously mentioned, year over year, health care insurance or health insurance costs have increased approximately 10 percent per year.

Our current landscape, we have um since 2022, these are large claimants, over 100,000 dollars.

So you can see there the year, the number of claimants, and then where those costs lie.

So from 2022, with exception of 2023, when there was a decrease, the city has been trending up in the cost of their claims.

Right now we are at 24 million.

No, that's not right.

Hold on one second, I'm sorry.

Possible closer to like 28 or yes, uh yes, you're right.

It's 28 million, and that was as of January.

So we still have the rest of through June before that we are able to update those numbers with the current year's cost, but it is trending upward.

Um the 28 million is medical overall.

Our current employer employee cost share is with the city at 84 percent and the employee share at 16 percent.

The recommendations for this year for the medical plan changes are to increase deductibles overall, increase PCP and specialist co-pays, and also increase maximum out-of-pocket cost.

For pharmacy, it is to remove all preventive brand medications and GLP ones from weight loss, um, for weight loss rather, from zero dollars co-pay, that means they would go into a tier, and depending on what brand the employee chooses would depend on what that copay is.

And also to implement medical management program, and that is our Pathwell specialty.

That is for infusions and um injections instead of going to the hospital for those that they now could have in-home um infusions or go to a provider that that handles that, which would be less costly than going to the hospital, and also for bone and joint for shoulders, um, hips, knees, that kind of thing to manage that care.

And then for premium changes, we are recommending an overall increase of seven percent for employees and retirees.

Again, we're recommending an overall seven percent for the overall increase for employee contributions, and this is a we're also recommending a lower premium increase for employee only.

You will see here on that employee only is less than the remain the remaining tiers for each plan under the core and the enhanced, and the majority of our employees are in employee only.

We have eight hundred and ninety-eight employee only on the um active, and about three hundred and sixty on the enhanced.

Um that's where the majority of our employees are is in the employee-only tier.

For retirement, it is again an overall increase of seven percent, and you can see what those um changes look like over the 2026 plan year versus the 2027 plan year.

Essentially, what this means is that um medical the the amounts that you see there would be the contribution changes, medical 875,000, pharmacy 645, contributions a little over 516,000.

This savings is or not necessarily a savings, but the the um contribution changes is about 2 million for 2027.

The employer versus employee cost share is 83 percent and 17 percent.

On the right, you will see a chart that has what the changes uh what the recommendations are um current versus proposed.

So I won't take time to go through those, but that is there for for your um information, and that is what we have uh to present to you today.

Any questions let's take any questions on the health care for now.

Uh Didi, you have one.

Go ahead.

Um, we basically right in line with our other peers on the cost share part of the health care us being what uh percent and an employees 17 percent.

Yes, we are.

We are also in the process of getting those exact numbers.

We don't have them from the localities, but according to the information that we do have, we are um in line and perhaps even above, you know, pre um contributing more than other localities for that cost share.

Okay, just a question, city manager, would we be looking at uh decreasing our cost share and employees picking up more of the cost?

And I know everybody don't want to hear that.

But it is what it is.

Yes, that's uh I I'm will back up a little bit.

I I do think an 8317 split is generous compared to our colleagues, that people that I've talked to, but that's anecdotal.

So we're trying to get some real actual data on what the employee employer share is in terms of of cost.

But a lot of people are 6040, 7525 tends to be more of the range that folks are in.

So we have over time put a lot more emphasis on benefits than on our salary and starting pay amounts as a as a city.

And so over the last couple of years, you have changed that, and so we're putting more money in towards salaries, and so therefore it's a total compensation.

We're gonna have to look at our benefits in line.

So one of the things that we're we are doing, and there's a variety of changes going on in the in the health benefit area is looking at what those numbers are.

This is what the budget is based on.

So I did want to make sure council understood that.

Health care changes do not go into effect until January.

Right.

So part of our issue is once we have an adopted budget with these amounts in it.

There are some other tweaks we can be looking at in terms of we we are not changing the programs right now to a large extent.

So other folks go to high deductible plans, other things that can reduce the cost to the employees, but continue to provide them with health insurance.

Uh another piece of that that's very I want to go back to that um that Keena mentioned is that if you look at our contribution increases, we very consciously try to make the employee only one a lower amount of an increase on a on a bi-weekly basis, with the understanding that a lot of our employees who are at the lower ends of the spectrums are taking employee only or that our newer employees that that are not far up in the ranges, tend to be those employee-only coverages.

So we we are working very hard to maintain a an affordable health care program for all employees.

And so there are higher increases for those of us that have employee spouse, employee children, family coverage than for those that are just employee only.

But yes, uh uh Mayor Pro Tim Adams, the that concept of what we should be paying as an employer is something that we have to look at and determine are we at the right percentages now?

And if anything, we're probably um a bit higher than our competition.

Thank you.

Thank you.

Any other questions, comments?

Uhre Bowen and Thank you, Chair.

Um, so we've seen a large increase in um the cost of claims over the past few years.

Is that due to the rise of health health care, or is that a rise in how many employees we have on staff and how many people are making claims?

It is truly the medical condition.

Our top three are we've had um we've had an employee this year that had a double lung transplant, cancer, uh cancer is a large part of these claims.

So those are um muscoskeletal, those are the large three that that are the top three of what we have represented in these claims that are over 100,000.

Okay, thank you.

Thank you, Chair.

Dr.

Jones, you you spoke um on recommendations page about the um preventative brand and GLP one uh folks choosing which medication.

But then you spoke about um shoulders, knees and such.

You kind of went past that real quick.

Okay.

You explained that one for me.

Yes, that is the Pathwell Specialty Program.

So what that means is there are um infusions and injections that employees may get for various reasons, and normally they would go to the hospital to receive those, which is more expensive.

And so this program allows for them to get those infusions or injections at home or through a network, a provider in the network or a facility, if you will, um, for a cheaper rate.

So there's this there would be a savings there.

And then also there's the um the program through Pathwell specialty for bones and joints, so that shoulders, knees, hips, that kind of thing.

And so that they would manage the care through that particular program with those types of injuries.

Okay.

All right, thank you.

Ms.

Hall, did you have a question comment?

I do, but I don't any more.

Thank you.

Okay.

Before we leave this.

Mr.

Manager, I do think it would be helpful to do a survey.

I think you're going to sign an 8317 split.

Might be the highest I've ever heard of.

I think you're going to find we are way above IPs there.

But we need we don't need anecdotal go ahead and do the survey and find out what it is.

And I thought you said earlier in the presentation we were currently at 8515.

So we're adjusted it just a touch.

It's 8416.

8416.

So now we're going down to 36%.

So it's just slightly different.

But we're starting to address that.

Yes.

Thank you.

Thank you.

All right.

Mr.

Tesh.

Coming back.

I will say, as the city manager noted, those would take a take place in January, so there are a half of fiscal years worth of uh changes to the budget as a result of that.

You will realize a full year's worth of savings the following year, as will they will have been in effect.

So we'll talk total budget summary.

This is all city funds.

Uh again, the manager showed you this information.

The city's budget is, I'm going to say technically going down year to year.

I will draw your attention to the bottom right corner to debt going down by 48 percent.

If you will remember in the current year, we'll see this on the next slide.

Uh but we budgeted to pay off the leasing program that we had and get out of that.

So debt is dropping precipitously.

You can see uh the operating budgets uh in all are up a little bit more than four percent, and capital I'm really gonna call even year to year capital improvement plan fluctuates based on uh the types of projects that we're doing from.

So again, that 22.3 million dollar decrease will show you 47 million dollar uh net difference in debt payments year to year.

Uh again, full-time salaries, so that is reflective of the three percent uh increases that um employees will receive, as well as the changes that you have made most recently for uh certified fire employees uh and things of that nature.

It also includes, and we'll talk about there are a few grant funded positions that are coming fully on uh uh to general fund, but we'll talk about the general fund section.

That benefits piece at $8.4 million.

That is basically all health care.

Um there are other ups and downs in our benefits package, but it nets out to basically the entire increase in benefits is related to the health care um increases that we've seen over the last couple of years that we're catching up to.

So we do have again WISTA contract changes for the WIST division plus the microtransit routes, uh, equipment replacement overall across all funds at about two and a half million dollars.

I think we'll see 1.9 million of that.

Uh I believe that's the number in the general fund, uh, but this includes uh water and sewer solid waste and other enterprise fund equipment replacement as well.

Again, the police axon contract that we have talked about numerous times.

I will say the actual contract is a little more expensive than that.

There were some other contracts uh that we are reducing as a result of that.

So the net impact of axon uh the axon contract will be uh 1.96 million dollars.

Uh we are dealing with inflation.

We'll talk about that specifically in the general fund, uh, some of those other areas.

IT charges up 1.4 million dollars.

Uh there are quite a few things going on that are causing informational technology charges to rise, particularly system replacements.

Um I will say we kind of have a multi-year strategy to dealing with that.

So you will see some increases in fiscal year 28 so that we didn't spike in 27.

We're trying to level some of that off.

We'll note specifically professional development in the range of about 265,000 across the organization.

This was one of the top things that employees told us about in the employee survey, and so we are going to provide opportunities to train people to give them access to things that will make them better at their jobs, and then uh the bottom of a plug number of just a few hundred thousand dollars at a very high level.

These are the main budget drivers across the entire budget.

So uh where does the money go and where does the money come from?

We did this at the city services expo.

Every year when we show this pie chart, environmental health is the largest slice.

When we think about all city funds, that includes city county utilities.

So the water and sewer system uh is the largest component of our budget there.

Public safety is about a quarter of the city's overall budget.

When we get to the general fund, you'll see that police fire and emergency management are actually more than 50 percent of the general fund, and then we go down from there again.

I would note if you were looking at this pie chart from last year, debt management would have been a larger percentage with the large payoff, and it has returned back to uh a normalized on the revenue side.

Uh property taxes make up our largest uh single revenue source, followed closely by charges for services again because of utilities that includes all of our water and sewer uh rates and fees that come in.

Again, because of utilities, that includes all of our water and sewer rates and fees that come in.

I will say uh it is a best practice to diversify your revenue portfolio.

Uh, as council member Clark has said a few times, it is the one knob or lever that the city council really has the ability uh to control.

So property taxes as a percentage of overall revenues uh have tended to increase uh over the last couple of years.

Um so we will be looking at additional strategies uh in terms of revenue production in the coming years.

Um, but that is an area that staff is aware of, and it obviously places a burden on the tax rate.

Um again, sales tax about 10%, uh intergovernmental revenues, things like our Powell bill money for state street aid, uh, and then net appropriate reserve appropriations again as the fancy way of saying fund balance, or that we are using available cash for certain projects.

So total budget of just over 700 million dollars.

Again, this is very similar to what the city manager showed on Monday, but for all of the residents who are looking at it, this is what is kind of changing.

What should I see differently?

Uh property tax increase of 2.6 cents.

That is going directly to the general fund.

It's about five and a half dollars uh per month for a median value home.

Water and sewer rates, again, um from the utilities commission uh at about five percent on average.

I believe water's a little lower and sewers a little higher, but that averages out to about three dollars a month uh for the average residential user.

Solid waste disposal fees.

Most residents won't see these.

Uh, this is more what the city is paying, what private haulers are paying as they're dumping things.

But if you do go to Haynes Mill Landfill, uh Road Landfill or one of the other facilities, uh you would see a dollar per ton uh dump there.

Stormwater fees increasing at 4%.

I believe this is the third year in a row that we have done a 4% increase.

Again, uh before that, it was about 15 or 16 years with no increases at all.

There are significant capital costs in that fund.

When we get to the enterprise section, we're gonna have a discussion about that as well.

And then there are a few other um miscellaneous uh user fees, so picnic shelters, uh special programs at historic Mathabra, and we'll talk about these road closures annexations and EV charging fees.

Um so when we look at historical property tax rates, uh, we'll again uh draw your attention to there are some decreases and increases.

FY22 and FY26 are revaluation years.

So when we had the revaluation, obviously we looked at uh what the revenue neutral rate was and then adopted a rate uh relative to the resources that we needed.

So this proposed budget includes again a 2.6 cent tax rate increase, which is uh 4.6 percent.

It is only for the general fund, and generally speaking, it's covering compensation and benefits, particularly the health care costs that we've been talking about, equipment replacement technology, grant funded positions, and inflation.

We will have a lot more specifics on these coming.

Uh from a property tax base perspective.

The manager uh said last Monday evening.

Uh the county does provide us an estimate of what they think the property tax base is increasing year to year.

That estimate that they gave us was less than one percent.

Um, they tend to be a little conservative, and so we are using a one percent uh increase in the base.

Um but you can see that the average growth in non-reval years has been 2.2 percent, uh, and so budgeting one percent or having actual growth recommended to be less than a percent is very difficult to balance a budget with very low property tax base um growth.

As the manager talked about, and again, I won't reiterate the point uh at length, uh, but a lot of what is being built is coming uh up in the city and in the county, but there are a lot of that building permit value that is in uh nonprofit, hospital, educational institution things that don't come onto the tax rolls.

So, what does all of this mean for the average household?

When we look at property taxes, water and sewer fees, stormwater, uh, and motor vehicle privilege tax uh about call it eight and a half dollars a month for the median regular user household.

Um, again, motor vehicle privilege tax.

I will note that is capped out.

You don't have the ability to charge any more for that.

The rest of those are things obviously that we can affect uh locally.

User fee changes.

So this is just quickly the other user fees that we talked about so that you could see them.

The two at the top are really related to how much it costs to advertise these things.

Um haven't touched the street closing permits in just under 20 years.

Annexation petitions the same thing.

There are costs associated with advertising these per state law, and we are trying to recover those.

Recreation is looking at increasing ten dollars per usage for the picnic shelters, resident and non-resident alike.

Again, some of those haven't been changed in 20 plus years.

The quick note there, uh, we did have separate weekday non-holiday rates that were lower.

We are eliminating those and just going to a here's the fee uh for what day it is.

Um then again at the bottom left uh historic metabra.

These are new programs, so I would encourage someone to go out and do some historic trades uh training and and other things, and then I believe uh Dr.

Shane Miller has talked about the electric vehicle charging fees, but essentially we are charging a kilowatt hour rate that gets us back what Duke Energy is going to cost us.

That rate does not include enough to offset the capital and maintenance cost associated with EV charging programs.

I will stop and say there are any questions at the total budget summary before I get into general fund and really into the nuts and bolts.

Um Mr.

Tesh, when you have full-time salaries on one of your slides of 5.5, does that include uh positions that are authorized but not filled, or are they all field positions?

It would include all position personnel forecasting includes every position we have.

If we have a vacant position, we budget it at 5% above the minimum rate for that position.

So there are that is the merit increases along with any difference in base change for vacant positions uh across the organization.

Let me rephrase that a little bit for him.

For my apples to apples comparison, it is the same.

They take they take all the positions.

We assume that they all can be filled during the year, but Scott also does a back out for vacancies during the year.

So we do not budget 100 percent of the salaries that it would take to fund every position all year long.

I think that might have been your question.

I yeah, I thought at one point we were budgeting all positions that we were needing, whether they were filled or not.

We do budget for all positions, but we also take out an amount with the anticipation that we'll have vacancies during the year, and then we have some vacancies now.

That's that's coming on a future slide, you'll see that directly.

What was that?

That salary savings adjustment.

I will show you that here on a future slide in just a few.

And I do have another question when we talked about our um the tax-based trend over the years.

Uh I know we were showing the rate, but I think it would be interesting to see how many properties we have over the years.

Are we increasing in the number of properties?

Residential, commercial, or are we losing properties?

Um, when we look at, I don't know if you can figure that out, but I know what the tax rate trend looks like, but I'm thinking about are we losing the actual tax base or not?

So I I think we can go back and look at that.

I I believe what I hear you asking is are the number of parcels changing.

So because if there are when a subdivision comes in, and so you have one large parcel and then it gets split up into 30 homes, then you would have 30 new parcels there.

So you would see an increase in the number of parcels.

And you would then see an increase in the tax value because instead of land, it would be 30 new homes.

So we are seeing growth.

So I I can almost tell you anecdotally, we're gonna see that there are more parcels now than there have been in the past.

Although in some cases you do have some redevelopment that takes out some of the parcels or some things that are combined.

But typically we we rely on the the value and to see how the value is going.

One of the things that you I get I think you are alluding to that you won't say as much is how much of our property that was taxable is now not taxable.

That is significant growing significantly over time.

And that's because it's that's because typically a lot of people may be changing ownership from uh a profit to a nonprofit.

Right, right.

Exactly.

And then the medical is a is a great example as a doctor's office was independent at one time it had been taxable.

If it becomes a part of one of the hospital systems or nonprofit, they take it off the tax rolls.

Um there's a one that was just announced on University Parkway just this week, where a taxable parcel is now going to be owned by one of the hospital systems as urgent care, not that that's not needed, but that will change the tax base of that parcel.

Yes.

Because that will impact our tax rate that we need to operate the city.

And we and we are and we do look at those all the time, and quite honestly, that is absolutely what is causing the the shift between commercial and residential.

So there's more value in the residential side now than the commercial side, because a lot of the commercial is being used in a different manner.

And so, yes, you are seeing that shift.

Ms.

Adams, and then it's the side note, we won't have to worry about that.

Raleigh will take care of all that for us.

Anyway, um test on your slide, it's marked 18 uh the main to maintain the butt the grant funded positions.

You probably got a slide, but what are those positions and how many?

There are 19 of them.

I do have a slide for this.

You'll see it calculated.

But I can wait.

I can wait.

Okay, Scott.

Thank you, Mr.

Chair.

Uh earlier you mentioned the um the what we are currently paying for police technology versus what we're we will be paying potentially for axon.

What was that number again that that we're kind of getting rid of to move towards Axon?

I can follow up and provide you all of the net changes there.

It's rounded, it's two million dollars, but there's more than two million dollars worth of increase in some things, and then there are other contracts that we're getting rid of.

Also, as the police department told you, Axon is buying up some of our current providers, and so those provider contracts are going away because that entity is now going to be absorbed into Axon.

So the real-time crime center was operated with the FUCSIS camera system, some of that is coming into Axon, as well as our drone as a first responder program.

They're buying some of that software, but we do have a I can show you the net difference.

Thank you.

Thank you, Chair.

Mr.

Tesh, um two questions.

One is the as we talk about this budget, um, the proposed budget.

Does that include the half cent that we were discussing for housing?

No, ma'am, we will talk about that.

Okay.

Does it include the proposed and ask for three percent for staff raises?

Yes.

Yes, it does.

Thank you.

Okay.

Any other questions, comments?

All right.

We will get keep going.

All right.

So we will move on to the general fund.

Again, the city's largest operating fund.

There is an increase in the general fund.

The manager noted this when he talked on Monday night, and I'm going to show you numbers in some cases that are adjusted.

The reason for this is there are some accounting changes, and I want you to know what the actual numbers that are being moved look like, and we are adjusting them so that you know really kind of more of what's an apples to apples.

So I'm going to show you a couple of these slides and be as transparent as I can possibly be about what's actually changing, net of some of these accounting changes that we're have to make and that the auditors tell us to.

So on this slide, one of the notes is if you were to look at non-personnel growth, you would see a decrease.

Non-personnel is not decreasing.

It's just because we are accrediting something a different way.

There's actually about a three and a half percent non-personnel growth, and it's about six percent personnel growth.

But again, we're gonna get into all this and I'll show you every component of this.

So every year I stand at this podium and say I will not put this giant table on this slide, and every year I do that.

Uh it is the summary slide that comes from the budget book.

That is this is what the general fund is increasing by revenue category and expense category.

And so we highlight things.

Property taxes are going up because the proposed budget includes a property tax rate increase.

Uh sales taxes and gross receipt taxes.

Uh gross receipt taxes are your taxes on uh short-term uh rentals for cars and construction equipment and things of that like.

Again, I'm gonna show you uh sales tax information.

We're gonna talk in depth about um how we're projecting sales tax.

You'll see a five and a half percent growth there.

We're actually uh budgeting for what is three percent growth in total sales tax distributions at the county level.

Uh licenses and permits.

There's a couple of accounting things there.

I'll highlight again construction permits are actually uh budget to budget up about $750,000 a year.

We'll talk through that.

Uh intergovernmental revenue.

If you see licenses of permits going up and intergovernmental going down, we'll talk about that.

There's a one-for-one swap for uh revenue sources based on some changes in state law and how we have to spend Powell bill funding.

As we get down to the personnel side, again, we're gonna talk through each one of these on a slide, but you'll see supplies and services increases, uh, capital and supplies and services are gonna offset each other uh as well.

And then we'll talk about some of the support to other funds or transfers uh as well.

There is also a decrease uh if you see the uh second from the bottom blue line.

Uh last year we did about 1.5 million dollars worth of one-time funding.

A million three of that was for the facility condition assessment as well as ARC flash hazard study.

Those have obviously been removed.

They were one-time expenses.

Uh the small part that is remaining is related to some of the uh ARPA folks that uh work for me and are finishing up.

This is the last year of ARPA spending and reporting.

So we will dive into the revenue side first and then the expenditures.

So again, property taxes with that 2.6 cent proposed tax rate increase, generating almost 12 million more dollars.

Local option sales tax, again, I'm gonna say 3% growth is what we're budgeting in terms of how much we expect retail sales to grow and be distributed back.

As I told you, there was a multi-year plan for health care.

We are using a million and a half dollars from one of our employee benefits funds to help stay off the cost in the general fund for this year.

There are changes coming with the plan changes you're making, which will help offset some of that, and depending on what growth in health care looks like.

There is again a multi-year strategy to this, so you will most likely see some kind of health care increase if we don't make additional plan changes in the future.

Construction permits, uh, again, we'll talk about that.

This one is really, and I want to make sure we stop on the slide, and I'll say it again.

It's not that construction permits are growing that much, it's that we were a little bit conservative and how we budgeted for them in the current year, but I'll show you the actual growth.

Umtility sales taxes.

So this is one of our three largest areas of growth, and I will have a chart for this as well.

But you can see that we are actually budget to budget going down in this area.

We are going to miss this year's budget, and we'll talk about why.

Uh ABC store allocations.

I spoke with the executive director of the ABC store.

He tells me people are just not buying alcohol the way that they were.

So this is the second year of a trend.

We're gonna hold that one closer if we can.

That indirect cost allocation piece is in italics.

If you look just at the revenue side, this looks like a reduction.

This is that crazy accounting change.

Uh, we are not losing six and a half million dollars, it's just being recognized in a different way.

I don't want to get into the debits and credits of this, but that's not an actual loss.

I've included it because if you're looking at the revenue side and you're looking for a bottom line number, that's how you balance it.

And then again, about a half a million dollars worth of other revenues that are increasing at various amounts.

So we'll tackle these one by one.

So uh sales taxes, and this is all funds, but we have a three percent growth assumption, and I will drop you down to the bottom left corner.

Uh our distribution of local sales taxes between the city and the county is actually decreasing year to year because for Scythe County increased their tax rate and levy more than we did in the prior year.

So, sales taxes once they come back to the county in for Scythe County are distributed on an ad valorum basis.

So we are a smaller share of total property tax levy than the county was, so uh losing about three-quarters of a percent of countywide sales tax distribution because of that.

So it looks like we're flat here, and again, these are actuals, not budget.

There is budget growth, uh, but next year we will not see as much growth as the three percent that we're talking about because of the distribution change from the county.

Uh I will also stop and say there 3% seems to be what a lot of our peers are looking at.

Umlation is in that three to four percent range.

Average growth is usually if you went over the 10 or 15 year period in the four and a half percent range.

So we're being a little conservative.

Um statewide net distributions of sales tax are closer to the four percent range.

So uh we are intentionally being a little more conservative uh than what we're seeing.

Just want to make you aware of that.

But we do know that there are potentially some things changing with fuel prices where they are.

What does that mean for retail sales?

So I think we're in a good conservative place to be with respect to our sales tax projections.

So construction permits again, um, budget to budget going up about $760,000 in terms of where we're actually projecting it.

Again, you can see from 24 to 25, we had a big jump.

We didn't budget for that because we didn't know at the time that was happening.

We've been a little conservative and we're catching up.

So, as you can see in the bottom left corner, construction permits are actually gonna exceed the current year's budget by more than a half a million dollars.

So, utility sales taxes.

This is the one again, one of our major revenue sources.

It's technically four different revenue sources.

The largest component of this is the electricity sales tax.

Um, it is, I want to say eighty-five percent of all of the utility sales taxes are in the form of the electricity sales tax.

Again, we're gonna miss uh the current year's budget.

We budgeted for 4.3% growth, and we're actually going to see an annual decrease.

You can see that from 22 to 23, 24 and 25, we were having good growth.

The League of Municipalities put out a memo as they do every year saying we can expect to see this continued growth, and we have not seen it this year.

They did say we expect to see a small amount of growth, so we are budgeting for a small amount of growth next year from the projected year end.

Uh but this is a place where budget to budget, you see a decrease in revenue in one of our larger revenue sources.

This is tied to electric bills.

So if Duke Energy raises rates significantly beyond what they're talking about, you would actually see an increase here as well.

So we talked about ABC uh store allocations.

Again, this is just the chart.

I don't want to belabor it, but again, we saw a decrease in 25, a projected decrease in 26.

Uh, we're hopeful that in 27 we don't see that decrease, but we are seeing um uh decrease in volume of sales at our local ABC stores.

And then other revenue.

So this is my way of getting back to the $500,000 difference in the other revenues.

It rounds down a little bit.

I want to draw your attention to the two at the top.

Again, motor vehicle privilege tax and our Powell bill funds.

We are simply switching what goes to capital and what goes to operating based on a state law that requires us to send more of our Powell bill money for street resurfacing.

So we are meeting the state requirement by just moving sources between funds.

There's no change in the actual budget there.

Charges to for Scythe County, so this is all of our city county operations.

As those budgets increase slightly, so do the revenues from the county, covering that cost share.

Transfer from the stormwater fund is for the increase in leaf collection costs, and then uh could go down the list there.

Um but you can see uh the differences.

Again, I'll also note that beer and wine is one.

We only get that distribution once a year.

It comes in uh later in May, so we actually should get it here soon.

Um we are budgeting for that to be down, and then the last thing I will note uh emergency management.

So this is our uh emergency management uh state funding that comes every year.

We are not getting it this year, or been told not to expect it and potentially not to expect it in the future.

That is from state EM.

So again, roughly $63,000 that you would normally see in the emergency management budget that we are not budgeting for because we have been told it may not come.

State's keeping it all.

I think there are this is related to federal pass throughs to the state as well.

Um how much money is available at the state level as a function of how much the federal government provides.

Okay.

So I want to stop here.

Um we talk about uh again the general fund, 53% of our general fund, so the majority of our general operating budget is public safety.

Police is a third of the city's general fund budget, fire is almost a fifth of it, um, emergency management, a much smaller percentage with their five employees.

But when we look at the budget and we look where increases are going to be, when public safety is 50 plus percent of your general fund budget, that is where the increases are going to take place.

And so this is one of those where I'm trying to be very transparent.

If you were looking at the book, I'm gonna tell you don't look at that first column that totals the 9.5, go to the one on the right.

That general government at negative five million dollars in that includes that crazy accounting change.

I have adjusted for that in the column on the right.

What you get is of all of the general fund increases by service area, public safety is two-thirds of the increases year to year.

So I know there's a lot of talk about property tax at the state level and what it gets used for.

So more than half of it in the general fund goes to fund public safety, and two-thirds of the increases in your general fund budget this year are related to public safety.

It is the vast majority of where that property tax money is going.

So on the personnel side, and Mayor Pro Tem, we will uh there are bullet points here that I will get to in just a second about your grant funded positions.

So recurring salary and wages increases, again, the benefits cost, just like it was for the total uh budget summary.

When you see that $6.6 million, there's actually $6.7 million worth of health care benefit increases and a net decrease in all of the other benefits combined in the general fund.

Health care is what is driving the general fund benefits costs.

Uh, we do have uh bullet point off to the left.

There is a CDL or commercial driver's license operator study that was part of the one-third studies that we are starting.

We are expecting to get that information.

There is money budgeted for a half a million dollars uh worth of salaries in beginning in January, uh, again with benefits, that number is about 730,000.

The bullet points here are uh kind of the policy decisions uh related to uh personnel.

The first one there, Mayor Pro Tem, is the 19 grant funded positions, so 15 of them are firefighters that were on a safer grant uh from FEMA, and four were uh bear team members.

Part of those costs actually came on to the general fund in FY26, the rest of it is coming on in FY27, but that's an additional 1.1 million dollars for positions we already had where the grant is expiring.

Again, all of those are in the fire department.

There is technically one position added to the general fund uh in this budget.

There's a traffic signal system technician in the Department of Transportation, 60% funded uh by NC DOT.

We are wanting to ensure that we meet the compliance uh sections of the agreement with NC DOT for the signal system and have been told this is a compliance issue, and so it is in the budget, but again, it is covered more than 60% by the state.

There are a few position removals, so there were two reorganizations that have happened.

One was in human relations, which netted the removal of one position in the human relations department.

And then also when we looked at uh the economic development department, which includes the former operations division, there was a reorganization there that resulted in a net loss of two positions in that department.

And so those are reflected in the recurring salary and wages numbers in this table.

I could have put this at the beginning and maybe have supported Dr.

Keena a little more, but I wanted to hit it again.

This is looking at our health care fund.

So this is not general fund data, but is to support the health care increase in the general fund.

This is how much basically just the claims and insurance costs have been increasing year to year.

Again, Dr.

Kina talked about almost 10% average annual growth.

We are projecting almost 9% growth to year end.

We had been hopeful that some of those large claims would have been kind of one time and that they would have tapered back down, as Dr.

Keena showed you.

That has not to date happened.

And again, the GLP one increases per our benefits consultant.

There's roughly $3 million worth of GLP ones in those increases as well.

So that is a large driver of the health care increase as well.

You can see in FY24 or excuse me, in uh 24, 25 and into 26, we have seen very large increases.

Again, we've covered some of those with cash.

The health care benefits increase is to make sure that we're matching operating revenues to operating expenses and not continuing to spend bound spend down fund balance.

So switching gears away from personnel to supplies, services, and equipment.

Again, about $3.6 million increase in supplies and services, 1.6, I think I said 1.9 earlier, 1.6 in vehicles and equipment.

I will note and we'll talk about it on the next slide, but they we do have kind of that multi-year strategy for increased IT charges.

We will be looking at that again, trying again to flatten out uh some of the multi-year impacts of things that are affecting us.

Um I do have here, I wanted to show this uh approved vehicle and equipment funding.

This is in the general fund by year.

So recently we have been putting a lot more money into that than we have in prior years.

Part of the reason that we had to increase significantly in general fund equipment replacement over the last four or five years is because you can see those numbers that were in the five million range before it.

One of our budget balancing strategies previously was to cut equipment replacement first.

That has led to you needing to replace more.

Um we are still looking at the appropriate amount for a long-term replacement plan over time, all funds considered, and fleet is looking at uh utilization of vehicles either to eliminate vehicles we don't need or at least allow departments or require departments to share them so that when someone says I need a new vehicle, we can say no, you can have something from the shared pool, you're not using it full time.

Okay.

I'm again will apologize for the size of this.

Um illustration perspective.

When I said there were $3.6 million in changes in supplies and services, this is essentially everything in the general fund on a non-personnel basis that is changing.

So we get a lot of questions and where is this hidden and all of that.

This is literally everything in the general fund that is changing, and it fits on one page.

Again, police department axon contract at 1.96 million dollars, almost a million dollars worth of IT charges, again, covering new systems as well as enhanced security.

Utilities in the form of gas, electric, and water at $340,000, fleet maintenance.

I will say there's one bright spot that I'm going to talk about and hopefully come back to you with some better information.

That public safety leased lines of $250,000.

We have been chasing increased cost from ATT.

The police department, particularly, uh, the new chief of staff has done some phenomenal chasing.

It is our expectation that we're gonna have some pretty serious reductions in those.

So I want to say thank you publicly to the police department for looking at that, uh, for following it down, and I hope that I can come to you in the not too distant future and tell you that that money may not be needed in next year's budget.

Again, I don't want to go through the entire list here, but you do have things.

There are some uh police facilities whose wireless internet infrastructure is more than a decade old.

Again, we talked about professional development across the organization.

We do have in here um the position compensation and classification study, so the one-third study that we keep talking about.

This is the first time that we are going to budget that classification compensation and classification study as an ongoing expense so that one third of the organization happens every year going forward.

Uh inflation adjustments for things related to vegetation management.

We do have a new area of Salem Lake Parkway.

Salem, excuse me, Salem Parkway, so the lake does not have its own parkway.

Salem Parkway that NC DOT built and it's coming on to us for maintenance.

And again, I I can go through and answer questions about any of these, but the numbers start to get much smaller as we go down.

We'll go down to the bottom and note again 125,000 or 120,000 reduction when we did the operations staffing division reorganization.

There were some uh opportunities to save money on the staff side as well as on the supplies and services side.

This budget does include the removal of the hydroponics facility contract.

It will be done under a different um contracting agreement whereby we don't have to pay a contractor and we'll hopefully not be responsible for any of the maintenance costs incurred at that facility either.

So we're able to remove that from the budget.

And then again, 1.3 million dollars were those were one-time studies that came back out.

So when the public says where is all of that money going?

There's money going to personnel, and then here is where the rest of it is going in the general fund.

Vehicle and equipment highlights.

So again, a total of $19 million includes 80 police per uh police pursuit vehicles as well uh as some other police vehicles that are not pursuit vehicles.

We do have two specialized fire apparatus, one is an aerial.

I got a picture, I think that's uh truck 19.

All right, uh, which is on Glen High Road over by my house.

Um do have a picture of the police vehicles again in the new paint scheme in the Explorer PPV package and we'll note we continue to have a commitment through fleet to look at um light vehicles and light trucks for conversion to um electric vehicles and/or hybrids.

I'm gonna stop there again and say that's the general fund summary before I hop into enterprise funds.

Do we have any questions about general funds?

All right.

Oh, yes, ma'am.

Will we get these flats?

Yes.

They should be looted into the system, but we will absolutely make sure you have access to them.

Yes, ma'am.

Um thanks.

Um 36 uh page 36.

This is going a little further down, but um community agencies at 27,000.

I guess we'll talk about that at a different time.

That is coming on Thursday, but there is a net increase in the general fund of 27,000 year to year for community agency funding.

Okay.

And then um you talked about the one-third study.

You talked about the one-third study happening every year going forward, just having that in there.

Manager Pay, you mentioned in your report that there would be a review of, I think you mentioned two-thirds study.

Um, but so I want to make sure I don't get the two confused.

But the first the first one-third was supposed to be finished this year, it's not going to be all be completed, but the fires are being done, CDLs being done now.

So the balance of what would have been in that one-third plus the next third of the organization.

So my comment was that two-thirds of the organization will have been studied by the time we get we're by the we're at time we're at this place next year, looking at the following year budget.

And then the 27.

And then the final uh one-third would be looked at in next year's budget.

But but so we're going ahead and um accounting for one-third of that in this going into 26-27.

Correct.

We're basically budgeting to do uh the study on an annual basis, and and technically we'll we'll do about a third of our positions every year.

So over a three-year period, everybody will be done.

Uh the only difference in the so at the end of this year will we'll have been two two-thirds of the way we'll have done two of these groups, and then we'll just be one group left.

Does that make sense?

Mm-hmm.

Thank you.

That's in the budget.

Correct.

Correct.

Okay.

All right, Chair.

Oh.

Mr.

Tesh, um on page 36 as well.

The yard carts, is that for the yard cart or for the trash can?

This is the yard cart program.

For years and years and years, they have been replacing yard carts because you have to every year.

We have not budgeted for it.

We have simply found savings to make those purchases happen.

Inflation has caught up with us, and you can call this inflation, but it is in the amount of the yard carts.

Essentially, there's supplies and services budget has been exhausted, and they can no longer purchase the yard carts they need to every year without an appropriation to do so.

Okay.

Thank you.

Okay.

Yes, ma'am.

What does community agencies mean refer to?

So we we will talk about this on Thursday, but those are the nonprofits when the um forms that you filled out to talk about which nonprofits there is a budget to budget increase of $27,000 in total available funding in the general fund for nonprofits.

We've adopted a formula.

We have it's on a per capita basis, so it will increase slightly every year.

Is the budget increases?

Okay.

Go ahead, Scott.

Thank you, sir.

Um you mentioned the grant funding for the bear team.

How many of those positions are no longer grant funded after this budget cycle?

Four.

So after we have after the cycle, they will all be fully funded.

Thank you.

Yes, sorry.

Misunderstood the question.

There's eight total, right?

Seven.

I believe there's probably fifteen.

It's eleven.

Okay.

Including the bear director, Ms.

Ryan.

Gotcha.

All right.

A question for clarity.

When you said this cycle, uh manager pay will you talk about it?

When you approve this budget.

Oh, this budget.

This budget that you're talking about right now, all the mayor team will be fully funded by city resources.

Thank you.

Yes.

With this budget.

That's good.

Okay.

Continue.

We will go on to the enterprise funds.

So for the transit fund, what I will say overall, the last two years we have increased the tax rate, uh, both because of the new contractor and contract that we have, as well as the what was referred to as a fiscal cliff that we had seen coming for many years, where there was not adequate funding for the transit program overall.

There are increases in the budget.

Uh Jeff Fansler, DOT director and his staff, Kelly Garvin, have talked about these.

You have voted on them already.

Essentially all of the increase in this budget is being covered by grants.

The ones again to worry about are the transit or the microtransit program, which about two and a half years down the road will come off of a short-term grant.

Uh the other parts are on a formula grant, so the increase is not being covered by an increase in local funding.

It's being covered by an increase in federal government funding.

This is the projected fund balance for the transit fund, which is a slightly better picture than we have shown for a couple of years.

Some of that is just driven by when we're spending the federal grant funding for capital.

Um so if I were to extend this out, you would continue to see a drawdown on funds uh for several years after that.

And again, in fiscal year 30, you will have a decision to make about the microtransit zones and local funding for those.

Uh notes off to the side, this includes not just the operating but the capital side, which is bus replacement for fixed route and trans aid.

It does not include uh matches for federal government grants for major facility renovations at the Clark Campbell Transit Center or at the Hampton Hayde facility.

Um so those are things that we will talk about on the capital improvement side.

Um you're gonna see some information.

Uh we've not provided some of this uh in this format.

The um public assembly facilities commission uh gets a more detailed analysis of some of our public assembly facilities, but based on request for information, we're providing that from a fairgrounds perspective.

Uh there are some changes in the budget.

Again, uh removing uh one-time debt expenses because of the leasing payoff.

Um we are removing general fund um indirect cost allocation from the fairgrounds and Bowman Gray Stadium.

This is a fancy way of saying we charge the enterprise funds for part of budget and HR and those administrative costs.

The operating subsidies to those funds are now large larger than those charges are, so there is no need to charge them and then send money to cover the charges.

So when you see a a drop um in in transfers, and I'll show this for um some other area.

This one is we used to run the transfer to Bowman Gray Stadium, which is 362,000 through this fund, and we used to charge it a quarter million dollars worth of indirect costs.

Those are going down.

The net subsidy to this fund is roughly the same as it was in previous years.

Again, you just have some changes in methods for how we're doing things.

Um Carolina Classic Fair attendance.

So uh again, the PAFC looks at this as well.

2020 was COVID year where we didn't have one, but overall you can see a downward trend in attendance at the fair, both paid and unpaid.

Oh, wait a couple back.

Uh net subsidies, so this is what I was talking about.

When you see that drop from estimated year end to next year, it's not that that they're miraculously getting a million dollars more efficient.

It's that we have some changes in how we're uh doing the accounting for these funds.

But we will have going forward an operating subsidy to the fairgrounds, which is fair and non-fair activities projected to increase each year.

I would note on the revenue side.

Uh we uh have had the NASCAR clash event twice now, and they are coming back in the I can't remember, it's another two years, hopefully.

No, to be determined.

Um again, we do have removal of one-time debt, and uh we're reflecting a direct general fund subsidy here instead of a pass-through uh to the fairgrounds.

The Benton Convention Center, or what I will say about the Benton, uh generally speaking, we are if you look at that line that says HVMG operating deficit, and that's the hospitality ventures management group.

So the amount of net profit or loss that the folks operate in the convention center for us, we are expecting that to be held constant.

They have been doing a great job over there.

We hope that they continue to.

The net increase in this budget is related to a roughly $50,000 increase in property insurance as well as a small increases to uh the management fee.

Uh for fund, this is the city share of convention center operations uh net deficit by general fund or occupancy tax fund over the years.

So you can see they had some pretty good years in 23 and 24, but they've had some uh years where the subsidy was higher going backwards as well.

Go back to that slide a minute.

You can also see the code effect.

Yes.

And we're coming back up, but not where we were pre-COVID.

Nope, not yet.

Not yet.

Okay.

So Trua Stadium or the downtown ballpark.

Um there is a long-term model for this where the debt service fund transfers money to this fund after that debt is paid off, the fund transfers money back to the debt service fund.

So you will see a transfer from the debt service fund for many years for this.

Uh we'll note we have a $250,000 subsidy from the general fund to the ballpark fund uh this year, which is helping to cover insurance and property maintenance and capital costs.

Stormwater fund, again, we have the four percent increase in stormwater.

Uh really the the discussion here is on the capital side for the stormwater fund.

Again, there are transfer increases for the leaf collection piece, but this is probably the chart that uh we need to be thinking about in long term.

Um as more and more proactive and and emergency projects are budgeted for and accomplished in this fund.

The revenue source coming in is not enough to continue a pay-go-only fund for this, uh funding source for this.

We will either need to increase revenues or we're gonna have to come back and talk about a debt strategy uh for stormwater capital improvements.

Uh this is very similar to what we've shown for many years.

We have pushed this out because of the rate increases that you've done in the last four years or so.

Um but this is a an issue that is going to come in the future.

And then I'll just put these two up here.

So the utilities commission goes through its own budget process with water, sewer, and solid waste disposal funds.

Uh, and uh Courtney and her staff in utilities do a great job answering the commission's questions.

So I will just highlight their um expected changes in fund balances here.

When you look at the bottom one, you see a giant drop in solid waste fund unrestricted cash reserves.

They are finishing that giant berm out there as well as opening a new cell of the landfill.

So it was expected that they would have a large decrease uh as they are finishing those capital projects.

So, what is not included in the budget?

Um there are over three million dollars worth of personnel requests from departments that are not included in this budget.

So there are again almost seven million dollars worth of non-personnel operating requests.

Uh affordable housing is four million dollars there.

The manager has talked about a half a penny, which would be two million dollars.

There are different scenarios.

There is no additional funding for housing production in the proposed budget.

You would have to increase the tax rate in addition to the 2.6 cents.

Uh the manager again talked about street resurfacing uh and the need to get closer to a 30-year cycle.

That would be roughly in the five million dollar range.

And there are more than three and a half million dollars worth of nonproject profit agency requests that will not be funded uh under the amounts that are in the proposed budget.

That operating request, 6.6 million over to the left.

I've created some bullet points because I wanted you to see some of those things.

Um there were requests for additional uh uh security enhancements at the Clark Campbell Transportation Center from uh DOT and WISTA.

Uh there is there are no additional pieces of equipment for snow and ice in this budget.

I will say about two weeks after the snow and ice event, we received a lot of the trucks that would have been really helpful to have had at that point, but there is not additional funding for more trucks and more plows in this budget.

Um the informational technology and marketing communications departments requested nearly $800,000 for a website replacement.

That has not been included in the budget.

Uh CityLink, the application that they use to create service requests when you call in, they would like to replace that.

There is no additional funding for youth programming.

Some of the operating and personnel requests are from our recreation and parks departments.

I know there's some other conversations about that as well.

And the progressive housing operations, the neighborhood services department submitted uh roughly a half a million dollar request on the operating side in the general fund uh related to uh housing uh homeless uh um uh individuals and families.

Um again, that progressive housing operations piece could be a part of your overall housing strategy if you elected to raise the rate there, but I wanted to be very transparent in saying there are lots of things that departments have asked for and that are potentially priorities that are not funded.

As the manager said, this is a no-frills budget.

We are trying to maintain service levels.

Many of these things are service level enhancements, and you would need to provide additional resources in order for them to happen.

And I'm gonna add on the Scott's there, while they're we you could call them enhancements.

I think there are ways for the departments to do their jobs better in those uh areas.

We do know, and I know you know as well that there are a lot of community folks that would like for us to actually increase or enhance services.

None of those are included in these requests.

So we asked departments to submit budgets based on continuing basic services and the absolute necessary needs that they had.

So we still cannot fund all of those with this proposal.

That is all I have in terms of the numbers, a couple of notes here.

We do have uh more budget workshops coming.

Um I will be uh out this Thursday.

It didn't make the list here, but marketing, I will work with marketing to make sure that we get it out.

Neighborhood services is doing several different opportunities, and I told you this year we would embed with some of those departments and go out.

So I will be doing that on Thursday to talk with some folks and then be out at another session in the community on May the 19th at Sprag Street Rec Center.

Um you have your workshop this Thursday, workshop the following Thursday.

The public hearing is next Monday evening, and then we are slated for adoption of the fiscal year 27 budget on June 1st.

And that is what I have for the operating budgets.

And if we hold there a minute.

Uh I have a number of comments, but I'm gonna wait and just go around.

Anybody got any questions or comments?

And also oftentimes questions, the staff oftentimes will have to get back with us later if you're asking for additional information.

I'm just gonna start with the come around.

Barbara, you got anything?

Yeah.

Ms.

Hall.

Yes, I do.

Thank you.

Thank you.

Um it is not here, and I know you had a slide talking about some of the things that were not included in the budget.

Um I can talk offline, so be prepared for an email, particularly about the additional funding for youth programming.

Um just to kind of see what that what that what the department may have talked about with that, but they may be able to do some other things.

Also, I was curious to see, and I can also send this by way of email.

Um, what so the three percent merit for personnel is included in this?

And we went over that and talked about that um and also talked about the increasing costs for um staff with health care benefits.

So I would like to see uh and I know that the merit is three percent, but this is not a colour.

There's no colour at all.

This is just merit, and that is based off of staff performance, right?

Normally, or is that just merit?

Like will everybody get three percent, or is it some get three, some get two, some get one?

No, it's it's a it's a flat amount of three percent if you meet expectations in your performance review.

Okay, so either so either you meet it based off of your supervisors discretion or you don't.

So either you get three percent or you don't, basically.

That is correct.

Okay.

And that will be paid in July or January to do that in December, but we suppose it for at least half a year.

Okay.

All right.

Okay.

Thank you.

Ms.

Adams.

Mr.

Mayor.

Yeah, two quick things.

Uh circling back to Jeff Fansler's operation area at WISTA.

And I don't want to seem polyannish, uh, Jeff, but uh aren't we hopeful that with the changes in the cross town routes that we're gonna see that that slide not go down in terms of uh utilization, maybe it's gonna level off and go up a little bit.

Come on up, Mr.

Fanfler.

Not to put you on the spot.

Not to put you on the spot, yeah.

But you are uh Mayor to answer your question, yeah.

Utilization is expected uh based on where we intend to send these with the job clusters, and so most definitely we have spent a lot of time researching where we're sending us buses.

So the intent would that the ridership would reflect that very specifically.

Okay, great.

Uh and then the other point was uh Scott, don't have a heart attack.

But what if this council said to you we really want to try to do this affordable housing, but we don't want to increase uh the tax rate.

Can you find $2 million someplace in that $700 million budget to allow us to do this?

I'm not asking you to ask answer that question today, but could you take just a quick peek at that and see what it might take?

I'm gonna stare down at the city manager.

We can provide a response to that coming back into budget workshops.

Okay.

Thank you.

Okay.

Ms.

I I think it's uh a decent budget, but my heart says I would love for us not to have to increase our tax rate, although I know this budget includes a tax rate.

And I see all of these, what's not budgeted, meaning there are some things our departments would love to have that would make them more efficient and effective.

Um I wonder if there's a way that departments can see how they can do what they do without having an increase in their budget so that we don't have to increase the tax rate.

Um that's just my concern.

Thank you.

Ms.

Andre Bowen.

Thank you, sir.

Um I I emailed you this earlier this week, but I wanted to kind of reiterate and maybe have this as a public conversation.

So uh the general fund has increased budget has increased, but our overall budget is decreased.

Can um is there funding anywhere the overall budget that we can kind of subsidize over into the general budget so we don't have to raise that tax rate.

Funds are set up as governmental standards and the funds are independent.

And so it it is actually generally speaking, uh uh it's it's clearly bad practice.

Sometimes it might be even against uh law to take money, for example, to to say, well, we're gonna increase our utility rates and use two million dollars to fund housing.

Um that would be considered um a a we'd probably get challenged on that and and taken away.

So while we look at the overall increases, those things are independent of each other.

And uh the only issue there is debt service, the debt service fund is we we are providing debt with that, and that capacity is in there, so again, from a housing standpoint, you could it doesn't create a sustainable source, but you could do debt service uh in the future and and use some of those funds to do it like for housing as an example.

Thank you.

Okay.

I got some comments, but I'm gonna finish with uh thank you, Chair.

I um not to be the dead horse, so to speak, but uh I want to go back to the uh compensation for staff.

Can you tell me that 3 percent increase?

Is that a half a penny, a penny?

Quarter percent.

I would have that sitting in front of me at the entire um until I ask the question.

I understand.

So why you're looking for it?

I have it for all funds.

Give me just a second.

Sure.

We'll give you something that's close to the number.

So why are you looking for it?

Um I come back to it because it's I I think it's very important that um we really consider um adequate compensation for staff.

Um I don't know a time where the head of a department has come in and not given praise to the staff that had to come and do the heavy lifting for or with and in partnership to get something done.

And um in my world, you know, the folks that you see up front absolutely have a very um intricate part to do.

But the folks you don't see, like in my world, the dishwasher.

No one ever pays attention to the dishwasher, but you cannot function on a daily basis without a dishwasher.

When you try, you wind up being there at three, four o'clock in the morning washing dishes and you don't sleep.

And everybody's very angry.

So I want to make sure that we're able to compensate.

Um, not overwhelmingly because we are in tough times, but as we as a as uh a body are in tough times, also know that individually, nothing, no price of anything that anybody has to buy, inclusive of the health insurance or the medication is going to go down in the next six months or year.

So I want to make sure that we do as well by them, the least of those, as we have and are trying really hard to do by some of the other more visible departments of our city.

Thank you, ma'am.

Um that number?

Is let me make sure I understand the question correctly there.

Is the question how much does the three percent merit cost us in the general fund?

Yes.

So I'm gonna give you my back of the napkin as I stand at the podium here.

Okay, then we will go back and do some better calculations and bring you a better number.

But each percentage point in merit in the general fund is roughly in the neighborhood of 1.3 million dollars.

So three percent would be north of four million dollars.

Okay.

Thank you.

Which is equivalent.

Thank you.

All right.

Okay.

Now my comments.

Um first off, some data points for everybody.

We have in taxable property.

I'm rounding it's just a little bit 40 billion dollars.

I mentioned that in that we we play with a lot bigger numbers than people think.

But in the city of Winsalem, we have 40 billion dollars of taxable property that we now tax it 50.56 cents to the hundred, whatever it may be.

56.7.

647.

Secondly, and uh Mr.

Mayor, these are your numbers, so you can uh sleep at night.

New single family housing permits.

This is units, not dollar amounts.

Dollar amounts are in here too.

They're in the very first and the city manager's comments to us.

And I'm assuming this is calendar year.

Uh it is 1,587 housing single family housing permits were issued in 25, 1,587.

That does not count non-residential building permits or multifamily.

That's exactly one more than we issued in 24, which is 1,586 permits.

So people wondering, oh, we're not building any houses.

And by the way, these are single family.

There are virtually no single families that come through uh the housing area.

We did a few in Happy Hills, we've done a few in Barb and your area over in uh Cleveland Avenue.

But I think in the last two years, the number of single family houses we've actually touched this council has from a subsidy standpoint.

I don't think would be more than 30 or 40.

It's very, very, very little.

So my point is the the I think the private sector is is generating a lot, and I will tell you out on Metal Art, my infamous roads, there are two projects that are I think they've been permitted, but they certainly haven't started, although they're clearing the land, and the two combined will be close to 400 homes.

Uh next.

This has been set a couple times.

I'm going to iterate it again.

This Thursday, we're going to talk about community agencies.

Now, for you rookies up here, we usually spend more time talking about community agencies than we do everything else combined.

So Thursday's going to be a rough day.

But we do have we all filled out a survey and said, okay, the these various organizations that have requested this is where we would like to spend money if it was up to us.

So we do have a data point to start with, and we'll see what happens from there.

And this is in no particular order, but these are questions you can get back to.

The uh book here calls for the closing of the uh Salisbury Road landfill, that's the C and D landfill, in 2030.

That's not very far away.

Uh my question is what's gonna happen to that material once it's closed.

By the way, the current the sanitary landfill was 2042.

I'm not worried about that one.

That tonnage will go to handsmill road landfill.

What's that?

The tonnage will go to handsmill road landfill.

Okay.

So then the question would be how uh you don't have to answer this today.

Will that impact the longevity of that landfill?

New bus routes, Mr.

Mayor, you stole a little bit of my fund, but if everybody's got their book, if you can open to page 110.

I don't know if you can pull it up on there or not.

11.

My favorite chart.

Why have I been such a vocal critic for 26 years of the bus system?

That's because this line has been going downhill for 22 years or however many is on here.

15 or something.

Back in 2012, we had 3.46 million riders.

The projected for this year is 1.5.

Please notice during COVID, you got a little dip in there.

But if you were to uh do regression analysis on there, that line has been steadily down to the extent that we're now running versus 2012, which was 14 years ago, we're down two-thirds of the riderships.

I am hopeful, and it shows on here that that line will begin to go up.

My question to the to the staff to Mr.

Fenciler back Fensler back there, is you don't need to answer it now.

Is when are the bus routes going to go into effect and when do we think we'll see an impact from them?

And you can reply that later.

The answer to your question is the fixed route changes will take place in August.

August.

So we might have after it gets aligned out a half a year worth of data there, maybe, maybe a little bit more.

I always ask for this if you could provide the total debt, GO revenue bonds, cops, etc.

Not liabilities, just debt, and a schedule, a payment schedule on kind of how we're coming on that.

Question on cemeteries do we have any plots left to sell at either one?

And if so, how many approximately?

I know the the number of plots are if not sold out or close, and I think long term or over the next few years we're going to see a change in the activity if we're not selling new plots, then we're simply using the ones that have already been sold.

So just hearage there.

My numbers I wrote down that we had 5.5 million of salary increases in the budget.

And I know from prior comments that one cent increase in property tax is about $4 million.

So to answer your question indirectly.

Now that $5.5 million included some salaries that were paid for by grants in years past.

Yes, that $5.5 million is all funds, not just general funds.

So that includes the folks in your water and sewer funds and storm.

Okay, yeah.

Okay.

Yeah.

So the general does include all those other things, too.

Yep.

So if you back those out, maybe around $4 million, which would be about a penny on the property tax to pay for the salaries.

I've already mentioned earlier.

I it is tough news.

I will tell you, as a small business owner, or at least I was for 30 some years, without a doubt, the most difficult thing I ever dealt with year in, year out was health insurance costs.

They go up relentlessly, and it's not a whole lot we can do to impact the total amount.

Please remember we we self-insure our health insurance costs, so when there is a triple loan bypass or whatever that was, that that cost does hit us fully.

If you were in the private sector and you're buying insurance from a blue cross or signature, whoever it may be, your experience is spread out over everyone else that buys insurance, and you kind of uh pay the average.

But what we pay for is in fact what we do that.

I don't believe we reinsure anything, do we?

Maybe?

I don't think so.

Um I will be curious to see what your study says, and I I would maybe just limit it to what the three or four or five cities around us do as far as the split.

Uh we're 8317 right now.

Uh please notice it's in here that the Bowman Gray, the convention center, the fairgrounds, all those auxiliary services are now received some subsidy.

Uh and that's not necessarily bad.

I used to use the example.

Haynes Park is subsidized.

Matter of fact, you can pretty much use Haynes Park free.

You walk in it, whatever.

So a lot of the amenities that we offer are subsidized.

All our parks are.

Uh, but but these things that are a little more proactive where you you do more activities there are subsidized as well.

But to me, that's part of the what we pay for for the um quality of life we have.

The last comment I'd like to make, and I'm not sure what the answer to this is, but folks, we are currently under the microscope from Raleigh.

The House is presenting a constitutional amendment to limit and they're they're basically addressing counties.

I think we will be next.

And I this is a direct result of pretty much what happened last year to us and to many other places, where the property owners, not the owners of the old BBT building or the owners of uh Through Way shopping center, but pro private property homeowners saw unbelievable increases.

And those people uh Shuay through a shopping center does not vote.

Matter of fact, the owner uh Saul properties is out of Baltimore, I think.

But the people who got those property tax bills do vote and they let Raleigh know about it.

And I I don't know what that means, but I just think we need to be cautious and understand that that we are being watched along with all the other folks.

And if in my opinion, if we don't watch out, Raleigh is gonna come help us more than we want to be helped.

Uh and I again I'm not sure what's going on, how it's going to affect us, but it is definitely the spotlight is on what local municipalities do.

Uh you know, the old saying I'm I'm from the government, I'm here to help.

Uh I'm afraid that what may be coming.

Um, and again, I can't predict any more than anybody else can what's going to happen, but we're certainly in the spotlight there.

With that, unless there's any other comments, yes, ma'am, Ms.

Hall.

This is my last comment.

That's fine.

Have all you want.

Thank you, um, Chair Clark.

Uh, Director Tish, I do have one request of you, and that's based off of the merit question.

So some people may not receive three, they may not receive anything.

So considering the rising costs just in general that the world is seeing, and then rising cost of health care that the employee would have to take on.

I would like to see, and you all may have this in the office, you may not, but what a 2% COLA would look like.

So that is just 2% Cola.

I can talk to you about that offline, but that is something that I would email you about so that you would know.

We could talk about what that what that could look like.

Because that may not have happened before.

This might be totally new.

But I would like to know what that would look like.

If if I could piggyback on that comment, you're saying everyone's getting three percent if they get a satisfactory rating.

And if not, they get nothing.

So if you have costs and you get nothing.

Well, let me let me finish the question.

After I get their attention.

Mr.

City Manager, I would like to know what percent of the employees get a satisfactory rating.

It's uh it's a meets expectation rating.

A meet sex.

So that's and so the reality is the only people that would not get an increase would be those folks that are typically under performance improvement program.

Yeah.

Uh and that's why they wouldn't be getting those.

So I honestly it's uh the vast majority.

Over 90 percent?

Yes.

Well over 95.

Yes.

Yeah, I I think it is virtually everyone's gonna get three percent.

But give us that note.

Yeah, thank you.

We we can we can still tell you what uh and the question was asked.

I'm assuming you're talking about we we uh two percent coal is just uh typically we would do that if we're gonna move the ranges up for everybody, and that's just a standard that's given to everybody, but I think that's what you are talking about.

It's a just a two percent across the board raised for everyone.

I think you're gonna find it's 99 percent of the people are getting three percent.

But we get the answer.

Let's take a look at the thing.

Thank you.

We can get the answer.

Okay, thank you.

With that, we'll see everybody back Thursday.

So remember to get the surveys to Jamie's tomorrow if we could, so we can get them back to the school of government and we'll do CIP on therapists.

Is that correct?

Okay.

All those in favor adjourning, please say aye.

We adjourn.