[0:08] >> GOOD AFTERNOON. MY NAME'S EMILY KOSKI, AND I WILL BE THE CHAIR OF THE BUDGET [0:14] COMMITTEE TODAY. I'M GOING TO CALL TO ORDER THE BUDGET COMMITTEE MEETING FOR MONDAY, [0:19] JULY 7th, 2025. BEFORE WE BEGIN THE MEETING I WANT TO OFFER A PHRENLY REMIND -- FRIENDLY REMINDER TO ALL MEMBERS, STAFF, AND THE PUBLIC [0:24] THAT THESE MEETINGS ARE BROADCAST LIVE TO ENABLE GREATER PUBLIC PARTICIPATION. THESE BROADCASTS INCLUDE REALTIME [0:31] CAPTIONING AS A FURTHER METHOD TO INCREASE THE ACCESSIBILITY OF OUR PROCEEDINGS TO THE [0:36] COMMUNITY. THEREFORE, ALL SPEAKERS NEED TO BE MINDFUL OF THE RATE OF THEIR SPEECH SO THAT OUR CAPTIONERS CAN FULLY CAPTURE [0:42] AND TRANSCRIBE ALL COMMENTS FOR THE BROADCAST. WE ASK ALL SPEAKERS TO MODERATE THE SPEED AND CLARITY OF THEIR COMMENTS. [0:48] AT THIS TIME, I'LL ASK THE CLERK TO CALL THE ROLL TO VERIFY THE PRESENCE OF A QUORUM. [0:55] >> COUNCILMEMBER PAYNE. >> PRESENT. >> WONSLEY IS ABSENT. [1:00] RAINVILLE. >> PRESENT. >> VETAW. >> PRESENT. >> ELLISON IS ABSENT. OSMAN IS ABSENT. CASHMAN IS ABSENT. [1:09] JENKINS. >> PRESENT. >> CHAVEZ. >> PRESENT. >> CHOWDHURY IS ABSENT. [1:16] PALMISANO. >> PRESENT. >> AND VICE CHAIR KOSKI. >> PRESENT. >> ALL RIGHT, THERE ARE SEVEN MEMBERS PRESENT. [1:21] >> LET THE RECORD REFLECT THAT WE HAVE A QUORUM. I'LL ALSO REMIND MY COLLEAGUES THAT WE'RE -- I'LL ALSO REMIND MY [1:28] COLLEAGUES THAT WE'RE USING SPEAKER MANAGEMENT TODAY, SO PLEASE MAKE SURE TO SIGN IN. [1:33] THE SINGLE ITEM ON OUR AGENDA TODAY IS A REPORT REGARDING THE ESTIMATED REVENUES AND EXPE [1:39] PENDITURES FOR THE 2026 SUPPLEMENTAL BUDGET AND I WILL WELCOME JAYNE DISCENZA TO SPEAK [1:45] ON THIS ITEM. WELCOME. >> GOOD AFTERNOON, VICE CHAIR KOSKI, MEMBERS OF THE BUDGET [1:50] COMMITTEE. MY NAME'S JAYNE DISCENZA AND I'M HERE TODAY TO DISCUSS THE 2026 CURRENT SEVERAL [1:59] LEVEL BUDGET CALCULATIONS. SO THESE ARE THE ESTIMATED REVENUES AND EXPENSES FOR NEXT YEAR'S SUPPLEMENTAL BUDGET. WERE WE TO [2:05] TAKE NO ACTION TO INCREASE OR DECREASE THE BUDGET. DIFFERENTLY THAN IN PRIOR YEARS, THE CURRENT SERVICE LEVEL THIS [2:11] YEAR IS NOT REALLY THE STARTING POINT FOR BUDGET DECISION MAKING, BUT RATHER A REFERENCE POINT. IN DEFERENCE TO THE [2:18] PROPERTY TAX PROJECTIONS THAT WE'LL BE TALKING ABOUT THROUGHOUT THIS PRESENTATION OUR [2:23] BUDGET PROCESS THIS YEAR DID NOT INVITE NEW SPENDING PROPOSALS [2:28] AND INSTEAD WE FOCUSED ON CONSTRAINING GROWTH. NEVER THE CURRENT SERVICE LEVEL IS AN [2:34] IMPORTANT REFERENCE POINT. THIS INFORMATION WAS ALSO PRINTED TO THE BOARD OF ESTIMATE AND TAXITATION ON JUNE 11th, SO IF [2:40] YOU HAVE ANY INTEREST IN FURTHER HEARING FURTHER CONVERSATION ABOUT THIS TOPIC, YOU'RE WELCOME TO TUNE INTO THAT MEETING AS [2:46] WELL. INFORMATION IN THESE SLEDS IS THE RESULT OF MANY -- [2:51] SLIDES IS THE RESULTS OF MANY WORK BY THE ENTIRE BUDGET TEAM AS WELL AS PARTNERS THROUGHOUT FINANCE AND THE REST OF THE CITY. THE BUDGET DIVISION IS [2:58] NOT ALL REPRESENTED HERE IN PERSON TODAY. A FEW ARE, BUT THIS PRESENTATION DEMONSTRATES THEIR WORK AND THEIR SERVICE, [3:04] AND WE'RE VERY GRATEFUL TO HAVE THEM ALL. YOU'LL NOTE THAT THIS IS A TECHNICAL PRESENTATION. WE ARE REALLY FOCUSED HERE ON [3:11] FUTURE REVENUES AND EXPENSES, AND PURSUANT TO THE BUDGET COMMITTEE'S PLANS, YOU CAN EXPECT TO HEAR MORE ABOUT [3:18] DEPARTMENT PROGRAMS AND POLICY AND THE FALL BUDGET PRESENTATIONS. THIS IS A BRIEF [3:28] WALKTHROUGH OF OUR PLAN TODAY. SO WE'LL BE REVIEWING THE BUDGET FRAMEWORK, ESTIMATING THOSE COSTS OF EXISTING CITY [3:35] OPERATIONS THAT WERE APPROVED ON AN ONGOING BASIS LAST YEAR. THROUGHOUT WE'LL BE COMPARING TO [3:42] THE 2025 ADOPTED BUDGET. WE'LL TALK ABOUT EXPENSE DRIVERS AND WHY WE'RE SEEING THE NUMBERS [3:48] WE'RE SEEING, AND WE'LL ALSO SPEND SOME TIME TALKING ABOUT REVENUES. THE FOCUS THROUGHOUT WILL BE MOSTLY ON THE GENERAL [3:55] FUND. AND WE WILL CLOSE THINGS OUT LOOKING AT HOW THE REVENUES AND THE EXPENSES IN THE GENERAL [4:01] FUND COMPARE. SO MOVING US [4:11] INTO SOME FINANCIAL OVERVIEW AND SOME GROUNDING ABOUT OUR BUDGET OVERALL, I WANT TO EMPHASIZE [4:17] THAT THIS IS A SNAPSHOT IN OUR BUDGET PROCESS. IT'S CERTAINLY NOT A RECOMMENDATIONMENT YOU [4:23] WILL HEAR IN JUST OVER A MONTH A BALANCE BUDGET COMING OUT OF THE MAYOR'S SHOP, AND THEN WE WILL OF COURSE TURN THINGS OVER TO THE COUNCIL FOR THE FINAL PHASE [4:29] OF THE BUDGET. SO FAR THOUGH WE ARE SEEING THAT EXPENSES ARE [4:35] INCREASING AT A FASTER CLIP THAN REVENUES ARE. SO IN THE GENERAL FUND THAT LOOKS LIKE 3.89% [4:44] INCREASE. ON THE EXPENSE SIDE AND THE REVENUE SIDE, 3.64% INCREASE. THERE ARE MANY FUNDS [4:50] THAT ARE NOT YET BALANCED, BUT WE ARE SEEING A SIMILAR SITUATION AT PLAY IN THE BROADER [4:56] BUDGET WHEN ALL FUNDS ARE CONSIDERED. THERE IS A MODEST GAP AS IS TYPICAL AT THIS TIME [5:02] OF YEAR BETWEEN REVENUE AND EXPENSES, AND THAT IS LARGELY DUE TO INCREASING COSTS AND MORE [5:08] MODEST REVENUE GROWTH, AND WE'LL CONTINUE TO TALK ABOUT THAT THROUGHOUT THIS PRESENTATION. [5:14] THE LEVY PICTURE I DO WANT TO NOTE IS SIGNIFICANTLY IMPROVED AS A RESULT OF THE FORECASTING [5:21] REVENUE FORECASTING PROCESS THAT OUR TEAM DOES WITH CITY DEPARTMENTS AND THROUGH SOME [5:26] REVISED PERSONNEL ASSUMPTIONS AROUND VACANCIES. SO WHILE LAST YEAR WE HAD A MUCH MORE DIRE GAP [5:32] BETWEEN REVENUES AND EXPENSES, IT'S MUCH MORE MODEST THIS YEAR SO WE'RE IN A MUCH MORE STABLE [5:38] POSITION. AS WE TALK ABOUT THE GENERAL FUND, I WANT TO MAKE [5:43] SURE WE ALL KNOW WHERE THAT SITS IN REGARD TO OTHER FUNDS, SO LOOKING AT THIS SLIDE, YOU CAN [5:49] SEE THE LARGEST SECTION, THE DARKER GREEN IS THE GENERAL FUND. AND THEN WE HAVE SPECIAL [5:55] REVENUE FUNDS WHICH IS WHERE GRANTS ROLL UP. WE HAVE DEBT SERVICE, WE HAVE CAPITAL [6:00] PROJECTS. THE GENERAL FUND IS WHERE WE USUALLY HAVE MOST OF OUR DISCUSSION BECAUSE IT IS PROPERTY PREDOMINANTLY PROPERTY [6:07] TAX SUPPORTED, AND IS THE MORE FLEXIBLE FUND FOR USE. WE'LL BE [6:12] TALKING ON THE NEXT SLIDE ABOUT THE PROPORTIONAL GROWTH OF PROPERTY TAX REVENUE. I DO WANT [6:20] TO NOTE THAT FUND DESCRIPTIONS ARE LOCATED IN THE BUDGET BOOK IF YOU HAVE QUESTIONS ABOUT ANY OF THESE CATEGORIES THAT ARE CURRENTLY SHOWN ON THE SCREEN. [6:26] YOU CAN ACCESS THAT IN THE FUND DESCRIPTION SECTION OF THE BUDGET BOOK, AND YOU CAN ALWAYS SEND US YOUR QUESTIONS AS WELL. [6:36] THIS SLIDE IS A BIT COMPLICATED, BUT IT TELLS A STORY OF A [6:41] GRADUAL SHIFT TOWARDS THE CITY'S RELIANCE MORE ON PROPERTY TAXES RATHER THAN THOSE NONPROFIT TAX [6:49] REVENUES. SO WE GOT A QUESTION LAST YEAR WHICH PROMPTED US TO DO SOME RESEARCH ON THIS TOPIC, SO IN PRIOR YEARS, BRIER TO [6:58] COVID ESPECIALLY -- PRIOR TO COVID ESPECIALLY, THE NONPROFIT TAX LEVY WAS THE MAJORITY OF THE [7:04] GENERAL FUND REVENUE. WE ARE SEEING A SHOW SHIFT TO PROPERTY [7:10] TAXES BEING THE MAJORITY OF THE REVENUE IN THE GENERAL FUND. AND THAT IS PROBABLY DUE TO A [7:16] NUMBER OF FACTORS, COVID BEING ONE OF THEM, SORT OF NOT INCREASING LICENSE FEES AND [7:21] THINGS DURING THOSE YEARS, PROBABLY PLAYS A ROLE HERE, BUT IT ALSO JUST ILLUSTRATES THAT WE [7:26] ARE PUTTING MORE OF A BURDEN ON PROPERTY TAXES THAN OUR OTHER [7:34] REVENUE SOURCES. SO GOING BACK TO OUR LONG RANGE FINANCIAL PLAN [7:39] HERE, THIS IS WHAT WAS ADOPTED IN DECEMBER OF 2024 FOR OUR 25-26 BIENNIAL BUDGET PROCESS. [7:46] SO THE RED BOX SHOWS YOU THE 2025 AND 26 LEVY PERCENTAGES AND [7:52] DOLLAR AMOUNTS. SO A COUPLE THINGS TO NOTE HERE. AS YOU ALL RECALL THERE WERE A NUMBER OF ONE-TIME REDUCTIONS TO [7:59] THE EXPENDITURE BUDGET IN DECEMBER, AND THAT DROPPED THE LEVY DOWN TO 6.8% THAT'S A [8:08] PERCENT CHANGE CALCULATION FROM THE PRIOR YEAR. BECAUSE MOST OF THOSE REDUCTIONS WERE ONE-TIME IN NATURE, YOU ARE SEEING A [8:16] BIGGER SWING GOING INTO 2026 AS OUR STARTING POINT, SO A 10.8% [8:22] CHANGE INCREASE IN 2026 WAS THE STARTING POINT OF THIS BUDGET [8:27] PROCESS. SO SINCE THEN, WE'VE WORKED ON REFORECASTING OUR [8:32] NONLEVY REVENUES AND RECALCULATING PERSONNEL AND INTERNAL SERVICE CHANGES. AND THIS NEXT SLIDE SHOWS A [8:39] PRELIMINARY UPDATED LEVY SO WERE WE TO MAKE NO CHANGES TO THE [8:47] PROGRAMS AND PERSONNEL THAT WE'VE COMMITTED TO IN THE LAST BUDGET PROCESS, OUR STARTING POINT WOULD BE AN 11.2% LEVY. [8:57] SO THAT CHANGE BETWEEN DECEMBER TO THIS FIGURE IS PRIMARILY DUE [9:02] TO INCREASED COSTS. THERE IS STILL A LOT OUT THERE THAT WE'RE FINALIZING IN THIS LAST MONTH, [9:08] SO I WOULD NOT ANTICIPATE THAT WE'LL SEE THAT FIGURE, BUT SOME THINGS TO NOTE ABOUT WHAT WE [9:13] ASSUME IN THIS VISUAL. SO WE HAVE NORMAL INFLATION BAKED IN FOR PERSONNEL IN THE OUT YEARS [9:19] AS WELL AS FOR INTERNAL SERVICE CHARGES. WE DO NOT PLAN THOUGH [9:25] FOR NEW SPENDING, SO ANY NEW SPENDING OR PILOTS OR NEW INITIATIVES THAT COME ONLINE ARE [9:30] NOT SHOWN IN THESE FIGURES. WE ALSO ASSUME THAT FEDERAL FUNDING [9:37] WILL CONTINUE. AND THIS VIEW ALSO HOLDS ALL THE OTHER LEVIES FLAT, WHICH IS, WHICH IS ALSO [9:43] SUBJECT TO BUDGET DECISION MAKING. SO YOU'LL NOTE THAT THE [9:48] PERMANENT IMPROVEMENT LEVY LINE HAS A LOT OF SWINGS IN IT. MANY OF THE PROJECTS WERE CAUGHT ON A ONE-TIME PROSOR DELAYED A YEAR, [9:53] SO YOU'RE SEEING A BIGGER INCREASE IN '26 AND SOME CONGESTION FOR THAT LEVY IN [9:59] 2027. WE ALSO HAVE A NUMBER OF PENSION LEVIES THAT ARE BEING HELD FLAT. THOSE ARE [10:06] COMMITMENTS THAT THE CITY IS IN UNTIL 2031 IN MOST CASES. WE CONTINUE TO ASSESS THOSE EVERY [10:12] YEAR. WORKING WITH THE CONTROLLER TO MAKE SURE WE HAVE ENOUGH REVENUE TO COVER THOSE COMMITMENTS. AND I THINK YOU [10:22] KNOW 11.2% IS WELL BEYOND THE BOUNDS OF WHAT A NORMAL BUDGET PROCESS IS, SO WHAT WE'VE HEARD [10:29] I THINK CONSISTENTLY FROM THE MAYOR AND ALSO FROM THE COUNCIL IS THAT IS NOT AN ACCEPTABLE LEVEL, SO LOT OF OUR WORK THIS [10:35] YEAR HAS BEEN FOCUSED ON BRINGING THAT DOWN, SO THAT'S SOMETHING THAT WE WILL TALK ABOUT IN AUGUST AND SEPTEMBER. [10:45] THIS SHOWS OUR CAPITAL IMPROVEMENT PROGRAM PLAN AS ADOPTED IN DECEMBER, SO NO CHANGES YET. YOU CAN ANTICIPATE [10:51] A CLICK -- THE CAPTUAL LONG RANGE IMPROVEMENT COMMITTEE'S REPORT COMING ONLINE THIS WEEK. [10:56] THEY'RE JUST FINALIZING THE CHAIR'S LETTER TODAY. SO WE WILL SEND OUT A NOTICE TO ALL OF YOU ABOUT THAT. BUT CAPITAL IS [11:04] ONE PLACE WHERE WE HAVE REALLY ROBUST PUBLIC ENGAGEMENT, AND ILLINOIS ALSO WHERE PEOPLE ARE -- IT'S ALSO WHERE PEOPLE [11:10] ARE INTERACTING WITH THE CITY ON A REALLY PERSONAL LEVEL. PEOPLE ARE EXPERIENCING OUR ROADS AND BRIDGES. THEY'RE EXPERIENCING PUBLIC ART. THEY'RE [11:16] EXPERIENCING OUR BUILDINGS. SO WE'RE VERY HAPPY TO SUPPORT THAT CLICK PROCESS, WHICH IS A ROBUST [11:22] ONE. THAT COMMITTEE IS JUST FINISHING REVIEWING ABOUT 130 OR [11:27] SO CAPITAL BUDGET REQUESTS FOR THIS YEAR. THEIR THEIR [11:33] RECOMMENDATION WILL INFORM THE MAYOR'S BUDGET, AND OF COURSE WILL BE DISTRIBUTED TO YOU. IF ANY OF YOU ARE INTERESTED IN A MORE THOROUGH EXPLANATION OF THE [11:39] CAPITAL BUDGET REQUEST, YOU CAN FIND THOSE ON THE FINANCE WEB SITE, THE CBRs ARE ALL THERE SO YOU CAN GET A FULL NARRATIVE [11:45] OF ALL OF THEM. FOR THE CURRENT SERVICE LEVEL, YOU CAN CONSIDER [11:53] THAT $267.8 MILLION AS THE CAPITAL CURRENT SERVICE LEVEL FOR 2026. WE WILL CONTINUE TO [12:00] KEEP AN EYE ON CAPITAL, ESPECIALLY WITH THE IMPACT OF TARIFFS AND FEDERAL FUNDING. [12:07] YOU KNOW, WE ARE MINDFUL THAT COSTS COULD INCREASE, AND SO WE'RE JUST KEEPING A CLOSE EYE [12:14] ON THAT. SO WE'LL TRANSITION NOW INTO SOME DETAILS OF THE [12:19] CURRENT SERVICE LEVELS, SO WHAT IS, WHAT DO WE MEAN WHEN WE SAY CSL? HOW DO WE CALCULATE IT? [12:24] WHAT ARE THE COMPONENT PARTS, AND THE MAIN TAKEAWAYS THAT YOU ALL CAN UNDERSTAND FROM EACH [12:29] CATEGORY ABOUT WHY NUMBERS ARE GOING UP OR DOWN. THROUGHOUT SOME OF THESE SLIDES, YOU'LL SEE REFERENCES TO OUR CITY'S [12:36] FINANCIAL POLICIES. THOSE WERE ADOPTED IN DECEMBER, AND WE PROVIDE THOSE REFERENCES SO THAT YOU CAN DIG INTO THEM FURTHER IF [12:43] YOU LIKE. AS A REMINDER THOSE POLICIES ARE INFORMED BY OUR INDUSTRY BEST PRACTICE SO WE [12:48] LOOK TO GAP AND GFOA AS WELL AS OUR CITY AND STATE ORDINANCES TO DEVELOP THOSE. SO WHAT IS A [12:58] CURRENT SERVICE LEVEL? SO A CURRENT SEVERAL LEVEL FIRST OF ALL IS NOT BINDING TO THE [13:03] COUNCIL. THIS IS AN EXPLANATION OF WHERE THE BUDGET WOULD SIT IF WE MADE NO CHANGES FOR 2026. SO [13:13] THE CURRENT SERVILE LEVEL FUNCTIONS AS KIND OF A REALITY CHECK AND A TRANSPARENCY MARKER [13:18] IN THE BUDGET PROCESS BECAUSE IT TELLS ALL OF US AND THE PUBLIC [13:24] WHAT HAPPENS BEFORE COUNCIL OR THE MAYOR MAKE ANY POLICY DECISIONS. SO IT IS A [13:30] CALCULATION, AND BUDGETING METHODOLOGY. IT'S NOT REALLY A GREAT TOOL FOR RETROACTIVE [13:37] ANALYSIS, BUT WHAT IT IS IS PROVIDES THE FRAMEWORK FOR WHAT EVENTUALLY BECOMES THE ADOPTED [13:46] BUDGET. WITHOUT THIS BASELINE OF THE CURRENT SERVICE LEVEL, IT CAN BE HARD TO TRACE THE IMPACT OF THE DECISIONS THAT YOU ALL [13:53] MAKE, SO AGAIN, SNAPSHOT IN TIME, THESE FIGURES TODAY, BUT THEY DO HELP US UNDERSTAND THE [13:58] IMPACT OF POLICY CHOICES, ESPECIALLY AROUND THE PROPERTY TAX LEVY. SO THIS SLIDE SHOWS [14:08] YOU A BIT OF A ROAD MAP OF HOW WE DEVELOP THE CSL. SO THE [14:14] POINT OF THE CSL IS REALLY TO ESTABLISH THE COST OF CONTINUITY [14:20] OF SERVICES. THERE ARE THREE EXPENSE COMPONENTS THAT WE LOOK AT AS WELL AS REVENUE OF COURSE. [14:25] SO YOU CAN SEE ON THE FAR LEFT OF THE SCREEN THERE'S PERSONNEL EXPENSES ARE ONE CATEGORY OF [14:32] SPENDING, THAT INFLATES YEAR TO YEAR BECAUSE AS WE KNOW, PERSONNEL COSTS DO TEND TO [14:39] INCREASE. WE HAVE BASE EXPENSES WHICH ARE THE NONPERSONNEL CATEGORIES, MOST DEPARTMENTS HAVE BUDGETS FOR THINGS LIKE [14:45] TRAVEL AND TRAINING AND OFFICE SUPPLIES, AND THOSE ARE HELD FLAT YEAR TO YEAR. AND THEN WE HAVE INTERNAL [14:50] SERVICE CHARGES, WHICH ARE THE COST OF, YOU KNOW, I.T. AND RENTS, AND THOSE CUSTOMER DRIVEN [14:56] NEEDS FOR OTHER CITY DEPARTMENTS. THOSE ARE ADJUSTED YEAR OVER YEAR BASED ON THE [15:02] ANTICIPATED COSTS OF PROVIDING THOSE SERVICES. SO IN ORDER TO DEVELOP THE CSL, WE ARE RUNNING [15:11] MANY PROCESSES CONCURRENTLY. WE PLACE A LOT OF DEMANDS ON CITY DEPARTMENTS, AND SO WE'RE OF [15:17] COURSE REALLY GRATEFUL FOR THEIR PARTNERSHIP AND THE TIME THAT IT TAKES TO DEVELOP THE BUDGET. THE PROCESSES ARE GUIDED BY [15:25] FINANCIAL POLICIES, WHICH OF COURSE YOU ALL GET TO REVIEW AND [15:30] ADOPTT. AT THE START OF EACH BIENNIAL BUDGET, SO WE'RE IN A SUPPLEMENTAL YEAR IN A BIENNIAL [15:35] BUDGET YEAR WE'RE TYPICALLY DOING A LARGE BUDGET KICKOFF FOR DEPARTMENTS. DEPARTMENT HEADS AND BUDGET CONTACTS WITHIN THE DEPARTMENTS WHERE WE'RE GIVING A [15:42] TRAINING ABOUT THE SPECIFICS OF THAT PROCESS, WHAT BUDGET CAPACITY LOOKS LIKE, AND WHAT [15:48] THE POLICY PRIORITIES MIGHT BE. WE GAVE AN ABBREVIATED VERSION OF THAT TO DEPARTMENT HEADS THIS [15:54] YEAR. THEN WE'RE ALSO REMOVING ONE-TIME SPENDING. SO WE MAKE SURE THAT ONLY THE THINGS THAT HAVE BEEN COMMITTED TO ONGOING [16:00] ARE FACTORING INTO OUR FIGURES GOING FORWARD. AND THEN WE'RE [16:06] ALSO UPDATING OUR PERSONNEL EXPENSES, SO IT'S A KIND OF A M MANUAL PROCESS OF WORKING [16:12] CLOSELY WITH HR'S DATA AND DEPARTMENT DATA TO MAKE SURE WE HAVE A COMPREHENSIVE POSITION BY POSITION REPORT, WHICH IS [16:18] ACCURATE AS OF MARCH OF THE YEAR. AND THEN WITH INTERNAL [16:24] SERVICE FUNDS, THAT'S REALLY ONE OF THE MORE INTENSIVE PROCESSES THAT BEGINS IN JANUARY. WE ARE [16:30] WORKING WITH ALL OF THE PROVIDER DEPARTMENTS TO ESTIMATE THEIR EXPENSES FOR PROVIDING THE SAME [16:35] LEVEL OF GOODS AND SERVICES TO THEIR CUSTOMER DEPARTMENTS. AND THEN WE WORK WITH THEM TO ALLOCATE THOSE COSTS OUT [16:40] ACCORDING TO ALLOCATION MODELS, AND THEN LASTLY, THE CUSTOMER DEPARTMENTS ARE REVIEWING THOSE CHARGES TO MAKE SURE THAT THEY [16:46] MAKE SENSE. THEY UNDERSTAND WHAT THEY'RE BEING CHARGED FOR, AND THAT IT'S BEING BILLED TO THE RIGHT PLACE. ON THE REVENUE [16:53] SIDE, WE'RE MEETING WITH SUBJECT MATTER EXPERTS THROUGHOUT THE CITY TO UPDATE OUR REVENUE [16:58] ASSUMPTIONS, SO THE CONVERSATIONS ARE TYPICALLY AROUND HOW SENSITIVE OR STABLE [17:04] THAT REVENUE IS OR HAVE THERE BEEN ANY RECENT TRENDS IN GROWTH OR DECLINE, ARE THERE NEW [17:09] REVENUE SOURCES THE CITY NEEDS TO CONSIDER, AND THEN WHAT SORT OF INTERNAL AND EXTERNAL DRIVERS MIGHT BE IMPACTING THESE GOING [17:15] FORWARD. SO EACH OF THESE PROCESS HAS NOW BEEN -- PROCESSES HAS NOW BEEN COMPLETED [17:20] AND THE NEXT SEVERAL SLIDES WE'LL BE GOING THROUGH THE CATEGORIES IN MORE DETAIL. THIS [17:30] SLIDE SHOWS YOU THE GENERAL FUND CURRENT SERVICE LEVEL EXPENSE BUDGET. IT'S THE GENERAL FUND ONLY. IT'S REMOVING TRANSFERS. [17:38] THE EXPENSE BUDGET IS ONE SIDE OF THE EQUATION. GUT WE LIKE TO LOOK AT THE CURRENT COST -- BUT [17:43] WE LIKE TO LOOK AT THE CURRENT COST OF CLS, THE 2025 ROLLED FORWARD BEFORE WE TURN TO HOW TO [17:48] FUND THOSE EXPENSES. SO MOST OF THIS SLIDE IS FOCUSED ON THE GENERAL FUND. MOST OF OUR [17:54] PROGRAMS ARE FUNDED THERE. THAT'S WHERE THE POLICY DECISIONS ARE HAPPENING, AND IT IS IMPORTANT TO NOTE HERE THAT THIS IS THE COST OF LAST YEAR'S [18:00] BUDGET TODAY. IT DOES NOT INCLUDE ANY INCREASES OR DECREASES TO EXISTING [18:07] PROGRAMMING. SO ACROSS ALL CITY FUNDS, AS PART OF OUR TECHNICAL REVIEW, WE WENT THROUGH AND [18:12] REMOVED $12 MILLION OF ONE-TIME OR EXPIRING PROGRAMS ON THE MAP TO BUILDING THE CSL. SO THOSE [18:18] ARE THOSE ONE-TIME THINGS THAT WERE ADOPTED FOR 25 ONLY. THAT [18:24] REMOVAL IS IN LINE WITH THE ADOPTED PLAN OF LAST YEAR'S BUDGET, AND COLLECTIVELY, WE ALSO SAW THAT SALARY PAYROLL AND [18:32] FRINGE COSTS INCREASED ABOUT $30 MILLION FROM THE 2025 [18:37] ADOPTED BUDGET. INTERNAL SERVICE CHARGES ARE INCREASING ABOUT $6 MILLION. THE [18:42] $30 MILLION WAS DECREASED DUE TO SOME MODIFICATIONS IN HOW WE BUDGET FOR VACANCIES WHICH [18:47] IMPACTS THEN SALARIES AND HEALTH CARE ESTIMATED COSTS. SO POLICY [18:52] ALLOWS FOR COST ESCALATION IN THE PERSONNEL AND INTERNAL [18:59] SERVICE SIDE OF THE CSL, THE DISCRETIONARY AMOUNT IS HELD FLAT YEAR OVER YEAR, AND THAT IS [19:05] IN PART SO THAT THE EXECUTIVE AND THE LEGISLATIVE BODY HAVE SOME TRANSPARENCY ABOUT HOW THOSE THINGS ARE CHANGING YEAR TO YEAR. MOVE FLING TO [19:19] PERSONNEL, WITH OVER 4,000 BUDGETED FULL-TIME EQUIVALENT POSITIONS IN THE CITY, THIS IS A [19:26] SIGNIFICANT PORTI PORTION OF OUR TOTAL CITY OPERATING COSTS SOWE CONTINUE TO WORK [19:31] CLOSELY WITH HUMAN RESOURCES AND WITH DEPARTMENTS TO COMPLETE THAT ANNUAL REVIEW AND MAKE SURE WE UNDERSTAND WHICH POSITIONS [19:37] AND AT WHAT STEP AND AT WHAT HEALTH INSURANCE ARE THEY BUDGETED. WE HAVE THEN A [19:43] COMPREHENSIVE POSITION BY POSITION WORKFORCE PLAN THAT DERIVES THAT BUDGET AMOUNT FOR [19:49] THE FOLLOWING YEAR, SO SALARY AND FRINGE EXPENSES BOTH HAVE INCREASED OVER WHAT WE PLAN FOR IN THE 2025 ADOPTED. GROWTH IN [19:59] SALARIES IS OUTPACING GROWTH IN FRINGE EXPENSES LARGELY [20:06] ATTRIBTABLE TO AGREEMENTS, JOB MARKET STUDIES, IMPACT WITH THE STEPS AND COST OF LIVING ADJUSTMENTS FOR POSITIONS THAT [20:12] ARE REPRESENTED BY THOSE BARGAINING UNITS. SO WE DO ALWAYS PLAN FOR INCREASES TO [20:20] PERSONNEL COSTS BASED ON GROWTH ASSUMPTIONS WE LOOK AT ANNUALLY WORKING WITH HUMAN RESOURCES, LABOR RELATIONS. THE 2026 [20:27] GENERAL FUND BUDGET FOR PERSONNEL IS ABOUT $4 MILLION HIGHER THAN WE PLANNED FOR IN [20:33] DECEMBER. SO THAT'S A REFLECTION OF LARGER THAN BUDGETED COLAs IN THOSE CONTRACTS THAT HAVE BEEN [20:38] SETTLED. WE CONTINUE OF COURSE TO WORK COLLABORATIVELY WITH LABOR RELATIONS TO MAKE SURE WEAR PLANNING AS BEST WE CAN FOR [20:44] THOSE INCREASES IN FUTURE YEARS. YOU MAY NOTE BECAUSE THIS SLIDE SHOWS TWO YEARS OF ACTUALS AND [20:50] THREE YEARS OF BUDGET THAT THERE ARE SOME DIFFERENCES BETWEEN THE ACTUAL SPEND AND THE BUDGETED [20:56] AMOUNT. PRIMARILY THIS IS DUE TO SOME ACCOUNTING DISTINCTIONS WHERE SOMETIMES WHERE WE BUDGET IS A LITTLE BIT DIFFERENT THAN [21:03] WHERE WE SPEND, SO THIS GRAPH ONLY SHOWS THE ACCOUNTS WHERE WE BUDGET SALARY AND FRINGE. AND [21:08] THAT WOULD EXCLUDE SOME PORTIONS OF ACTUAL PERSONNEL SPENDING. [21:19] FTE GROWTH IS OF COURSE A MAJOR COMPONENT OF ANY BUDGET GROWTH OVERALL, AND SO THIS SLIDE SHOWS [21:26] YOU THE FTE GROWTH THROUGH 2023 THROUGH WHAT'S PLANNED FOR 2026. SO YOU CAN SEE THAT THERE ARE [21:32] ALREADY CLOSE TO 16 POSITIONS THAT ARE PLANNED DO COME ONTO THE GENERAL FUND IN 2026. [21:39] MOSTLY THESE ARE FIREFIGHTER POSITIONS THAT ARE COMING TO THE GENERAL FUND AFTER THE EXPIRATION OF A FEDERAL SAFE [21:45] SAFER GRANT IN MID-2026. THIS ONLY CAPTURES POSITION ADDITIONS [21:51] AS OF MARCH, SO NEW POSITIONS THAT ARE ADDED THROUGH THE COUNCIL PROCESS OR THROUGH [21:56] ADMINISTRATIVE ADDITIONS WOULD NOT BE SHOWN IN OUR PERSONNEL BUDGET UNTIL 27 AT THE EARLIEST. [22:05] AND I'LL TURN NOW TO INTERNAL [22:10] SERVICE CHARGES. SO INTERNAL SERVICE CHARGES INCLUDE FLEET, I.T., REPRESENT, SELF-INSURANCE, [22:16] AND ALSO OUR GENERAL FUND OVERHEAD. GENERAL FUND OVERHEAD [22:21] IS A CHARGEBACK TO OUR NONGENERAL FUND DEPARTMENTS FOR THE SERVICES THAT GENERAL FUND [22:28] DEPARTMENTS DO. SO WE ASK THE DEPARTMENTS WHO PROVIDE ALL THESE SERVICES TO GENERATE AN EXPENSE BUDGET TO MAINTAIN [22:34] CURRENT SERVICE LEVELS. WE THEN REVIEW THOSE EXPENSE PROPOSALS [22:39] ALONGSIDE THE CONTROLLER AND THE CFO, AND WE MAKE A DETERMINATION ABOUT WHAT IS A CURRENT SERVICE [22:44] LEVEL THAT'S APPROPRIATE TO FUND FOR THE FOLLOWING YEAR, SO THIS IS THE SAME PROCESS WE FOLLOWED AS LAST YEAR. NO MAJOR CHANGES [22:51] TO METHODOLOGY. THESE CHARGES ARE ABOUT 17% OF OUR TOTAL [22:58] OPERATING EXPENSES. SO BEGINNING IN JANUARY, THOSE DEPARTMENTS ARE ESTIMATING THEIR [23:05] EXPENSE COSTS FOR PROVIDING THEIR SERVICES. WE DO A REASONABLENESS TEST OF THOSE, [23:12] AND THEN THOSE BUDGETS ARE ALLOCATED OUT TO DEPARTMENTS ACCORDING TO EACH INTERNAL [23:17] SERVICE DEPARTMENT'S ALLOCATION MODEL. SO SOME OF THE [23:22] DISTRIBUTION FACTORS ARE CUSTOMER DEPARTMENT FTE COUNT, [23:28] HISTORICAL ACTUALS, SOME DEPARTMENTS SPECIFIC PROJECTS, AND FOR WORKERS, FOR WORKERS [23:33] COMP AND LIABILITY, WE GET SOME INPUT FROM AN ACTUARIAL [23:38] CONSULTANT PINNACLE WHO SUBMITS A REPORT ANNUALLY THAT HELPS INFORM OUR NUMBERS THERE. SO [23:44] THIS CHART IS AN ENTERPRISE WIDE [23:49] VIEW. SO IT'S ALSO IMPORTANT TO NOTE THAT CHANGES IN PERSONNEL COSTS FEED INTO GROWTH IN [23:55] INTERNAL SERVICE CHARGES. SO AS WE ADD POSITIONS WE PROBABLY NEED TO ADD WORK SPACE OR [24:03] LABTOPS OR MAYBE A VEHICLE, AND SO INTERNAL SERVICE CHARGES ARE A DEMAND DRIVEN IN THAT WAY. [24:09] ANOTHER EXAMPLE WOULD BE BUILDINGS COMING ONLINE THAT THEN NEED CUSTODIAL SERVICES. [24:15] SO THESE ARE INCREASES THAT ARE SOMEWHAT MORE OPAQUE BUT ARE STILL REALLY IMPORTANT AND HAVE AN IMPACT ON PROPERTY TAXES. SO [24:23] AFTER ALL OF THESE COST DRIVERS ARE TAKEN INTO ACCOUNT, INTERNAL SERVICE CHARGES ARE INCREASING BY A NET AMOUNT OF ABOUT [24:31] $6.5 MILLION BETWEEN '25 ADOPTED AND '26 CURRENT SERVICE LEVEL. SO GENERAL FUND DEPARTMENTS ARE [24:37] PROVIDED THE BUDGET TO PAY FOR THEIR INTERNAL SERVICE CHARGES EACH YEAR, SO THERE'S NO IMPACT ON THEIR OPERATIONS, ALTHOUGH [24:43] THERE IS THAT REAL IMPACT TO EXPENDITURE GROWTH WITHIN THE GENERAL FUND. SO TO THIS POINT [24:53] IN THE PRESENTATION, WE'VE MOSTLY TALKED ABOUT EXPENSES, AND WE'LL NOW SHIFT OVER TO TALK ABOUT REVENUES, HOW WE'RE PAYING [25:00] FOR THOSE THINGS. SO THE ROAD MAP HERE IS TO TALK A LITTLE BIT ABOUT AN ALL FUNDS VIEW, BUT WE [25:06] WILL FOCUS MOSTLY ON THE GENERAL FUND AND SOME KEY REVENUE SOURCES THERE. AND AGAIN, A [25:13] THANK YOU TO THE DOZENS OF PEOPLE WHO WORKED WITH BEN ZIMMERMAN ON DEVELOPING THIS [25:19] REVENUE OUTLOOK FOR THIS YEAR. [25:24] SO THIS IS A VIEW OF THE ENTERPRISE WIDE ALL FUNDS [25:30] REVENUE. SO THIS INCLUDES THE GENERAL FUND AS WELL AS GRANTS, SPECIAL REVENUE, DEBT FUNDS, [25:36] CAPITAL, ET CETERA. MANY OF THOSE FUNDS ARE STILLED IF DEVELOPMENT, AND THERE ARE [25:42] SOME -- UNDER DEVELOPMENT, AND THERE ARE SOME FINAL PIECES THAT WE NEED TO LOCK DOWN, SO THIS IS JUST AGAIN A SNAPSHOT. THESE [25:49] WILL ALL BE FINALIZED BY THE TIME THE BUDGET IS RELEASED NEXT [25:56] MONTH. MOVING TO LOCAL OPTIONS [26:01] SALES TAXES. SO THIS IS THE PRIMARY REVENUE STREAM OF THE DOWNTOWN ASSETS FUND, AND THE [26:06] VISUAL HERE SHOWS NET LOST REVENUES BUT WE WILL BE TALKING MORE ABOUT GROSS REVENUES. SO [26:12] THE DIFFERENCE THERE IS THAT THERE ARE WITHHOLDINGS FROM THE STATE FOR THINGS LIKE OUR [26:18] STADIUM DEBT AND ALSO AN ADMINISTRATIVE FEE FROM THE MINNESOTA DEPARTMENT OF REVENUE. [26:23] SO IN TERMS OF GROSS REVENUES, WE SURPASSED OUR PRE-COVID NUMBERS IN 2023. THAT WAS [26:31] SOMETHING LIKE A 10% YEAR OVER YEAR GROWTH. WE'RE NOW AT THIS [26:36] PRESENT MOMENT PROJECTING SOMETHING CLOSER TO 7.1% GROWTH, ALTHOUGH THAT MAY, MAY BE [26:41] COOLING OFF DUE TO SOME OF THE ECONOMIC UNCERTAINTY THAT WE'RE CURRENTLY REASSESSING. SO OUR [26:47] LOWEST POINT IN 2020 WE WERE COLLECTING $51 MILLION HERE. WE'RE LOOKING AT SOMETHING LIKE [26:54] $115 MILLION FOR NEXT YEAR, BUT AGAIN, I DO WANT TO EMPHASIZE WE'RE CONTINUING TO TALK TO DEVELOPMENT FINANCE AND OUR [27:00] COLLEAGUES AT THE CONVENTION CENTER TO MAKE SURE WE'RE UNDERSTANDING THE ECONOMIC UNCERTAINTY AND SORT OF THE CONSUMER PICTURE THAT'S [27:05] HAPPENING RIGHT NOW BECAUSE THAT IS SHIFTING. AND WHILE WE DO [27:16] NOT HAVE UPDATED FINANCE PLANS YET WE WANTED TO SHOW YOU A VISUAL OF THE DOWNTOWN ASSETS [27:22] FUND BALANCE OUTLOOK. AND AGAIN, THIS IS MAYBE A MORE OPTIMISTIC VIEW GIVEN THAT WE'RE [27:27] STILL SORT OF ASSESSING THE IMPACT OF TARIFFS AND ECONOMIC UNCERTAINTY, BUT WHAT YOU CAN [27:32] SEE HERE IS THAT WE'RE SHOWING CURRENTLY A S SIX-YEAR OUTLOOK FROM THE ADOPTED BUDGET LAST [27:38] YEAR OF THE FUND BALANCE IF THE DOWNTOWN ASSETS DROPPING FROM $83 MILLION DOWN TO $57 MILLION [27:46] IN 2030. THE DRAFT SIX-YEAR PLAN LOOKING FORWARD IN THE CSL [27:52] SHOWS ABOUT $85 MILLION IN 2026 AS A FUND BALANCE DOWN TO [27:57] $29 MILLION IN 2031. SO THAT ALL ASSUMES THAT THERE'S NO DEBT ISSUANCE FOR THE CONVENTION [28:03] CENTER IN THE FIVE-YEAR PLAN, AND THAT OUR OTHER SALES TAXES ARE NONENTERTAINMENT TAX [28:09] REVENUES ARE PERFORMING STRONG. SO WHAT COULD CHANGE FROM THIS POINT? SO WE WILL CONTINUE TO [28:15] MONITOR GROSS AND NET RECEIPTS ALONGSIDE DEBT FINANCE AND CONVENTION CENTER. WE KNOW THE [28:22] TOURISM IMPROVEMENT DISTRICT COULD HAVE AN IMPACT, AND SO WE'RE LOOKING FORWARD TO THAT. [28:27] THE CAUTION HERE IS THAT WHILE WE CAN FUND ECONOMIC DEVELOPMENT WORK FROM DOWNTOWN ASSETS, THE [28:34] MAY COME A TIME -- THERE MAY COME A TIME IF WE CONTINUE AT THIS CLIP WHERE THAT'S NO LONGER SUSTAINABLE BECAUSE WE HAVE GONE [28:40] BELOW FUND BALANCE REQUIREMENTS. [28:49] SO HERE WE ARE AGAIN AT THE GENERAL FUND EXCLUDING ALL OF OUR TRANSFERS AND USE OF FUND [28:54] BALANCE TO FOCUS ON THOSE EXTERNAL REVENUES. THE GENERAL FUND AGAIN IS THE PRIMARY FOCUS [28:59] BECAUSE IT HAS THE MOST FLEXIBILITY AND IS WHERE MOST POLICY DECISION MAKING OCCURS. [29:05] SO OUR OUTLOOK FOR NEXT YEAR REMAINS SLIGHTLY POSITIVE, FORECASTING ABOUT 7% YEAR OVER [29:10] YEAR GROWTH FROM $615 MILLION TO $659 MILLION OR SO. THIS IS A [29:17] LITTLE DIFFERENT THAN THE RAST TWO YEARS WHERE THERE WAS -- LAST TWO YEARS WHERE THERE WAS A MORE CONSISTENT OUTLOOK OF REVENUES INCREASING SO WE ARE [29:23] SEEING A COUPLE NOTABLE INCREASES, PAIRED WITH A COUPLE OF NOTABLE DECREASES SO THAT'S [29:28] NETTING OUT TO PRETTY MODEST GROWTH. SO SOME NOTABLE INCREASES. CHARGES FOR SERVICES [29:33] AND SALES. THE MAIN DRIVER HERE AND THIS HAS BEEN A TOPIC OF CONVERSATION IN BET AS WELL IS [29:40] THE REVENUE THAT WE RECEIVE AS AN OFFSET FOR THE PARK BOARD'S USE OF OVERHEAD COSTS. SO [29:48] HISTORICALLY WE'VE ELIMITTED THAT GROWTH SO THAT THEY HAVE A MORE STEADY CONSISTENT INCREASE [29:57] MENTD WE DECIDED THIS YEAR TO REVISIT THE PLAN THERE, SO THERE HAVE BEEN A LOT OF ONGOING CONVERSATIONS, BUT WE ARE [30:03] PLANNING ON A MORE SIGNIFICANT INCREASE PAID BY THE PARK BOARD. [30:09] AND THEN IN FINES AND FORFEITS THERE'S ALSO SOME NOTABLE INCREASES THERE, SO THERE IS NEW [30:14] SPEEDING CITATION REVENUE, WHICH SHOULD BE IMPLEMENTED IN AUGUST OR SEPTEMBER OF THIS YEAR. [30:20] THOSE FUNDS ARE RESTRICTED SO THEY CAN ONLY BE USED FOR TRAFFIC SAFETY FUNCTIONS. ON THE NOTABLE DECREASES SIDE, SO [30:27] FRANCHISE FEES CAME IN ABOUT $3 MILLION BELOW WHAT WE HAD HOPED FOR. IN 2024. AND THAT'S [30:35] THE SORT OF MARGINAL INCREASE THAT IS ASSOCIATED WITH THE CLIMATE LEGACY INITIATIVE. AND [30:41] THEN IN THE LICENSES AND PERMITS CATEGORY, SO OUR CONSTRUCTION CODE SERVICES REVENUE, WHICH IS [30:47] RELATED TO MAJOR DEVELOPMENT ACTIVITY IN THE CITY, HAS SEEN [30:53] DECREASES, SO IN 2023, THEY HAD A REALLY LOW YEAR OF ONLY SEEING [30:58] ABOUT 29 PROJECTS COME THROUGH PLANNING COMMISSION. LAST YEAR IT WAS EVEN LOWER, IT WAS ONLY 12 PROJECTS THAT CAME THROUGH [31:04] PLANNING COMMISSION. THE RATE OF THOSE APPROVALS IS SORT OF A PROXY IN HOW WE CAN SORT OF [31:10] FORECAST WHAT DEVELOPMENT ACTIVITY MIGHT BE COMING OUR WAY. SO WE'RE PROJECTING REDUCED REVENUE IN THAT AREA. [31:21] AND THE TAXES CATEGORYISH, SO THIS IS OUR LARGEST REVENUE STREAM, SO YOU CAN SEE PROPERTY [31:27] TAXES, FRANCHISE FEES, LOCAL SALES TAX AND OTHER TAXES ARE ALL ROLLED UP INTO THIS [31:33] CATEGORY. PROPERTY TAXES ARE 53% OF OUR GENERAL FUND REVENUE, AND NEARLY 88% OF THIS CATEGORY. [31:40] WHAT WE'RE SHOWING HERE ALIGNS WITH THE FIVE-YEAR FINANCIAL DIRECTION, SO A 6.8% PROPERTY [31:48] TAX INCREASE IN 2025, AND 10.8% IN 2026. SO THESE FIGURES DON'T SHOW ANY NEW SPENDING OR ANY [31:54] EFFICIENCIES THAT MAY BE IDENTIFIED IN THOSE, THIS YEAR'S BUDGET PROCESS. [32:06] INTERGOVERNMENTAL REVENUES ARE THE SECOND LARGEST REVENUE STREAM IN THE GENERAL FUND, AND LGA, LOCAL GOVERNMENT AID, IS [32:12] THE MAJORITY OF THIS CATEGORY. WE ARE EXPECTING THAT THE 2026 [32:17] LOCAL GOVERNMENT AID AWARD WILL HOLD FLAT FROM 2025. SO [32:23] $71.7 MILLION THE TOTAL EXPECTED RECEIPT. WE SHARE THIS AWARD OR [32:29] THIS LGA AMOUNT WITH THE PARK BOARD AS WELL AS THE MUNICIPAL BUILDING COMMISSION. MUNICIPAL [32:36] BUILDING COMMISSION'S PORTION IS DESIGNATED IN ORDINANCE AS 11-POINT SPHOIP% OF OUR TOTAL [32:44] AWARD. LGA IS APPROXIMATELY AT THE LEVEL THAT IT WAS PRE-PANDEMIC, SO FOR A COUPLE OF YEARS DURING COVID IT DIPPED [32:50] DOWN INTO THE MID-60s BEFORE GETTING BACK ROUGHLY TO THAT CLOSE TO $72 MILLION IN 2024. [32:57] THIS REVENUE GETS CERTIFIED IN LATE JULY OR AUGUST, SO WE WORK WITH OUR IGR TEAM TO UNDERSTAND [33:03] WHAT TO PLAN FOR THERE. PUTTING EVERYTHING TOGETHER, SO WE [33:10] STARTED TODAY LOOKING AT THE DIFFERENT EXPENSE CATEGORY TRENDS AND PERSONNEL AND INTERNAL SERVICE CHARGES. WE [33:16] TALKED A BIT ABOUT THE BASE BUDGET, HOW THAT'S HELD FLAT AND THEN WE SHIFTED OVER TO THE [33:22] REVENUE DISCUSSION. AND ON THIS SLIDE WE'RE LOOKING AT BOTH OF THOSE EXPENSES IN RED AND [33:28] REVENUES IN GREEN NEXT TO EACH OTHER. SO THIS VIEW INCLUDES [33:33] PLAN TRANSFERS IN AND OUT, AND PLANNED USE OF CASH FOR ONE-TIME EXPENSES THAT WERE ADOPTED IN [33:43] THE DECEMBER BUDGET VOTE, SO THIS SHOWS 2025'S ADOPTED AS WELL AS THE PLAN FOR '26 THROUGH [33:50] '31. YOU KNOW, WE HAD SEVERAL YEARS OF INFLUX OF RESOURCES DUE TO FEDERAL AND STATE DOLLARS, [33:56] AND NOW WE ARE FACING A DIFFERENT ECONOMIC PICTURE WHERE WE HAVE A LOT OF UNCERTAINTY AROUND INFLATION, TARIFFS, AND [34:03] POTENTIAL LOSS OF FEDERAL FUNDING. AND SO WE ARE APPROACHING OUR PLANS WITH [34:09] PERHAPS MORE CONSERVATISM, AND THE PRIMARY TASK OF OUR OFFICE OVER THE REMAINDER OF THE YEAR [34:14] IS WORKING WITH THE MAYOR FIRST TO PRESENT A BALANCED BUDGET IN AUGUST AND THEN WITH ALL OF YOU [34:20] TO PRESENT AND ADOPT A BALANCED BUDGET IN DECEMBER. AGAIN, WE ARE USING THAT CURRENT SERVICE [34:26] LEVEL NOT SO MUCH AS THE DECISION MAKING STARTING POINT BUT AS A REFERENCE POINT WITH [34:34] MOVING TO A REAL FOCUS ON CONSTRAINING GROWTH FROM THE '25 ADOPTED BUDGET WHILE ALSO MAINING SURE WE'RE BEING -- [34:40] MAKING SURE WE'RE BEING CLEAR ABOUT OUR CITY GOALS. WE DIDN'T HAVE AN OPEN CALL FOR NEW SPENDING PROPOSALS THIS YEAR, SO [34:45] WE ARE CLEAR ABOUT OUR CHARGE, WHICH IS TO LIMIT RISK AND MAKE SURE THAT MINNEAPOLIS REMAINS AN [34:51] AFFORDABLE PLACE TO LIVE IN THE YEARS TO COME. AND SO I'LL JUST CONCLUDE WITH A BRIEF TIMELINE [35:00] OF WHAT'S JUST HAPPENED AND WHAT'S ABOUT TO HAPPEN. SO WE'RE TALKING TODAY ABOUT THE [35:06] CSL. IN JUNE AND JULY WE'VE BEEN TALKING ABOUT BUDGET SCENARIOS THE DEPARTMENTS HAVE SUBMITTED TO THE MAYOR AND [35:12] ENGAGING IN BUDGET DECISION MAKING AROUND THOSE. OF COURSE WE'LL HAVE THE MAYOR'S BUDGET RELEASE IN MID-AUGUST. WE WILL [35:19] THEN YOU KNOW PURSUANT TO THE BUDGET COMMITTEES PLAN WE'LL RETURN IN SEPTEMBER, WITH AN [35:25] OVERVIEW OF THE MAYOR'S RECOMMENDED BUDGET. AND THEN [35:32] THE BUDGET COMMITTEE WILL SET A PLAN FOR THE FALL. TYPICALLY 23459 MEANS BUDGET PRESENTATIONS [35:39] BEGIN IN SEPTEMBER AND OCTOBER THAT WE ALSO START HAVING PUBLIC HEARINGS ON THE BUDGET IN THE FALL MONTHS FINALLY WRAPPING UP IN DECEMBER WITH MARKUP AND [35:45] ADOPTION. AND WITH THAT, THANK YOU FOR YOUR TIME. BE HAPPY TO [35:51] STAND FOR ANY QUESTIONS. >> THANK YOU SO MUCH FOR THE PRESENTATION. ANY QUESTIONS [35:57] FROM THE COMMITTEE? I SEE COUNCILMEMBER CASHMAN HAS JOINED [36:02] US AND ALSO COUNCILMEMBER CHOWDHURY AS WELL. COUNCILMEMBER CASHMAN. >> THANK YOU, CHAIR KOSKI, VICE CHAIR KOSKI, THANK YOU DIRECTOR [36:08] DISCENZA FOR THE PRESENTATION. MY QUESTIONS REALLY CENTER AROUND THE DOWNTOWN ASSETS FUND. [36:14] I AM VERY CONFUSED AS TO WHY THE FIVE-YEAR LOOKBACK HAS IT DROPPING WHEN OVER THE LAST FIVE YEARS, IT HAS CONSISTENTLY GONE [36:21] UP. CAN YOU HELP EXPLAIN THAT A LITTLE BIT TO ME, AND YOU KNOW, FROM LIKE WE ENDED THE YEAR AT [36:32] $85 MILLION, SORRY, WE ENDED 2024 AT $97 MILLION, AND THEN [36:40] THE BUDGET FORECASTED $85 MILLION TO END THIS YEAR. HOWEVER, I THOUGHT I HEARD YOU SAY IT WAS GOING TO END THE YEAR [36:48] AT $115 MILLION SO CAN YOU HELP CORRECT THAT F FOR ME? >> SURE. THROUGH THE VICE [36:53] CHAIR, COUNCILMEMBER CASHMAN, COUPLE DIFFERENT THINGS HAPPENING THERE. SO IN LAST YEAR'S BUDGET PROCESS, WE [36:59] DECIDED TO TRANSFER A LOT MORE MONEY FROM THE DOWNTOWN ASSETS FUND INTO THE GENERAL FUND THAN WE HAVE IN PREVIOUS YEARS. [37:06] DURING COVID, WE REDUCED THAT TRANSFER, THERE'S ALWAYS BEEN SOME LEVEL OF TRANSFER. WE REDUCED IT QUITE A BIT DURING [37:13] COVID BECAUSE DOWNTOWN ACTIVITY WAS SO LOW. WE RETURNED TO SORT [37:18] OF A NORMAL AMOUNT OF TRANSFER LAST YEAR, AND THEN ALSO DID A CALCULATION TO SEE WHAT IS ALL [37:23] THE ECONOMIC DEVELOPMENT WORK IN THE CITY THAT WE COULD REASONABLY JUSTIFY TRANSFERRING [37:29] DOWNTOWN ASSETS DOLLARS INTO THE GENERAL FUND TO SORT OF HELP OFFSET THAT WORK. ECONOMIC [37:34] DEVELOPMENT IS ONE OF THE, IS HOW THE STATE, IS WHAT THE STATE [37:39] ALLOWS US TO SPEND THOSE DOLLARS ON. SO WE KIND OF TOOK A MAXIMAL APPROACH LAST YEAR, BOTH [37:45] IN THE MAYOR'S REC AND THEN I BELIEVE THE COUNCIL DID AN ADDITIONAL TRANSFER TOO. SO [37:50] THAT IS DRAWING DOWN THE FUND BALANCE. AND SO WE PLAN EVERY YEAR TO REVISIT THAT TRANSFER [37:58] AMOUNT AND MAKE SURE THAT WE ARE TRANSFERRING A RESPONSIBLE AMOUNT AND ALSO OFFSETTING A LOT OF THAT ECONOMIC DEVELOPMENT [38:04] ACTIVITY THAT THE CITY IS UNDERTAKING. THE $115 MILLION [38:13] NUMBER IS THE LOCAL OPTION SALES TAXES THAT'S AN EARLY PROJECTION OF WHAT WE MIGHT SEE IN LOCAL [38:20] OPTION SALES TAX REVENUE NINETY SIX YEAR. SO THOSE REVENUES, YES, FLOW INTO THE DOWNTOWN [38:26] ASSETS FUND, AND THEN THE DOWNTOWN ASSETS FUND IS SUPPORTING THE CONVENTION CENTER WE ALSO ADDED THE KOHL'S CENTER [38:35] AS PART OF THE DOWNTOWN ASSET SUITE SO THERE ARE INCREASES EXPENSES IN THE DOWNTOWN ASSETS FUND, AND WE WORK WITH THE [38:42] CONVENTION CENTER AND DEVELOPMENT FINANCE TO HELP UNDERSTAND WHAT THE FINANCE PLAN [38:47] IS FOR DOWNTOWN ASSETS, BUT THERE ARE REVENUES COMING IN, [38:52] REVENUES ALSO GOING OUT THE DOOR TO MAINTAIN THE BUILDING. >> OKAY SO THE REVENUES ARE EXPECTED TO BE $115 MILLION THIS [38:58] YEAR. THE FUND BALANCE IS EXPECTED TO BE $85 MILLION? [39:04] >> SO I WANT TO BE CAUTIOUS THROUGH THE CHAIR, COUNCILMEMBER CASHMAN, ABOUT SPECIFIC NUMBERS [39:09] BECAUSE THIS AGAIN S.N.A.P. SHOT SO I DON'T WANT TO WED UGTO THE [39:15] FIGURE. THE $85 MILLION IS PROBABLY OPTIMISTIC BUT WE ARE SHOWING IF WE WERE TO CONTINUE [39:20] SPENDING AS PLANNED, IT'D BE SOMETHING LIKE AN $85 MILLION FUND BALANCE IN 26, AND I'LL LET [39:26] BEN ZIMMERMAN ADD THE [39:36] $115 MILLION IS THE GROSS REVENUE SO WE HAVE TO TAKE STATE WITHHOLDINGS FROM THE FIGURE. [39:42] >> HOW MUCH DO WE HAVE TO TAKE OUT? >> WE HAVE .9% ADMIN FEE WITH [39:49] THE STATE DEPARTMENT OF REVENUE. SO THAT WAS ABOUT ALMOST HALF A [39:55] MILLION LAST YEAR. AND THEN FOR [40:01] THE STADIUM, $18.4 MILLION. [40:07] ABOUT $20 MILLION PROJECTED. >> ANNUAL OR TOTAL OVER THE COURSE OF -- >> ANNUAL. [40:13] >> ANNUAL. >>> OKAY. SO JUST A COUPLE FOLLOW-UP QUESTIONS ON THAT. [40:20] WHAT IS THE RECOMMENDED LEVEL OF RESERVES IN THE FUND? >> THROUGH THE CHAIR, [40:26] COUNCILMEMBER CASHMAN, I DON'T HAVE THE FUND BALANCE REQUIREMENTS FOR THAT FUND OFF-TOP OF MY HEAD. I DON'T KNOW IF -- OFF THE TOP OF MY [40:34] HEAD. I DON'T KNOW IF YOU KNOW KNOW. WE CAN CERTAINLY FOLLOW UP WITH YOU ON THAT. IT WILL BE IN THE QUARTERLY FINANCIAL [40:39] REPORTS. >> I HAVE A COUPLE OF QUESTIONS. MAYBE I WILL GET THROUGH THEM AND I CAN SEND THEM THROUGH THE [40:45] CHAIR TO THE CLERK. WHAT IS THE LEVEL OF RESERVES ACROSS THE FUND PROJECTED TO CHANGE OVER THE NEXT FIVE YEARS? [40:51] >> THROUGH THE CHAIR, I THINK WHEN WE HAVE AN UPDATED BUDGET [40:56] RECOMMENDATION, AND AN UPDATED FINANCE PLAN, THAT'S WHEN YOU'RE GOING TO GET BETTER INFORMATION ON THAT RATHER THAN THE CURRENT SERVICE LEVEL. [41:02] >> OKAY. AND WHEN WILL WE EXPECT THAT? [41:08] >> IN THE FALL ONCE THE MAYOR'S BUDGET IS OUT, WE HAVE BUDGET DECISIONS, THEN WE'D BE ABLE TO UPDATE THAT PLAN. IT WOULDN'T [41:15] BE SAME RELEASE DATE AS THE MAYOR'S BECAUSE IT IT'LL TAKE SOME TIME FOR US TO WORK THROUGH IF THERE ARE POLICY DECISIONS IN [41:22] THERE. >> HOW MUCH OF THE DOWNTOWN ASSETS FUND WAS TRANSFERRED INTO THE GENERAL FUND IN THE LAST [41:28] FIVE YEARS? >> SURE. IN THE LAST FIVE [41:33] YEARS, THAT'S -- >> LIKE EACH YEAR. BECAUSE YOU SAID IT WENT, IT WAS A LOT MORE WAS TRANSFERRED INTO THE GENERAL [41:39] FUND LAST YEAR THAN USUAL. >> I'M SURE THAT'S IN MY NOTES. ONE MOMENT. [41:58] >> WE'LL LET BEN TAKE A ROUGH GUESS AND THEN WE'LL FOLLOW UP WITH SOME EXACT FIGURES. [42:04] >> VICE CHAIR, BEN ZIMMERMAN, BUDGET ANALYST, VICE CHAIR KOSKI, COUNCILMEMBER CASHMAN. [42:10] PRIOR TO COVID, FOR A FEW YEARS THE ROUGH ANNUAL TRANSFER WAS [42:15] ABOUT $30 MILLION. IN THE DEPTHS OF COVID I BELIEVE THAT DROPPED DOWN TO ABOUT 10 TO $12 MILLION TO HELP STABILIZE [42:21] THE FUND. AND SLOWLY IT HAS CLIMBED BACK. I THINK THE MOST RECENT YEAR WAS IN THE LOW 40s, LIKE THE CURRENT BUDGET [42:28] YEAR 2025 WAS IN THE LOW $40 MILLION RANGE IS MY UNDERSTANDING. >> OKAY. AND THEN DO WE HAVE [42:33] LIKE A FIVE-YEAR PROJECTION OF HOW MUCH TO FANSFER INTO THE GENERAL FUND? BECAUSE I SEE THE [42:41] SLIDE RIGHT AFTER THIS IT DOES HAVE IT DROPPING, SO THAT'S WHAT I'M REALLY TRYING TO G GET AT [42:49] IS WHY IS IT DROPPING. >> YES, COUNCILMAN CASHMAN WE DO PLAN FOR INCREASED TRANSFER TO [42:55] ACCOUNT FOR BECAUSE WE ARE OFFSETTING ECONOMIC DEVELOPMENT WORK, WHICH IS, YOU KNOW, A LOT OF CPED AND ARTS AND CULTURAL AFFAIRS TYPE WORK, THOSE COSTS [43:02] ARE INCREASING YEAR TO YEAR SO WE BLAN FOR SOME LEVEL OF [43:07] INCREASE TO THAT TRANSFER ANNUALLY BUT OF COURSE WE WOULD REVISIT IT TO MAKE SURE WE'RE ACCURATELY RECOMMENDING AN [43:13] APPROPRIATE TRANSFER. >> OKAY, THANKS. I'M GOING TO SEND THESE FOLLOW-UP QUESTIONS BECAUSE I WOULD LIKE TO AT LEAST [43:22] SEE THEM IN WRITING IF YOU HAVE MORE SPECIFICS TOO. JUST TO MAKE SURE I UNDERSTAND. THE [43:27] SLIDE BEFORE US IS THE REVENUE PROJECTIONS AND THE FUND BALANCE [43:34] OUTLOOK. THERE'S MONEY COMING OUT EVERY YEAR, IT'S PLANNING TO GO UP IN REVENUES BUT DOWN IN BALANCE FUND, SO THE AMOUNT THAT WE'RE PLANNING TO TAKE OUT [43:39] INCREASES OVER THE NEXT FIVE YEARS. >> THROUGH THE, THROUGH VICE CHAIR KOSKI, COUNCILMEMBER [43:48] CASHMAN, YES. THE DOWNTOWN ASSETS FUND HAS REVENUES GOING IN AND EXPENSES GOING OUT TO MAINTAIN ALL OF OUR DOWNTOWN ASSETS, AND ALSO TRANSFERS THAT [43:57] ARE OF INCREASING MAGNITUDE TO SUPPORT ECONOMIC DEVELOPMENT WORK. >> OKAY, THANK YOU. >> THANK YOU. AND COUNCILMEMBER [44:03] CASHMAN, TO THE CLERKS WE'LL JUST HAVE YOU EMAIL THOSE IF THAT'S EASY ENOUGH FOR THE MEMO. OKAY. THANK YOU. AND I JUST [44:09] HAD ONE FOLLOW-UP QUESTION ON SLIDE 13 I BELIEVE WHEN YOU [44:14] TALKED ABOUT THE $12 MILLION REMOVAL OF ONE-TIME EXPENSES. [44:19] COULD YOU JUST GO INTO DEEPER DETAIL OF THAT OF WHAT THAT [44:25] MEANS AND IS THERE A LIST OF THAT $12 MILLION, LIKE WHAT THOSE EXPENSES ARE? >> VICE CHAIR KOSKI, SO THE, THAT IS REALLY A TECHNICAL [44:32] CLEAN-UP. SO IN THE '25 ADOPTED BUDGET, SOME OF THEM WOULD'VE BEEN MAYOR INITIATED PROPOSALS, [44:39] SOME OF THEM WERE CERTAINLY COUNCIL INITIATED PROPOSAL OF ONE-TIME SPENDING THAT IS ONLY A [44:44] FACTOR FOR 2025. SO IF THERE WAS A PILOT PROJECT OR SOMETHING [44:52] OF THAT NATURE, WE WOULDN'T COUNT THAT IN OUR 2026 BUDGET PROJECTION BECAUSE IT IS [44:57] ONE-TIME IN NATURE. >> OH, I GOT IT. >> SO IT'S NOT SAVINGS. IT'S JUST CLEANING IT UP. >> OKAY. THANK YOU. [45:02] I JUST NEEDED THAT EXTRA CLARITY. I APPRECIATE IT. AND THEN JUST TO THE COMMITTEE YOU [45:07] TALKED ABOUT THE CLIC BEING PREPARED WITH THEIR NEXT ITERATION OF THEIR PROPOSAL, AND [45:15] THEY ARE COMING ON AUGUST 4th TO THIS COMMITTEE TO DO A PRESENTATION AS WELL [45:20] JUST FOR YOUR NOTICE. SO ALL RIGHT. WELL, I AM -- OH, I SEE [45:27] COUNCILMEMBER CASHMAN BACK IN QUEUE HERE. >> THANK YOU, VICE CHAIR. I HAVE ANOTHER QUESTION THAT I FORGOT TO ASK BEFORE. SO THIS IS ABOUT THE FRANCHISE FEE. [45:33] WHERE IS THAT CATEGORIZED UNDER OUR REVENUES? DID I SEE IT? DID I MISS IT IN THE [45:40] PRESENTATION, THE FRANCHISE FEES AND THE CLIMATE LEGACY INITIATIVE EXPENSES? [45:47] >> THROUGH THE CHAIR, COUNCILMEMBER CASHMAN, IT ROLLS UP INTO THE TAXES CATEGORY. >> OKAY, DO WE HAVE LIKE A [45:53] FIVE-YEAR OUTLOOK FOR THAT AS WELL? >> WE CERTAINLY PLAN FOR BECAUSE [45:58] WE HAVE A, A SIX-YEAR BUDGET, WE CERTAINLY PLAN. WE CAN GET YOU SOME FOLLOW-UP ON WHAT WE'RE [46:04] ANTICIPATING. WE'VE HAD YOU KNOW CREDIT TO THE HEALTH DEPARTMENT, SUSTAINABILITY TEAM THEY HAVE BEEN GOING BACK AND [46:10] FORTH WITH THE UTILITIES TO CLARIFY AND REFINE THE NUMBERS. AND THE DATA THAT WE'RE GETTING. [46:16] WORKING CLOSELY WITH OUR DEPUTY CONTROLLER TO FIND THAT SO I [46:22] THINK WE KNOW A LOT MORE. WHAT WE HOPED FOR 2024, WE GOT CLOSER TO $8.05, WE WERE EXPECTING [46:28] $10 MILLION. SO THAT'S SOMETHING THAT WE'LL CONTINUE TO LOOK AT. >> OKAY, THANKS, I WILL ASK THAT IN THE FOLLOW-UP AS WELL. [46:33] >> GREAT. THANKS. >> ALL RIGHT. I AM NOT SEEING ANY FURTHER QUESTIONS, AND SO [46:39] I'LL ASK THE CLERK TO RECEIVE AND FILE THIS REPORT. THANK YOU SO MUCH FOR BEING HERE. WITH [46:44] THAT WE'VE CONCLUDED ALL BUSINESS TO COME BEFORE THE COMMITTEE TODAY, AND IF THERE IS NO OBJECTION, WE STAND ADJOURNED. THANK YOU. [46:54]