[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]