You have the chairs at the vets park on Monday. Then >> call the meeting to order. Roll call, please. >> Council member Nordby >> here. >> Council member Woods >> here. >> Council member McKenzie >> here. >> Council member Schwear is absent. Mayor Mongi >> here. >> Thank you very much. Agenda. Adopt the agenda. Motion. How we start with that? So move. >> So move McKenzie Woods. All those in favor say I. I. >> I. >> All right. Thank you. Topics. >> Thank you, Mayor. Um, we have three topics up tonight. The first one up is the first quarter 2026 budget update. We have finance director Dan Wick here to discuss. >> Good morning. Uh, good morning. Hey, >> you didn't go that long. We're not morning again, are we? >> I told you I could speak for an hour. No kidding. I can't talk for an hour 15 tonight, but uh mayor and council members, uh tonight we're just going to kind of go over where we're at right now with kind of uh our 2026 budget. Um we'll take a look at the where the general fund is now and then I kind of do a a conservative projection for the remainder of the year. Uh again, a lot is unknown at this point in time and how spending will will uh will go. Um but uh that and then our enterprise funds and then we'll take a look back at um how we ended 2025 because I want to look at the net position and the cash as net position as a comparison to what we had in our financial plans and then also cash and then there's a difference between the two of them and it's really going to be illustrative when we get into looking at item number C which is the electric utility power adjustment. um because there are a number of things in an enterprise fund that you do from an accounting perspective really do not impact cash. Um but there are some liabilities and journal entries that we have to do in how we report um enterprise funds because they're business enterprises and um so it does impact your net position yet it really doesn't impact your net position in sort of way as far as cash is concerned. So, we're going to kind of walk through through those. Um, there this will not take 1 hour and 15 minutes. There are a couple of other things if we do have some time, even though they're not on the topics that I would like to just kind of have an open discussion and kind of seek some direction from um the council um on some some things. one being um the penny uh the penny is going to be going away. Um and so some cities have well retail cu uh businesses have already made some changes. Um cities have also adopted some different policies and changes and so kind of want to throw out some concepts to you and see what you kind of favor of how we move forward with that. um and and also being as fair as possible um that we can with our uh residents um especially when we come to utility um payments. Um so kind of have a discussion on that and then kind of want to just uh kind of show you uh where uh the assessor's report for 2026 which those values they get adjusted as we're moving forward um because they're they're uh figured as of January 2nd of 2026 and there's still a lot of process of open book um there's petitions um that can adjust the values but kind of want to show you where the values are looking at and and we've had years of growth both on the residential and commercial side to it. Um, and we're seeing in the past few years that residential has been just barely kind of growing 1 2%. Now we're actually going to we're seeing a decrease. Um, and so that's something to be aware of especially when we go into looking at the 2027 budget. Um, and then kind of just want to talk about where we're at in the budget process and when we intend to be coming in front of city council with kind of like a budget kickoff. Um, so we'll kind of walk through those different pieces. Um, the first item that we're going to kind of talk about tonight is the first quarter of 2026 budget update and kind of gave a little summary there, but we'll kind of go right into like the general fund. Um what we're looking at overall for our revenues um right now projected for for the year, we have a an adopted budget that had our revenues for the general fund at about $10.1 million. Um we're projecting that uh we'll get um about $26,000 less right now. And again, I look at things from a conservative standpoint. Um, so bottom line is we're looking at that we're going to pretty much meet our our revenue um that we estimated for and we budgeted for in the 2026 budget. On the expenditure side um again we had a balanced budget. So we've got a 10.1 million um expenditure. Um as of the end of the first quarter in March um we had expended a little over $2 million. Um I project that uh we're kind of looking at that we'll end up with at least $130,000 savings. I anticipate that to grow as the years go on. We we've seen very um you know like this past year I think we ended up u being like $900,000 under budget. Um the last few years we've been in the tune of $800,000 or or better. Um I anticipate us not being as good as that. um and particularly is because we finally have a police force that's pretty much uh fully occupied. I mean, right now we have one vacancy. In the past when we've had these meetings, we've seen ourselves in the position of two, three, four, five um officers down. Um so, we're in a much better position as far as our compliment um is considered. Um and so, uh we're not going to see the salary savings that we've seen in the past. Like last year, I think the police salary savings had over $200,000 in in savings even though they exceeded their um overtime budget. Um you know, that kind of offset some of the savings of the vacancies, but still um you know, they've done very very well. We're not going to see that coming up in the 2026 if things stay the way they are, which is a good thing um because it means that we've got uh pretty much a complete uh you know um force out there. um to protect our residents. So, right now we're kind of looking at the general fund at it being about $130,000 to the positive again on a conservative basis. Um also supplied um each one of our um departments that are are showing there and I'll kind of just go down to the police right now. I'm projecting the police is you know um only at about a $5,000 savings. um personal services um only being about a $20,000 savings and that's because for the first quarter they actually were in full complement. Um we've just lost an individual more recently um in the going into the second quarter. So there'll be a little bit of savings onto that. And then if we take a a look at so it'll give you all the revenues. It'll show you everything where we were at 331. Um and again a lot of our revenues again to kind of a reminder um you know our property taxes um aren't collected and distributed normally at the end of June is usually when we see a payment with a final distribution of property taxes to the city in July. that's been delayed this year um because of um ICE. Um and so the county had allowed um underneath certain qualifications for um individuals to that are homeowners to actually apply um and then actually extend their payment date by a couple of months. And so the whole um settlement is what it's called when we finally get our our payments is being delayed a little bit. um which can be which could be hard um for many cities um because if you remember that um that's about uh a good 40% of our income and if we don't have fund balance we'll end up going negative. But as we saw um when the auditor was here and we saw how our financial position is we're sitting at a 67% of our subsequent year's budget um in our fund balance. So we have enough cash to be able to float ourselves through. Um Ramsey County did something very similar to this during the CO time. Um they kind of delayed payments to to help residents. Um which but then the burden actually shifts to the city because we don't collect our we don't get our money uh to help us cash flow. But we're in a much better position. We were only at 30% back in 2020. We're at 67% today. So we're in a much better financial position overall. take kind of a look at our enterprise funds one by one. The water fund, um we were um from a budgetary standpoint, we were projecting about a $23,000 decrease in our our net position or our fund balance. Um right now um looking at everything and projecting it, I believe that we're going to end up reversing that. Um, and we're going to end up about a uh 216,000 um to the good, which means total um about $240,000 to the positive side to it. Um part of of a lot of that additional component to it is other revenues. What you're going to see, and you'll see it when I when we go down and we look at the electric department a little bit closer, that it has been historical that his um historically we have not budgeted our interest um that we have our interest income. There's good and there's bad to that. Um the good part to it is is it does allow us to accumulate a fund balance. The bad to it is is that you could incorporate that into your rates and lower your rates down. Here's here's the other flip side to it. Right now, we're seeing, you know, a five-year bond um I think is at about a 4.2% um interest rate. Um, if you were to invest for five years, when I came here during just coming in 2021 off of the COVID years, you couldn't get a bond for more than6%. So, what happens if it flips the opposite way and all of a sudden you put a dependency hugely on that interest income? Then now all of a sudden you've got a shortage and you're going to have to make drastic increases in your rates. Now, for us at this point in time, it's worked out very well for us because we've had those 10-year plans. We haven't had to um every time we end up in a better position at a year end, it just means that we can keep delaying doing any increases in our utilities. Um we've been able to fund our three main categories of our infrastructure from our general fund and levy components to it. um meaning you know our streets um our parks um and um what is that third piece to it um I'll get to that if I can remember but we've actually put ourselves in a better financial position overall now some of the question as we get into the electric piece to it is is that we've been seeing some huge savings that have been part of the electric and so I kind of want to dive into that one a little bit more and that's item the third item because what we're going to make a suggestion is that we try to we will cap our power adjustment. It means we're going to be calculating some losses, but I think we can absorb those losses, but we'll get to that in a second. So, we're seeing that the water right now is is looking that we're going to end up pretty good for this upcoming year. Um, wastewater, um, we were looking at from a budgetary standpoint of change in our fund balance of about 94,000. Um, I'm projecting about 183, which is another $90,000 positive that we're seeing in our wastewater. Again, good news. Um, our electric fund, we were looking at about a $264,000 compared to our adop adopted budget. Um, I'm projecting at about a 472 um to the positive, an additional $28,000 on the positive side to it. the surface water we were looking at having a negative of about $187,000. I'm looking at it that it'll be about a negative of about 128. Again, a $58,000 improvement from what we have from a budgetary standpoint. So, so far everything is trending in a very positive light from the general fund to the four enterprise funds that I've talked about so far. Then we look at solid waste. If you remember, we've been running negative in our solid waste. Um, we've had fund balance in there. Um, I think back in 2021, we had about $650,000 of fund balance. Um, we have enough to cover our cash flow. Um, we don't have a lot of capital expenditures. The only capital component that we end up spending um on our our our garbage um hauling services is uh is carts. um we spend about 20,000 $25,000 a year on on you know building up our stock of of of the carts um themselves. So there isn't a huge need as far as you see some of the like you know like our our water or wastewater surface water that have a street component to it that have some huge needs and you're going to end up bonding for a major project and you're going to have debt service. You don't see that in the solid waste. So that allowed us to buy down that that fund balance for a number of years. Part of looking at that is that our city manager um in in consultation with city council, we had made the decision that we were going to go out for an RFP um in a few years, which we are currently we've gone out for the RFP where we um came back here in a workshop. We talked about uh the findings of the seven proposals. We made a recommendation to um bring in just two of those vendors um for a second, you know, for a real formal interview. There were four items that we kind of discussed with city council. Um you know, the customer service component, um the uh uh if there was an app or not having an app, truck technology, and then um bulky waste. So, we have met with those um two um and we threw out those four items in in a number of questions for each one of those vendors and we're wrapping everything together and we're in negotiation with one of them. Um again, can't make any of that public at this point in time and we'll be we're planning on bringing that back um to city council in June. The nice part about it, our rates um appear from what they're going to charge us are going to be going down significantly from what we're being charged today. Again, we had a very good um RFP where we had seven responses. And so it looks like we will not have to change our rates, but we should be closer to a break even point um to where um it won't require us to keep drawing down our fund balance nor increasing it um and not having an impact on our residents. And then we're going to also see that we're we're going to get some additional benefits, I think, for our residents um that we're pretty excited that to show you in June when we get to that point to it. But right now, um, we're pretty much where we kind of, uh, planned from an adopted budget, looking at a a negative approximately 197,000. I'm projecting we're going to be at about 198. That is not including the new contract that would go into place on September 1st. Um, so this is this is based upon our current contract. Um so this will actually go we won't get this negative um with the new contract in place and then in 2027 when we get to the budget u pieces we'll be much more even um to where we're uh where we where we want to be without a rate increase. Uh fiber optic um fund we love the fiber optic fund. Um again um you know we we look at you know that the fund balance should change to a positive about 74. I'm seeing it staying about the same at about 75. There's not a lot of variables that are really um within this. Again you know it's been brought up u year after year in our um by our auditor. You know this has a negative balance. It's going to take us another 20ome years to pay it off at this rate to break even. Um so um not a the greatest situation you know um if you remember there were I think three funds that were negative um this being one this one enterprise. The other two um actually are tiff districts and and um the money is being borrowed uh by uh the electric fund um to cover those. But they're negative, but they have a solid plan for payoff. Um because they're in tiffs and the tiff is generating, you know, um you know, property tax tiff coming in revenue on an annual basis that is dropping it down significantly and those will be paid off. Um and those will not be negative over time. This one is going to take is is really kind of our Achilles heel um piece to it. So, that's kind of a look at kind of our projection um right now of how we're looking at our enterprise funds and our general fund for the first quarter. Again, all of it looks good. We're trending in the right direction. One more time. Um and again, the credit goes to city council, it goes to our our uh city manager, and it goes to our department heads. um because they are very conservative and they really do a really good job not only in the budget process but also monitoring it throughout the year. The second item that we kind of talked about is kind of want to and if you have any questions please anytime uh so on this last stuff on the first quarter let's have some questions and and any dialogue that we need to have on that. So, would there be any value to being more aggressive with paying off the fiber fund? >> I mean, that's a good question. Um, would it be more aggressive? Uh, the fund itself, um, the real the only unless there's other revenue sources out there for people to get onto that fiber, which just has not shown itself. Right. >> Um the only way to generate additional revenue is by charging what we charge our departments to being on the fiber, >> right? >> Um so then you know we're hurting every one of our funds. Um because it's allocated um based upon the number of employees. Um so then it it would end up hitting the general fund, water, every one of the enterprise funds. Um so it's that's the only way to gener generate the revenue. Um the other way to do it is to transfer it from another fund. Um and again all of these actions require city council. Um the city manager and myself um did look at this uh probably about a year and a half ago. Um but at the end of the day, yes, it it's it's a negative fund balance. Um it's going to take 20ome years, but really what do you really gain from making it positive? You really don't. it it doesn't help you in any way. And and and kind of a I think the the proof of it really came out when we did this last bond rating. It's there. They get our whole financial statement. They see the comments that the auditor has put out there. It's a negative fund. Um there's a plan. It just takes a long time to, you know, to to pay it off. And yet our financial position in all the other areas are so strong that we ended up seeing an increase in our rating. So I guess to you know to a you know to answer that directly um we looked at it and we came to the conclusion that it really wasn't going to get >> okay >> a huge benefit and that's where we kind of decided well we went into that bond rating and he's got a and then our city manager has a smile because we went on the bond we went into the bond rating and we looked at how we've been performing and where we were at from the previous um bond rating and we said I can't see why we're not going to an upgrade and he was animate about it and our consultant said yeah no kind of oh no we'll be staying the same and he kept going no I don't understand that I don't see how we're we're going to do this and I said well I want to push for it so when we went in there we we you know you've got a number of information you have to provide the bond council ahead of time you have to go through and answer a whole bunch of questions and then you actually have a meeting with them um and they ask a whole bunch of other questions And what really came out of that to me that really sold to them was our conviction and our commitment to making sure that we were going to keep those 50% fund balance policies in place and that we've achieved them and that we're continuing to to achieve them. And and both um the city manager and myself in those meetings basically said as long as we're here, that is what we promise to keep. Um, and we're going to fight to to do that. We haven't had to fight with that because our city council has been so supportive of that. But that really was what really changed I think that that rating um and um and it's just the position that we've we've moved ourselves into from a pure financial. And then I think um I you know definitely the tenure planning was something that was brought up that they were very interested in. And so we had to send all of that to them supple um you know like supplemental information. They wanted to see all of that. Um and then it's it's um the support that we get from city council and and having these quarterly, you know, the quarterly updates on on the budget and getting your insight onto it and then our whole budget process. All of that um I think all weighed into um the very positive results. So, at the end of the day, Ryan and I said to one another that we're going to roll the dice and we're going to see what the results are. We're going to push to get an upgrade and see how it goes. If we get that upgrade, it kind of takes us back to the point of we don't see the value of of like transferring the money from some other fund to be able to cover that. So unfortunately, mayor, um that you're going to keep see seeing that uh that report in our financial statement for for I think a few years. >> So in terms So the bonding agencies, it's not a negative to them. The auditor kind of came back and said, "Yes, it's a negative fund, but we have a plan to pay it off." There's really no from a visit visibility perspective. There's really no like concerns with anybody saying, "Oh, well, you've got this and you should really be doing something about it." >> We are slowly >> Yep. >> Okay. and and and if you and part of the comment that our auditor um had said is that and and rightfully so, it does need to be brought up, you know, specifically to your attention so that you're fully aware that there are these negative balances that are out there. It also encourages to continuously look at the plan. How are you actually going to pay this off in which we have? And then on the flip side to it is that it is a worse situation if we didn't have fund balances in other areas. If if we were barely squeaking by everything and we were running negative on an annual basis in our general fund, in our enterprise funds and we were drawing everything down further and further, now your negative is now collectively it's a bigger portion. For us that hasn't been the case. Um we do have a plan. It's just a long plan. Um, but it is dropping down, but our other fund balances are increasing. So, from a percentage standpoint, it's low, it's gotten lower as an overall organizational, >> you know, percent. >> Um, so we are in a better position. Yeah. But it it's rightfully so that it needs to be brought up each and every single time and it's part of, you know, it's good >> technology elephant in the room. >> Absolutely. and to have these discussions that are are Yeah. Are are are we going to get there someday? >> Yeah. >> I mean, do we Sorry, Jason. >> Oh, no. You're you're good. >> Do we put I mean, I know the desire we're at 67% >> Mhm. >> 67% of our annual budget is what we maintain um or what we have currently. Correct. >> Correct. At the end of the year. >> And I know the desire is to keep at least 50%. 67 is awesome. Do we put a cap on that? And then anything that we hit above that I mean is there I mean could we say anything above 70% then that we throw in here to kind of >> we certainly can >> extra payment so to speak or something like that I don't know >> that that's that's an that's excellent. Um so if if you remember >> when out options >> no no that's fantastic. So, in my mind, um, as we were going into the 2027 budget, um, because over and over again, you know, I've been saying because of the infrastructural needs that we that we have. Um, and, uh, the third component now I remember is buildings. Um, so to me it was to me I would like to see us at least at that 60% level. Um, so that additional 7% to where we're at, we could comfortably um take out of the general fund about a half a million dollars um and still be above that 60%. To me, that and we haven't gotten quite to the end of of where we're going to flush out at until after the department heads um you know um get an opportunity to go through and present their budgets um to the city manager and myself before we present it to city council. I want to see where we're going to be at. Um, if you remember, part of what we're going to target for is no more than a 6% levy increase this upcoming year. What I've been saying is that you take those three components, the buildings, the streets, um, the parks, we're already looking at pretty dog on close to a 6% increase. You know, we've got cost of living. Um, we're in the third year of union contracts. The cost of living is 3%. Um, you have other costs that are rising. So, how do we first of all just get to that 6%. Um, you know, as a levy increase and that's where, you know, my initial thoughts were that that half a million dollars could be utilized and moved into one of those three buckets so we don't have to levy quite as much um into in into there. Now, if we can achieve in my mind, if we can achieve that 6% and we still had that half a million dollars left over, this is this is a great avenue to to put it into if if if the city council so desires or you still can put it into those buckets and offset it in future years um the levy needs to it. So, those will be part of the discussions as we get into the budget. Do we want to do any of that? Um, at that point it first will be do we need to to get it to a 6% and then if we don't need to or part of it, do we want to move it to some other funds and any option that's open? Um, totally totally open with >> this originally came from electric. Is that where this came from? The fiber money. >> Yes. >> So we're paying ourselves back then pretty much. Right. >> Pretty much. Are we paying interest to the electric or is there interest is it interest free or how is >> well act actually the the um it it is not it it's actually on the financial reporting it is not coming out of the electric it's being split between um two of our enterprise funds I think it's wastewater and water or I I can't remember exactly the two of them they they split and they show the advance showing in in in out of there the electric fund is has loans out to the two tiff districts that also have negative and that is getting interest. Um, and I believe the interest rate on those is 4%. >> Okay. This this fiber is there, but we're not paying anybody else interest. We're not paying banks or anything. It's just how money's moving around. >> Okay. >> And I guess at the end of the day, it's >> you know >> what >> what did you say Brian? I'm sorry. >> Came from the electric department though. It was later separated out uh by because of the debt that the electric was seeing that it might affect their bond rating had they go out for any kind of bonds but it originally came from there. >> Okay. Yeah. I mean it's just a money shift. >> Yeah. Okay. All right. >> So currently when you talk about the other balances this creates a positive in other balances. Correct. >> What creates a positive? Well, if if we're paying ourselves the I'm sorry, what's the total debt that the fiber is at? >> Um I think it was somewhere about 1.9 million. >> So So this 1.9 million shows up on other line items and other funds as positives. >> Uh shows up as negatives. It it shows up as a negative advance. Um so it actually is offsetting the cash that's available in those other funds. because we can't >> a lean against the fund pretty much. >> Exactly. And the same thing. So this one has the lean against two other enterprise funds. The two tiff districts have lean against the electric fund. So if I if I were to go out and look at how much cash is actually in so what we report what you're going to see in the cash is net of these negativities. Um, but if I were to go pull up on our system today, you'll see the caches are higher because we just show it from a from a um a reporting component to it than negative. So really right so in other words we have to make it whole when we do the publication itself. It can't show negative. Bottom line, this fund has no cash in it, but and then it fund balance is negative, but it bottom line is zeroed out because it has an advance. >> Even if we paid it, I mean, I guess ultimately we would would we ever have a we would never really want a positive balance in this fund anyway, right? you know, I really can't answer that. I >> given the state of the fiber as it stands now and everything. >> I would my my my my opinion would be no because you're not trying to utilize it in different ways. You're not trying to market it. You're not trying to make it a true ongoing business. It's more or less >> most of it's obsolete right now. The >> equipment. Yeah. We're just it's just dying on the vine. We're just waiting for it to be done. Done. >> Yeah. And you know, from the original standpoint, you know, there's um you know, because there's um contracts that'll be expiring and probably because this will get even worse um as far as being po, you know, having the $75,000 to the positive, you know, each year because you originally um you know, signed up um like Oakdale um Maplewood. Um, so there's a part that they advanced. So then you recognize over the 20 years. Well, you got about seven years left and those 20 years are all done. Um, and there's no additional revenue coming from them. And then um originally there were um a number of state of Minnesota contracts that were signed um for you know uh different police agencies. Uh a lot of them sunseted after eight years. Um and so right now we only have I think one still in existence. Um and that isn't for a lot on an annual basis. Uh the library used to be a part of this. The library went away from the fiber. So we we've lost streams. >> So and then we have we we have we distribute some of the cost for our own utilization from our city departments. Um but yeah, >> that's what I appreciate. Uh most of the time I think something like this would be glossed over with a city or a council because it's not doesn't make us look good, >> right? >> But you know what, we talk about it. We want to make sure it doesn't happen again. Stuff like that and we need to address it. So that's I'm very happy with the council and staff is you know what, we talk about things that work and we talk about things that that aren't great. >> Absolutely. Um, and I think that's, you know, at least in my time here, that open dialogue is what's put us in a very positive position. And it's really not just one fund, it's across the boards. Um, and I think it's, you know, um, that and the willingness to do the planning and and looking out and making those tough decisions and tough calls. And again, you you you have to make some very tough decisions, especially when it's having impact on our residents. um because again we have a heavier reliance on that property tax. Um but we're putting ourselves in a better and better position um to make sure that we're covering all of the needs in the city and we're we're not not to to coin a phrase um but I guess I will kicking the can down the road. Um, so we're addressing those those needs and and to me, um, I'm very impressed by that and again, a lot of the leadership from from my side on on a daily basis comes from our city manager and the planning process and then it's totally supported by city council. So I think we're in a very good direction and and in a good position. Um, so I thank everyone for that. Well, would it benefit our city if any of these new fiber companies coming through would extend through our lines to go through our our >> conduits? >> Conduits that we already have in place to reuse what we have put in years ago. >> I know Brian's been working with the groups and it's hasn't been going well for that part. I'll I'll defer that to the city manager because he has been more active in that side to it. Um >> we did try um they were installing some fiber in town here. U the path that they were going it met like part of the path but not all the path. So and where they're starting stopping didn't turn out to be exactly where the conduits were. So they just it was easier to not use it and put their own in which is unfortunate but so we try when we can. >> That would have saved us a lot of money. Okay. >> Any other questions on the quarterly update? >> No. >> Looking good. Appreciate it. >> Then we're going to move and and kind of look at net position and cash. Um and so what I've done um is just kind of to to show you where the change in the net position. Um and you'll see from the 2025 budget um the then the 2025 actual and then what the variance is. Um and you can see you know what I kind of mentioned before in that general fund um we were looking at you know you know at the end of the budget and the amendments um that we were looking at being a minus 20 uh we ended up being 1000 or $910,000 to the positive. So, it becomes a variance of $930,000 to the positive. You can look at we have all of our our funds that are are budgeted um shown here. And you can see that um for the most part they're all positive. We have a couple of negatives, the the water and the wastewater um surface water and fiber optic um funds. Um but you see one that to me really stands out a lot is the electric fund and that's why we will dive into that electric fund um in a little bit. Um kind of want to go through and kind of look at um you know when we look at fund balance fund balance has different categories. Some of it can be restricted for specific uses. Um some of it's unassigned or unrestricted. In other words, it can be used for for anything. Um and that's what this next um um page will show is is of that change for the year. What is truly unrestricted, unassigned um and you can see when we look at it from that standpoint again um you're seeing mostly positive amounts across the board. um which is you know the biggest one that has a negative is this again that solid waste which that's what we had planned um is to buy down some of that um fund balance or net position um until we went out for an RFP and and hopefully we would get um better rates um that and and not have a a significant impact on our residents and then when we get into our financial planning one of the biggest things that I do is I don't necessarily like to look at net position because there's other components that are a part of it. It's really looking at what do we have in cash. And so this shows how we we ended up changing our cash. Um it'll show what our beginning cash balances were. It'll show what our what our ending cash balances are and what the change um was. And again, you can see from a cash um perspective, we're seeing a lot of positives across the board. Um, solid waste again is the one that's negative, but again, that's kind of what we anticipated as we went in there. Um, but again, you can see, you know, if I just go back one, you can see unassigned in the electric is 1.8 um million, but then it's 1.4 when you get into looking at the actual cash change. Uh again, some of that is is due to some accounting principles um that have to be incorporated and we'll get into that when we go into our next item. Um but again, across the board, whether we look at it from, you know, overall net position fund balance to unassigned fund balance and cash, we really did perform very well in 2025. >> Can you I'm again I'm not an accountant, but maybe you can explain it to me. the surface fund um is the unassigned unrestricted, you know, we're at, you know, 301 net change, but then the change in cash is 1.1 million. >> Yep. Um you'll see uh a bigger difference between those two components looking at unassigned and then cash um in the water surface water and the wastewater. Um and that's because of the bond. >> Oh. >> Um because the cash will reflect the bond money that hasn't been spent as as of year end. >> And so you and that one I'm glad you caught caught that. And that's the thing. >> So when I do the when I do the 10-year plans, I will reduce cash and I'll show it on a line. I reduce the cash by what bond is outstanding because that bond is really and that's why it's not unassigned. It's restricted. it's restricted for a specific use even though it's in your cash, right? >> So, I'll reduce the cash by that amount of that balance. So, when we're doing our future planning and looking at everything and our needs, we're not incorporating something that's really should be being spent. Um, it's just a timing piece to it. >> Okay, >> good catch. Excellent. And then this next um item kind of want to show you the electric fund and kind of show that net position in cash and kind of break it down into some different categories and kind of show you a little bit more about it. But more importantly at the end of the day, um this item and then it it is on um the consent item for city council for tonight is that we would really like to uh move to capping um the power adjustment um for the summer months. um and show you through here that we believe, you know, it it's a start in the right direction um to to be able to um I guess more equalize the rates um that we're seeing in the electric. Um it's and I think it's a beginning. Um but we'd like to try start it here, see how this plays out and then look in the future for some other different adjustments and and I'll kind of walk through that part to it. But when we look at our net position, you know, um changed um you know, $2 million um overall our cash about 1.4. Um again, some of the items that you'll see that we have investment income and we don't budget that. Is that something city council wants to do in the future? There's pros and cons to it. Um can we do some of it from a conservative standpoint? Yeah, I'm not going to disagree with that. That might be a good idea. We want to do all of it. Um when we're sitting, you know, at, you know, rates, investment rates over 4% where what happens if they all of a sudden end up uh being a half a percent again someday? Um then we've got a hole of, you know, a half a million dollars. Um there's uh so these are looking at it from different budgetary line items. Um so our energy power sales um from what we budgeted was down about 204,000. It either and I put them in categories. Does does it affect net position? Does it affect cash? Some of these affect both. Some of them only affect net position um uh personnel um services. In other words, uh costs for our personnel was under budget by 106,000. Um processing fees weren't budgeted. They were 130. the air budget in the 2026 budget. Um other changes um that are non-cash were 246. There's a whole list of small items that make up that 246,000. Inventory uh $276,000 increase cash. We actually did the outlay of the cash. Um but but when you do a financial statement um you do an inventory um as of December 31st um our inventory grew $276,000. So we don't recognize that it becomes an asset um until um we actually utilize that. Um so that's where that shows again it's an accounting um component to it. Um power purchase line item was under budget 501,000. Uh we don't budget depreciation, but depreciation um you know was $151,000 for the year. Capitalized assets. We paid $125,000 for assets that we capitalized. But what do we do? They show up as an asset and they get depreciated over time. So then you know the the capitalized asset and depreciation work together over the useful life of an asset. Um but it does impact your net position. um pension and oped reductions. Um we have an actuary that does our pension liabilities. Um it actually did a reduction of $174,000. So it shows as a reduction in our expenditures as a journal entry that you do for it. It didn't affect cash um but it affects your net position. Now things can change. Uh inflation, you do it actu uh you do the actuary next year and all of a sudden before you know it you this could be um uh increase $400,000 um and all of a sudden 330. So our net position could actually drop $330,000. Doesn't impact cash, but it how it's reported will end up changing. um contractual services um that were budgeted but weren't spent about 116,000 and then there was capital that was budgeted that wasn't spent of 147. If we add all those in the net position it'll come to that $2 million yet what impacted actual cash was less um and came to that 1.4 for. And so then I kind of broke it down into different categories to kind of illustrate a little bit differently and saying what's not budgeted, what's over or under budget, and then what's purely a financial reporting. Um, and so if you added up the not budgeted and over and under, you would end up um getting um what the cash is and then the financial reporting and the cash is what ends up coming to your net position. power adjustment. As we see by the the graph, when we look at our our power adjustment that we then add on to the rate um for utilities, it it spikes and it spikes in the four summer months, June, July, August, and September. Um, I've got this nice spreadsheet that I can can show you. And actually, I'll kind of pull it up real real quick. Um, these numbers are based off of this spreadsheet. Um and in this spreadsheet we take all every residential service that we build, every commercial service that we build, um all the number of services that are build that every single month month in the consumption. We have the monthly service charges, the annual service charges. We have the KWH rates that are given um each month. Um, we annualize that. Um, there's another component that ends up coming into this and that's at the end. It shows that as a bill, it can either be known as the fuel clause, but it's shows up as a power adjustment on on an individual residential bill. And in our rate, it was always structured to cover 6 cents. um as rates have gone up um and no longer um it exceeds that. Um, and so you can see in this um column right here um that that's what it's over um that six cents because here's the actual average. And then in addition there is by our our supplier MMPA there's an additional adjustment that they put on and that's what it amounts to percents. So when you add up this what's over and this you'll end up getting what is the fuel clause or the power adjustment and you can see in January it was it was zero it was 1 12 cents 18 23 36 then you get in the summer months it's you know it's almost 58 46 46 52 3117 well our rate already increases when we're in the summer months. In the summer months, it it goes from 11:43 to 1251. So, if you add up those two together, we're getting, you know, higher spikes in those summer months in addition to usually consumption is up during that time. Um, and so many of our residents are experiencing a significant increase in their utility bills during those summer months. So, what we would like what we're proposing and it's also again on city council for in the consent is to kind of to to do kind of a pilot test and kind of and make this go into effect for this summer um to see if we were to cap that off what type of impact that would end up having. And then down below is the commercial. So, just did a tab with all of the same information. And what I did was that in the fuel clause I've highlighted right here is that during the summer months I cap it at 4 cents. Um instead of being 56 58 or whatever it would be it's at 4 cents. If we do that it'll result in a change of a loss of of revenue of $171,000 for our residents. This is based upon 2025 consumption and for commercial it would be a reduction in revenue of about $16,000 for combined reduction in revenue of about 277. I think you've already seen that we should be okay in this fund to be able to do that and and and we may after this want to do it even differently. Um but we want to try something to start out. It was kind of interesting. I kind of looked at the total rate that we have today and the revenue that we generated and where our revenue is. And it was kind of interesting that our total revenue comes out to about 11.4 million based upon the consumption of 2025. And then I compared that to what we have for our budget for 2026, which is um almost 11.5. Right now, our rate is showing if we have all of those revenues that we would end up having a difference of about $87,000 negative. That's just the rate part to it. That's not any of the other revenue items that we we do. So, in certain ways, it shows that our rates are okay, which really get building up our fund balances year after year is that we don't we don't we do not at this point in time budget that investment, which was like $588,000. um last year um you know we're we're now budgeting a couple of other items and we've had savings um from where we budget. So that's part of as we go into the budget process. We we need to make sure that we've got our budgets as tight as possible that we're not, you know, having extra money so we're not having these um we're spending considerably under our budgets. If we can prove that out over a year that we we get through and we're we're lowering where we're at, then we could actually drop our overall rates um you know and and do more of an analysis. But right now, just at a high level, our rates are really where they should be to support the operation. Um the revenue savings are coming from other sources and that's something for a future discussion with city council. Do we want to start moving towards budgeting some of that? That's where the city manager and myself said, "Okay, in in a roundabout way, that's what we're going to try to do by projecting about a $280,000 loss in revenue that we know that we can absorb and also help the residents during those summer months. Um, and so that's kind of we'd like to try it here and try it this summer and see what the results are. Um, and see if residents notice it. Um, see kind of how things kind of flush out, what the reality of the loss really is. Um and then um look at as we're going into next year maybe making different types of changes maybe in the rates maybe more of this capping um of that fuel cost adjustment piece to it. Um so those are kind of the thoughts uh and definitely we'll open it up for kind of discussion on to that. But that item is also with the same documentation showing up on city council for consent um for hopefully to have city council approve it so we can put it in place this for these summer months. >> When was the last time we had a rate increase again for electric? >> Uh I think it was 20 maybe 22. >> Yeah, >> that's good. I mean that's plateauing now. can see from there without >> making a radical change. Yep. Yeah. And that's where we're trying to this was kind of >> not like we raised it last year, now we're giving away, we raised it the year before, we've had a good level where we've been. I like that. >> And that's what we're trying we're trying this out to see. Um, and part of it is is is that when you do look just from a I always equate it to myself. Well, also when I open up my Excel bill and all a sudden I see a bigger spike when it comes in the summer months because my consumption's up too. Um, it's kind of hard to handle. Um, and this we're trying to even that flow a little bit and see how this goes. Um but it's amazing um when you just adjust something just like a scent um across the board. It can we were we were entertaining looking at instead of having that including six cents um in the budget uh or in the rate to move it up to seven cents equates to like a million dollars um in loss of revenue. And I was like okay we got to come up with a different plan here and kind of look at that. And that's where we looked at those summer months and kind of decide, okay, let's start here and target that first. Um, and see how that plays out. Um, and then we can expand upon that, you know, in future years. >> Yeah. This will go into effect by the May billing or June billing. >> It'll go for June consumption that actually goes out in July. Okay. >> Because we we bill after the month of consumption. >> Uh, Dan, thank you very much for this. I I appreciate this. And I think this is implied. I just want to hear it. With this plan, you you believe that we the city will not seek a rate increase in the next budget cycle. Is that >> Oh, guarantee it. >> Okay. >> There you go. >> And it was implied. I just wanted to make sure we're on the same page. >> Oh, yes. Yep. Yep. >> Yep. Absolutely. Yep. >> I think it's a safe way to dip your toe in and see where we got >> and see how it see how it plays out. Yeah. >> Well, as long as the residents save a little money I'm sorry. >> As long as the residents can save a little money, that's the biggest thing. >> Exactly. And that's what we're just trying we're trying to to to help out um a little bit and kind of even I I always look at things, you know, I mean, if I could pay the same amount, I can budget for it and then all of a sudden you get these big, you know, hiccups. That's what I think creates more issues for at least for myself and I think for other individuals and that's where we're trying to ease that a little bit um and see how that plays out. But um and yes, there will be no rate increase in 2027 on the electric side. >> Good. >> Right. Right. City manager, >> that's correct. >> And well, unfortunately lost when we had our we had an AC control program once upon a time a while back, but uh we no longer got credit for that program through our power agency. So that went away, but that helped with these summer spikes. Um, so this is a nice alternative. >> That's the one where they could cycle it on you. >> Yep. >> Yeah. I would be giving my AC a bear hog. Nobody's going to turn that off. >> And so, so again, this documentation here um will be um you know, in city council on the consent item. Um hopefully that uh you'll you'll pass that. Again, we're looking at uh an approximate savings to residents about 171,000 and for commercial owners about 106 for a total savings about $277,000. Um so that item will will be um not on your not on your scheduled program, but we have a little bit more time a little time left. Can't believe I talked this. >> Thank you for the explanation. That was great for what we're doing with the with electric. So that's that's a lot of questions that would have came up. >> Yeah. Yep. >> So now you're going in extra innings. >> We're going to go into extra innings. Just kind of want to show you this is kind of uh this is Ramsey Countyy's assessor's report for 2026 which is will be applicable for pay 27 which we'll be working on the budget. And you can see here that um you know overall with all for nursing pay for all different types of properties that we're going to see about a 1.6 6 uh% decrease. Um, >> sorry, I'm just laughing at the because the projector or the screen down here is just showing the mayor. >> Oh, is that what I look like? Going to say, who's that old guy on the screen? >> There we go. Thank you. >> If we look at uh residential, um, we're going to end up seeing about a 1.2% 2% decrease in our median value from 25 to 26. So this is the first decrease that we've seen in residential property in in a number of years. Um so you see that things are tightening up there. There was an article um I think in the Star Tribune today that shows kind of uh the last um I think it was a couple of months of of sales um that have shown like a 3% decrease in um price um on homes. Um, and so we're seeing, and I've read a number of articles and they're projecting that we're going to see home prices decrease, especially as interest rates stay the same or increase a little bit. I think they're right now, I think, 30 years at somewhere at about a a 6.4% interest. Um, and they see that's going to kind of if it goes up a little bit, we're going to see the prices dropping down a little bit more on on >> My wife's still seen them go up, so that's good. >> Yeah. Um and then we do see and I'll just kind of just show you real quickly the um commercial um commercial is actually increasing um which is a good thing because then it shifts some of the burden um >> you know on any potential uh levy or whatever um you know to commercial from residential um but again we don't have a great deal of of commercial >> and this is Ramsey County. >> This is Ramsey County. I >> was even taking St. Paul downtown St. Paul into a account for this. >> I'm only looking right here just at North St. Paul his area to it and that stuff. >> I didn't know if Ramsey County if they just you know how that takes if it's just a snapshot for so yeah glad to see ours are going up. >> Yeah. And we can definitely look at what what's uh well they they break it down into different areas. >> Yeah. I just just hear the horror stories about what's selling down there commercial wise and downtown. So >> it's kind of kind of funny that you know here's the downtown in St. Paul that they're saying it's a 26% increase, but we know that that's not true because the most recent articles that they're selling things uh lot lower than >> the estimated value. So with that um is where it ends up coming. If if uh you know a business purchases a downtown business for a lot less then what does the owner do? They they go in and they petition. And what do they do? you can abate the taxes um for three pri for the current year and two priors. Um so um then we end up seeing adjustments on on what property tax gets distributed. So, um, that kind of shows you the market values. And Dan, I have kind of just get a quick input on >> we're good, >> uh, quick input on, um, I think as everybody's aware, um, that the pennies going away, which kind of creates kind of an issue um, for both, you know, you know, for all businesses and we're not going to have pennies eventually to give out to people has changed. So, it's kind of like what do we want to do with that um kind of component to it and um a number of cities and and have one just in front of me that force lake um did a you know staff report to uh their mayor and city council members at looking at kind of two options. One was a a no change policy um with utility billing um credit option. So, in other words, um, if somebody came in, you know, so the calculation is going to run the same way, but it it ends up we they give no change. It just goes a credit on their bill. >> That makes sense. So, I came up with $130 and it was $129.50. That 50 cents would go on the next time, so they credit it. >> And again, if they move if they move out of North St. Paul, you know, they get a refund check of their full amount. Um, that way we're not shorting um, you know, the individual at all. The other option, you know, and a lot have done is you go to a rounding policy, which creates so many other issues. Um, and so really they recommended going with that no change um city. And for the most part, you know, everything that's being charged on um for uh you know, at least our rates for um parks and um the permitting and that stuff is all zeros at the end. It's really the utility billing component to it. Um, and so really that would be kind of, you know, you know, seeking your direction, but kind of like to move into a no change policy. And so then we do away with change. Um, but then it just goes as a credit. And again, um, when somebody moves out, they get the full refund. Um, it shows the pennies show up there. Um, it helps us out with balancing. It helps us out with everything else on a daily basis. We don't have to look at um, sort of rounding mechanisms in our in our systems. Um and it just it just it doesn't increase our costs at all. Um and it would be something that you know we would advertise you know um you know for a month or two months u before we would actually implement it. Um and you know um we wouldn't just throw it on people tomorrow. Um but that'll be an item if if uh city council's up you know um for it. It' be an item that would go in front of city council to be accepted with a policy. I see that as being very fair. >> Okay. >> Yep. Rather than trying to keep track of things. >> Okay. Fantastic. I can't believe I made it this long. Brian told you I could talk this long. Uh >> we didn't even get a seventh inning stretch. >> I know. Uh and then the the last thing I just kind of want to let everybody know, uh staff updates. We have uh an individual who's been with us for 10 years that'll be retiring on Friday. Um, thanks to um the support um from our city manager um and then from Jenny from from our HR perspective because she wears multiple hats in our organization. um that um we um went out and posted that position um early um and um we did uh um the initial part to it was promoted uh an internal posting and so we have an individual who's working on their accounting degree um and they got promoted into um Jackie's uh position and the two of them have had the ability to work together uh for about a month and a half Um and uh she's all ready to go. Um and so we should have no we should be pretty seamless. We should have no hiccups um on that. And then that leaves a vacancy that'll be vacant um after Friday. Um we went out and posted that position. Um and uh we had 89 applications. Um and uh we uh three of us went through each and every one of the applications. We combined our our ranking. Uh we offered um I think 14 or was it 14 interviews. Um some um declined um I think we ended up interviewing nine and then we brought uh three excellent candidates back in for a second round interview. Um we um were split. We had we had four on the interview. We were split two two uh and we had each had one and two you know in reverse piece to it. Um but we did uh go and offer to one individual. Um we could not um reach agreement on salary. Um and part of the way I look at that is that I'm I I don't want to upset the apple cart as far as our existing staff is concerned and pay somebody more who's already been here for years. Um and so we weren't able to make agreement um with that. So we went to the next candidate. Um and uh we have again that person was first on on two of our lists. Um we offered that position. They have accepted. They have gone through the background check and the financial check and everything's coming out really good. And they'll be in place on June 1st. They'll be uh coming and joining uh this wonderful nurse St. Paul um team. And so uh yeah, so very excited about that. Um we will miss Jackie uh quite a bit. Um she's done an excellent job. She's been um responsible for our accounts payable, our payroll. Um and she's done a fabulous job in in uh in her time here. Um but um I think we're sitting in a very good position um and moving forward and I think we've got a strong candidate now coming in um to replace um Melissa who moved over to Jackie's uh role. Um, and so I think we'll um we're I think we're stronger now with duplication of of uh services um than we've ever been in the past and we're continuously improving that. And so I thank city council for all the support that you've given to me and for u my team. Um and I want to give a lot of uh thank you to the city manager for allowing us to be able to move ahead of the process um instead of waiting for a vacancy. um we didn't create any additional costs um to our budget doing it this way um but um he helped out greatly and then Jenny um for doing all of the HR stuff and then um making herself available on the interviews um and unfortunately we weren't the only ones who were interviewing police was interviewing public works was interviewing electric was interviewing so uh she was running all over the place and this is the first time I think that Jenny really realized how lucky it was that the city's not like 30 miles by 30 miles cuz she would have been all over the place. But yeah, so no uh so eventually um you know hopefully you'll have a chance to to come down and um see um our new staff member and and uh yeah, we're a friendly group. >> Great. >> Yeah, we're good. >> So with that, if there's any follow-up questions, I think I >> No, I'm good. >> You're pretty good. >> I give you six minutes back. Oh, good. Well, appreciate all the great information and thank you so much as usual. Always learn a lot and know how to move forward. So, if there's nothing else, I'll ask for adjournment. >> So, move. >> So, move McKenzie. >> Second. >> Second. Norby. And we'll start up in five minutes or so. All those in favor say I. I. Thank you. Thank you.