Good evening everyone. It is now 6:30 and I will call our budget work session to order and um our work session is um very informal and we go directly to the items that we have before us. Um, our work sessions are conducted both in person and uh online. Members of the public may attend in person uh if they like or the public can also watch our meetings on burnsvillemn.gov/meings or comcast channel 16 or 859. The public can also join us and participate through Zoom by joining us at zoom. us/join. More information is available on our meeting web page and in the council agenda packet. So tonight uh this budget meeting we're going to be first of all um hearing about uh the proposed uh 2026 budget and property tax levy and then uh we will um go on then to the department budgets. And uh this we will now start with our deputy city manager CFO Jenny Broaddy who is going to be presenting the proposed operating budget. >> Greg, do you have any comments to make or we go directly to Jenny? >> I do not, mayor. Go right to Jenny. >> Okay, Jenny, floor is yours. >> Um good evening madam madame mayor and council members. Tonight uh we'll be discussing the proposed uh 2026 operating budget. um a month ago or around a month ago, we were here uh to go through the 2026 through 2020 30 uh capital improvement budget. So, this is just a progression in our annual budget meetings. Just as a reminder, our the remainder of our bund budget calendar, uh we'll have a department presentations following my presentation tonight, but additional department budget presentations on September 9th with um additionally uh discussion of the proposed fees and the uh proposed utility rate study for 2026. Uh we'll go over the utility funds, finance plans, enterprise funds, finance plans, and then any other funds that we haven't reviewed to date at that time. On September 16th, we've planned to adopt uh the proposed city and EDA property tax levy. And then there is a discussion uh tenatively planned if needed for the 2026 budget on November 25th. And then on December 2nd, uh the adoption of the final EDA and city property tax levy and budget as along with the budget hearing. So that's kind of rounds out the schedule for the next uh at least the next four or five months. Um in terms of budget and with that, I'll just I'll start running through the operating budget for 2026. We've balanced to the 7.4% 4% tax levy increase um that was part of that non-binding resolution um back in 2023. Um the impact of that 7.4% tax levy increase has about a $9 per month impact to the median value home. With that, we have a preliminary taxable market value rate uh or no, that's the next one. Taxable market value increased about 2.6% 6% or 247 million uh from pay 2025 to pay 2026. And then the tax rate increased from 45.8 to 47.8% year-over-year. Um with that, as we um analyzed um budget requests and put it all together to balance to that 7.4%, 4%. We did need to make about 1.9 million in 2026 in budget effectiveness corrections to balance to that 7.4%. We always do um we always look at what are other cities doing and kind of compare as we're putting as all cities are putting together their preliminary rates. So we do have some information back from some of our um market or comparable cities in terms of where where their at least their preliminary levies are coming in at. So if you look at, you know, where we stand, we're kind of bottom half. We're kind of middle of the range in terms of rate increases. Um there are a lot of um various reasons. Every city's different. Um some cities do have have mentioned, you know, additional debt service for for capital items, parks, um additional public safety investments. So um a lot of similar things that that we've experienced um in our budget development as well. So the average levy or preliminary levy is about 8.13% if you average uh those eight cities on the on the table and we expect these to change um as they go through their process they may change a little bit. These were were were early August numbers in terms of pressures. Um in terms of you know what are the current realities that that we're balancing to. We certainly have continued inflationary impacts um that are impacting budgets continued workers compensation um impacts impacts of PTSD as well as health insurance um related to duty disability. Um the state in 20 I believe it was 2023 um set aside one-time funds for reimbursement um to local governments for their health insurance costs related to duty disability. So last year this we received about 200 I think $250,000 that covered our costs. Um this year we've submitted I think $580,000 and we're hoping that that all gets covered. But since that is a one-time appropriation, at some point that money is going to run out. So it is unclear um kind of where the future of that uh reimbursement lies. And so hopefully we'll get this year's covered. Next year's budget is about 430,000 for that cost. So um certainly a substantial um cost as we look at our personnel personnel budgets. Um we also >> Jenny, just a quick question for you. Yeah. Uh the proposed budget, does it include that $580,000 worth of submission at this point or no? From a revenue, >> it includes the cost, not the revenue side because it's uncertain and we don't know what percent is covered. We always take a conservative approach and don't assume we're going to have that 100% covered. >> Yep. Um state and um additionally, we have state mandate a statemandated well-being program. So there are additional payroll taxes um around um that come with that program. Certainly um we'll talk a little bit more that about that program later as we get into this. Um the city is pursuing um approval of their own plan. So that would be good news to good news to everyone here if that happens because then we wouldn't need to pay that payroll tax. Um and then we have health insurance increases of about 13% year-over-year. So those are definitely um some very real pressures as we go through this. Um additionally we have um additional fire positions related to standard of cover at that discussion um back in April and that plan called for an additional 23 positions over five years. The first year was four positions. So that those were included in this year's budget. We do have four opening bargain bargaining agreements. So, um, while those aren't settled yet, we do know that those will be those will be, um, in negotiations here at the second half of the year. So, there definitely is some unknowns around that until those are finally settled. Um, certainly in terms of market pressures, we're we're definitely seeing um competitive or wage increases in the public sector. So, as we did a comp study a few years ago, all it seems like a lot of our market cities have done those and and there is um an upward trend in terms of um wages in the public sector right now that we're seeing. Additionally, deferred capital and maintenance investments. So, you know, as we're as we're going through these capital studies, um we're incorporating the results of those studies and operational impacts as well. So, um, you know, we're working those in, but those add additional pressures as we as we find things that maybe we need to invest, you know, make bigger investments in. So, um, that is part of what we what we've had to look at as we've developed the budget and as we as we've planned to do, we've spent down fund balance in the general fund. So certainly part of that 2023 budget 5-year projection was you know an um added investment to people and um services and part of that was you know we did um create some fund balance and we are spending that down as part of the plan. So we're we're always balancing to that plan to make sure that our fund balance numbers stay um within within those recommended levels. um reality is the current five-year plan. So the current five-year plan for the general fund really maintains current service levels. It does include that spending down a fund balance to policy minimums as we planned. Um so we'll talk a little bit more in detail about what those numbers are as we get get um into later slides. But um that is that is part of the plan. Um as a result, we don't have a lot of future budget flexibility. And I think you know as we've done the last year we had about $1.6 6 million in effectiveness corrections. Um this year we've had about $1.9 million. Um you know, as new things happen or as inflation has been larger, we just haven't had a lot of flexibility and we've really had to, you know, take a look at where we can be the most effective in our budget. you know, as we look towards future additional programs and things like that, as we're trying to balance um balance to this fund balance, we'll just we have to make sure we're pro prioritizing what those additional programs and services are in the future. Studies, um certainly we've talked about studies, we talked about capital studies um in the previous budget presentation. Um we're still working through those capital improvement studies. We have fleet um and horizontal infrastructure coming up in the fall. um an organizational analysis. We've been updating that plan um annually in the early parts of the year to uh to inform the next year's budget. We look at service staffing and compensation as part of that study um the fire standards of cover, communications assessment, um IT assessments, um and operations and maintenance studies in public works facilities and parks. So there are still a number of ongoing studies um either currently ongoing or planned in the future that that will inform uh future budgets um FMP property tax projections. So we've balanced two those um next two years of property tax increases the 7.4 and the 7.69. Um the last three years uh project a 7% increase. This is um very similar to last year's projection. Um and those 7% increases really help to uh build back start building back the general fund fund balance in that la in those later two years of the plan. [Music] 1.9 uh million of effect dollars of effectiveness corrections were included for 2026. And I'll kind of run through each category here and we'll talk I'll talk a little bit more in detail about a couple of these. Um we really did um increase revenue assumptions that really was in the permit area. We tried to um be a little less conservative in our permit revenues and rightsize it according to what at least what our recent experience has been. Uh we reduce current expenditures across departments. So um many of those are probably small right sizing of budgets um in many departments. We had some deferrals of maybe one-time um equipment that could be deferred to a later date as well as um we did have uh some maintenance maintenance agreements in the public works area that were a little larger around $100,000 um that we could reduce. Um we had reductions in personnel costs. So uh we did reduce two positions from the 2025 organizational analysis. We uh removed the two division coordinators. We did eliminate a halftime pos administrative position that was open as well as um uh we made some other shifts and changes um to to positions as we were able to. So, um, we did have, um, a number of reductions in personnel costs. We continued to budget for a vacancy factor. So, um, as we looked at the four-year average of what our vacant positions are, we we looked at that and applied applied a rate, uh, that we thought was reasonable, it's about a half a million dollars for 2026. That is actually down. We budgeted about 700,000 for it last year. We do expect to be closer to fully staffed in 2026. So, we wanted to be um conservative and not over overestimate what that was going to be. And our final our final suggestion is um adjustment of the economic development levy in the five-year plan. Um so those first uh four bullets really were about $900,000 in reductions. Um, this budget does propose um reallocating about a million dollars of the EDA levy to the general fund levy to support current services and operations in the general fund. Um, just wanted to review kind of what that kind of what that means and what you know we wanted to make sure we stayed true to the commitment of the 2023 budget and really built up that EDA fund balance. Um, a couple of things have happened since then. We've we've realized that um, expenditures. We've had some good budget um, results in the EDA fund and there were some things in there that that that we could budgets have expenditure budgets really have come down in that EDA fund. Additionally, since 2023, we've added a little over a million dollars of annual LAA funding for housing expenditures. So, that's kind of a change since we adopted this levy. Um also you know uh so so I guess the results it as we look at 2027 when we compare where we were where we thought we would be in 2023 and 20 in 2027 and where we are projecting to be now we still have about $200,000 more in fund balance at the end of that fiveyear period than we thought we would. So it's an you're comparing 5.3 million in 2027 to 5.5 million in 2020 or yeah at the 23 budget 5.5 million in 26 now that we're projecting. So we've just had some good budget results as you can see each year we're kind of ahead of where we thought we were going to be. Um it still increases the EDA levy year-over-year. So we still have built in a $50,000 increase year-over-year. it just extends out that time period to get to that maximum um amount. So if you look um our last audited year is 2024. So if you look um we're at $3.1 million today. So we're a little over $1.7 million ahead of where we thought we would be. This table was is similar to what we had last year. Um it does list out each of the effectiveness corrections and the impact on each year's budget um in the categories that we've um that we've um set. And as you look in 2026, it's about a little over $1.9 million of total changes that would give additional resources to the general fund. Um 2027 through 2030 are about um an average about $1.8 $8 million in corrections. So, um, revenue increases are around 50,000. Those personnel changes that I talked about are about $500,000 annually. The reduction in expenditures are $367,000 and 26 and a just about $200,000 in the in the years later. Um, the reduction in the EDA levy is a million. Um, in 2026 that means the EDA levy would be $7 and $700,000. In 2030 it would be $875,000 under this projection. um something that um if we if we have um have to look out in future years, if we do have other future butter future um reductions or effectiveness reductions that we need to make, you know, we probably need to start looking at eliminating some programs and services where we can. Um maybe looking at travel and lodging cross costs across departments. Those have really gone up over the last five years. um exploring some areas for additional fees. Um some things like that could look like um you know convenience fees on credit card usage. Um we've seen those costs go up. Um perhaps additional leases on fiber or things like that. So we could add explore some additional fee areas. Additionally, um we may have to look at eliminating some organiz organizational analysis positions in the future or open positions um as we face future budget pressures. So, these aren't programmed in, but as we think about future years and future pressures as we go forward, um those are just some things um to keep in mind. >> That's a good um >> if you could go back for just a minute. Um, so the leadership team has spent and I think that the team deserves credit at this point. Um, we spent the probably the past month, month and a half with Adam and Alyssa and Jenny's help uh to look line by line like we did last year through the budget and identify areas where we believed without impacting bottomline service delivery to the community, where are their where are the potential effectiveness uh changes? Um, that exercise last year was difficult. I would say that it was exponentially more difficult this year. Um team did a good job in having those conversations and came back frankly with some of these considerations on this slide this year to suggest to me or to suggest to the team uh areas where we might make additional changes. Uh it just so happens that to balance the budget this year, we didn't feel that we needed to go uh with the with the items that Jenny talked through that we felt we didn't need to go into programmatic or service cuts at this point in time. Uh but we are very much at that point, right? Uh last year, Jenny, I think it was about a million six in effectiveness corrections that we made, nearly 2 million this year. uh uh we're running we've very much identified as a team that we're running out of space. We're running out of runway when it comes to um when it comes to line by line budget effectiveness on the expenditure or the revenue side without approaching these more complex conversations and considerations in the future. And we we just wanted to be very honest with council, right? Uh I think it's important that the team put a lot of work into into talking about how are we efficient uh with taxpayer resources, right? Uh and also looking forward that we might not have the space that we've had in the past really three budget cycles, Jenny, uh where we've made these types of effectiveness changes. We're we're we're running out of we're running out of uh space both on the on the revenue and the and the expenditure side. So uh I think this is a really important slide uh as we think about our future, right? This is why we have a financial management plan. This is why we have uh monthsl long budget conversations. And from a from the team's perspective, it was important that uh that we at least identify and and talk through with the council and the community this kind of being where we're at from a uh certainly from a general fund perspective. >> Certainly. And as we I think I mentioned before, as we we know we're um at policy minimums in two years of the plan, we know we have a hard we have a hard stop, right? We we really can't go below that. So, uh we want to make sure that we're balancing to that. Um when we go issue bonds, I we want to make sure we're staying true to that plan because they're going to they're going to pay attention to that. So, um that's one of the considerations, right, as we go through this. But yeah, it is we are we are kind of we just wanted to to put these out for you know up for discussion. There are things we've talked about and that we're working through and as everything Greg said um you know we've worked really hard and there are some things that we may have to discuss in the future. uh the revenue assumptions. So in the general fund but across the organization as well but um property tax levy change year was four 7.4%. Uh fees and charges at 3%. Uh we do um as people look at their fees, we encourage them to make those um kind of 3% adjustments or kind of look at your fees and and see if they you know if expenses or or some or there's something else called for. Um certainly utility rate changes will will be made or utility fee changes will be made based on the utility rate study. Investment earnings we assume a 2% investment earnings and then all other non-propy tax revenue kind of those miscellaneous um kinds of areas uh uh fines and and things like that we assume about a 1% and that's very much in line with what we've done um in the past uh couple of years. Question on investment earnings. >> Yeah, >> Dan, >> question on investment earnings. The the 2%. What is that? How does that relate to the last few years and the forecast? >> Um, so the last couple of years we've seen about four to 5% and that's what we're getting. Um, that's what we're getting on our investments right now. Um, outside of any market value changes because that's kind of a different animal. Um, prior to that, obviously, uh, one to two% was pretty typical. We've been kind of conservative in this area because we keep hearing about rate reductions. And so, I don't I don't want to build in 4% and then not have that. Certainly, um, we haven't seen those rate reductions, but again, that conversation has kind of come up again recently about um, that there would be rate reductions. So, it's just not to be overly aggressive on those investment earnings. It's wise to be conservative in this regard. >> Yep. >> Especially with market conditions as it is. >> Yeah. We all hope interest rates go down. >> That's the only line that we don't want them to go down too far. But um >> every we have an interest in both sides of that equation though since we're you know it could go down maybe when we issue our next >> it'll reduce cost on the expense side if it really want. >> Mhm. >> Um compensation plan. So we assume about five to six% um depending on the year but as we look at that includes annual colas and any step increases but that is the projection. We kind of work that into our um outyear projections. Health insurance premiums um 13.08% is the change for um 2026. Uh workers compensation I did put a decrease here. We did see a slight we did see a decrease in rates this year. So certainly we'll we do add a little bit of an inflationary factor because um the years don't coincide and so part of next year will be next year's um next year's insurance policy. So we don't really know where that is. So we do add a little bit of it later but we did see about a 9% decrease this year. Uh what that does is we'll we'll use those actual rates but then when we project out into the out years we do use like a a 6% projection of increase because we do expect those to overall increase over time. But we did we did have good results this year in our insurance renewal. And then current expenditures we assume about 3 and a.5%. Um certainly that's less than we've seen in the last couple of years. It generally is about right when you average out you know the 5 to 10 year periods of time. So as we look at revenues um in the general fund 76% of the revenues are property taxes. The next biggest um revenue source is charges for services at 11% and um then the remainder uh intergovernmental licenses and permits miscellaneous and investment income account for about 13%. So, this just really shows, you know, we re we really want to see those other revenue sources go up, but in in actuality, they're not a very big part of our total overall funding for our operations in the general fund. Total uh revenues this year are about 64 million. That's about a seven 7.7 increase 7.7% increase over last year. So, that includes all those categories. expenditures, personnel, people, that service we provide, that's that's the biggest portion of our budget at 76%. Um current expenditures, those supplies, um professional services, maintenance, uh travel, professional development, those kinds of costs are about 22% of our costs in the general fund and the remaining two um is transfers out and just our um transfer of lodging tax funds to the CBB. So overall, our total expenditures in our uh general fund are about 67 million. That's about a 9.7% increase overall. So, um we are, you know, we are seeing expenditures outpace that revenue growth right now. Um especially the growth in the things like charges um charges for services and things like that. We're just not seeing that growth in you know things like EMS. Um it doesn't it doesn't coincide with the growth in the expenditure side of that equation. >> Madam Mayor, yes. >> Question on it. Can you go back to that? Um, you said this is about a 9%. That's not a like a in retail terms we call it same store sales, right? So use exactly the same scope and size of the organization last year and this year to see what the the core went up. Is there additional personnel, other things in that number that's that's driving it to 9 and a half? >> Yep. And yes, there is. I do have a slide that will show you kind of the main components of that increase. And I think that might answer your question in a couple slides, but yeah, there are additional costs, additional >> growth in in say like um staff positions and things like that. >> So really what you're seeing is that >> the the personnel services piece of the pie is getting larger and and more expensive as planned through the organizational analysis. Recall that we're in the middle of adding nine positions to the police department as an example, right? So you're starting to see those those expenditures be reflected reflected in actual budgets as opposed to a plan. >> Uh so and and that will continue over the course of the next couple of years as those positions come online. And to Jenny's point, we have that kind of laid out in different visual ways to to see that would address, you know, when you when you hear that number and you see a chart, you think, oh, the city's cost went up, you know, nothing changed, but the cost went up by 9 and a half%. It's really not the core. >> Yes. >> Like everybody's wage didn't run up nine and a half percent all that kind of stuff, right? It's it's adding new staff, um, police, fire, whatever it might, you know, staff in city hall. Uh, that is that is stacking on top of what that inflationary, you know, cost base might have been to get it that high. >> Yep. So it's it's yeah there's there's infl certainly inflationary factors and then there are new things too that that impact that. >> Um this this kind of takes that same information and splits it out differently into like how are we instead of um the type of expenditures what department are we spending >> chose uh funding on. So um >> expenditures >> police is about 30% of our operating budget in the general fund um with fire at 22%. So public safety accounts for about 60% of the operating budget within the general fund. Um 12% is uh parks, recreation and facilities. 11% is um or services. So that's finance, insurance, communications, HR and IT. Um those components of the budget and 7% is public works and community development is just under 5% leadership and administration and administration. So city manager um legal services, city council is about uh 4% and then transfers and other are um about 2%. So transfers are really just transfers to other funds. That's the main component of that little tiny light blue um sliver up top. So this just gives a different perspective to that um total of $67 million in operations in the general fund. >> Um so this is new this year, but I think this goes to some questions too like we wanted to just do like what's included and really these are kind of the big things. Um certainly there's hundreds or maybe more thousands of changes in the general fund but overall but um just kind of what are the bigger things. So we had four additional fire standard of cover positions. So four additional uh firefighter paramedics. Three of which are funded solely out of the general fund. One is um being funded by opioid funds. So um three impacted the total general fund um property tax or is funded by a general fund property taxes. We have two communications assessment positions. So we had that communications assessment that was completed um in the last uh first half of the year. We did add two positions uh related to um that study. Health insurance as I I I mentioned on a previous slide those um increases for 2026 were a little over 13%. Um we have included annual 3% cost of living adjustments and then step increases for those eligible employees. Um added in the payroll tax for the state well-being leave program. Uh we have submitted and we've actually heard heard back from the state. They have some questions. We do expect approval on that. So, um that would that would at least decrease the payroll tax uh for those for that program if that were to happen. >> Jenny, can you give the details on the percentage of the payroll tax and approximately what that means for us, general fund and otherwise? >> Yep. So, um the payroll tax is 888%. Is that right, Mike? Okay. Making sure. And um that's about $350,000 in the general fund uh for 2026. Um >> always >> the state has said employers have to pay for at least half of that, but we have um just we've made an estimate for what um what that contribution would be if we don't if we're not accepted uh for approval. So about $350,000. Um, additionally, um, another item in the in the general fund is, uh, we have seen an increase in vehicle maintenance costs, just general parts and those kinds of costs. Additionally, uh, we decided to out, you know, go out um, and do some additional maintenance on our larger fire vehicles. We've contracted with a outside group and we realized we needed some additional maintenance and additional preventative maintenance. So that's um adding about $135,000 to the general fund cost. But we need to make sure that those larger vehicles like fire engines and ambulances are in good working condition and are ready when they need when they're needed. Additionally, we have a a website accessibility project and additional professional services related to that. So that's included this year. A system for police data analytics. Um that is an addition this year. Community vision and comprehensive plan update as well as other small increases, inflationary increases. Um Dakota 911, we have a 12% increase in that um billing for 2026. And so that's about $192,000. So um those items are all baked into the general fund five-year plan or budget and five-year plan at this point. Um what's not included? uh the additional fire positions recommended by standard of cover. So we we we added in the 2026. Uh we do have 19 additional positions um that the standard of cover called for and those are um programmed in about 20 through 2027 through 2030. Um certainly we're going to look at that funding strategy. We'll come back with a funding strategy discussion uh with the 2027 or analysis. So, um, we're still planning to to look at look at that and what that implementation might be. Um, but we'll do that with the 2027 or analysis. Additionally, we did a compensation study market update and um, those adjustments are not yet are not included at this time. Um as well as we do have some ongoing or future studies in recreation and facilities, public works and parks in IT, human resources and police. Those positions are currently not included. If if if the study hasn't been completed, we haven't been adding those positions into the budget yet. Um additionally, increases to employer HA and HSA contributions. The IRS increases deductible limits annually. Um it usually is the city's practice to increase our contributions accordingly. Those have not been included yet. Um we anticipate those to be about 32 to $50,000. Um so we're still still looking at that. Um and additionally, I I think I mentioned this in another slide, we did we did eliminate two 2025 OA positions or organalysis positions. um the division coordinator from the budget as well as an existing halftime open administrative position. So, so here here's kind of the numbers that we talked about um kind of as we break down what are the major factors contributing to the increase year-over-year. Last year in 2025, we had uh total personnel of about 46.8 million. Uh in 26, we're proposing $51.2 $2 million. The major factors really that 2026 organ analysis. So as we look at new positions and I think this kind this goes to council member Keely's question. Um there were a number of new positions in the organ analysis um as well as those additional four standard of cover positions. So that makes up the largest component of that increase of about $1.7 million. Um that second line is really just um incorporates changes in compensate compensation. So COLA laws um step increases. We also did increase our overtime budget um in police. Um we have been seeing an increase in that overtime over the last 5 years and we wanted to recognize that especially now that we're getting closer to fully staffed. We want to make sure we have enough resources um to cover both those full-time positions and that overtime. and any other um kind of changes in classifications or other type of increases are really that second line there at about $1.6 million. Health insurance premiums were an increase of 555,000 or about 1.2% of that 9.2 increase. Um the state well-being payroll taxes were 347,000 so about 7% of that 9.2%. And then we did um make an additional investment to our compensated absences fund. Uh we track um and fund compensated absences separately because they are a liability a liability that the city will have to pay when when staff um leave employment or retire. And um we are seeing an increase in in those balances. So we did add um additional funding to that area very similar to what we did last year. So is about an overall.3% increase um to that expense for the year. So those are kind of the major factors. Certainly um certainly there are some other small increases or decreases and those are really in that um second line but um these are the major factors. As we look at current expenditures, uh we had about 13.76 million budgeted for last year or in 2025 with about 15.2 million budgeted in 2026. That is a $ 1.43 million increase or about 10.4%. Um, as we look at um those year-over-year increases, uh, the comp comprehensive plan update and vision community visioning study um is about $250,000. That is a one-time cost, but that is about 1.8% of the increase. Uh, vehicle maintenance. So that um those you know generally um increased fleet costs as well as that increased investment in vehicle maintenance for our larger fire vehicles is about $197,000 or a 1.4% change. Dakota 911 increases are 193,000 or about 1.4%. And then um website accessibility, I think that's about 50,000 and the police data analytics is about 77,500. So those two together are about 127,000 or about 1% of that overall change. Um the remainder is about a change of about $61,000 about 4.8%. A lot of that are is inflationary or small increases across departments. you know, smaller things maybe um not individually large, but these are the major factors in that change this year of about 1.4 million. Here's just a slide just um year-over-year increases um in the different categories. So, just to kind of um broadly look at look at the year-over-year changes, um personnel services was about a 9.2% 2% change about $4 million. Current expenditures um increased about 10.4% or $1.42 million and then transfers out increased about $231,000. And um that's mainly related to the Burnsville Parkway Yeah. Brunswell Parkway bridge aesthetic project in that one-year investment um in that project for a total of about five $6 million in increases in the general fund are about 9.7%. So you can see total expenditures uh projected for 2026 or proposed are 67.4 million. Um this slide just repres takes a look as we said we we need to keep fund balance. Um we always want to be be making sure that the plan um is in compliance with where our fund balance needs to be. Um that light blue line at the bottom is our policy minimum and the gray line at the top is that 50%. So we have that window of 40 to 50% that we really aim to keep our fund balance within. Uh the black line in the middle is the 45%. So that's kind of our target where, you know, when we get below 40 or 45, we kind of want to get back up to that 45 target. As you can see, this um current proposed budget um gets us right at that 40 in 2028 and 2029 with growth again uh by the end of the five years uh five-year plan. Certainly, you can see in 23 and 24 part of that plan was to really build up fund balance and we have we have seen that. In fact, we've seen positive budget results. So, that's that's been that's been good. It's helped us um fund uh fund uh the expenditures and operations as we need and um we are in compliance with our policy uh with this plan. This is uh a graphical representation of like the total revenues, total expenditures in the general fund as well as fund balance and the requirements. So you can see um the two lines meet for a couple of years in 2028 and 2029 where we are getting to that um policy minimum with um some growth then back to 42% by 2030. So um again this was uh part of the plan and certainly um it the plan is working. It's just something we need to balance to every year and it does you know we need to make sure that we are um keeping to those plan uh requirements and making sure our fund balance is is where we need it to be. >> Question. Yeah, Dan. >> What gives us that gap where we're 2030 back above the fund balance? So the structure of the plan um when we started kind of this in 2023 with the Oregon analysis um in order to kind of feather in those rate increases um we did we did kind of build that up in that first year built that fund balance up and then um the added positions we knew would be more than what we could add to the levy at that time. So, we kind of feathered we feathered that levy increase out over time and used the funds we had on hand with the intent of building building that back up. So, it's the the the rate. So, we've set property tax rates in the projection at about 7%. That's what we need to get that built that fund balance built back up again. >> How many years if through 2030 we're at 7% levy? When did we start with a 7%? And I know there was one year where we were 2 and a half million. I can't remember what the levy change was. I think it was 10 or 11 or something like that. 12% maybe. But >> how many years will we have been at 7% or higher at a levy when we hit 2030 and we could start rebuilding? >> So 2027 would be five years. So 28 29 30 would be eight >> eight years in a row. Jenny, can you go back to the previous slide for just a minute to council member Keely's question? I think I think part of the answer also needs to contemplate the the nature of our fund balance, general fund balance policy. >> Um, uh, the light blue line, the lowest line on the bars that are touching essentially fund balance in 28, proposed 28 and proposed 29. To Jenny's point, is our fund balance minimum. It's really that darker I think it's blue. I'm color blind. The darker blue line in the middle at 45%. Uh that is our policy target. Right. So we're meeting we we've intentionally spent down fund balance. There shows to be a small recovery in fund balance planned five years out proposed. um uh but that recovery doesn't actually meet our our stated 45% policy target. >> Uh so from a from just a broad financial management perspective really our goal should be recover to that 45% threshold. >> Yeah. >> By current policy. So we we start to see that recovery after 29 which was planned in the original FMP to your to your point council member Keley where we added the police and fire positions and the other organizational analysis positions. There was a bit of a recovery planned at the end of those years with kind of these these 28 29 years being fund balance minimum position. Uh so part of our conversation is going to have to be fund balance target versus fund balance minimums as we as we consider the longer term financial position and planning for the city. >> Sure. >> Well, I think it's worthy pointing out because it's also a sign that this plan of absorbing the additional staff members will have been succeeded. And it's going to be several years that we're doing this. Yep. and we're going to hopefully get not only have the staff that we needed, certainly in public safety, that's where the majority of the the need is and the staff additions that we're going to get to a point where we're um we are dealing with that core, right? We're not adding another eight or 10 positions, but we're managing the levy based on what are the cost drivers to keep >> things the way they are with the same staff. Yeah. Yeah, you know, we we had a we went a long time with the same staff, right, for a very long time. >> We kind of got used to just dealing with that core inflator kind of levy. >> And now we're going through this series of years. >> Yeah. >> U coming off some of the most horrendous inflation. >> Uh we've we've experienced it. We had to absorb like everybody did. But at the same time, we're adding a lot of staff, much needed staff. >> Um and in 2030, that's our sunshine date, right? where we have we've forecasted that we've probably added everybody by then and we can start if we keep it at 7%. We can start rebuilding to that 45 goal. >> Yeah. >> And we start to see it in 2030 right here as it's showing. >> Yeah. Not that 7% is something to celebrate. >> No. But coming off the last five, six years of incredible inflation, >> you know, I feel blessed as I talk with my peers around the metro, South Metro especially, and see the numbers that they're facing. And some of those have special projects in them. Uh Lakeville had a special project last year, but they're looking at 10% this year. I asked >> the mayor because he's not one of our peer cities, although because he's our southern border city, I consider him a pier city, right? Because when people consider if I don't want to live in Burnsville, where would I move? It's Egan, Apple Valley, Savage, Lakeville, right? Because people don't want to go, well, you know, I'm I'm I don't like what's happening in Burnsville, so I'm going to Lake Elmo, right? It's usually they want to stay in the vicinity that they're at. So, I consider Lakeville a comparable city. But, um, Lake Apple Valley was high again, and I think they had a really high one last year, and I know they're struggling with it. they're really grappling with. You know, I'm very happy, just to close out this comment, that we chose to use our ARPA funds to buy down the levy during those really rough years >> uh to keep it at seven and a little over seven, like 7.123, whatever it was. But, um, and and now we're still able to keep it at seven and add all of these additional staff. But as you pointed out and and city manager Lindberg pointed out, every year it's been 1.5 to 1.9 million in effectiveness, which is another word for savings, cuts, no ads, no replacements, all those things that >> cut that million and a half out or a million nine in this case. >> So it's not without the pain even to get to 7% or seven and change. Um, so I think we're doing a lot of the right things. There's just we're all feeling the fatigue of like, is there ever going to be a 5% levy, you know, again? And what was normal 15 years ago at 4%. >> Now it seems the norm certainly is is somewhere pushing 10. And it's not just us. I'm speaking, as you noted, all the cities are facing the same pressures that are driving levies higher and higher and higher. >> Yeah. >> So we're I think we're in a better place than most cities. It's still not ideal. It's not easy to swallow, but it's a heck of a lot better than 10 12%. >> Yeah. Or 14. >> Or 14. Yeah. >> Mayor and council, I I will add, council member key, that's very well put. Um, you know, as I talked to my colleagues, particularly in Dakota County, uh there are a few distinctives we have and I would agree with you that that the council's longer range financial planning starting in 2023 has certainly helped. Um, and I don't I don't take for granted or take lightly that seven plus percent year-over-year property tax levy increases are significant because they are. >> They are. >> Um, uh, and the benefit of that planning to us is we have been able to add four or five positions to the police department, two or three positions to the fire department, some of the admin staff or community development staff, whatever it might be that we've fallen behind on. uh where other organizations are looking at these increases and and they don't have plans to deal with those specific increases in public safety uh call for service demand increases uh like we've seen so on and so forth. So, um, even though these are absolutely significant investments that we're asking the community to make, um, those investments have real tangible results that the community should see and feel in their in their experiences as opposed to us trying to figure out how do we how do we do that and the other things and the pressures that that we're facing. So, >> um, uh, certainly is part of our reality. >> Yeah. Okay, Jenny. >> Um, so I'll move forward. Um, with that, wanted to take a look at the EDA fund since we are proposing a change um or a reallocation of that levy. Uh, that black or darker line represents the ending fund balance. So, uh, where we think we're going to be at the end of each of those years. Certainly, you do see, uh, funding sources, um, are in the dark blue, expenditures are in the gray. Uh we've predicted I think around $2 to $300,000 $200,000 going out I think in expenditures uh with an levy that's slightly increasing. You can see it's um just under total revenues are just under a million in 2030 and we do expect fund balance to be about 7.5 million. So it does still grow over time. The next fund is is the cable franchise fee fund. uh about three years ago, we introduced a plan to uh make this fund uh financially sustainable for the long term. What we're seeing and what we've continued to see is uh franchise fees and um PEG fees decrease um even at a maybe a faster rate than we originally predicted. This fund does pay for um the multimedia staffing and operations as well as capital funds uh for um community the the community television and those operations. So um the plan here uh the general fund did receive excess funding uh did receive fun some funding over the early years in this plan from the cable franchise fee fund. But as you can see that dark black line is the ending fund balance and we do very quickly go um go down to zero. So what we've done is really reduce that um transfer to the general fund. Eventually it results in a transfer uh from the general fund to shore up these operations in the outy years of the plan. Uh this is very similar to uh the plan the last three years for this fund and um we do annually take a look at what that transfer is and adjust that based on um the current operations and we have had to adjust general fund support and add additional general fund support over the past couple of years um because of the revenue declines. Um certainly we're seeing expenditures um generally you know increase um you can see in 25 and 26 I think those are some capital expenditures um then they do go back down and and generally do um remain consistent year-over-year. So we're not seeing huge operating increases for that uh cable television or multimedia um group. So this fund is it's in a sustainable position. I think you know some future discussions could be does it make some sense to bring those staff into the general fund and bring that franchise fee just into the general fund and then just leave this fund for the PEG fees which are restricted to certain activities. I believe they're um the more there are more restricted than the franchise fees. So I think that may be a future discussion so we don't have to do that transfer back and forth uh from the general fund. But um those but for now this is a good plan to move for moving forward. Um the forestry fund um this fund started I believe in uh around 2013 to deal with uh emerald ashbor. It was a it is an annual levy um that has remained at 200,000 for a number of years and um in about 2018 uh the purpose of this fund certainly is still emerald ashbor but also expanded to just really manage all diseased and dying trees so that we we are able to maintain um maintain and take care of um the trees within the city. So, uh, you can see in 26 there is a little bit of an there's an increase of about $100,000 in annual expenditures. We are doing additional removal of trees and stumps um related to a lot of well, as we see around town, a lot of the trees have died or are dying over the past couple of years. So, it really is um to manage that and and what the fund is intended for. But as you can see that dark line above, we do um have a healthy fund balance and are well able to manage um projected expenditures at this time. The sustainability fund, this really does um account for most of the activity in this fund is a grant from Dakota County uh for DVR, the Dakota Valley recycling uh with with our um other Dakota County cities, Apple Valley, Lakeville, and Egan, I believe. And so we do manage that activity here. Um there is also some additional city-f funded uh recycling sustainability activities uh that is funded through the landfill abatement reserves that we still have on hand. We do still have a balance in the general fund that is transferred in order to support the full activities in this fund. um each year is about 127 to I think it's 124,000 this year but around 120 to 130,000 annually um in support from the general fund. Um this is really uh revenues are are are in this revenues in this fund, excuse me, match expenditures. Um with that annual grant, uh we really do, you know, match revenues to program expenditures year-over-year. and fund balance is just a little over $400,000. So, we're in a good position at this point in time in this fund. Uh this next slide, we we usually um take a look at total FTEES um and compare back to the the organizational analysis. Uh current FTEES are that first column. Um those are those total of 338.5. Um last year's budget approved 332.5. But if you recall um earlier this spring we came with a budget amendment to um accelerate six of those 2026 positions for fire into 2025. So our that added six more to that current balance. Uh proposed 2026 you see some additions and some subtractions. Those really relate to some of the things that were discussed on earlier slides. Um, two uh division coordinators from the city manager department as well as a halftime administrative position uh in the city clerk. Uh we have two communications positions added for fire. Um there was an extra there was a 0.2 uh position in police to really um bring that well-being coordinator to a full-time position in 2025 and then um an additional strategic initiatives position that was part of the organ analysis uh for 2026. So a total uh movement in terms of additions a net of 4.7 that would bring the total complement to 343.2 two. Um the organ analysis um we always like to compare back to see make sure that we're kind of uh maintaining within that approved amount and that is um an eight that that did call for eight additional positions including those four fire from their standard of cover. With that, here is the overall year-over-year uh proposed uh levy at uh for 2026 for the city portion. So that includes city, all the capital funds, infrastructure, trust fund, parks, IT, equipment and vehicle. It includes our debt service levy as well as our forestry levy. So, we are proposing a $57.7 million total city levy with a $700,000 EDA levy to bring it to a total of 58.4, a total of $4 million increase or 7.4% year-over-year. Um the next slide, we like usually like to take a look at um some of these other um some of this other information related to taxes. As >> as we look at our year-over-year increases, you can see um the the history the past five years of um our year-over-year property tax increases. Um the city tax rate has increased over that time. Um in 2025, we were at 45.8. We are anticipating at least a preliminary uh tax rate of about 48.76. Now, we do expect this will change. There will be some minor changes to uh tax values, tax capacity, um those kinds of numbers before the before we get um before the county issues their proposed tax uh statements for 2020 2026. So, there will be some slight change, but we we're predicting we're going to be in this in this ballpark in this range. Our estimated market value is um right now the preliminary numbers were 10.02 billion with an increase in our median value home of about um just about 6,000 or just about $7,000 actually um to 356,500. >> Good ch job on that market value Jeff >> I can take credit for that. >> He's like yeah >> sure I'll take it. I was in a meeting with Jeff earlier today where I asked him to increase that by another about$2 billion dollar billion. That would really >> with a B because I feel like that would that would help. >> Seems seems reasonable. >> It would help our levy pressures a lot. >> Seem reasonable to me. There you go. >> So, thank you Jeff. >> We would throw you one of a party if you could do that. >> We'll give you a few weeks. >> Yeah. >> Uh so taxable market value. Um here are the components and the relative uh kind of how that breaks out. Residential val residential market value makes up about 62% of the total market value in the city. Uh commercial and industrial is 21% that is up from 20% uh last year. So those commercial industrial values have been increasing at a at a higher rate over the past um year um year year and a half um than residential rates which have been flat decreased slightly last year increased about 2% 2 and a.5% this year. Apartments uh make up about 15%. They um there they were 16% last year. There those market values have come down a little bit um year-over-year. So we're just seeing seeing the results of that there and utility values are about 2% and that's maintained has stayed the same. >> Residential is still the driver is >> Yeah. Yeah. I mean we've seen that shift it really shifted towards residential for a lot of years. We've seen a slight correction back um with our commercial mark commercial and industrial values. I think they were closer to 19% a couple years ago. So we are seeing that come back a little bit over the last couple of years. >> That's an important change for us, right? That really this this balance of taxable market value is a very important conversation uh for long-term >> sustainability. It's one of the items that I think is very important as we look to the future because that's where the base is >> and really when you look at our comparable cities, we're we're in a we're in a strong positive position from a from a market value perspective. >> We are >> uh we we are positioned well. We want to continue to strengthen that position. I like saying we're at 10 billion dollars in market value. >> You can say that now. We think pending final numbers. >> Final numbers. You never know. They might >> I'll still say it still. >> Very close. >> Very close. >> How many more projects did I was looking at? >> This is going to go back. >> I know. It's >> council weekly to see uh how many projects you have in there. in in all joking aside, it's one of the things that I appreciate about our our community development team, right? We've we've we've really rethought they've rethought kind of how how we're looking at at the market at the at the tax base and I think it's important that we celebrate those investments that are happening throughout the community that there are some significant ones and and certainly those significant investments are being supported by a um by a team of very talented professionals who know what they're doing. Yeah. From a community development perspective. So >> yeah. All right. Um, this next slide just uh shows market value in a different way. That estimated market value over time um over a 10-year period. You can see the growth um in the estimated market value which is uh the dark line and as well as the median home value which is the blue line. So they they do very closely correlate. Um you can see there was a little bit of a narrowing last year in that um the residential rates um decreased because of the change in the market value homestead inclusion that exclusion. It was a one-time change that all that affected all um all taxing districts that have residential values in the in the state. So everybody did have that slight decline. And then um this is just a reminder of the budget calendar. But um that is all I have for slides tonight. So if there are any questions or um input, happy to additional >> comments. I think we're right on track from looking at our financial management plan into uh the five-year budget, looking at our capital um improvements plan and all of that. When you look at it, it's right on target in terms of how we're continuously making sure that we are staying on track. >> Yep. And all of the studies have given us good information that informs what we're doing here, which says that that the financial management plan and a capital improvement plan and all of the other plans are allowing us to stay focused on what we need to deliver. So, but I don't know any other comments for staff. I think >> very well done usual. >> Anything else? >> Okay, >> Greg and Jenny and leadership team. Thank you very much. um >> you know, >> it's not lost the hard work that's gone into this, taking into consideration the pressures that you all uh are dealing with and staying within that 7.4. I mean, I was telling Alyssa that I went back and looked at some of our past budgets and I see where we were. We didn't make any um well during the recession where we really well we had one at zero and then it was like two and 3% but we weren't making any headway and now we're paying for it when we got to that 14%. But thank you, thanks to the ARPA fund allowed us to get out of some of that. But and now we're on track. But I went back and took a look at where we came from and why kicking the can down the road is not a good thing. Yeah. Because we pay for it some sometime. It doesn't go away. It just accumulates. Unfortunately, we're in competition with other cities who >> Yeah. >> raise everything. >> Yeah. >> But because we've been intentional, you can see where we're at today in comparison to others who are still struggling >> with double digits. >> So, and that's what I mean about being intentional and staying focused. So, thank you. Thank you so much. So, it's not lost even though we're making increases, you know, in in our employee count, but it's because we were running at a huge deficit for a long time. I mean, look at where we were with police and fire and now now we're at we're fully staffed now, aren't we, Chief? >> We're almost getting there. I'm going to more, but >> I think we're only two less. >> Yeah. >> And then in fire, we have How many that we have left in fire? >> I don't know. Do you >> to fill? >> Not sure. >> I'm not sure there. I think >> um I know they had a >> Well, they hire at most. >> The thing is we're getting there, but for the Oregon analysis, we wouldn't have gotten there >> in the way that we have. So, >> yeah, Dad. Well, I think it's worth pointing out that the cost drivers are Yes. We are adding more police and fire because there are more calls and policing in today's world is nothing like what it was just 10 years ago. >> Yeah. >> Or 5 years ago. And there are other departments that are getting some additional staff, but the bulk of it is in public safety. Yeah. >> That's really what's >> driving the need, and that's driven by data and evidence. It's not like we're just >> saying we need more. Um the call volume certainly in fire is >> very black and white. And then it's in >> and we see it every month, >> right? >> We see it every month in the reports. >> It's a different dynamic of policing that they never had to face before. >> And so and we've had to take care of our people better than we've ever taken care of them. >> Exactly. Um, so, >> um, that I won't restate what I said earlier. I'm just glad that we're at seven. >> Yeah, >> seven is the new three >> back in the old days. >> Yeah, >> but it's still not where we would like to be, but we're but we're doing it with purpose and there's justification. Yeah. >> In other words, when we express as elected, when we talk to the public and they say, "Why is the tax levy going up so high, here's what is driving it up?" >> Yeah. >> More police, more fire for more calls to keep our city safe. >> Oh, okay. Is that all of it? Most of it. Some of it is other areas. Straight up inflation, cost of wages, that's 3% plus every year. So those points, >> you know, so it's on top of that. And so what do you get? You know, what are you getting for this tax increase? These are the specific things. Sometimes it's um a capital project like city hall, which isn't part of the levy, but it's part of the franchise fees, which is on everyone's bill. What am I getting for that $8 that $4 electric $4 increase? You're getting a city hall for the next four decades. And um and it's not on the levy. Otherwise, it would have been a heck of a lot higher than that, right? And I explain that math to people. So, >> and when you tell them that everybody pays, we're not everybody pays on a >> tax. We're not just, you know, there's a perception of government sometimes that we just, >> you know, raise taxes because we can and everybody's getting a great great big raise because we can and that it's out of step with the private sector. >> Um, we don't do that. No, >> it isn't in step with the private sector because the public sector got raises all through the co co private sector did not unless they were a co beneficiary business where their their business went up 40%. Uh during but many others closed or went down and they're still struggling to come back so their wages didn't go up. So we we battle that sometimes right the perception of well wages keep going up for public sector but why aren't you suffering a little bit like the way the private sector had to suffer? >> Yeah. And and so that's a different discussion to have to explain how this works, right? We're not going to go up and down like the private sector. We're pretty much a steady yeti predictable and that's the way government should be, right? So we're not going to go down when the private sector goes down, but we're also not going to go up when the private sector goes up >> at expo. Right? So it is a it is a an articulation of the argument and presenting why this number is going up 7% every year >> and you can't get around the fact that we need more police and more fire. >> We have good data to back it up, >> right? >> And everything that we've been doing in the last uh two and three years are driven by all of the analysis that gives us the information that makes us >> make good decisions. And I want to close out by going back to the slide that you started with of potential future considerations. We're probably there because as Gary, as Greg pointed out, we don't have too many more rabbits in our hat as far as adjustments. That million five, which is now million9, which will be over 2 million, then it'll be 25 and eventually it could be 3 million to stay at 7% is going to make it up with a$2 billion increase in market value. >> So that was a joke. Just >> No, I know. I know. Uh, it's an inside joke to everybody listening. >> So, we just like to tease Jeff because he's really good at what he does. Um, so it it is it is there's going to be some very very hard choices over the next few years. >> Uh, because I I agree. I don't I don't believe you can continue to pull 2 million plus out every year. You're cutting, right? you're you're doing something to save that money that's eventually going to turn into something that is a cut that is more visible. Put it that way. >> It's very well put. Just to to answer the question, so as Tanya had mentioned, 85 of the 87 sworn police positions are filled. We're in process for the other two, so we're close. Six of the seven Cso positions. And then um uh for the fire department 50 this is as of August 1st 56 of 57 sworn positions >> are currently filled >> and I think that that is a an absolute testament >> to the city council's commitment to well-being of our staff. >> Uh this organization is in a position unlike any other. We've we've gone through it. uh and a commitment to caring for our staff, caring for our teams, and in investing in our people in that way is absolutely showing through um uh very positive results on the staffing side of things. Um uh and well, I can't express my appreciation to the council or the community enough for taking care of our staff and and because you do that, we can take good care of the community. Yeah. Uh, and that's that's very important. I very much appreciate Tanya's leadership, Matt's leadership, >> uh, the PD leadership team, the fire leadership team, BJ and and his folks. Um, u, it's a those are impressive results for for where we are right now. Yeah. And thank you because I always read your reports both police and fire every every month. And u yeah those call volumes continue to go up and crime goes down. That's a a a true statement. Crime is down but call volumes are up. So that means taking care of the community is still primary and you're addressing it. Okay, very good. Thank you very much. And now we're going into department budgets. Uh, and I'm not sure who is going first. Mike, are you first? >> Yeah. Mike Trey, our human resource director, is going to report on human resources. And you're also going to be uh uh reporting on the uh communications because you're the interim communications director. >> That is correct. Yep. Double duty tonight. >> Double duty. >> Um good evening, mayor and council. >> One of the things that I think our community needs to know that this leadership team all do double duty. There's a Yeah, Jeff and Jenny do double duty. Mike does double duty. BJ does double duty. And I think everybody does double duty on the leadership team. So, thank you so much everybody. You guys just do a great job of just taking care of things and keeping cost down. So, Mike Tracy, our human resource director and interim communications director. >> Yes. >> Thank you, Mayor Council. So, we'll start with human resources tonight. Um, just a quick kind of overview of our team. So, um, we are a small but mighty department of five. >> Um, we do a lot of different services. So, again, we care for our people so they can care for our community. Greg kind of reiterated that um here earlier. Um our core services, we do recruitment um and staffing support for the organization. Um we do employee payroll. Um so every other Friday we're everybody's favorite department. Um fleeting. >> Yes. Um employee benefits and and leading some of our well-being initiatives, labor and employee relations, and then employee safety. So, we kind of encompass and and and handle all those different uh core services. Some of our achievements, accomplishments over the last year is implementing the well-being enhancements that we are grateful for the city council uh for for adopting last year. Uh we completed an internal review of all of our position descriptions as part of our two-year compensation uh plan where we make sure that internal equity is aligned and those position descriptions are are up to date and accurate. And then earlier this year we conducted and completed a compensation market analysis to inform uh the the 2026 budget and moving forward. Um and then in addition 36 additional uh our full-time part-time staff that we recruited for onboarded 103 seasonal employees and then 324 election judges um to assist with the general election from last year which city clerk's office knows all about. Um there are some challenges and some opportunities ahead of us. Some of this was covered by Jenny's presentation um here earlier, but um growing compliance requirements obviously take staff time. There's additional reporting um that we do to the state. Seems like almost every year there's something new that we have to that we have to follow whether it's from an HR payroll perspective. Um we know coming up in 2026 we have the state's mandated uh leave program which um as you know we'll we'll reiterate we are applying for an exemption. We do feel very confident that we will get that exemption from that uh from that program. Um and with that more demand for HR services. So as we add more staff um as we do more recruitments uh it creates more you know as we pay more people it creates more demand for uh for our services. Um and then remaining competitive with rising labor and insurance costs. So, um particularly in public safety, um you know, market and and wage increases continue to rise. And then insurance costs, as we mentioned, 13 a little over 13% health insurance increase for for 2026. Um we're grateful that we had a rate cap. It would have been significantly higher if we did not negotiate that last year. So, um those are continued pressures that we anticipate will only continue into the future. Um we also have the four open labor agreements. So that is uh something that we'll be uh we'll be handling and tackling this fall. Um and then as we mentioned to every two year we do the market and job evaluation um uh evaluation where we review job descriptions, maintain an internal equity and then do that external market uh study. So you'll see here um department expenses. So 2024 um was light that was expected um in terms of overall expense expenses um so we were short staff you know we brought on Cameron Waters our HR uh manager um mid last year so we were we were operating kind of short-handed for a good portion of the year. Um and there were other other factors as well too. So, we have some centralized funds in our uh in our department such as tuition reimbursement. We also manage some of like our um employee wellness and gym spaces and and things like that. So, some of these expenses we expected not to have um uh expenses in 2024. And then we do have an amount for legal expenses that we hold um in case we need outside legal counsel related to employment or or investigations. that thankfully we did not have in 2021. You'll see in there. So again, major changes in uh in our HR department budget is an overall reduction of 15 almost $16,000 in operating expenses. That's simply just right sizing, looking at five-year trend history and seeing that there are opportunities um to reduce without impacting core services to to staff. Okay. >> Any questions from >> any questions? You run a lean ship, >> but you're the favorite department every two month every >> every other Friday. >> Every other Friday. >> Okay. >> Great. >> Okay. Thank you. >> Jumping into communications next. So, this is an overview of our team. So, this is different or has changed over the last handful of months. So, we did a communications assessment um this last year. Um we've had some changes obviously uh as interim communications director um we've implemented some some of the recommendations from that communications assessment. So, the biggest change you'll see is the assistant communications director. That's Amber Jacobson who was our experience and engagement manager. She was promoted to u assistant communications director. And then Cali um who was our digital communication specialist has been promoted to one of our communications coordinators. Um we did have our new communications coordinator Katie um who's coming from the city of Savage. Today was her first day today. So >> today was her first day. >> Today was day one. So uh we're very excited to have her. She's joining our team and makes um number two of the communications coordinator. Um and then you'll see we have our multimedia team uh with our multimedia manager uh and two videographers and then our engagement and experience team as well. Um the communications and events assistant is also a new position um as of this year using existing resources or or FTEEs that were that were vacant. Um and that position is filled by Laura Krueger who's been a a longtime seasonal employee for us. So to an overview, we build trust and engagement by connecting the community with city services, programs, and people. We tell our story and connect the the community with their government. Core services that we provide is general communication support and strategy to the to the organization, uh media relations, marketing and branding, multimedia and community TV, and our community experience and engagement teams. some of the achievements or accomplishments over the last year. Uh we com completed the communications assessment as I mentioned earlier. We launched our pilot neighborhoods and grants program um which is still ongoing. We conducted our community survey that we conduct every four years um and will be coming to council and the community on that in the coming months. Um and then we provided communication support for the uh small project that's occurring outside um and around the building. um other challenges and opportunities as we implement this communication assessment and kind of rebuild the the communications team. We're growing, we're restructuring, we have a lot of new people in new positions. Um so we're learning a lot. Um we had some temporary help over the last year that have uh you know come and gone as well too. So, there's just been a lot of shuffling and changing um and obviously having uh you know an interim director as well too um over the last year. And then I know we've talked about this before, it's in our leadership plan. We have you know upcoming digital accessibility compliance requirements that are that are coming in April of 2026. So, our team is focused on making sure that our website and other digital um platforms um meet the standards by by April of 2026. And we're working with it and their team as well to to make sure that that happens. Um this was touched on in in the in the presentation earlier, but revenue um you know, we expect the the cable franchise fee revenues to continue to decrease um as expected. And then expenses. Again, we had 2024, we had some obviously staffing changes over over the last 20 or over 2024. So, um, you know, community TV and and our public experience and engagement. Um, as expected, we did a little bit less initiatives there as they helped out with our communications functions. Um and uh overall in terms of major expenses, we did rightsize some budget line items resulting in a total reduction of about $11,000 of our non-personnel budget uh operating budget. Um but we did request or or additional two FTEEs. One's another communications coordinator to round out the communications team um as was uh recommended in our communications assessment. and then backfilling Amber Jacobson's experience and engagement manager position. Um, one other additional expense that was added was an addition of a website consultant. Um, so the idea is in 2026 we engage a consultant to help start thinking about how we can um rebuild, redesign and reimagine our our digital um our website presence. Well, that's good because we've been talking about it for a year, but you've been busy trying to keep the communications function moving along with all of the different changes. >> Correct. Correct. And and right now we will be doing a small redesign of our website to help get um more in compliance, more backend um uh code and and backend updates. But there will be a small redesign that we'll be doing this year that won't have significant it'll have some navigation impacts and then we we think that we'll have be able to create a better experience for our our community with that. But this would really be holistic looking at a complete redesign of our website. Okay. >> And it's the beginning stages of that. >> Improvements in search may be part of that. >> Yes, absolutely. >> Most definitely. >> We have a lot of information on our website, a lot. And some of it is maybe not so easy to find. So, and we're currently working on how we can address that now with our existing platform. >> Also, in that search button, you know, when you put in a word that you want to search, at least you get to it rather than trying to navigate through all kinds of methods to even get to the information you need. So, that's going to be great for our people. >> Yeah, >> we've we've talked about it with the council in the past. Yeah, we we fully expect to be in compliance by the April 2026th uh deadline um by through some of the changes that that Mike's outlined here. We also recognize the need to comprehensively look at how we approach our website and make holistic changes into the future and we'll use 2026 to start preparing uh to do just that. >> Yeah. And it would be good to understand our path forward, you know, so we can manage expectations as we go along. >> It will be a several year project. >> Yeah. So that people don't think it's once one and done. >> Yeah. It will be a significant project. >> Yeah. Okay. >> And then lastly, we do have a couple capital requests in our multimedia team. Um so one is edit share. that is like our platform for editing videos and also the storage of our our um digital uh content all the video um B-roll vote uh footage that they they collect that is past end of life and one thing that we are looking at is potential options for either cloud-based or hybrid based um storage solutions um and playout automation replacement. So that is the software system that actually transmits the live feed or the live meetings to our cable channels and and and such like that. That is again not only past end of life but also as we talk about digital accessibility, one of the requirements is making sure that we have closed captioning. Um and our current platform does not allow us to do that. So, one of the things that we are looking is trying to make sure that we can find one and we and we found one um that will make us compliant ahead of time. >> It would be also good to know how to access our YouTube channel for all of the different meetings that we have. So, if I'm looking for a meeting and if I can use a word to get to find that YouTube um program that's about that I can get to it right away. I think that would be really helpful. >> Absolutely. >> Because sometimes I want to go back and say, "Okay, I know it was a work session in May, but what's or or April, I don't know. But if I had a word and I can search I and I can get it, that would be great. >> Absolutely. Yeah. Right now it's about a dozen clicks to try to find it. Yeah. >> Um we're working right now on how we can make it easier um for the community to find especially things like that that might be more top of mind. >> Yeah. Good. That is all. >> Thank you. Any questions, comments for Mike? >> Okay. Thank you. Where where would she go? Oh, there she is. Okay. Next is a city clerk, um, Michelle Collins, and she's going to report on the functions of our city clerk. >> Thank you. Um, our team consists of myself, the city clerk, and we have a deputy assistant and assistant city clerk. Um, as Mike related to us, we had 324 election judges in 2024 3,000. Did I say 3,00 324? Right. Okay. And those are seasonal during election years. A little overview or about what we do at the city clerk's office. We do public meeting administration, preparing agendas, minutes, and other documents related to the council's work. We are in charge of records management and data requests. So we do assist other departments with the retention of their documents and and and helping them maintain that information. And we also help departments with data requests, people from the public or other government agencies or other entities that are looking for that public information. We do election administration. Um, typically this is only done in even years during a state uh general and primary election. Uh, every four years we do have the presidential nominating primary in March that corresponds in those presidential election years. We do licensing uh business license administration. Those would be your tobacco and liquor and massage type licenses. And we also assist with legal compliance, making sure we adhere to open meeting law, public notice requirements, and that type of thing. All right. Some of the achievements we've had in the last year, we have developed a new cannabis registration program in response to the state uh office of cannabis management requirement for cities to do so. Um we process over 300 new and renewal licenses a year approximately business licenses. Um definitely an achievement 20 it should say 20 fall of 2024 we had the primary and general elections and it has been uh over a year since we reported to the council. So those things would have happened within the last year. Um we've also taken on some BEu classes where we're um helping to train staff in things like agenda software, laser fish and uh data request software. Some of the challenges we have. So we are in the process of uh demoing new voting equipment. So implementation of that new voting equipment and also there are some new election laws. Uh this happened last year where the state legislature authorized what we now have. We kind of refer to it as early voting, but technically it's that um in-person direct balloting, right? It's it's still absentee voting. There was a law that changed that said we could implement early voting and that it was we were told that's supposed to be expected in 2026. Now whether or not that happens is completely related to whether or not the secretary of state's office is ready for that program to go live. Okay. >> We uh have already implemented the cannabis registration process. I believe we have one fully implemented cannabis register uh uh business registered and it was a um medical cannabis dispensary that is now fully registered. issued our first license, our first registration for that. And we're working on developing a contract tracking process so that um all the contracts that throughout the city that come through the city council that we know that they've been through the process, they've been vetted and signed and and ended up in the repository so that we can find them afterward because with um the the implementation of DocYsine, we have much easier ways of keeping track of those things now than when we had paper copies that had to be hands signed, but still want to keep track of those. For revenue, we do have licensing revenue and uh that actually has not increased. Um but we have lost some of our uh bigger licenses like um Outback for instance, right, has went away. So, um, and when we lose some of our on sale liquor licenses, that revenue will drop by a little over $8,000. Um, now for 2026, we do expect that we're going to get a little additional revenue for those cannabis registrations, but still budgeting. We did budget very conservatively on that because we're not sure how many we're going to get. There's our new cannabis registration fees for expenses. Um, we have stayed roughly as the same over year-over-year. In the city clerk's office, it goes up a little bit. However, you'll see in the election portion of our expenses, of course, those off election years, those odd election, those odd years, we don't have an election, the expenses for elections drops significantly. There are still some ongoing expenses for things like voting equipment maintenance and the JPA we have with the Dakota County for um absentee ballot administration. And the good news for that right now we we had gotten uh our portion of the Minnesota voter grant funds was about $5,500 and the legislature did increase that last year, maybe it was this year to $21,000. So we're getting about $16,000 more. Um what that means for us is that when um we have those elections and we have that JPA with Dakota County that it covers more of those costs so that we don't have to pay as much for them. We let the county um be the administrator of these grant funds on our behalf so that we don't have to peacemeal this and we then they would pay us and we would pay them back kind of thing. in the odd election in the odd years when we don't have an election that those funds can be used to cover our our voting equipment maintenance costs and that type of thing. So, it has uh lowered our election budget a little bit in that regard. Um the new voting equipment and uh we'll probably if we do get that actual early voting, we're probably going to need some additional staffing. Um, we're just assuming that uh voter turnout might be increased if that goes through. We saw this >> when we implemented that in-person direct balloting where you can put the ballot in the ballot counter. We did see a significant increase at that time in our in-person voting. And if we get the uh real early voting, we may see that again for capital improvement. um the new voting equipment, even though we're going to receive it in 2026, the county is going to uh fund is going to carry the project cost for us and allow us a 0% over five years to pay 0% interest over five years uh starting in 2027. So, we've got that one year to get that uh feathered into our budget and it'll be about $39,000 a year for five years. Um, our current capital improvement plan is only from 2026 to 2030. Um, it it will also go into 2031 for the five years. So total cost for the new voting equipment will is estimated to be just under 200,000 and they will do the financing interest rate over our five-year period. >> That's all I have. Any questions? >> Any questions for Michelle? >> Okay. And next is Tom, our IT director. Okay. Tom, floor is yours. >> Madame Mayor, council members. Thank you. Um, as like previous slides, I'm going to go through a few items and stand for any questions you have along the way. Um, our chart, uh, makeup of the IT group has changed a little bit from 2025 or 2024, excuse me. Um we actually transitioned and centralized GIS services under IT primarily a transfer of GIS one GIS FTP FTEE position from public works into IT and a internship position into IT to centralize our IT service the GIS services and operate out of IT. We still deliver the same level of GIS services to public works when they had their position. Um, and we're going to continue to assess our GIS needs throughout the organization, but operated as an enterprise service through for the entire organization through it. Um, this chart also represents 10 full-time positions currently in IT with one departure earlier this year. So, we are budgeted for 11 full-time positions. There's two seasonal positions which one is the GIS intern, one is a regular IT intern position and then we also have two contracted part-time staff people today currently to help backfill some of our our departure in May. Um these areas operate as um we deliver GIS services throughout the organization. We have a technical services group which is our day-to-day operations and service desk and we have a application services group that focus on our applications and our hosted services and our integrations between systems. And then we also have a infrastructure group of one plus consultants and and logist services uh that helps us manage our extensive network, our data center infrastructure and also um our automation and integrations between systems. Um as a department we provide robust technology services as I mentioned um which includes all those service groups um including security management maintenance of hundreds of devices and several software packages throughout the organization. We also support staff throughout the organization. Um we work with partner organizations like the MVTA, Dakota County and other groups that we offer services to along with the AIM center and other stakeholders that um may demand our services or use our services on occasions. Um and then we try to provide value to the organization and the community in our daily services that we offer and deliver. Some of the more recent achievements we've had um included an IT asset condition assessment to inform our ITCIP. Um along with that earlier in the year we did a IT security assessment um utilizing a consultant and we also utilize ongoing self- assessment tools to help us keep on top of cyber security um issues and incidents. Um, >> we've had some very positive reports in that process and we continue to see positive outcomes from our our great tools and services and and um efforts towards cyber security here in the organization. >> That's so important. We don't want to have the experience St. Paul is going through. >> It's very top of mind these days. Um, but it's always been top of mind in terms of our services that we keep on top of and and in front of as much as possible. It's also, you'll see it in a a subsequent slide under challenges. It's one of our challenges. It's a it's a it's a pressure point that we deal with daily. Um and it's not just during business hours, it's after hours and um constant um issues. Uh we also recently went through a infrastructure replacement project uh as part of the water treatment facility electrical project. Uh we replaced all low voltage infrastructure at the water treatment facility in anticipation for our large capital improvement project for um network services. Um that was completed earlier this year. In addition, we also helped bring forward a 10-year service agreement for Axon officer safety package which included body new body cameras, new generation body cameras for police and fire services along with vehicle cameras. And that also included the taser package um as one complete agreement for a 10-year period. One of the benefits of that 10-year period is it makes a very predictable budget process from 2030 through 2035. It'll be budget neutral increases. So, it'll be the same amount annually for those that 5-year period in the last five years of that contract. >> In addition, I already mentioned u we've centralized GIS services into it. So, that was a major accomplishment. Um, essentially we promoted Matt Tran our to our GIS manager. Um Nick Glatt Hav moved from public works into IT. He's still located at our maintenance facil facility delivering services to the public works group, but he now reports to Matt Tran in our group. Some of the challenges as I mentioned earlier um cyber security is top of mind is it's also an area of increase in in costs and and time and services that we are seeing uh constantly. uh we do have great tools. We're constantly doing training and awareness activities and we're changing our priorities around cyber security and security initiatives in general across all of our service delivery areas. System life cycles of IT systems and other systems across the board are shortened. They're becoming shorter as you may have heard me and our consultant from True North discuss during the IT capital assessment um condition assessment um process. Um there's higher demand in in number of devices and the types of devices that are being brought into the organization and then changing expectations of not only uh our staff needs and organizational needs but also in general of the public and and business community and what and how we deliver services opportunities though um we are using those capital that capital plan to help inform our work and we'll continue to do that going forward. Uh we're also continuing to work on our operational assessments um to make adjustments within our team and the services that we deliver to all the the parts of the organization. And then upcoming we are also identified in the O or analysis um for positions in 2027 and 2028 to help us address current needs um as we realign IT services to meet the needs of the organization. We do have lease revenue in it. We currently manage tower assets or tower space for antennas and land leases for monopoles and towers that are several that are cityowned and several private towers on city property. Um we also have funds coming into the water sewer fund um from our fiber leases um partnering primarily with partner organizations like the state of Minnesota, Dakota County, MVTA, uh Scott County and uh a few other uh small partners. Um so we we are seeing a slight decrease in revenue >> of fiber space available to sell. We uh we do have fiber capacity um and empty conduit still available for leasing to others. Um our lease revenues are going down somewhat only because the uh the realignment of telecommunications to need less space on towers. So in many cases they're um removing equipment, not necessarily adding equipment. We've also seen some um loss in revenue as a result of the u recent uh property sale from the uh old fire station parcel. Uh the city has had a water tower or excuse me a cellular tower on that location. So we've seen a slight decrease because of that and that will continue to be ongoing. uh expenses in it uh for 2026 are going down um primarily as a result of we've shifted some of the public safety costs and realigned those into police and fire budgets um primarily from our axon subscription >> costs under that 10-year agreement I mentioned earlier. So those costs you'll see borne in the operating budgets of police and fire. And so there's been a shift as a result of that. We did see a slight increase in our GIS services because of the transi the the realignment of GIS from public works to IT with a reduction in the public works operating budget as a result. Um but overall um we we are seeing a small decrease in the 2026 budget request for our expenses. Um, as I mentioned a little earlier, we u saw those expense changes as a result of the GIS expense moves. Um, some of the increases though are a result of our increased number of licenses we need for our services we deliver because of staffing increases over the last few years. Um, anticipated changes in our our systems coming up primarily with uh phone service and other um applications that we need from our subscriptions with Microsoft. We also have seen a um an increase in our Lois professional services. These would be services we use from Logis to help us manage our large network across all of our facilities. So we anticipate a larger um increase in the services needed. We've seen a trend in the last couple years of increase and so we've adjusted the budget to reflect that in 2026. And then security um we are seeing uh as a result of a capital purchase from uh three years ago um that capital purchase included three years worth of maintenance. We're now into the fourth year of those firewalls and so we're starting to realize that in our operating budget and we'll see a slight increase in our IT budget because of that. Our capital budget year over year through 2030 is all is increasing as a result of our uh capital asset condition plan and our our planned replacements over the next several years. And I'll go through some of those here in the next couple slides. So as a result uh 2026 we're seeing a spike in our overall capital. The major change in 2026 is our planned ERP replacement project which represents about 2.815 million out of that uh increase. Um some of the other capital increases that we're seeing um are continued extension of our fiber infrastructure to w utility sites today that are cellular based and are we're in plans to um be tied into our fiber network. Um equipment leases and IT infrastructure that were built into the capital plan and then our ERP platform that I mentioned earlier are the major increases that we're seeing. Um, we are using the condition assessment report as a way to inform that capital budget that um, shows year-over-year increases. And then some one other study coming up is our parks lighting and camera study to inform us on what our needs are in the parks as it relates to cameras and lighting conditions. Yeah, >> it's a long time coming. >> A few of the significant projects also that are represented in that capital budget um as I mentioned the and the time frames associated with those projects are ERP system replacement. Our anticipated time frame is that starting in 2025 and we anticipate a multi-year project to roll it out to the rest of the organization. As uh Jenny has mentioned several times in our budget discussions, we expect that it'll be an organizationwide impact, taking um time to implement um over course of a few years um to do it right. U we are also starting already on uh network infrastructure replacements that the council most recently uh approved. Uh we've made a purchase. We've already received equipment. We've got about seven pallets of equipment sitting downstairs right now uh ready to be deployed over the course of the next year and um we anticipate a couple more pallets to come in before we start. So uh quite a bit of equipment in associated with that project and then we also have another significant project starting at the end of this year into 2026 and that's a replacement of majority of staff uh devices, laptops, desktop computers throughout the all facilities in the entire organization. Um and then as a as a part of our um city hall project, we anticipate a new data center opening up in mid to late 2026 uh with a replacement of our infrastructure in those data center here at city hall and also at the maintenance center as I've mentioned in our capital study previously. So some significant projects coming up that are kicking off right now and going to be uh keeping us busy for quite a while. Yeah. >> And I stand for any questions. >> Any questions? Well, it seems like uh the report that you gave about I think it was last month, VIT report. Yes. >> Um study, you just reiterated it again in terms of the budget and how you're progressing with all of that. So, I like seeing all of that being so intentional and built in. You know, if we're going to do studies, then let's use the information to inform what we're doing and what the costs are as we move forward. So, thank you. Yeah. And you have the big project because that's that's going to be rewiring everything. You have a big infrastructure. It's going to keep us busy for quite a while. >> Yeah. >> Anything else? Uh, council members, any >> knee pads in the budget? >> Knee pads or e- pads. >> Yeah. >> Better security in the parks. That's good. >> Yeah, we need security in the parks. Yeah, I don't I feel very safe when I'm walking late at night from the AIM Center back to my house because I know there are eyes there's somebody watching and so I'm I can walk at night around Nichollet Commons Park coming home by myself and I feel very safe. So, it's and that's why I think it's good to have that. I think everybody uh at Red Oak would have wanted us to have better cameras there and so that's coming up. So, that's good. Anything else? Members of the council, Greg, Jenny, and the leadership team, thank you so much. I mean, it's really good for our community to see the same information that we're getting and they're getting at the same time. And that they understand that we're all in this together, all of us, staff, elected officials, and members of the community, because we're all seeing the budget as it's being built and presented. So, thank you. And uh if there are no other items to come before us tonight, we stand adjourned by acclamation. Thank you so much everybody.