Budget Review Commission - February 27, 2025

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review commission meeting of February 27
to order and someone will take a roll
call okay chair David
Smith yes commissioner Carla here
commissioner Brad Newman here
commissioner Jim ransco present Vice
chair Daniel schwier here commissioner
Sharon site
here and commissioner Mark Stevens
here oh
here and staff is
present now maybe you can hear
me um well we finished the meeting while
I had my microphone turned off
so um no I was just going to say we're
set up set up to have public comment and
the boilerplate that goes with that that
citizens May address the members of the
budget review commission regarding non
agendized items during public comment
Arizona state law prohibits the
commission from discussing or taking
action on any item that is not on the
agenda citizens May complete a one re
one request to speak on the public
comment card per meeting and submit it
to the city staff right over here and
the public testimony is limited to three
minutes per
speaker with that said let's start with
the business of the day and the first
business of the day is to have you all
um hear the introduction that Mark
Stevens who will give for himself the
rest of us did this last week and um he
was absent from the meeting Mark okay
thank you uh unfortunately I had a long
planned trip out of the country and so
that's why I wasn't here and uh sorry I
missed that but I did listen to the
entire replay of the meeting so believe
I'm up to speed uh as far as my
background I'm retired now I spent 36
years with the uh uh accounting firm of
ernston young I was on the audit staff
the entire time partner for 24 years uh
I was the office managing partner in the
Phoenix office for uh eight years and
then at the end of my career was asked
to transfer to San Diego continue to be
an audit partner and then also be the
managing partner of that office uh had a
little bit of governing experience and I
was a concurring review partner on
moderate sized city here in Maricopa
County and I did have a better a little
bit of experience I worked on a task
force in San Diego where there was a
combination of about 12 uh C CFO type
people Business Leaders that met for
about a year and a half and looked into
the
structural deficit problems that San
Diego had and issued several reports on
that so it created some awareness of
some of the issues you can get into and
one of the things I guess I'll
complement the city from what I'm seeing
now as I try to get up to speed here is
I appreciate in the orientation that
there were specific words in there
indicating that we will not have a
structural deficit that we will use
ongoing revenues to pay for ongoing
expenses and not use one-time items for
recurring expenses so that was like a
music to my ears when I when I saw that
so uh I haven't done Robert's rules for
about 20 years so uh you'll have to help
me if I do something wrong on that but I
look forward to determining where my
Lane is and how I can help the city and
the commi commission on this thank
you thank you Mark for those of you that
don't know Mark is the appointee of uh
council member Barry
Graham and uh and I think last week Jim
you were able to give a recap of your
background so you know us all now and
that will bring us right on to item
number two on the
agenda um which is the approval of the
minutes from the last meeting and before
we entertain a vote to do that do if you
have read the minutes are there any
comments or questions that any of you
have um commissioner
Carla uh yes the first correction is um
throughout the entire minutes meeting um
it city manager Greg Kon not
Canton so that needs to be corrected and
then on item number six the second
bullet
um it should be concerned with
sustainability not concerns with Su
sustainability
please commissioner Stevens
uh yes thank you uh may sound a little
nitpicky but on that same section six
the fourth bullet point as I listened to
the replay uh that ends with uh how they
come about uh why they go south rather
than selecting individual projects and
when I listen to the replay that's not
what I recalled and the replay if I
don't know if you need to go back and
look at that it's at the U 5815 Mark
what the chairman actually said if if he
agrees with this is so instead of
individ uh instead of rather than
selecting projects I believe he said so
we'll be judicious about what capital
projects we actually look at so I don't
know if you need to go back and listen
to the replay or if I just need to say
that uh the words rather than selecting
individual projects should be deleted
and replaced with uh so we will be
judicious about what capital projects we
actually look at and the reason I think
that's an important distinction is just
just that I didn't want to go on record
that we weren't going to be looking at
any uh detailed
information I do agree with that
commissioner
Stevens uh because we will I think at
some point want to look at some of the
projects we certainly heard from uh some
of our council member app pointers that
this is an area where they're concerned
about not so much that we can revisit
the project and correct anything that's
happened in the past but certainly
use it as a learning experience for the
future um and I have one other thing
that I I don't know whether it requires
a
change uh but on page um three of
the uh
minutes the comment is made that that I
noted that the bed tax which accounts
for $ 36 million of Revenue was only
spending $22 million on expenditures and
and it was later
clarified that that's 22 million that's
spent on expenditures and much of the
rest of the money is expended it's just
transferred out to the general fund for
Debt Service and capital projects and
and other items so I didn't want to
leave it as a statement that uh there is
an undere expenditure of the bed tax
money I mean it's uh it's all accounted
for I don't know whether that requires a
change or how you want to finesse that
but um
just don't want the record to show that
there was an underspending of
money does anyone house else have any
change to make on the
um seeing none then I will entertain a
motion to adopt the past minutes with
those noted
changes and I guess you now
vote uh so vote yes no or maybe is the
right hand
button and we
have unanimous
70 thank
you and then the major first major topic
today is to discuss the um major
operating budget
revenues and Sonia Andrews City treasur
Chief Financial Officer will present the
city's major operating Revenue VES
including but not limited to uh the
allocation of revenues the projections
and the forecasts for the budget review
commission
Sonia thank
you next
slide so the purpose of this agenda item
is really to help the um Commissioners
understand the uh major revenues that we
collect as a city and how we allocate
those revenues to each of our funds next
slide um we are still currently working
on our fiscal year 2526 Revenue
projections they're not quite done so
this presentation we are going to use
the fiscal year
2425 budgeted revenues essentially the
2526 um revenues will be more or less
the same as the 2425 revenu so not a lot
of change but uh since they were still
working on that I decided to use the
2425
budget revenues to share with you this
information so what you see on this
slide is the total City and this is the
revenues that we collect in the total
City you can see that we have um 38% of
our revenues comes from fees and charges
primarily that's because of our
Enterprise and internal service funds we
have water sewer Solid Waste airport and
we have some large internal service
funds like our self-insured health
insurance fund and our risk management
funds which are all 100% fee and charge
support it and so when you remove those
um Enterprise and internal service funds
the bulk of our revenues do come from
taxes and that is the local sales tax
which is the dark blue um pie in this
chart and the state shared taxes which
is the orange pi and then property taxes
which is the Green P so what um the next
two slides what I'll go through with you
is the details of each of these High
slices and what you'll see in the next
two slides is primarily those three uh
tax streams are uh make up probably more
than 75% of our revenues for our core
Services um and then our non uh uh I
mean um non-enterprise and internal
service functions so next slide so I've
kind of colorcoded all of this for you
so this is our Enterprise and internal
service functions which is our water and
wastewater
uh fund our Solid Waste airport uh
Aviation and internal service funds and
as you can see these Enterprise and
internal service functions do not rely
on taxes so the local sales tax column
here there's a 200,000 of sales tax we
collect from jet fuel sales that goes to
the airport fund outside of that none of
our sales tax or bed tax support any of
these Enterprise or internal service
functions likewise we do not use any of
our state shared revenues to support any
of these functions and for property tax
the only property tax that goes to our
risk management fund is the property tax
we assess for involuntary tort judgments
which is allowed under the Arizona admin
code and otherwise you can see that
these functions are fully supported by
fees and charges and other revenues
so other revenues in water and sewer is
primarily like um interest earnings as
well as our intergovernmental agreements
we have some intergovernmental
agreements we've entered into like the
Arizona Department of Water Resources
and the cap for uh compensating us for
reducing our usage uh from Lake me um
the other large other Revenue category
is in our internal service funds and
that is our self inssurance
healthc care fund where we uh collect
the um employer and employee
contributions to our health care fund
and so that's that 40.8
million next slide before you leave
before you leave that slide yes um I
will comment and I think I speak for the
commission but anyone else can comment
as well we probably will not be
addressing in great detail the
Enterprise rates and fees
um for this coming budget we may as we
as the commission matures over the
months to come we may look at this but I
think you're going to have a hearing on
rates and fees very soon and um I don't
know that we have a basis for making a
recommendation I think you might explain
to the Commissioners or to the public at
large what the drivers are and what they
will be when you make this
recommendation to council uh on the
rates and fees what are some of the
things that you
consider yes
yes and before you do that commissioner
Stevens has a question
too uh thank you I just wonder if you
could clarify a little more for me what
the internal service funds are if it's a
lost trust fund stuff I I think I
understand that but if there's a lot of
shared service things going on I'm just
trying to decide where we need to spend
our attention and if it's shared service
that's kind of a zero something so
unless there's fat in a shared service
function there's not a whole lot for us
to necessarily focus on so maybe tell me
a little bit about what's in there and
then the other OB thing if you can blend
in here somewhere is maybe your overall
approach to revenue budgeting in general
because from what I saw from the debrief
of last year and the five months through
November you appear to be fairly
conservative when it comes to doing
revenue and you don't try to pull in
even things that are audit related that
happen every year uh so it's I I'm an
accountant so I like conservative but
unduly conservative can be bad but I
still like conservative so just the two
things if there's something in shared
services that we need to understand
better to decide if we need to look at
anything there and then your overall
approach to revenue so we can decide do
we want to spend much time there or are
you consistently conservative so I would
personally from myself not care as much
okay well thank you for the question
commissioner um Stephen so for the
internal service funds we have our
Health Care self-insurance fund
and I guess you know in terms of this um
commission if you wanted to look into
our health care costs our health and
dental costs that's one area we can
certainly bring back to this commission
to explain how we um uh you know obtain
Health Care insurance which is partly
self-insured and partly with through SNA
and all those costs if you're interested
in that the other large internal service
fund is our self-insured risk management
fund which we are self-insured for work
workers comp and liability like property
liability or you know um any of our
other liabilities and again we can also
bring back to this commission if this
commission would like to see how we um
secure our stop loss insurance and our
excess insurance insurance so there is a
I think our insurance premium costs
about 5 million a year so if you wanted
to look into those costs you can as
well I don't know if I'm allowed to say
something since I asked the question but
thank you for that I was curious about
what the had an umbrella over some of
the self-insurance stuff so you do have
that and then my understanding is you
have a lost trust fund board that
actually digs into the details of the
propriety of those dollar amounts in the
in the budget I don't know if they T
touch on the budget amount but they look
at those things right yes we have a lost
trust fund board and um they also help
establish the confidence level for our
reserve requirements in our risk
management fund and they do re receive
reports of um basically our risk
management
activities and the last internal service
fund is our Fleet Management fund so our
internal service funds act like internal
businesses for our departments so our
Fleet fund our Fleet Department uh owns
all the fleet all the vehicles and they
lease it out to the Departments through
a rental rate that covers not just the
cost of the vehicle but also replacement
value for the vehicle and then they also
charge for maintenance and operation as
well as um
fuel but now returning to my question
which was was can you explain to the
fellow Commissioners in the World At
Large what some of the considerations
are that you have when you make a
recommendation for a rate increase or
decrease these are the little businesses
with inside the city and have their own
pnls their own income their own expenses
their own Capital program but
nevertheless Council controls the the
rates so talk for just a moment about
yes absolutely so the internal service
funds are all uh cost reimbursement
basis there is no profit or there is no
you know excess other than the reserve
requirements that are required basically
for both the self uh insured health care
and the self insured risk management
fund those reserve requirements are
determined by Actuarial calculations so
we actually have an actuary that
calculates what those reserve
requirements are and So based on those
reserve requirements and the cost needed
to pay the premiums and the self-insured
claims that's how the rates are
determined to charge the um departments
and both our risk management department
and our Fleet department they have their
a a rate model so to speak that
calculates how much they charge each of
the operating departments for their um
basically coverage or
services and I do invite anybody else up
here that has a question on these little
Enterprise funds and uh to ask it now or
come back later and ask it yeah go ahead
okay um next
slide so moving on to our non-enterprise
and non- internal service funds this
governmental funds is the bulk of where
our core services are which is police
fire Community Services Public Works
Human Services this is where all our
other operations are and as you can see
local taxes State shared and property
taxes so the dark blue column that First
Column the orange column the state
shared revenues and the property tax
column that makes up probably about I
think 74 to 75% of our revenues that
support these functions um the fees and
charges included in the general fund
include franchise fees from electric gas
and companies Planning and Building fees
that support the Planning and Building
Department uh westw World parks and
wreck fees that are not fully 100% cost
recovery because that also relies on
taxes but it covers a portion of our um
parks and wreck program costs there's
also court fines and other fines
ambulance charges business licenses and
such and in other revenues it's um our
indirect and direct cost allocations
interest earnings intergovernmental
revenues and some property uh lease uh
revenues so that's what's in the general
fund so really the core uh three primary
primary revenue sources are our local
sales tax our state shared Revenue which
I will go into a lot more detail um on
after this slide and our Pro our primary
property taxes and that makes up pretty
much over 75% of our revenues in the
general fund and then the next fund the
second line down is our preserve tax
fund and that is for
2425 the 2% preserve tax that we um uh
voters approved about 30 years ago to
buy land the mcdal or preserve and also
the second preserve tax the 0.15 sales
tax to buy land and make improvements to
The Preserve now we've completed all our
land purchase and there's also all the
trail heads have been um built there's
some minor trail head improvements that
still need to be made so the money
that's collected is all going to the
remaining debt that we have to pay for
the land so we still have um uh as of
the end of 204 we have 180 something
million of outstanding debt that we
still need to repay and and so that's
what that tax is being collected for is
to repay the remaining debt on the land
purchase then we have the transportation
fund that 31.7 million is the 2%
Transportation sales tax that we charge
and then the state shared is the highway
gas tax that's the um Highway user
Revenue fund it's called and so between
those two taxes that makes up the bulk
of our our Revenue source for Street
Maintenance signal maintenance um chip
seal you know all overlay all of the
street projects that we do in terms of
operation and maintenance and we also
transfer um a significant portion of
those taxes to our capital projects for
our street construction projects as
well then the tourism fund is our 5%
transient occupancy tax that's the 5% B
tax we collect about 30 a little over 30
million from the bed tax and the bed tax
is uh resides in our tourism fund for
use for tourism related activities as
outlined by Council
ordinance and then we have The Debt
Service fund and that is our secondary
property taxes our property taxes are
broken into two separate components the
primary tax component which goes into
the general fund and the secondary tax
component which is voter approved for
the uh General obligation bonds that we
issue so the 28.6 million is our
secondary property tax component that
goes into the debt service fund to pay
the debt on the bonds that voters
approved and then we have our operating
grants fund and that's primarily all
ours like uh housing Choice uh cdbg home
and all the Human Service grants that
fund those operations the 28.6
million we have special programs a lot
of that is special revenues designated
and restricted for specific purposes for
example our court enhancement fund um
our uh what we call Rico which is our uh
Public Safety police uh funding for some
of their equipment and some of their uh
specific expenditures we also have the
prop uh 207 allocations money there
which is the marijuana tax that is
required to be used for public safety
personnel so uh various different
specialized restricted revenues go into
that special programs fund for the uh
whatever purpose it's restricted for and
then finally our Stadium fund and that
really just accounts for the um Giants
and uh um contribution that goes in
there for specific specific purposes so
that's pretty much all the revenues that
the city has in terms of revenues
available for our core operations and
then the slide before that the revenues
we collect for our um Enterprise and
internal service operations so I'll
pause here for a moment to see if you
have any questions on these two
slides
um commissioner
sites I want to ask about the ground
fund how much of that is federal money
I'm sorry can you say that again which
Fund in Grants I think there's some
federal money in there can you tell
me uh yeah yeah there is there's Federal
and there's also pass through through
the state I don't have that information
in front of me but I can get that for
you thank you
yep uh commissioner
Stevens yeah can you just touch on your
overall approach of philosophy towards
Revenue budgeting like conservative but
not unduly conservative and then um oh
darn I thought I had that triggered
another question I just forgot sorry
about that I guess that's my only
question I guess okay well thank you so
our largest source of Revenue is our
local sales tax that's the
1.75% sales tax that we collect and we
actually budget that and forecast that
by category and in some later slide I'll
share with you all the different
categories that we track like sales tax
we collect from retail stores versus um
major department stores versus Auto
versus um rentals and uh restaurants and
construction so the
1.75% tax is charged to all these
different categories and we look at all
these different categories we monitor
the trends we monitor a lot of
historical Trends and we based out
ejections on historical Trends and what
we know is coming down so like known
factors like for example if we know that
there's going to be a new hotel and
additional um hotel rooms or if we know
that there's a significant price
increase we factor that into our uh
projections but a lot of it is based on
historical Trend and when we talk and
later on in our slides I'll share with
you our historical trend for our sales
tax and uh talk to you about a little
bit more about how we how we're
projecting the revenue I'm sorry I
really meant more bigger picture as far
as overall philosophy about how
conservative you are but that's okay
we'll we'll we'll decide if we want to
get into that my other question was on
grants on the grants are those do those
tie to specific things you wouldn't do
otherwise or what's the thing how how do
we look at Grants because do you say I'm
not going to do this unless I get this
grant or if you count on a grant and
you've got recurring expenses and the
grant doesn't come through do you then
need to plug that hole with something
else so how should I be looking at
Grants um I I think to answer your
question is the bulk of our grants are
formula grants that we get every single
year unless it's cut um then you we will
have to have that conversation
internally as to whether we can continue
those functions okay that's good thank
you commissioner Carla has a
question yes it's kind of a followup to
what commissioner sites and then
commissioner Stevens just said um at the
previous meeting when we were talking
about the possible freeze on federal
funds um city manager Kon said that um
staff was going to need to do a threat
assessment and I just want to make sure
that that's noted that that still needs
to be done and as part of it my question
also would be is what is then also the
process I'm not asking you to answer it
tonight I'm saying as part of the threat
assessment what then is the process to
decide if if those the funding for those
programs is replaced from somewhere
else just so we can have those answers
yes we can bring back to you uh a more
you know robust conversation about the
grants right now we do not have any
grants that are subject to this freeze
or subject to elimination as far as we
know but I'm not sure that you know um
will change so we will definitely bring
back to this Comm commission a more
robust discussion of Grants and how we
look at our grants and how we fund those
operations thank
you commissioner
Newman yes um regarding the internal
service funds you said that a lot of
those are transfers internal transfers
in terms of the funding and my question
along that along those lines is how are
those quote unquote prices or charges
benchmarked back to reality because you
can end up with transfer costs from an
accounting perspective I'm sure commer
Stevens would concur is if if you don't
have prices quote unquote that are
reflecting what they actually cost then
you end up with profit centers within
the government and and and then where
does that money go if you end up with
that so you can clarify that for me uh
in terms of how those prices are set or
benchmarked back to
reality um I I think if I answer your if
I understand your question you're asking
how are those prices we charge our
operating departments in our internal
service funds Benchmark back to what we
actually need to charge them is is that
Benchmark back to what they actually
cost so that let's say if you you say
it's a $100 to an department but it's
actually the actual cost to the
government was 80 where does the 20 go
or is in the following year is there a
process to then reset those prices to it
actually cost 80 so we won't charge them
that so we don't end up with profit
centers within government that kind of
it's kind of hard to to find where it
goes because transfer costs are real
money going back and forth and it's
important to have the unit cost yes
there's definitely a Reconciliation the
following year if we're if we have
overcharged the Departments and or
undercharged the Departments for say
risk or for um the Self insurance but
for the fuel and for the fleet there our
system is set up to charge them for
actual expenses um the maintenance and
the um fuel for example and they know
exactly all the vehicles that are used
by the Departments and that they're
charging for the you know cost and the
replacement cost of those Vehicles so
for um but we can also bring back to you
there's there's definitely a methodology
that we use it's not halfhazard and
there's definitely a methodology to make
sure that the Departments are accurately
charged for the usage and or for the
benefit that they receive from these uh
internal services and if it's
overcharged there is a correction in the
following year or likewise if it's under
charge there's a correction so that
we're not uh building up um the internal
service funds inappropriately and we're
not charging the Departments
inappropriately as well that answers my
question and I think the secondary
question which is a different discussion
is to then say benchmarking what those
actual costs are and how do we
competitively bid those things it's a
whole different discussion but I I I
understand your process for ensuring we
don't end up with pools of money
building up so thank you MH
yeah before we leave this slide let me
make a couple of comments uh it's it's
of course difficult for us to look at
what was done for the budget for 2425
and get any comprehension of where the
the sweet spots might be in the budget
coming up
um and I think as we March through in
Greater detail some of these
categories to the extent you can give us
any clue of preview of Coming
Attractions this one's liable to go up
this one's liable to disappear whatever
uh we know the old preserve tax on line
three is going to be substantially or
line two is going to be substantially
less than it was because the point as
you pointed out the 02 preserve tax
expired and another somewhat similar tax
for parks and whatever has been
implemented
um I think in particular I I would like
to know or I'd like to make a comment on
the column called and
charges um to the extent that these are
the charges that we impose on others
for whatever the use of our Parks or
facilities Westworld anything like that
um I think there is the consensus
Feeling by not a consensus feeling
there's a Feeling by some that we may
not be charging appropriately uh to the
to the users and maybe this is more a
question for the city manager it's not
necessarily A budgeting question but
um I I hope as you do rates and fees
with the council in the coming few days
that that you won't be afraid to deviate
from past practices and you know if if
we've been giving a bargain let's charge
it appropriately because we want to
associate I think in this column the the
benefits with the cost and um so if
there's some lwh hanging fruit there
that we can improve the re Vue by
charging users appropriately for some of
it um and I don't know whether those the
kinds of things I'm talking about are in
the column called fees and charges or
whether they're in other Revenue I don't
know what's in one versus the other but
as you do the rates and
fees uh I for one would encourage you to
be aggressive so take that guidance for
what it's worth
um let's march
on okay next slide
so the next set of slide I wanted to
share with the commission the revenue
trends that we have in our significant
sales tax revenues and state shared
revenues um so in a at a high level uh
what you're going to see is over the
last few years we've had significant
increases in our sales tax and also
State shared Revenue growth due to the
economic stimulus and sort of the
pandemic spending weight wave that has
happened it's also uh increased
significantly due to inflation and also
consumer spending continues to be strong
because of strong job and wage growth
and so for 2526 we are expecting a uh
the growth to slow somewhat as consumers
spend down their savings and there's
Rising credit card debt um there's also
impacts of the State Legislative action
we would which we will talk about in a
minute and also uncertainties with
continued inflation or any geopolitical
factors so that's our expectation for
2526 next slide so let's dive into our
local sales tax next slide so the city's
sales tax rate is
8.05% and of the
8.05%
5.6% goes to the state that's the state
sales tax it is actually a portion of it
is allocated back to the cities through
the state shared um Revenue
allocation 7% is charged by the county
and the city charges 1.75 today but
starting in July 1 of 2025 we will
charge
1.7% and so the 1.7% is made up of all
of these uh separate um components of
sales tax 1% going to the general fund
and that has no no expiration .1% is uh
designated or restricted for Public
Safety it also goes into our general
fund it has no expiration the0 2% is our
transportation sales tax which we talked
about a little earlier it goes into our
transportation fund for the Street
Maintenance um 0.1% if is our arterial
life cycle Transportation sales tax that
has an expiration in 2029 and that is uh
goes into our Capital funds to fund our
our arterial life cycle program so that
0.1 is not in any of our operating funds
it goes into our Capital which we'll
talk about in the next section and then
we have uh currently still collecting
the 2% preserve um uh sales tax which
sunsets in June of
2025 and that will go away and then we
have the remaining 0.15% Preserve sales
tax that uh goes away in
2034 and that was also for land purchase
and improvements and then we have that
new 0.15% prop 490 Park and preserve tax
that will start in July 1 of
20125 and that uh sunsets in 30 years so
that is the comp all the different
components of our sales
tax okay next slide let me comment um
for the benefit of of anybody that's
doing the math these sales tax numbers
here will total up to revenue for the
current year of
272.50 per which is not technically a
sales tax it's a a lodging transient
lodging tax but
um that's correct so if you go back to
slide
five this 1.7 currently it's
1.75 kind it's part of the blue column
the general fund The Preserve tax and
the point two in the transportation fund
it doesn't include the additional 5% bet
tax and in this column since this is the
operating funds it doesn't include the
point1 our Cher life cycle tax as well
and it doesn't include the new 0.1 five
from prop 490 because that is an
effective toll next fiscal
year uh commissioner Stevens has a
question yeah sorry um on the 0.1% and
0. 2% for Public Safety and
transportation are those in essence
really general fund money because you're
spending so much more on public safety
and transportation anyway that as long
as you make sure you spend at least that
much you meet that so it's really
general fund money for the uh for the
public safety defin Ely the 0.1 for the
public safety uh generates 1617 million
and our Public Safety budget is
significantly Beyond 16 17 million but
for the transportation fund that is not
the case we do uh transfer 50% of that
point2 tax to Street construction so our
operating needs is less than the point 2
and so it is not in the general fund the
point2 is in
Transportation sales tax fund okay I was
trying to get at dissecting it to know
if there's specific things that these
had to be spent for so their your hands
are tied as to what they get spent for
or as long as you're spending enough for
things you would otherwise do it's free
money but it sounds like at least 0.2%
of its general fund yeah all of these
are voter approved for specific purposes
so it has to be spent for the voter
approved purpose but it's pretty General
as far as like Public Safety and
transportation as long as you spend at
least that much money you're okay
whereas the other ones I guess like
preserve or park or whatever those were
more specifically defined as to how they
can be expended and so you need to track
that in separate buckets correct correct
you're
correct okay let's see where are
we so um and maybe this is a good time
to mention that some of that state sales
tax 5.6%
does come back to us um as our share of
state sales tax correct yes and I will
cover that in a little bit more detail
in another slide yes and before you go
too far commissioner Newman has a
question just a clarification for these
various taxes that our voter approved
are they are they worded in such a way
that you spend up to that amount or you
have to spend it all specifically we
have to spend all specific specifically
for the voter approved purpose and and
there's no because I'm I'm thinking in
terms of you there's a certain amount
you can spend on some you you think you
should spend on something and then
you're charging this much for it do you
do you set the tax to the amount you
think you should spend or do you have to
spend all of that you have to spend all
of it we we the the tax is voted on by
the voters as that percent and so we
don't set it every year it's that
percent is
fixed thank you
commissioner ransco do you have any
examples when you were unable to spend
the money in years past just curious
what happens when you
don't when we if we don't have any need
for the funds we would then go to
council to Sunset the tax but all of
these taxes there is a need for there is
an expenditure requirement so we H does
that answer your question yeah I think
you're saying you've never had an
example where you failed to spend F if
if we fail to spend it it stays within
that fund as the fund balance for
another future
year it does not get swept into the
general fund or used for other purposes
it stays within the fund that um it's
you know designated for
okay next
slide so um oh this slide just shows you
where our tax rate is compared to all
the other cities around us in terms of
uh their local sales tax
rate next
slide so I wanted to spend a little bit
of time on this slide and this will help
answer uh commissioner Steven's question
about how we budget and how we look at
the revenues and where we think these
revenues are going to go so as you can
see on this slide our sales tax revenues
before the pandemic we averaged about 4%
annual growth so what I show you here is
from fiscal year 2015 to fiscal year
2020 we um had an annual growth rate of
about
4% then starting in fiscal year 21
because of the stimulus the pandemic the
spending and everything that happened we
experienced an 11% increase um from the
prior year in our sales tax revenues and
then in fiscal year 22 we incre uh saw a
21.3% increase and then we contined to
see a robust
99.7% increase in fiscal year
23 and then in fiscal year 24 we started
to see that come back down so we had
minus 3.4% year-over-year growth and
this year I we we forecast that we're
going to end the year at around
1.7% growth from the prior year so
that's what has happened to our sales
tax revenue in the past we pretty much
project our sales tax moving forward in
our normal trend line of about
4% but over the last four years with the
pandemic spending and all that has
happened happen it's been very difficult
to project where the sales tax is going
to be the following year and so with um
this fiscal year we're projecting pretty
much no growth but we're also projecting
a slight reduction because we're uh
starting to see the reduction from the
residential rental tax that was
eliminated so the residential rental tax
was eliminated in January of this uh
this year and it will hit us uh in the
full year in fiscal year 2526
by way of comparison with this 196 on
the right hand bar the current forecast
for this
year tell me what pieces that has again
going back to page five the the general
fund I see is getting 183 in the budget
is that the number that has grown to 196
in your forecast that is correct so the
budget is 183 and we're forecasting that
we're going to end the year at
196 part of the reason is because we
continue to experience strong growth in
consumer spending we also have some
strong one-time audit revenues so audit
revenues have averaged about two to
three million a year in terms of audit
recoveries but uh in the last couple
years it's exceeded two to three million
I think it's upwards of 7 to n million
in terms of audit recoveries so we've uh
experienced stronger audit recoveries we
also have in fiscal year 25 we the state
collects administers and collects our
sales tax for us and they remit those
sales tax on a weekly basis so for
fiscal year 25 I think there's five
weeks in June so we're going to get one
extra week's payment in June and so
we've factored that in as well in terms
of our
projections as soon as you um
as you as you uh as you have some
insight into what the U budget is going
to be for sales tax I mean do you have
any hunch now I mean you budgeted 183
and it's turning out you now think it's
going to be
196 do you think that will be a
sustainable number or will you be back
to a more conservative forecast or is it
just too early to
tell uh you mean for fiscal year
2526 correct yeah it is really hard to
tell we try to um look at economic
forecast and you know for the last few
years economists out there are were
forecasting a Slowdown slowdown in
consumer spending even a recession and
so we have over the last few years
projected a slight correction in our
sales tax and that's why the 183 for
example we projecting a correction but
so far I guess this is what the soft
Landing is so we haven't really seen any
recession and we've also not heard any
economic forecast of a recession so we
will probably continue to project the
revenues at this level with the
exception of the residential rental tax
that we will remove out of the uh
revenues so unless we hear of unless
something happens and there is a uh some
economic um indicators or factors that
point to a recession or a you know uh
reduction in consumer spending then we
will um adjust our projections
accordingly and I didn't mean to put you
on the spot i' recognize
it's difficult to do our difficulty up
here of course is we are expected to
opine on the upcoming budget
presentation to council but many of the
moving parts are not yet known and so
we're we're looking at the budget for
last year and sometimes the forecast
coming up up and um we'll figure out
something to say but it may not be uh
entirely relevant at the time I got some
other people that have comments
commissioner
swager in your tracking I assume all the
bills that go through the legislature
that could significally affect our uh
Revenue sources you know I know there's
a bill I don't know the current status
of it but to get rid of the grocery tax
which obviously would would impact
Scottdale closely so do you kind of make
those adjustments the fly as those bills
go through the
legislature uh we do not adjust our
Revenue projections unless it's a known
Factor so if we know for sure that the
um grocery uh food for home consumption
tax is being eliminated then we will
remove that but if it's still you know
unknown we will leave it in but you keep
it kind of in the back of your mind that
it may be going away absolutely yes
thank
you commissioner
Stevens uh just for the group you can't
answer this now because I can't get my
head around it I don't think but what's
interesting about what you're coming
into right now you have a doge group
that's out there whacking federal
spending regardless of whether that's
good spending or bad spending that's
going to people that are buying stuff so
if there's a trillion dollar reduction
in government spending there's a whole
bunch of sales tax that isn't going to
happen by the people impacted by ning
the money on the other hand there's also
talk of trump tax cuts those tax cuts
potentially free up money that could
spur spending so I don't have any
suggestion here other than I think this
is a particularly unusual challenge this
year and I don't know that you're going
to know where these things are going to
be at by the time you got to put a
budget together you're absolutely right
it's been a particularly uh difficult
challenge for the last 3 four years with
um the way the revenues have been we
it's also uh you know aside from
consumer spending or unemployment or
lack of ability to spend we also have
had inflation that has increased prices
and so if this is not inflation adjusted
if this was inflation adjusted maybe
real growth would be actually even lower
so it's kind of hard to know what that
is we also could have some erosion in
our tax base so you know I I have
another slide later on that I can talk a
little bit more about that a lot of our
sales tax comes from miscellaneous
retail category and as the uh Valley
Cities build their own retail malls and
uh retail you know um shopping center
type we might lose some of that Revenue
base as well so you're absolutely right
there's a lot of factors that could
affect our revenues um both positively
or negatively we have uh on the positive
side Scottdale is a very fluent
community and so you know there's a lot
of spending here in our community that
keeps our sales tax High uh we also have
high tourism um there's like I think 12
million visitors a year or something
like that so one of our some of our
strong sales tax categories like hotel
motel restaurants retail that are driven
by our tourists that continue to be
really high but they're also very
volatile when you're you know um uh
dependent on the tourism
commissioner
Newman you're you're you're heading into
the question that I would I kind of had
so you kind of answered part of it I'm
thinking are in your opinion I see the
rise 11 21 9 and then you said there may
be a dip this year and there may be as
commissioner Steven said there may be
other things that affect so there's a
lot of moving Parts in this but are
there in your experience are there
levers within the budget like I'll give
an example like the tourism tax we've
talked about that being underspent okay
if that's properly placed what are the
could that be I'm not saying that's the
lever but I'm using it as an example can
that lever be used to then drive sales
taxers you bring more people in things
like that but are there other levers and
and I guess in your experience what are
the key levers that drive sales tax up
or down uh that in terms of actions the
city could take to to to shore up kind
of that potential dip that you
see yeah that's an interesting question
because the the drivers of our Sal tax
is really consumer spending so if you go
to let me see if I could find oh the
next slide that's a good one the next
slide so you can see these are our sales
tax categories
84% of our sales tax comes from those
top categories retail Automotive Rental
construction restaurants major
department stores food stores and hotel
motel that makes up 84% of our total Sal
tax revenues and to the extent that the
city um can continue to attract um
Economic Development the growth in our
retail sector the auto sector
construction restaurants uh department
stores that is something the city could
do to continue to ensure a robust base
for our sales tax you know what's
interesting as I was looking today when
I Was preparing for this presentation
how those C categories increased in The
Last 5 Years and miscellaneous retail
increased by 76% since 2019 and that's
because of the uh significant spending
and also inflation in terms of retail
and also in 2019 the State of Arizona um
passed a law to start taxing economic
Nexus and not just physical Nexus so now
you're online retail and remote sellers
are also having to collect um sales tax
and remit it to the city where before
they didn't have to if they didn't have
a physical either employee or physical
location or equipment or delivery trucks
in in the city they wouldn't have a
physical Nexus so they wouldn't have to
collect um any sales tax but starting in
2019 um the laws change and so they have
to collect sales tax so the retail
category is the one that really
significantly increased but it's also
the most vulnerable to recessionary um
factors uh construction was the other
one that's increased significantly and
my guess is because of construction
inflation so we do charge um sales tax
on construction so the state pays sales
tax when they construct or you know any
um entity when there's construction that
is subject to um fluctua ations based on
the level of construction activity
restaurants is another one that
increased by 51% over the last five
years um because of our you know um uh
strong restaurant um um industry here
and the hotel motel as well the hotel
motel probably because of increase in
prices as well and we've also seen some
increase in all those smaller categories
below like service with retail just a
across the board uh significant
increases now one thing that's
interesting to note is that auto uh
Automotive only increased by I think
less than 20% because of the Auto Mall
that opened in the Salt River Indian
Reservation so that took a lot of
business away from um Scottdale in terms
of Auto Sales and so our Auto uh sales
tax from Auto didn't increase as much um
and then also as I mentioned earlier as
neighboring cities build retail shops
and restaurants we might see um you know
a flattening of our base like I think I
was looking at you know Buckeye has some
new Marketplace Queen Creek py Mall um
Fiesta Mall and Mesa and various malls
in Phoenix so you know I I don't know if
that answers your question but I think
uh what the city can do is ensure that
we continue to uh support these
industries in order to to continue to
protect our uh sales tax
base thank you just a I guess a
clarification is it is is it fair to say
if we get an economic downturn we're
unusually vulnerable because we have a
low property tax base but we depend a
lot on the
activity in the in the
community I I would say we're no city is
exempt but we do uh we do seem to
weather uh sessions a little bit better
given our affluent Community however if
you look at these categories the
categories that are more more stable for
recession are probably your food for
home consumption and your residential
rental so eliminating the residential
rental and the food for home
construction then the remaining
categories are more uh volatile to
recession thank you for the
clarifications commissioner schwager I
don't know whether your question
question was on this slide or the
previous one
but oh kind of together um I just wonder
because like everybody else I've been
known to order online um how does the
city feel that they're doing on
collecting the proper amount from
e-commerce you know it's it's a tough
one and I've had some e-commerce stores
I've run before and everything and you
know you fill it out but do you think
that the city is actually getting fairly
close to what it's due or is there room
for improvement there
anyway um I I want I I don't know how to
answer that question but I know what
you're asking so um we collect from
Amazon and eBay
and Target and Walmart and so all these
large retail stores that have large
e-commerce presence we are collecting um
sales tax even before the economic Nexus
change from these you know re online
retailers and we believe that um their
sophisticated systems and their
collection processes can be relied upon
it might be some of the smaller retail
stores that are you know um primarily
maybe not knowledgeable about the state
of Arizona's sales tax that we may you
know find that there there is some Miss
on that however ever um uh Ador and our
tax and licensing department they do
audits they conu conduct audits I don't
know how many eCommerce retailers they
actually audit but we can look into that
okay and the other thing just from um
spending 40 years as a restaurant
supplier we were always kind of the
canary in the cold mine when it came to
uh how the economy was doing because as
soon as soon as people were a little bit
worried about money they quit going out
to dinner on Friday night and as soon as
they felt better about things they
started going out again and just from
what I'm hearing from my friends in the
industry is you need to keep a close eye
on the those restaurant sales taxes
because I think people are starting to
pull back just a little bit on
that thank
you and before we go on let me um make a
comment because I think some people
would think I lost my voice if I didn't
comment on this slide about the food tax
um and for those who are listening or
care to hear the story again and again
the food tax is the most regressive tax
that any City can impose on its citizens
period
paragraph it is most impactful on our
neediest citizens it is absolutely
optional where whether we impose it and
we do choose to impose it when I say
it's optional the state does not tax
food Paradise Valley does not tax food
Phoenix does not tax food tempy in the
list goes on and on but good old
Scottdale imposes a tax on food and I
would point out to you that the gain
you've had what we're looking at here
are the numbers that go into the general
fund and the food contributes 11.4% this
is grocery store food that people are
bringing home to cook for their family
it contributed 11.4 $ million but that's
not the end of the picture we also taxed
on The Preserve tax and so The Preserve
tax gets the benefit of a tax on food
and so does the transportation tax and
so does every other
tax it is certainly an item that the
city needs to in my opinion wake up and
address and of course you don't really
have to because I think the state
legislature will do it for you just as
they did for the rental property tax
which is by the way the second most
regressive tax and I used to combine the
both of my speech but the state took
care of that one and I think they will
take care of the food tax too but I will
urge my colleagues here and eventually
will urge the council to step up to this
regressive
tax and eliminate it on behalf of our
needest
citizens and that won't be the last I
say about
it now go to your next
slide all right next slide
so moving on to State shared revenues
which is our uh an uh one of our large
uh uh categories of revenues so we get
uh State shared sales tax so that
5.6% um that this state collects in
sales tax a portion of that is
distributed back to cities um and as you
can see this is the trend the state does
not um have a similar makeup as we do so
their uh Revenue growth is a little
different than our sales tax revenue
growth it doesn't track the same way
Statewide uh they don't have as many
tourists and visitors as Scottdale does
so we have stronger restaurant and hotel
um uh sales tax for example so um what I
wanted to share here is the
Scottdale uh share is about
4.1% so for fiscal year
2425 of the distribution base um we get
4.1% now that's down from about
4.49 or 5% in 2019 because as we grow we
are growing at a slower rate than other
cities are
so our piece of the pie is slightly
smaller every
year okay next Slide by the way the um
the growth rates that the state has
experienced and I know there's a
two-year lag is it between our
distribution or the and when they
collect the money I I can't correlate
their growth rates to ours very well for
any year and I know our economies are
different um not repeat myself but I
know the state doesn't tax food um so
there are some subtle differences but
still their numbers of growth
seem less volatile less cyclical than
ours is there any
explanation um so this is not two years
in aers so the state sales tax is
collected and distributed to us on a
semimonthly basis based on what they
collect
this fiscal year and um the probably my
guess is the reason why they don't track
with ours is because of our
tourism uh we have much higher tourism
than the state in general they also do
not tax residential rental so when we
adjust our sales tax projections for the
elimination of residential rental they
will not be adjusting anything down
because they already do not collect
residential rental they have only seen
like for
2122 they only saw an 11 12% growth in
their sales tax revenues that's
distributed to us where we saw a 21%
growth in our sales tax revenues so we
do not track with the state um so as
they are seeing a
2.9 or 2.8 8% growth we will actually
see a reduction next year because we're
losing residential rental tax and
they're not losing residential tax
because they're they haven't they don't
collect
it I hope that answers your
question I think it does there there
it's very hard to reconcile the two but
there a lot of moving Parts yes that is
correct it it's hard to reconcile the
two it doesn't you know we don't line
align with the state
next slide so the other state shared
revenue is the income tax both corporate
income tax and individual income tax and
this is the tax that is allocated to US
based on collections two years prior so
for fiscal year this fiscal year
2425 were being allocated what they
collected in fiscal year 20 um
223 and so for next year we know know
that we're going to get about 46.2
million because it's the collections
that they collect in fiscal year
2324 and what you're what you see here
it's been uh quite a wild ride as well
for the income tax so for uh fiscal year
2122 that decrease was a reflection of
the pandemic and how they allowed the
delay of collection of the income tax
and that's why there was a spike in
fiscal year
2223 and then the spike in fiscal year
2324 was the significant cap gains tax
that happened during that um 20 uh 2 22
year where there was a lot of um capital
gains from housing sales that were way
you know higher than the asking price
and all that all that was happening so
that was pretty much that year and then
what you'll see is the
2425 is a decrease because we're coming
off of that um uh you know cap gain high
and then the decrease to 46 million is
the result of the 2.5% flat
tax Okie doie and just to clarify for
anybody viewing these slides are just
the dollars that we receive from the
state is that right that is correct
these are what we receive from the state
yes so they're also affected to a small
extent by our declining participation
share of the state receipts that's
another Factor entering into the whole
thing
yes next slide and the other two
categories of State shared uh taxes we
receive is our state shared vehicle
license tax and that goes into our
general fund and that has traditionally
been very very steady at about 10 to 12
million and it really doesn't increase
much and that is
um uh that is allocated basically
primarily um based on their collections
of um you know annual registration of
Motor Vehicles and the money is
distributed to us on a monthly basis and
then the second graph below is is the
state gas tax that's distributed to us
and that is required by state law to be
used for Highway and Street Maintenance
and construction so that goes into our
transportation fund for that restricted
purpose and that has also been pretty
flat and somewhat decreasing as uh uh
you know as electric vehicles become um
more you know more of a market then
there's less gas sales and so there's
less taxes collected there do the
electric vehicles pay a fee in Li of a
gasoline
tax not to
us to the state I mean
no I think there's talk about some kind
of an inl payment but there's nothing
out there now
yeah well we should tell the council to
keep talking then about
it okay next slide so the last uh major
category of taxes we collect is our
property tax next slide and so the
property taxes in Scottdale are pretty
much allocated like so um most of our
property taxes go to our schools and
education so our uh Scottsdale Unified
School District and also the County
Community College the county also
assesses um 20 about 19% of our property
taxes go to the county and there's a lot
of uh small uh Special Districts in the
county like the library district or the
flood control district and it goes at
about 10% of our property taxes go there
the city then charges a primary property
tax which is about 8% of the property
taxes and a secondary property tax which
is for voter approved bonds that's about
7% of your property taxes so um the next
chart next
slide this chart shows you a comparison
of the sales tax rates for all our
Valley Cities as you can see um
Scottdale is uh C of at the lower end of
the chart Mesa doesn't charge a primary
property tax because they actually um
use contributions from one of their
utility funds in low of primary property
taxes to support Public
Safety that's just
um and next slide and the last slide I
have here for operating revenues is our
primary back up to that slide a minute I
want everybody to understand that um the
Yellow Part there is excuse me is the
voter approved secondary tax and I
suspect if we looked back over time
that's actually diminished in terms of
its impact as we paid down voter
approved debt yes um it would be
interesting at some point to see what's
happened to our primary tax rate over
time and I I doubt that it's gone up
much but it obviously drifts up as we uh
have new properties come on and as we
take the 2% per year perhaps you could
at some future meeting or just
distribute to us a a historical recap of
what that has
done so uh next slide so for the primary
property tax state law restricts the
growth and now Levy to 2% plus new
construction so as you can see with the
2%
limitation um the primary property taxes
we collect for the general fund um is
about 30 a little over 30 million and in
fiscal year 2425 which is this fiscal
year our property tax collection was
also affected by the
quasam uh I guess if IID flipped the
page I would have seen you did that gave
us historical uh primary property tax I
didn't recognize the number on the right
hand side it in another slide it said
that the budget was
384 I think on page five and and here it
says 331 and yes so the budget was 385
and after we put the budget together we
were notified by the county that they
received a judgment for the quasm
lawsuit and the quasm lawsuit you know
just really briefly is basically the
county back in I think um 2015 through
2021 failed to r value Residential
Properties that converted to um rental
so short-term rentals or any long-term
rentals so Residential Properties that
converted to rental the county was
supposed to revalue them and based on
their process they would have paid less
taxes but because the county failed to
do that they were hit with a lawsuit it
became a class action lawsuit and um the
Judgment required the county to refund
all these property owners that overpay
taxes and the total impact to the county
for these refunds was 33 something
million and the impact to Scottdale was
10 million 5 million to the uh general
fund and five million to the secondary
um uh property tax which is our debt
service fund and that's why the the
projection uh for this fiscal year is 33
million while our budget is 38 million
because of that quasi or lawsuit
refund I withdraw the
question did anybody else have questions
on this packet uh I have one more
question before we leave the sales tax
question but anyone have anything on
comments
or
um on any page we could look at page six
I guess or page eight whatever it was
talks about the sales tax components
that make up are now 1.75 and soon to be
1.70 sales
tax um one particular item on here which
is the next to the last item in the
summary is the 015 preserve land and
improvements tax that will otherwise
expire in
2034 um there
are over the next many years to 20 34
this tax will probably generate on the
order of magnitude of $250 million if we
just let it keep imposing on the on the
citizens um and we don't have I don't
think at as we sit today 250 million of
obligations um the outstanding debt for
The Preserve as I understand it will be
uh completely provided for with cash in
the bank if you
will uh in just a few months certainly
by the the end of the year and then
there may be other Capital commitments
uh that will
emerge but is there an opportunity uh
and I POS this question to the legal
department I'm not sure whether you have
an answer yet on this but is there is it
within the purview of the council to at
some point reduce this tax eliminate it
terminate it sunset it any of the
above chair and members of the
commission um you're basically asking
for legal advice and we for not to give
legal advice in in public but we don't
actually have an answer yet we we've
we're Consulting with Bond
counsel this may be an item that we talk
about in the future in uh in terms of
what to do about this so that it doesn't
end up with money trapped in a fund
that's restricted as to its
application and chair if um at some
point when we have the legal advice we
we'd like to have an executive session
to discuss it
commissioner
Carin uh yes on this same subject I was
going to say earlier when commissioner
ransco was asking questions about if you
don't need the money you know does it
ever go away and in the protect and
preserve task force which was year and a
half ago we talked about the fact that
the
2034 expiration date for The 0.15
Preserve tax it won't be needed to go
that long so there will be an
opportunity um for Council to Sunset it
early it's just a matter of when and
those are the answers that we're waiting
on as to when but just a note that if
the city doesn't need it anymore they
they can and they do have a history of
sun setting some taxes
early commissioner Stevens
just a general observation about um as I
try to learn this process because of all
the questions we're asking including me
uh we're now at almost an hour and a
half into the meeting we've only come to
one area so with a view towards what
we're going to be doing in the future I
guess I'd like us thinking about whether
we'd be better off after we're a little
more up to speed by having one or two
people dig into certain issues with
staff and then come back with staff to a
report to the committee so for example
on some of these Revenue items I might
not need that as much if I know a couple
of you people are going to dig into this
with staff and go through it and then
come back and we'll just ask a couple of
high level questions my concern is the
way we're going about it now if it's
just going to be staff report to us we
sit up here in public talk about
something as a group I'm not sure what
we're going to come up with and I don't
know that I'm going to add much much
value so uh this maybe it's a future
item agenda item thing or something but
I just wanted you all thinking about our
best operating procedure in attacking
this
animal uh let me ask any one of you that
want to respond to this uh can we as a
commission peel off two members to go
work on this project and another two to
go work on that project not an official
subcommittee of ourselves but just to
divide up the work
product chair and members of the
commission I think that might lead to an
open meeting law violation because
you're if you're each talking to each
other and have a Serial conversation
that could lead to an open meeting law
violation so I I think the commission
needs to work as a whole unless the
council formally establishes
subcommittees that could meet in
public yes sir
just a clarification connecting
something you said earlier you talked
about 180 million dollars in land debt
that Still Remains is that correct
Sonia sorry can you repeat that oh you
earlier you mentioned that we have $180
million of land debt that remains is
that correct that's correct at the end
of 24 so I think by the end of this
fiscal year will be like 150 million or
something like that can The Preserve
land and Improvement tax of that expires
in 2034 be used to pay that down yes
okay okay that's my clarification thank
you commissioner
Carla I just wanted to say to
commissioner Stevens's uh point if you
look at even the agenda for tomorrow it
has more opportunities to actually dig
into well how do we address this um so I
I think today is just a lot of going
into minutia and learning but if you
look at what's coming up tomorrow with
pensions and reserves and contingencies
I think that's where we're going to be
able to actually dig
in albe it in a public
setting commissioner Stevens yeah I I
appreciate what you're saying there and
there's questions we can ask about the
percentages the 9% the 7% the the stuff
like that but without a actual oral
report in front of you that I can study
in advance I can't do much you know in
this forum so let me I'm going to try to
ask a question other way uh can
I dig into something with staff to
understand it better so I can make
better recommendations in a public forum
and the other thing that I really
thought of was I wanted to do it doesn't
have to be a subcommittee can two of us
go meet with staff to understand
something a lot better make sure we
don't talk to any other member other
than possibly the chairman so we never
get to a point where a more than three
people are talking about about an item
and then when we have our meeting uh
share with staff our Collective
findings chair and members of the
commission certainly two of you could
talk to staff um I think you the problem
with reporting back to the chairman if
if you have groups of two reporting back
to the chairman then you you end up with
a Serial communication so um the key is
the two members deal with staff learn
the information come back here but I um
but I think you would need to limit it
just to the two of you
okay thank
you I think we've exhausted ourselves on
this topic you want to go on to the item
three item three being on
our uh schedule the or item four rather
the funding for capital projects and the
capital budget revenues
okay we're done with this item I think
we're moving on to item
four okay pull up this slides
okay next
slide so now we've moved on to Capital
funding so now we're going to talk about
all the revenues we use for our capital
projects so again we're using 2425
numbers because we're not quite ready
with
2526 um although the allocation and the
amount of funding is probably very
similar in 25 26 so as you can see the
the bulk of our um Capital Improvement
program is really our water and sewer
projects so that's why a lot of our
Capital funding comes from rates and
fees because of our water and sewer
capital projects and then you can see
that the orange SCE Transportation sales
tax provides 114 million or
11% and then we do issue debt um
basically the bond 2 19 projects and we
also issue what we call MPC debt
Municipal property Corporation debt and
those are um projects that are supported
and secured by our excise taxes and
repaid by specific revenue streams like
we do issue water sewer excise tax debt
we do issue Stadium TPC Westworld Museum
those are the types of projects we would
issue excise tax debt for under the MPC
versus like the bond 2019 type debt
which is like police fire stations and
Community facilities the general fund
does provide uh 14% of funding to our um
capital projects and then we also
utilize grants for our federal projects
I mean uh for our capital projects
primarily in the street area and also in
airport so next
slide so the one thing I do want want to
mention is we also receive a lot of
infrastructure from developers as they
construct their projects we don't budget
for developer contributions because
they're not a cash in cash out in terms
of our budget but I wanted to share with
you that for example in fiscal year 24
we recorded 115 million in developer
contributions for various infrastructure
like that's dedicated to us and so
public infrastructure that the de Vel
opers buildt as part of their project is
then dedicated to the city so for 20
fiscal year 24 we had 31 million in uh
land for streets 46 million in Street
infrastructure 19 million in water lines
17 million in sewer lines and then some
storm drains and bi hydrant that the
developers built and um uh dedicated to
the
city now next slide commiss commissioner
Carla has a question yes um yes just a
little Clarity on this are the
developers required to do 100% of the
interr infrastructure for their
development
or is the city is it a 5050 is it a
percentage does it just depend on the
Goodwill of that particular developer
and then do they ever contribute to
maintenance afterwards or is that that's
all left to the new residents they don't
contribute to maintenance and I'm going
to have to come back to this commission
with a better answer for that first part
of your question okay thank
you okay so we look at our Capital
funding based on what has dedicated
funding versus what doesn't have
dedicated funding so that's pretty much
how we break up our capital projects so
as far as the uh capital projects that
have dedicated funding and no general
fund support so they're 100% supported
by their fees and charges next slide so
again it's our Enterprise uh projects
that are water and sewer airport Solid
Waste those are our Enterprise
operations where they are 100% fee
supported not only in terms of their
operations but also in terms of their
Capital program so they uh you know we
look at their rates and fees for pay as
you go and we also issue debt to be
repaid from their rates and fees and our
policy requires that at least
25% of their Capital Improvement plan be
cash funded so that we uh manage and
limit the amount of debt that we issue
and again like we showed earlier
developers also contribute to the
infrastructure like water sewer lines
and all that and if there's any grants
especially in the airport area a lot of
the uh airport improvements are funded
by the FAA grants
okay next
slide we also have dedicated funding for
all our transportation projects so our
transportation projects do not rely on
the general fund our transportation
projects rely on the 0.2% transportation
sales tax a policy requires that at
least 50% of that 2% Transportation
sales tax is used for transportation
Capital infrastructure projects we also
use our state shared gas tax that
Highway user Revenue fund and we apply
for ad do and Federal Highway grants and
some of the bond 2019 funding also
supports a a little bit of it I can't
remember how much but a little bit of
that Bond 2019 funding uh improves some
of our sidewalks and streets we have an
arterial life cycle program that um in
uh
201819 we did ask voters to approve a
.1% Transportation arterial life cycle
sales tax to provide as the match for
the regional transportation sales tax
money that we get from the Maricopa
Association of governments mag so these
projects that's about 28 or so projects
to improve um the arterial um um the
like Scottsdale north and Pima and some
of those uh arterial uh roads up there
it's funded by a uh 70% Regional sales
tax and 30% City match through the. 1%
Transportation alcp sales
tax before you before you leave that
slide
um this particular tax I I know I was on
the council at the time we talked about
the need to raise $75 million to be
eventually our 30% match for the for the
Maricopa County Regional
funding um but I suspect by now we've
already raised 75 million and the tax
still has four or five years to run is
this is this as was talked about at the
time in the council is this totally
dedicated to this purpose or is it just
part of the Great Wash of money for
transportation it may be a different way
to ask it how much more do we have to
raise to meet our match on the 28
projects that you said are were
outstanding it is 100% dedicated to the
arterial life cycle projects they are
still being worked on as we speak and so
uh none of the money is uh used for
other Transportation
projects so that being the case do you
have an idea when we will have either
all the projects done or all the money
raised that we need to do the projects
either one is there an opportunity to
terminate this tax early is the basic uh
question I'm asking um I don't believe
so and then in March when we bring our
proposed Capital Improvement plan to
this commission we will dive into the
alcp uh program and all the projects and
all the projections we have for the re
uh this 0.1 tax and the mag money that
will be um that we are anticipating to
complete those projects
if you come up with a schedule that
predicts what's required and what's
available and what will be collected and
whatever I'd be interested in seeing
that if there's if there's ever an
opportunity to declare that the job we
intended to do with a tax is done we
should uh we should stop the tax so and
I just don't know what the status of
this one is yeah I believe the latest
projection is we will need to continue
collecting it till the EXP expiration in
2029 but we will definitely bring all
those details to you in
March thank
you next slide another uh group of
projects that we have that has dedicated
funding and no uh general fund support
is our storm water flood control
projects um we do have uh storm water
fee that we utilize for pay as you go
and we do also enter into intergo
agreements with the flood control
district for funding of those projects
and um it's about 50% to 65% of funding
from the flood control district and then
the other half of it comes from our
storm water
fee and then the mcdor and preserve
capital projects they have been um the
trail head improvements have been funded
with a
0.15% preserve tax that expires in
2034 and like I said earlier the debt
financing for the land purchase is still
being repaid by the two preserved
taxes okay I expect as to see Carl's
button pushed here um I do think it's
necessary to clarify on the
0.15 it is for not it is for more than
Trail improvements it is for new
Trails um the the um the original
language of this Bond limited it to
improvements theto on preserved land
but it was modified by the voters in
2018 more narrowly to include just
Trails uh not Trail improvements but
trails and new gateways or parking lots
or whatever
but it's a it's a subtle difference but
it's important and now I see her button
pushed you will see um there
there's ultimately the city is going to
have to give a legal opinion on that
because it it talks about in the 420
which is what you're talking about it
does talk about long plan projects in
The Preserve which does include Trails
um but in section B1 it says anything
approved by The Preserve commission for
trail improvements and necessary
improvements But ultimately legal's
going to have to give an opinion on what
it all does cover because there's things
that have been in the plan since
1997 so
go ahead okay next
slide so now we move on to all the
capital projects that do not have
dedicated funding where we do have to
rely on the general fund for some
support if not uh 100%
support next slide so all our Public
Safety capital projects like our fire
stations police um uh you know Public
Safety basically police and fire capital
projects uh require us to uh rely on
general fund as well as uh any voter
approved Bond programs so in 2019 we
have a voter approved Bond program that
uh is paying for some um training
facilities as well as fire
stations and also any of our technology
and Municipal facility uh projects also
do not have any dedicated funding so
those also rely on what's available in
the general fund as well as any bond uh
programs that's approved by
voters next
slide same with our Parks and Recreation
capital projects those are also similar
to our Public Safety and our Municipal
facility projects they rely on the
general fund we have any uh
contributions or donations that we
sometimes receive for say the mccormic
railroad park that could also help with
with some of the Capital Improvements
there any parks and recreation fees and
charges that are available and our bond
2019 program provided some funding for
that as well starting in July of 2025
with the prop 490 Park and preserve tax
51% of that tax will be allocated for
Park improvements so that that we will
have that uh Revenue source for Park um
improvements okay next slide
and then um a lot of these other uh
infrastructure that we have like excuse
me Mr Carla has a comment or question
yes uh not a question I just wanted to
stress something the bottom one um about
the proposition 490 Park and preserve
tax I I just wanted to stress that those
will all be pay as you go so
theoretically we shouldn't end up with
the same overage problems that have
happened with the 2019 Bond
projects yeah yes we will plan on uh
using that um funding as a pay as you go
for Capital uh
improvements commissioner
Newman along those lines as if you at
the 490 tax that when you say 51% goes
is that for new whatever Trails
equipment things like that and and and
Facilities where does the operating
expense come from to then compare them
because we in the meeting original
introductory meeting we had we talked
about there's parks in Scottdale that
don't get any up update or anything like
that is that all included in that tax or
where does that come from so every time
we um um develop a capital project for
funding we also estimate the operating
impact and in and include that operating
impact in the Department's budget so the
funding will have to come from wherever
the department uh operating budget is
coming from and where is that now is
that from that tax or is that from
General funds so park and Rex is funded
by the general fund and rates and fees
and that prop 490 tax will allocate
14% for Park maintenance as well because
because if we have facilities that
aren't being maintained now I think it's
hard to spend a lot on new facilities if
we can't maintain what we have so so we
have to solve that problem as a part of
this work that's correct so because then
it takes away from other important
things like pensions and other things
like that we want to ear capital
projects that we want to fund that are
equally important to the city so so the
prop 490 funds provides
um that Revenue Source in terms of a 14%
allocation to part
maintenance so so that can be used for
operating expense
to maintain those part okay that yes
that's where I was I like where does it
come from uh is it is so it's a part of
that that approve tax thank
you right right it's a Mr uh chairman
and acting city manager would like to
weigh in thank you so much yeah it's
very long time for me to stay quiet so
uh that but I I wanted to address that I
think the four my only offline comment
was that that's a new taxt though the 49
90 to address your issue and
historically that is a challenge for
municipalities because you have a
growing community so you need to build
I'll just you continue use the parks as
an example so you have a growing
community and if you don't add Parks
then your level of service in Parks and
Recreation will decrease so you have to
add parks to support uh a growing
community and new neighborhoods but then
you have to have the discipline to have
uh lifestyle maintenance typee work and
replacement and so the play equipment
for example they built them different 30
years ago than they do today thankfully
much safer uh so we have to continually
invest in those types of facilities
throughout our entire system otherwise
you build up that deficiency and then
need to go back to the voters and say
now we have a real situation that has
accumulated over a number of years so
what I uh what we are identifying
through the capital program is uh those
routine maintenance which uh have to
have the discipline to fund on a regular
basis and replacement and then see where
there are new dollars for expansion and
growth thank you Mr chairman thank
you um that's a good explanation and I
think um in layman's terms that's called
Kicking the can down the road which
we've done on some needs in the city for
too many years which is why we Face the
reality the deterioration of the parks
is there this is the question that
arises in my mind is there a
um is can you put into next year's
budget some kind of a line item for
parks and for streets and for buildings
and All City assets of what we're
dedicating to maintenance what they're
what they're State of Affairs is um and
I while you're puzzling over how to
respond to that I think there are a lot
of people we know that the parks need uh
improvements and they've been long
delayed but some people are having the
same impression of the streets with the
potholes and everything else that uh
maybe we're not
maintaining as aggressively as we should
and and maybe that's because if it's not
a line item in the budget it's something
we deferred to
Manana so I've given you long enough to
think of an
answer you're very gracious in that uh
and so let me add yes the answer is uh
yes that we are uh identifying a new
opportunities let me answer it in in at
least two different ways and so I'll
take the Street Maintenance it's much
like the example that we utilized in
park maintenance and particular play
areas and things of that nature but on
the Street Maintenance uh we have two
areas you have your growth and expansion
and I will tell you that although the
developers uh do that in the
neighborhoods and in many instances
there are additional uh costs to those
improvements primarily in the major
intersections I'm familiar with with one
up north where we are spending currently
have a project underway uh and that
utilizes the existing Revenue uh
dedicated revenue and that sales tax in
addition to the match that comes at the
regional level and then to your point
about the maintenance that is measured
through the pavement condition index PCI
and a good number of years ago we had a
significantly High pavement condition
index and happy to discuss this in
Greater detail in one of our future
sessions I I spent a good number of my
years in my career
learning about PCI because it's such an
important uh part of the infrastructure
that we're delivering to the community
and it's it's quite uh expensive if you
don't have the maintenance uh discipline
so we had a very high PCI and uh over
the more recent years that has dropped
as a result uh the calls coming in for
complaints and concerns have increased
there's a a natural connection there and
then when you have Engineers can show
this chart it's quite fascinating when
you get to the the lower level it's kind
of a one to 100 is a one to 100 scale
and then when you get to where we're
approaching you can't just do minimal
maintenance or surface treatments you
have to begin to do significant
infrastructure improvements which are
very costly so to the Point Mr chairman
having the dis discipline to do that
regular maintenance is critical we've
already identified that in know for the
upcoming budget and are adding
additional dollars for Street
Maintenance uh but we've got ourselves
in a situation that in my professional
opinion will not be corrected within a
year but we'll take multiple years of
investment significant investment into
our trans a network system uh to get
back up to what I believe is a standard
that would be acceptable for the
community uh in addition what I would
mention that we're starting to explore
is there's the capital program and there
are it's a very uh long list however
there is what I would refer to is
operating Capital items that we have
very little discretion over uh each year
to fund or not fund I might give an
example of Police radios mdc's things of
that nature in the car where it ends up
on a capital list but it's not like you
don't fund the police officers uh Mobile
Radio if you will so th those be need to
be put on what I would refer to is more
of an operating capital and that does
come uh off the top or out of and then
what ends up being left is more
expansion more of dare I say maybe the
nice to have versus the other is the
critical functions that the must have uh
the mus haves are blended with the nice
to haves on the capital list and
therefore it seems more exhaustive than
it actually is and once you end up uh
doing that exercise we end up with way
more needs uh than resources and uh
whether that is on the capital side or
on the operating side so Mr chairman
thank you for allowing me the
opportunity to explain
that you really wanted to get that off
your chest didn't
you let me um commissioner schwier wants
to make a comment but let me say before
you before I call on him um I would
encourage you uh in the budget to in any
way you can line item identify a a a
budget item for for maintenance and
whether it's minor capital or you know
just routine maintenance or whatever and
uh and introduce some of the metrics so
that we know how we're doing I thought
the PCI was a great number uh years ago
and I was told we don't do it anymore I
figured we don't do it because it's
embarrassing uh but I would like to see
the budget uh identify that as a a need
and maybe we won't get in the kind of
situation we got with with the uh with
the parks and now commissioner
schwier yeah I'm glad you brought that
up because you know when we talk about a
lot of these budget things I always sit
back and look at it is how does this
affect tourism in the state because you
know that tourism in Scottdale is really
what drives so much of our sales tax and
you know road maintenance is one of the
things you hear from a lot about people
and I just happened to be meeting with
your counterpart at Paradise valy last
week they just did their their Road
survey and even though they have a lot
of money to spend over there they fell
from 77 to
73% so they're having to uh step that up
a notch but you know I really worry
about you know the people that just come
here to visit
Scottdale they don't want to see road
signs that are faded they don't want to
see the potholes and that affects really
the Financial Security of the entire
city so I'm glad you're looking at
that commissioner Newman thank you one
question um
Greg I went in a clarification we have
the 0 2% tax for New Roads as I
understand it and then there's the 0.1%
tax that for for arterial renewal is
that is that is that directly in
response to the PCI and the lower the
lowering of PCI or is that as a
maintenance item or is that something
different so the 0.1% was specifically
on 20s something projects that we went
to the voters for in order to obtain the
mag money match for these arterial life
cycle um there Road expansions or Road
uh improvements so they're not um PCI uh
are maintenance related there actual uh
expansion and improvements of certain
streets is that go ahead is that what
you're asking so so that tax basically
adds more infrastructure that then needs
to be maintained correct so yeah would
it what do you
think I'm interested because we can have
the discipline to um put line items in
there to maintain the roads or do you
then take that tax or some form of that
and take that to the voters and say hey
we need to maintain what we've built
let's structurally put that in there so
we don't have to have the discipline um
of of of future councils and and all
that it's it's built into the
maintenance of Scott scale we already
built it into our Parks and Recreation
now should we do that with roads because
that's very important to the city from a
funding standpoint the 02 Transportation
sales tax and the highway gas tax that
we receive are used for
maintenance okay the point the point As
I understood the point two was for new
construction but you're saying it's for
maintenance no the point one is for the
20 something projects that we've
identified I had backwards okay obtained
voter approval for and arterial life
cycle your Replacements and um the 2%
Transportation sales tax and the highway
gas tax that's allocated to the city is
for maintaining the roads and 50% of the
point to by policy is used for
construction okay so I guess the
question then is is that
enough for the maintenance if our PCI is
dropping I guess we will have to bring
that back to you in April when we look
at the proposed
budget and talk about the transportation
fund and the uh how we spend the point 2
and the PCI and the maintenance work
that is needed yeah I I I'm not in favor
of putting more constraints on how
monies are used because it seems like
there's already enough constraints but
it seems like an important one to think
about as what that proper ratio is for
new versus and and and then we approve
development and that requires more
infrastructure things like that so I
don't know what that proper ratio is but
it seems like an area to pin
down thank
you that's all the questions we have on
on this topic for now so I just have a
few more slides so um next slide so
we're still on the uh no dedicated
funding requiring general fund support
projects so of all the projects that we
went through that require um general
fund support if there's any other
projects that also gets grouped into uh
the projects that require general fund
uh support So moving on to the next
slide so how we determine how we uh
allocate money from the general fund for
all these projects that requires some if
not all general fund support we have a
uh Financial policy or budget governing
guidance where we allocate 25 to 50% of
the unrestricted portion of our
construction sales tax revenues to um
fund these projects we also transfer
100% of our general fund interest
earnings the rationale is that these
taxes are more volatile and that we
don't want to rely on uh these taxes for
operations so we consider these taxes
for capital projects and then thirdly
our policy also allows us to take any
additional general fund monies that is
not needed in our operating in our
operations um for capital projects and
so basically these are the three
different pots of money from the general
fund that we have ability to look at to
fund um the capital projects that have
no dedicated funding and that require
some kind of general fund support and
then what we do is internally we have a
group that rangs these projects in order
of priority in terms of um you know
priority for funding from the general
fund basically
so next slide so for fiscal year
2425 the 50% of construction sales tax
is about 8.7 million just to give you a
perspective on uh the amount we're
looking at uh the interest earnings uh
is about 15.6 million and we um uh
assigned 17.8 million from the general
fund to provide for a loan for actually
the transfer station
so you know what's uh what I wanted to
comment on this slide is that prior to
the significant increase in interest
rates um and also the significant incre
increase in construction sales tax we
were transferring about maybe four to
five four to six million a year from the
general fund based on these sources um
over to fund
all those capital projects which was
clearly not enough but then since the
you know a significant increase in
construction sales tax and Al also
interest earnings we've been able to
allocate more from the general fund um
for these capital projects in the last
couple last couple years last few
years and then next slide um the tourism
fund also can be used for Capital
project objects that have any uh related
tourism component to it so we have an
ordinance when we collect the 5% bet tax
that 50% of that 5% bet tax has to be
used for Destination marketing based on
voter approval so it's restricted for
Destination marketing and then our
ordinance the other 50% is allocated 12%
to the general fund 9% for tourism
events 4% for tourism Administration and
research and then 25% and any remaining
funds in um the tourism fund can then be
used for other tourism related
activities and projects so again uh some
projects like for example if there's a
stadium project or Capital Improvement
in Westworld or something that is
related to tourism then that uh we
identify some of those funds for um
funding from tourism it does go through
our tourism development commission for
approval and also um Council for
approval as
well and that is the last
slide I think you might have mentioned
perhaps would should mention on the
tourism fund that besides these sources
of money and their distribution they can
also issue debt or the council can issue
debt on behalf of some of their capital
projects MPC C debt which is then not
secured by them but repaid from tourism
bed tax dollars
yes
um what is shown on the screen right now
is a a slide that I worked with Sonia to
try to put together and it's got so many
numbers you can't possibly read it or
make sense of it and I'm I'll leave it
to her to to say whether my
IA made any sense or whether she was
just humoring me but I was trying to
indicate the number of dollars that
actually flow to these various
departmental
activities and where they come from
where they come from the Transportation
tax or the um grants or the state or
whatever
um I I don't know whether you want to
spend any time on this Sonia or whether
it yet makes sense or whether we'll talk
about it in some future meeting but
I'm happy to answer any questions but
this was a spreadsheet that chair Smith
requested that does help show for our
fiscal year
2425 uh budget all the different um
categories of capital projects and where
the funding comes from and again the
first section of uh projects that have
dedicated funding as you can see
primarily Water and Sewer projects you
can see the one two 3 fourth Colum
general fund does not support these
projects they're supported by rates and
fees debt and then the on the
transportation side the transportation
Sales Tax Grants and so on and so forth
and then as you can see the projects
that have no dedicated funding like our
Public Safety so this basically um
summarizes in a from a dollar amount
standpoint basically the presentation
that just we just went through
we'll put this in the Deep archives for
the moment
um we're about out of time folks um on
our allotment of time here um does
anybody have any overarching question
for the capital Project funding
discussion
um and I've got one speaker but let me
say this I I I know that what we were
looking at here is on the very first
page a million a billion pardon me a
billion dollar spending program
scheduled for 2425 the Year we're
currently
in um so it's a it is a
significant part of the
total revenues that we do on behalf of
the citizens uh that we try to spend
wisely um earlier commissioner Stevens
made the point I think we will want to
see um whatever you want to call it the
top 12 projects or the top 20 projects
or whatever of that have been in the
headlines and we'll probably want to do
some kind of a deep dive into those to
understand
um if they went haywire why did they go
haywire and it's uh and are there any
disciplines that staff might propose or
we might propose to the council in the
future to uh be early warning signals
for some of these projects I know we
have some Financial policies and whether
they're followed I don't know but
there's one that's um we'll talk about
next
tomorrow a million if our project comes
in at a million dollar over a budget or
10% or something to that effect then
lights goof I don't know whether the
lights have g off on these and whether
we need brighter light bulbs um so I'm
I'm I'm anxious to see what we can do
with this we don't have much to work
with here in terms of what our budget
will be next year but I do think we want
to learn from those
projects and uh commissioner
Newman thank you I'll make I'll be brief
just a question um personally I'm
loathed to take on debt so um and I see
debt in the capital plan is it in this
case what's is it advisable to have debt
what's the necessity of debt or is it
preferred to pay as you go all the way
through capital projects I I'd like to
understand kind of how how we think
about because I just don't know okay
thank you for that question um debt
allows us to spread large Capital costs
to multiple Generations so part of the
um the need for debt is so you don't
overburden your current
um citizens with uh projects that
potentially last 30 50 years that
benefit future residents it does
increase the cost of the projects but
there are some projects that are just
too large to be able to fund pay as you
go primarily uh water sewer projects
they last 50 plus years they serve you
know future growth and future
generations and those are very
appropriate for debt funding we are very
conservative when issuing debt we do
have coverage ratios that we have to
meet and um you know a very strict uh
Reven any requirements to make sure we
can pay the debt before we issue debt
thank
you commissioner
Stevens yeah I know we're low on time
I'm afraid it I won't get the agenda
item next time but are we at the point
where we can ask propose agenda item so
they get in a future agenda we will we
will be in a moment okay let me get back
to you um and I think I would like to
add on that comment about debt um the
city is I I would say conservative in
its debt issuance um and whether we're
too conservative who knows but um but
the objective of debt is just as the
city treasurer said to you incur the
debt now to pay for a project so you can
build it now but it will essentially be
paid for over the years of its future
life and and there's alternative ways to
do it uh commissioner car mentioned you
know many of the park projects are going
to be pay as you go and so it
it is an effective way to assign
costs to the beneficiaries and is is
useful in that
regard okay now we are I think to item
number five U item number five on the
agenda which is the identification and
approval of possible future agenda items
and this is we don't have a disc we
don't have a debate or don't take a vote
on these but it's topics that we'd like
to have uh on future agendas and anyone
can propose something and
if if at least four of us agree then
we'd like to have it that on the agenda
commissioner
Carla yes uh like I said earlier I think
tomorrow's agenda is going to give us a
lot more specifics to make future agenda
items but I wanted to bring two things
up as part of our assignment you know
the budget and the work we do is
supposed to be aligned with city council
priorities
and they generally talk about that at
their Retreat when is their Retreat
scheduled is it going to be able to feed
into this at
all uh Mr chair and uh uh commissioner
we had a tenative date uh that may have
aligned and I don't know if that is
going to be able to work for all of the
council members and so I think at this
point um I would not anticipate the
ability for this body to have that
knowledge in advance of of of the work
for this year okay then second question
is yesterday at the state of the city
the mayor's address she specifically
said that she's looking at this group to
recommend a 5% cut in the budget and so
we need to be aware and be dealing with
that down the road but I wanted to ask
um Sonia
as we move
forward will staff be bringing us
recommendations for cuts like
that
sorry I'm happy to help out on that uh
uh we I think we have an interesting
process here because as most of this
information has been
2425 really uh the current fiscal year
that we're in we're simultaneously
building next years and uh so when those
two intersect is going to be an
interesting time uh coming to a a
meeting near you very soon in addition
to that I believe it's the city
manager's responsibility uh to present a
balanced budget and so that's uh how we
do it uh that's our goal I have not
received a major majority of council
with any direction uh to anything
specific uh they may have communicated
that individually W with you uh and then
collectively as it relates to budget uh
sending uh having that exchange between
staff and and and this group um but as
as we are
finalizing uh which is not nearly uh
where we need it to be in in the next
few days but as we're finalizing ing
that budget we would be presenting a
budget that we believe meets the
priorities uh of a variety of documents
the general plan much like we talked
about the the maintenance and the
discipline for that whether it's the
Street Maintenance or the park
maintenance given the uh variety of
funds and revenue sources and dedicated
Revenue sources and the needs throughout
the city to present that in a balanced
budget and then I think that's where the
exchange starts to occur and of us
explaining how we got to that point and
so I hope that answers your
question and now commissioner Stevens
you have something to put on item number
five uh yes so I figure out how this
works uh what I would cons like you to
consider as an agenda item is a review
of all projects where cost Changed by $1
million and 10% from the initial
approval that for f SCH 24 and year to
date
25 so I tried to follow the um City's
policy for uh the 1 million 10% that you
referred to because that is written in
the financial policies and the idea is
if we can get a list of all the projects
where they were changed by over a
million dollar and
10% then we'd be able to look at that
chart and then I'd like myself and if
someone else is would like to do it to
to work with staff as they put it
together to do some digesting to make it
easier for our discussion with a view
towards looking at uh what the natures
of those changes were were they errors
in the estimate were they cost growth
were they unanticipated inflation where
they approve change orders for scope
increases just to try to that's why I'd
like to kind of spend some time with
staff if they're putting it together to
say okay what's a reasonable way to do
this that doesn't kill you workwise that
gets the big picture of what happens so
that's why at the agenda I'm trying to
keep it simple the agenda item would be
review of all projects where costs Chang
by a million dollar in 10% since the
initial approval for the period of
fiscal uh
2324 and then 2425 year to
date so is that a motion so I'm so is
that do I make the motion it's it's it's
a motion I'll take it as a motion but
let me first ask a clarifying statement
of of staff is this is it possible to
put together such they say yes they can
do
that do I have a second for the motion
second commissioner schwier seconds it
and um we proceed to vote yes no or
maybe and it seems to be something that
we're all seven interested in
unanimously so if you can uh prepare
such a schedule and then put it on a
future agenda we will decide what we do
with it commissioner
Newman I I I just wanted to comment on
that and if we can I don't know since we
voted I don't know if we can do this but
can we include contingency in that
because because to my comments from the
last meeting around contingency siloed
by project or a pooled contingency
what's the appropriate amount because it
may free up cash for other
things there are probably a lot of
things that you'll have to struggle with
defining before you put this list
together but um even as the motion says
we'd like to see the approved projects
uh from the date of approval
to completion or whatever I you'll have
to figure out whe When the approval date
was and what Mark in time that was
but commissioner
Carla before we go all the way down this
road because I think it's interesting
I'm just curious too how many projects
are we talking talk about I mean I think
that needs to be part of the
discussion so thank
you City attorney wants to weigh in on
this
question I just want to remind the
commission chair members of the
commission while you can vote and put a
um future agenda item for future things
you shouldn't really be discussing it
and it it's specifically agendized that
way so just be
careful good point we'll stop the
discussion and hope for the best
have any other speakers or any other
comments from anyone on staff or on the
commission hearing none we move to the
adjournment I oh commissioner Stevens
you want to add comments this is going
to be real fast because it's not going
to be a motion one of the things I'm
thinking about do we need to be looking
at Personnel at some point so maybe
we'll make a motion in the future about
whether we should have an agenda item to
look at overtime and to look at
compensation and look at the impact of
overtime on pension and pension like
Carla said we might be getting into
tomorrow anyway so I'm just going to
park that idea I just wanted people
thinking about it as a possible future
agenda
item And to clarify we're doing pensions
tomorrow right and I think there was
some scheduled item on a future meeting
to do I'll call it FTE and Personnel
costs and benefits and whatever but Mr
chair I might just also add as it
relates to overtime primary departments
are your police and fire and so we had
planned to have those large significant
operating departments present and that
may uh capture it and certainly to go
deeper if need be but that likely covers
it well this has been fun shall we do
this for tomorrow again I move we
adjourn motion to adjourn all in favor
signify by saying I
I it is unanimous we are adjourned e