Town Council Annual Meeting

Welcome to day two of the 2026 council staff retreat. At this time, I'm going to recognize our inter manager, Russ Overton.

Uh thank you, mayor. Thank you everyone for being here. I think we had a productive day yesterday. Today we'll um we've adjusted the agenda a little bit on presentations and it's going to be a finance and budget uh focus. Um and I'm going to go a little off script here that no one knows about except one person in this room. Invite John Collins up since we did not get to debrief yesterday afternoon. We're going to do a little bit of an icebreaker that won't really require anything but you writing something at this point in time. And I'm going to let John explain.

Thank you, Russ. Good morning, Mayor Council Otterbox. Um, I am really excited to be back up and to give you guys just a minute uh to think about yesterday. I feel like it was certainly a really good day. Um, I've had lots of conversations with lots of folks in the room. One of those was Russ um and and kind of stumbled on on this piece. So, what I want you to do is for the council row to look to your left, next row, look to your right. The row beyond that, look to your left. So, it's going to be like this.

Kind of snake draft. So, just there's three rows. If you're in row one, look left.

Note, make a note of who that person is sitting next to you. Lisa, yours is going to be behind you.

Right. Okay. So, what you're going to do, you're going to take two minutes and you're going to quietly think about yesterday. And I want you to think through either a theme of the day that stood out to you. Or you can look at that person on your left and think about something specific from that person that stood out from you yesterday. And we're going to share with that person either the positive theme of yesterday, what's sticking with you, or something specific to that person. And I will give mine publicly to the room. If I were sitting in Cararissa's seat and I was looking at Michelle, something she said yesterday

has stuck with me. Um, she said, "We don't strive for excellence." Or maybe I don't want us to strive for excellence just because,

but because it's the best way we help.

And that stuck with me. If I were to share a theme of yesterday that stuck with me, it would have been the concept around redefining in our values what growth is. um that was really represented from multiple specifically council members around that theme, that word means something totally different in 2026 than it did in 2006. So, as you think through this on your own, think through one of those two things. It can either be a theme from yesterday uh that stuck with you or something specific to that person uh that stuck with you from yesterday. So, take a moment. I don't know if maybe we have some music. Final Jeopardy. I don't know.

John stole yours already.

John, I write about Lori or Chevy?

No, you're doing Lori. So, the first row goes here.

Lisa, you're with Alison.

So,

Jimmy, you are Nicole.

So, theme and person or person or theme?

Either or. Person or theme? If you want to overachieve and do both, you can.

I I don't I don't know what what I would what thinking on your own.

Sorry. Quiet. Quietly thinking on your own

scratch sheet of paper. That's what I was just thinking.

I guess

It's the most eclectic pick for music. All right, for all of you Oxford, English folks, doesn't have to be complete sentences. just get the the broad thoughts down on paper. All right. As you finish, if the person that you are passing to is finished, you can engage them in conversation. If they're still writing like Lisa, just give them a second. Uh but you can start passing and explaining what you have on your paper to that person.

Yeah. Yeah. Yeah. You'll just pass it over, start reading. It's going to be a little chaotic. That's part of the deal. It's good that way. So share and be shared with Serious.

Mhm. I and I love it at my at my staff meetings. This is the part like if this is all we did,

I I would probably consider it a success. I just love it. Okay. Okay. If you haven't been shared with or had an opportunity to share, your time is up. You'll never get it again. Share share with them later. Uh, every staff meeting that I start ends up starting late because this portion of the room when it when it livens up like that is the part that I love the most. So, I I just it's it's really fun to stand up here and watch you guys begin to loosen. And it was interesting. It started really kind of slow and then and then all of a sudden there's a laugh and then there's 14 more other laughs and then there's smiles and then there's way off topic and all that is great. Uh so thank you Russ for the opportunity and uh now we're on with our day.

I don't know who I'm passing to.

Uh back to the tech team because Liam is getting miked. Glad to see the good energy in the room and a good way to start the morning because you're going to need some energy as we start um doing our budget priorities. And Liam introduces his voting method. So remember your energy later when you

start voting on things. He'll explain.

Start eating

teeing it up. I'm teasing you.

Thank you, Russ. Thank you. Um good morning, um mayor. Good morning, council. Uh I have the sad job of following up Carissa's favorite presentation ever. So, um but I think I can top it. So, I'm going to do my best and we're going to try. Um, today we're going to talk about budget priorities. In the past, we've talked about budget pillars, pillars, priorities. It's the same thing. It's what council wants out of the budget and what the community wants out of the budget.

So, some key takeaways. Um, the first is that prioritization can help us reconcile competing demands for resources. Priorities should also be re-evaluated every year to best align with emerging community needs. that judges on some of what Allison was talking about yesterday, uh, values versus priorities. And then council's priorities create a framework for staff to make key budget decisions and create a budget that aligns with your values. So, we're going to talk about some underlying assumptions. We'll go into those potential priorities and a discussion of definitions and then rust tease this. We'll do quadratic voting at the end. I promise it's easier um than it sounds. We have a fun ice cream. uh voting scenario to do before we get into the hard priority discussion.

There you go, Bella. Ice cream.

Um before I get into all of it, I wanted to highlight that you guys have already started having the priority discussion. I think when I was in grad school, one of my professors tried to convince us all that we would be great budget analysts. And at least half of the class said, "I could never be a budget analyst. I hate numbers. I hate math." And their response was being a good budget analyst, being a good person in budget, being a good leader is not about the numbers. That's kind of gravy. It's a lot about being able to communicate what your priorities are and make those decisions. So even if you're scared by the numbers, when you have the

conversations, that qualitative conversation on what service levels you want, what your priorities are, that's the first half of the battle. And then we sometimes need a quantitative tool to help tease out the subtle differences. But just as important today to the actual voting you're going to be doing is the discussions around what the definitions are. So at any point please interrupt me. Your words are more important than mine. Um and make my life miserable. Um moving on. Uh another kind of clarifying right at the beginning. This is very high level priority right we have 10 priorities 10 potential priorities I'm going to share with you. Um, but what we're not going to be talking about is specific capital projects. That will happen at the March 12th and the March 24th work sessions. We're not going to be talking about specific operating budget items unless you really want to. That will be happening primarily at the May 28th, June 11th, and June 23rd council meetings and work sessions um before budget adoption on the 25th. So, right now, we're really focused on what are your priorities. This might look a little familiar to our pillars from last year. We've left it blank because we're recreating them for this year. And then we've added um on I think it was January 8th or January 10th, I came before council at a work session and we talked about what potential priorities for this year could be. And the one that I think everyone said was transparency is really high. And so we added transparency as this underlying assumption for the ent entire budget process. It circles all of our priorities that when we're talking about what we want to do, that's always encompassed by a desire for transparency. So, we have this underlying assumption, transparency, which we define as continue providing clear, accessible, and timely information regarding how public funds are allocated, ensuring the community can easily track government performance and decisions. And so, with all of these definitions, I'm going to pause. And if you don't like the definition, please tell me. or if you have a little tweak or if you love it,

let me know. Great. So now we have that underlying assumption transparency and taking your feedback from that January 8th work session, we've come up with these 10 potential budget priorities.

So those are

Sorry, you can you go back to the transparency one again? was just

it is another underlying assumption that we've talked about um being citizen engagement. Is that an assumption or is that a priority associated with how we make decisions?

I think that would be an underlying assumption with transparency. So, we have some note takers in the back. I think we can add to this definition. I mean that's my I'm not speaking for the rest but I don't I just for me that would be also an additional underlying assumption is is working to make sure that like our engagement in the past has been us asking citizens to respond to us but not us actively asking them until the last year when we went to um boards and commissions. That was the first time I I think we actually created a mechanism for direct feedback. And for me, I think ensuring we continue that active engagement is an important assumption especially for where we are now.

Separate assumption or a part of transparency.

It doesn't matter to me. just so that it's it's um

yeah maybe maybe if track was more active like understand

right that like is that makes people part of the process rather than just tracking it after the fact

right ensure ensuring the community can engage in the process

and track government performance and decisions

yeah or something like understand and influence Mhm.

More accurate.

All those. Yeah.

Yeah.

You said our words were going to be more important than yours. That was pretty good.

Flatter me.

Wonder if it'll change his mind. How much can we flatter him?

I'll see what else I can.

Is that where you're going?

A lot more slides for you to do your best look.

Um, okay. Any more comments on transparency? That was really good. Okay, so we have these 10 potential budget priorities. Um, we're not setting a limit on which ones will make it into the budget as our top priorities for this budget year, but I can tell you it won't be 10. Um, when we get to a large number of priorities, it starts they they're in conflict, right? It's hard to make decisions when you value everything. All of these things are obviously important, but we have to make decisions with our resources. Um so these priorities are affordability, community safety, environmental stewardship, fiscal responsibility, high performing staff, maintaining facilities, maintaining service levels, operational efficiency, service excellent and new capital investment.

So um sorry just a quick question. Um where does infrastructure sit because I do remember that we did mention infrastructure as well. So is it part of or a subcategory or one of these categories? You think maybe new capital investment?

Yeah, I think infrastructure would fall in two. Um maintaining facilities would tie to our discussion on um street maintenance yesterday, right? Okay.

And then new capital investment would tie to specific projects like widening a road or building a new greenway or sidewalk.

Thank you.

I would I actually I see it the same way you see it that maintaining infrastructure to me isn't clear in those things. I would actually

I'd rather group facilities in with

infrastructure and say maintaining infrastructure right

I think that's more outwardly understandable

yeah we can we can change the words on that

clarity because I think a lot of residents they have um expressed their concern about the infrastructure in general

and the you know priority right there probably will help see this very clearly.

Yeah. So we can change maintaining facilities to maintaining infrastructure.

That that would be

for infrastructure and facilities, but it's going to be a crowded circle.

We can just make it bigger and bigger. Um

that would be wonderful.

I think it also, this is a little more tangential, but something like maintaining service levels. Uh Chief Cooper talked about a new fire station. Um that is both a new capital investment and also to maintain our service levels out west.

So our first one here is affordability. I'm going to read the draft definition for you. So, it's balancing the need for revenue with the community's ability to pay. This is one that I think in that work session on the 8th, I heard a lot of council members talk a lot about. Um, and some potential impacts on the budget for this one is we might need to refine our service portfolio to match the needs of the community. Um, we might have to have an increased investment in partnerships to mitigate disproportionate impacts and then also property tax adjustments andor fee adjustments. Perfect.

So, focusing specifically on that definition, do we have any comments? Does that feel like it hits what council thinks of when they think of affordability or is there something else that we're missing?

I think it's perfect.

Personally,

I like how that reads.

Great.

We can always come back. Um, our next one is community safety. And so our draft definition here is prioritizing the protection of life and property through well-resourced police and fire departments as well as proactive community programming and infrastructure safety. So we get a little bit of infrastructure here as well. Um

potential impacts on the budget would be a fully funded capital maintenance including in our utility fund.

Are there other components? I mean, I'm I don't have um an idea of what they might be, but are there other components that fit into community safety besides

police and fire?

I think that's kind of what we're trying to get at with community programming and and infrastructure safety.

A really common example that we use internally is uh building inspections is a is a key part of safety, that your buildings are safe, but it's not a traditional community safety. Um, also having roads that aren't dangerous allows our police and firefighters to get to the responses. And then also like a lot of I'm looking at John, a lot of parks programs can help prevent crime and those other things.

So would those fit into the community safety bucket or would they fit into the bucket in which they're managed?

I think this one is primarily those frontline community safety. Okay. Um, but I don't if we prioritize this, we will continue investing in

the

the others as well.

Gotcha.

You included infrastructure safety if that's a little meant to be

cross. A perfect example that I was thinking was crosswalks, right? Does that fit here or does it fit under capital or infrastructure?

Right.

Because of like maintenance

or maintenance.

Yeah. Yeah, I think part of your prioritization is also going to be prioritizing multiple of them, right? So, if you prioritize new capital infrastructure and community safety, staff will start thinking in the new crosswalks, new sidewalks area, if you just do community safety and not new capital, we're going to be thinking more on the operational side of of how to add more resources and staffing. And even an example might be last year as we were going through the budget exercise and you were um electing to reassess

projects. Um one that came up was like traffic signals and they were were taken out until they were left in because those are safety projects except we didn't have a pillar to match that to. Um, I I think that's what is going to be nice about moving forward is trying to match your budget priorities to what your real priorities what you're doing in the budget to your budget priorities.

I see.

Our next one is environmental stewardship. So our draft definition here is integrating sustainability into budget decisions to protect natural resources, reduce the municipal carbon footprint, and ensure the community is resilient against climate related challenges. And some potential impacts on the budget here would be funding for alternative energy, additional open space acquisition, and a continued investment in storm water infrastructure and operations.

How about replanting some of the trees? And um I thought that was one of the things and I know that the leadership has changed now but um we kind of touched upon this last year a little bit about replanting trees especially in district like mine where you know so much development is happening and it's probably you know um wise to like replant some of the lost trees.

Yeah, that's a a great addition a potential impact. I don't want to spoil the later presentation today. Um, okay.

But one of the

position requests for next year from public works was an urban forester expedator and Jimmy can correct me if I'm wrong on that one. Um, but that would help with our maintenance of our existing stock as well as investment.

Does this fall into out of these three?

So,

so, so these are potential impacts. I think there are more potential impacts. I was just trying to give some examples. Yes.

Okay.

Yeah.

I open space acquisition. Is there really opportunities to acquire additional open space at this point in Kerry or is that really a matter of open space

preservation and potentially?

I thought this open space was and Dana probably could touch upon this um we took some funding away from storm water

um open policy, right Dana? you were you had that money to purchase land in case if we needed were to protect the and I'll let you finish that.

You you got it right. You that is exactly right. So, uh we use open space money in many different ways. Um but one of the key ways that we can and um have been doing as part of our uh our flood plane program is the acquisition of properties that are in flood areas for um converting them back to open space. So, the open space acquisition includes um even some of the proposed things in the Walnut Creek corridor where there's been flooding and things

like the property on Park Street.

Correct. Like the property on Park Street. Yes,

that's sort of where my brain was going. It's it's I think this is unclear. This this to me reads we're going to purchase like we did with the Bryson Preserve. Right. Right. So, so

return like um you know preservation and acquisition or sure but I think the if it wasn't so early in the morning on a Saturday I could string a sentence together. I apologize. Um really what we want to do is invest to increase open space perhaps or something like that. Um and preserve obviously what what we have. But I think that, you know, when I when I hear about our what developable land is left, how much of the non-developed land is undevelopable is our is our goal to acquire some of that undevelopable land that has buffers and other reasons, maybe easements. I don't know. or is this I just think the

goal here is is not clear as written because that implies we're gonna buy another nature preserve and that's just not

so and I say this because of how surprised people were that we were purchasing properties to return them to open space

to green infrastructure.

Yeah. So I I just like that to be really clear because this is one of the things that residents have been absolutely clamoring for that they do want us to increase the you know forested or I guess maybe that's not even the right word sometimes in an urban environment but or suburban they want us to invest in that and I think there'd be a lot of support for buying a regularly flooding property and removing the structure and you know returning the trees and the repairarian buffer and all those things. So, I just would like to be really on the nose with that part of this pillar, the stated goal. Does that make sense or am I splitting hairs?

You are making a lot of sense. We'll go back and make sure that in the request that it's very clear about what this includes because it could include, for example, there's uh there's a very generous um wetlands area in the White Oak Creek area. And um and there's some missing comp part, you know, parcels, missing components to it. And so it might

is right.

Yeah. So it might include things like that as well.

And is that really in the spirit of what this is really saying? We acquired or had that land and then built that greenway on it and now it's preserved wetland

and it's also an amenity that people can use. That that's sort of what I'm getting at.

That is correct. Yes. Yep.

Okay. And you're actually touching on um I'll just add not to complicate it but um and we'll try to make sure this is clear in the budget as well. There is a watershed fee that is in the utility fund um that is within the so so that

fee can apply to things within the Jordan Lake um watershed area and and so that also might be applicable to for instance the wetlands and ensuring that the wetlands are the highest quality that they're maintained um and there isn't destruction through you know natural processes. Soap comma watershed protection

comma thank you

Oxford comma another another

I have my Oxford comma as well

sorry

that should have been one of the things yesterday

one more one more thing I want to highlight too is that we do have the open space plan which council you saw a draft of that presented by Leslie Mormon um at one of your work sessions last year there is a draft copy on the table up there with all the plans on it if you want to peruse it. It's also available on the website still. So, if citizens are curious as to what the long-term planning around open space is, that's also available.

And that's a draft plan that's online.

That's a draft plan. Yep.

But I think that for me, the most important part of what you brought up is in the past the term open space acquisition to council members and residents is we're going to buy a park. We're going to buy a whole bunch of land for a park. And all of our open space, not all, all the ones we talk about have been about parks. Whereas if you look at the layer on the GIS system that Shelly sent to us of all the town owned properties, or something like that. They're for so many different reasons, many of which were green infrastructure that would fit into that. So, I think it's a great point that you brought up is

in many in many of us, we think open space acquisition means, hey, we're going to buy a new park and that's just not necessarily true.

Correct.

Yes. Yes.

Can you also give me an example for the uh storm water system uh infrastructure? How do we impact the budget on that?

Yeah, I think there are a couple of different ways that storm water and Dana is going to help me out if I get anything wrong here. Um but the primary investment is in culverts and storm water control measures. The town has a lot of town-owned stormwater control measures where um we have to do maintenance like drenching a lake or um fixing and then we also have to clean and expand culverts. Um and there's a lot of downstream impacts on storm water. If we have our measures properly maintained and our culverts clear and wide enough, it will stop potential flooding on properties. Um and I think Dana can talk about our recent stormwater certification. I feel like that was a good information.

Yeah. So that uh included in this would also be some of the work that we do with the um FEMA community rating system which is the recent thing that we got the 15% for um reduction of flood insurance for our citizens. As a downtown resident, I do miss um being able to play in the in the puddle across the street when it rains. Um the the neighbor's yard always flooded, but those that water in the downtown park, that's storm water infrastructure,

regional storm water infrastructure.

Yeah.

Before we leave this, Liam, let me ask a a philosophical question. uh you know how much these priorities are an expression of values even if they might not be feasible with our financial resources. Just thinking for me open space acquisition for the sake of having open space is still very much a value of mine even if that would be a very tough budget reality. Yeah. And so, I mean, I would love to see it still captured as a a value, but is that not what this is intended to do? Should it more closely correspond to

what we think we're actually going to be able to achieve in the budget?

Question. Let let me give a a hypothetical like not a um

if you were voting and environmental stewardship was really important to you as a value but you didn't think you'd be willing to raise property taxes say specifically for open space acquisition then I would say you would prioritize affordability and financial sustainability over environmental stewardship but I would still vote for environmental stewardship. So that's telling staff, my top priority is keeping the property tax rate affordable and being a good financial steward, but I still have a value of environmental stewardship.

And and really the point I'm trying to make is not that I don't want open space acquisition to be one of the the significant things, you know, on this um draft. It's that we are it I don't feel like the words open space acquisition accurately reflect what we're able to do right now. what we're more likely to be able to do if we had the funding is reclaim land to make it open space, right? So, it just I think the spirit's not there.

Um there's just, you know, there's a handful of acres of open space left that if we even wanted to

Yeah.

we could acquire, right?

Yeah. This is probably top of mind just because I just met with residents a couple of days ago and we know that the parcels that are left are small. Um, you know, so it's it's a few acres. It's not a Bryson Nature Preserve, but for the folks that live there, they still would love for those few acres to to be a park instead of maybe what uh is currently proposed. And so that's still meaningful to them. And again, not saying that necessarily that that's feasible, but open space acquisition as a possibility, as a value, as something we would consider doing um even for all

of our little

awkwardly shaped parcels that are are peace meal here and there.

Absolutely. Yeah. Absolutely. I'd just add Britney, you're talking a little bit about um the timeless and the timely and I and and what you're touching on is how it is in both areas.

Um that this is a value that is timeless and um and then as it relates to the budget, you can choose is it timely now or you know

not. Yeah. Our next one is fiscal responsibility. So our draft definition is a commitment to long-term financial health through balance budgeting, maintaining healthy reserve funds, and ensuring that current expenditures do not outpace sustainable revenue growth. and some potential impacts on the budget is um later today we'll talk about the long-term forecast and including a balanced budget in our plans for that long-term forecast having a healthy fund balance and Kim later today we'll talk about some financial indicators and so having positive financial indicators

so Leah one thing I want to and I'm probably this is what you're talking about but you know this is what I would like to see at some point if this is what it is

wonderful if not you know maybe we need to start thinking about this and I know we touched upon this last time a little bit but now maybe it's time to reset with the new leadership and um kind of understand a long-term goal for town of Kerry that you know every year how what are the numbers going to look like so that you know that mindset already is there and we also understand where this money is being allocated and how this is going to work. Going year by year is a wonderful plan because that's obviously in in the moment and you know the real life but

then some projections probably would be helpful at some point.

Yeah. So my next presentation today is going to include a model exercise. it will be the five-year model. And so that will just be a base assumption that staff has put together of what the next five years could look like.

And then as the budget process continues, you can continue to get additional scenarios um in 3x4s and in work sessions.

Wonderful.

So you always think ahead.

Okay.

Great. Uh high performing staff. This is a pillar that we included last year, but the draft definition is investing in the recruitment, retention, and professional development of a diverse and skilled workforce that is empowered to innovate and serve the public effectively. And potential impacts on the budget include merit increases every year that keep up with the market, maintaining our low to low staff to citizen ratio, although maybe not at the level that it is right now. um because those high performing staff are able to do more and then a continued investment in employee development.

The the only thing that pops up to me is it is not my my personal priority to keep a low staff to citizen ratio. For me it would be an efficient staff to citizen ratio just because I once you put in a a number or a hey we always want to be the lowest that's not necessarily the goal. The goal is to be the most efficient with resources we have. So

agree.

That would be my only 100% feedback.

And the merit increases to keep up with the market. That one bothers me.

Yeah.

We're just trying to stay up. I thought

we want to retain the best.

Keeping up's not retaining the best.

That's a good point. I think the thought here was we are if we're at the best, we want to keep up with the market to maintain being the best. But we'll we'll edit the language.

Be competitive and market competitive.

Lori, can I jump in on your um

efficiency comment?

Um I'm wondering for the council if the word effectiveness also might work in here because sometimes what you ask us to do um isn't the most efficient thing,

it's the most effective thing. And so if you were to be willing to consider having both of those words in there, then it might round out what we see you want from us more completely. U just I just throw that out as as something for the for the council to consider.

Yeah,

I think that's that's the spirit of what Lori just said. I think we need we need a right sized

staff for what we're trying to accomplish, not put constant pressure to work a little too lean,

right? And it's not it the goal isn't uh for me it's I don't know if that's the how or the what, but the goal is to as you both said to have the right people with the right skills doing the right job, right? rather than that we have a low staff to citizen ratio.

Yeah.

Uh I have another uh question about the low uh staff to citizen ratio because we know that uh in Kerry a lot of residents they are not citizens. So that ratio is only to citizen or is to res.

It actually is to residents. So we'll change that language as well. Yeah.

The call out

a question about merit too for my colleagues. You know, we've had a lot of conversations recently about our current merit structure, and I've heard, I think, some desire to reexamine merit. And we've talked about cost of living, we've talked about living wage. Is is merit, you know, that that that specific language what we want captured there or something

compensation?

Yeah. Something broader. If if I'm fairly understanding what I've heard,

I think Britney, you're right from everyone else was in my mind because I

think we had some conversations where we were going to evaluate the current salaries with what other municipalities are doing and the market rate and I think that was an HR exercise.

I don't know if that needs to be incorporated here or how do we do this?

Change the language however you feel. Just a for a point of clarification, we've got a staff group working on the pay for performance policy. It's a council policy, so it has to come back to you to be changed. The goal would be um in the June time frame

before the next fiscal year. So for this budget merit increase would be appropriate language and then but moving forward

y'all can change the language to whatever you'd like and the policy can fit uh the priority.

I I'd like to see that have living wage livable wage language in it. Mhm.

If you if for this you use the word compensation, then it it can

it can capture all of that for right now and we can make those notes

exactly

as you as you want to move forward because because compensation would include whatever you decide with Marcola. It would it can include living wage. It can include um the leave benefits. all of those things that that this for this higher level priority that it's that package of things

and that as we move through this the uh re-examination of the council's policy then in that policy we can get much more specific for you about all the things you want to accomplish with the living wage for carry the colas and those things if you if you find that to be an acceptable way to move forward yes

I think that's what I'm hearing Okay,

our next one is maintaining

and thank you for that. We appreciate it very much. Yes.

Uh maintaining infrastructure not facilities. Um and so our draft definition is protecting the previous investments in Kerry by prioritizing the

upkeep, repair and modernization of physical assets including bridges, community centers, fire stations, parks, greenways, streets and water systems and sewer systems and so much more. Um, and then the potential impacts on budget would be fully funding crap critical capital maintenance.

I thought you said crap.

I did say okay.

Thank you.

Some way to point it out.

Sorry, I didn't mean to call you out, but I thought I thought it was just melting. It's just

uh renovating functionally obsolete facilities and additional public works expenditures for preventative maintenance. We talked yesterday about how this is also kind of a balance where if we're funding our capital maintenance, it can relieve pressure on public works. So, it's a little bit of a balance.

So, just to be technical, facilities, does that imply to you or others structure, whereas the word assets would imply all

Yeah. This is this is where I said infrastructure instead of facilities. And then because facilities to me says buildings.

Yeah. Yeah.

So assets is the

Oh,

then I'm even

then I'm going to ask about ERP systems. Where would that where it's all the the technical infrastructure that runs, you know, 311 and all those others, where do those kinds of current facilities because it is a facility

as well as some of the new things we want like AI and digital twins, where do those fit? because they're also facilities or infrastructure. They're just not roads or bridges or greenways or streets.

When I think of assets, I think of if you're talking about, let's say, the 311, it's the electricity that supplies it. It's all the physical things, not the actual.

It's software in the cloud.

I don't see it that way.

But assets,

that's an operational thing, not an asset. But

do we have an operational bucket. I think so.

I'm pretty sure maintaining service levels is trying to get at the operational side, but we can

Okay.

We can change the language instead of maintaining service levels to like invest in operations or

and to Lor's point, maybe we put it in the parking lot and get through them. If Yeah.

If one doesn't fit wondering, come back. That's a good

And and not only where do they fit, but Where would that have fit in our priority?

Technically, capital.

Yeah.

Um, as you get there, but then you're really tight maintaining it is not

and doing something new. Where would something new fit?

Right.

And so, so this definition, the first one, critical capital maintenance, I I introduced that last year and one of the projects in that was the CAD replacement, which I think is pointing exactly to what you're talking about, right? Replacing a technology that's very expensive, but is a backbone of the work that we do.

Gotcha. And where was that last time? And what bucket would that have been in?

That was in there was a critical capital maintenance bucket in the model and that would have been in maintaining facilities.

Okay.

I think the mayor was the word facilities was more asset. You might facilities and assets

or maybe you want to talk about changing the title

if you wish to make it.

Facilities does feel like a building.

Yes.

I I think I really like infrastructure because I think it gets the

that is true.

The CAD and the ERP as well as the roads and the bridges. That's great.

Our next one is maintaining service levels. Um, and our draft definition is ensuring that the quality, frequency, and reliability of core services such as trash collection, fire and police response, and park maintenance remain consistent and reliable. And potential potential impacts on the budget could be adjusting operations and maintenance budgets to keep up with inflation, additional employees to catch up with growth, and then also refining our

service portfolio to match the needs of our community.

I need to add 311 to that draft.

Yeah.

Definition, I believe,

as a core service. So, it's easy to see the overlap between some of these, which I think is especially good in the beginning when we're starting to see what our priorities are because

if if community safety is really important to you, there's like that category, but also it's captured here like fire and police response is still community safety, but it's also maintaining service levels. So, in the end, we may be able to tease some of it out a little better. Well, and your budget request may hit multiple values as you start seeing them aligned with values or priorities,

sorry,

or pillars.

Critical capital maintenance.

Uh, our next one is operational efficiency. So our draft definition here is the continuous refinement of internal processes to reduce inefficiencies and maximize output by leveraging technology and best practices. Some potential impacts in the budget would be a continued investment in technology,

continuing to do performance management and benchmarking which we'll talk about a little bit in my next presentation and funding for comprehensive plans and community plan updates. Just to ask a question I guess of my council colleague friends. Is innovation a value? It was one of the values that we worked on the mission statement right. It was one of those words on one of Is it still if that's a value should it show up in a pillar and I know we still have probably two more but is that

we probably won't get to interface.

Okay. Okay. Never mind. I'll wait then.

No, you should do it now. We will not get to innovation. This is the innovation pillar.

Okay. So, would that

So, would that be something you'd want

to see covered

in that if it's of value? Because this is really about keeping the for me it reads like it's keeping the lights on.

Keeping the lights on, do it better, faster, cheaper, not really about looking forward. So in our last cycle when we were discussing about the capital projects and whatnot, I'll just go back the guiding factors we used back then that it was seen as nice to have because there were some projects that were put um on that list. They would have definitely added value to the residents. But then um that's you um but I don't know if they were prioriti they were not prioritized actually because um there were other projects that were more important. So when I think about innovation, I'm big on innovation, technology, cyber security, but I the way I look at innovation is it depends on how we to how we are balancing the budget and if there is a direct benefit to cutting the cost in the future on something then we should definitely invest on those kind of things. Are you thinking about timely like it's it's still super important but like right now is that what we have to

Thank you. Yes. Thank you for helping me find some words.

But I I would when I think of innovation I don't think of just cyber security and software and and and operations. I think green storm water infrastructure and you know working solar into any project where it's feasible. That's the kind of innovation as a municipality that I believe we're really good at. Um, and we've already got some traction. So, I don't really see innovation, maybe innovation isn't exactly the right word. Maybe it's more

innovative or I mean stable homes as an example is innovative.

Is innovative. Yeah, that was a huge hugely innovative solution that the staff came up with to what is an intractable problem, right? It was it was sort of a a leap forward.

It's more about innovative thinking maybe

which may be embedded in many of these.

Yeah,

maybe. But is it something that you need to call out so that people know it's a value

perhaps in the service? But I think in this one it um specifically talks the first bullet continued investment in technology.

So that's where I was coming.

Oh, I was talking about the description more than the actual potential impacts on the budget. I was talking about the the con the definition the continuous refinement of internal processes speaks to you know just looking at how we're doing things and how can we do them better reduce the inefficiencies but maybe we want that definition to say and think out of the box and continue to do what one of our core values is which is to always reexamine our processes for

those all good days you know we used to invest a lot of um when I was in corporate world my organization always invested a lot in six sigma that's not necessarily um uh technology but it's a certification and if we show improvement if our staff gets an opportunity that's a development opportunity for them they get some sort of sigma black sigma yellow blue and then um they can show improvement in a process and they you know that is also a professional development for them because they're getting a certificate from the organization. So those kind of things probably um the efficiency part I understand but I think

this first bullet kind of was what I was talking about. Yeah, I I think that's a really important question, Lori, because to me, when I first read this, I thought this feels like this is embedded in everything that we do, that this is part of the carry way. Uh, does it need to be a standalone priority in order for it to continue to be a part of everything we do? Because if we don't prioritize it, uh if if we if we don't call it out as a priority, would we risk it not being a value that's embedded in all of our other operations? Or is it such a core value that it it might be there anyway? And so I don't have the answer for you, but I think that's an important question.

Just something to think about since it came up yesterday as one of our

values. Most of those values that we read through are showing up somewhere on our pillar.

And as Susan just said, effective

and efficient aren't synonyms all the time, right?

I feel like there's efficiency or effectiveness language in many of the pillars.

Yeah.

So just something to think about if we value it, maybe we should call it out. if we don't or it's already an assumption.

Maybe it's just putting language in multiple areas that speak to innovation. I'm thinking about community safety. I mean like you know the the new technology we've had within fire and police over the years has been innovative. um high performing staff. The way we the efforts we put into maintaining and recruiting high quality staff is innovative compared to many areas but

and what technology are we providing to the staff and empowering them with the information to be effective. I think that's very critical for their job especially I know with the police

department um with the amazing technology innovation that they had on several fronts. So it is important you're right but a standalone pillar I don't know

at this point as the as we get through this um it'll be interesting to see how then your votes line up to if something's missing. So you might just keep this in the backdrop of your thinking as we see what the results are and if you think something that landed low is missing and is it is it a core value is it intrinsic to us might even be on the uh the foundation of how you build the budget because that's kind of what our mission statement statement of values are and these are your really annual priorities so to speak that can be revisited um each year each budget year

right that question also goes to is innovation a timeless or timely

as well. Right.

So, uh I want to express that this operational efficiency is like uh the staff is the people and organization and the planning work together because even if you have the best staff, you don't have a like great plan, efficient plan, they couldn't be effective. And if we don't provide the staff with the the right technology or the tools, they couldn't uh in um like deliver in a productive way. So so I feel this operational efficiency is like combining everything not only thinking about staff but also the um tangible and intangible infrastructure or uh or tools. That's that am I uh is that I understanding for this part?

I think you're understanding.

Yeah. Y

Bella, do you feel like the other pillars don't capture those things, those important things well enough and it needs to be a standalone pillar?

Uh this is my first retreat for me. I feel I need to uh processing is longer

like this machine needs to set up like I'm processing all those informations and especially these are very general descriptions and for me I was think example to help me understand this uh but I'm trying to catch up with you guys especially more discussion will help me to understand these and also I think for the staff they they write this in a very uh like uh general way to to try to cover everything but you know these can be a thick like 200 pages to one topic right

so um

so I really like the discussions no matter is uh what kind of discussion really help me to understand these

that's fair

and there's no wrong answer because last year was the first year ever

if that if that makes you feel better first year I was so lost and tired and I was like, what am I doing here? So, you're you're much better.

Right. So, last year was the first year we introduced the concept of pillars.

Yeah.

Um not sure yet how much they meant to that budget. This year, we're really trying to hone in on it. Y'all are a new council body, so see what's important to this year. And you you I think you've got to go through it a couple years to see how your priorities align to what what the budget is. And that's what we'll be trying to do in this budget year. or if something doesn't work out, we'll refine it and change it and come back to you. This this will be a a living document. What I really like about these is they also feel like the pillars of policy as well, which is is really where my brain is

because they're so they're so representative of our priorities in a very general way that there's, you know, I think they're more than just budget pillars or especially when we're done here, I suspect they're going to be really good foundational pillars for policy across the board.

That's true. A lot of good conversation on that one. I think it needs some editing. Um, our next one is service excellence. Um, so

this is a dedication to providing highquality customer- centric programs and services that meet or exceed resident expectations and enhance the overall quality of life, potential impacts on budget. Um, you could have higher expenses because to remain at the beginning of an adoption curve for new technologies and services, it is generally more expensive as well as additional investment in staff and resources for staff.

I think you guys had a lot of conversations about excellence yesterday and um some of the discussions about the last one also apply here. Mhm.

I was waiting for someone else to speak first because I'm so bossy this morning, but I hate higher expenses to remain at the beginning of the adoption curve. I don't think that captures the spirit of the service excellence that we're striving for at all. Being first to market, being first to adopt is not even a little bit one of my goals.

What is your goal instead? The goal when I think of service excellence, it's really a balanced, you know, what is you it's not giving residents every single thing they want.

It's delivering the right thing at the right time at the right speed

to the right people

to to the right pe well. Yeah.

Well, I mean to the people who want it.

To the people who need. Yeah. It's it's not um you know and and I mean we we all have conversations with residents that or citizens whatever you want to call them who say I want this thing and sometimes the answer is no right that doesn't mean that staff didn't deliver excellent service it's we don't have $4 million to put that sidewalk in right now right so it really is this that that I do feel like there's that umformational component of it that's critical it's you know getting the information, delivering understanding and getting, like I said, that right thing to at the right time. Um, and and there is a really big

component of doing what's best. Sometimes that's your best, that's the most timely, that's what we can reasonably deliver and all that. So, I I feel like um the adoption curve just that to me doesn't really represent.

So, is makes sense. Is that a when you're thinking about priorities you're I mean maintaining service levels versus service excellence like it's not that we don't want to have really good service. Maybe maintaining sounds like it's not good enough. I mean know it was like uh we're just kind of maintaining.

Yeah. But I mean, but I think at least in previous years, I know for some council members, service excellence was really high priority. So, I think it's going to be it'll be interesting to see where we land at the end.

And I think um it's kind of in the wording and we probably at some point will have to sit down and evaluate what does the meet or exceed means. And um it says services that meet or exceed resident expectations. So what is the difference like you know at some point what does meat means and what would exceed mean

and what would meet minus mean

right um like how does how do we evaluate where do we stand

and I would like to get some understanding on what is um if you could please rephrase this for me or higher expenses to remain at the beginning of the adoption curve like what does that mean?

Um, let me talk a little bit about where my mind was at on this one, which I think doesn't come across incredibly clearly in the definition that I wrote. Um,

we've talked a lot about a maintenance budget or an expansion budget. I think I was thinking about an expansion budget and this is the priority if you wanted

an expansion budget that you would use. Right? So, we're talking about adding new services. We're talking about doing new things and oftent times

to do something for the first time it's incred incredibly expensive and so you're at the beginning of that operate adoption curve.

Well, if you're the last person to do something or the person in the middle, you copy everyone else and it's cheaper. So what essentially you're saying is that we are we're going to reflect like our expenses are going to be on the higher side given the priorities if you know we change in if there's a change in service level to exceed when we say exceed we're not saying we will start picking up trash every day we're talking about we'll add service and how does that impact downstream right is that what it means Yeah, instead like picking up trash every day, right? We don't pick up trash every day, but picking up trash every week. That's what residents expect.

And are we doing that?

And are we doing that? But in this case, it would be providing programs and services that they don't even think to ask for and and exceed their expectations in that way. So maybe that does mean that we add to that definition something about, you know, having a sharing a standard, a transparent standard because picking up the trash every day could be a need, an excellent service, but it's not um it's not going to uh allow us to do other services as well. So maybe we we deliver services with some sort of transparent standard in a way that solves the need and provides value for our citizens, you know. So So we're very explicit because I I agree saying meet or exceed resident expectations, everyone's going to have a different set of expectations. So I'm afraid that if we put it somewhat nebulous like that we

just for the record that I think you

know the previous council that really I think was

Oh

a pillar when I say I hate that I'm talking about for this council me personally I believe that that's no longer really the the goal. It's um we don't always need to be first and and fastest and all and all of that. To me, that's not what's really critical. What's really critical is that we find a way to express how important it is that sometimes we can't give you a stoplight where you want it because there's a lot of really important traffic best practices that tell us why we can't do that right and so we can't exceed your expectation by doing exactly what you're asking for because it's very

not the right solution. So to me, service excellence means delivering the right solution. That doesn't mean we can't do anything about a traffic issue or an inability to to turn left or those things. It just it it doesn't mean

exactly what the way you want it done, but in a done in a responsible and transparent way

and explained. And that's the thing like a lot I hear a lot of residents say I called the town about the water was coming out of my little overflow thing in my yard. They were here in an hour and it was fixed and you know that kind of stuff. We do deliver that kind of over-the-top wow you know wow the the resident service a lot but there just as often they want a solution that we can't deliver. And so there's that educational component and there's that making the right decision for the situation component because if we just delivered excellent service and and exceeded their expectations all the time, we'd be doing some really not smart things regularly. And so I know I'm be that does sound like splitting hairs, but I think that's important for for a budget pillar because there's going to be situations where we do have to prioritize

giving them the sidewalks they want instead of some of the stuff we that is needed that's going to get delayed a little bit. So it's almost this sort of does that make sense? This balancing between needs and wants. I just feel like the word higher expenses, although I understand where you're coming from, it might um be seen in a very different light from people who don't have this background and information.

Maybe, you know, um we can come up with some better,

but it's potential.

Yeah. Because I I'm thinking of this for just the purpose of this exercise this morning and us identifying priorities. Maybe we're tripping up on excellence and service expansion might actually capture this because I think what you're what we're trying to evaluate here is if our priority is more services, the implication for the budget is more money and having to just face that reality. So that as we go through our our next exercise of of priorities, this exists to give us an opportunity to express that as a potential priority or not. Um that isn't captured elsewhere.

Is that fairly

I like the word potential. I like the word potential. I think that would keep uh some

potential for us.

Yeah. But it is there. potential impacts on the budget are that you might have

but the higher expenses could be potential expenses.

I I feel the higher expenses might we could use a long-term investment because long-term investment like infrastructure you invest at beginning but in the long term actually you're saving.

Yeah.

And I think Britney kind of nailed it. Once we see what your voting results are, you may wish to have a deeper dive.

And I agree this how is this not captured in the other service slide is

I I think the point that this is service expansion instead of service excellence is exactly right and I think we should just change this to service expansion. I think it goes back to yesterday how I have said so many times that I think we are not all on the same page sometimes about what excellence

means and that that's not defin necessarily a bad thing but that we when we talk about excellence we may want to have a operational definition of when we say that and the whole idea of Um, I'll change tangents quickly, but I was just going to mention that I agree with what you're saying about how when I think of excellence, it's more along those lines, but I don't want to take away from the fact that others have maybe a different operational definition. In the retreat video yesterday, I took a note of um a comment about a mustave is like excellence, being the best of the best. So I think it as Russ said probably getting to the end and then getting a rough idea of what the priorities are and then teasing out if we need to.

Yeah.

So so being a person that always think tries to think the other side

what worries me if you take excellence away

that we're going to say I want you to be like this community. I want you to be like this community and that's not Carrie. Carrie's never been like this community. Car's always been better. And that's why I always say best of the best. Maybe we're not the best of the best, but that's that's kind of the mindset where I am on

Oh, we are. Do you

I don't know if we're in agreement or what?

I'm curious if if that is covered in the maintaining service levels, what you're saying,

right? Do you think that what you just said of of having high not service expansion but maintaining service level

is what you're saying covered here or do you want it maybe covered here because this is stuff we're already doing

and this could be

and the other one is stuff we might want to do.

Yeah, we let's say for example we do food waste collection which we do and we did do it and one of our neighboring communities did it. I want Carrie to be like so and so and do food waste collection. That makes my skin crawl. I was like I don't want to be I want to be out there first. I want to be the excellent. I want to be the

innovative

and maybe but the rest of the council doesn't want that but that's the way I think.

I it's a good it's a good point. If this one is the moving forward, right, what do we want to do for new services or service expansion? I think making sure that high quality is there should be on this one. If you also want to be the best of the best, then that should be covered in the service maintaining service levels for me.

Okay.

I they they're to so maybe you want to go back and make sure best of the best is in the maintaining service levels is I'm just trying to call out that there are one is keep doing what you're doing and the other one is when you want to do something new make sure it's really great. I think we do have some community guidelines and standards, right? And it uh I wish there was a straight answer that we could say and Russ is nodding which is good that I wish we had a straight answer. We could say we want it this way like the parking lot situation is the best example here. We had to go back on standard a little bit because of the given circumstances and it's a temporary location. Had it had this been a permanent situation, I would have said we should not be compromising on the quality of the product. But given that very short period of time you're going to be using

that property. Does that even make sense? Is this like you know um help the residents in long term? And I think what I'm hearing from you is that anything new probably we have to keep those kind of that kind of mindset that we want to explore the best option and then take it from there on where do we want to land and we still want to be seen as the best because Kerry has always delivered the best.

Is that correct?

I agree with what you said

Lori. Yeah. I I we might be violently agreeing.

Okay.

Differently um

channeling to Jack Smith.

Yeah. But I the 4951. No, I think we are violently agreeing. And now that you've described this as more service um expansion, then I likely agree with the way it is. If it were just everything we do's got to be defined that way, I would probably like I don't know. Yeah, it's also different to me than the innovation question, right? Is innovation baked into everything we do? Is excellence baked into everything we do? Do we have to preserve it uh separately in order for it to continue to be a value? But I think for the exercise, maybe it's just mention

maintenance and expansion in order for us to get a feel for what we're prioritizing.

Yeah. So that we could have more discussions

to see if anything's left out.

Right. Right.

At that point in time,

I would just say the word higher probably is

it's gone.

Boom.

Get the scissors.

It never exists.

Addition.

Who has scissors?

Is additional more palatable than higher?

Potential. I like potential. Potential is good.

Enhanced.

Yeah.

New capital.

Yes. Which brings us to our final one. We've gotten through the 10 is new

capital investment. the funding of capital assets and infrastructure that sustain reliable service delivery over time, expand capacity, and support future community needs. This is kind of a catch-all for if something that you're invested in have like a project is not in one of the other areas. Um, I would think something like a new community center would be a great example for this because it is both expanding our service levels, but also it's something new and it it wouldn't really be captured in the other nine. basically the same as the last one except this one's capital and the other one's service.

Maybe they should be just be new capital and service investments and expansion possibly.

Yeah, I think put them together as one.

Do you need it? I'm sorry,

but do you need

differences in the financial impacts of one-time expenses versus recurring expenses? And I think gauging council's appetite for both is important.

So, they're puzzle pieces. If you take one, you absolutely have to bring the other one with it.

Right.

Yeah. I you should probably rank them kind of similarly if you're prioritizing.

Right. Right. Okay.

So, to help me um educate myself, when I think of capital investment, I also think of economic development. And is that captured? In other words, if you expand this whatever we have, you could probably bring in 1015 million dollars of additional economic development every year. Um,

is that captured? That's

mean able to get revenue in three years.

When we're thinking about new capital investment, if I'm going to go into the general fund and all this other stuff, there's got to be some return on that investment for me. And that's what I'm thinking about. So, is that captured? That's what I'm trying to figure out.

You talking about the tennis park mayor?

I mean, as an example.

So, pickle ball, right?

Big I don't know how much I can say,

but there's big potential in the tennis

park expansion that could bring in a lot of economic development. We'll talk about that one day. Um, but is that captured? Well, I think it always depends would be my answer is because if then in that specific capital request that request probably captures what the return on investment might be or not.

Okay.

Kind of like with the park,

right?

Right. Yes,

we made the investment in the park

knowing hoping assuming that economic development would follow

or

but we didn't make the well I I don't know about other people but I didn't make the park decision solely because

right

it was going to bring in money

but some people did

yes some people did

but then that discussion is had at the individual level of the uh capital project as part of the budget

and and everybody uses their own

a little bit

reasoning for every decision.

I think it would be to the mayor's point if that was um such a priority for you, you'd have your own pillar slashpriority

for it. So, this one gives you the ability to have it any way you wish in my opinion.

So, this is our list again, all 10. I'm not going to read them out so I don't say a bad word again. Um, but we're going to move into let's see my next slide.

And I'm going to suggest that we take a like a 10-minute break.

Great before we start this. Is that okay?

Y I like it. Perfect.

Yeah.

Welcome back. Uh we're going to start quadratic voting. So this is a GFO recommended way of measuring the preferences of a group. It primarily stops kind of people from only prioritizing one thing. It incentivizes splitting your votes out across a couple of preferences. Um, and it's fun. So, the way that it works is you get a certain number of voice credits and then those turn into votes. And the more that you vote for one thing, the more voice credits it takes. And so, one voice credit is one vote. And then for two votes, you multiply it by two and it's four votes. And for three votes, you multiply it by three and so it's nine votes.

So, to start, um, we have an app to help you do the math,

but we're going to do some ice cream priorities. Um, and so you'll get 100 voice credits and we're going to share a way that you could spend those 100 voice credits on ice cream and then you will actually vote on your favorite ice cream flavors. Um, and Margaret is going to pass around QR codes for you. So you have 100 voice credits to use. You vote once for chocolate, so that costs one voice credit. And then you vote twice for pistachio. Again, 2 * 2 is four, so that would cost four voice credits. We're at five so far. Then you vote three times for vanilla. 3 * 3 is nine. So, we're at 14 voice credits. You vote six times for strawberry because you love strawberry. So, six times six, that's 36 voice credits. I believe we're at 60 or yeah, um 50, sorry. And then you vote seven times for sorbet cuz who doesn't love non-dairy options? And 7* 7 is 49 voice credits. You can also use negative. So you absolutely hate cookies and cream. So you use one vote to downvote cookies and cream. And so that's how you can get to your 100. Right? So you spent one voice credit on chocolate, four on pistachio, nine on vanilla, six on or 36 on strawberry, 49 on sorbet, and one on cookies and cream.

Minus one on

minus one. But it costs one voice credit.

Oh, I see. I see.

Yes. Um,

voice credit to

staff did this yesterday. Um, it probably just sounds harder than it is. So, we're gonna help you in the practice.

Yeah, I'm here and we have Stacy and Margaret as well as all of staff have done it. So, ask anyone a question, but scan the QR code and get going.

So, star voting.

Yeah.

This called quadratic voting.

Yes.

It's like Reddit,

the quadratic equation. Yeah,

when I vote, I can still change my mind until the end.

Yes. And it will show you the number of credits you have left over. So, you can play around with using all of them.

The simplest thing would be to vote 10 times for one,

but then you would lose the learning how to use the tool. So,

play around a little bit. questions, raise your hand. One of us

and I'm going to go back to

this lovely slide. Can we choose not to vote?

You can choose not to vote.

You can and you can have some left over at the end

or you can choose to negative vote.

Yeah.

But that also counts as a vote

uh and takes away someone else's vote.

Yes. points.

It does take away others votes.

Yes, it does.

Yes. As Dana learned yesterday,

more pistachio.

So, it's based on our uh like which flavor you like.

If you don't like anything, just don't vote. That's right. That's right.

Or if you hate it, vote against it. What's Rocky Road having?

Marshmallow almond.

Oh, now we're okay. Stop. Right.

Yeah.

Fudge or something. Yeah.

Almond is the I think

chocolate ice cream.

Is this anonymous or can people see

it? Is anonymous.

I don't want to upset Dana.

Are are you embarrassed by your ice cream votes?

I just care very deeply about Dana and don't want her to be upset by my Down voting of pistachio.

As with the real exercise, we care about how council feels as a whole, not how individual council members feel.

I don't like this.

Do you have to use all 100?

We have sorbet,

not an ice cream. Sorbet.

Was it sorbet?

I lobbied for Neapolitan to be on the list, but I was told that's cheating because it's just combining multiple ones. If Harry were an ice cream, what would it be?

Apparently not pistachio.

Like strawberry cheese,

I think. Birthday cake.

It's a celebration every day.

Look at you.

And when you're done, let me know so that we can

done. Mayor's done. Ca's done. Fella's done.

I'm almost there.

Can I quickly run and get my bagel?

You can get your

bagel. I'm a girl.

Let's do Oh, I just realized I can't vote for that one again cuz I don't have enough credits.

Yeah, I don't have enough. So, you might have

figuring out how it works.

You can always vote one for one that you

haven't voted for yet. But,

but I don't like it.

Yeah, you can vote negatively. So I can do the possible

so I can use all my votes.

I know. I had to actually vote once for butter pecan even though I don't really like it.

That's what I had.

It's going to happen and there's going to be zero. Everyone's going to have negative voted. Everyone else votes.

Don't you want me to ice cream significantly superior to the others?

Maybe I'll get it now.

Yummy.

Okay. Okay.

I didn't.

So we don't have to use them all.

You don't have to use them all.

I went straight Reddit. I downvoted

with my extras.

I'm good enough. Yeah.

Okay.

Submit.

And we might have one more.

Okay. I'm gonna submit. I'm just This is ice cream.

I think.

Yeah.

And it'll show you user results, too. But he's going to show them.

Yeah. Tech's gonna show them.

They show up on your tag. event dashboard.

Here we go.

If you get desperate, you can still change your vote.

We have a a clear winner

of chocolate with 33 votes, then vanilla and strawberry. So, we have the full Neapolitan suite up here. Um, butter pecan did really well. The directors do not like butter pecan. So there's agreement in the room

or pistachio.

Yeah, pistachio. And a lot of hate for coffee.

So Liam,

I voted for Rocky Road, but it So if it appears there, that means somebody

someone negative voted. Yes,

that's what Dana That's what Dana learned.

Yeah, I don't like Rocky Road. I think it's an abomination.

So you're the one. So, any questions on

how this worked?

If someone who gave the vote doesn't call that out, how will we know that it was canceled out by a vote as opposed to nobody voted for it?

We will not. Um, but the goal of this is not to know how each of you voted. Okay? It's to know how council as a whole feels. That's kind of our goal is to to get

council priorities. But we're also going to ask you how all of you voted

after we show the results. So you can bring up any of your canceled out votes. This

I thought you were not going to show. Just kidding.

Um yeah. So we have our next QR codes. Um and we're I'm going to go back to the quadratic loading slide. Actually, I will go back to this one.

Thank you.

And this is we will do the same process. 100 voice credits for the 10 potential budget priorities.

Assuming that we have already made the changes that you discussed for all of these priorities in the last hour.

This is going to take way more time, right?

Yeah. And so

I mean very specific with ice cream.

We um have the option and I think council can decide their preferences. We can leave this open um until midnight tonight if you think you'll need extra time and want to edit your votes as we go through discussions today. Okay.

Or we can close it at the end and actually see the results now. No matter what, staff will look at the results and actually use them

for um

Well, we want to talk about the results a little bit.

Yeah. At some point, you will have to talk about So, yes, you have to do it quickly.

Are you going to lock us after this?

What?

Are you going to lock all of us with this vote? uh this doesn't have to be the final vote,

right? It's it's a you know it's dynamic process. It doesn't have to be static, but the team needs to know what the parties are to start aligning the budget to. So

yes,

and at as I was talking I'm sorry talking at the break I mean obviously if we start seeing budget requests don't align with priority somehow we can revisit this in a in a work session or

wordsmith definitions if you will um as you go

sorry to ask you to flip through the deck could you go back to the definition of fiscal responsibility

thank It's a very serious tone all of a sudden. Quiet. Can you go back to a portal? Billy,

thank you. you go to service excellence

expansion.

Thank you.

I was I thought that's what that one was, but I You want to know when we're done?

Yes, please. Done.

I'm done. Can

you go back to operational

or another one? This one.

Done.

Oh, I'm done. Is it tight?

You want to come up and dance, John?

I told him to ask that. Are you good, Michelle?

Carissa?

Yep.

Bella?

Yes.

Okay, I think we're all done. And so we'll close it and pull up the results.

I'm all over you, but yeah.

Drum roll.

Pistachio.

Pistachio.

We should have put an ice cream flavor on this list. That would have been good.

Are we all done?

Yep. They're probably getting the URL.

Yeah. Any feelings on the tool before we

move on to the results?

I know what the budget staff feelings are. that there aren't 11 equal priorities.

I like this better than the dots that we had in my first retreat.

Okay,

that was the alternative that we were going to do today. So, it's good to do that. We're really We're trying to build suspense. We know that everyone

must be really good.

It's the pause. I was going to do this, but it would have been on forever.

A very slow drum roll. Sorry tech team. We have a new member

next year.

YouTube's going to pull the stream down.

No, it's not me. Mayor Mayor, you have to stop that.

All right.

I mean, you you can have it, but

that's why you don't have music right now because of copyright issues.

Oh,

yeah. Just that little law thing.

She didn't make the law.

She's not on the Supreme Court yet. So you want to want to guess what the highest vote getter would be.

I was thinking about Jeopardy questions like the funding of capital assets and infrastructure is what budget priorities

going on

fiscal responsibility. Yeah.

Or has anyone looked at the results on the phone?

Oh, you also do have the results on your phone.

That is probably should have lived with that. see event.

Dang, I've already killed it,

which is what we're trying to access for the big screen, but

Oh, do we have to we have to

click the URL

event?

Yeah.

Should be there.

Come on.

Oh, the voting results are not in.

Not yet.

Not really. Just

It might not be closed yet.

Yeah, we're trying to get it to close. Ah,

once it's closed, you can see it on your dashboard.

Soda in here somewhere. If you have to do it again, would you go the same way?

Oh gosh.

I mean, can you remember?

It gives you another opportunity. Well, let me rethink that.

I've already been rethinking, but I didn't want to.

There's always next year. Go.

I did that in class the other day.

Ice cream went so well.

Did you scare him?

No matter what, we have council's ice cream preferences. That's what matters today.

It just came out.

Oh, great.

Community safety.

Wow. Fiscal responsibility showed up so low.

Wow.

It's just a given.

It's not a given.

Of course it is.

They're all important.

Should No, it's not. It's a given for you. So, you didn't vote? I'm curious.

Oh, no. I did vote for it, but not many more than the others because it's the foundation of every single pillar.

Which one?

Responsibility on a

Maybe it's the foundation.

I don't think

like it belongs in that circle around everything,

right? That's what I mean. Maybe it's more

Maybe it's more of an assumption because for me I made it

very different

the highest because

it is for me the most important.

Me too.

I rated it the highest.

Which one?

Fiscal responsibility.

I figured we were voting for what those circles should be and then when we were done voting I could make an argument that fiscal responsibility should be

Oh, you had a

an outer ring. and you can get it all. Um, yeah. So, reading these, community safety is our top priority here, followed by new capital investment

closely followed by high performing staff. And then I think affordability, maintaining service levels, and maintaining facilities are all tied. And then we just had a conversation on fiscal responsibility, environmental stewardship, and service excellence are tied beyond that. and operational efficiency. I think that makes sense based on the discussion that we had. Um, it probably got votes and on your dashboard you might be able to see if it got votes,

but it's not showing up on the chart here.

It just would have gotten below 10.

It wasn't me.

It was okay. Um, yeah. So, I think the plan now I'd love to go around council and maybe we can talk about how you voted and and what assumptions you made or if anything up here surprises you.

You don't remember. killed my

app and then tried to bring it up and it brought up a new voting thing and I know they were trying to close it so I shut that down

like so

you were the reason.

No, brought it up after they said you could see it.

Okay. Um let's start over here.

Sure. Oh, I think it's interesting. we landed in the situation that we had talked about about new capital investment and service expansion probably needing to be relatively linked and here we've ended up with one near the top and one near the bottom. So we'll have to reconcile that. Um I mean not surprisingly I think for the folks in the room who've gotten to know me I rated environmental stewardship higher than is reflected here. Um, but community safety, uh, I was amongst the votes that ranked that near the top. Um, so I my my takeaway is I don't feel shocked by how this ranking has sorted out even though it doesn't reflect mine precisely. Uh, I had environmental stewardship higher than this. I had my new capital investment and my service expansion more. uh my my votes were more closely aligned and they were a little bit higher than this. I had high performing staff and affordability for me. I I rated those I gave those the same number of votes. Um and they would have landed somewhere in the high middle for me. Um fiscal responsibility was not one of my votes. I didn't allocate it to it. I also didn't vote for uh allocate any

votes to operational efficiency. Um, I ran out of votes. So, uh, that's that might be why we're lower. You didn't get any of my votes for some of those. I gave at least a vote to everything, but my three highest were affordability, community safety, and high performing staff. And then I did rank maintaining infrastructure and maintaining service levels the same. And what were the other two that we said were the same that had to go together? Or I ranked New Capital Investment and um

service excellence

probably

service experience.

Yeah,

about the same.

Um despite wanting to flout the R rules, I did put a couple of votes in the um fiscal responsibility bucket because

I just assumed everybody would and that would end up on top. Mhm.

And then I plan to argue that it should be a circle around everything. Um but I too um that the things that I put the most votes towards were environmental stewardship, uh affordability, investing in staff. Um those I believe are timely and really high priority investments for me right now. Um then you know close very close second I think one vote difference um between community safety and capital investment and I did give the same number of votes to capital investment and the service necessary to and I and I did not put any in the operational efficiency bucket because I think that's encompassed in in the other um the other ones as well. Um I I am actually surprised that the environmental stewardship didn't score higher than it did on one hand. On other hand with these

competing priorities, this is exactly a conversation we have all the time with folks when they reach out to us. It's not that that's not important. It's a competing priorities issue,

right? So I saw it and at first I was surprised and I was like well yeah you know when it comes to like Michelle said before when it comes to you know issues of life or death community safety you know that does not surprise me that that's right up there at the top as far as the things we need to invest in. So um it's interesting to see what all of my I'm glad to see a picture of what we all think though like it's

this is really helpful. This might be my favorite.

Two in a row.

Yeah, you say that to all the boys.

Just wait for my next presentation.

Uh, it's interesting for me since we prioritize all the time over the years and I can tell you a few years ago my votes would have been completely different. But viewing where we are today, I feel that community safety and capital investment have been neglected. And so I spent a lot of my capital there

and maintaining service levels. I spent capital there as well. And then I gave everything at least one boat. And I can't remember if some got one or two,

but I since I can't pull it up, I can't tell you. But those were the three main ones for me.

Say that again, Harold. three main ones were community safety, capital investment, maintaining service levels because I I feel that I don't want to use the word endangered, but I felt they're somewhat neglected and they need a lot of attention.

So, doesn't mean I don't care about the other stuff because I desperately do.

Yeah.

But I'm like right now that needs a lot of attention. Well, with your 20-year

perspective, that's why I'm I'm really I was really keen to see where

I figured you approached it like the tennis thing. Remember when we did the dots, you put all your dots on tennis?

Right. So I know there'd be some place where the there was a bucket where you would be like here's where um you know weing a little

yeah I took more of a timeless rather than a timely view. Um, and having said that, if I had looked at this for just this year kind of as we have sometimes done in the past with the stickies, I may have voted differently. But because of where we are and where we've been with taxes and revenue and all that, I ranked fiscal responsibility the highest and used and and then my process was rather than try to do the votes in my head, I wanted to make sure that instead of just playing with the votes up and down, which is what I did with the ice cream one, my approach here was what is the one that I want to be the absolute highest and then what's the next one? And that's the next one. And then weighted them accordingly. And so for me, fiscal responsibility was the highest. Um and then accordingly in order to deliver those um equal was high performing staff and community safety, similar to what Harold said, making sure that we provide the base and core services for our community. Um and then you know um affordability and environmental stewardship and then capital investment I made sure was the same as service expansion

a as well as maintaining facilities. So those kind of fell all equally important but I wanted to make sure that my votes actually showed what I thought were more

timeless rather than timely. Like if I were to do this differently and come back and put the Cararissa hat on and say just take fiscal responsibility off, right? Because it's a it's a horizontal or a circle, then I would probably do um just move everything up that community safety given where we are um high performing staff affordability. I would probably move capital investment down um and service expansion up. Thank you.

So, please don't hold me to what I actually did here versus what I'm going to say because I don't remember what I did.

Okay.

But um I did um exactly the same thing. I gave some mood to every single category because I feel like every category is important. Where does it stand in terms of priority uh for everybody collectively? I think that's where we have to kind of have to focus on for me if I have to see what is a priority for me like top few five things would be fiscal responsibility community safety capital investments because of the growth we have to continue to grow and we have to stay at top of the arc um don't shoot me if you don't like that word anymore um affordability and environmental stewardship. My turn.

Okay, real quick. How high did you rate the environmental stewardship?

I think I probably and again I don't remember maybe three.

Yeah. I'm just curious if it and if we do choose to move the fiscal responsibility as more of a foundational

you know pillar like transparency if there's a way to rewe these

I think if we could run it let's if I think what you're saying is if we could run it again with just the 10 rather than the 11 I'll bet we they get significantly different answers just

yeah hearing I think nine

what you said

we had 11 uh values yesterday these are 10 priorities today

so nine instead of 10 oh was it 10 not 11 okay okay

I was just using

yes crap number

no Michelle and I were just clarifying for one another

yeah yeah

she was letting me know it's okay I can count

okay got it

I'm Sorry. Go ahead, Beller.

Yeah. Yeah. I I voted more timely. Uh so that's why Lori you didn't get enough fiscal responsibility here because I feel our uh fiscal like our bond rating and uh um bond balance is always excellent and uh so I didn't think it was the top top like priority but this rank actually match like one two three four five on my top the safety community safety and new capital investment I voted top the same five so they're are top two and high performance of staff is number three as match but operational efficiency I voted three and there shows zero so that's uh the reason why I I voted for operational efficiency is I feel we have everything um like good stuff and uh system plannings but still we need to match everything together to work as a machine so it will be more efficient uh but it's okay I think if we I think it's

more if we get the the best staff that should be included in that they they will think in a more efficient way to work together

so do you think want to throw something back at you would you say that operational efficiency is a core like fiscal respons responsibility and transparency. Is that what you're thinking here?

Uh yeah, I think that's uh not u

it's like a non-negotiable. We're doing that.

That's not a like a por thing is like your gene like your DNA. Yesterday we said that

that's a good point.

Yeah, that's always no matter what changed priorities that's always we all theanges that never change. All the staff are trying to work efficiently and efficiency. Um and also affordability I think is a fourth one. Uh it's really important because now we can see the AMI increase a lot compared to last year but not everyone is having that kind of salary increased including our staff. It's cannot match the market. So we have to think more about the middle and lower income people. How can they how how can they still living in Kerry and survive? It's not a good word to say survive but actually

thrive.

Thrive. Yeah, let's say thrive would be better.

Um

and m maintain facilities is also um on my top priorities because like your car if you don't maintain like your body you don't take care of yourself you will see a like get a disease or you would be have a very bad surgery. So maintenance is really important because some car can run 200,000 miles but some car could only run a 100,000 miles. So that's also a kind of saving for for the long-term uh perspective view.

Let me see. Environmental stewardship that's also a

very important but I think that's also in our DNA. um how can we combine those kind of lower uh service excellence but even if we don't put it in the pillar I feel

everyone work uh in their work they will put that in their mind and look at their uh project plan do we have these considerations

so that's my uh my voting

thank you Um, this was all very helpful and I'm sure the budget team will take this back and start using it in discussions and deliberations as we look at budget requests and capital requests and this won't be the last time council gets to look at these. Um, and as we can dig a little bit deeper into the data, there might be more to share. Um, and potentially another vote. I'm going to move Oh, can I have my power powerpoint back?

I'm so happy they're not all equal like they were with the bond projects. I am also incredibly happy that they're quality pool.

So, our next step staff as part of the budget process will take that first half of editing the definitions and bring those back to council as part of Russ's manager's recommended budget or the work sessions before that. Um staff will use these results and your discussions to make budget decisions moving forward. And then also um staff are going to boards and commissions over the next month and the idea is to use the same prioritization exercise so that we have a boards and commission result. And maybe that's something to talk about because um depended upon how it went with y'all. Even yesterday or in our practice we were talking about do we want to do that? Do we not want to do that? I obviously want to share budget with them

uh priorities to build the budget by. Um, so I I might would leave that in up in the air as to what we decide to do because we could share your results with them and just get them talking about it. So leave that one a little bit uh uh squishy for us to decide next steps. And certainly if y'all have any feelings on that, happy to hear them now.

I I quite like that. And I think one of the values of doing it, if you did the exercise like you just did with the QR code and the app, you're going to get the quieter board members perspective in a way you might not get with just a discussion

and I would hope you would divide them up too. I would love to know what the seniors think as opposed to P&Z. Oh yes, that would be fascinating

if everybody you kind of have results from all your boards and commissions what you choose to do with that or you know how you use it or how it may affect your votes and y'all will be at those board and commission meetings too. Well, this quadratic voting as well at the boards and commissions would I mean as well as great as the Excel exercises um potentially walking through these with the definitions of them because without the definitions it's kind of nebulous. Yeah.

And maybe removing some of the transparent fiscal responsibility maybe environmental stewardship. Although some people might say, "Oh, I want a new canopy program." Right? That would be a service.

As the EAB liaison, I think they're going to want that one there as a priority.

So, as a Right. That's what I mean. I mean, that there are some uh specific things aligned with those, right? But um but maybe not with fiscal respons. ones that I think are more horizontal um to get an idea of what's important to them but also with some examples because sometimes capital investment you know if you have new community center or you

know more greenways examples will help them vote more according to their desires and that might be a really interesting exercise too.

Yeah. So maybe continue to evolve those potential budget impacts to be more specific.

Yeah. Because I know that at least in the ISAP and the HID one, they gave a a lot of individual feedback, but we didn't get a collective feedback, right? We didn't get this, hey, here's a snapshot in time of what this particular group thinks. And I think like was it Chris or Harold said it would be interesting you know does the senior advisory board align with the EAB it they might and that would be great.

Yeah. and we get them involved in the prioritization part and then when we bring the budget to them for like we did before. If we do that again then and we can say okay this reflects that prioritization exercise and see if that elicits a more balanced like understanding the pillars that went into the budget I think would enhance the feedback we get when we review the budget.

Yeah. because they'd have that insight.

And giving them two separate opportunities makes it not just a whole brain dump of budget stuff in one time.

They can do one exercise, consume it, you know, understand it, absorb it, and then come back later and go, "Oh, that's what you mean by this." Right? That time for for some people, that time to process it is really important.

And we can also do that. Um, we start board exercises on believe March 2nd, so a week from Monday. um some of those boards won't meet before your budget's adopted. So if we if we're gone multiple times, part of it is just a learning exercise um uh for boards and commissions. So as long as you don't mind um you may have seen a recommendate uh recommended budget before we could

get to them with the second exercise. But if it's just to make, you know, educate this year in preparation for possibly even more involvement in future years is something y'all mentioned, we can certainly do that. I just don't want to be left with the impression, especially people watching that we're going to get to all boards and commissions twice. Um,

one more item I'd add to that, Russ. Um, when we were talking a minute ago about fiscal responsibility and whether or not to include that in the list, I would recommend include or I do recommend including it because it is a choice and that's something we were talking about back here. We can choose to do some of those other things and that could be at the choice or cost of fiscal responsibility in the sense that it will require more fund bounds. It will require more debt. there is more financial thinking that that will occur in order to make some of those other things happen. So I I understand and I appreciate that the um timelessness of that as a concept, but it is also a timely concept when we're thinking about managing where we are financially.

Yes,

agree. But I think we need to then substitute the word responsibility because if it mean if we're talking about needing to let's say for example raise property taxes to pay for these other things then that should the title shouldn't be fiscal responsibility. It should be lowest possible taxes or something like that. I think it's a different pillar.

I agree. I think we could tweak the wording of it but the concept behind it I think is really important that it stands alone because it will be tested when we are choosing um against other priorities later

and that gives us insight. Do they say you know what we don't care about any of that we just would rather have lower taxes that would give us insight there as well

right because if it I'll just say if it said the lowest taxes in Wake County instead of fiscal responsibility I wouldn't have given it all my votes.

You bring up the definition

right? Yeah, because I think we're pointing to, you know, u the notion of having it like transparency as a um an

underlying value. I think it's the discrepancy between what fiscal responsibility means in like a valuesbased sense versus what it means in a hard and fast budgeting sense when we're, you know, adjusting fund balance. And so I think we just need language to distinguish between those two concepts of what fiscal responsibility means philosophically and probably to the average resident versus what it means as a budget consideration

and changing the title is an

so

but if we change the now that we're going back to if we change the title which I'm totally about we have to change the rest of this because this was a commitment to long-term financial health. Right.

So this definition is really about fiscal responsibility. It's not

it's not about keeping low taxes.

Yes, that is correct. In fact, the affordability um the affordability almost comes to um the tax rate a little bit because it's not based on um it's not a um it's not by itself. it it it's within a community. So, it's based on the ability of this community's ability to pay. So, the tax rate the tax rate hits multiple different places

and it is on this one.

Yeah. And I want to add just a couple of things. Um the sprint that happens because you have to kind of iteratively keep making decisions, keep making decisions, keep making decisions. um because we've got to get to an end result where there's a budget and um and so the you know the good side is you're getting into the beginning stages and um and then you're but it's also it's causing discomfort because it's like I don't want you know like I don't want to decide that yet and

and so you just have to know that that's how the budget process works and you're going to have these more detailed page bypage discussions that allow you to kind of keep teasing out this information because your your uh qualitative discussions are is equally as important as your quantitative voting. And and Dana, that's a good point because since it's the beginning of the budget, the other side of this coin is probably as you define this council defines their um priorities, you can look at where you spent your money on the back end um to see if you're spending according to your priorities.

Q. Yes. Thank you, Liam.

Thank you.

This last year,

you know,

Good morning, mayor and council. Um, it's always a delight when I can come before you and give you a financial update. This financial update is going to be a little bit different than we have in the past because we've decided to add um some other context that you can use um in your toolkits as you continue to go through your um budget process. What I will say is I love the conversation on fiscal responsibility. We're going to talk a little bit more about that because that is essentially the foundation that will allow us to do anything that you all decide to do um in the future. So that's very um important. So let's just talk about what you've already heard from me. Um November 13th, a most of you um had the opportunity to um hear the quarter 1 for fiscal this current fiscal year financial update. February 5th, that was our big day because everyone um was in on those discussions. We started off with our work session and doing a deep dive of the annual comprehensive financial report. And then um following that that evening, we talked about our audit. I am very pleased to announce that as of February the 12th, we submitted that audit to the local government um commission. Great. Give yourself kudos

for that. Um with the same opinions, unmodified. So very good. All right. So, the areas I'm going to cover with you this morning, we're going to talk about four a four-year spending pattern. This is just to give you all an idea of how from 2022 to 2025, how we actually spent, like what our increases were um and what our decreases were. Our uh secondly, we're going to go into some key financial indicators looking at our fiscal year 2025 year end. What I'm going to highlight here is that every time we complete an audit, these are some indicators we look at so that we can measure our financial condition and see how well we're doing. Thirdly, we're going to talk about the quarter 2 results. So, we're going to talk about we're going to pick up from quarter 1 and just let you all know how we're doing as of the end of the year. I'm not sure, have they received the quarterly packets? You all should have received the um quarterly packets this morning. So, what I'm going to do is just highlight some areas within that um quarterly report. And then lastly, time permitting, we're going to give you some baseline education on fund balance. So, we are going to, as you heard me mention on February 5th, we are going to be walking through over the next few months. I mean, it'll be a while, um recommendations on what new policy for fund balance could be based on where Carrie is now, um size, um financial, um condition, all of that. But we're going to provide that. But so this is going to be um more definition driven so you all can start familiarizing yourself with some of the terms that we use. All right, let's get started in talking about the past. Okay, when you look at 2025 actual revenues, some of this, let me just say, may be repetitive from the February 5th presentation, but that's helpful because you all will start picking it up and it'll become um second nature to you. So this is just a different picture of our actual revenues. As you can see, as of the end of the fiscal year, our leading revenue that we've discussed is property taxes. So there's no um surprises here.

Secondly is the other taxes and license within this category. This is a category that we use within our annual comprehensive financial report, but within this category is sales tax. That makes up about 58 million of this um number that we have here. So, as you can see from a revenue perspective, of course, our top two property tax, sales tax. Okay, this is a top 20 revenues increase that we've had since um for the P from 2022 to 2025. As you can see here with this um trajectory, Wake County here is our property tax. So, that has been our biggest increase of this 72.6 6 million in the past four years. What that tells us, of course, we are property tax heavy. I love the conversation y'all started um yesterday and thinking as we go through budget within the next year or so how we can start diversifying our revenue stream. But this is an illustration where you can see clearly that um our property tax is driving most of our change. And this has to do with the tax rate that we decided to adopt when we had that assessment in fiscal year 2025. That's where most of this change came from. All right, let's look at top 20 revenue decreases. Um, that makes up about 5.5 million from the same time period, fiscal year 2022 to 2025. Here you can see our our leading um decline in revenue was the watershed maintenance fee. Um, the state decided um over the I can't remember the exact year, but that we can no longer collect this fee. Um, so therefore that was a significant about $900,000 decrease in our revenue stream.

Kim, can I clarify too? Yes. And and also that what we collected is this the one that they can request back.

Yes. So we've had to pay back some too over recently. Yeah.

How far back? Uh I don't think there's a

and yeah we have records on all the way

to the beginning of when we corre collected it and um if they go through a process and request it back

how far back are we talking like 20 years? it it's probably somewhere in the 2000s um somewhere. It relates primarily to uh storm storm water control measures

and this is different than the watershed fee that we set aside that comes out of the utility budget but they're both called watershed.

Well, this is the maintenance fee I think. Okay.

Yeah.

Some kind of water

which I'm sorry I was taking a note. Which fee are we talking about?

So, it's the fee that we uh used to be able to charge developers a fee. It was about 15% of the cost of construction of their storm water control measure and we would hold that in case there was a problem with their device later on and we needed to go fix it.

And these are their private devices.

Private devices

they have to maintain. It's kind of a

I recall

a bit of an insurance policy almost.

And it's about two years ago the legislature said you can no longer number one collect that fee and number two if people asked to have it back you had to give it back.

Yeah.

Okay. Okay. And switching gears over to the expenditure side. Here we have um the same picture as of fiscal year 2025. I mentioned during the presentation on February 5th that public safety and general government were at the top of um the holders of the general fund um revenue. So this is just to show you that same picture. I think I had a pie chart during that um illustration. And here we have the bar chart. So let's look at the same from 22 to 2025. the spending increase. We see here, this is all spending um for general government of $60.6 million. That's how much we have increased over the past four years. You can see that our leaders in the increase have to do with public with police, um non-EP departmental, parks and recreation, and IT. Those are our top four. What we can um be reminded of here, we open our downtown park. as a

result of opening our downtown park, we picked up new public safety positions um in that. So those increases are showed here. Um same with the parks and recreation. The downtown park was a large part of that increase. It just talking to the um technology discussion. We have increased technology across the board across the organization in the past four years. Um it is a centralized department. As a result, they absorb all of those costs and so therefore that um directly impacts the um increase in the IT budget for non-depart within this category. We have our debt service cost and we have utilities. Util utilities has gone up that we have to pay um in the past four years and our debt service. 2021 was the year we issued our first trunch of the 2019 referendum. 2022 was when we had our first year of full debt service. So that is um what has contributed to that increase over the past four years

in non-dep departmental

in the non-EP departmental. Yeah.

Can can you clarify this includes personnel and non-personnel and operating and maintenance expenses?

Yes. I'm going get that from Lamb. Just confirmation. This is everything. Okay.

Yep.

Does does the IT for the police department fit in that police or is it under the IT bucket? I believe some of it is in the IT department. Correct, Nicole.

Department.

Yeah.

Like the real time interface or real time what's it called?

Real time arctic. Is that in the police one or is it in the

it?

It's mainly uh budgeted in ours. Uh but it's kind of changed some over the last couple of years. And maybe Nicole can can answer this or the fire chief can answer a little bit more than that. Normally we would budget the first year and then it would pick up the licensing for the the future years, but any upgrades and that

sort of thing typically come out of ours. Okay.

Is that typically how it um if we introduce new IT things, the implementation is in the departmental budget and then the ongoing use of the technologies in that that be under it or then it would be under planning.

It's under it. So the first year is in the departments and then subsequent years come over to it.

Y and um so I can speak directly to like our ERP that we just went um live with. We started off in capital

because it was ongoing for a couple of years and then as it became maintenance you know going ongoing those have been absorbed in um the IT's budget. Can we define the acronyms

for uh ERP?

Yeah,

that is enterprise resource planning system. That is basically with any organization that you go to that houses all of the financial information. That's the foundation for the financial um operation.

Can I ask a question about what is this non-EP departmental?

I'm sorry.

What is this non-EP departmental? So within the non-dep departmental we run things like um our debt service is running through here as well as utilities things like utilities

that the organization has to pay. It might be great just from a public perspective to break out the debt service if you can debt service as a line item and then what's really non like miscellaneous. I don't know because I think tracking the debt service increase spending over time. Um I don't want to say it's hidden there but it'd be nice to see where it fits in the list

explicitly. Okay. be healthy.

And for the police, is that for the uh like upgrade vehicles or uh like more on assets or that's for personnel?

This is operationally to run the police department. So it does include the personnel. Um so like when we opened our downtown park, there were new um officers that were hired as a result.

Um

capital items are not included in here per se. This is just to operate the police department

and and this is three years from 2022 to 2025.

2022 2023 20 24 years four years total four years. Okay.

But I think we don't we have a separate budget for um downtown Kerry Park and the police officers were part of that bucket.

So downtown Kerry Park operational expenses are within parks and recreation. However, I mean, you know, to to operate like the the the positions of the police department would be within police because it's still to operate, you know, how do we operate our public safety?

Um, downtown part is not a separate

project on its own because the project per se is complete. Now, we're operating

years ago. I thought I understood that we were going to hire separate staff just for maintenance, just for police, just for the park.

I think we do have operate, we have police departments that are d I mean police officers that are directly linked to the downtown, but I'll have the chief talk to that a little bit.

Yeah. Uh two things. One is during this this time period, we went to a one-on-one car plan so that we would have a surge capability because we had more or less short of officers. It's a more efficient way of doing business. Now, the vehicles were funded through uh fleet and public works, but the equipment that goes into the the those vehicles close to a million dollars uh was budgeted through the police department and continues to be. So, that's one thing. The other thing is is that you get additional positions during this time frame for the park, which means you have to um there's about

$125,000 impact u just for startup uh and some of that is spread across fleet and everything else. And then the $125,000 that is basically for uh the officers including benefits and and that type of thing. they they are budgeted through the police department and uh can be moved for assignments as needed based upon the critical need at the moment.

So the 6.5 million operation cost of downtown Kerry Park does not include the police officers is what I'm hearing. That correct?

That is correct. Nor any of the equipment or if you see the little ATVs and UTVs, bicycles, it doesn't include any of that. and chief clarified that there were a downtown team, not just specific to the downtown

that you'll never get it back. So that's why we put that emphasis there.

I think it's critical. Thank you for clarifying.

Yeah.

Okay. And breaking down that spending increase we've we're highlighting here personnel spending increase increased about 33.9 um% over the past four years partially due to what we've already mentioned. This does include merit um anything that changes in health insurance retirement that is all inclusive in these um numbers. As you can see, police public um uh parks and recreation they are are leading to um increases here operate when just isolating.

Do you mind sorry can you go back?

Yep. at some point is there we've talked about it each of the departments have talked about it but I'm curious how the per capita numbers of these roll up like is that is the and I think the chief spoke to this you know the the average number from a service level perspective of how many officers per resident

right I would love to know over time not just

because I think what it'll show shows how um efficient and effective

um our departments are to see what it looks like compared to either norms or best practices or other municipalities. It would be interesting to show that yes, this is a number that is um represented in

the cumulative will be in Liam's final presentation. So if you wanted more breakdown, we'd have to provide that separately. But the cumulative numbers and the comparison of the cumulative is part of Liam's last presentation today.

Oh,

and we also um include the uh

last presentation ever actually.

Yes. With with the town of Terry.

I don't know. Depends how I'm feeling about you.

And he might be getting an assist from the old hand. So,

but I like what you're probably suggesting. I mean, this is kind of a little harder to digest because it's a four a combined cumulative fouryear instead of yearbyear. Exactly.

In the back of the budget book, there's also a um kind of a per department look at FTEES employees full-time equivalents um per individual budget year, which is may also be helpful as we talk about this more going forward. I mean under seven people. Not that I think we should continue to strive for that number, but it does it it's very helpful to know how efficient each of the respective groups are. And some things may not show up right. Right. We have an urban park and it there's a lot more requirements for staff and investment in an urban park as there is to like Mcrimman Park where there might be one person there one day, right? So, it'd be nice to understand the difference and um in our investment and what that looks like.

Yeah, I I like that a lot, Lori. It really helps me to understand because we are trying to explain to our citizens residents about how e efficient we are,

but the the total amount of dollars don't show our efficiency. So, that's the that's a good idea. Yeah.

I'd like to share an observation looking at this. Not because not and not comparing it to the other buckets because I don't think that the relativ relativity is very important but this tells me that we are underinvesting in the IT and finance headcount and departments um going on four years now especially as we just discussed we bring on new IT and it you know it's and it goes into that IT budget. I'm I'm curious to know does this personnel spending include contractors?

It includes all of what we Yes. It does not include our contracted services.

No, not contract.

Okay. I stand corrected.

Yeah. It it does not include contractors who are paid in the contracted services line item. It includes permanent employees, temporary employees, and all of their benefits.

And how about the um the software?

And there's a number in it of contractors

and in finance.

And in finance. So that is

that's a big load is being carried.

Contractors are an operational a different that makes me even more nervous worried

that we're not investing in the technology where we need to.

You got it.

Okay. Okay. So I'm not bananas.

Your point is this.

You might be bananas.

Well, I mean I you know I I live and breathe in in it all day long. So sometimes I have a skewed perspective on on that. But

you're spot on. That is not a very big amount considering what I know they've needed to do over the last four

years and understanding that we're significantly understaffed, right?

And really relying on contract work. Not that the work isn't high quality, but it's

that's different.

It could it's different than FTE.

Yep.

Different than an FTE.

It's also This is just pure spending. uh to tie the weekend together. This

doesn't say whether or not service levels are being met or maintained.

Yeah.

Yeah. And and it is important to remember there's a it's the spending increase and the base is higher. So it's not a percent of of the department. So you know the largest departments are public works, fire and police. Um police you can see the the larger increase recently due to the reasons that chief mentioned. Uh but then you know as you get the to the smaller in part it's because they're the smaller departments and I believe she has something that gives a sense

the percent to budget.

Yeah the

Hey. Oh well we're not there yet. Next slide. Awesome.

So this is just a depiction of 25.3 over the past four years um for operational spending. I think well you can see here some of those leader leading in the increases are the same. Um it's consistent. Um but a few um changes there

and you can

Oh, go ahead.

You can see um the it how much is picked up in contracted services there.

Yep.

Yes.

And the fire is zero and infrastructure development is negative and legislative is negative because operations

in operation because we didn't open a new fire station. Is that why? And everything's just been

less than the year before

you know operationally going normal. Is that

Or are there are they are there decreases

the they're talking about the negatives limb at the bottom infrastructure and legislature?

Yes ma'am. Uh we have done everything we can to control operational costs

and so uh they have been relatively without adding new stations or resources when we've been able to do that pretty effectively.

So you've been flat for four years.

Yes ma'am.

Over four years. Yeah. So,

y

holy crap.

This is extremely wonder for the legislative is negative.

So, legislative is both clerk's office, council, and the legal department. Right, Jenny?

Yes.

Um, so in the legal department, we've fluctuated staff members and then different years when we've spent different amounts on outside counsel. You know, some years we need a lot of money for outside counsel, some years we don't. So that number fluctuates, but then it also does include

affect that number.

I think it's probably too soon if it's a one year. Um, yeah.

So within within operations that would would this reflect um loss of personnel, loss of positions.

Oh yeah, sure. No, no, not the operations and maintenance. This is completely operations. Y Okay. Okay, this is the chart that facing what they um the percent that they hold within the budget. So, this is something that could be a telltale story for you all as you go through figuring out how budget should be allocated um in the future. Should we move try to align these more? Should we not? Um that's just something that is worth um discussion. Just highlighting it. It's growth shows here about se 16 um 17% how oh wrong line sorry a little bit less than 15% but what they hold as a percent of the general fund budget is a little bit less than 10 right so um just being able to dive into what could cause that um imbalance is something that I think would be a good idea to just look at

any questions on this

so Would uh would you then provide some sort of staff report or update that details why these are just like making it up in my head

PRCR is probably because that's when we opened the park

right

and you know over right this is um over

three years four years or

this is over four

four years so in the beginning it was this percentage of the budget and at the end it was this percentage that doesn't say that we didn't um we didn't overspend. It's just the last couple of years the budget allocation was higher.

Yes.

Right. There's definitely not an overspending discussion here. This is just more about you know how we actually trend.

Yes, it's a trend. I do think it might be a good idea and I know we're taking notes to do a history because we know what year should be those um outlining you know those anomaly years um that we can pick up to see what those true averages should should be. So maybe the story behind the information technology one is that we didn't have enough FTEEs. We had to use um contractors so our costs were higher. It'd be nice to understand

why they're not in alignment. Not that it's that the alignment is wrong, right?

But just the story behind the misalignment.

Sure.

I can give you a quick example from the police department over the last four or five years. When I first got interum, we were down 27

police officers and

we revamped our whole recruiting strategy and turned it from six month turnaround to a 45day turnound.

So as a result, we stayed very close if not into overhire positions

and

so there was no s. So that's one of the things that keep bump up. You're talking 20 plus positions. That's a substantial increase in what you're see. that that story explains it so it doesn't look to the average person that sees that is why it looks like you might be overspending or there's some misalignment that's that story is really helpful thank you all right so that wraps up our history now we are going to talk a little bit about financial condition that goes to some of our fiscal responsibility discussion what you will see in the next few slides is when we get our audited report at the end of the year there are several ratios and things that we look

at to see where we are um from a condition standpoint. And I'm going to highlight about four of those ratios that are um looked at and who looks at them so that we can have an idea of um those things and ranges that they should be within. Okay. But before I do that, I want to start off with this net position number across the top. This is our governmental activi what I call governmental activities, which is going back to our ACER exhibit A. um that says carry as a whole and looking at carry as a whole assets um considering assets and considering everything that we owe. How are we looking? And you can see for the past four years we were ranging in the um 900 million 2025 governmental activities jumped to the 1 billion that you see here. And that is as a result really I mean we've got new taxes um and things like that that is embedded in this number. Why we like looking at net position is because it includes all act all liabilities for example that we are responsible for reporting even if we don't have to pay them out in the next year. That means things like OPED. Um there are some lease liabilities that we have but for reporting we have to record those as liabilities to carry which is unified across the board for local municipalities.

Define OPED

um other post-employment benefits. Those are the health insurance um that we paid to our retirees.

Yep.

Thank you.

Okay. So now let's talk about some of these indicators. After I show you just raw numbers, I'm actually going to show you some trends too, just so you can see line um line charts with them. The fund balance policy, our fund balance policy is 112. Um just for familiarity, these are the numbers I discussed during our fe February 5th time together. Um over the past five years, you can see the numbers here. 57% in 2021, we're at 41% in 2025. When we talk about debt to assessed

value, this is a ratio that you will be able to see in the back of your ACER in the statistical section. We have not talked much about this um ratio. However, this is a good ratio to look at because it kind of gauges how our tax value how solid it is compared to what the debt the general obligation date debt that we owe. This particular um result we like to be between zero and 2%. So as you can see over the past five years we've been in a very um positive um space there available fund balance as a percent of revenue. What I will tell you here is this is a ratio that our rating agencies run which is very different than what we run as a fund balance percentage um policy. So this is another way they gauge our policy. It's not saying ours is wrong or theirs is correct. This is just another way that they look at it. I will define later on in the presentation more of what the available fund balance is. But when you look at um this number here, the rating agencies look at anything over 15% as a good number. I look at things as anything over 25% as a great number. um because 25% essentially is saying we have about three months um that we can do pretty um solid things given if our revenue was to plummet anything unknown that would happen in our revenue. Um this particular ratio is a good one to look at.

So I I blacked out apparently for about three seconds and you were saying they

who is they

our rate some of our rating agencies okay run this particular ratio. One example is standard and

I'm sorry

who who are those three?

So our rating agencies are standard and pores. We say S&P Moody's and Fitch.

Yep.

It's a fun trip if you ever go on one of those.

That's right.

Um our last ratio that I just wanted to highlight for today is the debt service

that we pay as compared to our operational expenditures. This is just our debt ratio. This is a policy that we have. We have a a debt policy um policy 176. Within our policy, it says that our debt ratio will be will not exceed 20%. So, as you can see here, our capacity is great because we are well below that 20%.

Wow. Or is there another slide that talks about fund balance or is this is this it?

So, fund balance, we do have a educational section at the end. So, we'll give you some of those definitions and things like that so you can follow. I know I'm kind of talking through this as if y'all already know, right?

And Kim, when we talk about debt debt ratio, we're not just talking about voter approved general obligation bonds.

Not in the debt service expenditures in the debt to assessed value. That is general obligation debt.

Yeah. And they're comparing that to what the tax value.

What other debt?

Harold, he's fading.

You said what other debt do we have?

Can you say that another way?

Which one? The what other kind of debt besides general obligation?

Exactly what I wanted you to Thank you.

So the debt that we have on our books now is uh between the um general obligation debt and installment um purchase type debt. You all have been approving some of that annually.

We started operating. Yes. Anything where we can get an asset. It doesn't have to be just vehicles. It could be a building where you can use that as the collateral to support the debt. that's when we would do it in the form of installment. So that's why I like Susan's comment. I think yesterday when she said we don't always have to do general obligation debt um because we can do other there's other instruments that we can use. We have bands that we're

Yeah. You can borrow money without going to the voters.

Yeah.

Right. So it's like the difference between you know a credit card, a mortgage, right? multiple ways of getting

we're using bands as the gap between our general obligation to be um it's like a

line of credit.

Um so a lot of times we say tell us what you want and what you're trying to do and we'll figure out how to finance it because there's so many instruments that we could possibly use.

So I apologize for keep lagging behind but this does not include general obligation bonds. Is that what you said?

The debt the debt service they both include general obligations. So the debt to assessed value and the debt service is okay let me back up. The debt to assessed value that's whole debt general obligation what we owe compared to assessed value.

Debt service to expenditures is how much we are paying

on that debt.

Yep.

And it's all the debt.

Okay. And what did you say was a healthy number for that debt service?

For the debt service one our policy says anything under 20% we're good. We've been close to 20%. We haven't been close. Yeah, I didn't think so.

At least not in the past five years.

Yeah.

Okay. All right. So, now let's just look at the um trend lines. And I'll just click through these fairly quickly. This is our net position. You can see that we increased to the 1 billion for governmental activities. This is the fund balance percentage. Um that red line is um the responsible and get those um limits back up to comfortable reserve levels. The 50% line that's just one we threw in that's not like um written anywhere, but at some point we've talked about very briefly that sometimes you can have too much fund balance, right? And at that point you just try to figure out what we need to do or what we can invest in to spend it down. Can you go back for a second?

Yep.

Looking at the blue line and the red line, I noticed that the blue line goes below the red line. Is that like we don't want to see that?

We don't want to see that.

Making sure that I see what I thought I saw.

And that's in the 23 year we talked about we landed at about 32%.

I got it.

Yeah.

But in real life, that fund balance,

that red line, is not a line

coming up. It's an individual dot based off of an exact percentage of the budget we adopt. Correct.

At the at a point in time,

but that's that's portraying it as a trend line just to give us a visual representation.

Well, that maybe I'm misunderstanding it because I'm understanding that it's representing our policy.

It is our policy,

which is our we're looking at floor and ceiling.

Policy isn't a flat number. It's a percent

in absolute terms but so the percentage is the same but in absolute

we measure the policy at the end of the year that's really what happens. Yep.

So the 33.3% is set for the policy for how long

that it's current policy. It's the current policy until we provide over several months a recommendation just based on the changes that we've incurred, you know, here in Kerry for something that's more realistic.

This is our policy. Oh, I have a definition somewhere. Okay, let's get through these and I'll give you it's a definition um of that policy in a few.

We're getting ahead of you.

A few It's okay. Um this is just the debt to assessed um value. This is where we like to see between zero really zero and two. We just gave you some border lines um there, but it's the blue line that we're tracking. This is the available fund balance that I mentioned. Some of our rating agencies like S&P, they run. Um as you can see here in 23, it went down to I believe maybe sixish um percent, but we are um on the trajectory back up. Debt service ratio. This is what we have as the policy that I mentioned 176. We say 20 the this ratio will not exceed 20%. As you can see, we've been well under that percentage.

All right. All right.

And let maybe just summarize what you just saw is ultimately probably getting to having a conversation with you like

what's a health meter or health check or a financial statement if you will so that's easier to understand uh by everyone including the public.

Yeah. And maybe this is something too like we're doing here. I love that we've added it. We've added this to our um presentation, but at the end when we do the audit, we can pull out some of these ratios and say this is where we are just so you all can gauge some of how we're really looking um financially.

But this just help me out. This one is not a policy. It's just a um unwritten.

This one is a policy.

Is it 176%?

Which one is this?

176 which is our debt. 175 is the 33 and a third and 176 is the debt service.

112 is our fund balance policy.

175 fund balance. Uh 112 finance policy.

Okay. You're

you got it. I made up those numbers.

So there's three then. Got it.

Yes. Okay.

We'll have a slide on that later today.

Can you back up one more real quick for me? I'm sorry to make this take. I want to understand what the takeaway is from this slide because when I look at this and I see available fund balance being so low in 2023, I'm interpreting that to to tell me that our fund balance monies were committed to something and while we had that reserve, it wasn't available funds for use.

That's spot on. Yep. And so there's a diff. So what we what you will see when we get to the fund balance piece, our current policy is based on total whatever that total number is. And I think I reported at um the February 5th meeting, we're at 106 million total, but there are so many categories that go into total. There's so many restrictions that we cannot use in that total. And you will see it in um

some of the slides that you know um and that is one of the recommendations I'll tell you in advance is trying to establish a policy that's more realistic to what is really free for

and what the goal is in a reserve fund. Yeah.

What the goal is in the fund. Yeah. Because I think when when we were reviewing our bud our health our fiscal health in in that recent meeting I think one of the the impressions that folks got was you raised our taxes too much because now you have extra money when that's not necessarily the whole the picture and the thing we want people to understand is that we were really strapped.

Yeah.

And we corrected for that. So now we do have a available funds to do things,

projects that were put on hold.

Yes. And that's what we should be that's what we should be looking at that available number. And again, we'll illustrate what categories those are that we really should be looking at.

Yeah.

This is incredibly helpful that this in a graph form is is sort of what I was working to really wrap my my brain around when it came to not just the fund balance. We talk about the, you know, we're going to talk about our fund policy, but this seems like the far more important bit to me.

I would say it's always your favorite presentation.

YOU KNOW, I WAS WAITING ON THAT, CARARISSA. COME ON.

You're just doing so good this retreat. Not that they're not always great, but

is it is it safe to say that this retreat this year is the first time we've seen graphics like this? I

we think if we had seen graphics like this in the past two years

it would have been more obvious.

We haven't pulled out the ratios directly.

I don't remember the ratio but I do remember the fund balance over time.

Like I get when the blue goes below the red I that stands out to me. But if I suspect perhaps some of this information

went over my head

or

it was not presented.

I didn't want to highlight it.

It was not obviously

so and available and and just in talking about this particular one as I mentioned this is a rating agency one and I just thought it would be good because I do think it's a good marker

for us to look at and they grade us on it right it's credit it's they grade our um credit based on it. So, this is something we have to look at.

And you'll see a lot of other municipalities use this as part of their fund balance policy.

Okay.

And this is um just going back because one of the comments you've given us before is that different municipalities use different buckets of money to define fund balance and and what it is. Is are we maybe this is in another presentation. Are we aligned with the way other municipalities do it? We'll get we'll get there.

Okay.

Yeah.

And she does have a slide, but it's more of a snapshot in time today, but I might frame it when you get there.

Hold that.

Okay. Y'all ready?

Okay. So, let's just move to the quarter two. What you have in front of you?

These are some things um I want to highlight just to pull it off the pages for you um to reflect on. Takeaways. You will see that property tax and sales tax revenues are outperforming the budget. You all have heard that um for this fiscal year staff closely is continuing to closely monitor the financial performance including revenue growth and the net results and positive net results and fund balance projected for June 30th 2026. This is something new that we have inserted in your quarterly for um review. All right. So as of the December 31st, which is quarter 2 of fiscal year 2026, you can see how it compares to the previous five years. Um very positive results for quarter two of this year. You see here revenues is over um is running over expenditures. A large part of that has to do of course with how our

property tax is performing, our sales tax is performing very positively. Um also we increased rates on our um solid waste. So that's another um contributing factor to the revenues. We have a decrease as you can see if you compare to 2025 in expenditures. The decrease is largely um the direct result of some decisioning that you all have made from the timing of capital projects. We've reduced some of those transfers that go into capital projects because we're more in a maintenance form. So that is why um we have decreased here um during this fiscal year. Now what I also believe this trend um line is showing um for you is that you can see here 23 24 again is consistent story. Those are the years um that we did a lot of good investment. We did a lot of planned investment. However um we did a lot of investment. So those years will show um that the revenue was lower than expenditures at that point of time during the year. We are back to nor I say we're beginning to normalize a little bit back to those fiscal year 2022 area because if you look at history beyond 2022 you will see that in December of the year usually our revenues outpace our expenditures largely because property tax comes in the majority of property tax comes in by the end of the second quarter. So that that was a question I was going to ask. The trend is perfect. I understand that. But if I just looked at one column, that doesn't make sense because cash flow you're getting more revenue in at this time of year and you're that's expending whatever.

So I will say it makes sense for the these because we're comparing the same quarter in each year. Now if you compare quarter one to quarter two, that's totally the cash flow. You'll see the difference in the revenues and stuff.

Yeah. Kim, you said solid waste uh revenues from the the from the fee increase are part of that.

Yes, they weren't

revenue number. They're temporarily in the general fund. Correct. Do we are do they do they behave do we do we treat them the way we do um utility where we do redirect them to reinvest.

So right now they are directly in the general fund. There has not been a decision to treat it as if it's an enterprise type fund. um as we do the utility fund.

Oh.

So, but our goal within

Yeah. Our goal within the general fund though still we're treating it as if it is to cover the cost and that was based on the decision you all made to increase the rate so that we could cover the cost.

I I just assumed that. So, I wanted to So, it's not really uh available funds uh uh practically right now. It's not available funds for other use. It's available funds for solid

wast. Okay. Thank you.

Yeah,

that makes sense. I'm sorry. I know I've always got questions. I can't help it.

Okay, these are charts you've seen. I think um Dana has brought these to some of your work sessions. So, there's no I will say, you know, this is as of the point in time that we're speaking of, quarter two, January has been updated. The trends are similar. We're up a little um compared to our previous year, the blue line. Same for sales tax there. As you can see here, we have I show because it's as of December 31st, the first three months of the year. Reminder, sales tax is on about a three-month lag. Um, which is why this is only September. We have received another receipt um since then. And those trends are still trending. I believe Liam's still at about 6%.

Yeah, I think we're at 5% for the recent month of collections. So, a little under 6% so far this year. And comparing that to um expectations,

we had one.

I believe we budgeted one.

Yeah.

So about $3 million projected for the end of the year if it holds in additional revenue.

Okay.

That feels like a miracle.

I know it does.

So far so yet.

Don't stop shopping.

Knock on wood.

Knock knock.

Yeah.

Knocking on wood over here.

All right. So these are just snapshots. Um revenue uh is we've received 62% of the budget as of December the 31st. Total revenue increased about 9%. Property tax revenue reminder this is our largest revenue about 61% for this year's um budget. That was up 9% 80% was collected as of December 31st. I pointed out in the quarterly though the actual deadline is early January. As of about January, early January, we've received about 94% um of that revenue. Most of the time for property tax, we are very close to 100% collected by the end of the year. So the trends are um proving true here. Sales tax again is our second largest about 21% that was up the 6% but with limbs update we're around five on the expenditure side um we spent about 47% of the budget the expenditure growth um overall total expenditures decrease 5% operations which is before anything transfers anything that's nonoperational we um recognize a nominal very small increase of about 2%. The overall um decrease here is directly um going back to our decision that we're not doing the capital that we used to do in the past. So the transfers are um have gone down there. Okay. So this is just a net results history. So after looking at revenues, after looking at expenses, how we look revenue minus expenses, right? Um so here you can see quarter 2 fiscal year 2026. we recognized about $42.4 million um for that quarter. You can see the two

years that again um have been our um outliers which is 23 and 24. Those actual net result numbers um in this chart again we're going back to positive um results which we we were seeing in quarter 2 of 22 and prior

is it con okay so I'm going to state a really obvious thing. There are four quarters in a year. This is one quarter. So, do we get concerned about seeing one quarter dip down or is it overall on the year?

So, this is two quarters. This is year to date through. That's a very good um thing to pull out. This is the year to date as of December. Yep. So, the next quarter when you see quarter three, you'll have three quarters. Got it.

Year to date. Okay. But but again, are we

as long as by the end of the year that doesn't dip down? Is that

So, it's going to change and it will be less than this um as as the year goes on because it does depend on the timing of when we get receipts when we don't. So, we just have to measure it and measure projections so that we can kind of try to predict what these es and flows will look like. Dana, did you want to add something?

Yeah, there's a couple things. So um so we start looking at the trends that were this the slide that was a little while ago that she said this is normal 23 22 was normal 24 and 25 were more normal I think it was um or 25 and 22. When we get to this this is where we start to where we can take the performance that has happened so far and begin to project what the year will look like. So the relevancy of the performance at this point. So this little snapshot at six months um we look at both the trends and what we think h how things were are going to end up at the end of the year and every month that goes by we get our our projections get better and better.

Yep.

With the expectation that nothing will go wrong.

It depends.

No hurricanes.

All right. So this is the chart that um Dana was going into. So this within your quarterly you have our um first attempt of projecting where we may end the year um this year. And so as you can see and this is based on quarter 2 fiscal year 2026 that are um actual numbers and looking at history you know like percent changes and things like that whatever that methodology is that's included in these assumptions. Um we are projecting to the end of the year to pick up some more in fund balance about 18 million. Um again it's at the point of December the 31st of 20 26. What that means is um to Dana's point we're going to start doing we do this every month now so that your next quarter you'll see another update of this and it may be different than what you saw this quarter but it's more in line with what's happening in the current year. Any questions on this slide?

Maybe it's coming. Are we going to see this compared to budget?

Are we going to see this compared to budget?

Actuals. Uh projection versus you know the projection versus actuals. So like the dotted line is the projection. The solid line is the actuals. Do we have a budgeted line?

Yeah. So we could add Yes, we could definitely add a budget line here. I think within your um quarterly as well, there's a budget column um there. So, it's there. We can add it for sure.

I I'll also add as the budget process goes forward definitely with the interim manager's recommended budget, this information will be there. There will be a projected column and then also in the 3x4 council packets, there should be some additional information like this.

Oh, awesome.

Which will tie hopefully to everything we present to you for sure. Okay.

All right. So this is our utility fund. Um we always have um positive news. We've had positive news for the utility fund in quarter 2 2026. You can see here which is different from the previous quarters that revenue is surpassing the um expense. There are a couple of reasons for that during this quarter. It does the expenditures going down to that 34 million is directly related to some of the capital decisions that we've made. We're doing less new capital. So that um is the driving factor for the expenditures on the revenue side. Um if you all recall, we increased our fee 4% um for this fiscal year as well as there was some settlement dollars from PAS that we received in the amount of Jamie about 5 million

um during the quarter. So um we have that that we didn't have in our previous quarter. So I won't I won't I was going to say so if you're thinking about what's normal for the quarter two those previous years are what's normal but we had a couple of um outliers this year snapshot for the utility fund revenue we've received about 54% of budget um it was up 23% for those reasons I've outlined expenditures 34% of budget has been spent down 36% based on um the capital timing. These are the net results just in a bar chart for you um that was illustrated a couple of slides earlier. All right. Also, within your quarterly, we just want to get this back in front of you, the midyear appropriations, there's a million dollars that you all um appropriated within the budget for any unforeseen um contingency type items. Just a reminder, um, we've already allocated 40,000 I believe was for the convenience centers. 775,000 you all. I added quarter 3 for you, just as a reminder. Um, I think you believe you approved it February 5th for like the

merit increase adjustment. Um, there's WBLE in here for that partnership um, to do their review. So now we are our remaining available midyear appropriation is about 185,000 cash. You all don't see cash much um but we wanted to show you the history of our total cash balances that we hold for the organization. We are as of December 31st we are at $510 million. That's across the board um of everything. And as you can

this is cash in hand. This is cash and investments that we have. Yes. In the bank. Now, what I always say is that, you know, if you were to p to pull like our um ledger accounting terms, I'm trying not to go too deep, but ledger numbers, they may be a little bit off from this just because we have reconciling items because of timing outstanding outstanding things, but if you look at our bank statements as of December 31st and these previous dates, this is actually what we have on in hand. I'm just curious why are these red color bars like red is generally seen as negative and not good and

I love

uh green as

so do y'all see red or orange that's a color

their color scheme orange I think

it's carry orange like our stars

orange accounting terms that's a thing but I'll take that accounting is red is not so good

when you say that you know generally I worked in departments that is always red.

Yep.

It's it's ne it it doesn't generate revenue.

And this is cash enhance. So,

this is actually cash. Maybe we should consider our color scheme on this one. But

next time

um yeah, this is just

so this uh doesn't include the reserve. Um

it's everything that we have in that we're able to spend on something. A lot of some of this is restricted, some of

it is not. This is just if you look at all of our bank statements collectively, we have $510 million. Okay. So, um this is real quick short term.

Is this the last slide before

this can be the last slide today?

All right. Then I have a announcement.

Hold on. Let me make sure. Yep.

Oh, yay.

Last slide today. Just letting you know um in brief how we invest these funds. um our goal for investing public funds is safety, liquidity, liquidity, safety and yield. Um so that we don't really chaste um returns. So this is just to show you a lot the majority of our investments are in short term and we're making about 37 3.75% as of December 31st, 2025 26.

Liquidity, safety, and

yield.

That's the return is always last.

Okay.

Yeah. And the LGC keeps us in check on all of that, which, you know, I'm thankful for. So, we we comply to those guidelines.

LGC is

local government commission. Thank you for keeping me honest.

Well, if I can't remember the acronym, I'm just like I'm just going to ask.

Yes.

I'm getting there.

All right. So, with that, I'm done for for now.

Yes. And

Okay. Just

Well done,

Kim. That really was terrific.

Thank you. I think it was my favorite yet.

There you go.

And Kim has not gotten to uh discussion, if you will, and education on fun balance. So, we suggest that we go to lunch.

Um possibly have a shortened lunch

if possible and then come back and adjust the schedule a little bit for the afternoon. So,

to get to that fund balance today.

Yes. as a kind of an educational component to tee it up for future discussions. Come back like 2:35

12:30 12:35

or 12:35 will be fine. 12:30 12:35

you might

We'll reconvene the retreat and at this time council needs to go into a close session and I would entertain a motion. Pursuant to GS143 318.11a13 and6 I move that we hold a close session to consult with attorneys employed by and or retained by the town in order to preserve the cl attorney client privileged between the attorneys and the town. prevent the disclosure of information that is made privileged or confidential pursuant to the laws of the state or not considered a public record within the meaning of chapter 132 of the general statutes. Consider the qualifications, competence, performance, character, fitness conditions or appointments or conditions of initial employment of one or more individual public officers or employees.

There is a motion. Is there a second and a second? Discussion. All in favor, please say I.

I. Any opposed? Motion carries. Council will go in the close session with a target time of 30 minutes.

We'll reconvene our retreat at this time. I'm going to turn it over to interim manager over to

All right. Thank you, Mayor. We're going to bring uh Kimberly Branch, our finance director, back and talk about uh the fund balance policy 175. And the way I want to frame this is this is more about kind of education and learning. Uh we'll have several more sessions. Um this is not to redesign the policy today. Um ask your questions of what the policy is. Um any background you wish and then we'll bring this back to uh future work sessions as we work on revising the policy based on the feedback that you ultimately get it. But I want to say there will be more work sessions on this topic.

Okay. Thanks um Russ for that introduction. So with that being said, the takeaways that we want you to um to consider with the next about eight slides are fund balance and its categories are measured at the end of the year and used in strategy while making decisions on spending as a part of carry becoming a maturing community. Financial benchmarks and policies such as this um should evolve. And the last one, bond ratings are important and an area of focus for you all leadership and the investment community. and they look at measures like fund balance when they um consider our ratings strategies of maintaining strong fund balance. Um we have to adhere to the policy which is why we do an annual review. We forecast regularly monitor spending and we limit the use of fund balance to those one-time um um uses when it comes to what we consider to use fund balance for. All right, let's talk about the definition. The definition of fund balance is the net worth of a fund calculated as assets minus liabilities. Um it's cumulative funds remaining at the end of the year after all expenses have been paid. I will say quickly this goes back to your exhibit C in your axer that you can refer to every year to know what fund balance results are. Okay. Uses of fund balance. We use it for cash flow. It covers short-term cash flow

needs. Um it's also defined as that emergency fund contingent funds for which is a reserve provides a financial safety net for unexpected events. Um we use it for planned capital and again those one-time expenses cover onetime capital costs without having to use things like that funding like that. All right, this is the main um foundation we just want to um start with lay for today. the different cap categories of fund balance and I have definitions here. There's non-spendable. We cannot spend this. This um represents those items from our balance sheet. Inventory, prepaid pre prepaid expenses we have to have. Those are a part of our fund balance. There is a restricted category that you will see. This is a legally required for specific purposes. It's it's it's restricted by state statute. So the state has given us a formula. It's very complex of what to include in that. But in a nutshell, that's your cash minus the obligations that we have um liabilities as well as even the incumbrances. Those in commitments that we've made, we have those as restricted because we cannot um utilize those funds for appropriation committed. These funds have been set aside at some previous action um by council. Um and the only way that we can use this is if is if there is a formal action um by council. We only have one um item within committed as of the end of our fiscal year and that has to do with the law enforcement separation allowance. That's just reserving for those um future payments if we have to make them. Assigned is a category intended for the specific purpose. Um this is just uh really the fund balance and separate respective funds like workers comp, small claims. um we have um reservations for those that we have in our assigned category and the big category is unassigned. There is no restrictions here or designations. So if we have to look at those things that are unavailable these top three

non-spendable restricted committed are unavailable when I was referring to available fund balance in those pre in my previous presentation available is considered as the assigned and unassigned categories. Is there any reason is there any restriction on the unassigned that it cannot be used for?

No. Unassigned is really that money that has not been designated for any other purpose.

So absolutely anything.

That's right.

And are these North Carolina LGC definitions? Are they our definitions purpose? Like does everybody use the same definition?

This is consistent with local municipalities. So if you go out of state, they have the same designation.

Okay.

Yeah. fund balance policy just one uh 175 we are we've said it already 33% of budgeted general fund expenditures we use as our base that original budget in any given year so 33% of our original budget of any given year is what we say is what our minimum for fund balance should be

can I ask clarification what's the difference between general fund expenditures and operating costs

general fund expens expenditures include the operations of the general fund. So, it's the same. It's I'm looking that as the same thing.

Okay. I'm just trying to make sure.

Yep. And just to say where you find it, if you look at your budget, as a reminder on that general fund summary, total expenditures is the number that we um base this calculation on before other financing sources.

Maybe the points being that it's not applicable to the other funds,

okay,

that we have. That might be getting to part of your question.

Very good. Thank you. Okay. So, this is a nice five-year history by the categories that we discussed. So, you can see here um these non-spendable categories restricted is that black category. Again, that is something we have to do at the end of the year. That base calculation committed, assigned and unassigned. As

you can see the green and the orange, those are those available categories that we have flexibility in every year. If you look at you can see in 2023 again that's our telling year that is falling below the line because unassigned that particular year was about a negative $4 million. Okay. We wanted to leave you with today just so you know for your awareness different um policies that we have for other North um North Carolina jurisdictions. Just to highlight a few on the different types. Charlotte, they base their um fund balance policy on total fund balance. Similar to us, they use 16%. Um I want to flip because Lori, I think you referenced Raleigh. Um during our February 5th meeting, Raleigh bases their fund balance policy on 14% of that available fund balance that we were talking about. Another measure that a lot of people um use like Morrisville, Winston Salem um unassigned, they're using just the unassigned piece because that's really un you know that's really the um free money there um for lack of better words. Okay. So with that next steps, our plan is to prepare options for fund balance policy change and to present those options um to you all for for the fund balance policy change at a future work session

and I'm going to add we'll prepare them. It would be good to hear feedback on possibly ideas you'd like us to prepare. And back to the list.

Yeah. Can you go back to the list? Are there best practices about which funds you should use to determine and define that that um fund balance because is it it looks like there's one's using available fund balance, one's using unassigned fund balance like how do we compare if we all same nomenclature?

Well, I mean that's a very good question. It is um left to the

jurisdiction. I mean it we have to determine on based on our results based on what we're trying to do from investing you know in our future but my recommendation and the recommendations that will come forth will be on either the available or the unassigned because we know that th that's really money that you can consider for future appropriation right

those other ones are restricted so

so what are we at if you were to today if you were to go back what is you had the picture

so if I were you mean like if I were to Look at the calculation as of the end of the year for say available fund balance.

Yeah.

If we're looking at available fund balance, we may be between 20 and 21%.

So that 51 million that we currently had is about

So the 50 well available remember is assigned and unassigned. So that as of the end of the year that's about 55, but you're right. If we just use unassigned, I think we're a little bit lower because that's a lower number. So we're around the 16 17%. Don't, you know, mark my words on that, but it's a little bit lower because it's a lower number. Yeah, that's at the 51 million.

Okay,

Kimberly, forgive me. I'm might be revealing my ignorance here of uh accounting practices. If you take the approach of only accounting for unassigned, what mechanism exists then for making sure that you do have all those other categories accounted for, that you have the funds for them. Am I thinking about this correctly? Because I mean, right now we use total fund and so we've got all of our categories that are being reserved, you know, at the threshold that we've set. If you then pick just one of those categories like unassigned,

then how do you account for making sure you have the dollars for all those other categories?

So what it boils down to is all those other categories come first. The unassigned is usually what's left. Um so in order to make those estimates in my

mind without having my pencil and paper is really looking at the history because if you look at the history of those other categories, they're very close. Um and it may be in those other categories too as we're spending things down that that stuff is rolling. Whatever's left is rolling to the unassigned. Um so it's all based on estimate um calculations of history best guess um at that time. We're never you know even in unassigned it would be considered during the year um or before the year as a budgeted number. It's not locked in until the end of the year

and they're going to measure all of them no matter what. It's just whether or not you have a policy that reflects certain parts of it.

Yeah,

Kim, I've got a I I'm not 100% following our fund balance policy right now. Seems hyper simplistic compared to these. It's just 33.33% of the total bucket regardless of whether it's assigned whatever it's just a random number. So I how how do we go? We went negative -4 million for unassigned balance in 2023.

I think that's what can happen when you have it on a total fund balance perspective because that's what you're measuring it on. You're not measuring it on the category. So it is easier to fall with if

Yeah. So we're not just talking about changing the amount we required to be in this fund. We're looking to make this fund more sophisticated and really reflect the spirit of this fund balance really being reserves.

That's right.

Okay. Now, 25% of of 25% unassigned fund balance, say three like like the one that Morrisville uses, uh 25% of total budgeted operating, that would be a much larger fund balance than we currently hold. right now or they're

much smaller community too.

I think it depends but I would say yes.

Um just looking at the numbers. So like we have $51 million in our unassigned now and that is 20 20%. But our no my analogy is not going to match um where I was.

That's what I'm saying. So it's it would it would actually make our fund balance

much bigger than it has been historically.

Yes. Because historically we've had like four about that well it'll we had like four months. It'll be a little bit lower than four months of reserve.

Well we can and we'll bring you maybe bring scenarios.

Yeah we're definitely going to bring you scenario.

I just want to make sure I understand this because I think it's easy to to look at this and go well if we need some money we can just lower our fund balance policy. That's actually not accurate. Our fund the the spirit of the fund balance policy what we think it does for us and what it is according to that one chart you showed it's it's not a reserve fund.

Not now.

Right.

Not now. Yes. We don't have much flexibility right now.

But if there were an emergency, let's say um you a hurricane happened and we needed a significant amount of funds to react to it. Yep.

We could take council action to uncommit funds and move them to be used.

You can uncommit the funds to to be used. Yes. But our policy will also have the verbiage. If we elect to go down use utilize fund balance under the policy, this is how long it's going to take. We're going to say about two years to get us back to where we Yeah. to get us back. Um none of these towns um probably are in the same range as our town, right? in terms of population and um budget and the percentage

percentage could mean different things for different municipalities here and um

even though what whatever buckets are assigned or unassigned or available

um

I'm pretty sure there must be some towns um of our size maybe town/c city that we could use as a

we'll definitely bring you back some of those comparables.

Yeah.

Yeah. I think that would be helpful to see like exactly what other towns are doing so that we can understand from

or learn from their

uh positions.

That's right. Cuz a lot of this is based on budget. So to your point, everybody's budget is different.

Yes.

So that is going to um

and the size of the town and city whatever it is is different too. So it's hard to we can't compare apples with oranges right now.

That's right. I'm notice sorry I'm noticing so far that it's Carrie and Charlotte that is based off of total fund balance and I'm wondering do you when did we set 33.3

I believe that was back in 21 um was last yeah when we last changed our policy

wasn't it but I thought it was 33 and a3 before that it's been

it's been up there

maybe you updated it but decided not to change. I mean like you

maybe it was on a different category too, you know. Um

like we're doing total fund balance. We may have used a different base when it was prior to that.

We we can look at the history.

We definitely can give you that. Yeah.

But I think you were Were you going somewhere Michelle?

I don't know.

I was just wondering, you know, like was there a way municipalities used to think about it 20 years ago and others have updated it and maybe we hadn't or something like that? Well, I think you I mean everybody's brought up a really interesting point which is the size of the municipality matters too, right? When you have a municipality is 300,000 people or Raleigh that's, you know, so big, Durham's 300,000 or Greensboro, you know, their budgets are really big

and so they don't need as large of a fund balance. But then you have some place like Wilmington which might need

maybe closer to our size which might have a hurricane tomorrow and they need faster access to more cash.

So I think it really depends not just the size but where you are where you have

accessibility. But I do think that out of all of them the thing that pops up to me like what popped up to you the total fund balance is also different than the available fund balance. Just looking at Raleighs or any of the ones that are closer to our size, even Asheville or whatever, they're more than half less than us.

Even if they do use something different.

Yeah. And for Charlotte and us even we use uh the same total fund balance but uh in our uh policy says the bud budgeted general fund expenditures the Charlotte is of the operating budget are they the same or

they are the same.

Yeah they're the same

and we're on the other side of that because they're much bigger than we are. So you would expect it to be lower. I want to make one statement for those that are watching the streaming. Excess money at the end of the year is not bad budgeting. We have to have that. We cannot go below zero. So we always have access and that's why the fund balance grows.

So having said that, my concern with changing the fund balance is how do we present this to the bond rating agency. So there's h are we going to discuss that?

Are we going to issue a statement? Do we say here's our plan because

to show that it's intentional, not that we're reacting to bad whatever.

That's absolutely right. We have constant communications with our rating agencies. Every year they do a surveillance. They ask for updated policies at that time. So whenever we change the fund balance statement or even you know the walk up to that change, they will be um in constant communications. As you can if you remember from my last presentation, they don't even look at this measure, right?

they're looking at the available fund balance to revenue. So, you know, in that in that case, it doesn't say we have to do that because sometimes they're kind of neck and neck. Um, if you have a goal of like having three months in your reserve, most of the time they're um neck and neck. But I just wanted to highlight that they look at different things too,

including working with our consultants.

That's right. With our financial advisors. That is correct. Thank you, Russ. I do remember reading during the GFOA review that there isn't a legal, tell me if I'm wrong, there isn't necessarily a a legal stipulation. UNCC said something about, oh, it was 8% and some people said it's 14%. Is there a legal?

There's not a legal requirement. That 8% has been around. Yeah. For local um the LGC that has been around for a long time and that was a recommendation in particular for the smaller jurisdictions.

Um so this is based on Kerry. This will be based on carry, where we are, our budget size, and um our metrics.

So there there's no legal requirement.

There's no requirement.

There's no I guess is there a recommended requirement by the LGC?

The 8%. I mean, that's what they've been on. Yeah. But that's, you know, is that relevant for us or is that good for us? No. But they are going to want to make sure that we have a reser you know a reserve and a reserve policy so that in times of change we can take care of oursel reasonably.

So let me ask a higher level question. What is the fund balance for? We say emergencies and always thought of oh there's no emergency we can't handle with our fund balance and then I saw what happened in the mountains. I go oh yeah I guess there is kind of an emergency that we can't handle. But the way that it happens, the way I understand it is when you have those types of emergencies, use cash on hand and then you get reimbursed by FEMA.

Mhm.

Is that right? So, when we're thinking about fund balance level or whatever we want to go to or stay at, uh, we need to

know information about can we cover if we had tornadoes come through like multiple ones and they trashed,

you know, water. Yeah. What could happen and do we have enough money to cover it? That's kind of

good question and an it depends answer

it. Yep. It definitely depends. And the reserve is not just for those, you know, when going back to the uses of fund balance. We could use it to pay for a specific something in capital um for the you know a one-time usage of something.

So that's not frowned upon. Even if we had a policy and we went under it to use on capital for something,

it's all in what your policy states and we're going to make sure that we state that if we do if the council elects to it's a plan. It's a plan decision, right? And if you elect to go under your p your policy, how long do you want for us to correct to bring it back to those um those levels?

Is there a need, desire, um plan to talk to the rating agency about their feedback associated with this? Is that something we should get their insight into?

Well, and that's how our consultant can help us. Yeah. as well.

We we are definitely talking to our financial advisors more so on that because their ears are um in sync with the rating agency. So yes, indirectly. Yes.

Okay.

Yes.

Okay. More fun to come. All right.

More fun to come.

Handshake, Paul.

It's the perfect sign off for a finance.

No handshake, Paul.

Did you like that one, Carissa?

I really enjoyed that. I learned

I'm gonna see if this budget next budget presentation is better than the last one you like.

So Lee and I are going to tag team this one. Uh we're going to start out with a budget update that's going to start bringing you some very preliminary information on the FY2027 budget. Um and then we'll roll from that if time permits. I know we've got a little

limited time period here uh into the budget model exercise that Liam will walk us through. Um if for some reason we don't get to that exercise today, we will get to it. it will just be in a later work session. So, we want to make sure we have enough time to talk about this very preliminary 2027 information with you all first. So, sound good?

All right. And I apologize for the voice. I've been dealing with it for months. We're getting closer to an answer. Um key takeaways. Uh the first is that by the time we leave here today, uh we will have discussed uh a preview of very early 2027 budget requests. We have also produced a document that you will leave with or at least a binder. I'm I'm getting a little bit of grief over the size of the binder. But the goal is that all of the present the but two budget presentations that you've seen today, the budget priorities and now this one along with any other documentation that we will give you in the coming months related to the budget. That would mean ultimately even to include the recommended budget will all go in this one binder. So you can carry all of your budget information with you at one time in one place.

Cararissa, it has your name on it.

And it has names.

That way when you forget it, we it will find you.

I need a locker on campus.

We're going to put an air tag in it for you.

So when we're done today, we will hand those out to you and it contains the first two uh presentations about the budget that you received today. Oh, so that's bullet one. Bullet two. Uh, really great point. Current year budget decisions are important for setting up a strong financial position in the long-term model. Um, we talked about that last year when Liam first introduced the budget model to you all. That is a theme that is clearly continuing on this year and for years to come. And then lastly, you all do know the levers that you can pull to change the budget picture. Those cover a lot of ground from tax rate to fees to expense levels, right? and we'll walk through those when we walk through the model again, whether that's later today or later at a future work session. So,

questions about takeaways. Okay. So, the three things we're going to cover or at least two of the three, we're going to do a quick budget schedule recap and then we're going to do a review of some very early FY2027 budget preview information. Can I re very

I was going to say you're going to hear me say very very early preliminary and draft until you're tired of me. Um but it's this is very early and it's wonderful to be able to bring you all into the process at this point in time. Um which is different than recently. So we'll do that and then if time allows then Liam will uh close us out with a model exercise with you all and if not we'll cover that soon. Okay. So let's start with the schedule update and I'm the person that likes to point at the charts. So, let's hope this doesn't irritate the the camera work here. Um, we're obviously here at February 20th and 21st in the staff retreat. Our next big date is March 9th through 13th when you all will be having preview meetings. Um, that will be your next packet of information that will go into your big budget document. You will get those preview packets and you can put them right behind the tab in your big old binder. Um, from there, we'll look toward March 12th and March 24th as big dates. Those are set aside for capital work sessions right now. So, we'll talk more about active capital projects and also about future capital projects. Um, let's see. In April, uh, noted down here, I think it's still noted as a town hall, but technically we're going, I think right now with the term budget openhouse is, uh, April 7th. So, that's coming up. Um, and then we'll roll into carry 101. uh we'll have the quarterly the recommendation the recommended budget presentation and then that brings us into May and June when we're doing public hearings budget work sessions and then ultimately at the last council member in uh council member council meeting in June uh you all will adopt a budget to have us ready to go on July 1. So, okay, let's set the stage a little bit before we get into actual requests.

Wanted to just talk a little bit about assessed values, right? This is what is driving the property tax income that we receive is the value of what of the property that is in Kerry. So, this is a 10-year history from 2017 to 2027. That 2027 figure is estimated. Um, it's factoring in Wake County and Chattam County and it's sitting at about 53 million. You'll notice there's not a lot of difference between 26 adopted and 27 estimated. That's because we don't have a reval right now. And what we're really looking at is just what I like to call natural growth. So, it's just um new things that have been added into our system that are bringing that new assessed value with it. Right? Um so, we're not seeing much change there. Uh you might note, they're small that there's a note down here. There are asterisks at 2017, 2021, and 2025. Those were budget years that were affected by revals. Meaning in January of that year, there was a revaluation. And in July 1, when that budget was adopted, we saw the the uh outcropping of that in our budget, namely in our tax property tax revenue estimates. Questions on that one? So that in my mind leads us to a quick question of well, what does our property tax rate look like and how do we look like our and how does that compare to our neighbors? So, this is based off of current information for fiscal year 2026. Um, Carrie is at the top and then it's just alphabetical. We debated is it by rate or by alphabet alphabetizing and so we went alphabetizing.

Um, but I'll give you a minute to absorb that and if you have any questions about what our neighbors rates are currently set at, we can talk about that.

All right. Um, one look that we get asked about periodically is, you know, what is the tax rate that the taxpayer will see on their tax bill. And that's what this chart is displaying. So, again, because I point um we've got 34 cents up here is the town of Car's tax rate. It doesn't matter if you live in the Wake County portion or the Chattam County portion.

Our tax rate is 34 cents. Um, we've then layered in the Wake County portion here at 0.5171. And when you add R34 plus their 0.5171, you get a total tax rate of 08571. And then that math continues down below again. Carries at 34 cents. Chattam County is currently at 60 cents. You add those together and the combined rate is 94 cents. All right. Thank you. Susan's bringing me a bottle of water. Thank you. I appreciate it. Thank you. I appreciate it. Um and I I feel the need. I always tell people I am not sick. I have not been sick. I will not make you sick. I have a vocal cord nodule that we're

Or we'll just all be sick at the end.

But I did.

Let's go both extremes.

Thank you, Susan. All right. So, um this was uh Russ's specific ask that we include this in today's presentation. And then I'm really glad that you had that ask because I know at least Britney asked in our small group, oh, what about the vin diagram? Um so, it's back. Um this is just a quick reminder that there are a number of forces at play when we're trying to decide affordability for example um or priority. And so uh the way this works just as a reminder for those who are joining us uh televised or in the room and haven't seen it before we've got three big factors to think about. You know, you can want stable service, you can be partial to low density, or you can have an interest in lower taxes, but at some point those three things start competing with one another. And you have to give something up. The circle in the middle is telling us we can't have it all. So, for example, if I'm interested in stable service levels, you know, but I want lower taxes, how do I go about doing that? Well, it means I may have to be okay with a little more density to make that happen. Um, looking up top, if I'm looking at stable services as an option, but I definitely want low density, well then the way you're going to counteract that is a higher tax rate. Um, lower taxes and low density, you might need to

think about service cuts. So, just a good reminder as we start looking at these early 2027 uh request looks of kind of the dynamics between the choices that we'll all have to be making together. Questions here? Alrighty. Uh earlier we had a question about I think it was Lori mentioned it'd be nice to see uh the full-time equivalent which is what FTE stands for comparison uh per 1,000 of Car's population. Uh so this chart it's a great great look at history, right? Goes back to 1990 and we can all find ourselves back there on on on Russ's chart to the right um through 2026. And we were kind of joking the other day. I showed up I kind of showed up at the peak here in 2000, but I think Rush said he showed up at the trough in 1998. So, um, but you can see now we're sitting down here at the far right. This is through 2026. It's about 6.8, I think is the number. It's on the next slide, of uh, employees per thousand residents.

And this does not include the number of positions. It includes the um the position currently that are filled.

This is all position uh it's all positions that are budgeted within our budget. So some of those could be filled and some could be vacant. It's all of our approved positions

and fun funded positions.

So but 70 of those 68 or 70 positions are not filled.

We're going to talk a bit more about that in a second, but I believe My understanding and Liam if you have a different understanding

is this this is the it's all positions.

Yeah it's all positions minus the 29

29 that are vacant in the FY26 budget.

Okay. So funded is correct

29 positions which are funded.

Yeah we'll get to the list of those positions but in the FY26 budget 29 positions were approved but not funded.

So this is

not including those 29. Um but it does

include positions that may be vacant at this time.

Correct.

But those are vacant positions that were funded in the 26 budget.

You're going to see that

the actual work that our staff is doing probably is more than what we are showing here. So we are showing here 6.8 per thousand

per thousand

per thousand uh residents which is probably

a little bit um that includes the vacant positions. Yes, it does.

I I think to compare it to other municipalities in the next slide, you have to do approved positions because a city like Raleigh or a city like Morrisville also has vacancies and in a lot of cases they have a higher vacancy rate than we do.

Yeah. So, we're going to give you some more comparative information that I think is going to get at exactly what you're asking about. So, we'll do that now. So this chart takes a look at um other pure North Carolina municipalities and uh their population and then what their number of FTEEs are and then ultimately what that uh staff to resident ratio breaks down to. So there you see Carrie at 6.8. Again, this is done alphabetically. So I'll give you a minute to take a look to see where our peers fall out.

Wow, Winston Salem has a lot of staff.

Do they have more services like do they I mean I know some counties have

everybody's different some are electric cities right some are not so

some have libraries some right

it's not a perfect onetoone comparison and we talk a little bit about that I think in the next slide um so

make sure everybody's got a chance

to double our employees

um years ago we were a part of the University of North Carolina's school of government's uh benchmarking study and I told the group the other day fun In fact, that project's been around 30 years. And I know that because I was the very first graduate research assistant to ever work on that project. And my boss was the former uh Kerry budget director who worked here in the 80s named Paul a few. So um that is ultimately how I came to be in Kerry was

because of that project. Uh but we participated in this project for a number of years and then I don't remember we were trying to decide when the other day 10 12 years ago for whatever reason we stopped participating. Um we are requesting one of the requests that you'll see in the budget this next year is to rejoin that group. Um but what's great is they do benchmark against a number of services and you are able to access information like this where you can see uh through that benchmarking program what's the system average in that in that group against where does Carrie fall out which is the orange line. So the blue line is again showing the benchmarking benchmarking group average uh against our line which is the orange. We don't have that data yet obviously for 25 or 26. So you can see that as of 2024 where the benchmarking average is at 12.4 FTEES per thousand residents. Um and at that point we were at 72 and now we're at 68.

But the point is I think Lori may have asked the question earlier about police services or how or someone did about benchmarking against individual departments. Um their benchmarking study does a lot of that. I remember being in inspections and permits and so it tell how many inspections do we do or maybe how many single family houses do we build. So there's a lot of um interesting information in that benchmark against those other cities that they benchmark that I think would just be helpful to have on record and for you and citizens to see.

Well, it's also helpful to compare apples to apples. Right. And you can actually say, well, our permitting group does this many and this is how how much we do and here's how many people we do it.

Right.

Right. When you compare to another city who maybe outsources it, you can see the value ad, you can see the efficiency,

the effectiveness.

I was getting um of of this organization comparatively or you can also see that they're struggling. I mean, some

sometimes effectiveness and efficiency is hiding the fact that they're overworked.

That's what I was just thinking was that you don't necessarily know that because

they could be working 20 more hours a week compared to others to make up the difference, which is what I assume our staff are doing.

Yeah.

All right. Great conversation. Lot a lot more to discuss, right? Okay. So now here we are at the very very very early preliminary review of FY2027 position requests. It looks like it's getting cut off just a little bit there on the side on the screen, but I think we can make out what it says. Um overall 58 positions have been requested. Um this is the raw data that we received that the budget team received from the department. So all the folks in the room,

I'll give you a minute to take that in. There are some themes there you'll see in it. A number of needs and parks, some storm water police.

What's the beginning of that acronym per the other police? Emergency communications ECO

ECO emergency communications officer.

Okay. Thank you. And this doesn't mean this is going to be what you'll see in the budget that's presented to you, but as we go through previews and get you information earlier. Um, this is as early as you've ever seen and maybe a council has never seen what comes in from the actual departments.

So, this came in from the department directors

the directors have requested. Yes.

And what uh was their uh what was the ask to them? Was this a

tell us everything you need this year? Just broadly,

this is new positions.

New positions.

New positions. Um, sorry, going back to the original definitions of vacated, right? When we saw that number,

this slide may help.

These are Sorry,

this slide may help you.

29 unfunded. These

that was where I was getting the word word unfunded. Yeah.

Yes. So, week earlier you asked about positions that were not funded. So, existing positions, but they don't have funding. Right. Right.

That's this list of 29. We're also not saying yet. We're evaluating that to see what may need to be funded. I'm not yet saying that all 29 need need to be

funded. That this would be part of the evaluation.

But the requests are completely separate from this. There's not

this they are separate list, separate slides, but both important to consider.

Yes.

So is there a proc Sorry gohead.

So is there a process when um departments submit the uh requirement? Is this does this get wetted before it gets to this stage or

we do work through this process

likely very unrealistic that we can fund 58 new positions and 29 currently unfunded positions.

So these are approved and funded.

This list is new.

This is new.

This list of 58 is new. I'm going to change the slide. Ready? Okay.

This list of 29. This these positions exist. They are not funded. and they were unfunded as part of this current year FY26 budget. So the

of that you you could not hire someone on that list without um um h having the funding source being brought back to it. You would need to take action to fund something and we're not looking to fill any of those positions.

I think we keep maybe asking the same question in the same way. I'll ask it one more time. So were departments asked to evaluate if these 29 needs still exist? I mean was there any evaluation done of these 29 positions?

I'm just still trying to reconcile this wedding. Yeah,

that is what is currently going on right now. Okay.

So when you when we say you're seeing it at the very beginning, this truly is the beginning. So on the list of 29, the question is, do you need that filled next year?

Positions we want to fund in the next budget.

You'll get a list of positions we want to fund in the next include a combination of the requested new positions. Yes.

And the unfunded

one of the I get there. One of the things that one of the things about the 29 unfunded is departments may say, you know, we've had that position title do whatever on the books for a long long time. If I only get one or two or three positions this year, I don't know. I want that one. I might want this one or maybe I can combine this with this because now we have two parks and they're right beside each other and I don't need blah blah blah. So that's all that's what's happening.

Yeah. So that work is coming, right, that we're all going to do together. But we wanted to show you the raw information as it was submitted so you know the true starting point.

Yeah. But are there any more positions that are approved and funded and vacant?

There are always vacant positions and we just call it attrition either through retirements or otherwise. And I think we gave you that number at a point in time last week was 70 which is always variable because we're always recruiting and people are still leaving retiring whatever it is.

So Russ the 6.8,000 number that is the current positions that are approved and filled

funded. Approved and funded and approved both filled and vacant.

Sure. Yes. But this is not in that this list.

We took these off of that. We've always said um there's uh 1328. So we've started to get to the 6.8 to give you the real number. We took out these 29.

Got it.

Sorry. I know there's a lot of math.

Yeah.

No, this good information.

The point being I mean if if

positions doesn't help help anything. I guess in theory it's nice to know that you wouldn't have to approve a position. You could just fund it. But you could do that anyway. Um, so if we're having those discussions with one another, if we need a position, I think we should bring it to you and

have a conversation about filling a

position or changing a position or something like that whenever we need to do it.

So when you're looking at these raw numbers, and that's what they are the way I understand them. How do they compare to previous years? Because I know we've been holding. Is this a large number? The slide before

on y'all seen the but I mean it feels like a large number. Liam's seen the more recent more recent years than I have, but

um it's definitely larger than in more recent years. I will say the process around the budget is different this year where we had messaging around ask for what you need when in previous years it might have been

don't ask for positions, we're not going to fill positions, we aren't going to be able to fill positions. Um but things like additional police officers have been requested for several years in a row and various other ones on this list as well. Yeah, my newbie question was how common is it to have unfunded positions or was that a budget anomaly of our circumstances? Dana's nodding. Yes.

Yeah.

Yeah. I don't think it's very common.

Okay.

It's not. Um, can Chief Chief Salt, can you tell me is there a a kind of a guard rail as to how many officers you can on board in a year and is does is that reflected in the number of officers requested in this budget?

Yes, ma'am. Uh, as I've mentioned to uh Russ and Dana on many occasions, I'm never going to ask for more than we can recruit. It's just a just a budget number if you do that and it affects other departments. What we've asked for here is the max we could do in one year. And then I think we need to have a strategy of how we start catching up over the the next number of years

is is 20 that's sort of a a class an academy so to speak but some of them will be exist officers already.

It will allow us to add an additional officer on each shift to uh help us

maybe con I have another beat which makes those beats smaller which can impact our response times.

Thank you. I appreciate that. We also, Chrissa, at times, and Stacy can help me with this, but um you've maybe elect to bring on positions say midyear

where you would fund um you know half of the salary in a year um to do that very thing to work with HR so that you make sure you can onboard people appropriately throughout the year.

And that saves you that might save you money in year one.

Sure.

Um but it also is kind of thinking towards how you onboard people.

Sure. I was just thinking, you know, that what that that 20 sworn officer ask versus the need that was expressed yesterday. I was trying to understand that and uh understand um I don't see any additional fire personnel unless they're in a bucket that I'm not identifying as a fire bucket.

Weird analogy,

a fire bucket.

There are no there are no firefighters in this year's budget. If we were approved for a station that we've requested, then th those personnel would come in

uh 29 or 30.

So the firehouses and the shifts are currently adequately staffed.

We have current staffing for the existing stations.

Okay. Thank you. Are there um any positions as I look at these any positions that are funded by other entities or cost recovery? Like we do 911 for multiple entities. Are those cons are those considerations?

Yes. You'll see in this in this up here where it says ECO FTE 12.

That's for that. And it's very similar to adding one one for each shift plus a quality control individual. And uh back when we started doing the CAM, these numbers were recommended but they were never filled.

And CAM go your acronym for everybody.

Sorry, Chief

Carrie Morrisville or Kerry Apex and Morrisville. So when you add those to a list of 58, let's say that using the 12, is there some offset that we'll see in the budget because that obviously would be paid for because we're expanding services to 911. They also had increased population too, right? Don't they help pay for 911? the current model that we have under the I the uh interlocal agreement I'm trying to Susan I'm trying u the uh uh is based upon costs for service and how many we process uh we just had a meeting uh of that group this past week and uh we all agreed that we will revisit the ILA to see if we can find something a little more realistic that also talks about improvements under under the capital improvement project such as, you know, do they participate in our backup 911 center which is also in this budget as well.

Okay.

I'm drawing a blank on another acronym for under department. What's TMO?

Town manager's office.

Sorry.

Of course it is.

Um, and Lori to your question, aside from the question about the emergency communication officers, looking at the rest of this list, those are their town their town employees with no other source of budget. No, no other sources of revenue

because do we are there any other shared services that we have that have

our transit fund has grant funded positions

which none have been

but they wouldn't show up in this

they wouldn't show up well they're already funded so they they are not asking for addition

yeah if there was a request they would show up this is the requested this list

right but if they were funded by that outside organization and they were requested, they would still show up in this, but you would have some

offsetting.

Yes, we we show it and then we indicate that there's an offsetting revenue.

Okay. Thanks.

Uh our utilities positions if they were requesting uh Kerry Apex or Western Wake, those would also be funded partially by

reimbursements from those from

So these are all Kerry funded positions.

Yeah. One one of one of the things that council does in the ordinance is authorize a certain number of positions. And so even if it's funded by someone else, we need to authorize it in the ordinance. So that's what we're sharing here. Positions in excess of that number that you would be authorizing new in the upcoming year. Oh,

okay. So authorization and funding are two different activities.

Yes. Yes.

Correct.

In the budget ordinance. Yes.

Which might be why you

That's why I was

Some would want to have authorized positions and figure out the funding later.

This is my favorite part. Okay, I found one. Liam, you're back in the favorites again. All right, I'm going to go to the next slide. And we've talked about this one unless there are other questions there. So, we're going to roll on. Um, okay. Again, early preview written all over this. Um, this is by dollar amount. Um, what we pulled from our system showing the 20 largest by dollar amount budget requests that were submitted for 2027. Now, what what uh sticks out to me, and we'll see if Liam has a different opinion, um when I look at this is so much of this is fixed and beyond any department's control. That's what sticks out to me. So, when I look at bond principal due, that's just like the principal due on your home mortgage. That's our debt repayment. When you see two lines down from that where it says bond interest due, that's just like your house payment. That's the interest that you're paying, right? That's also due. um leased equipment that is again a contractual engagement that we have for laptops and other such things that we use in ID world that's kind of a required payment um installment purchase principle due for the debt that we've

taken out recently to fund vehicles that's the debt repayment um

I like medians though as a uh kind of ties to a service standard

yeah where did you find it's down there I've just missed it

yep general turf contract yep um you know we we're paying gas, our own gas and electric utilities, right, to heat and run the buildings. We've got here our own uh vehicle replacement funding. So, this is a tough list when you look at it because it is the top 20 expenses, but so much of it is set or fixed.

Uh this also just excludes any personnel requests. So, if we included our department personnel requests, police salaries, fire salaries would be right to the side to make it operational expenses we remove

and this isn't the delta difference of new

this is just total total amount I'm just saying right we we have some of these expenses right now this year's budget

yeah and so we will bring more information like this to you in the preview packets but again this is very very early in exactly the way it was requested

I was um I just want to understand a little bit so when we say this does not include personnel um numbers right it's not about headcount or anything.

Correct.

Let's take an example of operating transfer to support transit fund.

Would you mind explaining that to me a little bit? Like what exactly are we funding there for 3 million?

So the transit fund receives funding from outside sources like the federal transit authority and other outside funding agencies, but it is typically not enough to fully cover the cost of the service that our transit group provides. And so that means that portion of that cost that Carrie must cover and that is covered by a transfer from the general fund to the transit fund. So that's the technical answer of what that represents. I don't know Kelly's here but I don't know that she can break down is it a specific service? I don't know that we have it down to that level of detail. Go ahead.

Um and Kelly I'll leave it in case you have additional input.

Um sure. So there is a little bit more information. We are obligated also through our participation with Wake Transit to maintain a certain base level of local funding. Um, and so that goes up by about 2 and a half% each year. And then there are certain things that don't receive outside funding. So, for example, the downtown loop was started about a year and a half ago. that is not yet eligible for federal funding and it does not re receive Wake Transit funding and so that is 100% supported by town funding. Um and then the doortodoor service also sees quite a bit more town funding versus federal and wake transit um because of the premium level of service that we provide.

Thank you. Are those all the biggest um contracts we have? Like does that include Salesforce, Vox, like all of the services, software services?

Are those on there too or

not included?

Yeah, I don't know that those are captured in this list looking at the list.

So they're probably just Yeah, they're further down. We just cut it at 20.

Things like Microsoft licenses, Salesforce Box are going to be below that 2 million.

Okay. Because the CRM

Yeah.

Uh customer relation management platform.

Yeah. See that one of

the higher ones.

I know. That's what I'm looking. I'm like, is it on? Oh, yeah. Customer relationship management platform. Yeah, right there. It is right there.

Sorry. Yeah,

right here. Customer relationship plat platform. That is

that's Salesforce.

Yeah, that's Salesforce

which are a annual. So, they do amount to a lot over time.

Yeah. So, um, I'll ask Mayor, sorry to put you on the spot, but have you guys ever seen this kind of list before?

I don't recall seeing it before

at this level of detail. This is good detail. I love it, you know, but um, this has become my favorite part of the presentation. I I think what you've seen

is um probably at a quarterly when we either either in previews that you the way we we talked about you used to receive it or if the manager was presenting the budget

whatever had been whittleled down to that point you would have seen that in some way. So I think it's probably better to say it's the earliest you've ever seen

um all the requests. So, uh, the Wake County property tax collection fee that is, uh, for the tax or the collection, what does that mean?

Yes. So, Wake County collects our property tax revenue for us. So, when you get your tax bill and you're paying your town of Kerry taxes, you're also paying your Wake County taxes at the same time. The county collects that funding for us and then distributes our portion

and there is a fee for that. And that amount represents the fee that they charge us. It's based off of a percentage. I honestly don't recall what the exact percentage is right now. Um, but it did increase I believe last year.

Um, and so that's what that charge is.

Okay. So, the way county collect all the property tax and when we need our carry property tax, they need we need to pay the county.

They they distribute our our revenue to us, but they charge us a fee for them collecting it on our behalf.

Got it.

Is it kind of like a credit card charge fee or they like service charge? Pretty much sounds like

pretty much pretty much

it seems like a lot.

Do we have an option?

It did increase about was it a year ago, two years ago?

It's it's increased a couple of times. Um part of it pays for the assessment process, the revaluation which has got and if they're doing it more often, it gets more expensive. And then also they have a lot of court cases over what those assessments are and if people have to pay their bills and those can get expensive. Um we could collect it ourselves which would mean people would get two bills and we would be responsible for a lot of those costs.

So, it has it has it is typically more cost-effective to let them to allow them to perform that service for us and pay them for it than it would be for us to perform the service on our own.

All right, questions on that one? Otherwise, I think we've reached the end of my portion, which is kind of the preview portion. We will very much be talking uh more uh and so at this point, we've got doing a time check. It looks like we have time to start working a little bit doing some of the model work together if you'd like to do that.

So, I'm gonna toss that over to Liam to lead your swan song, my friend.

Thank you, Stacey.

Um, so we've updated the budget model exercise. It should look familiar to all of you from previous meetings and carry 101 sessions. Um, we have added an additional two years from what we were showing last year. So, last year it was a three-year model. This year we're showing five years to get a a longer term financial picture. And just to very quickly go through it, at the top you'll see our total revenue and then the change from the prior year. Then we get to total expenses that change from the prior year. And then you have this net income loss, right? That's total revenue minus total expenditures including some of the capital expenditures in the bottom half of the spreadsheet. Then you have what our starting fund balance is. We pulled that from the 2025 audit. Um, and so for 2027, we're just assuming it is that starting level that it was at in the 2025 audit. Ending fund balance is that net income loss plus your starting fund balance. We have what our fund balance percentage is, which is um our ending fund balance over that total expenses. The fund balance target is 33% of the total expenses. And then you have the gap or the surplus from where our fund balance is versus what our target is. And then you have our property tax rate. You can note here it's 34 cents at this over the life of the model over in this base scenario. And then the yearly increase or decrease. You have the sanitation fee $26 over the life of the model. Sales tax growth right now at 0%. Um critical capital maintenance. We've talked about that before, but it's things like CAD replacement and maintaining our facilities and our roads and our um all of our critical capital infrastructure. Then you have capital

programming which will be in addition to that maintenance doing other capital projects like sidewalks or road expansions. Um then you have our personnel services percentage. This is the percentage of what our personnel that we're funding. So if it goes up we're funding more personnel. If it goes down we're funding less personnel. The actual dollar value behind that. And then the same for operations. And then at the end I guess then we have debt which would be the potential debt we could issue in that year. And then at the bottom it's just a miscellaneous increase decrease if we have something that doesn't fit in a row above it. So talking about this model I mentioned the lights are really messing with me. Um everything right now is at kind of 0% growth right sales tax isn't growing but also we're not assuming that personal services or operations and maintenance are growing. That's obviously not a real scenario but it's a great place to start because I'm going to walk you through all of the assumptions that we're making for the model. So, our first one would be 105% personnel in FY27. What I'm assuming there is if we did a 5% merit increase for staff, it would be 105% of personnel and that would be about an $ 8.6 million yearly cost. And you can see that the model doesn't look that bad with a 5% merit increase and no other changes, right? We're just a little negative net income in FY27 and then it's affordable for the rest of the years. But that's highlights why you want to do multi-year planning, a decision that can look good in FY27, let's do 5% merit. If you say we're going to do the same merit over the entire life of the model, the financial picture starts to get a lot worse, right? And let me just preface, numbers are going to get really red and that's because we're bringing you into the budget process kind of early, right? We're making the decisions together. And the fun of budgeting is you get to see a lot of really red numbers and then kind of fix them and go through scenarios. So, it's really a benefit. It's going to be really fun. Um, but you can see that the merit by year 2031, right, the annual cost is up to 10.4 million because every time you add 5%, the next

5% is a little higher. Um, and here you can see that we now have a negative net income in 2031 of $31 million and our fund balance has dropped to $27 million at the end of the period, which is below policy. We're going to do the same with operations and maintenance where we're assuming 3% for inflation every year. That could be 2%, that could be 4%, right? But for the sake of simplicity, we're going to say inflation is increasing the cost of our operations and maintenance by 3% every year. First year of the model, that's about $2.8 million. Last year of the model, about $3.2 million. Um, and these are cumulative effects, right? So that 2.8 is 2.8 every year. And then that 2.9 is continues as well. Looking back at our net income and fund balance, at the end of the model, we've gone negative on our projected fund balance and our um first year net income is negative $3.5 million. Our final year net income is negative $50 million. Next, we have debt issuance. I've assumed a hundred mi a hund00 million in debt issuance in 27. Council might recall that in fall of this year, you issued $50 million of bans. Those bands in either 27 or 28 are going to need to be replaced with actual geo debt. And so that will be at least $50 million of issuance. The additional 50 million was authorized in 2019 and um has not been allocated to projects yet, but could be allocated to projects in this budget year. And so we're assuming that you will make that choice and issue, but that 100 million could be as low as 50 and it could probably be pushed out to 2028. And we'll talk about making that choice at our March work sessions when we start talking about capital projects.

Um the actual impact of $10 million in or $und00 million in additional bond issuance is about $10 million a year in debt service. That's kind of a

good um

which is about two cents on the tax rate.

It's a little under two cents on the tax rate. Yeah.

Currently, what's one cent on the tax

rate?

I believe it's $5.2 million.

It's still 52. I thought it was 58. I just wanted to double check.

We can double check it for you. But last time I looked at it, I saw 52.

Yeah.

Um, then I went ahead and populated 10 million in critical capital maintenance and 10 million in capital programming for the life of the model. This is the general fund support for our capital plan, right? So transfers from the general fund to our capital projects funds. There are other funding sources in the capital plan like vehicle license fees, pal bill funding, payment in loo that would go towards those sources, but they're heavily restricted. So, this would be for the um projects that don't have access to those restrictions or need funding and access to those restricted funding sources.

Why do you use the word programming? What's that meaning in this use?

Yeah. So it's the difference is um critical capital maintenance is like public works has done a lot of really good work in the last two years with asset management and figuring out what we need to replace in all of our assets. And so we have I think it's about $4 million in recommended maintenance for parks, fire, and general government. There's something over $3 million for CAD kind of requested that could be in that area and then some storm water that um maintenance that could get us up to that 10 million. And in my experience, it has been about $10 million of really needed capital maintenance over the time. Capital programming would be additional capital programming on top of those maintenance new.

Yeah, it would be new, but it could also be things like funding for housing, funding for the environment, as well as funding for additional sidewalks and additional road.

And while he's given examples, I might just keep saying this is a hypothetical at this point in time.

I just want to understand what the thing is.

Yeah, good questions. We should probably change the thing to match what your um

capital enhancements.

What? No. What your priority vote was basically, right?

Yeah. New capital improvements.

Okay. New

Okay.

Um I think capital programming also

talks to the fact that a lot of our housing um initiatives are funded out of capital and those need general fund dollars as well.

That's good to know. Does that in Does what you're showing include the 50 new requested people?

It does not.

Yes.

So, this is at no new FTE.

It's based off of the 2026 budget.

Okay.

Um budgeted numbers. Those 59 um positions very very preliminary. Estimates for what they would cost would be about $10 million a year.

Okay. Is there a place you would put them if you

uh what I would probably do is increase that personnel services percentage to 110 or 112% to do that or in miscellaneous increase decrease you could just put a $10 million

cost on the bottom there.

I see. Okay.

Um 1328 funded positions. So 1% of that would be about 13 positions. So if you wanted to add 13 positions, it would be 1% of our personnel cost. I see

we're out of adding things that make the financial picture look worse. So, we're going to add sales tax in here. To be conservative, I've assumed 3% in 2027 and then 2% in the remaining years. At five or 6% right now, that's a pretty safe assumption, but as we get further into the budget process, the numbers will solidify a little bit more. Sanitation fee. Um, again, as the budget process continues, calculating that reimbursement rate will become clearer. But right now, I've assumed that it can increase by $1 a year to keep up with inflation. So that's $30 a month at the end of the period. And you can see the financial position is still quite negative. Um I think that's negative $31.8 million in the first year, 67 in the last year, and fund balance goes below policy in FY27 and would go negative in FY28. So the first way that you could address

this is solely through property taxes and that would be a 6-centent increase in FY27 followed by two cent increases every year after that. Um so that would be 40 cents in FY27 and third uh 48 in 31. Um

in this in this hypothetical

is a hypothetical just to let you know if you so only wanted to use property taxes to close the gap that we've identified that would be what you would. Um, and you can see we're almost positive on net income for FY27 and pretty healthfully positive for the remainder of the period. Again, we want negative. We want net income to be positive because as we're adding to expenditures, we need to be adding fund balance to meet our fund balance policy. And you can see here um the lowest that we would get would be 3399 in 2028. Another solution is to say that we don't want to raise taxes at all. And then you could direct the interim town manager to find $32 million in reductions from this model somewhere. And these are recurring reductions. So you need to find an additional 8 in 28, an additional 9 in 29. So that would be 32 and 27, 40 and 28, 49 in 29, etc. um that also seems a little unrealistic, but we wanted to show you what the the dollar values of reducing the budget would be. And then a middle ground could be a two cent rate smoothing approach for every year of the model, right? going up to 36 and 27, 38 and 28, and then identifying in the FY27 budget $20 million of permanent reductions to make, but then for the life of the model after that, you would be needing to make additional reductions unless you decided to add additional services or expand in some way.

In a rate smoothing approach like this, can we adopt a budget that's not balanced and shows a net loss for the year? So you'd have to

uh we so we we could adopt a budget like this because we're transferring to

capital that net loss of 1.2 million, right? So it's an appropriation from fund balance for capital at this level.

Got it.

Um but in general, we want to keep it a positive

and then we'd have but we'd still have to find that 20 million and remove it. Why um can't why isn't then that 1.2 2 million that we'd move into the from the fund balance. Why why can't we make that number bigger?

Um so it could be there's a little wiggle room, right? If you look at the fund balance percentage, we're only dropping to 3538 in FY28. So there's about $7 million. Additionally, the $20 million just stabilizes the model for the entirety of the period. It could

for the whole fiveyear period. Yeah.

So if we monkey with that number, those we get red in the other year.

We could probably do 14 and 27 and then an additional six in 28 next year.

But no matter what over the life it's going to have to be 20.

We don't want to create a budget scenario where we've got to find more money to cut from a future budget when we have no idea what's going to happen. Right. That's just that doesn't happen. That sounds very difficult to do.

That does not sound fiscally responsible.

No, we we're going to have a we're going to have a yard sale.

It's now timely.

You've moved to timely.

Make sure I understand.

In 2029, I think there's another property reevaluation. Yes.

So,

yes. Um, this model assumes that we would go revenue neutral in each of these years. um just because raising property taxes is raising the bill on people even if their assessed value has gone up. So the actual ending rate that people would pay would probably be lower than 44 but the effective rate on the bill that they get today would be 44 cents.

Are you asking in addition to what's like it says it on the top of the thing?

So in these

it says reval at the top. Did you actually move some of the fund ballot balance surplus

revenue number

to another location? Right. Where you have let's say we

Yes. Fund balance surplus a lever.

Yeah. Is that a lever?

At least once.

You you could use it once, right? So you could say let's get rid of 10 million in capital programming in 2027,

right?

And just use fund balance for that instead. What you would do is go right at your policy and if anything went wrong in FY27, like sales tax didn't grow by 3%, you would be at risk of going under your policy. So when Kim showed the fund balance percentage slide of what's a healthy fund balance, it wasn't at 33%, it was between 33% and about 45%. Because you kind of want to be in a range to make sure that you're not right at the line because then if anything goes wrong, you

Sorry. What I meant was could it be a lever, you know, us making against so many assumptions, making an assumption that we would likely reduce the fund balance target for 2028, let's say, not I don't want to mess with 2027, that would be too hard, but for 2028, could I move could I use that as a lever and move some say we drop it from 33 and third to 25, could I then move um some of that surplus into, you know, some other program

that that is an assumption that you could make and the model last year I think was built that way. Part of Kim's presentation is to explain that it is such a complicated lever to pull and it's also a lever that might take longer than six months to pull right making having all the

fun move to 2028.

Yeah. So that is something that you can make for 2028 or out years and staff will be happy to help you model that and and work in a model to get

Can I add one thing to that too as you're in your thinking of fund balance and how it relates to this the way the

policy can be written is that even in those years that you have excess you can transfer that excess say to capital which would indirectly come back to this and you won't have to allocate as much capital in the general fund. So that's just something to think about. Okay. Okay.

So, Lori, what you said, if I understood this correctly and maybe

between both of you, uh what you said is that in 2027, it's probably too soon to make too many drastic adjustment, drastic changes

but for the fund balance. But for 2028, if we can achieve that transfer some money, we can limit the overall impact on the tax increase.

Yeah. Or

which is target. Yeah. also or target. If you look back at the values prioritization, capital came up as one of the high ones. So that money could be used for a capital project and have uh less of a requirement to take out more debt.

You're right. Yes.

And allow us to rate smooth too.

And allow us to rate smooth. And

that's this seeing this perspective is helpful because I'm very keen to see us rate smooth and not have

jumps. and be able to create sense in one go is like too much of a shock for people and I I don't think it's fair.

Yeah. Then it takes away the pillar of affordability.

Yeah.

Right.

Great reference to our priorities. Um I think the thing that

the best practice that you want to avoid is spending fund balance on recurring expenses. So limiting it to those one-time capital transfers is really important so you don't take a make a structural imbalance that takes more pain to fix in the future

or or leveraging it to enable rate smoothing without the pain for citizens, right? that if you're using that fund balance um that allows you to basically spread the um the rate smoothing rather

than giving a requirement of six cents for one year that that would be an investment that would be worth it.

Does this in what level of increased personnel does this include?

Um so this includes no new positions

and only merit.

So this is

Yes.

Yeah. I mean, this is still bare bones because this is not any of those new FTEEs. And as if I'm understanding this correctly, that capital programming is $10 million. And that would mean that's not even one new firehouse. Correct. Yes.

So, I mean, the chief told us yesterday what the next firehouse is going to be. 15 to 16.

13 to 15.

A lot.

Along with

if we do it soon. God only knows if we wait. That's what it keeps happening. You also have some again a discussion about your debt issuance amount and your flexibility of what you want to spend 2019 bond debt on.

Yeah.

Yeah. That fire station would be 15 million in capital transfer. It could also be

um 15 million in debt issuance which would be about $1.5 million a year in additional expenditures.

Oh, right. So that $100 million debt issuance amount, is that what you're talking?

Yes. You're only 50 though. 50 has been obligated and will need to be authorized. Um,

okay.

That's our minimum is what you're saying. We have to do at least 50.

Yeah. Based on your actions in the fall,

and we have 50 million remaining that's been approved by voters in the bond referendum. Correct.

That we could choose to use.

Yes.

That was a 2019 bond referendum.

And that's I'm not going to give you exact numbers, but it's

Yeah.

Um, probably 60% transportation, 40% parks. But I think it was uh we have three more years. Last year, didn't we push the

You applied for an extension.

Yes.

You have seven years after the authorization by voters to um issue the funding and then you got a three-year extension. So 2029 is the deadline for that,

which is why it's a this year discussion

because we would have to get those projects started.

Okay. So at the 100 million that you have on the debt issuance amount, should that be 50 or I'm trying to understand

by the end of the budget process, we will know if it should be 50 or 100. At this point, we are assuming 100 because we have 100 in authorization.

Gotcha. Okay.

But to Liam's point earlier, I think uh to Britney's question about installment purchase debt, there are other ways you could fund capital projects. And Liam's point about that uh fire station is you could use installment purchase debt to do that. just know that you're adding say a million and a half a year to debt, right? So, we have to be able to make sure that we can afford that debt repayment which you know can be managed. So, it's just important to think about that capital piece holistically. There is a reliance on the general fund, but there are other avenues that don't involve that are debt avenues that don't always involve voter approval that can also be utilized.

Can you do Sorry, it that 100 million now I'm kind of fixated. When you change that, does it it affects everything? So, could you do 50 million and 50 million? So, you could

um

you you could issue 50 million and then 50 million in the next year. The cost of issuance for bonds and the amount of staff time that it takes to go out and sell these bonds is so high that we would not want to do 50 and 50. I'm looking for Kim does not have the staff level to do 50 and 50. It would need to be 100.

She has contractors, remember? contractors.

Okay. Just trying to understand where things

and and you you go to the LGC and you go to the bond rating agencies. It's a very long and involved process to

ask people to give you hundred million

especially with our amount of time to finish spending it as well.

That that's the key right there is three years sounds like a long period of time but it is not for construction of a road for instance or sidewalk. So, three years if you allocate these in the 27 budget um is about the minimum amount of

time you need to get through and close those projects down.

Makes sense.

Good to know.

Um I was going to ask Liam to bring up one thing. For the past several years, you've had this midyear appropriation pot. Um this year it was a million. It's not really in there, but just wanted to bring that up that, you know, if you want mid-year appropriations, obviously you could add it to miscellaneous increase, but this this did technically not include that.

Um, but you you've had that several years and we've used it more recently and that'll just be something we talk about as well

um from the past discussion of having this rolling budget concept or pot of money that you can do things or make adjustments throughout the year if you wish. conversation for later but um no one's asked.

So Russ um I would suggest something here at least for myself I think it'll be very useful and helpful. This is the first time we're looking at the information that's being presented and it's super helpful. I know we saw this last year but then

the rest of the information I think was very helpful to build to the point where we are right now. Maybe we can have like a deeper dive where you know Lori has been suggesting this from the day we got elected. Um deeper uh deeper review of this um information with a staff member and kind of understand from their perspective as well on what do they think on how you know the numbers are right now and what you know what the projections need to be. So getting two or three views, different views, I think probably will help me at least.

And Liam, do you have the schedule?

It's it's way back. I can go all the way. Um

but just to highlight the amount of time that we still have um to to do those types of

Yeah, I think I'll appreciate it. Thank you. Um, I also just want to highlight from a staff perspective, seeing a $20 million gap at the beginning of the

process is not abnormal and it is something that is not easy to close, but it is something that we have closed before and that local governments across North Carolina close every year. Um, so a lot of tough discussions, a lot of work to be done, but it is not insurmountable or hopeless.

Well, that's a $20 million gap without any of the stuff in there. So we know that's a much much much bigger gap.

Can can you explain to me Michelle and I were trying to understand the reval year and how that impacts particularly the total revenue. I see the the we see the reval year noted at the top but it doesn't appear to be substantively changing the number in the total revenue bucket. So the the assumption that we've made is that the town would go revenue neutral in both of those years and then

on top of that revenue neutral rate add an additional two cents

here or whatever the changes.

So it's like a a flat percentage of increase in value for each reval. Not another big jump or anything like that, but a sort of a modest or conservative estimate of what the

home property and commercial property values would increase by. No, no. He's actually saying that just imagine there what even though it is a revalu just imagine you're paying the se same percentage right revenue neutral which means that even though right you're going to basically pay the same amount every year even though your house is valued more.

So that

your tax that two cents two cents two cents is above revenue neutral not above our current tax rate.

Yes.

Correct.

Yes. Correct.

So Liam, one way to talk about it is if we look at 2028, that tax rate is 38 cents, right? Okay.

And then the reval happens in 29 and you see that 40.

So the base assumption that I hear everyone discussing is the fact that it's a revenue neutral plus additional

two cents

to get you right. Additional two cents to get you to 40.

But the tax rate could go down. I don't

know if anyone's saying that because the property values go up.

The rate may not actually be 40. Correct. But it would have been a two.

But so Stacy

potentially this

Stacy can the revenue neutral be

Sorry,

I don't see you. Sorry. No, no, you're fine. So revenue neutral could be um could be more than two cents. So the overall probably

Yeah. What we're assuming here is let's say that there was 30%ist growth in the value of your property. we would have dropped the rate by 30%. So that your bill would stay the same and then on top of that bill that stayed the same, we've raised the rate by 2 cents.

That's right.

So revenue neutral just means your your bill is the same. Yes. Whether the property value went up or not.

What so it's the ease

on your property.

Even though your the value of your property went up, your bill is still going to end up being the same what you're paying for your taxes.

So in that makes it easier.

Bothered me. average.

On average, some will go up, some will go down.

Sorry. On average. On average.

And this um help me remember. Wake County changed it to every year.

Every other year. And Chadams continues to be four years, but they were eight years. But yeah, four years.

Um both of them I believe will be in 2029.

Okay.

That will be to

No, I think it's aligning

so that for 2029 it will be Wake and Cadam. In 2031, it will just be Wake. In 2033, it will be

unless they change.

Yeah. Unless they change.

Wake has talked about going to

Liam. Liam, am I remembering correctly that we went from a fouryear down to a threeyear, then we're going to go to a two-year. So, in FY2 or in 2027, we'll have the first one.

We'll have a rebound.

20.

Yeah, I think 207 is the rebound.

Every other year,

we have one for you. No. So, first floor,

right?

Mhm.

And then,

how about we we did not have a reval

this year, so for our budget year FY27, we will not have a reval. But it could be for FY28 that we have one.

But we will go back and check and make sure that we're talking about it correctly.

We thought the last one was 24. So, the next one would have been 28 and then they go to two years at 30. So, it's 28. It's

not. It was 24. It impacted the FY25 budget year. Yes.

So when we're talking about budget year versus reval year, it is different.

So we're saying the same thing. The revals happen in 28.

Yes.

Right. So just it's scheduled for 27 but it's effective 28 and then after that it's every two years. So, it's really

going to be done in January, just looking it up, January 2027 and then after that it's every two years starting in 2021.

We'll make sure the reval year is accurate as we actually start talking about previews.

We can put a star next to it.

Um,

no problem.

No.

So, um, just one more. You can you can be done with this yet. So 50,000 the uh

50 million

million the debt issuance amount that's remaining and on top of this two cents

um for each 50 million that you issue assume about one penny. So with the bans from this fall that will be about one penny. If you decide to do 50 million more in projects and issue that debt, it would then be two pennies.

So it's four p four

that 100 million is in this scenario.

Oh, it is already.

So this two cents essentially pays for the debt issuance.

Okay.

With a $20 million

with a 20 Yeah. Yes.

And

with all of the assumptions listed before you.

Yes.

What do you mean by 20 million?

Sorry. The very last line of miscellaneous decrease. Huh?

You have to find 20 million in order to make

this. This was the uh rate smoothing hypothetic if you will.

We can go back to this other one.

Yes.

Turkey is going to write a check.

All hypotheticals at this point in time.

Very pre prelooks over and over.

Yes. We should stamp hypothetical on this chart when it gets taken off the voice recording video somehow.

How about our hypothetical and average? and a new development coming in and so will that affect like how much will that affect our um property tax revenue as we have

the total revenue is increasing

I mean the uh like the current

we're assuming about 1% growth in property tax revenue across the life of the model

um

that is kind of suspect right now in Wake County there's a lot going on with affordable housing and nonprofit status that

is decreasing RSS value growth especially in Raleigh but it could come over to Kerry. Um and I think the latest things I saw from Wake County was FY27 growth is assumed at oh sorry the growth for FY26 actually ended up being about 6%. So we're under that 1% threshold. So growth is even with all of the new development that you're seeing in the town, growth is below a percent and we're not expecting it to

change substantially over the life of this model.

Still in the system where growth isn't helping

pay more. Back to the growth subsidy kind of term that we've used in the past.

Yeah, growth subsidy error is over. That gets to something I've been thinking a lot about and talked a little bit about in my small group yesterday when we were doing our values priorities is uh you know if we go back to the ven

diagram density is you know one of those uh uh levers right to offset the other two but am I hearing you correctly that I mean density or growth is no longer offsetting those expenses, you know. So, I'm wondering how does that change that ven diagram? How do we think about the evolution of a town? Um, and what tools are at their disposal if density and growth is no longer one of those those, you know, it can no longer offset the other two. you know, we're looking at services and tax rate,

right? I I guess your point is right, we haven't added a a monetary value. How much density would move the needle? How much property tax, how much growth would equal one penny?

I I would love an analysis of that. I mean, I'm I'm actually curious of our UNCC school of government experience because I mean, municipalities everywhere have to ask this question. you know, in in a life cycle when your influx subsidy uh era ends, what happens next?

And I think it goes back to the timely timeless conversation where uh growth is a timely investment right now, but the timeless value has not always been for density in Kerry. And so with the influx subsidy era being over, we're in some ways paying for the lack of density in previous.

And as other fees have come up or other um ways that you have that can affect revenue, obviously we've seen sales tax flat. The only one that you really ever added in here was sanitation fee. I know you brought up parking

monies if you revenues. Um but we've we've not studied that to a degree that you would know

sponsorships. I mean, we haven't we

previous councils have been against

looking at those types of

talk about sponsorships

or uh naming rights.

Sponsorships, right? I mean that name rights,

you know, parking fees, right? Lots of

they're not going to impact a model in a big way, but you know, they might be.

Well, you know, you know the magic number, right? You need five millionish for a penny. So, naming rights or parking fees or whatever it is, it every 5 million helps you. 5 point something

helps you get there.

As long as it's a recurring 5 million and not a onetime 5 million.

Yes.

And lots of those things will probably need to be be a study kind of as you're mentioning.

This is not my favorite exercise.

Not your favorite presentation, Cararissa. But that I think it's an interesting comment you made because properties and maybe the rest of new council members don't know but properties like Glenn Air retirement communities that are worth you know maybe 150 million pay no property tax. Oh, nope. Not a single dime

or government entities

or government entities or um churches, nonprofits or hospitals that are owned by universities

or right none of those

large entities that you think would generate revenue for the town generate any revenue. So if a retirement community, you know, if Glenn Air expands into even further, although it's great for residents and offers more senior opportunities, it doesn't increase any revenue to the town,

which was also a a bit of a chart that um Heather and Heather and Katie had, but I think it was by land size, which was the civic part of that pie

that's not paying tax,

schools, right? Yeah,

I mean when you think of these great big

opportunities,

all the properties we buy

well to create uh employment centers, right? You think of those places often create an employment center. Glenn Air is an employment center for many people.

It does not generate revenue.

And that's a that's at the state legislative level. That's not something we can change. Just to point that out. But it is what there's a group right now that's studying that at the legislature and they la last week they met and they specifically talked about hospitals and medical facilities and whether the way we are taxing those is fair or if there should be some room there that they should be paying more. So there legislature is at least studying those categories of things that are exempt and looking at possible changes.

I wanted to just provide clarification. Cassie had mentioned three years then two years on the Wake County reval. That is correct. So there is a labeling problem on this. The reval will um be uh effective in the 2028 um fiscal year. Uh but the actual numbers that are not are included in here are not affected at all because the numbers are based on revenue neutral.

That was good.

All right. Any other questions for Liam?

And if they're not, this is Liam is Liam's swan song.

So, I'm leaving you with a smile.

It is Liam, but I'm going to miss.

Do you want us to pres pretend this was our favorite?

I already had a favorite, so

yeah, he he ended up on the last one.

It was a good presentation.

Yes. And thank you, Liam, for everything you've done, especially in the past couple years. Um it's been some trying times with regards to the budget and you've done amazing work and you will be missed and that we invited him back for several uh like the town hall. Um I think

did you take anytime Liam wants to come back?

He can he can be Gail Ecock next year and put you all in a circle.

Yes. When he wants to come down to some warm weather in the winter as well.

Yeah. Um and then Stacy has graciously um you know stepped in to help complete the budget and we looking to hire a position for that and we'll talk more about what budget staff looks like um in the future with some positions that are being requested. Um so thank you Liam and uh before we wrap up for the day, could we take like a fivem minute break? Sure. Sure. Come back and wrap up here. so much.

reconvene at this time.

Yes. I I really wanted Liam to tell you this because this should have been his parting gift for you all. Um but he has left Liam.

He's literally left.

It's just me and Margaret now.

I see. He was literally leaving. uh left this wonderful three- ring binder uh for you all and one for me apparently. Um that will you will start populating the information you get um as we go through budget previews um much like uh we used to do many many years ago. I'm sorry it's so large obviously that's a reflection on how large our budget is and how much information you'll be getting

and how much we didn't before. That's

um so we are going to um if I go to the agenda as you have it, we're going to um bypass the miscellaneous updates and probably bring that back just with some highlevel updates on uh numerous things that are happening uh over the next several months and we'll do that at one of the next two work sessions. Let's just spend a few minutes on some of the goings on. So other than that, we're going to move into final reflections. But one thing that I wanted to do with the help of some friends Kayn is uh I'll grab a mic sorry is at least just go through reflecting on our past and shaping our future. So it looks like most folks uh spent some time on this. I'm not sure if I should mention the mayor.

Start at the beginning.

Okay. Okay. So, we started at 1950 and went through 2050. Um, and just has some things that have happened in Car's uh past.

And speak And speaking of history, just to make a point,

all these years I've been making fun of Jack Smith and now I'm going to be the butt of the joke.

The torch has been passed.

That hurts a lot.

I'm not going to spend a lot of time on this, but thank you, mayor, for at least

getting something in on the 1950 decade. Um unfortunately there's a few of us now that started in Kerry that are the only ones left in the 1990 decade. Uh thank you friends. Um but I do think it was very interesting to see uh what was populated at least up until present and some of the highlights that we've done through the years that I think are amazing work. So, uh, looking forward, um, maybe I'll highlight a few, I guess, cuz things that stood out to me, and I I had this in the video, but Cocoa Booth was one of the projects under construction when I started. Always felt like that was a signature project. We put the streetscape somewhere on here. Um, and then obviously the downtown park, and I kind of always felt like in my 28 years at Kerry that about every seven years, we've done a really cool special project. So somewhere out in the future I hope there's a really cool special project that we are doing or multiple special projects. Um lots of planning obviously spend any time over here and a lot of them are highlighted. All almost all of our planning efforts are on that table over there and if we do anything very well it's obviously planning the community. Uh looking to the future uh two people put on here it looks like multiple Skyliners. So, I'm not sure. Someone turned the second Skyliner into Skyliner maintenance. Uh, because I guess after we build it in 20 more years and 20 more years after that.

What's a Skyliner?

Skyliner, Susan, what's a Skyliner?

It's a gondola system that they have at Disney. It's the

Sky and ours will go from the multimotal center downtown to from Fenton downtown to Fenton and then out to South Hills.

Then we'll do or we could do it the other way and we could go all the way to western carrier because we need some transit out there. So, we might as well put Skyliner going that way. Then we could use

Ding ding ding ding ding.

But this was this was pretty neat to see when people started through the years um and to see projects that people checked that they liked and I'll just read a

couple that people wrote moving forward. It's just a thinking kind of exercise. Um get the brain thinking. We didn't make these type of decisions, but what people would like to see in the future. Uh, digital twin, nurse greenways, finished project mirold, tennis pickle ball expansion. Thanks for whoever said pickle ball.

Oh, whoever said that.

Yeah,

pickle ball.

Whoever that could have been.

The dad.

Another Laurel Street project, more affordable housing. Uh, Trinity Road bridge, which is a DOT project, I believe. And we'll see if it's finished. It should be finished in the decade of the 2030s. Um, expan. I wonder who wrote expansion to the waist to the west plant. Oh, look. Shocker.

Who do you think?

It was It was Jam Jamie. Um, we've got new community center. Uh, Middle Creek infrastructure, a northern gateway, uh, Weston. Let's see. Chapel Hill Road, something we've talked about for a long time, town hall campus, uh, redevelopment, bike way, which might be the Triangle Bike Way, possibly. Yes. Um, so you know, just a lot of things that I think was kind of cool as a backdrop of the retreat. So when we talk about things that you're looking forward to the future, even though we didn't spend a lot of these things, these are the type of issues we're tackling uh to be able to set priorities in the budget and just your priorities for the future. Uh, I think this is just a good backdrop to know where we might be headed as a community. Um, I just I just want to highlight it because everybody did what they were supposed to and come up here and put some information on it. Other than that, um, I'll drop this and return to my

mic drop.

Mic drop

because uh, one thing that I noted from this retreat uh, that I was hoping would be the case and I'll see if you all agree, but it felt like um, maybe you all talked more than staff this year, which was a specific goal of mine. Um, if you didn't talk more, I feel like you talked more than you have in the past because we gave you time uh to give

input to things. Uh, so we'll see if you agree with that or not or how that sat with you. And now I think everyone would really like to hear from you and your reflections. And mayor, if you don't mind, I'd really love to start with our two newest council members to see what they thought of their first retreat.

And I could just say ditto.

Yes. Y'all choose who wants to start.

So cute. cuz it's hard to start.

Yeah. For the future, I were thinking um uh the skyline will be super cool and

I love that. Susan, you got to vote for it.

Well, in that front, anything that your takeaway was from this weekend

uh broadly um or any input you have? Uh that's the deeper understanding of our staff the low ratio or uh percentage of the staff to city residents. Uh this really made me feel it's a deep understanding why we need to hire more and the new request 58 59 and unfunded uh put it in the in the in the budget. It's really a hard practice because we really want to hire more staff and shows that budget is really uh tight but planning for the future that's the stab stability of our community of our town is I think is the timeless um compared to timeless to timely is really you need to always think about timeless but timeless annually budget we have to think differently maybe next year we need more capital uh investment uh capital investment, right? Um but in the next few years, maybe we we can spend less on capital but more on maintenance. And how to understand the

saving money instead of spending because sometimes you spending you spend on maintenance that means you are saving in the long term. Um and also transportation uh the budget for the transportation I also understand for everybody wants us sidewalk and want to improve our road situation but that's some of them are our responsibility but some are the DO's responsibility. I wish sometime I I had um uh listened to the R um RD use CEO's presentation the other year. He said maybe in five years we'll have the like drone drones you can just fly from your house to someone else anywhere you want to go and it's small it's smaller you don't have to drive anymore so you will see traffic maybe in the air not on the road. Yeah. So um it's really uh a fun very fun uh retreat this year and better understanding each other know each other and you're introvert or extrovert and the future work models is really um I feel is I remember that a lot. I still remember who is introvert who is extrovert and communication styles. Um I think this is just the beginning of the this year's budget but I feel we need more communication discussion and also with the staff and involve more our residents to discuss um to make uh a decision decision better for next year next 30 years. Britney I thought this was fantastic. Uh, I told Lisa this morning that I think it is a common pitfall of these kinds of meetings that they take up a lot of time

and then don't accomplish very much. Uh, but I thought this was so productive. I thought this was so substantive. You know, I walked in. What I really wanted to achieve was the first real opportunity for me to express some of my thinking and some of my values to everyone in this room and then to hear the same from my colleagues. And so I absolutely got that. I feel like this has done exactly what it needed to do, which was set the stage for all the deliberations that are to come particularly for the budget over the next six months. Um, and then again, just to extend a thank you to all of the staff in the room. Uh, something that I said when I recorded uh uh for the DNA video that didn't make the cut in our lovely video, there was way too much material there, Susan. So, I know a lot is sitting on the cutting room floor. There's actually there are actually five videos that were created from all of that. You've seen one.

Okay.

So, we'll make the other links available to you so you can see the the guts of it.

Well, one of the things I shared was all of you who have chosen to work in the public sector and have foregone some tangible compensation that I'm sure all of you could make if you were in equivalent jobs in the private sector. You must be here in this room because of some intangible commitment you have to this work and to Carrie. And it's proven to me that you are here all day on your Saturday. So many of you are with us late into the hours recently for uh council meetings or 11 p.m. when we go into close session. And so I am just so grateful for the tremendous work you do every day, but the work you did to accomplish this weekend. I thought it was fantastic.

Oh, me. Now you can pick everyone else by seniority.

Years in service.

Michelle, do you want to go or do you want me to go?

Oh, I think Are you saying mayor's going next?

You want me to go?

I like I like how you what you what Lorie said. We keep going.

Absolutely.

Okay.

I'll bring us home.

Okay. He just wants to say ditto.

Yeah. Yeah. That's like Let's go. Um I think this was a total game changer for me this particular session. I felt like I'm I will leave today with a lot more knowledge, lot more understanding and also probably um because this is my third retreat, it gives me a little bit more information and leverage. But then the information that was presented was very good and I think I have learned a lot and I understand your challenges better. Um at this point um I also want you to know that you know past um few months have been very difficult. Some of you were in the room with us in close sessions and you know when we were going through since November and have seen everything firsthand um everything that we have all gone through together. We have seen we have held each other firmly. You see how different we are but in that um room when we were making these decisions since November we were all holding each other very tight. There were tears there were sadness but at the end of the day we all wanted same thing. What is best for town of Kerry and what is in the best interest of our staff? what is in the best interest of all of us and I think at that point you know we all stayed united in our decisions and I will just say that without sharing too much information to each one of you please know that there's a lot of information that we cannot be we cannot share we cannot come

to each one of you directly we cannot I wish we could and there would be probably a day when we can do that but Today I would just say trust us a little bit. Let's hold each other together. Some of the information you might see on public platform will give you a very different picture. But please trust us because we have taken a very very hard decision and if we do not stay united, if we do not support the leadership, if we do not empower the staff, if we do not listen to residents, if we do not do make decisions collectively, we are going to fall apart and we all need each other emotionally and you know just be there with each other. We're going to get mad at each other. There will be moments we're going to be very, very mad at each other. And it is okay. These are the moments that we're going through. We Kerry is strong. Carrie is resilient. And we will make it to the other side stronger. Our commitment as a council has not shaken. Our commitment to the staff is same. Your work is what is helping us get through when mayor has taken such a strong position on some of the things. He's spending so much more time in every meeting. We appreciate you. Thank you.

I know that there were mistakes that were made by everyone, by me, by everyone, but it is okay and we will get through this. And mayor, you are really, you know, who's taking this forward for all of us and we are proud of everything that you're doing and we support you right now because I feel like the work that you're doing is so much necessary to move us forward.

Thank you.

So you have all our support.

Appreciate it. Overall, I I just feel like I have such a better understanding of perspective and other council members priorities. I really enjoyed when Gail was here, that little conversation that we had and especially the better understanding of personnel needs and the value discussion. I mean that's kind of where the the you know the foundation is and that we build from there. So that's really helpful. This is I guess probably the first retreat where I didn't I won't be leaving feeling completely overwhelmed as you said. This is probably because it's the third one. Um but I think a lot of it is the right materials, the right amount of materials, the amount to be able to absorb. Again, part of that is because of the I think the longer I'm on council, the more giving that additional time purposefully for for us to be able to to talk and and have that time was was really helpful. I am 100% happy to do the work and I'm so grateful for the opportunity that we have during the breaks to get to know staff better. I I've been coming in kind of not too early and I really need that quiet breakfast time. But at lunches, just little conversations in the hall. I've tried to get around to most everybody and I think I've missed a few. But I've been trying to sit at different tables for lunches and things like that. But if we

we see with our values, the our discussions and what we did today that we we do value our staff. And I think having that opportunity to do that and to sit and chat is not that we just value all that we can get out of you like work work, but we value who you are as people and your and your commitment to Carrie.

Is that everything? That's a long list you got in front of you.

These are my notes from earlier. Just a small one here.

Just saying. I'm a I'm a I'm a Barinsky, so I wanted to make sure that you were done. Um, this was the best retreat for me by a lot. Like, it's not about preparation or any of that kind of stuff. It's the information and when I was, you know, jotting down notes and that this retreat is just what I needed, exactly what I needed, exactly the right time. um the understanding I've gained um I I I feel like I've got an opportunity to change some of the language or the way I think about things. Critical maintenance budget versus a neglect budget. I hate to use that really negative word, but if we continue the way we are, I do feel like we would be neglectful. And so that's that's really changed the way I'm looking at um that especially in light of that prioritization um because of that exercise, you know, ice cream, you know, votes aside, being able to get an idea of what our current council prioritizes, values the most or um how it compares to the other items that we consider to be potential pillars for all of our work and for staff to work from that really sort of shifted some of the stuff that I, you know, I'll come to you like, oh, I want to do this thing or we should do this. Now I have a better lens to

decide whether or not my ideas maybe going to get a little traction or if I think my colleagues might be, you know, up for it. That's been really, really helpful. the property tax discussions. You know, I think a lot of folks know that I I had um a very particular way to talk about property taxes when I was campaigning for reelection. Um I felt as though I really understood what our future tax rates probably had to be to be able to do what we need to do. this simultaneously shifted how I'm going to look at some of those particularly the you know what buckets need the most investment but also really it's it the rate smoothing approach for example is now I I'm even more committed to that being something we should absolutely explore and see um if we can execute on that well because you know looking at the the impact that since I've joined council that the property taxes increases have had and understanding the complex pieces of the budget and how we what we are likely to need to do to fund it. Now I I really feel like I have the pieces to really understand what I'm really asking for when I talk about rate smoothing in a way that previously I had, you know, like a high level understanding and I feel like I' I've got a better hyper local understanding of what that really looks like. And I can thank Britney again for giving me some some of that perceived value language. Maybe not when I talk to people, but the way I'm looking at when I get feedback about the budget from from individual people, it's helpful to understand how they're seeing what I'm saying and seeing what we're doing. And for me, language is everything if that's not clear when I, you know, get to talking and talking and talking. Um, and the other thing that the biggest takeaway and why I declared that session my favorite session when we had the panel of staff now I understand the

downstream impacts of the decisions and the priorities we have so much better than I did before and I I I especially how interdependent our departments are that I didn't have the clarity on that that I have now like okay I get it and it's going to really help me not make dumb suggestions. which ultimately with me is a win. If you can just get me not to suggest something that'll just cause a a pileup behind it, you know, like that that's I think half the battle. Um and so so to me, this really was a retreat of clarity like this all I've learned a lot of information over the last four years and it's all jumbled in. It's all jumbled in my head and I try to pull what I need, but now it's sort of like it's brought together like the puzzle pieces are starting to fall into place. And so staff, I want to that that's I really want to thank you. I know everybody's just so stretched thin. And so you to take this time to bring us this information. I'm going to make very good use of it. I listen to every darn word. And so yeah, I can't wait to I just want to get more now. Unfortunately,

you have room to put it in a binder.

And I've got this giant binder to fill

room in that binder.

Now, I don't know.

Going to need a new bag.

Yeah.

For nurturing my knowledge.

Thank you.

Um, well, besides the Lego experience,

that was a good one.

That was a good one. I think out of my 14 years is the best retreat besides that one experience in that one day. I think this is my best my most favorite most um connected most fulfilling um retreat and for a couple of reasons. one is I I

know for many years um the mayor has talked about you know we have a hundred years um of experience and there's value to that absolutely but I want to say now that I think there's just as much value if not more in the refreshing ideas we had the ability to challenge assumptions um that I certainly had um to reconnecting to our values use in a in an exercise rather than on paper. That experience um really was really measurably impactful for me. Um also um I'm continually grateful and impressed with every staff member whether you're here in the seat, whether you um manage other people who are doing great work because all of you are such great leaders. you always say, "Oh, it's not me. It's my team." Now, it's you and your team. It's not. But, um, but I I want to pile on to what Cararissa said because your plates were already full. Your plates were immeasurably full. So, um, I I I don't know how to say thank you without more support. I also have to say I am so impressed with my fellow council members. When I was sitting in that chair, I remember just going back to my hotel room think I'm never going to be able to do this. Um because you guys have all captured and and and thanks to staff as well for being able to present this information, captured concepts that I did not get I know until many years in in the job. And it's so impressive, but it's also so very Carrie, right? I expected you guys to to do that so so well. Um, also I I have to say that sometimes I think I know something and I'm continually or think I

know something I'm continually impressed um and also mortified at how much I didn't know. So the service level discussion was um immensely important. You one of your favorites. Um, but I I I am also surprised at how much I learned even though I thought I had a base of knowledge that was that was pretty good. Um, one other thing that I I I want to share and it didn't happen until like five minutes ago when Russ stood up and said, you know, every seven years we've done something pretty amazing. And I don't know what the whale is. I would love to know Susan whale thing, but to me it was like, I wonder if that's the whale thing. I I've been I've been um lucky enough to have been in knowledgeable or involved or a part of some of those items at the top that I'm immensely proud that we all collectively we and all of our citizens and our residents have done. But what it but looking at that I don't know what our next big thing is. And when you said that, it made me realize I don't know that we have that direction or a vision of what that looks like. And I think that's a really important thing for us as a body to think of because our our residents are wondering what that is, too. They're expecting the very carry way of always moving forward, always delivering something exceptional and excellent. And I don't know if we know what that is yet. And I would love us to work as a team to figure out what that is and and what we can deliver that's

exceptional that keeps Carrie, you know, always striving to be more for our citizens. So that was just like a last five minute thing. I don't know if that was your expectation of that. I it was something that hit me in putting that together and I'm certain if you went back in time there was there was even more.

Yeah. You know,

and I don't know what those are. I mean, I see lots of ideas, but I don't know that any of them except maybe the multimodal center,

right?

That's it.

But it's not a done deal like it's not visioned for all of us.

Might be vision for you.

We're going to bring a vision to you.

So, yeah. So, that's great. Maybe it's the next seven years, but that's kind of what popped up in the last couple the last couple of minutes and and I do want to um thank thank all the council members as well as all of staff because this was very different and it wasn't just different because of what staff did but it was different because of the people in the room and your willingness. It it was a very respectful and engaging and team and united retreat that I don't think I felt before. So I want to thank you all for that. Can I add can I add uh I really feel Briny and I are super lucky to on board this time but at last uh in November wasn't feeling this way but this retreat really make me feel

everything else.

I'm glad feel part of it.

Just turn it around. A

I get it.

Russ, I want to start off by thanking you for starting us off the way you did. I guess thank your wife.

Oh, some of us we feel like we've experienced a lifetime of hate in the last two, three months.

And that's hard. And I went home and played that again, that exact video. It's like, yes,

it's like, and I know a lot of you are hurting out there, too.

And I I feel for you because I hurt. But this retreat I wanted I'm losing my voice. I wanted to learn from my council members especially the first two. And I can tell you out of 23 retreats I have never seen new council members participate as much as you did. And that was extremely valuable because as we move forward as a team, we all like you said hundred years that's great and I could sit back and empower but now I need all of us or we need all of us to be together as a team if we're going to move forward. And to see you participate, it's like awesome. That's great. So you're an amazing group of people and this was to me exhausting because I had to participate so much.

I could sit back and get in my normal position of personal and just watch. We had to talk and we had to discuss and it was so valuable and to set this up the way the staff and Russ set this up to make us go through that exercise. Like I said, one of my goals was to learn my new council and another goal is where are we in the budget where and have the panel up there like I said earlier and when I I or somebody said so are are we not sustainable and all heads nodded. That was powerful for me to see that and going whoa that's where we are and that's what we got to dig ourselves out of. So that was extremely valuable. So thank you for that. And uh thank you for setting this up. It it's a hard time. Uh for the new people, every year I've been on council, it's got more and more

difficult. So it's not going to be easier as we go forward. Uh but you have an incredible team behind you. They are the best of the best and uh believe that and trust in them and work with them and we'll do great things. I I'm totally confident of that. So, thank you for this retreat and thank you for all that you did

leadership either. So, I know it's also difficult for y'all to take two days out of your schedule um and do this. So, uh thank you Senator Adcock for uh speaking to us. I thought that was neat. And when I walked in, she obviously it's um hadn't been to a retreat, you know, since her time on council. So, just a funny moment. Uh, thank you for the guests in the audience and thank you for everyone that was watching online. Uh, thank you to uh, Sergeant Edge Paige and Margaret Moore. Um, Ed was not here when we did the first timers, but they were our two first timers now. Um, so thank you both. Uh, thank you everyone back that was running the town of Kerry Machine that allowed us all to be here quite frankly. Um, that carried on services and such like that. Thank you for Shellyley and Susan and Dana and Scott and Britney has left and Carrie specifically for the support on this um and managing the retreat and then quite frankly the tech team back here couldn't do it without each of you all the presenters if you didn't present you are certainly supporting the presenters um Jenny and Lisa thank you for um you know your support of the town council as well um and I think uh thank thanks for the everyone here at the Marriott that has helped us so many years. We are actually going to take a break for the Marriott um in our meeting in May. Um so we get a little reprieve because we've done a lot of things out here and we'll be back at Herb Young for the next one. So uh thank you for Kerry Citizens for your support of us as well. And that's all I got and

I'll throw it back to you.

Unless there's anything else we are ajourned. I'm using my phone. Thank you.