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For full disclosure, this does not alleviate the cost to our rate payers today. In addition, due to the significant amount of debt we have foreseen needing to issue for the next phase of the WWTP (approximately $55 million), we must still proceed with scheduled rate increases in 2024 in order to cash flow the expected payments (although we are hopeful that the "Commercial Paper Loan" option will impact this to a degree), but this shift in utility rate to property tax is expected to allow us the potential of cutting off the 2026 and possibly even the 2025 rate increases we have planned. This is not a guarantee as much will be learned when we receive bids for the next phase of the WWTP. But what is for certain is freeing up $1.5 million in existing utility revenue will alleviate the cost to rate payers at some point in the upcoming few years. When examining this from a rate payment vs. tax increase, we are going to focus our attention on the residential impact as they are the ones most hard hit by these rates because they have the least ability of adjusting their revenue stream to account for them vs. retail, commercial and industrial. In addition, every property within Paris, whether they are serviced by the utility at this time or not, ultimately benefits by the presence of a fully functioning and operational WWTP. Without a WWTP, this community does not operate, thus property values, quality of life, and business suffers. Therefore, working with our consultants, the estimated savings to a person owning a $100,000.00 home who uses a typical amount of utility service would be approximately $140/year. The estimated increase in taxes due strictly to this change would be approximately $30/year more. This is a net savings of approximately $110/year. Again, that may not be seen immediately, but given this is a long-term project with cost implications that will span for many decades, this change will ultimately help our rate payers in the long run. The ultimate goal for the Water and Sewer Fund is to operate as a stand-alone enterprise where costs are supported by utility rates. However, the WWTP is a unique situation that, in our opinion, warrants assistance from property tax. The presence of a fully operational and functioning WWTP provides a public benefit to all residents, properties, and property owners. In addition, affordability is a critical aspect for our residents. In time, it will be our goal to shift this expense back from property tax to utility rates. 3. Employee Pay and Benefits — The greatest asset the City of Paris has is its Employees. The primary role of local government is to provide those services needed by the community that the private sector cannot provide. The primary reason the private sector does not provide these services is they are labor intensive with little to no profit return. In addition, the tax payers expect the highest of quality from the City services, thereby the expectation is for the employees to be of such a quality that accomplishes the Financial Policy stated above. In FY21/22, the City Council authorized the implementation of a comprehensive change to the City's pay structure. First, the City Council authorized the movement from a 6% / 12% TMRS contribution rate to a 7% / 14% contribution rate, which greatly improves the future retirement outlook for our employees and helps with retention and morale. Second, the City Council approved a pay plan that moved all positions towards comparable pay with that of our peer communities. The City had fallen far behind in keeping up with comparable and market rate pay, issuing only a handful of cost of living adjustments ("COLAs") over the prior 20+ years. This pay study was implemented for non -civil service employees in FY21/22, and across two phases for civil -service employees in FY21/22 and FY22/23. This change also resulted in a comprehensive overhaul of the Fire and Police Department seniority scales, eliminating any overlap between ranks and making a smooth and progressively increasing tiered scale for all the ranks. We are tentatively planning on conducting a new pay study in FY24/25 for the FY25/26 budget. Third, each of the last three budgets, the City has implemented 2% COLAs to help offset our employee's rising cost of living. While this can be seen as a pay raise, it is more appropriately seen as a means to ensure the employee's personal purchasing power is not eroded by market inflation while working for the City. Market inflation — the increase in price you pay for a standard basket of goods — can become a leading reason for why employees seek other employment opportunities of higher pay. Fourth, the City implemented a transition of all Fire personnel from the Paris Firefighters' Relief and Retirement Fund ("pension") to the TMRS in FY22/23. The City "froze" the pension while simultaneously moving all existing and future fire employees over to the TMRS program. To accomplish this, long term debt via a pension bond was issued. This successfully dropped the City's Page 8 of 23