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08-08-2023MINUTES OF THE SPECIAL CITY COUNCIL MEETING OF THE CITY OF PARIS, TEXAS August 8, 2023 The City Council of the City of Paris met for a special session at 5:30 p.m. on Tuesday, August 8, 2023, at the City Council Chamber, 107 E. Kaufman, Paris, Texas. Present: Mayor: Reginald B. Hughes Mayor Pro -Tem: Mihir Pankaj Council Members: Shatara Moore, Gary Savage, Rebecca Norment, Rebecca Norment, and Clayton Pilgrim City Staff: Grayson Path, City Manager; Robert Vine, Assistant City Manager; Stephanie Harris, City Attorney; Janice Ellis, City Clerk; Gene Anderson, Finance Director; Richard Salter, Police Chief, Thomas McMonigle, Fire Chief; Doug Harris, Utilities Director; Clyde Crews, Fire Marshal; Connie Lawman, Library Director; Todd Mittge, City Engineer; Jason Dyess, Assistant EMS Director; Paul Strahan, Airport Manager; Sandy Collard, HR Director; Cheri Bedford, Main Street Manager; and Celso Arrieta, IT Manager Opening Agenda 1. Call meeting to order. Mayor Hughes called the meeting to order at 5:30 p.m. 2. Citizens' forum. No one spoke during citizens' forum. 3. Receive presentation, discuss and provide direction on the FY 2023-2024 budget for the City of Paris. City Manager Grayson Path announced that department heads and supervisors were in attendance should anyone have questions of them. Mr. Path referenced the budget memo he provided to City Council on July 25, 2023 and revised on August 5, 2023. Mr. Path addressed budget priorities, balance of operational funds, the property tax rate, general fund revenue, general fund expenditures, and gave an overview of each department budget. (See attached budget executive summary) Special Meeting August 8, 2023 Page 2 Council Member Pilgrim asked questions about the I&S rate as related to the 2013 bond. Mr. Path explained that with restructuring of the 2013 bond and the decrease of interest rates, the City would be saving about one million dollars which would be used on the new wastewater plant project. Mr. Path spoke about cost of living raises of 2% for all employees, with an 8% increase for police officers in an effort to recruit and retain due to the shortage in that department. Mayor Pro -Tem Pankaj inquired about the competition. Police Chief Richard Salter said the competition was local, such as local school districts. He said it was a nationwide problem and expounded on the workload of Paris police officers. Mr. Path said his hope was that this increase would help attract and retain, but that the workload was a factor too. Council Member Savage said he had no problem with adding employees but said they would be asked why they could not find the money to retain employees but to hire new positions. Mr. Path explained the City had over 300 employees and adding the new positions was a drop in the book in comparison to giving over 300 employees a larger COLA. Council Member Norment inquired about how the street department was doing on staffing. Public Works Director M.A. Smith said they were 30% down. Council Member Norment asked if an increase in salaries would help retain employees in that department. Mr. Smith said it could not hurt. Council Member Pilgrim confirmed with Mr. Path that over the last few years there had been a deficit in the EMS Department. Mr. Path said over the last year changes had been made to help with that, which included adding Emergicon for billing and increasing the rates. Next, Mr. Path reviewed the revenue, property valuations, and expenditure summary including the capital outlay. Mayor Hughes said lie appreciated Mr. Path and the staff for their hard work. He said he was very happy to be a part of this team, as did other Council Members. Mr. Path inquired if Council wished to have another special meeting and if not, he would plan to bring budget items for their consideration on the August 28 agenda. He reminded Council that they were working with deadlines and later it would be hard to change the budgets. Council Members did not request a special meeting. 4. Adjournment. There being no further business, a Motion to adjourn was made by Council Member Special Meeting August 8, 2023 Page 3 Savage and by Mayor Pro -Tem Pankaj. Motion carried, 7 ayes — 0 nays. The meeting was adjourned at 7:20 p.m. L2 ALD B. HUGHES MA O ' yf CIO ! CICE ELLIS, CITtCLEI" TEXAS ,SRVYJ„G,ct, , (,-R.,,h", er Memorandum TO: Mayor, Mayor Pro Tem, City Council FROM: Grayson Path, City Manager SUBJECT: Proposed Fiscal Year 2023/2024 Budget Executive Summary DATE: July 25, 2023 REVISED: August 5, 2023 Introduction It is with pleasure that I present to you the City Manager's Proposed Fiscal Year 2023/2024 ("FY23/24") Budget. Many hours by many individuals have gone in to its preparation. Through careful review, editing, and discussion, we have developed a great final product to present to you. This memorandum has been structured to address Article V in the City of Paris Charter. The duty and responsibility of a public servant is to carry out the Code of the City to the best of his/her ability, therefore in order to provide greater transparency to those reviewing this memorandum for completeness to the code, I will divide up this memorandum to address each specific applicable section of that article. This has the unintended consequence of breaking up a desired "flow", sometimes making this memorandum bulky, but nevertheless it fulfills my obligation in providing you thorough information regarding the budget. I will be making a. presentation, summarizing this memorandum, to the City Council on August 8, 2023. At that time, we will also touch on upcoming deadlines pursuant to the City Charter and Senate Bill 2. I will also ask how you, as a Council, would like to proceed in order to review, discuss, consider, etc. the Proposed FY23/24 Budget including any workshops, research, additional information, etc. you would like to hold. Please be considering this in preparation for the August 81 discussion. The reader of this report may find the material presented here to be complex. This is unavoidable as the City Charter is clear as to what must be included in this report. Municipal budgets are indeed complex, for a reason. Throughout my career and working with various City Councils, I have heard two different schools of thought when it comes to the content of a budget. Some prefer to see budgets broken out as much as possible with many itemized line items minutely separating out expenses, while others prefer fewer line items representing generalized categories of expenses. The version you have before you in this memorandum falls closer to the first school of thought — many funds with many line items, thus breaking out the entire budget in to more definable individual purposes. This of course produces a lengthy budget to go through and review, but, it is a more transparent approach for our public and it assists departments with better tracking their budgetary status as the year progresses. A very condensed and summarized budget where line items are lumped together, while extremely easy for staff to process and councils to flip through, is also much less transparent as the purpose of each line item is obscure, turning them more in to larger "miscellaneous" line items, and it can also cause departments to lose track of their budgetary status unless they keep their own notes on the side as to what has or will still yet occur by way of known and unforeseen expenses. It is my recommendation that we continue with our current format. Page I of 23 If at any time the reader of this memorandum has any questions, please contact my office at City Hall. I will be more than happy to answer any questions you have. Summary Prior to getting started with the substance of this memorandum, I would like to present to you a few initial summary results regarding the Property Tax Levy and Rate, as well as the balancing of the Operational Funds. Of greatest interest to most any Council Member and citizen is the impact of the proposed budget to the Property Tax Rate and Levy. The City has a Maintenance and Operation (M & O) property tax rate and a Debt Service (sometimes also referred to as "Interest and Sinking" or "I&S") property tax rate. These rates, once applied against the property valuation, produce the tax levy (the dollars the City receives). The M & O rate is subject to Senate Bill 2 (2019) growth restrictions year to year while the Debt Service rate is not; both will be discussed in fiuther detail later in this memorandum. The Proposed FY23/24 Budget incorporates a flat property tax levy for the M & O as compared to last year. In other words, the $8,030,000.00 in proposed property tax revenue in FY23/24 for M & O matches the budgeted amount from FY22/23, which also matches the levy in the FY21/22 budget. This will be our second consecutive year of keeping the property tax levy static. This is based on a 97% collection rate. The Debt Service levy however is proposed to increase in order to subsidize the rising utility rates needed to pay for the City's bonded indebtedness tied to its new Wastewater Treatment Plant (WWTP). This will be discussed in depth later in this memorandum. As occurs each year, changes in property valuations through the Lamar County Appraisal District impact the final rate associated with our budgeted levy amounts. While the M & O rate is decreasing in the proposed FY23/24 as compared to FY22/23, the total combined property tax rate between M & O and Debt Service is increasing. The following lists the FY20/21, FY21/22, FY22/23 and the Proposed FY23/24 tax rates: Year..._.................m............ .....__._._..... M&............._—......__._. _�..:D.ebt .......... Tota t FY22/23 $0.39788 $0.08290 $0.48078 FY21/22 $0.37357 $0.08016 $0.45373 FY22/23 $0.34377 $0.09901 $0.44278 FY23/24 $0.32176 $0.15606 $0.47782 Preliminary The following represents a comparison of these tax rates against that of the Proposed FY23/24 tax rate: FY23/24 Fund FY20/21m FY21/22 FY22/23 $0.32176 M & O ($0.07612) ($0.05181) ($0.02201) $0.15606 Debt $0.07316 $0.07590 $0.05705 $0.47782 Total ($0.00296) $0.02409 $0.03504 The Proposed FY23/24 Tax Rate will be the highest tax rate since FY20/21 ($0.02201 less) and before. This tax rate is, to the best of our determination using the Comptroller's Forms, in full compliance with Senate Bill 2, also known as the Texas Property Tax Reform and Transparency Act of 2019, approved by the Texas Legislature in 2019. Among other things, this Act is designed to restrict the City's ability to raise property taxes. This is a double edged sword. I will provide more details regarding this Act later in this memorandum, nevertheless, given the restrictions this Act places upon municipalities, it is strongly recommended that the City of Paris utilize the allowed restricted growth passed by the State Legislature when needed in order to keep up with the vital services we offer the citizens. To fall behind under this legislation could eventually prove irreversible thus detrimental to the desired operations and services the citizens expect of the City. The key point in my above statement however is "when needed". In FY22/23, the City did not use its fu113.5% growth due to better than expected Sales Tax revenue. Instead, we left $0.00681 available to be utilized if ever needed in the next three years (SB -2 allows it to remain available for up to three years before disappearing forever). In addition, we have balanced our budget using the 97% value of the total estimated property taxes to be received under the M & O property tax rate. Historically, the City never receives 100% of the property tax levied, a table is shown later in this memorandum, thus why foreclosures occur from time to time, but rather we typically hover around 97%. Therefore, it is logical to utilize a more realistic 97% figure when balancing the budget Page 2 of 23 rather than a 100% figure knowing it will produce a large revenue deficit by the end of the fiscal year. The $8,030,000.00 in the Proposed FY23/24 Budget represents this 97% value. This has been the practice for several years. In FY23/24, a number of factors have set in that have not occurred in recent years. Over the last three years since the beginning of SB -2, when the LCAD valuation is given to the City on July 25', there have been zero (0) properties still undergoing protest. In addition, there have been no instances of court appeals of valuation with the LCAD mid - fiscal year (following approval and implementation of a budget and tax rate). This year, as of July 251, there are still 581 properties undergoing protest with LCAD and there were several court appeals of LCAD valuation mid -fiscal year for last year's valuation of certain properties. Both of these have played a role in impacting our growth calculations for FY23/24. The figures we have used for taxable value are the most conservative available to us by LCAD. As it turns out, maintaining the levy at $8,030,000.00 at the 97% collection rate, is just slightly beyond the 3.5% growth allocation ($0.00255, or 1/5 of a cent). We do however still have unused growth from FY22/23 in the amount of $0.00681 that we can use to help bridge that gap. To accomplish a flat levy, which is recommended to accomplish the goals laid out in this memorandum, and given a 97% collection rate, we are proposing expanding the 3.5% growth by $0.00255, thereby using up a portion of the unused FY22/23 growth allocation authorized under Texas Tax Code 26.04(c)(2)(B). This gives us a M & O tax rate of $0.32176 instead of $0.31921. The next key element typically of interest would be the balancing of the Operational Funds. The City of Paris has numerous Funds, the vast majority of which are Special Purpose Funds which will be discussed later in this memorandum. The Operational Funds are Fund 01 — General Fund, 03 — Airport Fund, 10 — Water and Sewer Fund, and 45 — Sanitation and Landfill Fund. These four funds make up the vast majority of the financial accounting and are what the City operates out of to perform its daily tasks. In addition, these four funds are unique from other special purpose funds in that they are supported primarily from taxes, fines, fees, and utility rates, thus the importance to balance them. Each year, city staff carefully examines the historical trends behind each line item in order to focus the budget while capturing and repurposing available funds for efficiency and to become even more effective in the duties we are tasked with performing to maintain services, all while keeping the property tax rate as low as possible. The following table shows the balancing of each of our operating funds: Fund Revenue ,.... E"nditure Net, 01 —General Fund $29,616,550.00 $31,051,550.00 ($1,435,000.00) — —General Fun Reserve '1,435,000 00 w '0.00 ...... w _... „00 1 43$0.00 , ww_ wwwwwwww W Net $31,051,550.00 $31,051,550.00 $0.00 03 —Airport Fund $1,007,041.00 $1,037,041.00 ($30,000.00) 03 — Airport Fund Reserve $30 000.00 '0.00 . . x`30 000.00 Net $1,037,041.00 $1,037,041.00 $0.00 10 — Water and Sewer Fund $20,987,300.00 $20,987,300.00 $0.00 45—Sanitation Fund $1,380,000.00 $1,380,000.00 $0.00 The Proposed FY23/24 Budget has all four of the above Operational Funds balanced. To accomplish this, given our General Fund Reserve is healthy with some available surplus — primarily through better than expected Sales Tax receipts, I have budgeted to access a portion of this surplus to help cover several needed equipment and/or one-time significant purchases so that we can maintain our goal of a flat property tax levy this year in the M & O, which also happens to be limited by SB -2 restrictions. I went back to FY21/22 (the last completed FY) and determined how much revenue above budget and how much expenditure below budget we had, net the two amounts, and determined this balance. This, in essence, is the amount that was forwarded to the reserve at the close of the FY21 /22. It is always our goal to come in over revenue and under expense — this gives us the needed room to operate while allowing us to maintain a healthy reserve for unique situations and to further our services to the citizens via several important capital purchases that must occur. This use of the surplus puts the citizens' tax money to work benefiting them, while still maintaining a healthy reserve. In addition, given restrictions under SB -2 as discussed above, use of surplus funds is also the only means of purchasing some capital items outside of ARPA and CARES (which are finite). Page 3 of 23 The use of surplus funding to help balance an operational budget must be done with great care. The City is not a finite entity; instead it will continue to exist and therefore will have routine expenses year after year (ex: payroll, insurance, chemicals, fuel, etc.). These repeating expenses must be supported year after year with dedicated annual revenue streams, in other words, revenue that is reliably raised and available each year. To use surplus money in this instance would be inappropriate because it is a finite source of money and would eventually end. Should a repeating expenditure be supported by a finite revenue stream, a time would come when necessary revenue would not be available to continue that service. Therefore, the City of Paris does not support any of its routine expenditures with surplus funds. On the other end of the spectrum, we have one-time sizable expenses that are not routine year after year (ex: certain equipment, studies, etc.). We commonly refer to these as capital purchases (note: our annual ambulance and police car replacement programs are both capital purchases, but are routinely done each year and therefore excluded from consideration of surplus funds). While we routinely have capital purchases each year, the purpose, number, size, amount, dollar requirement, etc. is quite dynamic and difficult to predict. When surplus funds are not available, reoccurring and/or new revenue must be reallocated and/or raised to fund non -reoccurring capital purchases. This is not always possible and the City must make difficult decisions on what services it will be able to provide year after year. However, when surplus funds are available and assuming the reserve is healthy without the addition of these surplus funds, then opportunities to expand our reach within our capital purchase list become possible. This will not always be the case for the City of Paris, but as with last year, this opportunity is available to us this year. The City of Paris had an approximate amount in excess of $3 million in surplus revenue upon the close of FY21/22. This is predominately because of excellent sales tax receipts beyond what was budgeted in the balancing of the FY21/22 budget. To be in excess by this much is indeed rare and cannot be expected each year. However, it presents us with an opportunity to 1) pursue some significant one-time capital expenses not normally possible, and 2) has given the City Manager and Finance Director a different perspective towards budgeting its revenue in FY23/24. While we enjoy seeing excess revenue upon the close of a FY, it may be more appropriate to adjust our budgets to take advantage of this growing reoccurring revenue stream, thus tightening down the amount of excess we will see upon close of a FY, in order to provide more services to our citizens. The thought is simple, so long as a healthy reserve exists, citizens would prefer to see their tax dollars put to use rather than stored away. We have therefore attempted to loosen up our conservative approach towards budgeting the FY23/24 revenue so as to give us opportunity towards more reoccurring expenditure needs (ex: pursuing a Public Information Officer). This will be a work in progress this year and the next few. This does not come without risk. Given the primary cause of our excess is the sales tax, and given how dynamic the sales tax can be, we will have to monitor the budget more closely each month to make sure our budgetary predictions remain doable as the revenue comes in. With this said, we believe we have still budgeted our various revenue streams fairly conservatively for the Proposed FY23/24 Budget. The City Airport Fund has a minimal amount of reserve that we are planning on making available for capital expenses within the Airport Fund in FY23/24 for a TxDOT project. The Water and Sewer Fund (Fund 10) and Landfill Fund (Fund 45) do not have excess reserve available for capital purchases, therefore all expenses within these funds are supported with reoccurring revenue streams raised in FY23/24. In addition to the operating funds, the City still has some remaining ARPA (Fund 04) and CARES (Fund 05) funding. Through our past efforts, we have de -obligated this funding under the lost revenue category authorized by the Federal government, thus opening it up to other purposes as needed. This funding has an expiration date in the upcoming years, but we plan to have it spent before these deadlines hit. The items supported with this funding will be shown later in this memorandum and have been selected primarily based on their long term impacts to our operations and service to the community. One final helpful key, the City's accounting system is structured based on account numbers. We utilize consistent numbering for each of the departments, but it first takes some training to learn how to read the system. The following is an example of a typical account number: "01-0101-12-00". To assist you in reading this, please take the following example: Page 4 of 23 AA-BBBB-CC-DD Fund Number Example: General Fund, Water and Sewer Fund, etc. "BBBB" = Line Item Example: Salaries and Wages, Office Supplies, Communications, Buildings and Grounds, etc.; these are consistent throughout all departments. So "0101" in all Departments is "Salaries and Wages". "CC" = Department Number Example: City Council, Police, Fire, Library, Water Production, etc. "DD" = Sub -Department Number and/or Special Sub -Accounts Example: Pool (Sub -Department of Parks), Capital Purchase Accounts such as a Vehicle or Heavy Equipment, etc. If at any time you have questions regarding the Accounting Structure, please let either myself or Gene Anderson, Finance Director, know. City of Paris Charter Pursuant to the City of Paris Charter, Section 19(3), the City Council has the power and duty to: Section 19(3) — `Adopt the budget of the city. " To accomplish this, the City Manager has the power and duty under Section 38(2) to: Section 38(2) — "Prepare the budget and submit it to the council and be responsible.for its administration after adoption. " Article V, entitled "The Budget", sections 42 — 58 of the City of Paris Charter further spell out the composition, transparency, publication, and other key components of the budget and budget process. This memorandum is therefore designed to fulfill, to the best my ability, Article V. The remainder of this memorandum will be structured off of the requirements of Sections 42 — 45, in order. Other sections not addressed are primarily procedural matters. Pursuant to Section 46, this budget and all supporting schedules will be filed with the City Clerk when submitted to the City Council and shall be a public record for the inspection of anyone. City of Paris Charter — Article V — Section 42. "The fiscal year of the City of Paris shall begin on the first day of October and shall end on the last day of September of each calendar year. Such fiscal year shall also constitute the budget and accounting year. " The Proposed Budget is for the Fiscal Year beginning October 1, 2023 and ending on September 30, 2024. This will be shown throughout this document as "FY23/24 City of Paris Charter — Article V — Section 43. "The City Manager, between thirty and ninety days prior to the beginning of each fiscal year, shall submit to the Council a proposed budget, which budget shall provide a complete financial plan for the fiscal year, and shall contain the following: " The following sections of this memorandum shall be divided up between the fifteen (15) sub -sections of Section 43. These sub -sections are designed to represent the "complete financial plan for the fiscal year". Page 5 of 23 City of Paris Charter — Article V — Section 43(1) "A budget message, explanatory of the budget, which message shall contain an outline of the proposed financial policies of the city for the fiscal year, shall set forth the reasons for salient changes from the previous fiscal year in expenditure and revenue items, and shall explain any major changes in financial policy. " Financial,,,, Policy Our Financial Policy is as follows: The mission of the City of Paris is to serve with professionalism and integrity, promote a safe and prosperous community for all citizens, and provide efficient and effective services for an excellent quality of life. ]3udet,,,,,,,essap e In order to accomplish the Financial Policy stated above, I have carefully considered the priorities for the Proposed FY23/24 Budget. While there are many important tasks, projects, and programs that can be singled out for discussion, the following is a breakdown of the most notable priorities pursued due to the level of impact they had to the overall budget. City Council Strategic Plan — On January 9, 2023, the City Council approved a new Strategic Plan via Resolution 2023-002. This Strategic Plan is made up of a Vision, Mission Statement and Goals for the City of Paris. It is intended to guide the City in the development and implementation of its fiscal budget for the next ten years, with the flexibility of knowing that future City Councils will review and amend as needed to keep this plan relevant and effective. The above stated Financial Policy is based directly on the mission statement in the Strategic Plan and the following narrative explains how the City Council's Goals from the plan are represented within the Proposed FY23/24 Budget. The City Council has prioritized five (5) primary goals, rooted in the Strategic Plan's Vision and Mission Statement. These are intended to be long term goals that will be relevant in the immediate and future fiscal years. From these goals, and as funding is available, action items will be established each fiscal year through the budgeting process. The following are the five goals with action items identified in the Proposed FY23/24 Budget: 1.) Enhance the City's relationship with key State and County Representatives. 2.) Encourage Economic Development through business development and retention planning. 3.) Promote long-term growth in the community. 4.) Retain our citizens. 5.) Market the City. Pursuant to the Strategic Plan, a report will be given to the City Council during the fiscal year budgeting process as to the status of the FY22/23 Strategic Plan Action Items. That report has been created and is attached as Exhibit G. The Proposed FY23/24 Strategic Plan Action Items has been created and is attached as Exhibit H. These action items are made up of those with budgetary notes as well as those that are administrative in nature (not a defined budgetary note). It also includes several carryover from FY22/23 that are ongoing and/or still applicable. For those with a budgetary note, if the reader desires to examine its location in the budget, please either continue to read this memorandum or speak with the City Manager. Page 6 of 23 2. Wastewater Treatment Plant (WWTP) / Utility Rates / Property Tax Levy — The City of Paris has issued significant debt in order to construct a new WWTP. More debt is forecasted to be issued in 2024 to prepare for future phases of this WWTP construction. To pay for this debt, the City has been incrementally increasing its sewer utility rate. Pursuant to City Code A10.004, we have planned rate increases that began in 4/01/2021 and routinely increase approximately every six months (with exceptions) until a final increase that is planned on 04/01/2026. It is unknown whether these increases will completely cover the ultimate cost of the WWTP debt as we still yet must bid out the next phase of construction. With this, we are fully aware of the impact this is having to our residents and their monthly bills. The City Council and Staff are taking necessary steps to protect our future ability of treating wastewater by constructing the WWTP; there is unfortunately no avoiding this project and the costs that come with it. We are also, however, always working on ways of alleviating the burden on our residents. First, City Staff continue to work hard to seek out best practices and prices to avoid sharp operational cost increases (ex: bidding). Second, we have recently obtained the City Council's approval to bring back documents necessary to refund and restructure the GO Bond Series 2013 which will save an approximate $1 million each year in existing debt payment that can be reallocated towards the WWTP debt payments (these early year savings are created by extending the initial term of the debt by 10 years). Third, given the amount of debt we have incurred has reached certain thresholds, we may now have available to us an option of issuing the next round of debt as a "Commercial Paper Loan" which in layman terms is a form of line of credit that will reduce interest costs on that debt (more is to be researched on this before making a recommendation to the City Council). Fourth, we were fortunate this year in that when we performed our annual rate analysis, it produced results showing that a water rate increase was not necessary for this upcoming year. Fifth, we have been working to plug holes in our utility revenue stream by identifying bad debt accounts (ex: City of Toco, Route 40, etc.) and bringing them in to compliance, thus opening up revenue we were not previously receiving. Sixth, our Community Development Department and Paris Economic Development Corporation are very busy working with developers to add new retail, residential and industrial growth to our community (in essence, adding more chairs to the table to spread our existing cost out amongst). To help facilitate this, seventh, the Public Works Department, with the use of ARPA Funds, has been installing new water lines in our industrial districts with the added benefit of servicing existing customers in the surrounding area via looping of utility lines, but also making these properties more "shovel ready" for attracting industry to our community. All of these efforts can and will have positive impacts on alleviating the burden —. over time — to our utility rate customers. Our next option available to us that we are recommending to pursue as part of the Proposed FY23/24 Budget is to shift a portion of debt expense from the utility rates to property tax. As has been discussed in the above Summary section of this memo, the City of Paris can, for the second year in a row, maintain our Maintenance and Operation (M&O) Property Tax Levy flat at $8,030,000.00. Gains in Sales Tax as well as other revenues are enough to balance the cost increases we are seeing in the General Fund without asking for additional property tax. This results in an even lower Property Tax Rate for the M&O. Our Debt Service Property Tax Rate (aka, "Interest and Sinking" or "I&S") was scheduled to adjust only on account of existing changes in our debt payment schedule for various bonds, however that was not foreseen to be a significant amount. We as City Staff, after working closely with our Financial Advisor and Utility Rate Consultant, would like to propose moving $1.5 million in existing Utility Bond Debt from utility rates to I&S property tax. Much like how the refund and restructuring works for the GO Bond Series 2013, this would free up existing $1.5 million in annual revenue from the utility rates that can be reallocated towards the WWTP debt payments. The City's Property Tax Rates would change as follows: Year a M&0— I&S�—Total FY22/23 $ 0.34377 I ........ $0.09901 $0.44278 FY23/24 $ 0.32176 $0.15606 $0.47782 Net $(0.02201) $0.05705 $0.03504 Page 7 of 23 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 contribution rate from 14% to 5.1% (the FY22/23 TMRS rate), and 16% to 7% for the employee — both proving to be significant annual savings to the City and employee. The City took on additional debt payment to fund this pension bond, but the ultimate long term cost benefit to the City of Paris of this bond far outweighs the ever growing unfunded liability the City would be facing were the pension to have continued on its previous trajectory. At the time of implementation, the City of Paris' Fire Pension was known as the least funded fire pension in the State of Texas at 28% funded. We are now fully funded and on course to sun setting this liability. Fifth, during the FY22/23, the City experienced greater than expected rate increases for its TML Health Care Benefit. This cost increase is primarily bom by the employee as the City pays a flat monthly amount that does not change unless approved by the City Council. The City Council agreed to increase the monthly contribution from $565/employee to $595/employee. This $30/month increase helped restore some of the balance that the increase in rates threw our program off for employees. On behalf of the City Staff, I would like to thank the City Council for all their support for our employees with the above much needed changes and improvements. In the Proposed FY23/24 Budget, we have included the following adjustments to further make positive impacts to our employee pay and benefits in order to attract and retain quality personnel in the service of our community. 1) A 2% Cost of Living Adjustment for all full-time positions, except the City Manager position. 2) A transition from biennial step increases / seniority increases for employees to an annual step increase / seniority increase program. 3) A $30/month increase in the City's monthly contribution for Health Insurance from $595/month to $625/month. 4) In lieu of #1, the Police Department sworn officers will see a sliding scale increase in between 2% and 8%. Regarding item #1 — annual COLAs will allow the City to try and maintain its pay program in comparison against our comparable communities and help avoid drastic changes at each pay study. Regarding item #2 — For non -civil service employees, the City incorporates an 8 step pay plan where a new step is reached every two years. In other words, an employee typically begins on Step 1 upon initial hire (unless a negotiated higher step is approved by the City Manager where appropriate) and will not move to Step 2 until their second year anniversary (two years later). This continues every other year until finally reaching Step 8 (in approximately 14 years). For civil service employees, their seniority levels work much the same as steps, therefore they reach the next level of seniority every other year. The result of this is employees, while receiving a cost of living adjustment is meant to account for rising prices in the market, do not receive a pay raise but every two years. The new program will take the existing 8 steps, and divide those out to make 15 steps with Step 1 of both plans matching and Step 8 of the current plan matching Step 15 of the new plan. The revised Step Plan has been included as Exhibit E. Therefore, after the same amount of time, the employee will reach the same pay rate, but they will enjoy pay raises each year instead of every other year, which will provide them a cumulative gain in their income over their tenure of service with the City. In order to effectively accomplish this, employees who received a pay increase in FY22/23 will receive their next pay increase on their anniversary one year later in FY23/24. Those however who were set to receive their biennial pay rate in FY23/24, thus did not receive a pay raise in FY22/23, will be moved to the next pay rate available on the new scale on October 151 (where they would have moved to under an annual increase were it have been available in FY22/23), and then again will move to the next step increase on their anniversary in FY23/24. This will prevent unfair compression among employees simply because of the riming of the implementation of this program and where they happen to be in their biennial pay increase process as compared to others. While there will be a higher than normal cost to the City to implement this in year 1, it should in theory resume our typical annual financial cost increase in year 2 and beyond as every employee will be receiving what we would consider a half increase under the proposed plan vs. a portion of the Page 9 of 23 employees receiving a full increase under the current plan (currently about half of the employees get a biennial increase in one year and the other half receive their increase in the next). Regarding item #3 — While the rates are not typically known until the budget process is complete, our communications with TML show that we expect another sizable rate increase beginning in January 2024. Without knowing how much this may be, and given limitations with available budget, we have budgeted to increase the City's monthly contribution another $30 for each employee to help offset the upcoming rate increases. Regarding item #4 — The City of Paris continues to struggle with hiring and retaining our police force (sworn officers). As of July 2023, the department is down 16 patrol positions. Over the past three years, we have lost 26 sworn officers while only gaining 14. This same time period began with a vacancy list in existence. The City has dramatically increased the pay via the comparable pay study as well as seniority pay, certification pay, sign on bonuses, and allowing for lateral transfers with years of service. However, we continue to struggle in this market. So as to try and stay ahead — or at the very least keep up —with local competition, we have proposed a higher COLA adjustment for the police department than that under item #1 above. In order to balance the budget, we could not do one rate across the board for all officers, and given our greatest need is new officers, we have created a new scale that adjusts the starting base for a patrolman position up by 8% ($52k to $56k) while only increasing the highest seniority level of the Assistant Chief of Police position by 2%. With this, we shifted the entire scale in between these two end posts like we did during the comparable pay study. Every sworn position will therefore receive no less than a 2% COLA, in addition to the pay increases they will see under item #2 above. In order to financially accomplish this, we have unbudgeted a majority of the remaining vacant police positions, which is similar to the practice we have done each of the past three years in order to accomplish our budgetary goals, particularly the comparable pay study. However, we will continue to seek out and hire new officers as quickly as possible in order to make up the entire vacancy list until we are fully staffed. Given historically we have been unsuccessful in filling these vacant positions, to continually budget for them while trying to maintain a balanced — and tight — budget with pay adjustments for our employees, has become challenging. Therefore, in order to still try and maintain a flat property tax levy for our tax payers in FY23/24, we are going to take advantage of this available budget room within the vacant positions to increase our pay for existing police positions (retain), which we hope will further draw more applicants (attract and hire). Should we successfully hire more officers, we will simply have to amend our budget and account for it in FY24/25 and beyond, which is the ultimate conclusion — to be at full staff. However, given the hiring process takes many months, the financial risk to the City in FY23/24 seems relatively low. This is a departure from our typical methodology of keeping several vacant positions budgeted, however, we need this funding in order to implement yet another financial strategy to attract and retain officers to begin filling these vacant positions as soon as possible. It must be noted that the un - budgeting of vacant officer positions was done strictly to offset the above stated plan to increase our police department's pay, and not to assist with any other position's pay or municipal service expense. The above stated amounts determined as increases for the police department were the result of the available sum total of funding from the vacant positions. Had there been more funding in these vacant positions, the amount of increases would likely have been higher. Another significant pay item that is worth noting is that of the EMS Department. In short, I have struggled to correctly estimate the EMS Department salary lines when developing each of my budgets the past three years. EMS has the most complicated pay arrangement of all departments, CoVid-19 and staff shortages have not made this any easier. It was brought to my attention this year that changes to the shift scheduling were made that we had not sufficiently budgeted for. We have therefore attempted to adjust for this. Additional changes will be discussed under the New Position category below. By request of the Municipal Judge, a step plan has been proposed and included in the Proposed FY23/24 Budget unless otherwise directed by the City Council. Having gone many years without a significant pay increase, the Municipal Judge has requested a scale that places his position at 1/2 that of the City Attorney's Page 10 of 23 pay scale and his placement on this scale to match the step placement of the City Attorney. For more information, please speak with the Municipal Judge. Finally, my position as City Manager is not scheduled to see a pay change or COLA in FY23/24 unless directed otherwise by the City Council. 4. Street Mill and Overlay Projects — The City issued long term debt via GO Bond 2017 and GO Bond 2018 for Street, Utility and Park Improvements. Those portions tied to parks have been primarily spent, and there still remains a portion for utility, however we currently have in excess of $2.2 million remaining in funding available for street work. In addition, the proposed FY23/24 Budget includes $1 million in surplus revenue from FY21 /22 that we are proposing to add to this amount, giving us in excess of $3.2 million for the purpose of performing mill and overlay projects in strategic places across the community. City Staff have been developing a priority listing of primary roadways in town that are in need of a mill and overlay (milling the top surface down a set number of inches and repaving). While every street in town could use some work, this limited pool of funds is proposed to be dedicated towards our busiest non-TxDOT roadways to give our citizens the largest impact possible. That list is still in the works, but will be presented to the City Council at a future time, assuming this is included in the FY23/24 Budget. Fire Apparatus Replacement — The City of Paris has for many years incorporated a repeating replacement program within our annual budgets for police cars and EMS Ambulances. While we have two existing loans of marginal amount that were used to replace some apparatus years ago, we do not have a dedicated source of funding set aside each year to replace Fire Apparatus on a sustainable and satisfactory scale. The primary reason is the shear cost with apparatus reaching in excess of $500k each and typically ranging in the millions of dollars. Nevertheless, the City needs to reengage itself towards replacing our aging fleet of fire apparatus. While the Proposed FY23/24 Budget does not include a long term solution to this replacement program, it does however look to kick start replacement to help buy our community some time to figure this out. Next on the list is the 1996 Ladder Truck in Station #1. This is our largest and most expensive piece of equipment, but it is also the next to be replaced. This apparatus has been quoted to cost in excess of $2.2 million and has a 2.5+ year lead time for delivery once ordered. This truck is vital to servicing fires of high rise buildings and significant square footage structures. The resale value of a truck like this is next to non-existent, therefore the City must raise nearly the entire amount to replace. While the City has two existing 10 -year loans that were used to replace equipment, they are both with the principal amount of less than $1 million each and will not become due for another 1-2 years, which places them as 1) too small individually to renew to cover this cost and 2) too far out to be combined to cover this cost (plus too small) while we still have yet a whole other fleet of apparatus that we need to begin replacement of in the near future. With this, the Proposed FY23/24 Budget includes taking $1.5 million of surplus revenue from FY21 /22, partitioning it within the City's reserve in to its own special CD, and using it towards the replacement of this apparatus. Payment of the apparatus is not due until delivery, so by the time delivery occurs, we will be able to combine this $1.5 million with one of these expiring loans, plus perhaps a small amount for any difference that may occur, to purchase this apparatus. We would then issue a new loan for another 10 years. This $1.5 million does not show up in any line item you will see in this packet, but nevertheless it is a fundamental part of this Proposed FY23/24 Budget process to officially set aside funds towards this important replacement purchase. 6. Rising Costs — While the Proposed FY23/24 Budget is not seeing the steepness in cost increases like the FY22/23 Budget saw, we are still dealing with rising costs across the board. Numerous line items have seen their budgets increase just due to the rise in prices for the same amount of product we are purchasing. Staff continue to work hard to find good deals on our significant purchases, but even maintaining minimum services continue to require increases in revenue to fund. 7. Capital Projects and Purchases — With the help of ARPA, General Fund Reserve, and CARES funding, we will be undertaking several needed projects and large capital purchases. In order for the employees to do their work and fulfill the Financial Policy, they must have adequate equipment. Once again, much of the work the Page 11 of 23 City provides its citizens is labor intensive. Therefore, the proposed FY23/24 budget includes a series of equipment purchases. More details as to what these items are will be provided later in this memorandum, but we will touch on several of the more significant items below. The City will be allocating a significant amount of funding to the demolition of the Belford Building, located at 260 South Main Street. This building is in a severe case of dilapidation and has begun to collapse internally. With the availability of ARPA funding, the City now has the chance to bring this multi -story building down safely, thus greatly improving our downtown district. The City completed a Phase I analysis of the Grand Theater in FY22/23. This analysis included a structural analysis of the building and development of bid documents to clean the building and abate asbestos. The goal is to set this building up in such a way to give the non-profit association tied to this city -owned building a clean slate to begin donation collection for future restoration. Using ARPA funds, we plan to clean and abate the building. As this is a city -owned building, and given it is located within the downtown, we wish to do our part like many other downtown building owners and work towards restoration and occupancy. We have a long road ahead, but this Phase II is the next step in the process. Having completed the Phase I of the Housing Study, we are budgeting to proceed with Phase II, which will be the study itself. We are working with the Paris Economic Development Corporation as well as the Carl Cecil Foundation to share in this expense. This study will be extremely helpful with advising future city policy towards housing initiatives for our community. There is a lengthy series of equipment we are seeking to purchase for most all departments. Whether it be vehicles, heavy equipment, technology, etc., this equipment will either be replacing old and tired equipment and/or providing us new abilities to better serve our citizens. A full listing of all capital purchases planned in the Proposed FY23/24 Budget can be found later in this report. 8. New Positions — The proposed FY23/24 Budget includes eight new positions. The first new position is a reclassification of an existing position. I would like to promote Doug Harris, Director of Utilities, to the position of Assistant City Manager. Mr. Harris has served the City of Paris for 30+ years, many of which has been in his current position. After three years of direct observation, it is my professional opinion that Mr. Harris has skills and abilities that can be put to even greater use upon promotion to a position of higher responsibility and accountability within the City of Paris. His faithful and loyal service to the City of Paris, carefully managing the City's treatment infrastructure for water and sewer, has proven his ability as a manager and leader, and I would like to tap into this to serve Paris, its council, citizens and staff, at a higher level. To accomplish this, I have reorganized the city's organizational chart. I will reclassify Rob Vine to Deputy City Manager to create a distinction in the progression of chain of command and shift responsibilities of all departments between the three positions. First, as City Manager, I will continue to remain fully responsible for all departments under me, including those overseen by the DCM and ACM positions. However, my focus will be the oversight of our Emergency Service Departments and HR. Mr. Vine will take on responsibility of Community Service Departments, including the addition of City Clerk, Finance and PIO (discussed below). Mr. Harris will take on responsibility of Public Infrastructure Departments, including those he currently oversees as well as Public Works and City Engineering. He will continue to perform many of his current duties while delegating some to his direct assigns as needed to accommodate his new responsibilities as the ACM. A copy of the new proposed organizational chart is included as Exhibit F. Separating out these three spheres of municipal operation will allow the City Management Department to have greater efficiency and response time to issues, questions, requests, and concerns raised by City Councilmembers, citizens, developers, other governmental agencies, consultants, etc. Furthermore, this will give Department Heads and staff greater timely access to and response from the City Management Department for high level decision making, strategizing, issue handling, contract negotiation, HR management, and more. This will also allow us to better focus our efforts within the Community Service related departments, Public Infrastructure related departments, and Emergency Service Page 12 of 23 related departments. To accomplish this change financially, the Director of Utilities position will be unbudgeted. Mr. Harris is currently on Step 8 of his current range and will move to Step 1 of the ACM range. Mr. Vine's pay range under a DCM will simply shift around his current pay. Both employees will receive pay adjustments commensurate with those being done under item #3 of this Budget Message, other than Mr. Harris who will indeed see an additional pay increase from Step 8 of his current range to Step 1 of the ACM range. The Step Plan for these and all other positions are included as part of the Proposed FY23/24 Budget packet, Exhibit E. As the City Manager, it is one of my many duties to recognize and promote opportunities for greater efficiency for our municipal operations and service to our community, particularly when those opportunities exist from within. Given the available in-house skill and talent we have in Mr. Harris, it makes total sense to promote his abilities forward and upwards to perform even greater service to our community. The second new position is a Public Information Officer (PIO). The City of Paris has grown to a point that keeping the public informed is not only vital to our operations, but now a full-time job. Whether it is open record requests, social media interactions, reworking and updating the city website, preparing press releases and interacting with the media, or educating the public to the services we provide, there is much that we can improve upon to better interact with our citizens. During emergency situations, the City Management team will greatly benefit by having a PIO on hand who can focus the appropriate amount of time needed to preparing messaging to the community, giving management the opportunity to stay focused on addressing the situation. Another strong need is to begin accessing and using the Public, Educational and Governmental (PEG) funding. For years, the City has been accumulating PEG funding pursuant to Texas Utility Code 66.009. Citizens pay this additional fee as part of their cable bills and the franchised cable provider forwards it to the City. This funding however has very specific and narrow uses, all circling around having a PEG television channel for public information. The PEG funding cannot be used to fund a position, but a PIO is best suited to spend down these funds via equipment needs to perform their duties and maintain this PEG channel with content under the law. Whether we start a PIO or not, we need to seriously explore ways of spending down the PEG funding. Attempts to cease this funding have so far failed, however, we have not had sufficient time to attack this issue with the franchise provider. A task of the PIO will be to help us cease this funding should that be found appropriate, but given the amount that has accumulated, they will have many years of funding available to access for work to be done. Having a PEG channel as well as a vibrant social media presence will allow a PIO to help tell our story. We foresee interviews of council members and staff about hot topics, processes, new initiatives, project updates, etc. There is so much we see a PIO doing to help our community stay informed. This new position will report directly to the reclassified Deputy City Manager position. The third new position is the creation of an Assistant Finance Director. The purpose of this position is two- fold. First, there is a need to try and prepare a succession plan for the Finance Director position. Second and most importantly, there is an ever growing need to add capacity to this bustling department. The world of finance (audits, accounting, bonds, investments, etc.) is becoming ever so more complex with new regulations and rules that we must follow and remain compliant within. The Finance Department consists of payroll, accounts receivable, accounts payable, budgeting, utility billing, fixed assets, general ledger, and warehouse. However, there is also grant administration, auditing, reporting, investing, and much more that takes up tremendous amounts of time and must be done correctly. The Finance Department is also responsible for the PEDC finances. Gene Anderson, Finance Director, has done exemplary work for the City of Paris for many decades, however, he and I are in agreement that we have long surpassed the point of needing to add additional help, particularly on the management end of the spectrum. We have examined outsourcing some of these tasks, but given the hourly rates for this high level work as well as the lack of immediate availability as we would have with our own employee, let alone succession planning and management designation during times of leave, having an AFD appears more advantageous to the City than outsourcing certain tasks. It will also allow us to further separate out financial responsibilities and duties, which is a subject of greater accountability and trust that auditors and citizens wish to see when it comes to local government. An additional task that I would like to see added to the department is that of centralized procurement. We currently task every department with navigating the challenges of procurement, however it would be Page 13 of 23 advantageous to the City to centralize this effort by having one person with the knowledge, process and documents that everyone can go to and work together with to accomplish this critical task. Our goal will be to obtain another person with a CPA certificate if possible which will add further depth and skill to this department for critical financial analysis. Having this position will also allow Mr. Anderson to delegate staff managerial duties. As with the ACM position discussed earlier, this is another position that I believe will create greater efficiency within our ever increasingly dynamic organization. The fourth, fifth and sixth positions that I am seeking permission to create are three additional full-time paramedics to replace three part-time positions within the City's EMS Department. This would allow us a full-time 4th frontline ambulance crew each shift with the Deputy Chief available in a 511 unit to supervise and respond to emergencies as necessary on a 24/7 basis. The number of calls for service has begun to approach ten thousand a year and will likely exceed that in short time. To service this ever increasing demand for emergency services, the EMS Department currently has four full-time frontline ambulance crews each day (24/7). Each truck requires two personnel (Captain and Crewmember). Three of these units are staffed with full-time employees while the 4' unit is staffed with a full-time employee and a part-time employee for 15 hours, after which the part-time employee leaves and the full-time employee is joined by the Deputy Chief. This prevents the Deputy Chief from effectively managing the shift at night and causes us to lose the ability to utilize a fifth ambulance quickly when needed. After much discussion, Fire Chief Thomas McMonigle, Assistant EMS Chief Jason Dyess and I are in agreement that the City of Paris will be better served with four full-time front line ambulances, operating 24/7 along with the Deputy Chief in a 5t' unit to properly supervise and be ready to effectively respond when necessary. To accomplish this, we need to hire three new personnel (one per each of three shifts). We would like to replace the part-time position with a full-time position, thus giving us a Deputy Chief and eight full-time positions each shift. Given the demand requires the need of a 4' front line truck (often times even more than this), we need to shift away from a permanent part-time employee presence each day to a full-time employee each day. This will also allow us to once again place our part-time employees in reserve status for filling in for vacation, sick, high demand times beyond what four front line trucks can manage, transfers, etc., which was the goal of part-time positions to begin with in this department. When examining the net cost change, we will take a 15 -hour per day part-time position and simply add the additional 9 hours a day and make it a full-time position. There will be added cost for these 9 hours each day with benefits for the entire day, but given the differences in hourly rates between FT and PT, a need to have the position more reliably and consistently filled, and a need to free up the Deputy Chief for shift management 24/7 and part-time employees for leave coverage, we believe the added cost is outweighed by the gains we will receive. The seventh position that I am seeking permission to create is a fourth Utility Meter Reader. We currently have two Utility Meter Readers and a Customer Service Representative who doubles as a Meter Reader. With the City of Paris increasing its sewer rate incrementally these past 24 months, and with more increases planned in the future on account of our Wastewater Treatment Plant Project, we have seen the number of disconnects for non-payment double. This places a heavy demand on staff as we must timely perform this task, as well as timely restore service upon payment by the customer. During these tense situations with upset customers, we believe there is a need to increase our service ability by adding a new full-time meter reader. This is also necessary to prevent abuse of non-payment situations as utility bills must be paid in order to operate our utility business, which means situations where non-payment is occurring must be dealt with swiftly to cease the issue before becoming worse. Given our rate increases are not a temporary measure, making this a full-time position is necessary. For full disclosure, due to the high demand on staff and the need to keep up with the service, Mr. Anderson and I approved utilizing temporary help beginning this summer with the hopeful goal of it turning into a full time position in FY23/24. The eighth and final new full-time position that I am seeking permission to create is a Community Development Department Secretary. The City of Paris has enjoyed a tremendous amount of industrial, commercial, and residential growth in recent years with much more planned on the horizon. To accomplish this pursuant to city code, city staff must be swift and timely with its pre -development meetings, plan reviews, Page 14 of 23 permit issuance, permit tracking, inspections, council and board actions, etc. The demand on frontline staff has increased tremendously in the City Hall Annex Building. Andrew Mack, Director of Planning and Community Development, would like to add a front desk position who will relieve existing staff, who have technical responsibilities in permitting, zoning, tracking, planning, housing, main street, etc., of these critical yet time consuming front desk duties. This position will be stationed inside the front room of the City Hall Annex and will handle the technical questions related to the Community Development and Fire Marshal's office that the City Clerk Secretary cannot. We want to be responsive to not only those who come through the front door, but also those who are communicating with us on the backend as well as expecting responses to inquiries sent in to our technical staff. This position will help provide some relief for our Permit Tech and Deputy City Clerk who both primarily cover the front desk, but also provide direct assistance to Mr. Mack and Cheri Bedford, Main Street Coordinator and Historic Commission Officer, while also benefiting the entire department via an upward ripple effect of relief and assistance. We also foresee this position potentially relieving the Fire Department Secretary of various Code Enforcement Department secretarial duties that have continued on since when this department was subsidiary to the Fire Department a few years ago. The budget impact for this position is minimal, but the operational impact to the overall department and its divisions will be tremendous. 9. Maintaining Operational Services — Despite the significant challenges and priorities mentioned above, the Proposed FY23/24 Budget is also designed to maintain operational services for our citizens. Throughout the entire budget, it is clear to me that the City Staff continue to do a great job of being frugal, consistent, and conscientious of the tax payer dollar. Departments are steadily providing the services under the same budgets year after year, only with minimal increases to account for increases in prices. We continue to set individual line item budgets such that it matches the true cost to provide the service as seen over the prior few years. Any adjustments up or down are for known reasons (a new piece of equipment, dropping the need for a particular subscription, better pricing through new bids, increases in service costs, etc.). While there is much more we would like to do for our citizens, we respect that resources are limited and will continue to use them as wisely as we can to impact the most individuals possible. 10. Texas Property Tax Reform and Transparency Act of 2019 — This Act was passed by the Texas Legislature in 2019. This represents a fairly comprehensive amendment to how Municipalities in Texas prepare their budgets. This Act first took effect in FY20/21. A large amount of the Act changes how the Texas Comptroller operates, but there is a fair amount of edits to how the City of Paris must handle the procedure of passing a budget (notices, deadlines, public hearings, content of material produced, etc.), but the primary and long lasting impact that the City of Paris will feel for years to come is the restriction in Property Tax Growth. The Texas Municipal League (TML) has produced an Explanatory Q&A, found on their website. The reader can also read S132 directly, but I would strongly recommend starting with the TML Q&A first to give you an idea of what it is you are reading in the Act. The Act is rather complicated. The TML Q&A does a very good job of capturing the essence of SB2. "At its most fundamental level, S.B. 2 reforms the system of property taxation in three primary ways: (1) lowering the tax rate a taxing unit can adopt without voter approval and requiring a mandatory election to go above the lowered rate; (2) making numerous changes to the procedure by which a city, adopts a tax rate; and (3) making several changes to the property tax appraisal process. " The Act produces the following formula when calculating our new Property Tax Rate: "Voter -Approval Rate = (No -New -Revenue Maintenance and Operations Rate x 1.035) + Current Debt Service Tax Rate" In short, the City of Paris can only grow its Maintenance and Operational Tax Rate by 3.5% each year without, possibly, triggering a mandatory election (hence the "Voter Approval" terminology). Cities with Page 15 of 23 populations less than 30,000 have an additional threshold called the "De Minimis Rate" that is calculated differently (not shown here), would exceed the Voter -Approval Rate and would give the city the ability to raise additional Property Tax without triggering the election. In this situation, an election would only be required if the final requested property tax rate exceeded both the Voter Approval Rate as well as the De Minimis Rate. It is not recommended that the City of Paris utilize this additional growth created by the De Minimis Rate unless necessary. From professional experience working in the State of Nebraska which has had a "Growth Restriction' for 20+ years, it is strongly recommended that the City of Paris attempt to utilize this allowed growth each year, when needed, in order to keep up with the growing costs of performing the Financial Policy. The costs that the City sees (third party, professional services, benefits, insurance, fuel, etc.) is not limited by this same legislation, therefore if the City falls behind, it could find itself unable to keep up, thus cutting services. Fortunately, the legislation is currently written such that a City can still utilize unused growth within three years (if the City utilizes 2.5% of the allowed 3.5% in year one, it can still use that additional 1% within the next three years). After that though, the City forever loses that growth potential, thus the road to falling behind begins. Utilizing the 3.5% growth each year, when needed, also allows for steady and healthy increases instead of drastic and last minute ones. I am in no way proposing that we arbitrarily increase the property tax for M&O each year by 3.5% if it is not needed. But if the service calls for this, given the legislators have already acted on behalf of the general public by limiting the growth potential, the 3.5%, which is not a lot to work with, would be reasonable to utilize when necessary. Reasons for Salient, Chanes from the Previous Fiscal Year So as not to repeat myself, please see Sections 43(7) and 43(8) below, which are combined in this memorandum. ChpSgswin Financial Policy The Financial Policy for FY23/24 is the same as given in FY22/23. City of Paris Charter — Article V — Section 43(2) "A consolidated statement of receipts and expenditures for all, funds. " Page 16 of 23 In situations above where you see a negative net (ex: General Fund, Airport Fund, Municipal Court Security Fee, etc.), this Fund has existing carryover and/or reserve funding available. The Revenue line shows the new revenue raised, while the Expenditure line shows the possible expenditure of both new revenue and reserve and/or carryover. In other cases, a positive net is shown when the City foresees more collection than expense, but these are primarily in Special Funds which have very restricted and narrowly defined expense options. The primary focus of our attention is the Operational Funds which are Funds #1, 3, 10, and 45. General Fund (#1) shows utilizing General Fund Reserve to fund capital requests (one-time expenses). Despite using some of the reserve, the City will still be able to maintain its minimum 4 month reserve balance. It is important that the City utilize its full allowable growth under SB2 to keep up with the rising costs of non -capital expenses. The reserve should only ever be used to fund one -rime purchases while reoccurring expenses are covered through annual revenue. The City must also be careful never to utilize too much of the reserve such that we dip below our minimum 4 month balance. This must be forecasted over an entire year as the reserve fluctuates given revenue does not all come in equal and regular increments, thus there must be an ability to cash flow while maintaining a 4 month balance. The Airport Fund (0) shows utilizing a small portion of reserve to help fund our share of a TxDOT capital project. The Water and Sewer Fund (#10) and Landfill and Sanitation Fund (#45) are our two primary business accounts and those are both balanced (new revenue = expense). It is important to note that the City has not raised its Solid Waste Rates in over a decade, therefore as costs have risen, we have decreased the subsidy to the General Fund (primarily used to help offset street maintenance costs). It is foreseen that in FY24/25, we will have to increase our rates as we will run out of subsidy to turn back to Fund 45. This may be a moot point as the City is currently considering proposals for privatizing its solid waste service which will change these affected accounts. Of final note, it is not critical that non -operational funds be balanced as we can only spend what is in the account and on things that are eligible contractually and/or lawfully. In addition, even if we do not have an amount budgeted, or not enough shown, we can still access the available funds within the non -operational fund when needed. City of Paris Charter — Article V — Section 43(3) "An analysis ofproperty valuations. " Page 17 of 23 1 - 1 2019-2020 2020 2021 2021mZ02 2022-2023 2023-2024 _ Total Taxable Value $16817 47,299.00 $1,732,236,641.00 — j $ 1,794,161,289.00 '$1,876,141,460.00 $2,228,001,573.00 $ 2,423,466,605.00 $2,588,988,526. Percent Difference 3% 3% 4% 5%19% 9% 7% 08 M Tax Rate 0.44248 0.4 3831 0.40868 0.39788 0.37357 0.34377 0.32176 Debt Tax Rate 0.109470.11 364 0.1074 0 .0829 0.080160.09901 0.15606 Total Tax Rate 0.55195 �_— 0.55195 0.51608 0.48078 0.45373 0.44278 0.47782 Percent Difference 10% 0% 6% 7% -6% .......,.... -.,...- -2% 8% Page 17 of 23 While Total Taxable Value has increased in recent years, the City's Total Tax Rate has decreased except for the Proposed FY23/24 Budget. The Texas Property Tax Reform and Transparency Act of 2019 will continue to manage, or as the intended goal of the legislators might be summarized as to say "keep in check", the City's M & O Tax Rate (note: the Debt Tax Rate is unaffected by this Act). City of Paris Charter - Article V - Section 43(4) "An analysis of the tax rate. " The Maintenance and Operation tax rate is decreasing while the Debt Service Tax rate is increasing in FY23/24. The following represents a comparison of FY20/21, FY21/22, and FY22/23 vs. the Proposed FY23/24 Tax Rates: YearM&O . Debt Total FY20/21 $0.39788 $0.08290 $0.48078 FY21/22 $0.37357 $0.08016 $0.45373 FY22/23 $0.34377 $0.09901 $0.44278 FY23/24 $0.32176 $0.15606 $0.47782 Preliminary The following represents a comparison of these tax rates against that of the Proposed FY23/24 tax rate: FY23/24 Fund FY20/211.,._� FY21/22 _ . FY22/23 $0.32176 M & O ($0.07612) ($0.05181) ($0.02201) $0.15606 Debt $0.07316 $0.07590 $0.05705 $0.47782 Total ($0.00296) $0.02409 $0.03504 This Tax Rate is, to the best of our determination using the Comptroller's Forms, in full compliance with Senate Bill 2, also known as the Texas Property Tax Reform and Transparency Act of 2019, approved by the Texas Legislature in 2019. To calculate the Property Tax of a Home, the following formula can be used: (Value of Home/100) x $0.47782 = Property Tax to be Paid Example: $100,000.00 Value Home: ($100,000.00/100) x $0.47782 = $1,000 x $0.47782 = $477.82 Please note that the Property Tax Rates of Lamar County, Paris Junior College, and either the Pans ISD, North Lamar ISD, or Chisum ISD will also affect the Property Tax to be paid. In FY22/23, the following shows the Property Tax Rates broken out by School District for FY22/23. Depending on which ISD a resident lives, the City of Paris' Property Tax Rate in 2022 (FY22/23) was either 22% or 23% of their total Property Tax Bill. The 2023 (FY23/24) Property Tax Rates are not yet known, but they are likely not to change dramatically. It should therefore be noted that when the City utilizes it's 3.5% growth as allowed by the Texas Property Tax Reform and Transparency Act of 2019, while critical to the City's Financial Policy and planned operation, it has a nearly de minimis impact as compared to the total tax bill owed by a resident. Page 18 of 23 City of Paris Charter — Article V — Section 43(5) "Tax levies and tax collections by years for at least five years or, if records for five years are not available, then for as many years as are available. " Total Tax Levy is what could have been paid if 100% of the taxes were paid. Total Tax Collected is what was actually paid. The City typically hovers in the 97% - 98% range. As of the writing of this memorandum, the city is once again around 97.3% so far in FY22/23. We work closely with our Delinquent Tax Attorney to address issues of unpaid property tax each year. Total Tax collected for FY22/23 is not yet known, therefore is excluded from this table. City of Paris Charter — Article V — Section 43(6) "General Fund Resources in detail. " Please see Exhibit A attached for a detailed listing of all Funds by line item (not just General Fund). This Exhibit A shows the Proposed FY22/23 Budget (shown on the sheets as "Proposed FY2024 Budget"). The "Year Budget" is the FY22/23 Budget. The "Current Year" is how much has been received to -date as of the printing of Exhibit A. And finally FY2022, FY2021, FY2020, and FY2019 are the prior four years of Actual Revenues that were used to help produce the Proposed FY23/24 Budget. There is of course a lot of information here, but for a community the size of Paris, budgets are complex. The purpose of showing you this much information is to give transparency. City of Paris Charter — Article V — Section 43(7), 43(8), 43(9) "Summmy of proposed expenditures by function, department, and activity. " "Summary ofproposed expenditures by character and object. " "Detailed estimates of expenditures shown separately for each activity to support the summaries No. 7 and 8 above. Such estimates of expenditures are to include an itemization of positions showing the number of persons having each title and the rate of pay. " Please see Exhibit B attached for a detailed listing of all Funds by line item. This Exhibit B shows the Proposed FY23/24 Budget (shown in the software as "Proposed FY2024 Budget"). The "Year Budget" is the FY22/23 Budget. The "Expended Year" is how much has been spent to -date as of the printing of Exhibit B. And finally FY2022, FY2021, FY2020, and FY2019 are the prior four years of Actual Expenditures that were used to help produce the Proposed FY23/24 Budget. There is of course a lot of information here, but for a community the size of Paris, budgets are complex. The purpose of showing you this much information is to give transparency. To assist you in identifying Operating Departments, the following legend is a breakdown of the Departments by Fund Number and Department Number, and for added convenience, I have entered the total Proposed FY23/24 Budget for each department (in some situations, you must add the Expense and Capital Outlay -Equipment to get the total). Page 19 of 23 The following Table is a listing of all of the significant capital outlay and improvement requests that have been added to the Proposed FY23/24 Budget. and and ig and C_ollecti ig and Collecti Council Council , Council Iia "nffi U'N der vti Code Enforcement Code Enforcement Code Enforcement Community Develo EMS EMS EMS EMS Line Item Description Payroll Lines Assistant Finance_ Director 01-0408-21-00 Flag Pole & Flags 04-0915-61-98 AWOSUpgrade .. ............_.._..-- ...._........._...... 04-0217-61-00 61-00 Furniture Replacement Payroll Li Reader Lines Meter ....-..es m.�_. -- 10-1002-81-99 Meter Reading Truck O1-0350-11-00 Housing Assessment 04-0310-11-00 1Belford Demolition 04-0401-11-00 (Grand Theater Pavroll lines Publie Information Officer Payroll Lines Assistant City 01-1002-40-02 Mower _ 04-1004-40-02 1/2 Ton Truck 04-1004-40-02 UTV Pavroll Lines Secretary Payroll Lines Crewmembers (x3) O1-0318-54-00 PCG Contract - Medicare 05-0209-54-00 IV Pumps 05-0211-54-00 Jump Kits EMS 05-0211-54-00 'Zoll ZVents EMS 05-0401-54-00 (Eastside Floor'ing Engineering 01-0321-41-00 Lida rSurvey Structural Analysis - Depot Engineering 04-0318-41-00 Building Fire 01-1005-32-99 Fire Marshall Truck Fire 01-0221-32-00 Radios Fire N/A Ladder Apparatus Replacement IT 01-0210-89-01 Citch crosoft365 IT 05-0510-89-01 and Server Replacement Library_ 01-0402-64-00 Roof Repairs Library 01-0216-64-00 Furniture Replacement Lift Station 05-0510-87-00 Lift Station IT Infrastructure Notes See Budget Message. Salary and Benefits. Citv Hall Flae Dole and flaes. $ 125,000.00 TxDOT 90/10 grant project to replace aging AWOS system. $ 5,000.00 Replace aging furniture in terminal. $ 42,000.00 see Budget Message salon and Be nefats. $_40,000.00 Truck for new Metter Reader. ______ $ 65,000.00 Phase II of Housing Assessment Study. 1 $1000000.00 Dem. -o.._... ._. y. olition of Belford Building- Public Safety. Phase II - Cleanup and Asbestos Abatement. City -owned $ 100,000.00 building._ $ 76,000.00 (See Budget . .. y g Message. salary a and Benefits. See Budget Message. Salary and Benefits. Spread out $ 160,000.00 across Depts. 12, 82, and 86 Unbudget Dir. of Utilities. $W 12,600.00 Nuisance abatement, replace aging mower. $ 40,000.00 Replace aging vehicle for code enforceme _ nt officer. Replace aging equipment for better nuisance abatement $ 16,000.00 access. $ 39000.00 See Budget -.. . _Benefits._ Mee ....ssage. Salary and See Budget Message. Salary and Benefits. Note: This $ 195,000.00 expense does not reflect net difference from PT. _Pe rexistmgcontract, Medicare regulations require surveymm $ 35,000.00 completion. $ 20,000.00 Better IV man _....... _ agement and timing. Reorganize existing personnel bags for�ww greater ease and $ 10,000.00 less strain. ................ Medical equipment, fourtrucks .w...__ have been outfitted, need $ 45,000.00 to finish the final three. $ 8,801 00 ',Rehabilitation of flooring Countour mapping of city, 8 shots per meter. Will help $ 34,000.00 :with drainage, floodplain, developer, surveys, etc. �. ........... _ Aging building, cracking occuring, need to determine if $ 38,000.00 structural issues exist. City -owned building. $ 90,000.00 Replace aging Fire Marshal Truck. $ 23,000.00 Radio replacement. ........... ..r................ Funding set aside for future purchase of $2.2 million ladder $1,500,000.00 apparatus. 2+ year lead time for delivery. --_1._- .... Annual_, ,- _— expense. Current software support ends October $ 55,000.00 2023. Shifting from server based to cloud based. -.111".."1111111111 Switches connect offices to network, 12+ old and $ 43,000.00 failing. Servers also aged and failing. $ 10,000.00 Misc roof repairs. $ 45,000 00 Replace existing aging furniture throughout building. Current radio failed, using borrowed radio. Needed to $ 16,000.00 maintain offsite connection to liftstation. Page 20 of 23 Lifts tation -- 10-0911-87-28 6" Portable Pump -- Liftstation 10-0915-87-98 Woodard Fencing n f.Liftstati... ..111.1. 10-0401-87-00 Southeast Lift Station Entry Gate Main Street 01-0324-40-03 Market Square Landscaping ...�...._ ... .e MMain Street 01-0323-40-01 Sots & Labor - Downtown Parks A, ..._..� 1111 ..:..�....-.. 04-1004-43-98 Truck-CrewC ab _ Parks 04-1002-43-99 NN Bed Trailer Police „.. ... .,........ -... 01-0401-31-00 —. HVAC Repairs 1111 .�- Police01-0401-31-00 . _ 1111... � Roof Repairs -.,.�............... .-, ..., 1111... : Anima I Shelter - Dog Runs - �Police 01-1005-31-99 'Concrete Police � F. 01 1006 31 99 - Shelter Banks & Maintenance IPolice01-1007-31-99 .. Surveillance Cameras .mm....._„_ .... ....... Police .................................................... 10-1009-31-99 ............ ........m..-.,,..-111__1... Cop -Logic System Police 01-1011-31-99 Patrol Revisions Police 101-0219-31-00 1 Ra Police ing Police �...04-09015-31-98 ID spat h Conversion nCosts Police 04-0209-31-00 DigiTicket Writer Streets 04-1004-46- 98 F-450 Chassis Truck ..... - 01-0915-46-98 Streets 46-0908-46-98 Street Mill and Overl WasteWater Treatment 10-0911-86-98 8" Auxiliary Pump �Waste_WaterT_reatment 10-1004-86-99 IUN Water Distribution 104-1005-83-99 U Bobcat Compact Track Loader Water TDreatme toI 04-1004-82-99 Electric an Trp ck Excavator Fj Fj Water Treatment � 10-0915-82-98 I', Filtration Cell Rehabilitation 1 $ 4,000.00 Widen gate for easier equipment access. 20,000.00_ Replace existing landscaping, beautify downtown square 38,000.00 Replace existing sod, beautify downtown square. 50,000.00. , w. ,Replace aging vehicle. 17,000.00 tBetter equipment loading and unloading ease for s tall. 25,00_0.00 Creation of new line item to service HVAC system. 25,000.00Creation of new line item to service roof. .... ,,,,,,,, ­.... Concrete floor of remaining outdoor dog runs as well as 20,000.00 low spot where water pools. m..�m,.._m��.� 15,000.00 Animal shelter re airs and roofs. 15,000.00 Police operations. 6,000.00 Online repo .........— - ..... _. — n reporting system. 17,000.00 Patrol Department office rehabilitation. _ ation. _ Radio replacement, gun replacement, and traffic speed cover for backup generators, SWAT equipment, Continuation of dispatch improvements from FY22/23. ..................................................................................................................................................................................................... Replace existing aging ticket writer equipment for all patrol units. Provide greater field ease and upload. Replace aging vehicle. -,,,,. ...---...... ...... - Mill and overlay arterial roads throughout town. Using existing unused bond funding. Replace wheel -base with a track -base for greater cross- country access. Give us two c........ . ., ,,. _ t. . ........ . .......................... ....._..__. ompact excavators so that both crews can work at same time. Daily use and need. Replace aging vehicle. Continuation of rotation cleani ing out fltration cell's one at a time. Please see Exhibit C for an itemization of positions showing the number of persons having each title and the rate of pay as shown in the Proposed FY23/24 Budget. Note, this only reflects the starting pay as of October 1, 2023. Employees eligible for merit or seniority pay increases will experience those throughout the year. City of Paris Charter — Article V — Section 43(10) "A revenue and expense statement, for all types of bonds. " The following is a summary of the Long Term Financing that the City of Paris is currently scheduled and/or proposed to make payments on in the Proposed FY23/24 Budget. City of Paris Charter — Article V — Section 43(11) and 43(12) "A description of all bond issues outstanding, showing rate of interest, date of issue, maturity date, amount authorized, amount issued, and amount outstanding. " A schedule of requirements for the principal and interest of each issue of bonds. " Page 21 of 23 Please see Exhibit D attached for a list of all Amortization Schedules for the Long Term Financing that the City of Paris currently has outstanding or is proposed to have outstanding. City of Paris Charter — Article V — Section 43(13) "A special funds section. " The following table is a summary of the special funds proposed in the FY23/24 Budget. The above are also shown in Exhibits A and B. City of Paris Charter — Article V — Section 43(14) and 43(15) "The appropriation ordinance. " "The tax levying ordinance. " The Appropriation Ordinance and Tax Levying Ordinance will be provided at a future City Council Meeting for the City Council's consideration. Page 22 of 23 City of Paris Charter — Article V — Section 44 "In preparing the budget, the City Manager shall in the preparation of the budgetplace in parallel columns opposite the several items of revenue the actual amount of each item of the last completed fiscal year, the estimated amount for the current fiscal year, and the proposed amount for the ensuing fiscal year. " The Proposed FY23/24 Budget will show columns for the Proposed FY23/24 Budget, the Budget for FY22/23 (the City of Paris is currently within the FY22/23, therefore Actual Yearend Values are not yet available), the Actual FY21/22 Values, as well as the Actual Values for several previous Fiscal Years. Please see Exhibit A. City of Paris Charter — Article V — Section 45 "The City Manager, in the preparation of the budget, shall, in parallel columns opposite the various items of expenditures, place the actual amount of such items of expenditures for the last completed fiscal year, the estimate for the current fiscal year and the proposed amount for- the ensuing fiscal year. " The Proposed FY23/24 Budget will show columns for the Proposed FY23/24 Budget, the Budget for FY22/23 (the City of Paris is currently within the FY22/23, therefore Actual Yearend Values are not yet available), the Actual FY21/22 Values, as well as the Actual Values for several previous Fiscal Years. Please see Exhibit B. City of Paris Charter — Article V — Section 56 "Provision shall be made in the annual budget and in the appropriation ordinance for a contingent appropriation in an amount not more than three (3) percent of the total general fund expenditure, to be used in case of unforeseen items of expenditures. Such contingent appropriation shall be under the control of the City Manager and distributed by him, after approval by the City Council. [... J " The total General Fund Expenditure in the Proposed FY23/24 Budget is $31,051,550.00. Three Percent (3%) of this would be $931,546.50. The Proposed FY23/24 Budget has a listed contingency of $50,000.00 found under 01-0000- 91-00. This has been the amount used for several years. City of Paris Charter — Article V — Section 57 "The total estimated expenditures of the general fund and debt service fund shall not exceed the total estimated resources of each, fund (prospective income plus cash on hand). [... J " As has been discussed in the above memorandum, the Proposed FY23/24 General Fund Budget will be balanced using prospective income as well as cash on hand from the General Fund Reserve. The General Fund Reserve is healthy enough to allow for this use while not exceeding policy. In addition, the Proposed FY23/24 Budget shows a slight net positive in each of the Debt Service Funds in order to meet our debt obligations. Conclusion The Proposed FY23/24 Budget is a true reflection of the Financial Policy. Through the hard work of many City Staff, the budget has been thoroughly reviewed so that our most basic of services are properly accounted for, excess funding has been captured and re -directed to further the services we seek to provide, and the priorities listed in the Budget Message have been funded while keeping a careful eye on the impact to the taxpayer. We are very pleased to present this Proposed FY23/24 Budget to the City Council and we look forward to an opportunity to discuss it further. Page 23 of 23