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6. Rising Costs — As has been the case over the past several years, rising costs for goods and services continue to impact many areas of the budget. Numerous line items have increased simply due to inflation reflecting higher prices for the same quantity of goods or services. While staff work diligently to find cost-saving opportunities and secure competitive pricing, even maintaining current service levels increasingly requires additional revenue to support ongoing operations. 7. Revenue: The City's two primary revenue sources, property tax and sales tax continue to shape the overall budget. The proposed FY25/26 budget assumes adoption of the de minimis property tax rate, generating approximately $485,000.00 in additional revenue (based on a 97% collection rate). However, due to a recent softening in sales tax collections, projections for sales tax revenue have been adjusted downward compared to last year. Interest earnings are also lower this year, and we are conservatively projecting similar performance in the coming year. On a positive note, EMS revenues have remained strong and are projected to increase again in FY25/26. Overall, total revenues including restricted HOT tax revenue are expected to increase by approximately $1.4 million compared to the prior fiscal year. Conclusion The Proposed FY25/26 Budget is a clear reflection of the City's Financial Policy. Thanks to the diligent efforts of City staff, the budget has been carefully reviewed to ensure that core services are fully funded, excess funds have been identified and reallocated to support key service enhancements, and the priorities outlined in the Budget Message have been addressed all while remaining mindful of the impact on taxpayers. We are proud to present this Proposed FY25/26 Budget to the City Council, along with a strong recommendation to begin developing a long- range financial plan. This plan should include the opportunity for a comprehensive overhaul of the existing pay study, staff benchmarking, and strategic planning for capital improvements in streets, sidewalks, gutters, underground infrastructure, and stormwater management. 7