Thank you. Thank you. Thank you. Thank you. We'll be right back. We'll be right back. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Good afternoon. Thank you all for coming out and declaring this committee of the whole on the FY24 budget. So this one is going to be, we're going to have a couple of presentations from finance on our quarterly financial update and also on the mayor's proposed budget overview. It'll be kind of two separate presentations with time for us to ask questions and engage after each one. And at the end of this meeting we will make some sort of move on our revenue. So without any further ado, Commissioner Hensley, if you want to kick it off, thank you very much. Oh man, the timer beeped at me before I even got started. Doesn't bode well. All right, well, hello everybody. Today we're going to start with our financial update. And this is for the period ended March 31st. So this is the first nine months of our fiscal year. Just as a reminder, we'd like to provide our revenues and expense budget in a picture because it's easy to forget how seasonal our revenues are and that our expenses come at different times as well. So that is what our adopted budget looks like. And you can see for the nine months into March 31st, it looks very similar to our budget. So we're doing really well. Our actual revenues exceed our actual expenses. Transfers to the positive, almost $10 million. dollars. As we go into April and May, those represent our large collection months for our net profits. So we'll see a tremendous increase, hopefully. Already seeing that come in. But we expect a major increase in revenue in April and May for those net profits. Wes is going to talk about that a little bit more. Our personnel is holding. We're within 4% of our budget personnel expense. It is our largest expense, so that's really important And then we hit that one. And we are still seeing some professional services and some operating supply costs that continue to be a driver of that variance in the operating variance because of the supply chain issues or just inability to find contractors or folks to work on the projects that we have. We're having to go out to bid more than one time sometimes. And that's just delaying things a little bit. So we're going to dive in. This presentation, since it's quarterly, has a few more charts and graphs. And so if you all will permit, I would introduce Director Holbrook, Director of Revenue. He'll go over the revenues. Good afternoon, Council members. The first two charts just show our two major revenue sources and what our performance in the prior year and this current fiscal year look like to the current year budget. So you can see this is our FY23 payroll withholding actuals versus the budget. And then also the gray line would be the prior year collections. And there's a little bit of variance between the two. But overall, for the first half of the year, we saw some very strong performance in our payroll withholdings. Much higher over budget, much higher over prior year. As we've gotten into the second half of the year and we're ending quarter three, it's a little bit more mixed. we've had some other performance, we've had some not meeting budget, we've had some roughly similar results to last year. And so this is something that might be indicative of some of the national news that a lot of the growth we've seen is sort of calming down and we're going to be on a more normal growth trajectory than what we've seen. But overall it's caused our surpluses to stabilize. We haven't seen a lot of change in those. And so that's something we're going to continue to monitor as we go forward. Still very strong performance going through the rest of this fiscal year, it looks like, but something we're just going to need to keep an eye on and see if we get any change one way or the other. But right now, overall, it's sort of a stable picture. And looking into net profits, we've had very strong overperformance in net profits for this fiscal year relative to prior year and relative to budget. One of the things you can see are our two biggest months. We're in one of them right now, and the next one is coming up. We've made some process changes that we believe may be allowing us to get money in the bank quicker in April. Normally, the reason that those two months are so big is because it takes us that long to open all the mail and get the checks processed in our system. We've partnered with a lockbox processor, Fifth Third Bank, and they do a lot of the mail opening and check depositing for several of our net profit mailings. And so that may actually allow us to realize a lot more of this revenue in April versus May. But right now we're in the midst of it. We've got buckets full of mail that we're still running through. We've had some very large checks, and we'll have to get to the end of the month to see how that's performing relative to what we expected and and to prior year which was our highest year on record just looking overall and this is actuals to budget we've again we've seen strong performance through most of the fiscal year in our top four some strong growth right now especially in payroll insurance and franchise fees those surpluses are sort of stabilized net profits this being the largest uh largest month that's that's something that we we might continue we might see to grow as you get on down into the other sections you see services one of the large changes there on that negative is is related to a budgetary difference in the excess fees and collections line there is not really much of a difference when you look actuals to actuals which you'll see on the next slide but it is a budgetary difference that we're we're looking into Just looking year over year, you can see how in most of our categories we've seen some very strong performance compared with prior year. The services line, which was a negative variance to budget, is actually performing very strongly compared with prior year. And overall, both to budget and also compared with actuals prior year, we've seen very strong revenue performance. and we're going to watch that for the rest of the fiscal year for the last quarter to see how it how it ends up. But right now it looks like the way that everything's running will will perform on the whole well over the prior fiscal year and also to budget as well. And if there are no questions, I can turn it over to Director Luker for the expenses. Yes, sir. Thank you very much. So did you change the process last year too for receipt of the net profit tax in April? No, this is the first year that we're seeing that. And one of the things that we experienced last year, we were very short-staffed. Right now we have a staff of 10 compliance analysts that do most of this work. We were down to six last year. This year we have this expanded process with fifth, third for lockbox processing. and then also we're almost fully staffed as well. So we're on April 25th, and so even if we, your numbers through April 25th probably wouldn't be relative to last year's numbers, so the guess is not going to be very good for April and May. I think we need to see, because I think some of what we're seeing right now is what we likely would have collected and processed in May last year, and so we really need to get a little bit into May to see. I think what we've opened so far is very encouraging, but we still have tubs and tubs and tubs of mail that we need to process. Thank you. Appreciate it. Any other questions on revenue? You all can sign in if you do. Can I ask real quick on the, I think on the last slide, the actual budget, talk me through a little bit on the ones that have the really big variance percentages, like income investment, other financial, other income? Like, what are those? Why is that variance so big? And is that relatively normal year to year? Okay, so on income, investment income, that is being in a high interest rate environment that is resulting in a much higher collection of that. It's not, if you look at the percentage, it's not really that much money, but the money we have in the bank through the safe and secure investments that we're able to invest in, that's just able to generate a lot more from the interest rates that are a lot higher right now. As far as other income, one of those is contributions, which could be a variety of things because that has a relatively small budget. Penalties and interest, this could be other divisions too, but one of the activities that we engage in when we audit accounts or people pay late, they typically pay penalties and interest. And so that's adding some of that revenue as well. And that falls in other income. Moe was the other one you had asked about, I'm sorry. I think just generally on some of those big numbers, so in that total number at the bottom, the 9.1%, how does that compare year to year? Is that a pretty predictable number, that 9.1%? I think the 9.1% is just based on what we've seen the last few years. That seems relatively normal, but if you look over the long history of our revenue, we're typically around the three and a half to four percent depending on what the revenue source is some of them are very volatile like net profits is an extremely volatile number and is difficult to say it's going to grow three percent it could be up 20 percent one year down 10 the next up one the following year some of them are a little more steady like insurance is one that that typically does see some some pretty regular growth going down into that each of those those other lines has a lot of different pieces to it to come together and so it's it's hard to look at one of one piece of that and say that this is what's what's driving that but on the whole we typically see around three and a half to four percent um just over the long the long life of our revenue history so this is a little bit out of the ordinary but not necessarily completely strange yeah we've we've seen years like that the last couple years um you know in the previous decade We've had other years have been like that. We've had other years that have been relatively flat in the past decade. So it's really, we do see a lot of reflections in the national economy and some of the growth that we've heard about in our own economy. But we also have some uniquenesses to us that might provide a more nuanced picture if we were to dig in. Thank you. Any other questions on revenue? If not, carry on. Thanks. All right, we'll switch over to the expense side here. And this chart shows our personnel budget to actuals. You'll see the blue line is the budget for FY23, the gray bar is the actuals for FY22, and the orange bar is the actuals for FY23. So you'll see that we are coming in very close to budget, within 4%, as the commissioner said earlier, for FY23. You'll see we're coming higher than we were last year, all of those bars, with the exception of a couple three payroll months being different from one fiscal year to the next. Last year we had three payrolls in October. This fiscal year we had three payrolls in September. And then you'll see spikes in January. If you all remember, that's sick checks and that's a lot of retirement payouts, so you see it spiked there. We had three payrolls again in March this year, so that's why that large spike is there. And then I do want to point out we've got a large spike in June on the budget, and that is where the FY22 fund balance assignment for the salary enhancements for public safety, that is where that is budgeted because that will be carried forward to the next fiscal year. So that has increased the budget for June. So that's why you see that large spike on the budget spread. That is built into the mayor's proposed budget based on the FY22 fund balance assignments. So we've put that there. So I did want to explain why we've got such a high budget there in June because that is, it does look a little funny compared to the rest of the chart there. Here is the same chart for operating. and you can see we're not as close on our operating budget to actuals as we were on the personnel. We are spending more than we did last fiscal year, but we are spending under budget still year-to-date in our operating as well. So looking at the numbers here, you'll see the personnel is within 3.8% of budget, and that's primarily due to a number of vacancies that we have right now. that's our largest component of the general fund budget so we watch the personnel very closely the operating variance it is a mixture of items as the commissioner said some of our professional service contracts operating supplies maintenance equipment various things like that we know we've seen savings at the jail with our medical and mental health contracts and so we continue to watch those as we go throughout the fiscal year. The insurance expense, we are booking that. Some of it was booked a little bit early, some of it booked a little bit ahead, but you'll remember we did a budget amendment to correct our insurance problem. So this variance here is just a timing difference of when a premium was booked versus when it was budgeted. The debt service, we're right on track. I like that 0.0% there. No large percentages there. And then same with our partner agencies. We're less than a percent there. The capital, that is a large percentage variance. And that's just the capital are typically our one-time expenses. And so with it being a one-time expense, larger projects, you don't know. It's harder to predict when during the fiscal year you'll have those expenses. So that one is a little bit harder to look at compared to budget. The transfers were within 2% on our transfers, and that's just a movement of resources in and out of the general fund to various other funds for ordinance-required things or subsidies to other funds that need assistance. So overall, for the first nine months, you'll see that we brought in $9.7 million more than we spent for the fiscal year. Comparing to prior fiscal year, you'll see that we have spent more in every single category. I will point out that large number in personnel, we've spent almost $24 million more this fiscal year in the first nine months than we did last fiscal year's first nine months. So that is quite a large number, and that goes to show all the personnel enhancements that have been added for employees. we also have that's all the expenses and then the ARPA slides are in the packet for information so if there are questions council member James Brown thank you thank you vice mayor thanks for the presentation on the slide the previous slide, the 2023 fiscal year cash flow variance. The variance in operating and capital, what do you associate that with? Is that supply chain issues? So there are some supply chain issues there in the operating variance. I know there's one division that placed an order in, I believe it was in like March of 2021. They're supposed to get the stuff this fall. So there are things that are taking longer to get. Some of that is also with the contracts at the jail. If our inmate population has been down, then we're not spending as much on the per diem for the food contract, the mental health, the medical contracts. you know, we get those contracts have built in. If we don't reach a certain number of inmates' daily population, then we get credits back. So we're not spending as much there due to lower number of inmates as well. Okay. All right. And then on the personnel, the variance in personnel on the next slide, is that due to the pay increases or is that due to us actually filling vacancies? It's mostly due to the pay increases. We've added, you know, all of the public safety units have gotten, their contracts have been negotiated, the additional enhancements. We've implemented the compensation study. We've implemented two raises during the current fiscal year. And so it's just a lot of the additional salary enhancements that we've given out that's causing that. All right. Thank you. Thank you, Vice Mayor. Council Member Sheehan. Thank you, Vice Mayor. I actually have a more general question for Director Holbrook. So for my education and just for the public, when you talk about buckets of mail, you're literally talking about buckets of mail, correct? Yes. We have 46,000 registered businesses, and two-thirds of those submit a net profit return or an extension during this time period. they're also submitting their estimated payments. So we're, we have buckets and buckets. I mean, at one point we probably had 10 to 12 buckets of mail a day coming in. And then could you talk a little bit about, you know, for other city services and things we can select, we can collect through like ACH. What are the challenges or barriers here? Because it does seem inefficient, right? So I'm sure you've looked at this. Could you talk a little bit about why we do it this way? We are, and that's something that we're we're looking at we we had an item before council to to expand our electronic billing and and merchant services one of the challenges is whenever a business submits their tax return for an individual which is actually about half of our businesses are sole proprietors and their tax returns are generally fairly small but when you get a large corporation an international corporation, they might send you a tax return that's, you know, this big. And to be able to get all of those documents securely, you know, to send them to a lockbox service like we did with some of our other mailings is cost prohibitive. And so we need a way to be able to get that information, have it for our audit period, and make sure it's there and kept secure for, you know, for the business's confidentiality. So it sounds like some of it is the cost of keeping the information secure. That's a bit of it. And because there's a little bit of, there are a lot of pieces that go into the net profit return, the local form, the federal form, the payment. Did they do their calculations right? What pieces from their federal return might be feeding into their local return? There's a lot that has to be put in there that then has to go into our tax system. So it's like a whole packet you're saving. It's not like you're just getting a check. Right, right, yeah. I mean, it's a lot of paper from every single individual business that files. Okay. Thank you for that explanation. I appreciate it. Thank you, Vice Mayor. Thank you. Thank you. Council Member Civigni. Thank you, Vice Mayor. This question is mostly about, so it seems like, if I'm understanding this correctly, our change in fund balance in the general fund on march 31st is 9.7 million correct that's correct okay and and i i know that the administration has recommended i think using 25 million dollars of fund balance uh to pre-fund next year so would i is it correct to assume that the budget for the fund balance is going to be 25 million dollars at the end of the fiscal year i'm going to let the commissioner handle that question yeah i i think the the thing that we are looking at um in these slides is that the 9.7 million dollars is through march and it is actual budget versus actual expenses through that date, which if we would have ended on March 31st, that would have been where we landed. However, we know that our second largest revenue source comes in in April and May. We've already anticipated where we're going to be with both expenses and revenue through the end of the year. But if you do look at your revenue slide on the first revenue slide that has That's the blue action. Sorry, that's me. I can show that to you. So our actual to budget revenue collection without net profits happening in March and April exceeded our budget by $27.8 million at that point. We also know that we're going to recognize some expense savings. So those factors make us feel very comfortable that the 24-6 that's proposed the mayor's proposed budget is a comfortable number for pre-funding and that we'll have resources after that because that number is as of march we still have april may and june to go thanks i have one follow-up then sure um that then the spike in the spike in expenses that's predicted for june is that from the pre-funding recommendation that we've received or is that from last year you approved that that would take place in our budget in June? Right. Our budget historically has higher spend for expenses at the end of the year, just everybody closing out the things that are happening ongoing, making sure all the contracts are paid out that they have agreed to for the course of the year. We really are on our vendors to get information in, and we typically have a higher spend on expenses in June historically. It does not include the pre-fund. Okay. Thank you. Appreciate the help. Thank you, Vice Mayor. All right. Any other questions on the financial update? All right, Commissioner, if you would, let's kick off the proposed budget overview. All righty. All right, so we are going to go through today, if you will, the how the budget is put together. The mayor does a really great job in her speech of telling you what is in the budget, and this is kind of how the budget is built. So we start with her guiding principles, her framework that she gives us. And so this year, her priorities were to continue to invest in public safety, focus on sustainability and green spaces. We've continued to see that throughout the course of the pandemic, that that's really important to our residents. We saw it with the investments in ARPA and what people were asking for. That has continued in this budget. We were looking ahead for the government facility needs. We'll talk about that a little bit more here in a little bit. Continue to invest in paving traffic and pedestrian infrastructure. That's always a big focus for our residents. Address those pent-up capital needs. We talked about this a lot last year, and that is continuing in this year. So those items that may not necessarily be items that we want to bond but are still expensive items that we need to go ahead and pay for, our things are reaching end of life like playgrounds. Those are things we want to continue to address so we don't get in a situation where we're not able to keep up with the useful lives of our assets. and then lastly our focus on wages to recruit retain our talent our talented employees in addition to that we spent a lot of time paying attention to what you all told the mayor was important to you and so we've been able to provide you all a list of the items that you particularly had interest in as well as though are those overarching goals of council which many of which were also the mayor's priorities so that was really great that we were able to align those. For our revenue overview, obviously 23 we've just talked about, it's coming in, our revenues are coming in much stronger than we anticipated and that we budgeted for. So we are very comfortable in proposing a pre-funding in the amount of about 25 million dollars. We're going to talk about specifically what's in that list here in a minute and there is a budget amendment that is in your all's packet for this afternoon's work session that has that list and where if we pre-fund those items it will go I think it's really important to note that when you look at the budget book the list of pre-funded items are in the front of the book they're not included in the total dollars because they're actually going to be 23 expenses as opposed to 24 so when you pre-fund something we're going ahead and alleviating next year's expenses by doing it this year so it does look a little bit different in the budget book if you're trying to tie those out. For our 24 revenue estimate, we did adopt the net profits and payroll withholdings recommendation from Dr. Clark. He came and presented at the budget and finance. We were very comfortable with his estimations. They were well within range of where we thought we would be, and then we took a look at the remaining revenue sources and have estimated those as well. We continue to have conversations with our counterparts in Louisville and at the state just to make sure we're on track. Nobody's seeing any red flags or anything that really we need to pay attention to if maybe we're delayed or we're not seeing it here yet. But our counterparts in Louisville and the state are seeing those. We want to make sure that we are heading that off. So we continue to have those conversations. And, of course, look at the national economy as a whole when we are estimating those revenues. throughout the course of this year and all of the pandemic we were able to hold our bond ratings stable we actually are double a stable which is great for a local government and so we've been really proud of that progress so when you look at the budget as a whole we anticipate that our earned revenue which is our recurring coming in will be 461 million dollars our expenditures in this budget are 504 million dollars creating a gap of 42 million dollars when council elected to do the additional increases for public safety they made a commitment to do a year and a half allocation of those funds so as director was lucre was telling you all when you saw that spike in payroll in June we already knew that we were going to be carrying money from this year to next year to allow our organic revenues time to grow and compensate for those payrolls. So you will see that $18.8 million of that is coming in from the 22 fund balance assignment to offset those payroll costs that we were seeing coming from public safety. After you take that away, the remaining variance is $23.5 million. We are pre-funding the $24.5 million. And so you might ask, what's the sending fund balance? So from the point of time that we adopt our budget, so that's July 1st, through October, November, around that time when we have fund balance conversation, our budget is locked down and that is all of the resources that we have. Unfortunately, we have a number of items that will come up, things that we didn't think of, things that need to be addressed. One of those things is ad valorem. We try and anticipate that, but it happens in August. So if we have to make an adjustment for that, there's got to be somewhere that comes from. So we do leave an ending fund balance to be able to account for that. Just as a frame of reference, last year our ad valorem adjustment to the library was $1,800,000. So not a whole lot of wiggle room there, and we don't really know, but everything that we have in our budget is a projection, so we need to make sure that we leave a little space. fund revenue breakdown includes payroll withholding is our largest source the mayor's proposed budget has 260 million dollars almost 261 million dollars net profits our second largest source has 64 million dollars insurance at 39 that is as director Holbrook mentioned a kind of a steadily growing item it's slow but steady and franchise fees is kind of in that same boat at 28 million dollars all of the other items our fees for service our other investment income everything else we are anticipating being just over 69 billion dollars next year so that gets you to that 461 million dollar revenue estimate that we showed on that first page so again just to look at it across years the fund balance from 22 is coming in to offset some of the salaries 23 has pre-funding that will enable us to alleviate some expenses from next year and then we have earned revenue for next year 461 million in the pre-fund list we have a number of items that are kind of helping out offsetting, if you will, some of our other funds. So you'll see streetlight subsidy, E911 subsidy up there at the very top. Those items are not items that can really pay for themselves. So the general fund is able to offset and help some of those expenses when we anticipate that expenses are going to exceed revenue. Also at the top there is extended social resource grants. We're in a two-year grant cycle. We already know what those contracts are going to be, but it's really helpful to go ahead and get that out in front of the end of the year so that our nonprofits are not lagging and having trouble with the timing of when their payments are available. So we have historically put ESR in this list of pre-funded items just to kind of help that out. There's a number of other items in here. Primarily they are capital. If you look through the list, they're items that are things that need replacement or things that are something that we can do one time that we're able to cash flow. Uh-oh, I broke it. Okay, sorry about that. This is a list. Just a reminder, our largest source, in case you all forgot, largest expense is our people. In this budget is a 5% increase for all non-sworn personnel, of which $3.7 million is the general fund portion. We do have 34 new and expanded positions across all funds. So we're having this conversation today primarily about the general fund. I probably should have started with that. But this list, just so you all get a full picture of what's in the book, 22 of those positions are general fund impacted positions. And the remainder are over in waste management. They're trying to start a pilot program for converting some of our seasonal and part-time folks to full-time. So we're giving that a shot. A number of these positions are things that we have seen a dramatic increase in our operations over the last several years, such that we really need additional personnel to try and keep that up. You see Parks and Recreation in there. You see Environmental Services in there. The Department of Planning and Preservation, the mayor talked about in her speech, was previously just kind of held for a period of time when we were experiencing some tighter budget years. They're bringing that back out. And then there's just a number of different services, including the paramedicine folks, that we would like to continue and enhance, And those are on this list. So overall for our highlights, very top level, what we're looking at is our large personnel increases over 23 adopted budget. You saw that spike again a number of different times. And the full implementation of our compensation changes for public safety plus their contracts, the 5% for non-sworn. We are continuing to experience that market pressure. I know nobody is immune to, you know, it's just costing a lot more to recruit and retain good personnel and just get enough to be able to continue our services. So that continues to be a pressure that we're experiencing as well. Our professional services and other contracts are going up. We showed the increases, even though we're under budget. Those are an increasing cost for us. In the highlights, we also have a $2 million allocation to affordable housing outside of ARPA. the $4.3 million for ESR, which is the highest it's been thus far, and it does include $476 million for the nonprofit capital grants. We heard the message loud and clear. I'm sorry, did I say million? $476,000. Let me clarify that. $476,000 for nonprofit capital grants. We heard very clearly from our nonprofit partners that that was very helpful, and we'd like to continue that. the new department of planning and preservation we talked about and then the long-term capital investment planning when we looked at our facilities there are a number of needs and items that are priorities for the mayor and that she wanted to address so included are the senior and therapeutic center design the police and fire joint training facility the site study of where that will be as well as a allocation for the government center you all know we're going through that space study we hope to have an idea idea fairly soon of what we will be working towards and so there's funding in there for that in addition with our green spaces and recreational enhancements we have funding in there for Douglas Poole Phoenix Park Deerhaven and the Kelly properties which are new parks for us. Also of much importance to our residents is paving and what is going to be happening for infrastructure and where. We do have $14 million in paving in this budget, 12 of which is bonded, two of which is map funding, and then there's a list of the other map funded projects. We get a significant amount of money from the state and federal government for these projects and we provide a match and those matching funds are vitally important in order to be able to do those projects our bond is 38 and a half million dollars it includes paving as the largest item at 12 million the next steps for the city hall pre-development a significant investment in fleet fleet prices have just gone through the roof particularly those in fire. And unfortunately, the lead time is almost three years to get new fire apparatuses. So if you don't get your orders in and get in the queue, you're just getting kind of behind. So we do have a $5.2 million investment in our heavy fleet for fire. They're also needing their portable radios replaced. Those have reached their end of life. It's pretty significant, but if you think every single one of our firefighters carries one around. That's a lot of equipment that we're purchasing. We have police vehicles at $2.6 million. The HVAC at police headquarters is $2.3 million. I had no idea an AC unit could cost anything like what it costs, but that's one building. And then we have our investments that we just discussed in our Douglas Pool and Phoenix Park, as well as our continued investment in PDR. And then lastly is our streets and roads vehicles while we did not have as much snow this year Which was great. We had a number of events for which our streets and roads professionals were called out And so we continue to need to invest in replacement vehicles for them. You know, they they were tremendously Just they were just amazing during the windstorms and all of the cleanup and debris and helped by Parks and Recreation and we just need to make sure that they have what they need to be able to do their work. We have traditionally provided this slide. It's just a long-range look at where our bonds have been. And then also, as a percentage, we've talked about over time how much our personnel costs. It's our largest piece of the pie at 63%. Operating budgets, 15%. Debt at 11%. And then the smaller pieces. If you break that up by department, our public safety is obviously our largest. That includes police, fire, corrections, E911, DEAM, so it's not just the big two that everybody likes to think about, but it does include that whole grouping, and they do represent over, well, at least half of our staff in the general fund as well. So with that, I will close and answer whatever questions you may have. All right, thank you, Commissioner. We have questions, please sign in. Councilmember Sheehan. Thank you, Vice Mayor. Thank you, Commissioner. I have a question, just for clarification. Based on our past presentation, we have to predict out our revenues at this point when we're going through the budget. How does that work with our funds where we're allocating a percentage of the past fiscal year? So is that also a projection that we have to then fine tune once we actually get the actuals? How does that work? That's a really great question. We have actually been very fortunate that when you all have adopted those kind of things, it's of the last audited fiscal year, so we know exactly what that number is and we can go back and pull it. So like this one that we would be, if we were looking at those now, it wouldn't be the fiscal year we're in, it's the one prior to that that is completed. Right. So when we are looking at FY24's budget, we're in 23 right now, so our audit won't start until June. So the last audited year we have is 22. So that's the year that we look at when we're assigning a dollar value for that. Okay, thank you. Sure. Thank you, Vice Mayor. Council Member James Brown. Thank you, Vice Mayor. Thank you, Commissioner, for the presentation and your thoroughness on it. I'm looking at the slide, by the number slide, where it has the beginning fund balance. So was our fund balance, beginning fund balance last year, was it also a million dollars? And is that? I'm not real sure. maybe Melissa can tell me what it was last year when I first got here our beginning fund balance was like a hundred and fifty thousand dollars and one of the goals that council gave to us was to go ahead and increase that because we do have those unexpected events where we need to be able to make adjustments before fund balance comes out that was really great advice for last year because the ad valorem adjustment was so significant we've not seen anything like that in the past. So we have been trying to increase this for where we think is reasonable over the course of time. You may know last year. Thank you. The beginning fund balance last year was $500,000 and the budgeted ending fund balance was a little over a million. Okay. Okay. Yeah, I've been here for both of those discussions where we funded it at a million and less so hearing the rationale for why we would want to have that kind of cushion makes sense. Also on this slide, the pre-funded in FY23, I think it's important to point out that none of that is ARPA money that we're a project. So what that represents is additional revenue that we have recognized to date in 23 and what we are doing when we pre-fund is actually taking the expense off of next year and going ahead and having it in this year so we will recognize the revenue and we will recognize the expense both in 23. all right and then on the the five percent salary increase what was can you talk speak a little bit to what the administration's rationale was for for that that number that percentage sure Sure. We have the last couple of years been really trying to take a look historically where our increases have been. We did implement the comp study. That did affect some of our employees. We also had a couple of pay raises over the course of this past year. But we are still continuing to have difficulty recruiting and retaining our employees. We're trying to address that. We know that we're hearing numbers of that 5% coming from the state as well, and we're just trying to remain competitive. Okay. Do we have any collective bargaining contracts that are considered in this budget that we know we're going to have to negotiate this year? The only collective bargaining contract that will open this year will be our corrections officers and sergeants. It expires, I believe, in December of this year. so we will have a partial year. We would have a partial year to maybe negotiate. We try to take into account those negotiations in the budget, but it just depends on how long the negotiation process takes, whether or not it will actually impact this budget. Okay, okay. And then one last question, and I might have missed it. You might have said it. What our bonding package, what is the proposed debt service payment for the amount that we're talking about bonding this year? The debt service payment? Yeah. Let me see if any of my staff, if my team knows. But I do think maybe one of the questions that is typically asked by council is, where does this put us in our overall debt? And we are just at 12%. Do we know what our additional? Okay, $4.6 million in debt service. And the additional bond amount still keeps us within the 12 percent. It does. Okay. Our revenues have increased sufficiently enough that it was within 12 percent. Okay. Thank you, Commissioner. Sure. Thank you. Council Member Savigny. Thank you, Vice Mayor. Commissioner, I've got a question, a couple of things. On the pre-funding stuff, the streetlight subsidy, streetlights do have a tax associated with them, correct? They do. And what's typically the total, so it appears that we're short on that tax to cover the cost of streetlights. What's the typical expense for streetlights? in a year? Melissa is flipping. I can hear her. I'm just curious if we doubled the tax, would it cover it? Would we have to increase it by 5%? What's the number? The total cost is $6.9 million. That does happen with our ad valorem in August. So we're kind of short about half of it correct okay all right and on the e911 subsidy that also is a line item on uh is it like cable and telephone and stuff like it's all phone bills yeah home phone bills yeah we've we've seen a dramatic decrease in our revenues um for 9-1-1 because some of the revenue significant revenue that was associated with that was on landline phones. And as people did away with their landline phones, our revenue also went with it. Okay. And is that a rate that we control? Or is that a federal rate? I believe, if I'm not mistaken, it's controlled at a state level. It is a very detailed process to get that changed. Okay. But, you know, that may be something worth having a conversation about. Okay. And my last question is the comp study. So when you say a 5% increase across the board on the non-sworn personnel, like what I remember about the comp study, they would say this position is between $35,000 and say $45,000. So does the whole thing just move up? That position moves up 5%? So $35,000 plus 5%, $45,000 plus 5%? So we adjust 5% on the pay that the individual is receiving right now. HR also will adjust the scale so that we're not unbalancing those items, if you will. I don't know what the scale increases would be. But if you recall, for the comp study, we allocated $5 million. We spent two and a half of it on those individual analysis. and then the other half of it was spent on an additional 3% increase for all staff across the board mid-year. But they'll still get their, because you divide that range out over 30 years or whatever, the time duration of the person. So they're going to get a daily increase every year, right? Okay. I'm sorry, Dave. I've got people all over the place. I think Dave wants to talk. No? Go ahead. Okay. I'm back on the streetlights when you get a chance. Okay. Tammy is, I'm sorry, Director of HR, Tammy, is looking at 2% and 3% for the scale adjustment. Okay. Thank you. Dave has something on streetlights. So some clarification on the streetlights. Typically what will happen is when you get back in August from your break, they will present the ad valorem taxes to you all, And they'll present a list of options. One of the options they have historically been presenting the last several years is the amount that it would take to cover that streetlight thing. And that would be one of the many issues in there is it would be above the compensating rate. So you'd have the exposure to, if you decided to go in that direction, you'd have some exposure to a potential recall vote if you did that. Thanks. Thank you so much. Thank you, Vice Mayor. Thank you. Council Member Plowman. Thank you, Vice Mayor. I had a couple questions, and this is on page 13, general fund revenue breakdown. And this year we're projecting a growth of 4.8% in payroll withholdings. I'm sorry? This year we're projecting a 4.8% in payroll withholdings. That is an increase over our estimate. Okay. Not our 23 adopted number, but our revised 23. So it was revised 23, 3.5%? No. I'm not sure what you're asking, I'm sorry. I guess we projected 3.5% growth, right? No, is that not? I'm sorry, I'm missing whatever you're asking me. Well, I guess what I'm asking is when do you expect to see some type of slowdown on growth in the payroll withholdings? Sure, okay. And what are your thoughts on that? Sorry about that. So we've already seen a significant increase in 23. That has been reflected in the ability to do pre-funding, which will create this 23 estimate different from our 23 adopted. So we've already recognized a significant portion of that growth to date. We are expecting it to slow down and normalize to our normal growth rate of about 3 or 4%. prior to the pandemic and all the influx of additional federal dollars, that was kind of a normal space, a normal growth rate for us. And so we are expecting to return to that, and I think Dr. Clark is on the same page with us. Okay. Do you have anything to add, Wes? And then my last question has to do, do we expect the net profits growth to slow down more quickly than the payroll withholdings? Yeah, and actually that is one of the items that Dr. Clark was more conservative on was the slowing of the net profits. And so you can see that between the estimate and the mayor's proposed budget is not a significant amount of growth over the course of the year. We had a huge jump during the pandemic, and if we can maintain that, I think we'll be in good shape. Okay, great. Thank you so much. Thank you, Chair. Thank you. Council Member Lynch. Thank you, Vice Mayor. My question is, how did you select the projects that were on the pre-funding list? Oh, that's a really good question all the time. We take a look at the items that we may already have a contract for. So like we have state price contracts for certain items. We know we can go ahead and get them started without going into the next year for the bid process. We look at items that are those subsidies that can go ahead and transfer out to the other funds and get them ahead of the game, if you will, for next year. We look at things that we know folks are interested in, like affordable housing. That tends to be one that everybody's very supportive of. Go ahead and get that money out there and working for us. And so we really kind of just look across the budget as a whole, see what looks like it might be a good fit. We can go ahead and get started and get reasonably into by the end of this fiscal year. And then those are the items that we suggest. Thank you. Yes, ma'am. Thank you. Council Member Fogle. Thank you, Vice Mayor. My question is, I have three. The first, when you spoke about part-time to full-time, do you already have the diversity makeup of who will be going to full-time? Because the diversity makeup of our whole hiring staff is not reflective of our city, but can you shed some light on that? So the part-time to full-time I was speaking about is in reference to waste management. they are recognizing they've previously had money for either part-time or seasonal employees. Those have come to us through temp labor agencies historically. We have found some really great employees, and we want to make sure that we can keep them when they come in and they express the want to stay with us. And so it is a pilot program to just create the positions. I don't know that any individuals are yet identified, and it's really not anything that in budgetary terms we took into account. But that was their proposal to us was actually 10 and 10 with the supervisors, and we thought, you know, it seems like a good idea. Let's give it a try and see what happens. Okay, thank you. Sure. And thank you for your hard work. So with corrections and as we're talking about salaries for the staff, which we approved, and we know there's been a lot of overtime, so does that factor in and the fact that they have not been able to hire other staff? And we know that the population is not decreasing, it's increasing to the point of overflow, actually. And so how does that? So, a couple, I think your question has a couple of parts. The first has to do with our staffing and how we pay for overtime. We do balance our overall attrition. We go through every single division of government, look at where they're staffed, look at where they've been historically, and we assess where we think their attrition is going to be. So we don't budget most divisions at 100%. We look at where they typically are and we are close to that. When we don't have full spend on the full-time salaries, that typically is offset by overtime. Folks are having to work overtime because there are vacancies. And so you'll see the years where we have lower full-time staff kind of offsetting with that higher overtime. So that is reflected in a number of places in this budget. You will see that. Okay, and I was basically talking about corrections because I know that they're very understaffed out at the corrections. And I think the next one is really simple. I've heard about studies for our new building. And so does that mean every time we talk about we're going to move, we get a new study? Or did the old study, we paid them, didn't we? And do we continue to use them? Or do we need a new study from someone else, and so the money that we paid the old study since we haven't moved out of this building, how does that work? Sure, so the money that's in the budget this year is not actually for the study. It would be for the next step. So if that step, if when the study comes back they say, this is a great building, you should stay here, but you need to redesign it and it looks like this. That money would be for design. Or if they say, hey, you might want to consider moving, you might want to try this geoscape study, I'm going to murder that. It might be for that. So when the space study comes back and tells us really what we need and what we have, and if those things are mutually exclusive or they can be accommodated somehow, that will be the funding that will allow us to take that next step, whatever that next step is. We're not duplicating the study that we're going through right now. Thank you. You're welcome. Thank you. Council Member Fred Brown. Thank you, Vice Mayor. A couple of thoughts or questions. Go to the pre-funding budget amendment schedule. And I guess I wanted to see how we were mixing the paving. I noticed out of Parks, we've got some Shiltoe Park and Jacobson Park and probably some other. Anyway, that's paving in there. Is that paving going to be correlated through public works or is Parks going to do that in their own realm? The commissioner may have to, one of the commissioners may have to tell me how that's coordinating. And the reason I say that is that we've got $14 million in there for our regular paving situation. And I don't know if we're capped out with the contractor or not. And I guess the second part of the question here is this paving here seems like, I mean, you're doing them all. I guess are they all that bad of shape? So just give me some background. Yes, thank you, Councilmember. We will take all the paving money that Streets and Roads does not need. We have a number of paving issues within our parks, just something we've not prioritized in recent years. So the pre-funded projects that you see here for Shellito Park Paving and Jacobson Park Paving are both needed. We would use the unit price contract. So Parks goes out and uses that same contract to get bids for any of these projects, any of the paving projects. So you're competing with Public Works and getting the contractor? Because usually we're only one contractor that we're dealing with. Yeah, I think we have a good relationship, both obviously with Director Allen with Streets and Roads and also with the paving contractors. So we try to work with them and schedule. And a lot of times these park projects are filler for those paving companies. Okay, and you're probably going to do that during the summer? Correct. We usually don't do them in the summer. Okay, that's all on that. And then I wanted to bounce over to the bonding. And I guess the question is, and I think it's already been answered, is that our percentage that we're over is around 12% still. Yes, sir. And we do have a, is it an ordinance that we have? It's supposed to be 10%. Both 10%. Yeah, I just want to get that word out there, but I'm not really happy with the $38 million bonding. I think some of that should be cut, and maybe we'll do that in lengths. but I'm unhappy with that because all it's driving up are debt amount that's in the budget. So we're not accomplishing a whole lot and not getting that down to the 10%. So I just wanted to make that information out there. That's kind of where I'm looking at it, the bonding just being a little bit too high. And I was hoping that in this pre-funding budget amendment, we could have done some things that we had in bonding and could have worked that out a little bit better and had our bonding less. That's all I have, thanks. Thank you. I have some questions of my own, but if any council members who have not spoken yet would like to sign in, feel free. Thank you, Commissioner, for this presentation. Every time you're in front of me, I get a little bit less confused, which is great. I have a sort of a big picture revenue related question. We talked about FY23 revenue being higher than predicted. So why was that? Was that COVID recovery related and how does that compare to the national, state, and also comparable cities in terms of where we were with the projection versus the reality. So I can answer both of those questions, which is great, but Director Holbrook is also welcome to help me. In talking with our counterparts in Louisville at the state, they're seeing the same thing, which is really helpful to us in feeling comfortable and confident with what we're seeing, that it is not just a Lexington anomaly. That being said, we do have a different demographic than Louisville. They're much more highly manufacturing. We're much more service-oriented, health care, education, those kind of items. So we have seen over the course of pandemic, obviously our largest revenue sources are payroll withholdings. There have been significant increases in the pay that our residents are making, and so we are seeing the effects of that come through. In addition, we've had some job creation. I think that Dr. Clark reported on the fact that both of those were uplifting that payroll source. And so we are seeing kind of the after effects of the pandemic just in that wages are higher on the whole. And with, you know, we heard a presentation today. It's three and a half percent national unemployment. With it being that low, you know, that demand and that drive for paying more to get good employees to get employees, period. is something that we're going to continue to see. Going to, I think it's slide number eight on page 14, the use of FY 2024 earned revenue. There you go. So I have a question on that second item on the little left column there, that 5% increases for all non-sworn, valued at $6 million, overall $3.7 million in the general fund. Can you tell me what the other part of that is, the $2.3 million, what that is? So when we do an across-the-board increase for our non-sworn members, obviously we have individuals that work in urban services, that be your waste management. You have water quality in the water quality funds, and so they are considered in the 5% their civil service as well. So when they get increased, their increase occurs over in a different fund. Today we're talking about general funds, so we just wanted to note across the board it's about a $6 million increase. But just for general fund for today's purposes and what we're talking about, it represents 3.7 million. Thank you. Go back to slide four, the by the numbers. We've kind of touched on this a couple of times. That ending fund balance cushion, basically, right? Are we comfortable with that amount? Do we, you know, in the past, have we gotten into situations where unforeseen things have come and really taken that hit or taken it really close to zero? As far as I'm aware, last year was the largest one-time increase from the significant jump in property tax values. We don't expect that to happen again this year. But that being said, things are costing us more. So if we have two or three items that we really need to address and we're not recognizing the savings to that point to be able to pull it out of the budget, a million dollars is not what it used to be. I know that sounds kind of ridiculous. But you have a couple of items, some are known and some are unknown. So I think at this point we are comfortable with that number. Other than that, we would need to pull in more from our anticipated current year fund balance and increase that. But I do think we're pretty comfortable with that number being a good number. A follow-up to something you mentioned, and I don't know if this is strictly a budget question, but you talked about the price of everything going up, right? So if we have projects, and especially capital projects lined up, how does it work when, let's say it's a bid that's a million dollars, but then it ends up costing 1.3? How do we work it as a city to where we can head that off or do those prices lock in? Or by the time we're about to pay, do they say, sorry, it's not a million, it's 1.3 now? How does that work with our contracts? So we've had kind of the gambit of the scenarios happen. We do budget for contingencies in a lot of our capital projects. We expect that there's going to be some fluctuation in price. We have had projects where the contractor is assigned. We've gone through the bid process. They said, yep, this is it. A month later, they come back to us and say, I'm sorry, we just can't do it. And then we have to go back out for a bid and find another contractor. Some of the items are coming back down. The prices are coming back down, and there's others that are not. Our paving, our asphalt continues to kind of remain at those higher levels. And so we are seeing all of those things. And we do try and lock down our contracts well enough that there's nobody that gets to the end and goes, whoops, I'm going to bill you another $300,000. They're not able to do that because they're under contract. But we have had some vendors have to pull out of bids that they've committed to because they just can't meet the expectations with increasing the prices. Gotcha. Thank you, Commissioner. Council Member James Brown. Thank you, Vice Mayor. I have a few more questions, and then I'll be ready to make a motion. Okay. Since Tammy, I've seen Tammy come down. The question was about the increases. What's the formula for increasing the pay scale? I know we talked about before how the pay scale kind of gets out of whack when we hire new folks in. Is this something new that we're doing, or is this normally how you increase the pay scale when we increase the wages? So it is a standard practice to adjust the pay scales as well. some percentage of the across the board increase so the across the board increase takes all of the employees current employees in that system and gives them all a five percent increase which moves them forward in the pay scale the range that they're in adjusting that range and moving at some portion of that then keeps that range flowing with the marketability for the job so the grade minimum adjusts essentially and maximum of course but it keeps the pay grades up with the market as well so you actually have two adjustments one is the salary schedules and then the other would be all of the employees that are in those ranges okay so this won't completely address the issue but it would help to adjust the disparity that we're seeing when we hire new folks in that that existing employees feel like coming in at a higher paid scale and higher in the range than they are in. Right, because essentially employees would move farther into the range than the scales are adjusting. Okay, okay. All right, thank you for that. And then, So we have 34, 38 new positions in this budget. I can't help, and tell me if I'm thinking about this wrong. I'm drawing some kind of correlation between the variance that we have in the operating expenses. Maybe we're not, or the divisions are not expending that operating money because we don't have the bodies or the ability to deliver the services. that they've budgeted for. So maybe adding some of these new positions and some of these divisions will help us deliver and provide the services across city government with these new employees. Am I thinking about that right? I think actually one really great example in here is the construction manager position, EQPW. We have a lot of projects that are coming on board, a lot of things kind of getting in the hopper but are not able to progress as quickly as we would like them to because there's just a capacity issue. And so when we look at positions and when we evaluate them, we have probably 100 positions that were proposed. So when we actually go through and evaluate which positions are recommended and which are not, that is a huge factor in inclusion. Are we meeting the needs? Are we meeting the demands? And if not, what is it going to take to get there? And so I do think that the positions that are included are a reflection of that. Yeah. Okay. So, yeah, that's kind of the way I was seeing it to kind of justify my mind, this amount of new employees. The other thing I'll kind of point out, and this is just thinking about public safety and how the public perceives how big our budget is slanted towards public safety in regards to just talking about the general fund. I think mainly, and you correct me if I'm wrong, the optics of that is because we have some employees that pay is funded out of other funds that the city collects. But since most of our public safety employees are collective bargaining, it all comes out of general funds. So all that pay is coming out of that one pool of money. So when we're talking about that one pool of money, it looks heavy towards public safety. but that's because the way we pay other employees is kind of distributed across other funds. Is that correct? Yeah, so public safety is general fund funded. So when you look at those positions and the pay that's included for general fund, they are a huge portion. As we talked about with Vice Mayor Wu's question on the $6 million versus the $3.7 million, a number of our employees live outside of that general fund. And so when you look at the graph, this one at the very end, they're not included in this because they're not in this fund. So they're actually separate from that. Yeah, I think it's just, you know, just trying to put it in perspective because we need people to deliver the services. Absolutely. All right. So there are no other questions, Vice Mayor. I'll make a motion to adopt the proposed revenue amount of $461,438,764 for the FY 2024 budget. So moved. We have a second? Second. Okay. We have a motion and a second from Council Member Sheehan. Discussion on the motion? Sign in if you have anything. All right. Seeing none. Do we need a roll call vote for this or a voice vote? Okay. Excuse me. Sorry. Go ahead. Apologize. I think you can just do a regular vote on it because you'll be voting on it again formally when the budget amendment is in front of you all. Okay, thank you. All right, all those in favor, please say aye. Aye. Any opposed? That motion passed. Okay, one opposed. Do we pull up a screen for this, or do you got it? Okay. All right, so one opposed, that motion passes. Thank you. I noticed, Commissioner, towards the end of our little packet there, there were a couple other slides. Were you intending on presenting on those, or is that for our information? So the slides at the end are for information only. We typically present the general fund budget. Included in the packet and included for your information is where we expect the other funds to be. As their revenue source is dedicated to that activity and as are their expenses, it's kind of a different process. but we just wanted to make sure as it is part of the mayor's overall budget that you all have those. So we don't typically present on them, but we're happy to answer any questions you may have on any of the funds. So those are basically all the other buckets that we talk about that are outside the general fund. Correct. Okay. If anybody has any questions on that information on those other funds or ARPA, you can sign in. Otherwise, I believe we are wrapping up. Let me go over a couple of upcoming budget committee of the whole dates. We have two more budget committee of the whole meetings scheduled. May 30th, 10 AM and June 1st, 10 AM. And then on June 13th, we will have our first reading of the FY24 budget. And on June 15th, we will have our second reading of the FY24 budget. All right, I believe we're done. We are adjourned. Thank you.