City Council Work Session

JC MartinezstaffMayor, Council, thank you. As the manager, sorry, allergies are kicking in. As the manager suggested, we would like to try to present some different scenarios, but before doing that, just sort of laying down a potential starting point. To the left of the screen or on the left side of the screen are some assumptions of where we are maintaining the real estate rate as where it currently is no change to the meals tax we have seen a healthy assessment appreciation some of the other items that are listed there that is sort of the starting point in the basis of what what we did when we started the budget back a couple of months ago and given all that information on the left those assumptions it equates to about a hundred and ninety million dollars in revenues that's about

When you compare the starting point to the potential reductions, that lower box in red there sort of shows what the delta would be. So we would need to cover about $3.5 million as is with no changes. It still shows that we would be short about a little over 4 cents. We go to scenario one. Scenario one would be what the city manager proposed at the end of February. In his proposed budget, he did include a 9.5% increase to the real estate tax rate, making it $1.12.5. That would generate about $8 million in additional revenue within that category. We did propose an additional 2% to the meals tax, making it from 4% to 6%. That additional increase is about $4.5 million. And then we would realize some assigned fund balance from FY25 that would be carried over into FY26 in the amount of about $4.1 million.

or meals tax increases as well in this scenario it would be a seven and a half cent increase to the real estate tax rate making it a dollar ten and a half the associated revenue with that is a little over six million dollars a one and a half cent increase in addition to the four percent meals tax making it 5.5 again a little over 3.3 million we would carry over a smaller amount of unassigned fund balance from fy 25 to 26 that'd be another 3.3 net change in revenue from scenario one to scenario two is a decrease of about 3.6 and we would have to at this point utilize a portion of that potential expenditure reductions that we covered in one of the first slides of about 3.6 million from the EDA estate resource fund again that would be

needed to ensure that we balance our revenues with our expenditures which they do do on the right hand side there in scenario three further reduction to the real estate tax rate dropping it from the proposed nine and a half to five and a half cents a one percent additional increase to the meals tax bringing it from four to five percent you can see the associated revenues that these changes would do again try to carry over a little over two million dollars from fy25 to fy26 from an assigned fund balance the delta between scenario scenario one and scenario three is about another $7.2 million in these decreased revenues. At this time, we would have to realize, or it's proposed to realize, all of the $5,000

That was also part of that 10% reduction exercise that was provided to council last week. moving on to scenario four potential three and a half cent increase to the real estate tax rate making it a dollar six and a half from where we currently are the associated sorry the associated revenue with that a half cent a half percent increase additional to the meals tax rate making at four and a half percent brings in another about 1.1 million dollars again a little less transfer from fy25 assigned fund balance and then the net change there is almost 11 million dollars in reduction of revenue from scenario one to scenario four we would keep on adding other potential expenditure reductions at this point again five million dollars from the eda real estate resource

and our expenditures balance at a hundred and ninety six million dollars those would be the potential effects on the left-hand side the last scenario here scenario five would be a two and a half cent increase to the real estate tax rate making the new potential rate a dollar five and a half and the associated revenue that that would happen there is about two million dollars no change to the meals tax and then a smaller reduced amount from FY 25 assigned fund balance coming over from FY 25 to FY 26 about 1.2 million there significant reduction in revenue from scenario one which was a city manager's proposed budget to this scenario scenario five in this scenario we would every single potential expenditure reduction to its max five million dollars from the eda