[0:00] We will go ahead and get started. Tonight we are having started. Tonight we are having another budget analysis another budget analysis discussion, but we have our discussion, but we have our friends in from PFM. So I will friends in from PFM.

[0:12] So I will go ahead and mic pass over for go ahead and mic pass over for you all. Um, to kind of you're you all. Um, to kind of you're going to be running this show. going to be running this show. Oh, boy. Oh, boy.

[0:21] Well, thank you again for the Well, thank you again for the for the opportunity to speak for the opportunity to speak with you and to work with you. with you and to work with you. Uh, I'm joined by my colleague Uh, I'm joined by my colleague Lauren Sankovich, who has Lauren Sankovich, who has worked side by side with me on worked side by side with me on this, as also worked reading,

[0:31] this, as also worked reading, uh, Chester, lots of other uh, Chester, lots of other places. Uh, she when we build places. Uh, she when we build these, when we do these plans, these, when we do these plans, we have a, a financial model we have a, a financial model that where you saw the output

[0:40] that where you saw the output of the last time I was here of the last time I was here with the revenues and the with the revenues and the expenditure projections, and expenditure projections, and Lauren is responsible for not Lauren is responsible for not just building those models, but

[0:46] just building those models, but she actually runs our training she actually runs our training program. So she's kind of like program. So she's kind of like the Yoda to our our Star Wars the Yoda to our our Star Wars Jedi.

[0:53] So I don't know if that's Jedi. So I don't know if that's a I don't know talk about that a I don't know talk about that later. Um, but we'll, uh, take later. Um, but we'll, uh, take you through the, uh, the you through the, uh, the presentation that we have here presentation that we have here tonight.

[1:04] Um, just as a reminder tonight. Um, just as a reminder r where we are. If you're on r where we are. If you're on the second slide, I need to do, the second slide, I need to do, like, the old school boop or like, the old school boop or something. So people know to something. So people know to change the slide.

[1:11] change the slide. The slides maybe don't have the The slides maybe don't have the slide poop. slide poop. Oh, that's right, I need. Oh, that's right, I need. The little clicker. Yeah. The little clicker. Yeah. So I could change the slide. So I could change the slide. Excellent. Thank you.

[1:23] Uh, just Excellent. Thank you. Uh, just to remind you where we are. to remind you where we are. This is a this is a three step This is a this is a three step process. So we're now near. process. So we're now near. The. The.

[1:32] I guess in the summer to talk I guess in the summer to talk about the financial condition about the financial condition assessment, baseline assessment, baseline projection. What are your projection.

[1:41] What are your finances look likef you don't finances look likef you don't take any action? We talked take any action? We talked about the deficit as we were about the deficit as we were projecting it, about a $12 projecting it, about a $12 million deficit for for next million deficit for for next year. That's, of course, the year.

[1:48] That's, of course, the deficit that you're just deficit that you're just starting to think about how to, starting to think about how to, to tackle in, in with specific to tackle in, in with specific decisions coming up for next decisions coming up for next year in between then and now, year in between then and now, we met with all of the we met with all of the department directors, the

[1:58] department directors, the division managers. We did a division managers. We did a review of operations. Um, what review of operations. Um, what do you do? Why do you do it? do you do? Why do you do it? How do you do it? How many How do you do it? How many people that sort of stuff.

[2:06] Uh, people that sort of stuff. Uh, we'll talk about this a little we'll talk about this a little bit more, but we we spent part bit more, but we we spent part of that discussion, uh, honing of that discussion, uh, honing in on the things that the city

[2:15] in on the things that the city has added since Covid. So has added since Covid. So you'll recall, when we were you'll recall, when we were here, we talked about the fact here, we talked about the fact that spending is growing faster that spending is growing faster than revenues.

[2:24] Um, some of that than revenues. Um, some of that is because of positions that is because of positions that have been added over the last have been added over the last really six years. Some of really six years.

[2:34] Some of that's because of large, large that's because of large, large expenses that are, you know, expenses that are, you know, certainly, uh, defensible and certainly, uh, defensible and perhaps necessary. The Miller perhaps necessary. The Miller Brothers Building for public Brothers Building for public works, the large axon contract. works, the large axon contract.

[2:45] But asking your department But asking your department directors to give us a sense directors to give us a sense for what the value of those for what the value of those added positions. What do you added positions. What do you get for spending more? And then get for spending more? And then comparing that to the cost. And comparing that to the cost. And there's two different things.

[2:53] there's two different things. The cost is relatively easy to The cost is relatively easy to to calculate, right. If I add to calculate, right. If I add ten police officers it's ten ten police officers it's ten officers. It's their salaries, officers. It's their salaries, their health insurance. You their health insurance. You multiply it out.

[3:03] It's not very multiply it out. It's not very complicated. But the question complicated. But the question is what's the value of it. What is what's the value of it. What do they do? What are they doing do they do? What are they doing that's new? Are they. Do you that's new? Are they.

[3:11] Do you have new specialized forces? Do have new specialized forces? Do you have more people on patrol you have more people on patrol and trying to give you a sense and trying to give you a sense of those two things? Because of those two things? Because when you do the budget, those when you do the budget, those are going to behe decisions

[3:18] are going to behe decisions you're going to have to make, you're going to have to make, right? The first place you'll right? The first place you'll go will not be the thing you've go will not be the thing you've had for a hundred years, had for a hundred years, because you'll probably have it

[3:23] because you'll probably have it for 101. It will be the things for 101. It will be the things that you added more recently. that you added more recently.

[3:32] And to ask yourself the And to ask yourself the question, what are the costs question, what are the costs that we and Lisa and other that we and Lisa and other people can tell you? And what people can tell you? And what are the value to kind of to are the value to kind of to weigh that against each other? weigh that against each other? We know that the budget process We know that the budget process is going to be difficult.

[3:39] We is going to be difficult. We talked about that the last talked about that the last time. So what we wanted to do time. So what we wanted to do was come here and give you our was come here and give you our list of the most significant list of the most significant deficit closing options that we

[3:48] deficit closing options that we could identify. Um, ando run could identify. Um, ando run through those with you. So you through those with you.

[3:57] So you have them in your head at the have them in your head at the start of the process so that start of the process so that you don't get into or there you don't get into or there will be six different council will be six different council meetings that you'll do and meetings that you'll do and say, I wonder what those people say, I wonder what those people from PFM are thinking, right? from PFM are thinking, right? We'll wait for them to.

[4:04] We We'll wait for them to. We wanted to get this in front of wanted to get this in front of you at the start of it, so you you at the start of it, so you can think about them. There can think about them.

[4:09] There will be some you like, there'll will be some you like, there'll be some you don't, and you can be some you don't, and you can sort of weigh them in your mind sort of weigh them in your mind as the people come in to talk as the people come in to talk to you about the departments,

[4:15] to you about the departments, knowing that the thing we knowing that the thing we provide at the end will be a provide at the end will be a report that looks like this, report that looks like this, like it did the last time, it like it did the last time, it will be long, um, and would not

[4:22] will be long, um, and would not recommend you try and read it recommend you try and read it cover to cover, but this is cover to cover, but this is designed to pull out the things designed to pull out the things that we think are useful for

[4:28] that we think are useful for you to know up front. It's not you to know up front. It's not a list of everything that will a list of everything that will cover a, you know, one thing we cover a, you know, one thing we will cover in our report that I

[4:35] will cover in our report that I don't have specific don't have specific recommendations on tonight is recommendations on tonight is related to Lerna. And the related to Lerna. And the reason why is included on the reason why is included on the list tonight. Well, because list tonight.

[4:43] Well, because it's authorized to four more it's authorized to four more years. So you're you're not years. So you're you're not going to close the deficit that going to close the deficit that you face in four months by you face in four months by looking at something four years looking at something four years from now.

[4:49] But because that's a from now. But because that's a multi-year plan that covers multi-year plan that covers multiple years, it will cover multiple years, it will cover those sorts of things. So, um, those sorts of things. So, um, just as a reminder of where we just as a reminder of where we started. Oh, thanks.

[4:58] I forgot started. Oh, thanks. I forgot about the little button. Boop. about the little button. Boop. Uh, this is where we were with Uh, this is where we were with the baseline projection. This the baseline projection. This is a projection of, uh, your is a projection of, uh, your general fund. This is the $12.

[5:09] 3 general fund. This is the $12.3 million deficit. Again, you'll million deficit. Again, you'll recall three things. Drive that recall three things. Drive that one. We need to align your one. We need to align your pension spending with your pension spending with your pension revenues. So make sure pension revenues.

[5:18] So make sure that everything you collect that everything you collect from the pension tax and the from the pension tax and the state aid goes into the pension state aid goes into the pension fund. Um, and it goes towards fund.

[5:27] Um, and it goes towards that purpose, for our purposes, that purpose, for our purposes, we remove things that are we remove things that are nonrecurring. So you do still nonrecurring. So you do still have some Arpa funding left. have some Arpa funding left. It's not in our projection It's not in our projection because we're trying to because because we're trying to because you don't have an infinite you don't have an infinite amount left.

[5:36] Once it's spent, amount left. Once it's spent, it's gone. So we're trying to it's gone. So we're trying to show recurring revenues and show recurring revenues and recurring expenses here. And recurring expenses here.

[5:45] And then you wrestle with the same then you wrestle with the same thing that the school district thing that the school district does that Erie County does does that Erie County does that, Mill Creek does go that, Mill Creek does go farther out. Pick a county, farther out. Pick a county, pick a town, pick a school pick a town, pick a school district. They all struggle district.

[5:53] They all struggle with the fact that in with the fact that in Pennsylvania, you are dependent Pennsylvania, you are dependent to a large extent here, a very to a large extent here, a very large extent, but to a large large extent, but to a large extent on your real estate tax extent on your real estate tax revenues, which do not grow revenues, which do not grow absent tax increases and all

[6:02] absent tax increases and all your expenses do, because you your expenses do, because you want to give people wage want to give people wage increas, health insurance increas, health insurance goes up the cost of gas. I goes up the cost of gas.

[6:07] I guess you could turn off the guess you could turn off the heat if that helps a little heat if that helps a little bit. But eventually those costs bit. But eventually those costs do go up and you have to cover do go up and you have to cover them somehow.

[6:15] I do get to start them somehow. I do get to start with good news. I don't get to with good news. I don't get to do this too often. So I want to do this too often. So I want to and I do get to start with an and I do get to start with an acknowledgment here.

[6:22] So the acknowledgment here. So the last time we were here, this last time we were here, this this table that you have in this table that you have in front of you, this is your fund front of you, this is your fund balance. Uh, fund balance is balance. Uh, fund balance is accountant speak for reserves.

[6:30] accountant speak for reserves. Right. This is the money that Right. This is the money that you can draw down as needed for you can draw down as needed for different scenarios. And one of different scenarios.

[6:38] And one of the things that we had talked the things that we had talked about the last time we were about the last time we were here,hich was a warning sign, here,hich was a warning sign, is the fact that the reserves is the fact that the reserves were dropping. So if you direct were dropping.

[6:45] So if you direct your eyes to the bottom row or your eyes to the bottom row or of that table or the either the of that table or the either the one that's in green or the one one that's in green or the one that's in blue, you can see that's in blue, you can see that the one in blue, where you

[6:50] that the one in blue, where you start at $22 million, then the start at $22 million, then the reserves can actually go up a reserves can actually go up a little bit to 23, then back to little bit to 23, then back to 22, then to 14.

[7:02] Um, and the 22, then to 14. Um, and the measure of your reserves is measure of your reserves is reserves as a those are all big reserves as a those are all big numbers. What's too big? What's numbers.

[7:08] What's too big? What's not big enough? You have to put not big enough? You have to put them in the context of how much them in the context of how much you're spending. What you you're spending. What you really want is at least t really want is at least t months worth of, of reserves on months worth of, of reserves on hand.

[7:15] Talk about why in a hand. Talk about why in a moment. But the most obvious moment. But the most obvious reason is because your real reason is because your real estate tax revenues, like estate tax revenues, like everywhere else in everywhere else in Pennsylvania, come in sometime Pennsylvania, come in sometime April May, and you want to be

[7:23] April May, and you want to be able to pay people for the able to pay people for the first two months of the year first two months of the year and not tell them, hey, get and not tell them, hey, get back to me when my revenues get

[7:27] back to me when my revenues get here. So we talked about the here. So we talked about the fact that that was going down, fact that that was going down, and you can see the number and you can see the number highlighted in yellow for 2024. highlighted in yellow for 2024.

[7:35] That's the first time you drop That's the first time you drop below that recommended minimum. below that recommended minimum. So at the end of 2024, your So at the end of 2024, your unassigned fund balance meaning unassigned fund balance meaning money that you could use for money that you could use for any purpose at all, was $14.

[7:46] 5 any purpose at all, was $14.5 million. Your total revenues million. Your total revenues were 100 105. And so, you know, were 100 105. And so, you know, 14 divided by 105 or whatever 14 divided by 105 or whatever it is, is the 13.7. Uh, Lisa, it is, is the 13.7.

[7:57] Uh, Lisa, your finance director and her your finance director and her staff had worked very hard on staff had worked very hard on an issue that we talked about an issue that we talked about in the past, which is what in the past, which is what about the money that is about the money that is restricted for pension

[8:03] restricted for pension purposes? So you had a portion purposes? So you had a portion of your fund balance that of your fund balance that previously auditors have said, previously auditors have said, hey, that has to go for hey, that has to go for pensions.

[8:12] You can't use it for pensions. You can't use it for other things, which is exactly other things, which is exactly what you want your reserves what you want your reserves for. And through a lot of work, for.

[8:20] And through a lot of work, uh, Lisa and her tm were able uh, Lisa and her tm were able to identify that that could be to identify that that could be moved to unrestricted. So you moved to unrestricted. So you went from being a little under went from being a little under to being way over the minimum to being way over the minimum for the reserves.

[8:29] So if you get for the reserves. So if you get a look at that bottom line, you a look at that bottom line, you go 22, 21, 23, 14. That's the go 22, 21, 23, 14. That's the oh point to 30. And what oh point to 30.

[8:39] And what happened is you had a series of happened is you had a series of money, a portion of money that money, a portion of money that through your finance department through your finance department and an outside auditor, an and an outside auditor, an outside auditor, you can't just outside auditor, you can't just do this on your own.

[8:46] Right? do this on your own. Right? Somebody from the outside has Somebody from the outside has to come in and say that money to come in and say that money can be used for a wider range can be used for a wider range of purposes, and not just for

[8:52] of purposes, and not just for pensions. So what does that pensions. So what does that mean? That means your problem mean? That means your problem is fixed. No, unfortunately, is fixed. No, unfortunately, that would be great. But what that would be great.

[8:59] But what it does mean is you have more it does mean is you have more time, right? Think of it this time, right? Think of it this way. If I only have a small way.

[9:06] If I only have a small amount of things to that I can amount of things to that I can draw from to build something, draw from to build something, and now suddenly I have more. I and now suddenly I have more. I still need to build whatever still need to build whatever that thing is. But you have. that thing is. But you have.

[9:14] You have more reserves, and You have more reserves, and what you really have is more what you really have is more time. So rather than being in a time. So rather than being in a situation where like, wow, we situation where like, wow, we have a $12 million deficit, we have a $12 million deficit, we really need to fill it with $12

[9:22] really need to fill it with $12 million right now because we million right now because we can't have our reserves go down can't have our reserves go down an lower. Some of that urgency an lower. Some of that urgency lifts a little bit. Home rule lifts a little bit.

[9:30] Home rule is a long discussion, but if is a long discussion, but if you wanted to go down that you wanted to go down that road, it takes two years. Now road, it takes two years. Now you have some money that you have some money that provides a bridge to that. Uh, provides a bridge to that. Uh, collective bargaining.

[9:38] You have collective bargaining. You have some unions that you can talk some unions that you can talk to right away about health to right away about health insurance. If others like insurance.

[9:45] If others like police and fire that you can or police and fire that you can or you can, but they don't have to you can, but they don't have to necessarily come to the table. necessarily come to the table. You can try, um, this buys you You can try, um, this buys you a little bit of time. It buys a little bit of time. It buys you time to do some things.

[9:52] It you time to do some things. It buys you some time for buys you some time for creativity, too. You'll notice creativity, too. You'll notice that the short term things, that the short term things, nothing on here will probably nothing on here will probably surprise you. I kno you've surprise you. I kno you've already seen this presentation.

[10:00] already seen this presentation. It's not terribly creative It's not terribly creative because Pennsylvania doesn't because Pennsylvania doesn't reward creativity, especially reward creativity, especially in the short term. But the more in the short term.

[10:08] But the more time you have, the more you can time you have, the more you can do the types of structural do the types of structural things that minimize the hit on things that minimize the hit on your residents and still get your residents and still get you to where you want. So this you to where you want. So this buys you. This buys you time. buys you. This buys you time. It buys you one other thing.

[10:18] It It buys you one other thing. It buys you, uh, it buys you a buys you, uh, it buys you a resource to deal with what resource to deal with what you're dealing with, with the you're dealing with, with the emergencies, uh, with the trees emergencies, uh, with the trees that are down with the disaster

[10:27] that are down with the disaster response. This is exactly why response. This is exactly why you want to reserve. You want you want to reserve. You want here on slide five, that we here on slide five, that we think about it as Phil. Think think about it as Phil.

[10:37] Think about it as a filter at the about it as a filter at the top. We want two months worth top. We want two months worth of revenue on reserves. That's of revenue on reserves. That's that 17%. That's what credit that 17%. That's what credit rating agencies look about. But rating agencies look about. But forget about the outside world.

[10:47] forget about the outside world. That's the amount of money you That's the amount of money you want. So you don't have to want. So you don't have to borrow money to pay your borrow money to pay your employees at the start of the employees at the start of the year.

[10:53] You want to avoid those year. You want to avoid those transactions. Cash flow loans. transactions. Cash flow loans. Nothing's worse than to borrow Nothing's worse than to borrow money to keep the lights on or money to keep the lights on or whatever. It's a bad place to whatever. It's a bad place to be.

[11:00] It wouldn't be unique, but be. It wouldn't be unique, but when we try and draw the line when we try and draw the line and say, okay, no, no less than and say, okay, no, no less than this, that s the first part. this, that s the first part.

[11:07] And again, you're at 30 And again, you're at 30 relative to 17. The next thing relative to 17. The next thing that we would recommend is that that we would recommend is that you have I'll call it no trying you have I'll call it no trying to be punny here, but a rainy

[11:15] to be punny here, but a rainy day reserve that you would have day reserve that you would have in hand for rain or more in hand for rain or more likely, the case here, snow. likely, the case here, snow.

[11:25] Those types of of natural Those types of of natural disasters so that if you have a disasters so that if you have a hole in the roof right here or hole in the roof right here or in a fire station, or you have in a fire station, or you have lots of trees that go down, you lots of trees that go down, you don't want to be cash strong

[11:32] don't want to be cash strong and say, gee, I really wish we and say, gee, I really wish we could fix that problem, help could fix that problem, help these people. But it happened these people.

[11:39] But it happened to happen in January and I to happen in January and I n't have my real estate tax n't have my real estate tax revenue, so I can't do it revenue, so I can't do it right. You want to have that right. You want to have that flexibility, knowing that you flexibility, knowing that you can get reimbursed for it. We can get reimbursed for it.

[11:49] We understand that the cost of the understand that the cost of the response here to the for the response here to the for the emergency could be somewhere emergency could be somewhere around $3 million you want to around $3 million you want to be able to do, and you should be able to do, and you should be able to get it reimbursed by

[11:56] be able to get it reimbursed by Pima or FEMA or whoever, Pima or FEMA or whoever, whoever is the agency. But you whoever is the agency. But you have to front the cash, right? have to front the cash, right? You don't want your residents You don't want your residents or your your businesses to be

[12:03] or your your businesses to be stuck with trees down on their stuck with trees down on their property because you're waiting property because you're waiting for the for the federal for the for the federal government to arrive with a government to arrive with a check.

[12:11] So having some amount of check. So having some amount of money. And what I would say is money. And what I would say is pick your last three big things pick your last three big things that happened. Snowstorms, or that happened. Snowstorms, or eye holes and roof. We've seen eye holes and roof. We've seen that.

[12:21] We've seen places that that. We've seen places that have a lot of rain with have a lot of rain with flooding issues. What did those flooding issues. What did those costs? And then average them costs? And then average them together and set that aside as together and set that aside as an extra reserve.

[12:29] So that's an extra reserve. So that's over and above the 16%. But over and above the 16%. But it's probably 3% more. So let's it's probably 3% more. So let's just round up and call that 20. just round up and call that 20.

[12:37] So we started with 30 and now So we started with 30 and now we've put 20 aside for we've put 20 aside for different types of reserves. different types of reserves. You have ten that you can and You have ten that you can and you should use. So this is very you should use.

[12:45] So this is very weird to have the fincial weird to have the fincial consultant come here and tell consultant come here and tell you, hey look you can we'll do you, hey look you can we'll do even something weirder. We'll even something weirder.

[12:52] We'll talk about tax decreases here talk about tax decreases here in a little bit in a very in a little bit in a very specific way. Um, but you have specific way. Um, but you have reserves that you can apply to reserves that you can apply to fix some of the problems that fix some of the problems that you have.

[13:00] And while this paper you have. And while this paper makes me pick one thing and put makes me pick one thing and put it first because I can't put it first because I can't put two and have them off to the two and have them off to the side, they really are parallel.

[13:06] side, they really are parallel. One thing you could do is talk One thing you could do is talk about is start to put money about is start to put money aside to deal with a very large aside to deal with a very large increase in your debt schedule,

[13:12] increase in your debt schedule, which I'll show you at the end. which I'll show you at the end. But right now your debt is But right now your debt is going to go from think of it as going to go from think of it as tiny little steps to a giant

[13:18] tiny little steps to a giant increase. You're going to increase. You're going to gradually work your way up to gradually work your way up to $5 million, and then it's going $5 million, and then it's going to double to ten. Right. And to double to ten. Right. And you.. you.. So yes.

[13:27] So yes. So you get too far down. Sure. So you get too far down. Sure. I'm not sitting next to her so I'm not sitting next to her so she she restricts my line of she she restricts my line of questioning. questioning. Okay. Okay. But. But. Uh. Uh. Now you're free. Now you're free. Free reign.

[13:36] Free reign. You sit up in the stirrup. Did You sit up in the stirrup. Did you, um, with the instability you, um, with the instability at the federal level? Mhm. at the federal level? Mhm.

[13:48] Wouldn't it be more prudent to Wouldn't it be more prudent to to hold three months? You could to hold three months? You could be served above the 16. be served above the 16. You could. You could. You, you'd b You, you'd b Yep. Yep. You could decide to go higher. You could decide to go higher.

[13:59] Um, we have seen places, the Um, we have seen places, the places that we, that generally places that we, that generally go higher are a couple of go higher are a couple of things. One, they're very things. One, they're very small. Right. Because two small. Right. Because two months could be a very small months could be a very small amount of money.

[14:07] Two if they amount of money. Two if they have if they have an economy have if they have an economy that's very subject to swings that's very subject to swings of their revenues in of their revenues in Pennsylvania, you have some of Pennsylvania, you have some of that.

[14:16] But the downside, the the that. But the downside, the the downside of the real estate tax downside of the real estate tax revenue is it doesn't change revenue is it doesn't change it. it. Where you're going to get every Where you're going to get every year. year. The upside is it doesn't The upside is it doesn't change.

[14:21] change. You know, what you're going to You know, what you're going to get every year. So some of that get every year. So some of that stability. stability., you actually have someuffer , you actually have someuffer in. in. But the. But the. The third thing is um, is The third thing is um, is community instability.

[14:32] Where do community instability. Where do you think you might have needs? you think you might have needs? There are places. Look, if you There are places. Look, if you were a Triple-A rated city, were a Triple-A rated city, they have ridiculous amounts of they have ridiculous amounts of reserves.

[14:39] And you're not trying reserves. And you're not trying you're not trying to do that. you're not trying to do that. But there is definitely an But there is definitely an argument to go higher than two argument to go higher than two months. If you wanted to, which months.

[14:47] If you wanted to, which is we understand that you are is we understand that you are balancing the need for reserves balancing the need for reserves with the need to balance your with the need to balance your budget, with the need to put budget, with the need to put that money into. that money into. Place. The community needs. Place. The community needs.

[14:56] Yeah, at some point someone Yeah, at some point someone will say, you're raising my will say, you're raising my taxes, and you have h much in taxes, and you have h much in the bank, right? So we're the bank, right? So we're trying to anticipate those trying to anticipate those sorts of things and give you a

[15:03] sorts of things and give you a way to think about that. But way to think about that. But you are absolutely right. You you are absolutely right.

[15:09] You could go higher and there are a could go higher and there are a lot of places who start at 20, lot of places who start at 20, which is kind of. little. Yeah, which is kind of. little. Yeah, yeah, yeah. So the last thing yeah, yeah.

[15:19] So the last thing is, so you have money for debt is, so you have money for debt and you also have some money to and you also have some money to use in the 2027 budget. And use in the 2027 budget. And wait, this is the guy who just wait, this is the guy who just yelled at me for three months yelled at me for three months about non-recurring revenues about non-recurring revenues and non-recurring expenses.

[15:28] And and non-recurring expenses. And now he's telling me to do the now he's telling me to do the same thing. Here's how I would same thing. Here's how I would think about it. Non-recurring think about it. Non-recurring revenue fund balance to balance revenue fund balance to balance your budget is an okay.

[15:39] It's your budget is an okay. It's not a great. It's not a not a great. It's not a perfect. You'd rather use it perfect. You'd rather use it for something else, but it's an for something else, but it's an acceptable move if it's a acceptable move if it's a bridge to something.

[15:48] If you're bridge to something. If you're just burning $3 million because just burning $3 million because you don't have a better idea or you don't have a better idea or decisions are hard or everyone decisions are hard or everyone dies someday, or whatever your dies someday, or whatever your philosophy is, that's not

[15:56] philosophy is, that's not great. But if you're saying, I great. But if you're saying, I need to, I need two years to do need to, I need two years to do X home rule collective X home rule collective bargaining, negotiations, bargaining, negotiations, restructure operations, restructure operations, whatever it is, it is okay to

[16:09] whatever it is, it is okay to use a portion, not a huge use a portion, not a huge portion, but a portion of that portion, but a portion of that to buy yourself time. And the to buy yourself time.

[16:17] And the way you can answer that way you can answer that question for yourself, where am question for yourself, where am I really doing this the right I really doing this the right way? Or am I just convincing way? Or am I just convincing myself? Is is this a bridge or myself? Is is this a bridge or a Band-Aid? A Band-Aid is a Band-Aid? A Band-Aid is something you use just to

[16:24] something you use just to temporarily to get you through temporarily to get you through this year, a bridge is I am this year, a bridge is I am doing this to buy me time so doing this to buy me time so that I can.

[16:32] And there has to be that I can. And there has to be a specific answer to the rest a specific answer to the rest of that question. That's not of that question. That's not so. It can be someone else's so. It can be someone else's problem, right? Okay. I'm going problem, right? Okay.

[16:40] I'm going to remember to do that to remember to do that eventually. I've got two more eventually. I've got two more slides to see if I can remember slides to see if I can remember on the last one. Um, so let's on the last one.

[16:47] Um, so let's let's start with the the let's start with the the elephant in the room and just elephant in the room and just put it out there. I think put it out there. I think you're going to you're very you're going to you're very likely to need a real estate likely to need a real estate tax. I don't know tax.

[16:54] I don't know mathematically how you solve mathematically how you solve this problem without one. It's this problem without one. It's been several years since you've been several years since you've had one. Um, but rather than had one.

[17:03] Um, but rather than just talk to you in very vague just talk to you in very vague things, I, I threw a number out things, I, I threw a number out there for you to, to start with there for you to, to start with so that people, at least so that people, at least initially, can be mad at me and initially, can be mad at me and so that you can try and beat

[17:11] so that you can try and beat it. So the number that I would it. So the number that I would start wit in your head is start wit in your head is either a one mil or a two mil either a one mil or a two mil real estate tax increase.

[17:17] real estate tax increase. Right? A one mil tax increase Right? A one mil tax increase is about seven and a half. It's is about seven and a half. It's what you had last year, give or what you had last year, give or take.

[17:24] I know it rounded down to take. I know it rounded down to something. I actually no, it something. I actually no, it was full one mil. Uh, a two mil was full one mil. Uh, a two mil would be twice that. Not would be twice that. Not surprisingly, a 15% tax surprisingly, a 15% tax increase.

[17:32] Those are big increase. Those are big numbers. But if we think about numbers. But if we think about this in over a longer period of this in over a longer period of time, from 2020 to 2025, you time, from 2020 to 2025, you had nothing, right? So if I had nothing, right? So if I take your one mil tax increase

[17:43] take your one mil tax increase that you did last year, and I that you did last year, and I don't look att in terms of don't look att in terms of one year because the world one year because the world existed before 2025, it existed before 2025, it stretches out to be an average

[17:52] stretches out to be an average increase of about 1.2% per year increase of about 1.2% per year in your tax increase. in your tax increase. So what would that one mill net So what would that one mill net us in real dollars. us in real dollars. So would net you about $2.

[18:02] 9 So would net you about $2.9 million. So here's here's three million. So here's here's three ways to think about the the one ways to think about the the one mil. It's worth $3 million. mil. It's worth $3 million. It's a quarter of the deficit. It's a quarter of the deficit.

[18:12] Or it would basically mean from Or it would basically mean from 2020 to 2027, we had had an 2020 to 2027, we had had an average tax increase of about average tax increase of about 3%, which is very closeo cost 3%, which is very closeo cost of living. Now, if you go twice of living.

[18:23] Now, if you go twice that, not surprisingly, that, not surprisingly, everything doubles right. So everything doubles right. So it's worth 6 billion instead of it's worth 6 billion instead of three. It's half instead of a three. It's half instead of a quarter. And this is probably quarter.

[18:30] And this is probably the mayor's already told me the mayor's already told me this. This is too high. Right. this. This is too high. Right. Um, but this is the range that Um, but this is the range that I would that I would start to I would that I would start to think about and think about it

[18:36] think about and think about it over the course of what I could over the course of what I could tell you is you didn't raise tell you is you didn't raise taxes enough for five years, taxes enough for five years, and now you got to pay the

[18:42] and now you got to pay the piper and you got to do it all piper and you got to do it all at once, and you got to suck it at once, and you got to suck it up and stinks to be you because up and stinks to be you because of the first thing we talked

[18:49] of the first thing we talked about. That's not true, right? about. That's not true, right? You have some reserves in some You have some reserves in some time, but I'm sorry. You have time, but I'm sorry. You have to do something. to do something. I'm sorry.

[18:58] So that one mil I'm sorry. So that one mil represents roughly $3 million represents roughly $3 million in revenue? in revenue? Yeah, they're gonna make it. Yeah, they're gonna make it. Nothing. Nothing. It represents almost $3 million It represents almost $3 million in revenue to the city. Right. in revenue to the city. Right.

[19:11] What does that represent to What does that represent to $100,000 on a $100,000 home to $100,000 on a $100,000 home to the to the citizen? the to the citizen? Yep. So a one mil. Yep. So a one mil. Would be. What is that? Would be. What is that? A I'm looking at you.

[19:19] Is that a A I'm looking at you. Is that a $100? Something like that. $100? Something like that. Yeah. So and remember it's Yeah. So and remember it's assessed value. So I don't know assessed value.

[19:27] So I don't know how many of your homes here are how many of your homes here are there might be market value there might be market value 100, but they might be assessed 100, but they might be assessed much lower than that. But yes much lower than that. But yes it's an impact. It is if my it's an impact.

[19:35] It is if my super quick math is right and super quick math is right and it's 100 bucks, it's whatever it's 100 bucks, it's whatever that is less than $10 a month. that is less than $10 a month.

[19:42] But it's meaningful on a if you But it's meaningful on a if you were on a fixed income, right, were on a fixed income, right, you're a senior and you don't you're a senior and you don't have if you are. have if you are. It's very meaningful when the It's very meaningful when the median income range around here median income range around here is what where it at? It's at. is what where it at? It's at. It's very meaningful.

[19:50] And if we It's very meaningful. And if we double it then that's $200, double it then that's $200, right? Yep. I just want. right? Yep. I just want. To you're right to think about To you're right to think about it. That's the way I would it.

[19:57] That's the way I would think about it too is think think about it too is think about it from the perspective about it from the perspective of the government and think of the government and think about it from the perspective about it from the perspective of the taxpayer. Um, but I of the taxpayer.

[20:06] Um, but I think that's if we're if we're think that's if we're if we're trying to move this because trying to move this because you're getting you're not quite you're getting you're not quite there yet. You're certainly not there yet. You're certainly not voting on a budget tonight. But voting on a budget tonight.

[20:13] But as we as you start to move as we as you start to move towards that deadline, somebody towards that deadline, somebody has to put out a specific has to put out a specific number to think about. Second. number to think about. Second. Sure. Please go ahead. Sure. Please go ahead. Councilman. Councilman.

[20:25] You made a comment saying that You made a comment saying that we didn't raise taxes, which is we didn't raise taxes, which is true. Right? But during that true. Right? But during that entire time, we did raise fees. entire time, we did raise fees.

[20:35] Well, you raised your I think Well, you raised your I think you got pretty good at raising you got pretty good at raising the trash fee. I think that one the trash fee. I think that one you've raised pretty regularly, you've raised pretty regularly, the sewer fees, I believe, as the sewer fees, I believe, as well, which was whether it was well, which was whether it was happenstance or we could take

[20:43] happenstance or we could take credit for it, for talking credit for it, for talking about it. The last time we were about it. The last time we were here, uh, and those things, here, uh, and those things, those are painful. The taxes, those are painful.

[20:51] The taxes, the fee is not the same as a the fee is not the same as a tax. I don't, you know, any. tax. I don't, you know, any. Does anybody here have Disney Does anybody here have Disney Plus? Yes. Okay. What happened Plus? Yes. Okay. What happened earlier this week with Disney earlier this week with Disney Plus? Plus? They had an increase, right.

[21:03] Uh, They had an increase, right. Uh, on a monthly subscription. on a monthly subscription. What do you value more watching What do you value more watching Bluey o having a police Bluey o having a police department? The answer better department? The answer better be better be the police be better be the police department and not Bluey.

[21:11] The department and not Bluey. The cost of things are the cost of cost of things are the cost of things go up over time, right? things go up over time, right? If you will pay without If you will pay without blinking or without complaining blinking or without complaining or without cancelling extra

[21:22] or without cancelling extra money to have the ability to money to have the ability to watch honey, I Shrunk the Kids, watch honey, I Shrunk the Kids, then you have to be able to then you have to be able to admit to.

[21:29] And I'm not trying to admit to. And I'm not trying to make light of this thing. I'm make light of this thing. I'm just saying things. The cost of just saying things. The cost of things go up over time. It's things go up over time. It's true of everything. It's just true of everything.

[21:38] It's just as a society, we've decided as a society, we've decided this is the one thing where it this is the one thing where it can't ever hapn, where it has can't ever hapn, where it has to be. Go get the money from to be. Go get the money from somebody else. somebody else.

[21:46] I agree, as the youngest person I agree, as the youngest person at the table at 33, I'm used to at the table at 33, I'm used to things just going up and just things just going up and just dealing with it. And the dealing with it.

[21:53] And the rebuttal that I hear from other rebuttal that I hear from other people is that every excuse people is that every excuse under the book, except for when under the book, except for when there's certain other expenses. there's certain other expenses. Yeah. Yeah.

[22:03] Well and that that the thing Well and that that the thing with tax increases is you have with tax increases is you have to be able to you have to be to be able to you have to be able to earn them through able to earn them through credibility. Right. That's the credibility. Right. That's the other side of it is. Well then other side of it is.

[22:10] Well then you could always increase the you could always increase the taxes. It could be the answer taxes. It could be the answer to everything. Right. So this to everything. Right. So this gets back to the first thing we gets back to the first thing we talked about cost. That's the talked about cost. That's the revenue and value.

[22:20] So you have revenue and value. So you have to be able to talk about what to be able to talk about what the value is that city the value is that city government delivers. That's why government delivers. That's why the police are more important the police are more important than Bluey.

[22:26] Um, but you also than Bluey. Um, but you also have to be able to explain that have to be able to explain that when you're thinking about, when you're thinking about, well, okay, I get it, but well, okay, I get it, but you're not going to eliminate you're not going to eliminate all the police.

[22:33] How many would all the police. How many would it be? Or what if it's not it be? Or what if it's not police? And what if it's police? And what if it's something else? You don't have something else? You don't have a wildly lucrative, uh, super a wildly lucrative, uh, super expansive city government.

[22:45] You expansive city government. You have all the things that other have all the things that other city governments have. You have city governments have. You have a police department and a fire a police department and a fire department. You have a sewer department. You have a sewer fund and a public works fund.

[22:51] fund and a public works fund. You are I, I, I never buy the You are I, I, I never buy the phrase, you know, we're running phrase, you know, we're running at bare bones and I can't cut at bare bones and I can't cut any more because I bet you can.

[22:59] any more because I bet you can. Um, but what you don't have is Um, but what you don't have is tons of discretionary tons of discretionary positions. You have, and you positions. You have, and you deliver the services that are deliver the services that are expected of third class city.

[23:08] expected of third class city. If we were to benchmark you to If we were to benchmark you to Redding and Allentown and Redding and Allentown and Scranton and whatever, and you Scranton and whatever, and you would find. Oh, look at that. would find. Oh, look at that.

[23:16] We all look more or less We all look more or less somewhat the same. One thing somewhat the same. One thing you do have different actually, you do have different actually, most of those places have this most of those places have this to, uh. Is you have a parking to, uh.

[23:31] Is you have a parking authority, so this is as an authority, so this is as an outsider, I get to say things outsider, I get to say things that I think are right. That that I think are right.

[23:39] That may not be entirely right may not be entirely right relationally, but I can say relationally, but I can say them and hopefully give you a them and hopefully give you a different perspective on that. different perspective on that. So, uh, you're right. Now you So, uh, you're right.

[23:50] Now you have a 15% parking tax on, as have a 15% parking tax on, as your ordinance reads, each your ordinance reads, each parking transaction by a patron parking transaction by a patron of a non-residential parking of a non-residential parking place, except for the EPA, they place, except for the EPA, they don't have the parking tax on don't have the parking tax on their on their transactions. their on their transactions.

[24:00] What the city and the EPA, EPA What the city and the EPA, EPA have done in the past, the have done in the past, the parking authority is they've parking authority is they've agreed to basically it's it agreed to basically it's it still involves money, but it's still involves money, but it's almost like a barter. Right.

[24:07] almost like a barter. Right. I'll let you do, uh, parking I'll let you do, uh, parking enforcement. You let me have enforcement. You let me have the fines. I'll do this for the fines. I'll do this for you. You do that for me. And at you. You do that for me.

[24:16] And at the end, the parking authority the end, the parking authority was making a contribution of was making a contribution of somewhere around, in addition somewhere around, in addition to all those back and forth to all those back and forth things of about 500 to $550,000 things of about 500 to $550,000 a year in 2018, t last

[24:27] a year in 2018, t last agreement, I believe, expired agreement, I believe, expired August 2017. It did when I was August 2017. It did when I was here in 19 and 20, they were here in 19 and 20, they were still doing something. It was a still doing something. It was a smaller amount.

[24:36] So it's not smaller amount. So it's not that the parking authority that the parking authority didn't give anything after the didn't give anything after the agreement, but I think the last agreement, but I think the last year we were here, at least year we were here, at least when I left, it was $100,000 or

[24:43] when I left, it was $100,000 or something like that was midway something like that was midway through the year. So it through the year. So it certainly could have finished certainly could have finished higher. The thing that I would higher.

[24:49] The thing that I would advise you to do is, is a advise you to do is, is a couple of things with the couple of things with the parking authority. The first is parking authority.

[24:58] The first is whatever exchange of goods or whatever exchange of goods or services that you had that services that you had that justified that $500,000 in the justified that $500,000 in the past, all of that stuff still past, all of that stuff still happened. It still happened in happened. It still happened in 2019 and 20 and 21 and 22. It 2019 and 20 and 21 and 22. It did not happen. The thing that did not happen.

[25:07] The thing that didn't happen was you didn't didn't happen was you didn't get the $500,000 in reserve. get the $500,000 in reserve. And again, this is where And again, this is where somebody from the parking somebody from the parking authority waves their hand and authority waves their hand and says, wait, but what about says, wait, but what about these five things that I, you

[25:15] these five things that I, you know, don't know about? But the know, don't know about? But the first thing I would do is first thing I would do is figure out what that truck figure out what that truck payment is, right? Maybe they payment is, right? Maybe they could make it right away.

[25:22] Maybe could make it right away. Maybe they can't. Um, but figure get they can't. Um, but figure get hole for whatever that hole for whatever that arrangement was. And it won't arrangement was.

[25:30] And it won't be just one way because again I be just one way because again I there are things that, you there are things that, you know, the barter didn't go just know, the barter didn't go just one direction, but that's t one direction, but that's t first thing. The second thing first thing.

[25:37] The second thing is you want to have that is you want to have that multiyear agreement, you want multiyear agreement, you want it in writing and you want it it in writing and you want it in writing predominantly to in writing predominantly to give yourself and the parking give yourself and the parking authority peace of mind, authority peace of mind, transparency and transparency and predictability.

[25:46] Why do I need predictability. Why do I need an agreement with Gannon an agreement with Gannon University? I know that University? I know that so-and-so knows so-and-so and so-and-so knows so-and-so and they'll always be friends. You they'll always be friends.

[25:55] You want it because you want want it because you want transparency and you want transparency and you want stability. You want that basis stability. You want that basis so that if one of your so that if one of your so-and-so's in my and my so-and-so's in my and my so-and-so and so-and-so leaves so-and-so and so-and-so leaves the person such and such who

[26:03] the person such and such who takes their place, you don't takes their place, you don't have to worry of their friends have to worry of their friends too, right? You want that kind too, right? You want that kind of relationship. And the last of relationship.

[26:10] And the last thing, and this is where it thing, and this is where it gets a little sticky and you or gets a little sticky and you or I, or hopefully me, hopefully I, or hopefully me, hopefully if it's wrong, they'll just if it's wrong, they'll just reach out to me. I think you reach out to me.

[26:16] I think you should think about applying the should think about applying the parking tax to their parking tax to their properties. And here's the properties. And here's the argument why one other places argument why one other places do it Wilkes-Barre. Pittsburgh do it Wilkes-Barre.

[26:26] Pittsburgh I I'm not going to get into the I I'm not going to get into the legal thing about whether you legal thing about whether you can make them do it. I just can make them do it. I just know that other places do. Two know that other places do.

[26:35] Two why would you disadvantage a why would you disadvantage a private parking owner by saying private parking owner by saying you have to pay the tax, but you have to pay the tax, but the authority doesn't unless the authority doesn't unless there's something the other there's something the other way, but the something the way, but the something the other way has to be other way has to be transparent, has to be transparent, has to be specific, and it has to be

[26:44] specific, and it has to be valued. So this is a little bit valued. So this is a little bit of, you know, classical economy of, you know, classical economy libertarianism or whatever. But libertarianism or whatever.

[26:53] But I don't know why you would I I don't know why you would I don't know why you would give don't know why you would give the parking authority a cost the parking authority a cost advantage over a private vendor advantage over a private vendor unless unless you have it, unless unless you have it, unless there's a reason. And unless there's a reason.

[27:01] And look, what I didn't say here look, what I didn't say here is. But they own property and is. But they own property and they should be paying you real they should be paying you real estate tax. There are lots of estate tax. There are lots of non there are lots of tax non there are lots of tax exempt properties.

[27:08] You could exempt properties. You could certainly go to them and make certainly go to them and make that argument. But now we're that argument. But now we're getting into a little more of getting into a little more of what about the couy what about the couy buildings.

[27:15] You know, they look buildings. You know, they look more like they look both like a more like they look both like a government. But parking is not government. But parking is not a purely public good. You have a purely public good. You have private parking operators who private parking operators who pay this tax.

[27:26] I think it's fair pay this tax. I think it's fair to look at extending it to them. to look at extending it to them. And with me firing up the hate And with me firing up the hate mail from the parking mail from the parking authority, I will turn it over. authority, I will turn it over. To Marty. To Marty. Now.

[27:36] Now. I. I. Okay, so Gordon talked a lot Okay, so Gordon talked a lot about revenues and the options about revenues and the options that you have in the short that you have in the short term, which on the revenue term, which on the revenue side, like you said, in

[27:46] side, like you said, in lot of options in the short lot of options in the short term to really diversify and term to really diversify and grow your revenues. Besides tax grow your revenues. Besides tax increases. That's just the way increases. That's just the way that it is.

[27:56] Um, on the that it is. Um, on the expenditure side, we're going expenditure side, we're going to address a couple of things. to address a couple of things. Personnel is the biggest cost Personnel is the biggest cost category that you have. And category that you have. And then we'll also talk about then we'll also talk about operating expenses.

[28:05] Again, operating expenses. Again, we're still talking about we're still talking about options that you have options that you have potentially for 2027. The first potentially for 2027. The first one that we have on the screen one that we have on the screen here is really a budgeting here is really a budgeting move.

[28:18] This would be including move. This would be including some kind of allowance for some kind of allowance for vacancy savings that you vacancy savings that you probably already or may already probably already or may already experience. And what I mean by experience.

[28:28] And what I mean by that is you budget a certain that is you budget a certain amount for salaries and wages amount for salaries and wages at the beginning of the year, at the beginning of the year, based on the headcount and the based on the headcount and the salaries of those employees. salaries of those employees.

[28:36] But you don't have those But you don't have those positions filled for 100% of positions filled for 100% of the year, right? You have the year, right? You have people leave. You have someone people leave.

[28:44] You have someone who's higher paid leave and is who's higher paid leave and is replaced by someone who is replaced by someone who is lower paid. You have some gap lower paid. You have some gap in the middle. And what you see in the middle.

[28:51] And what you see in that table is that you have in that table is that you have had some amount of what we had some amount of what we think is vacancy savings each think is vacancy savings each year. In some years it's been year.

[29:01] In some years it's been pretty small, less than pretty small, less than $500,000, but in other years $500,000, but in other years it's been a lot more it's been a lot more meaningful. Over $1 million. So meaningful. Over $1 million. So what we recommend here is what we recommend here is figuring out what's a figuring out what's a reasonable vacancy allowance, reasonable vacancy allowance, either across the board or either across the board or specific to departments.

[29:12] If you specific to departments. If you have departments that have, you have departments that have, you know, high levels of vacancies, know, high levels of vacancies, kind of chronically and kind of chronically and including that in your budget, including that in your budget, this does not change your this does not change your financial performance, because

[29:23] financial performance, because in the past couple of years, in the past couple of years, you've already experienced that you've already experienced that kind of savings. What it does kind of savings.

[29:31] What it does is help you when you're putting is help you when you're putting together the budget, solve for together the budget, solve for a potentially smaller and more a potentially smaller and more realistic number. So let's say realistic number.

[29:41] So let's say that you're budgeting next year that you're budgeting next year for another $47 million in for another $47 million in salaries, but you're only going salaries, but you're only going to spend 45. You don't have to to spend 45. You don't have to solve for that other $2 solve for that other $2 million, because at the end of million, because at the end of the year, it probably won't the year, it probably won't actually be there.

[29:48] So that's actually be there. So that's that's kind of the first that's kind of the first recommendation, which is is an recommendation, which is is an easy one. The next two are a easy one. The next two are a lot more complicated. What we lot more complicated.

[30:01] What we talked about when we were here, talked about when we were here, when Gordon was here a few when Gordon was here a few months ago, relative to your months ago, relative to your headcount, is that this is an headcount, is that this is an area where you have added a lot area where you have added a lot of positions, meaning you've

[30:10] of positions, meaning you've added cost. This chart you've added cost. This chart you've seen before, it shows the seen before, it shows the number of of full time number of of full time equivalents or FTEs that you've equivalents or FTEs that you've added over the past decade, added over the past decade, going from 516 roughly to

[30:23] going from 516 roughly to almost 560 FTEs in your general almost 560 FTEs in your general fund. So what do we recommend fund. So what do we recommend here? Again, coming from the here? Again, coming from the outside, we're not going to be outside, we're not going to be able to look at each position

[30:33] able to look at each position and say, these positions are and say, these positions are not valuable to you. Who are not valuable to you. Who are the governing body and are more the governing body and are more connected to what the actual connected to what the actual services and needs are of your

[30:43] services and needs are of your constituents. So we kind of constituents. So we kind of give a framework, and we also give a framework, and we also try to contextualize these try to contextualize these things in two categories or two things in two categories or two weights basically.

[30:52] And Gordon weights basically. And Gordon kind of talked about this in kind of talked about this in the beginning. And the two the beginning. And the two weights are in terms of their weights are in terms of their cost, which we can actually cost, which we can actually tell you when we try to do a

[30:58] tell you when we try to do a little bit in one of the little bit in one of the chapters that you'll see later chapters that you'll see later on when this all comes out. But on when this all comes out.

[31:06] But the cost of each of those the cost of each of those positions, you know that the positions, you know that the police officer, their health police officer, their health insurance, all of those things, insurance, all of those things, and the value and the value is and the value and the value is a lot squishy are what we did

[31:14] a lot squishy are what we did when we were here over the when we were here over the summer is when we sat down with summer is when we sat down with all the department heads. We all the department heads. We had a list of.

[31:20] These are the had a list of. These are the positions that you've added. positions that you've added. Tell me what those positions do Tell me what those positions do and what they've kind of and what they've kind of brought to the table. In some brought to the table. In some cases.

[31:29] We found that the cases. We found that the department was able to expand department was able to expand existing services, and in some existing services, and in some cases they expanded what they cases they expanded what they were doing. So they added were doing. So they added services. The police services.

[31:39] The police department, for example, they department, for example, they have specialized units that have specialized units that they didn't have prior to they didn't have prior to adding some of that headcount. adding some of that headcount. So there's a couple of So there's a couple of different ways that services or different ways that services or value has been added.

[31:49] So you value has been added. So you have the cost and you have the have the cost and you have the value that we can provide from value that we can provide from what we've heard or what you what we've heard or what you have seen. And then the have seen.

[31:58] And then the decision making framework is decision making framework is really what this body is going really what this body is going to be tasked with doing over to be tasked with doing over the next couple of months. So the next couple of months. So we kind of give you a way to we kind of give you a way to evaluate these positions.

[32:06] And evaluate these positions. And there's three categories that there's three categories that we ask you to put them in. And we ask you to put them in. And the first is high priority the first is high priority positions. And the ones that positions.

[32:16] And the ones that you determine are, um, valuable you determine are, um, valuable enough to justify their cost. enough to justify their cost. Talked a lot about tax Talked a lot about tax increases in this presentation. increases in this presentation.

[32:27] One of the ways that you can One of the ways that you can think about the the value think about the the value according to their cost is what according to their cost is what is it going to cost one of your is it going to cost one of your residents. This department has residents. This department has added X number of positions. added X number of positions. This is the cost.

[32:34] This is what This is the cost. This is what it translates to. If we want to it translates to. If we want to keep that in terms of a millage keep that in terms of a millage rate, can I justify that to my rate, can I justify that to my constituency? Can I justify

[32:41] constituency? Can I justify increasing a tax rate to keep increasing a tax rate to keep that service? There are that service? There are probably a lot of positions probably a lot of positions that have been added that are that have been added that are gog to fall into that

[32:48] gog to fall into that category. And what we recommend category. And what we recommend here is that you keep them if here is that you keep them if they're valuable enough to they're valuable enough to justify the tax rate, you keep justify the tax rate, you keep those positions.

[33:00] The second are those positions. The second are positions that are high positions that are high priority or that you would like priority or that you would like to see funded. Um, but they to see funded.

[33:11] Um, but they have also some offsetting, uh, have also some offsetting, uh, I'm sorry, some offsetting I'm sorry, some offsetting expenditure reductions or some expenditure reductions or some kind of offsetting revenue to kind of offsetting revenue to support them. We in these support them.

[33:22] We in these cases, if they do not have a cases, if they do not have a funding source and you can't funding source and you can't justify that value,ut you justify that value,ut you still feel that they're very still feel that they're very high priority. Um, we think high priority. Um, we think that you should set them aside that you should set them aside as potential investments. And as potential investments.

[33:33] And last category are positions last category are positions that you determined they're not that you determined they're not justifiable at this point, and justifiable at this point, and we need to cut them. And in we need to cut them. And in those cases, we recommend that those cases, we recommend that you eliminate them. So that's you eliminate them. So that's one hard decision.

[33:48] Another hard one hard decision. Another hard decision is going to be, um, decision is going to be, um, determining changes to employee determining changes to employee health insurance. Employee health insurance. Employee health insurance is one of the health insurance is one of the largest cost categories that largest cost categories that the city has. And it's growing.

[33:59] the city has. And it's growing. When we look at the total When we look at the total amount of health insurance amount of health insurance costs that has grown over the costs that has grown over the last couple of years, we see a last couple of years, we see a growth rate of around 6%.

[34:07] It's growth rate of around 6%. It's not extraordinarily high. But not extraordinarily high. But if you compare that to if you compare that to recurring revenues like real recurring revenues like real estate taxes and earned income estate taxes and earned income taxes, the dollar amount is not taxes, the dollar amount is not growing fast enough to meet the

[34:16] growing fast enough to meet the cost. It's a couple of figures cost. It's a couple of figures in the table below that. I just in the table below that. I just wanted to direct your wanted to direct your attention, the medical claims. attention, the medical claims.

[34:24] So I go to the doctor, I get a So I go to the doctor, I get a bill, it's paid by my bill, it's paid by my insurance. Um, those medical insurance. Um, those medical claims have grown byround 4%. claims have grown byround 4%.

[34:32] Prescription drugs have grown Prescription drugs have grown really fast, around 15% over really fast, around 15% over the last couple of years. Um, the last couple of years. Um, that is high. It's also that is high. It's also consistent with what we've seen consistent with what we've seen kind of in the market. At the kind of in the market.

[34:40] At the same time, employee same time, employee contributions to their plans contributions to their plans have only grown at around 1%. have only grown at around 1%. So what we've done in this So what we've done in this process and what we're process and what we're recommending in the plan, that recommending in the plan, that you'll see more specific

[34:51] you'll see more specific provisions that we recommend provisions that we recommend you look closer into is we've you look closer into is we've talked to your broker and talked to your broker and identified some strategies to identified some strategies to to generate savings in your to generate savings in your health insurance plans.

[35:00] health insurance plans. So that would be non bargaining So that would be non bargaining because the unions have to be because the unions have to be negotiated. negotiated. So yep. So yep. Oh I'm sorry. Oh I'm sorry. No no. No no. No no I'm sorry. No no I'm sorry. That's.

[35:12] that's the logical next That's. that's the logical next question. Right. So obviously question. Right. So obviously they're you know there's going they're you know there's going to be collective bargaining to be collective bargaining that we need to take into that we need to take into account. So most of the savings account.

[35:21] So most of the savings that we're calculating, if that we're calculating, if you're looking at okay, if you you're looking at okay, if you have if you change this have if you change this provision in health insurance, provision in health insurance, you can generate millions of you can generate millions of dollars in savings. Well, dollars in savings.

[35:28] Well, that's if everybody goes at that's if everybody goes at once. But you know that that's once. But you know that that's not the case when you have most not the case when you have most of your employees are in in one of your employees are in in one of these collective bargaining of these collective bargaining units. So we acknowledge that.

[35:35] units. So we acknowledge that. And we kind of give you like a And we kind of give you like a timeline and a way to address timeline and a way to address these one at a time. Obviously these one at a time.

[35:42] Obviously for management and non for management and non bargaining you can implement bargaining you can implement those changes as soon as is those changes as soon as is practicable for you. Um, for practicable for you.

[35:53] Um, for AFS me, there is a provision in AFS me, there is a provision in the contract that exists right the contract that exists right now that is kind of a re opener now that is kind of a re opener to specifically address health to specifically address health insurance and prescriptions. insurance and prescriptions. So that's kind of the next. So that's kind of the next.

[36:02] The next step in the process The next step in the process for the last three, you'll see for the last three, you'll see in that table that they have in that table that they have contracts that are spanning contracts that are spanning between 2027 and 2028. So they between 2027 and 2028. So they do have active contracts for do have active contracts for the next couple of years.

[36:13] And the next couple of years. And you can't force those you can't force those bargaining units to come to the bargaining units to come to the come to the table to talk about come to the table to talk about health insurance. But what you health insurance.

[36:21] But what you can do is present the potential can do is present the potential savings options to generate savings options to generate financial stability for the financial stability for the city and get them to understand city and get them to understand the flexibility that they make the flexibility that they make that may allow the city to, for

[36:29] that may allow the city to, for example, maintain headcount at example, maintain headcount at a particular rate or maintain a particular rate or maintain other things because you have a other things because you have a more financially stable budget. more financially stable budget. So that's your personnel.

[36:48] That So that's your personnel. That is the biggest cost center, as is the biggest cost center, as we said. Um, but we also wanted we said. Um, but we also wanted to address operating expenses, to address operating expenses, which is even more granular which is even more granular because you're going into each

[36:57] because you're going into each department and looking at department and looking at things like materials and things like materials and contracted services. So the contracted services.

[37:05] So the value that these things have value that these things have added over the last couple of added over the last couple of years is, is a little bit more years is, is a little bit more difficult to determine. But difficult to determine. But again, that's what we've tried again, that's what we've tried to to parse when we were in to to parse when we were in these interviews over the these interviews over the summer.

[37:13] Um, this table shows summer. Um, this table shows two periods of time whe we two periods of time whe we saw operating expenditure saw operating expenditure growth. The first is over the growth. The first is over the last five years or so. It's last five years or so.

[37:24] It's around $2 million, and the around $2 million, and the latter is just in the 2026 latter is just in the 2026 budget, which was another $2.5 budget, which was another $2.5 million of operating million of operating expenditure growth in just expenditure growth in just these top departments. these top departments. We isolate. We isolate.

[37:34] These departments because these These departments because these are also areas where we were are also areas where we were able to talk to the department able to talk to the department heads, and very similar to what heads, and very similar to what we've done on the personnel we've done on the personnel side, we've said, where have

[37:42] side, we've said, where have you added value? What is this you added value? What is this added to the city? There are added to the city? There are some descriptions on this some descriptions on this slide. The chapter that will slide.

[37:48] The chapter that will produce has a lot more produce has a lot more formation on specific things formation on specific things that have been added in that have been added in particular departments. But the particular departments. But the the process is very similar for the process is very similar for the personnel side.

[37:57] We can tell the personnel side. We can tell you the cost. We can describe you the cost. We can describe to you what the value has been. to you what the value has been.

[38:04] According to the department According to the department heads, and then the decision is heads, and then the decision is ultimately yours of what ultimately yours of what happens with these operating happens with these operating expenditures. expenditures. For the budget. For the budget. What we recommend is What we recommend is scrutinizing any large scrutinizing any large increases. You'll see that in increases. You'll see that in the 2026 budget, there was an the 2026 budget, there was an injustice.

[38:19] Top department's injustice. Top department's $2.5 million added in operating $2.5 million added in operating expenses.ome of those were expenses.ome of those were small here and there things, small here and there things, but some of them were large but some of them were large operating expenditure operating expenditure additions.

[38:29] So if you have a additions. So if you have a because of the financial because of the financial position that you're in, have position that you're in, have these large requests come these large requests come through the budget process. through the budget process. Those should be looked at very Those should be looked at very carefully. carefully. The other.

[38:37] The other. Recommendation that we have on Recommendation that we have on the expenditure side is a way the expenditure side is a way to kind of think about your to kind of think about your operating expenses, not just in operating expenses, not just in siloed buckets of the police

[38:46] siloed buckets of the police come with their operating or come with their operating or their budget requests. This their budget requests. This other department comes with its other department comes with its separate budget request, but separate budget request, but kind of thinking about them kind of thinking about them holistically, like you would a

[38:54] holistically, like you would a capital budget. And there are capital budget. And there are some expenses on the operating some expenses on the operating side that we saw in some cities side that we saw in some cities that they may have be that they may have be considered actually part of a

[39:02] considered actually part of a capital budget. So equipment or capital budget. So equipment or vehicles or things like that. vehicles or things like that. So thinking about it in this So thinking about it in this holistic sense across city holistic sense across city government, in terms of a government, in terms of a capital budget, in terms of

[39:11] capital budget, in terms of your capital needs, is another your capital needs, is another way to kind of evaluate the way way to kind of evaluate the way that you're adding capital that you're adding capital operating expenses. I should operating expenses. I should say.

[39:24] So those are really the say. So those are really the options that we see. Um, in the options that we see. Um, in the short term. And as Gordon said, short term. And as Gordon said, they're nothe most creative. they're nothe most creative. They're very straightforward. They're very straightforward. And they're probably things And they're probably things that you all have thought of.

[39:34] that you all have thought of. Right. Tax increase. Looking at Right. Tax increase. Looking at personnel in terms of personnel in terms of headcount, looking at health headcount, looking at health insurance benefits, operating insurance benefits, operating expenditure cuts. These are expenditure cuts. These are not, you know, new ideas.

[39:45] in not, you know, new ideas. in the longer term. We also wanted the longer term. We also wanted to address a couple of things. to address a couple of things.

[39:52] We know that these are not We know that these are not things that are going to be things that are going to be accomplished in the next couple accomplished in the next couple of months. You have your budget of months. You have your budget process that you're going process that you're going through, but they are things we through, but they are things we wanted to put on your radar and wanted to put on your radar and things that will be in our

[39:58] things that will be in our document, because a couple of document, because a couple of reasons. There are some big reasons. There are some big recommendations in here, and recommendations in here, and some of them you may want to some of them you may want to start thinking about or making

[40:06] start thinking about or making moves on in the short term, moves on in the short term, because they are long because they are long processes. And the first one, processes.

[40:17] And the first one, which I'm sure everyone knows, which I'm sure everyone knows, is in anticipating to talk is in anticipating to talk about tonight, is starting the about tonight, is starting the home rule process. home rule process. In the. In the. Plan, we are going to recommend Plan, we are going to recommend looking into Home Rule as a looking into Home Rule as a potential way to gain tax and potential way to gain tax and flexibility.

[40:28] We are thinking flexibility. We are thinking about Home Rule as a way to about Home Rule as a way to gain financial stability, and gain financial stability, and that is our perspective. Um, that is our perspective.

[40:40] Um, the the taxation flexibility to the the taxation flexibility to allow you to go over that 1% allow you to go over that 1% cap that is usually applied to cap that is usually applied to governments like yourselves and governments like yourselves and municipal governments. That is municipal governments. That is the critical benefit of home the critical benefit of home rule.

[40:48] And that is the reason rule. And that is the reason that we included in our plan. that we included in our plan. A couple of. A couple of. Things that we wanted to talk Things that we wanted to talk about, specifically with the about, specifically with the benefit that that flexibility. benefit that that flexibility. One is revenue diversification.

[40:59] One is revenue diversification. So, okay, you can increase So, okay, you can increase right now your real estate tax. right now your real estate tax.

[41:07] Why would you care about Why would you care about increasing your in income tax? increasing your in income tax? It's another lever that you It's another lever that you have when you get to budget have when you get to budget season to say, okay, we need to season to say, okay, we need to do some kind of a tax increase. do some kind of a tax increase.

[41:12] We've looked at what we can on We've looked at what we can on the expenditure side. We need the expenditure side. We need to find room on the revenue to find room on the revenue side. It's another lever that side. It's another lever that you can pull during budget you can pull during budget season.

[41:19] If you needed to find season. If you needed to find some revenue. It also is there some revenue. It also is there is probably a lot of overlap in is probably a lot of overlap in the tax base, but there is it's the tax base, but there is it's not 100%. So only working not 100%. So only working residents.

[41:29] residents. Their capital, city and home Their capital, city and home rule turns. rule turns. It would depend on what's in It would depend on what's in your in your charter. Yeah. your in your charter. Yeah. And yeah. And yeah. Um so that's that's the revenue Um so that's that's the revenue versification piece.

[41:43] The versification piece. The other benefit of increasing the other benefit of increasing the earned income tax over your earned income tax over your real estate tax is that it is real estate tax is that it is levied on a base that grows, as levied on a base that grows, as Gordon said, the the good side

[41:53] Gordon said, the the good side and the bad side of your real and the bad side of your real estate tax is that it's pretty estate tax is that it's pretty much the same every year, much the same every year, unless you increase the rate unless you increase the rate your income tax actually grows.

[41:59] your income tax actually grows. It's been growing over the past It's been growing over the past few years. I think somewhere few years. I think somewhere around 5% are actually even around 5% are actually even higher in some years, depending higher in some years, depending on what period you're looking

[42:06] on what period you're looking at. So you would, for example, at. So you would, for example, if you increase that rate if you increase that rate beyond the 1%, you have that beyond the 1%, you have that bigger pot in year one, and bigger pot in year one, and then in year two that would

[42:15] then in year two that would actually grow. It wouldn't just actually grow. It wouldn't just stay the same. stay the same. I just want to say this because I just want to say this because I believe in full transparency, I believe in full transparency, and I'm very interested in the

[42:24] and I'm very interested in the revenue side of it. Uh, but the revenue side of it. Uh, but the stuff I'm hearing about stuff I'm hearing about electing legislators by electing legislators by district, I think it amounts to district, I think it amounts to a citywide gerrymander.

[42:34] And I a citywide gerrymander. And I see in there where you say see in there where you say public support is essential. public support is essential.

[42:42] Um, and I don't think you're Um, and I don't think you're going to have that public going to have that public support unless you put we put a support unless you put we put a provision in there, and I'm not provision in there, and I'm not sure you can do that when you sure you can do that when you open up the study. Uh, but if open up the study.

[42:50] Uh, but if there's there's a provision in there's there's a provision in there, it's going to be I don't there, it's going to be I don't ever see that being publicly ever see that being publicly supported by the masses. supported by the masses. Yeah. Yeah. That and that's a key reason That and that's a key reason why we're highlighting.

[42:59] Look, why we're highlighting. Look, you need to have public support you need to have public support for this before you even start for this before you even start the process. There's a couple the process. There's a couple of votes that happen along the of votes that happen along the way.

[43:07] And if it's if it's shot way. And if it's if it's shot down at any point, you are down at any point, you are prohibited for five years. prohibited for five years.

[43:15] I think we'd be well advised to I think we'd be well advised to take a year if you're even take a year if you're even considering this to educate considering this to educate people on. Exactly. Don't throw people on. Exactly. Don't throw this on the ballot because I'll this on the ballot because I'll be the first one in line saying be the first one in line saying no. no. Sure, sure. Sure, sure. Yeah. Yeah. That's you. Yeah.

[43:25] The public That's you. Yeah. The public support is really essential. support is really essential. There is also, as I said, There is also, as I said, there's multiple votes in the there's multiple votes in the process. And the first one is process.

[43:32] And the first one is the first vote that you that the first vote that you that you place on the ballot is you place on the ballot is really just, should we do this really just, should we do this at all? Should we move forward at all? Should we move forward at all? Then beyond that, there at all? Then beyond that, there are several votes in the

[43:40] are several votes in the process. The last vote all the process. The last vote all the way at the end is we've drafted way at the end is we've drafted a home rule charter. Are we a home rule charter.

[43:47] Are we going to adopt this? going to adopt this? We just had it play out in our We just had it play out in our community and our region, right community and our region, right next door with our neighbors in next door with our neighbors in Mill Creek. Uh, I watched the Mill Creek.

[43:55] Uh, I watched the good stuff about it, and I good stuff about it, and I watched a really, really ugly watched a really, really ugly stuff about the process, too. stuff about the process, too. And a lot of that stuff. I And a lot of that stuff.

[44:06] I think we're way too premature think we're way too premature to be talking to having that to be talking to having that conversation, unless they want conversation, unless they want to try it and then wait five to try it and then wait five more years. more years. Yeah. And I think that's also Yeah. And I think that's also another reason why we put it in another reason why we put it in the long term.

[44:13] If you started the long term. If you started the process today, you the process today, you wouldn't, you know, that the wouldn't, you know, that the financial benefit that we're financial benefit that we're talking about that wouldn't talking about that wouldn't come into your bank account for come into your bank account for for two plus years.

[44:20] So that's for two plus years. So that's the other kind of piece. the other kind of piece. Of this community has to have Of this community has to have some real, real, real gut some real, real, real gut level, honest discussion. Uh, level, honest discussion.

[44:31] Uh, abouthat that means, not the abouthat that means, not the revenue side of it. Uh, but any revenue side of it. Uh, but any attempts to elect legislators attempts to elect legislators by district. And I'm by district. And I'm unapologetic about it. Uh, at unapologetic about it.

[44:43] Uh, at one point, uh, Bipoc community one point, uh, Bipoc community was like 9% of the population was like 9% of the population went out there like one third went out there like one third of the city proper. Um, but of the city proper.

[44:53] Um, but after 250 years of redlining after 250 years of redlining being pushed and land being pushed and land covenants, they had a little covenants, they had a little sliver, uh, you see, we're sliver, uh, you see, we're represented here today. Uh, represented here today. Uh, that could all go away. Uh, that could all go away.

[45:02] Uh, might be lucky if we get one might be lucky if we get one seat or gerrymander. And so the seat or gerrymander. And so the people I speak to, they don't people I speak to, they don't care if you push them in one care if you push them in one one barrio, one ghetto or one

[45:12] one barrio, one ghetto or one project. We want the popular project. We want the popular vote. We don't want Erie to vote. We don't want Erie to look like Missouri or look like Missouri or Mississippi. After this last Mississippi. After this last thing fiasco that they did.

[45:21] And thing fiasco that they did. And so I just felt like I should, so I just felt like I should, should qualify that because should qualify that because they know me. You don't. And they know me. You don't. And I'm not a progress stopper. Uh, I'm not a progress stopper. Uh, I believe status quo.

[45:33] She likes I believe status quo. She likes I, I'm in practicing this I, I'm in practicing this status quo i the enemy of status quo i the enemy of progress. And it's the killer progress. And it's the killer of hope. Clearly, what we're of hope. Clearly, what we're doing is not working.

[45:42] Uh, but doing is not working. Uh, but that would be kind of crazy. that would be kind of crazy. Sure. So I just, you know, I'm Sure. So I just, you know, I'm Andre. Andre. Yeah. Yeah.

[45:55] And there's obviously, you And there's obviously, you know, we're really simplifying know, we're really simplifying this, right? There's a lot of this, right? There's a lot of governance considerations. governance considerations. I see how simple how you I see how simple how you simplify it. That's why I want. simplify it. That's why I want. Right. That's why we won't just Right. That's why we won't just gloss over that. gloss over that. Sure. Sure. Yeah.

[46:03] We don't have these Yeah. We don't have these discussions. They gotta start discussions. They gotta start right here. Yeah. Yeah. right here. Yeah. Yeah. There's a there's another. There's a there's another. Piece of home rule that is not Piece of home rule that is not simple that we also wanted to simple that we also wanted to highlight here.

[46:14] And something highlight here. And something that similar to some of the that similar to some of the other governance considerations other governance considerations that we absolutely recommend that we absolutely recommend that you address before jumping that you address before jumping into the process. And that is into the process.

[46:25] And that is any risk that home rule may any risk that home rule may pose to your pension plans. pose to your pension plans. This is not something that we This is not something that we know too much about or know know too much about or know whether or not this is this is

[46:33] whether or not this is this is going to be the case or would going to be the case or would be the case if you adopted a be the case if you adopted a home rule charter. But it's home rule charter.

[46:39] But it's something that we've heard something that we've heard about and and something that we about and and something that we wanted to flag because it could wanted to flag because it could potentially be significant. potentially be significant. Um, there was a memo. Um, there was a memo.

[46:50] That we saw that basically That we saw that basically cited a, um, a conversation cited a, um, a conversation with a state auditor general with a state auditor general representative that voiced some representative that voiced some concerns about risk to state concerns about risk to state pension aid if the city were to pension aid if the city were to adopt a home rule charter, and adopt a home rule charter, and without getting too technical,

[46:58] without getting too technical, um, essentially the concern was um, essentially the concern was there's some provisions in the there's some provisions in the city's pension plans that would city's pension plans that would not be in line with third class not be in line with third class city code.

[47:09] Those claims we have city code. Those claims we have not, you know, evaluated. And not, you know, evaluated. And we're not making a ruling on we're not making a ruling on that today. What we are that today.

[47:16] What we are basically recommending that you basically recommending that you do is look into the two do is look into the two questions that are on this questions that are on this slide. So how would adopting a slide.

[47:25] So how would adopting a home rule charter impact the home rule charter impact the city's pension plans? Um, in city's pension plans? Um, in terms of their compliance with terms of their compliance with third class city code? And is third class city code? And is what is the value of that? what is the value of that? Again, what is the risk? Can Again, what is the risk? Can you put that in terms of you put that in terms of dollars.

[47:33] And your actuary may dollars. And your actuary may be able to guide you in that be able to guide you in that conversation. conversation. Just add sorry to grab your Just add sorry to grab your microphone. Councillor Horton, microphone. Councillor Horton, apologize. Uh, I just want to apologize.

[47:42] Uh, I just want to let council know, as we've let council know, as we've talked about this, the city has talked about this, the city has engaged a legal counsel to look engaged a legal counsel to look into this. I had hoped that we into this. I had hoped that we would have some answers from would have some answers from them by tonight.

[47:50] I was back and them by tonight. I was back and forth with their counsel today forth with their counsel today and he did not have them. I did and he did not have them.

[47:56] I did say to him, you know, I would say to him, you know, I would say within the next two weeks, say within the next two weeks, we really need to have this we really need to have this answered. We've been waiting answered. We've been waiting quite a while. So to to quite a while.

[48:04] So to to Lauren's point, we are getting Lauren's point, we are getting council to weigh in on this and council to weigh in on this and we will have some sort of legal we will have some sort of legal statement for you on because as statement for you on because as we've we've talked to PFM, PFM we've we've talked to PFM, PFM says we can't answer this. Yes.

[48:12] says we can't answer this. Yes. So we have a lawyer. We are So we have a lawyer. We are looking into it. We are paying. looking into it. We are paying. This is what they do. And so we This is what they do.

[48:18] And so we just want to assure council just want to assure council that we will have an answer for that we will have an answer for you on that topic alone. I you on that topic alone. I don't want to address don't want to address Councillor Horton's concerns. Councillor Horton's concerns. Thos are different on this Thos are different on this pension concern.

[48:25] We will have pension concern. We will have an answer for you soon. an answer for you soon. Well, that actually was, uh, in Well, that actually was, uh, in in addition to my concern, that in addition to my concern, that was a major concern. I spoke was a major concern. I spoke with our comptroller.

[48:35] And you with our comptroller. And you coming in the door in January coming in the door in January about it, and that is, I mean, about it, and that is, I mean, that is this was actually on that is this was actually on going to be on our ballot last

[48:46] going to be on our ballot last spring, and these questions spring, and these questions hadn't been answered or asked. hadn't been answered or asked. And so I'm adamant about, And so I'm adamant about, again, I say this, this is again, I say this, this is moving a little too.

[48:57] hey need moving a little too.hey need about a year to really set some about a year to really set some of this stuff up. I hear her of this stuff up. I hear her saying, two weeks and I get it. saying, two weeks and I get it. Uh, but yeah, it's a lot.

[49:06] We Uh, but yeah, it's a lot. We don't know. Yeah. don't know. Yeah. You also have to recruit the You also have to recruit the folks that would be on that folks that would be on that forum. forum. Right. And then study Right. And then study commission. commission. Right.

[49:16] And they have to realize Right. And they have to realize how much time they have to put how much time they have to put in. in. Right. Right. So he's right about the time on So he's right about the time on and on. It. and on. It. So I know. So I know. Home Rule is a big topic.

[49:28] And Home Rule is a big topic. And again, this is something we again, this is something we wanted to. to put in here and wanted to.

[49:35] to put in here and talk about tonight so that you talk about tonight so that you don't see it when our report is don't see it when our report is finalized. And in your hands we finalized. And in your hands we want it to share. Look, this is want it to share. Look, this is the way that we are thinking the way that we are thinking about home rule.

[49:41] It is from a about home rule. It is from a financial perspective. We can financial perspective. We can provide any of the information provide any of the information that we have from where we're that we have from where we're sitting, and those kinds of sitting, and those kinds of questions like we see questions like we see potentially these, these legal

[49:49] potentially these, these legal or actuarial questions that you or actuarial questions that you should answer before you start should answer before you start the process. Another, um, the process.

[50:03] Another, um, topic, kind of quasi related to topic, kind of quasi related to the pension that we wanted to the pension that we wanted to talk about tonight, because talk about tonight, because it's gng to be in our report, it's gng to be in our report, is considering lowering the is considering lowering the pension, restricted it. So pension, restricted it. So we've talked about tax we've talked about tax increases. And again, as Gordon increases.

[50:13] And again, as Gordon said, it's you know, weird that said, it's you know, weird that we would come and talk about we would come and talk about the financial distress that the the financial distress that the city is in. But now you're city is in. But now you're talking about lowering taxes. talking about lowering taxes.

[50:21] So I think if we think about So I think if we think about this in terms of almost the this in terms of almost the reverse of the budget hole reverse of the budget hole problem that we that we problem that we that we introduced in May of this year, introduced in May of this year, you can see on this graph that

[50:30] you can see on this graph that there is a gap in that pension there is a gap in that pension required revenue. So earlier required revenue. So earlier this year we talked about two this year we talked about two revenues that you receive every revenues that you receive every year that have to go into the

[50:38] year that have to go into the pension plan. That is the state pension plan. That is the state aid. And the act 205 earned aid. And the act 205 earned income tax. You get that into a income tax.

[50:47] You get that into a different bank account, and different bank account, and then you put that into your then you put that into your pension plans. We know already pension plans. We know already that that amount in 2026 is that that amount in 2026 is greater than the required greater than the required minimum contribution. Or what's minimum contribution. Or what's in Pennsylvania called the MMO.

[50:57] in Pennsylvania called the MMO. The other thing that we know is The other thing that we know is if in a baseline projection, if in a baseline projection, again, taking into account some again, taking into account some some growth in your earned some growth in your earned income tax revenue, we assume

[51:07] income tax revenue, we assume some marginal growth in your some marginal growth in your state aid and also some small state aid and also some small decreases in your MMO over the decreases in your MMO over the next couple of years, at least next couple of years, at least according to your actuary

[51:16] according to your actuary today, that gap is projected to today, that gap is projected to widen a little bit over the widen a little bit over the next five years, an option that next five years, an option that you have is actually taking you have is actually taking that tax down a little bit.

[51:27] The that tax down a little bit. The the benefit to doing that. the benefit to doing that. Let's get to the. Let's get to the. Next the benefit of. Next the benefit of.

[51:37] Keeping your tax rate at the Keeping your tax rate at the current level is basically that current level is basically that you can continue to put in you can continue to put in larger contributions into your larger contributions into your pension fund abovehat MMO, pension fund abovehat MMO, and that does have a benefit to and that does have a benefit to your pension plans.

[51:46] It could your pension plans. It could potentially, depending on other potentially, depending on other variables that are involved in variables that are involved in in calculating the funding in calculating the funding ratio, could increase your ratio, could increase your funding levels. Maybe that one funding levels.

[51:56] Maybe that one day translates to an even lower day translates to an even lower MMO. There are benefits to MMO. There are benefits to putting in more into your putting in more into your pension plans, but everything pension plans, but everything we're talking about tonight is we're talking about tonight is in the in the environment that

[52:05] in the in the environment that you have a lot of needs going you have a lot of needs going on and you have a lot of needs on and you have a lot of needs that are being saddled on the that are being saddled on the same tax payers. same tax payers. The benefit of.

[52:12] The benefit of. Lowering the tax is basically Lowering the tax is basically that you can provide some that you can provide some relief to some of those relief to some of those taxpayers. Talk about kind of a taxpayers.

[52:20] Talk about kind of a Venn diagram between the earned Venn diagram between the earned income tax and the real estate income tax and the real estate tax payers. The Act 205 are an tax payers.

[52:30] The Act 205 are an income tax is paid by both income tax is paid by both residents and non-resident residents and non-resident commuters that work in the commuters that work in the city. Um, and the earned income city. Um, and the earned income tax is paid by property owners tax is paid by property owners and probably indirectly, we and probably indirectly, we would we would understand would we would understand indirectly by renters as well.

[52:40] indirectly by renters as well. So the people that pay both of So the people that pay both of those tax, there are certain those tax, there are certain people that are going to be in people that are going to be in the middle of that Venn diagram the middle of that Venn diagram that both pay their earned

[52:45] that both pay their earned income tax and the real estate income tax and the real estate tax. If you were to offer a tax tax.

[52:56] If you were to offer a tax reduction in the Act 205 or an reduction in the Act 205 or an income tax rate, it would offer income tax rate, it would offer relief to just those people relief to just those people that pay their income tax rate. that pay their income tax rate.

[53:05] There are kind of three points There are kind of three points that we think would maybe be that we think would maybe be appropriate to look at, appropriate to look at, potentially lowering that tax potentially lowering that tax rate. The first, as I started rate.

[53:16] The first, as I started to allude to, is coinciding to allude to, is coinciding with increases, major increases with increases, major increases to the real estate tax rate, to the real estate tax rate, which we are recommending and which we are recommending and probably will have to be in probably will have to be in 2027. The people that are in 2027.

[53:23] The people that are in the middle of that Venn the middle of that Venn diagram, as I said, if they see diagram, as I said, if they see a higher real estate tax rate a higher real estate tax rate and you lower the Act to a five and you lower the Act to a five rate, you can provide a little rate, you can provide a little bit of offsetting tax relief to bit of offsetting tax relief to those people. those people.

[53:31] Does that mean those people Does that mean those people would get that back in their would get that back in their tax return? tax return? Because this would. Because this would. Be right now being in the Be right now being in the distressed fund. They can't distressed fund. They can't they can't.

[53:40] They don't get no they can't. They don't get no return on as long as that return on as long as that designation is on there. I designation is on there. I actually had a couple people, actually had a couple people, as fate would have it, um, as fate would have it, um, complained to me about that.

[53:48] complained to me about that. Yeah. Yeah. This would be for for future This would be for for future tax years. tax years. You would you would. You would you would. Set the tax. Set the tax. Rate.. Rate..

[53:56] The other point that we would The other point that we would recommend looking into lowering recommend looking into lowering the tax re, is it coinciding the tax re, is it coinciding with home rule taxation going with home rule taxation going into effect? The thing that is, into effect? The thing that is, um, a benefit, as I said, about um, a benefit, as I said, about the the home rule taxation, if

[54:06] the the home rule taxation, if you have that flexibility, is you have that flexibility, is that it is general purpose. You that it is general purpose. You can use that for anything. You can use that for anything.

[54:13] You can use that to fund your can use that to fund your police department and all the police department and all the other departmental expenses other departmental expenses that you have on your general that you have on your general fund, whereas the actual five fund, whereas the actual five tax you can only put into your tax you can only put into your pension if you had that

[54:21] pension if you had that flexibility of raising the flexibility of raising the general purpose earned income general purpose earned income tax rate on just your tax rate on just your residents, you could swap the residents, you could swap the tax in a way that is more one

[54:30] tax in a way that is more one for one. So if I'm a resident for one. So if I'm a resident And in a couple of years, Home And in a couple of years, Home Rule goes into effect and the Rule goes into effect and the earned income tax rate is

[54:36] earned income tax rate is elevated. But the act 205 tax elevated. But the act 205 tax rate drops. I effectively see rate drops. I effectively see no change as long as it's by no change as long as it's by the same rate. the same rate. Well, that's like what? $52.

[54:45] Well, that's like what? $52. That's the tax to work in the That's the tax to work in the city. city. Yeah that's the. Yeah that's the. Local services. Local services. Tax. Tax. It's kind of things that will It's kind of things that will affect the working people. affect the working people.

[54:55] Really doing anything for the Really doing anything for the folks that are most people. folks that are most people. Working here who come from the Working here who come from the county. county. That's correct. That this That's correct. That this wouldn't benefit those people. wouldn't benefit those people.

[55:06] Um, but the the fact remains Um, but the the fact remains that right now, the benefit of that right now, the benefit of keeping the tax rate where it keeping the tax rate where it is is just that you can put is is just that you can put that higher amount in again.

[55:12] that higher amount in again. It's it could be good to do, It's it could be good to do, but you're balancing all these but you're balancing all these other needs on the same tax other needs on the same tax base. If you have other base.

[55:21] If you have other priorities that you need to priorities that you need to divert money to this, this divert money to this, this might be a way to do it. might be a way to do it. And Lauren, I'm sorry, can I And Lauren, I'm sorry, can I just say one thing just to just say one thing just to Councilor Brzezinski? Point.

[55:27] Councilor Brzezinski? Point. Yes. The way that she's Yes. The way that she's describing it. But in the long describing it. But in the long run, if we were able to run, if we were able to increase our IT tax and we were increase our IT tax and we were able to then not we were able

[55:36] able to then not we were able to cover our operating costs to cover our operating costs with that and not have to raise with that and not have to raise property taxes. Now we are property taxes. Now we are doing what you're asking. Do doing what you're asking.

[55:43] Do you see what I'm saying? So you see what I'm saying? So yes, in this swap that she's yes, in this swap that she's describing. No, it doesn't help describing. No, it doesn't help our, let's say, our retired our, let's say, our retired homeowners. But if we were able homeowners.

[55:52] But if we were able to get more funds to the to get more funds to the general fund with the EIT and general fund with the EIT and then not have to raise property then not have to raise property taxes, then certainly that taxes, then certainly that benefits all of our property benefits all of our property owners. Makes sense.

[56:00] owners. Makes sense. So I know that you can't give a So I know that you can't give a definitive but is there like a definitive but is there like a ballpark figure? How much money ballpark figure? How much money do you think you've raised for do you think you've raised for that? It all depending on what

[56:10] that? It all depending on what we set it at, right? we set it at, right? Yes. Yes. For for the home rule tax For for the home rule tax portion. portion. Mhm. Yeah. That would. And do Mhm. Yeah. That would. And do other what. other what.

[56:19] Do give us an example of rates Do give us an example of rates and other. Do you have. and other. Do you have. Yeah. So there I mean there are Yeah. So there I mean there are some high ones. So reading is some high ones. So reading is 3.6. Um Chester's 3.75. 3.6. Um Chester's 3.75.

[56:31] What does that generate in What does that generate in terms of real dollars. terms of real dollars. So for Chester a 3.5 remember So for Chester a 3.5 remember Chester is probably the 60% of Chester is probably the 60% of the population, if not more is the population, if not more is below the is below the poverty

[56:41] below the is below the poverty rate. So very. rate. So very. Kind of like you. Yeah. Kind of like you. Yeah. Deeper poverty. But yes. But Deeper poverty. But yes. But there are definitely there are definitely challenges. Chester is in challenges. Chester is in bankruptcy.

[56:50] It's one of the bankruptcy. It's one of the only cities in the country only cities in the country that's that's not like a that's that's not like a colorful term that's like colorful term that's like actually in federal bankruptcy. actually in federal bankruptcy. Um, there tax generates $15 Um, there tax generates $15 million in general fund money.

[57:04] million in general fund money. And another nine for the And another nine for the distressed pension they have. distressed pension they have. Their pension plan is 10% Their pension plan is 10% funded or whatever it is. It's funded or whatever it is.

[57:17] It's something ridiculously low, not something ridiculously low, not quite that low, but very, very quite that low, but very, very low. Their police plan. So it's low. Their police plan. So it's worth a reading. Reading it was, worth a reading. Reading it was, uh, they had a 3.2% real earned uh, they had a 3.2% real earned income tax, which is very high.

[57:27] income tax, which is very high. It's one of the highest five It's one of the highest five highest in the state. Took it highest in the state. Took it up to 3.6 during financial up to 3.6 during financial oversight. And then when they oversight.

[57:36] And then when they left, financial oversight left, financial oversight decided to take that extra decided to take that extra percentage and fund their percentage and fund their capital program. capital program.

[57:44] I mean, say, we do say all I mean, say, we do say all things are peachy keen and we things are peachy keen and we do all this stuff and it comes do all this stuff and it comes out, let's say, 3.7. It raises out, let's say, 3.7. It raises it what's it's still going to it what's it's still going to do anything for the property do anything for the property tax. tax.

[57:53] So, so where it would is you're So, so where it would is you're right if you only do that. So right if you only do that. So where it could as if you can where it could as if you can rebalance right. Say I have to rebalance right. Say I have to get pick a number $100 million.

[58:00] get pick a number $100 million. Right. And I have to get 70 Right. And I have to get 70 from taxes because that's from taxes because that's basically how it works. I know basically how it works.

[58:08] I know that the real estate tax that the real estate tax doesn't grow, so that whatever doesn't grow, so that whatever portion it is, it's not going portion it is, it's not going to move unless I increase the to move unless I increase the tax rate, the earned income tax tax rate, the earned income tax I know will grow on its own.

[58:16] So I know will grow on its own. So it's not just the dollar. It's it's not just the dollar. It's not. not. You know, it'll grow on its You know, it'll grow on its own. How? own. How? Because. Well, because it has. Because. Well, because it has. And. And.

[58:24] Growth has for years what it is Growth has for years what it is it does. But generally speaking it does. But generally speaking total tax base of your wage tax total tax base of your wage tax grows over time. Right. People grows over time. Right. People get people get raises. People get people get raises. People get new jobs.

[58:35] get new jobs. Wages have been stagnant for 30 Wages have been stagnant for 30 years. years. Well, that's not what your Well, that's not what your numbers show because your numbers show because your earned income tax revenues are earned income tax revenues are growing by 5%. growing by 5%.

[58:43] Median income here is like Median income here is like what, $23,000? what, $23,000? There is there is a substantial There is there is a substantial portion. portion. Of 1651 is 4500 people sitting Of 1651 is 4500 people sitting right in this footprint in right in this footprint in these buildings that make less these buildings that make less than $17,000 a year.

[58:57] than $17,000 a year. That is true. Yep And for That is true. Yep And for those people, the earned income those people, the earned income that it is undeniable that you that it is undeniable that you have a portion of your have a portion of your population for who are and you

[59:06] population for who are and you have a number of people who have a number of people who don't have any earnings that don't have any earnings that are taxed. are taxed. Aging homeowners. Aging homeowners. Right. Or people who are on Right. Or people who are on social social services social social services assistance. assistance. That's kind of population.

[59:15] That's kind of population. Yeah. Yeah. I'm just not trying. Know I'm just not trying. Know being. right practical. being. right practical. Right. I it's still I mean, the Right. I it's still I mean, the math your history and the math math your history and the math shows us that it grows.

[59:25] The shows us that it grows. The other way to think about this other way to think about this is okay. So don't do it. So is okay. So don't do it. So increase your real estate taxes increase your real estate taxes every single year. How's that every single year. How's that feel? Feel good.

[59:35] You solve the feel? Feel good. You solve the problem. Doesn't sound like it. problem. Doesn't sound like it. Oh, there are other things. I Oh, there are other things. I believe in austerity. I don't believe in austerity. I don't think that one thing gets it. think that one thing gets it. Maybe not even to I.

[59:44] Sure, it's Maybe not even to I. Sure, it's a multifaceted. I agree with a multifaceted. I agree with you. I don't think anything's you. I don't think anything's off the table. off the table. No, I think you're right. I No, I think you're right. I think you're. think you're.

[59:50] We're locked into some stuff We're locked into some stuff that we can't do. Yeah, by the that we can't do. Yeah, by the police department, by the grant police department, by the grant funded positions. There is. So funded positions. There is. So I mean, I get it. I mean, I get it. Yeah.

[59:59] I council, you're exactly Yeah. I council, you're exactly right. And that you will not right. And that you will not solve this just on one side of solve this just on one side of the equation, you have to do the equation, you have to do stuff on the expenditure side.

[1:00:05] stuff on the expenditure side. I agree with you, by the way. I I agree with you, by the way. I am not a fan of the Cops am not a fan of the Cops grants. Overall, but. grants. Overall, but. Then. Then. Yeah, the controller. Yeah, the controller. We come to like though.

[1:00:15] Thank We come to like though. Thank you. You want to sit up? Okay. you. You want to sit up? Okay. I'm sorry. I have to. I'm sorry. I have to. I just have one question. I'm I just have one question. I'm reading your, um, preliminary reading your, um, preliminary report. The at 511 at 1%.

[1:00:28] Is report. The at 511 at 1%. Is that locked into 1%? that locked into 1%? Yes. You can't exceed that by Yes. You can't exceed that by state law. And it's split with state law. And it's split with the school district. the school district. You say again because I didn't You say again because I didn't hear. hear. You.

[1:00:36] You. The act 511. It is a 1% tax The act 511. It is a 1% tax levied on residents and levied on residents and commuters. I didn't know if commuters. I didn't know if that was a set. percent or not. that was a set. percent or not.

[1:00:45] That's the whole thing that the That's the whole thing that the that whole rule allows you to., that whole rule allows you to., to. to. Basically to change. Yes. Basically to change. Yes. Thank you. Yeah. Thank you. Yeah. That's just yeah. That's just yeah. That's all right. I'm in there. That's all right. I'm in there. Yeah.

[1:00:57] The last two are pretty Yeah. The last two are pretty anticlimactic here in terms of anticlimactic here in terms of thinking about, you know, fees thinking about, you know, fees and non-tax revenues. This is and non-tax revenues.

[1:01:08] This is generally applicable in your, generally applicable in your, uh, licenses, inspections, uh, licenses, inspections, building permits, that sort of building permits, that sort of area. If you have a fee that area.

[1:01:15] If you have a fee that hasn't been looked at in a hasn't been looked at in a number of years, if it hasn't number of years, if it hasn't gone up since the Reagan gone up since the Reagan administration or, you know, administration or, you know, pick another president, pick another president, whichever one you prefer. Um, whichever one you prefer. Um, it just again, the cost of it just again, the cost of services go up, the cost of services go up, the cost of things grow up, it go up.

[1:01:23] It's things grow up, it go up. It's it's worth a look. You do this it's worth a look. You do this on a routine basis for your on a routine basis for your trash fees and your sewer fees. trash fees and your sewer fees. And you, you should.

[1:01:30] And you, And you, you should. And you, you know, will continue to need you know, will continue to need to do so. There are some other to do so. There are some other fees that we we think are worth fees that we we think are worth a look.

[1:01:36] We're not telling you a look. We're not telling you they're too low because we they're too low because we haven't done that analysis. haven't done that analysis. Delinquent. Delinquent. So your delinquency, your your So your delinquency, your your current year collection rate current year collection rate for real estate taxes,t least for real estate taxes,t least relative to other cities.

[1:01:46] Your relative to other cities. Your size is pretty good. Very good. size is pretty good. Very good. Yeah, it is. Where is he? There Yeah, it is. Where is he? There he is. I know he's gonna. He's he is. I know he's gonna.

[1:01:53] He's the one who normally pings me the one who normally pings me about the current year real about the current year real estate. estate. Tax. I'm talking about. Tax. I'm talking about. Those are that's. Yeah. That I Those are that's. Yeah.

[1:02:00] That I don't know that one that off don't know that one that off the top of my head that one is the top of my head that one is usually harder to get. What we usually harder to get. What we usually see is, you know, a usually see is, you know, a good benchmark for a current good benchmark for a current year real estate tax collection year real estate tax collection for a Pennsylvania city is

[1:02:10] for a Pennsylvania city is north of 90%. Now, if you're a north of 90%. Now, if you're a wealthy suburb, you're going to wealthy suburb, you're going to be 96 or 97. But if you can be be 96 or 97.

[1:02:20] But if you can be 92, 93, that puts you ahead of 92, 93, that puts you ahead of reading and some other places, reading and some other places, trash stuff. And I see trash stuff.

[1:02:31] And I see collection rates in the 70s and collection rates in the 70s and 80s, it's easier to ignore what 80s, it's easier to ignore what we have done, what we have seen we have done, what we have seen other communities do is you you other communities do is you you put liens on the property, but put liens on the property, but you don't try and sell it out you don't try and sell it out from under people. Right? You from under people.

[1:02:39] Right? You are not trying to sell are not trying to sell someone's house because they someone's house because they didn't pay their trash bill didn't pay their trash bill this year, and you're not going this year, and you're not going to tack on $1,000 worth of to tack on $1,000 worth of legal bills because they didn't

[1:02:46] legal bills because they didn't pay their trash this year. But pay their trash this year. But there's a decent chance that if there's a decent chance that if they didn't pay their trash they didn't pay their trash bill this year, they didn't pay bill this year, they didn't pay it last yr, they didn't pay

[1:02:52] it last yr, they didn't pay it the year before that, and it the year before that, and they didn't pay it the year they didn't pay it the year before that. Not always, but before that. Not always, but there's there's usually some there's there's usually some consistency there. And they consistency there.

[1:02:59] And they probably there's probably other probably there's probably other things they didn't pay too by things they didn't pay too by putting the liens on it. putting the liens on it. Whenever the property is sold. Whenever the property is sold. Right. Whenever this person Right.

[1:03:09] Whenever this person sells the property, moves on sells the property, moves on whatever it is, you protected whatever it is, you protected yourself where you get to yourself where you get to collect that, right? There are collect that, right? There are things that you you could be things that you you could be even more aggressive. There are even more aggressive.

[1:03:17] There are firms that will come out and or firms that will come out and or law firms that do this. There law firms that do this. There are collection firms that do are collection firms that do this. Um, that's how we have this. Um, that's how we have generally tried to approach generally tried to approach trash stuff.

[1:03:25] The the other trash stuff. The the other community where I've done a lot community where I've done a lot of work with this is we look of work with this is we look for an overlap. Where is it? for an overlap.

[1:03:34] Where is it? Trash and real estate taxes? Trash and real estate taxes? Are there unpaid code Are there unpaid code violations? Is this a what of violations? Is this a what of your fire? Your police your fire? Your police department's favorite department's favorite properties? Because they know properties? Because they know there's going to be 17 things there's going to be 17 things going on there.

[1:03:42] We look for going on there. We look for that sort of overlap. that sort of overlap. Um, probably at least ten years Um, probably at least ten years ago. It might be a little ago. It might be a little longer. They tacked on the longer. They tacked on the refuse bills with the sewage.

[1:03:53] refuse bills with the sewage. Okay. Yeah. That's right. I Okay. Yeah. That's right. I remember the. So do your water remember the. So do your water authority still collect those? authority still collect those? Right.kay. Right.kay. Yeah. So we would have that. Yeah. So we would have that. That's true. Well yeah.

[1:04:02] So That's true. Well yeah. So that's a good point. So they that's a good point. So they would be behind on those. would be behind on those. That's the other thing that That's the other thing that they would be people. they would be people.

[1:04:08] Because people don't care about Because people don't care about if their garbage is paid for or if their garbage is paid for or not because they'll pick the not because they'll pick the garbage up or not. garbage up or not. Well, that's no, especially as Well, that's no, especially as a city service. a city service. So correct.

[1:04:16] But if it's tacked So correct. But if it's tacked on to the sewer and they're not on to the sewer and they're not paying it, then we have a paying it, then we have a bigger chance to be able to bigger chance to be able to collect that money. So we have collect that money. So we have to investigate.

[1:04:23] to investigate. And not picking up the trash is And not picking up the trash is I mean, I don't think that's a I mean, I don't think that's a great option. So you just let great option. So you just let it stink in the street. Now it stink in the street. Now it's a public health thing.

[1:04:31] I it's a public health thing. I mean. mean. But there's no way of knowing But there's no way of knowing who pays your garbage fee or who pays your garbage fee or not. So it's picked up no not. So it's picked up no matter what. matter what.

[1:04:39] I just got one little small I just got one little small thing. thing. Go ahead. Go ahead. So the millage increases or So the millage increases or whatever I think it generated whatever I think it generated would be like 5.8 million. would be like 5.8 million. Yeah. At the two mills. Right, Yeah. At the two mills. Right, right.

[1:04:50] right. With the two mills and and that With the two mills and and that represents, um, almost half of represents, um, almost half of our debt does. our debt does. Yeah. Yeah. Parking authority give us our Parking authority give us our damn money. damn money. Yeah. Yeah. That's right.

[1:05:03] I'm not laughing That's right. I'm not laughing it. Sure. I'm not laughing at it. Sure. I'm not laughing at all. all. No. No. It was $4 million. And so we It was $4 million. And so we inject that into our budget. We inject that into our budget. We can a lot of this stuff.

[1:05:12] We buy can a lot of this stuff. We buy some time to do some stuff, and some time to do some stuff, and I didn't because we talked I didn't because we talked about it, but we didn't talk about it, but we didn't talk about it in real dollars and

[1:05:18] about it in real dollars and what it would mean and what it what it would mean and what it means to this budget. Yeah. Uh, means to this budget. Yeah.

[1:05:26] Uh, and I'm very, very, very, very and I'm very, very, very, very public about saying, I know we public about saying, I know we need a millage increase, but need a millage increase, but that is, I don't know, huh. that is, I don't know, huh.

[1:05:37] Well, how the hell of it, to Well, how the hell of it, to your point about corporate your point about corporate asking, uh, putting a charge on asking, uh, putting a charge on or 15% on the parking authority or 15% on the parking authority structures as opposed to structures as opposed to whatever. Uh, because the other whatever.

[1:05:49] Uh, because the other Parkers people pay it, and and Parkers people pay it, and and we don't want private citizens we don't want private citizens paying it or whatever. I feel paying it or whatever. I feel that same way about a millage that same way about a millage increase. Why the hell would I increase. Why the hell would I ask somebody to pay a damn tax? ask somebody to pay a damn tax? And they owe us money.

[1:05:58] And they owe us money. Sure. Sure. Yeah. Yeah. And I don't want to be crude And I don't want to be crude about it. I'm not going to be about it. I'm not going to be cute about it. And I don't cute about it. And I don't think you all should either.

[1:06:16] think you all should either. I agree with you. I agree with you. It's an insult. And ain't fair It's an insult. And ain't fair to the citizens of this to the citizens of this community. We're sitting here community.

[1:06:28] We're sitting here trying to figure out how to trying to figure out how to lighten everyone's load, and lighten everyone's load, and we're responsible for all their we're responsible for all their doggone debt. And I'm not going doggone debt. And I'm not going to do this to much longer. And to do this to much longer.

[1:06:40] And if they don't do something, we if they don't do something, we are going to our professional are going to our professional fees and take action. fees and take action. Wha's your relationship like Wha's your relationship like with the parking authority? with the parking authority? There is no I. There is no I. Want everyone to know. I Want everyone to know.

[1:06:52] I emailed the director of the emailed the director of the parking authority today to let parking authority today to let him know, because PFM has put him know, because PFM has put this in their report. It is now this in their report. It is now here and memorialized in here and memorialized in public.

[1:07:02] So I let him know this public. So I let him know this was going to be in the report was going to be in the report tonight. When we met last met, tonight. When we met last met, we told them we wanted some we told them we wanted some sort of negotiation response. sort of negotiation response. By October 1st.

[1:07:10] He responded to By October 1st. He responded to me today that he felt that was me today that he felt that was reasonable. So we we have given reasonable.

[1:07:18] So we we have given them the proposal for the $4 them the proposal for the $4 million plus, and we have asked million plus, and we have asked for a respoe by October 1st. for a respoe by October 1st.

[1:07:24] And I've told him we need to And I've told him we need to have this negotiation wrapped have this negotiation wrapped up by the end of the calendar up by the end of the calendar year so that we can have this year so that we can have this planned for 2027 budget. planned for 2027 budget. So that's it. So that's it. Madam mayor, I'm I'm sorry, Madam mayor, I'm I'm sorry, Doctor Titus and my colleague.

[1:07:31] Doctor Titus and my colleague. I'm sorry, but that one there I'm sorry, but that one there gets me a little hot under the gets me a little hot under the collar. I feel like it's very collar. I feel like it's very disrespectful, not considerate. disrespectful, not considerate.

[1:07:41] And I think as long as we play And I think as long as we play footsie with it, I'm going to footsie with it, I'm going to get what we've been getting. get what we've been getting. You keep doing what you've been You keep doing what you've been doing. You keep getting what doing. You keep getting what you've been getting.

[1:07:48] I'm so I'm you've been getting. I'm so I'm glad to see that there's some glad to see that there's some movement. I've gone to their movement. I've gone to their meetings. I didn't want, don't meetings. I didn't want, don't want to be adversarial about want to be adversarial about it. But we created that body.

[1:07:58] it. But we created that body. How dare that. How dare that. Do you appoint their members? Do you appoint their members? Yes. Yes. I am putting all of their I am putting all of their members. Okay. And also, I let members. Okay.

[1:08:05] And also, I let Director Friday know at our Director Friday know at our last meeting that while it's last meeting that while it's not something we want, if we not something we want, if we can't reach an agreement with can't reach an agreement with the current board, then I will the current board, then I will be forced to replace the board.

[1:08:15] be forced to replace the board. So we have action. We've let So we have action. We've let them know where we stand. I do them know where we stand. I do believe, and as I said, I got a believe, and as I said, I got a response back today.

[1:08:22] I do response back today. I do believe we will have some believe we will have some response from them by October response from them by October 1st. And I know council is 1st. And I know council is concerned about this as I am. concerned about this as I am.

[1:08:30] And as soon as I have something And as soon as I have something from them, I promise you that I from them, I promise you that I will bring it. will bring it. To you and I will qualify. To you and I will qualify. Because Donald rocks and hide Because Donald rocks and hide my hand.

[1:08:38] We're responsible for my hand. We're responsible for the debt to be the $60 million the debt to be the $60 million hotel here. That that that hotel here. That that that parking ramp needs drastically parking ramp needs drastically needs repairs. And they're needs repairs. And they're undergoing it. It's talk of undergoing it.

[1:08:50] It's talk of them purchasing another parking them purchasing another parking ramp, and I don't think they ramp, and I don't think they should be doing any capital should be doing any capital project improvements or project improvements or purchasing of that nature, purchasing of that nature, especially since we're especially since we're responsible for theirebt. Uh, responsible for theirebt.

[1:09:01] Uh, any failure of them to pay any failure of them to pay their debt? Uh, until we their debt? Uh, until we resolve this, I agree, and I resolve this, I agree, and I don't think that's. don't think that's. Yeah, that's. Yeah, that's. To be resolved. To be resolved.

[1:09:10] That your agreement going That your agreement going forward, especially if they're forward, especially if they're increasing their debt, because increasing their debt, because that was one of the things that that was one of the things that was in the barter before. was in the barter before.

[1:09:17] Right? You part of what they Right? You part of what they paid you for is because you paid you for is because you were back stopping their debt. were back stopping their debt. So if you were back stopping a So if you were back stopping a larger amount than it stands to larger amount than it stands to reason that the payment should reason that the payment should be higher.

[1:09:23] be higher. A lot may ask one question. A lot may ask one question. Sure. Sure. As far as the Port Authority As far as the Port Authority goes, have we surveyed all the goes, have we surveyed all the properties and check the properties and check the condition there in? Yes.

[1:09:34] condition there in? Yes. We have. We have not surveyed We have. We have not surveyed their properties, but I would their properties, but I would argue. that's not that's what argue. that's not that's what they exist to do, and I they exist to do, and I understand.

[1:09:43] And when you speak understand. And when you speak with Director Friday, he will with Director Friday, he will tell you. And he is correct. tell you. And he is correct. They have pretty extreme They have pretty extreme deferred maintenance concerns. deferred maintenance concerns. They have a lot of property They have a lot of property that they need.

[1:09:52] No one is that they need. No one is debating that. It's I don't debating that. It's I don't feel it's our job to survey feel it's our job to survey their properties. We understand their properties.

[1:10:00] We understand it's their job to take care of it's their job to take care of them, and there needs to be them, and there needs to be compensation to the city. Both compensation to the city. Both of those things have to be true of those things have to be true at the same time. at the same time.

[1:10:11] Compensation and adds insult to Compensation and adds insult to injury because every incident injury because every incident that they have over there, our that they have over there, our officers are tied up responding officers are tied up responding to them, right? Yes. Our fire to them, right? Yes. Our fire department, our people have to department, our people have to go over and respond.

[1:10:20] And so I go over and respond. And so I you know, I apologize, but I, you know, I apologize, but I, I'm not willing to do this and I'm not willing to do this and come over here to do this. come over here to do this. It's been a long year. It's been a long year. With the parking authority.

[1:10:32] So, With the parking authority. So, you know, you know, It's been years. It's been years. Yes. A long last five years, I Yes. A long last five years, I believe that we've been going believe that we've been going back and forth just trying to back and forth just trying to establish a where the city

[1:10:41] establish a where the city where the authority you have a where the authority you have a agreement with us, please agreement with us, please follow it. But, you know, okay. follow it. But, you know, okay. Absent an agreement, a MoU is Absent an agreement, a MoU is 15% of their annual revenue.

[1:10:56] 15% of their annual revenue. One of the other areas. And One of the other areas. And this is a hard left from this this is a hard left from this current conversation. Okay, is, current conversation. Okay, is, uh, around, um, amusement tax. uh, around, um, amusement tax.

[1:11:08] I would just be curious to I would just be curious to know, um, other other places know, um, other other places and what you're seeing when and what you're seeing when when they're assessing it. I when they're assessing it. I this is one that I kind of harp this is one that I kind of harp on quite a bit.

[1:11:15] I don't think on quite a bit. I don't think that we, we are collecting and that we, we are collecting and all the ways, but I also think all the ways, but I also think that we might be there's, that we might be there's, there's, there's room here. there's, there's room here. Yep.

[1:11:23] So I had I knew you were Yep. So I had I knew you were you were interested in this. So you were interested in this. So I spent some time looking into I spent some time looking into this, uh, comparing your uh, this, uh, comparing your uh, uh, ordinance to other places uh, ordinance to other places like you.

[1:11:33] And there's two ways like you. And there's two ways that you are different. They're that you are different. They're going to pull in two different going to pull in two different directions, but you'll see both directions, but you'll see both recommendations in a report. recommendations in a report.

[1:11:41] One is Uber levy three and most One is Uber levy three and most places are five. I don't think places are five. I don't think you could go higher than five you could go higher than five anymore. I think that's the anymore. I think that's the capped amount. Maybe home rule capped amount.

[1:11:47] Maybe home rule lets you but don't do home lets you but don't do home rule. So you could do a higher rule. So you could do a higher amusement tax. That's not a amusement tax.

[1:11:52] That's not a good use of resources, but I good use of resources, but I believe you can go from 3 to 5, believe you can go from 3 to 5, but most places are five. I was but most places are five. I was surprised when I saw yours was surprised when I saw yours was three. We five. I don't know, three. We five. I don't know, it just is.

[1:11:58] It's just the it just is. It's just the number that places pay. number that places pay. Bethlehem is five, writing is Bethlehem is five, writing is five, jester is five. There are five, jester is five. There are others that are five. So that's others that are five. So that's the first thing.

[1:12:06] The second the first thing. The second thing is a lot of these places, thing is a lot of these places, what they've done is they've what they've done is they've decided to exempt certain decided to exempt certain things. So, uh, Chester just things.

[1:12:13] So, uh, Chester just went through this process and went through this process and they said, you know what? We're they said, you know what? We're not really trying to tax wider not really trying to tax wider university for their field university for their field hockey game. I'm not really hockey game.

[1:12:20] I'm not really tryi to tax a Chester high tryi to tax a Chester high school basketball game. I don't school basketball game. I don't really want to chase the really want to chase the churches movie night, where churches movie night, where they charge the youth group $5 they charge the youth group $5 to come in and eat pizza.

[1:12:29] Now, to come in and eat pizza. Now, all of those things are maybe all of those things are maybe not the youth group. One all of not the youth group. One all of those things are amusements and those things are amusements and would be taxable.

[1:12:35] But there is would be taxable. But there is a threshold at which you would a threshold at which you would say, and I think it's worth say, and I think it's worth saying, and most of the other saying, and most of the other places have like, we're not places have like, we're not after this, you could do it by

[1:12:42] after this, you could do it by size of venue. I think that's size of venue. I think that's what Bethlehem does. You could what Bethlehem does. You could do it by who organizes it. But do it by who organizes it.

[1:12:51] But one of the cities says, if one of the cities says, if you're a veterans organization, you're a veterans organization, the reality is, is a veterans the reality is, is a veterans organization putting on a lot organization putting on a lot of amusement events? No, not of amusement events? No, not really. So some of this might really. So some of this might frankly be value signaling.

[1:13:00] Um, frankly be value signaling. Um, but that's what I would I would but that's what I would I would suggest looking at thinking suggest looking at thinking about the higher rate, but also about the higher rate, but also putting some sort of limit on putting some sort of limit on this so that you're not,

[1:13:10] this so that you're not, because there's also it's because there's also it's impossible to get the impossible to get the compliance. I mean, are you compliance. I mean, are you really going to assign someone really going to assign someone to go chase down bingo night? to go chase down bingo night? No, of course not.

[1:13:18] And and the No, of course not. And and the logic behind it is if you have logic behind it is if you have a concert that brings whatever a concert that brings whatever a couple thousand people to a couple thousand people to town, those people willhange town, those people willhange your traffic patterns and that

[1:13:27] your traffic patterns and that will have an impact. 50 people will have an impact. 50 people at a, you know, a bingo party at a, you know, a bingo party does not change you or change does not change you or change your your community in a your your community in a meaningful way.

[1:13:36] So those are meaningful way. So those are the two things that I would the two things that I would suggest on that. The other one suggest on that. The other one that you had asked about that I that you had asked about that I researched was the mechanical researched was the mechanical device tax.

[1:13:44] So this is the tax device tax. So this is the tax on what are called however you on what are called however you feel about them. Games of feel about them. Games of skill. Right now we're in a skill. Right now we're in a holding pattern. So right now holding pattern.

[1:13:52] So right now the state you probably already the state you probably already know this unless they pass know this unless they pass legislation, all those machines legislation, all those machines go away. So right now what I do go away. So right now what I do is nothing. But once they do is nothing. But once they do we'll have some thoughts.

[1:14:02] we'll have some thoughts. There is an issue. I mean There is an issue. I mean there's a nice little press there's a nice little press release that was issued since I release that was issued since I asked that question. Okay. You asked that question. Okay. You know, I mean, not by us.

[1:14:09] By know, I mean, not by us. By buy, by the governor. And so I buy, by the governor. And so I think that that one kind of think that that one kind of took some things off the table took some things off the table or exploration off the table. or exploration off the table. Yeah.

[1:14:16] Yeah. We already talked about the We already talked about the debt. I talk about finishing on debt. I talk about finishing on a on a down note here. But to a on a down note here.

[1:14:27] But to go back to the, um, to the go back to the, um, to the reserves, the old corny analogy reserves, the old corny analogy that I used last time, you'll that I used last time, you'll remember the corny analogy, and remember the corny analogy, and you probably will too, with the you probably will too, with the three headed dragon, with the three headed dragon, with the pension andhe debt and the

[1:14:34] pension andhe debt and the and the and the general fund, and the and the general fund, you're now at a point where the you're now at a point where the pension is it. Your plan is not pension is it.

[1:14:41] Your plan is not 100% funded, but you are 100% funded, but you are putting more into it than you putting more into it than you are required to, and you do. are required to, and you do. Actually, I wish this is the Actually, I wish this is the headline. It probably isn't, headline.

[1:14:49] It probably isn't, but you could actually reduce but you could actually reduce the tax there and not the tax there and not disadvantage and not impact disadvantage and not impact your general fund. Right? If your general fund.

[1:14:57] Right? If you if you reduce the real you if you reduce the real estate tax, you'd have a bigger estate tax, you'd have a bigger hole. But you could reduce that hole. But you could reduce that tax. And if you do a real tax. And if you do a real estate tax increase, it's worth estate tax increase, it's worth thinking about. Doing something thinking about.

[1:15:05] Doing something doesn't offset for everybody, doesn't offset for everybody, but for the working family, for but for the working family, for the person who is making only the person who is making only $20,000 or whatever it is, and $20,000 or whatever it is, and the real estate tax, if you're the real estate tax, if you're going to do one, that is a

[1:15:14] going to do one, that is a meaningful thing, that is money meaningful thing, that is money back in their pocket and for back in their pocket and for for the for the for the people for the for the for the people here who are struggling to make

[1:15:20] here who are struggling to make ends meet, that is, that is ends meet, that is, that is meaningful. Um, but for the, meaningful.

[1:15:30] Um, but for the, for the, for the we want to for the, for the we want to think about the debt side of it think about the debt side of it because 2033 is some time off, because 2033 is some time off, right? It's not next year's right? It's not next year's problem. Next year's problem is problem. Next year's problem is the whatever it is, $12 million the whatever it is, $12 million deficit.

[1:15:40] But it's not forever deficit. But it's not forever either, right. The 20 I won't either, right. The 20 I won't say we'll be here before you say we'll be here before you know it, but it will be here know it, but it will be here eventually. Um, and the more eventually.

[1:15:50] Um, and the more you're able, we're able to you're able, we're able to address it now, the better your address it now, the better your options will be. So, uh, again, options will be. So, uh, again, finish kind of where we finish kind of where we started. This is intended to started.

[1:16:02] This is intended to give you some things to think give you some things to think about. Uh, when you have your about. Uh, when you have your meetings with the departments meetings with the departments coming up, I. One way to do it coming up, I.

[1:16:10] One way to do it is the police chief will come is the police chief will come in here. He will. I think he'll in here. He will. I think he'll come in here. Y well? come in here. Y well? All right. All right. Oh. All right. So. So somebody Oh. All right. So. So somebody will come in here.

[1:16:18] It will give will come in here. It will give you a chance, whether privately you a chance, whether privately or publicly, to talk to them or publicly, to talk to them about. Tell me about the about. Tell me about the positions you've added. Tell me positions you've added. Tell me about the added things.

[1:16:24] What's about the added things. What's the value? I can see what the the value? I can see what the cost is. And then you can make cost is.

[1:16:31] And then you can make decisions for yourself where decisions for yourself where you do need to make moves in you do need to make moves in terms of austerity or to live terms of austerity or to live within your means and where you within your means and where you where you can only take that so where you can only take that so far.

[1:16:40] Um, the, the other things far. Um, the, the other things that we have, things like Home that we have, things like Home rule. You're absolutely right. rule. You're absolutely right. You need to take time of that. You need to take time of that.

[1:16:46] Or even if I was the biggest Or even if I was the biggest home rule fan in the world, it home rule fan in the world, it would fail, right? Because would fail, right? Because without the without the without the without the education, you won't have the education, you won't have the impetus.

[1:16:55] One people may not impetus. One people may not even run, but two, it won't go even run, but two, it won't go anywhere, even if it does. So anywhere, even if it does. So you have because of the you have because of the reserves, you have some space reserves, you have some space to buy that time.

[1:17:03] Because of to buy that time. Because of that good news. Um, there are that good news. Um, there are some things that you will have some things that you will have to do that are that we will to do that are that we will have in the report or that are

[1:17:10] have in the report or that are that we recommend you do that that we recommend you do that or not. These 12 things, it or not. These 12 things, it won't be a 20 page report. You won't be a 20 page report. You could bet on that.

[1:17:19] Um, but could bet on that. Um, but those things that we put in those things that we put in there that will round things there that will round things out also are not that we're not out also are not that we're not holding some million dollar holding some million dollar idea behind our back so we can,

[1:17:27] idea behind our back so we can, you know, surprise you when we you know, surprise you when we release the report. These are release the report. These are the main things that you have the main things that you have this year. Right now. this year. Right now. Gordon. Thank you. Man.

[1:17:38] Gordon. Thank you. Man. George. Thank you. Your I George. Thank you. Your I appreciate your passion and the appreciate your passion and the fact that you advocate for the fact that you advocate for the people who elected you. people who elected you. My first rodeo. My first rodeo. I can tell. I can tell. All right. Well.

[1:17:49] All right. Well. I say packing up. We are about I say packing up. We are about 18 minutes over. So tha you 18 minutes over. So tha you again for everybody for coming again for everybody for coming in. Um, within the next, like, in.

[1:17:58] Um, within the next, like, week and a half, we'll send out week and a half, we'll send out the, the budget schedule the, the budget schedule because we're heading into that because we're heading into that time, we're going to look to time, we're going to look to start hopefully by the third start hopefully by the third week of October, that we can

[1:18:06] week of October, that we can start scheduling out some of

City Council Study Session - September 24, 2026

Transcript