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I'm going to go to the next room. I'm going to show you out. Thank you. Good evening. the special meeting of the Percival Town Council is now called to order. We are now rise for the Pledge of Allegiance. I would like to reach into the flag of the United States of America and to the Republic for which it stands one nation under God in the visible with liberty and justice for all. Thank you for coming to the meeting this evening and or viewing it online. We have only one item on the agenda. That is a presentation by the interim town manager of the proposed fiscal year 2026 budget. Well, good evening, honorable mayor, members of the Town Council and Town of Percival Residents. Before we get started, I would like to thank Linda for the hard work you did in putting this all together. It is a new system and anytime you try to integrate a new system and get the output, it is a quality product and please give her a round of applause. Thank you very much. Okay, so, and I'm joined this evening with Liz and Diana. Again, thank you for your hard-earned work over the past month in getting this budget together. Thank you very much. It is with a strategic and resource-oriented focus, mayor and members of Tangkong-Song that I present the proposed fiscal year 2026 budget to you all. This plan is not just a budget. It is a roadmap for sustaining and advancing the quality of service our residents, businesses and visitors rely At $26.4 million, our fiscal year 2026 operating plan reflects a $2.2 million increase from fiscal year 2025. Covering the five core funds, which are general fund at $15.9 million, parks and I'm at5,000, and water at 3.8 million, waste water at 5 million, and that all includes an additional 527,000 for targeted enhancements. Our capital improvement plan known as the CIP stands at 9.5 million for fiscal year 2026. Mark in a significant $3.1 million or 48% increase from fiscal year 2025. This investment addresses pressing infrastructure needs and is distributed as follows. projects 3.93.9 million, parks and rec at $412,000, water at $1.6 million, and waste water at $3.6 million. This is just an introduction, folks. I would get into the agenda, but I'm just giving an intro. With this, our total year fiscal year 2026 fiscal plan reaches $35.9 million. A necessary evolution driven by the critical need to modernize an agent infrastructure. With that said, I will now go through the presentation. This evening we will cover the economic challenges we face. We are in interesting times. Then we will go into the workforce alignment or as I call it workforce position in. Then into the fiscal plan highlights followed by budget overview, by fund, five year CIP, the debt management and our pad forward then followed in concluding remarks and next steps. First item as I mentioned we are in interesting times. We have what I call triple constraints of federal workforce reduction, followed by inflation and rising costs and market volatility and employment on certainties. These all present opportunities but most importantly they present risk. And how are we going to manage our risk and optimize the opportunities to benefit the tongue of Percival? Some of the risk from the workforce reduction, as we all probably know, statistics shows at least 3.5% of all federal workers are in these loud and county. So, as we're looking at workforce reduction, it will impact the Tonga Perseville. The risk to us is strain on our budget, whether it be the tax or utility fees. As you'll see in this presentation, there'll be no increase in utility fees, and our tax rate is the same from last year. Of course, we will be getting revenue based on the fact of a sales values increase in. The second constraint we face is inflation and rising costs. CPI increased by 3%. The CIP projected costs uncertainty. Our CIP becomes more difficult for us to get to a degree of precision when we start looking three to five years out. One to two years, we probably have the best estimates, but once we start looking at three to five years out, it becomes less precise. That is a risk that we need to manage. Market volatility and employment on certainty goes with L.A., potential business closures and job losses, infrastructure and maintenance project delays based on these. I'll now move on to workforce positioning. I'd like to call this, I'll do we align our workforce to continue to provide best of class service to our citizens. This year, my proposed budget includes no reduction of workforce, no new personnel requests. We look to technology integration and process simplification. The approach in most businesses to optimize this operation is to look at it from a perspective of people, system and process. We want to be able to go through that and make sure that we have the systems and processes in place with clear objectives to make sure that they can deliver on what is expected. Merit-based compensation. This year we will be focusing, when I say this year, I mean fiscal year 2026, we will be focusing on a merit increase of up to 3%. Those are for our performing employees. This year we would not do any collar. It's a zero collar, that's my proposed budget. Future proof and workforce pipeline. As we speak, we have members of the tongue of Percival operations that are Considered retirement. How do we fill the gap? Specifically in the utility enterprise our young people are not interested in these fields We want to be able to expand an apprenticeship Program and in addition to that we are looking to So, align with partners like Johns Hopkins University to be a research center of excellence partnership with the Tonga Percival. Budget highlights for 2026. The proposed budget, as I mentioned, is $35.9 million that is is broken out into operation cost of $26.4 million which covers all of our funds. $527,000 is in targeted enhancements. Capital improvement plan is at $9.5 million. Below that is a breakout. 4% which accounts for the general fund comes from the general funds. 16% is from the wastewater and then you see water is at 11% and general fund CIP is at 11%. So total we have a budget with CIP and general fund operating plan as 35.9 million. Next slide. Operating plan highlights. Proposed budget for the operation is 25 or 26.4 million. It includes general fund operation of 15.9. 5.9 million is wastewater, 3.8 million water and Parks and Rec is 805. So 60% of all of this goes to general fund, 22% accounts for wastewater. the IP highlights. Before I get to that I should talk about enhancement. So this year the enhancement is only $527,000,000,000,000, the breakout there is HR at merit increases of 139 K wastewater wastewater enhancement 130 K, public works 79.5 K and parks and rec water EPA does a project for 25 K. So total these all add up to 527 K, these are the an announcement that was requested by the department. Now to our CIP highlights, our proposed budget accounts for CIP in the number of 9.5 million. General fund, we call that all of people's money but it's still money going to the federal government and returning to us so So it is still taxpayers money. That's $3.9 million. It's not local taxpayers money. Waste water, we are looking to make an investment of $3.6 million. Water, $1.6 million, and parks and rec, we are looking at $412,000. So in totality, the general funds account for 41% of all the CIP in fiscal year 2026, followed by the wastewater at 38%. We'll now go to revenue overview. General funds, the real estate tax rate stays the same at 20 and a half cents per 100 dollars. The firements feel special tax is rigged. Also a real estate tax is at $3 cents per 100. These are no changes from the prior year, but expect a bump in our revenue because our assess value is increasing, our increase in. 50% mail stacks transfer for a request direction from town council. That is approximately $1.8 million. Over the years we have been blessed to see our mail stacks increase significantly over the last decade. And so this is 1.8 million coming from that projected increase of 3.6 million. That projected number 3.6 million for fiscal year 2026. Sales tax revenue, that is a challenge. It is declining as percentage of school age population falls, and we're looking at a potential loss of $400,000 there. Minor changes proposed in fees charged by departments, and that's our cost allocation, or you folks know that as a chargeback. So from year over year, we do not see a substantial increase in that and I'll get into that in the later slides. Utility funds, this budget proposes no rate increases for water and sewer and as I stated before, mill stacks would be supported from the general fund water will receive 616,000 and wastewater will receive 1.14 million. And wastewater used 300,000 of capital reserve funds from our nutrient credit bank. And that is money from the nutrient credit bank that was put aside for the wastewater fund. Now moving on to General Fund. So our General Fund is our highest performing fund. So historically strong financial performance, structural balance and robust reserve. That is all based on having fiscal discipline in year over year committing to paying our bills. And we have done that consistently in the general fund. For fiscal year 2026, the budget proposes 1.6 million draw on reserve resulting from the 50% meal stats transferred to utility fund. This leaves $8.3 million in reserve, which is $4.1 million above our fiscal policy level. So again, this shows shows the strength of the general fund. Fiscal year 2026 budget proposes a 1.17 million in charge back or as we call them cause allocation from utility funds to the general fund. The chart below shows you the operating revenue, the expenses, the debt, followed by the less of mills tax, and then it shows the deficit and the cash above policy that is available. At the end of the day, the net is $4 million available in cash reserve and the deficit as 1.9 million. Parks and Rec. Okay, this fund accounts for a fireman's field, special district tax. That's a major revenue generator for the Parks and Rec fund. Sore plus is in fiscal year 26 year 26 is expected to be 30,000. Available cash is projected to be at 173K. So this is good news for the parks and rec fund. They are in the black and by a surplus of $30,000. And again, these are the, this is a projected budget, okay? Utility funds. Enterprise funds provide public service in exchange for fees. So the main driver of revenue for the utility fund, as we know, are fees for water and sewer. The goal is to recover the cost of providing the service through user charges. Historically operating revenues have been insufficient to cover full debt. Loathe following heavy capital investment during the growth period of Percival which occurred in the 2000s and early 2010. We look back and but but we can blame the past, but there were opportunities for us, especially in the wastewater treatment fund to obtain a loan that would be 40 years out. But instead we had bonds at 20 years and now we are feeling some of the challenges of that. But going forward, we are looking to see how we can obtain revenue to address all of these payment. The CIP plan estimates shows capital investment needs of 28.6 million. Again, this is just a projection for the water system and 4.7 million for the wastewater treatment system. When we look at that 28.6 million in the later slides, you will see that this is that period of three to five years of projections. The Waterfront Fiscal Year 26 is balanced as a result of the 616K of Milt Stats Transfer from the General Fund. Cash will exceed fiscal policy target by $489,000, which is 112% of annual expenditures and debt service. That's versus our policy of 100%. So it goes without say, at the bottom, it shows the operating revenue, the mail stacks transfer, which is a 615,000, followed by the expense of 3.1 million, less debt of 760,000. That debt that we see there will carry us all the way to 2038 unless we incur new debt. And there's no deficit, there's a surplus. Now to the wastewater fund, fiscal year 26 is balanced via the 1.1 million meal stats transfer and use of 300,000 of the nutrient credit revenue or reserve fund. Remain in 187K in nutrient credit proceeds will be fully expanded fiscal year 2027. Cash is 14% below fiscal policy target. Our fiscal policy target is 86% annual cost. I did speak to finance about this. This, again, this is going below our fiscal policy, but we do not see that as a major issue. It becomes a major issue when you're at 75%. Right Liz? Can you comment on that? Yes so our fiscal policy is 100% which is the same as 12 months. We've talked to our financial advisors about this and we may have to drop down below while we're getting rates up to the level they need to be. We think 75% is a good level that we can go to. Once we have a plan forward and have a plan for structural balance, I should say. I just to note, we'll fix this on this slide. It's a $61,000 surplus not deficit there so we'll just need to correct that. Yes, yes, I saw that. So that number should be in black folks until the last column. It is suppressed. Thank you, Liz. We now move on to the five-year CIP projection. Again, the estimate from 20 to 2030. These are estimates. The numbers becomes difficult to estimate into the future. But we are trying our best estimate based on consultants and what we can get from the market in competitive pricing. Five-year period for fiscal planning purposes. Fiscal year, 26-budget appropriation will be for a single year which I mentioned before is 9.5 million. So in forward for fiscal year 2027, when you folks sit in these chambers is 36.78 million. Again, that's a projection. And then for five year total is that 9.5 million plus the 36 million, which is 46.287 million. We intend to have a multitude of ways to fund these, includes the general fund is relatively easy. We are looking at external sources for the majority of the general fund. Grants and cash, parks and rec, again, grants, cash and loans are for the water and wastewater treatment funds. Those are the ways to fund this. Fiscal resilience and debt management. So the tongue of Percivil has stellar credit ratings. To some, they'll say, okay, you can borrow more money. But this shows the financial strength of the tongue. Which we are triple A rated, S&P, triple A rated, and Moody's SAA. We have stable and responsible taxation that will be continued in this coming year. We will benefit from increasing property values, but our rate is at 20 and a half pennies for $100. Strong reserve management, maintained in $8.3 million in reserve, which exceed our fiscal policy, as mentioned. Aggressive, existing debt reduction. General fund debt, we should be debt free unless we build a new town hall that will unlock $1.3 million in the next 10 years. Parks and Rec, that will be completely eliminated in 2037. That's removing the risk of the000 off our books. What a fun, the debt will be cleared in 2038. And this is fiscal year 2038. That will be removing $760,000 off our books, unless we incur additional debt, which we are anticipating based on the need for a new water treatment plan. Waste water fun, this is the major debt that we have, which is 2.4 million, and that will continue until 2040. Future-ready financial resiliency, we need to have a strategic approach to debt reduction of a commitment to reducing our debt, discipline, reserve management, and responsible taxation. Position in our town for long-term growth and economic stability. We need to attract businesses into a town of Percival. We need to make sure our taxes align with what will make businesses see our community as an attractive place to do business. Okay, utility debt. Utility debt was restructured in 2013, 2017, and 2021 achieve various objectives and this is going back to our debt policy. It lowered the annual debt payment as businesses and residential revenue grew. For the last decade, as I mentioned, our mill stacks grew by twice. Our mill stacks actually doubled over the last decade. Cash flow savings of $2 million from 2014 to 2025. We'll hear a lot about why did we restructure in 2013? The answer is simple. In 2013, we would, in just the water, we will be paying $2.3 million. In 2013, we didn't have that kind of mail stacks, right? So, one of the strategic objectives from our financial advisors was these restructuring bought us time. And now that we are now into future. Our debt is still steep, but now we are in a better fiscal position. Use excess cash to pay down, long term, down loan principle that was another byproduct of the restructuring and refinancing. As a fiscal year, 2026, both utility funds must support the full debt load, falling about a decade of lower debt service. The town council has given us a direction of meal tax revenue being double so can we take some of that meal tax revenue to pay down for utility enterprise? MealStacks revenue is projected in this year, fiscal year 2026, to be at 8.3% increase. And we are hopeful for that. Now, pad forward. Objectives and key results. The first objective is to strengthen our fiscal resilience. That means inviting new businesses to the town of Percival. We are looking at with new businesses coming into the town of Percival. We have mill stacks. We're looking to pursue grants. Objective number two, ensure sustainable infrastructure investments. We talk a lot about making sure our utility fund, water and sewer, we have an issue with the quantity of water in the Tonga Percival. Our wastewater treatment plant can support a tongue probably to have the size of the Tonga Percivil. We have excess capacity in that. But we do have strains in our water system and we're looking to bring new wells online. And of course that water treatment plant we'll need to invest millions into upgrading that okay so once we have sustainable infrastructure doing that investments we can then boldly go to the Loudon County and say we could connect water and sewer for their recreation and I'm sending an aquatic blender. I understand the vision there is that they would have their on-site water, but based on my conversation with Tim Hemstreet, there is an opportunity potentially following their study to have the water also connected. But that's pending study. I understand tongue concles about two years ago made a resolution saying that we can commit to supporting that. Objective number three, enhanced workforce efficiency and retention. As I speak, there are members of our staff, management team, near retirement. And. attention. As I speak, there are members of our staff, management team, near retirement, and that's just agent work force. We need to understand how do we strengthen that pipeline to make sure that we have young people coming in with interest in water and sewer. The salaries are good. A lot of these things are now automated, and so we need to have partners where we could invite those young people to get into these fields. Objective number four is to drive innovation and visionary progress. As I mentioned, Johns Hopkins University, they'll be visiting our wastewater and water treatment plant in early April. These folks, as I mentioned, they are working on projects to colonize Mars. And I sat in one of their demonstration rooms, which is rapid demonstration. And myself and Jason sat in that room. And we saw manufacturing being done before our eyes. we believe in a partnership with them we can see opportunities in our wastewater treatment and our water treatment facility for them to be able to provide us with solution. What is beneficial to that also is by having the tongue of Percival as a partner we could jointly go after million dollars in grants from the federal government. So that's a drive innovation and visionary progress. Now, so is 629, I thought I would take 640, but in closing, despite challenges, both internally and externally, we remain steadfast in our commitment to some financial strategies and operational excellence. True resilience, efficiency and strategic leadership, we will continue to build a stronger, more prosperous, personal. That ends my presentation, and I'll now go on to expectations going forward within the next this upcoming four weeks March 19th. This is a meeting the first budget work session That I presented to the March at 25th is your regular town council meeting. Oh, sorry folks. All right, four. Yeah, so Tuesday, March 25th, next week, your regular town council meeting. Look to adopt that 20 and a half pennies for $100, real estate taxes. March 26th, budget work session number two. Budget work session number three is April the 2nd and regular town council meeting April the 8th. We'll look at fiscal year budget and tax and fee public hearing on that date. And on April the 9th, we'll budget work Number four, where we'll be Where our financial advisors would be with us. They'll make the presentation on utility rate Modeling and then we'll have a Q&A and final plan markup and April the 22nd That is our goal to adopt the fiscal year, 2026 budget and master tax fee. Fall back day is May the 13th. Next step, materials and deliberations include the fiscal year proposed fiscal plan book. You all have the fiscal year plan book. As I was speaking, I should have pointed out where some of these items are. But that fiscal year point book, that's plan book, that's your book. The expectation from myself and staff is that you'll review that and come ready with your questions. Please submit questions to Diana A's. And of course, those are emails. And then all of those questions would be tallied up and we'll be able to provide that to each of our, the folks that are responsible for providing answers to it. Okay, next steps, as I indicated, the real estate tax adoption next next week public airing was held on March 11th. Additional budget work sessions which was mentioned in the prior table and not going through this. And that's it. Wait one last thing., it is to the proposed plan. We'll be going through these plans and we'll look at town council, mayor and council to have strong poll votes on what changes that you will all recommend. The expectation is that you'll provide those changes to Diana and as we get to this room we can discuss What you folks would like to see what you'll agree on okay with that said We're at 6.33 Any questions Any concerns on laser. So the next meeting, thank you very much, Liz. The next meeting, your focus should be the general fund because that's what we are covering. And if you want to read in advance, you can go on to the other, but that next that next meeting the focus is the general fund and staff and myself will be prepared to provide answers and guidance. Okay. Mayor. Thank you Mr. Town Manager and thank you to all the members of the staff who contributed so heavily to producing both tonight's presentation. And these very large binders that each of us has been gifted with. It's now the job of this town council to go through, according to the schedule that has been laid out tonight and come forth with your questions sending them to Diana Hayes and also any suggestions for improvements to this budget and with that I will call for a motion to adjourn. Do I hear a motion to adjourn? I move to adjourn. Second. Second. All in favor? Thank you, one.