City Council

MINUTE RECORD PAPILLION CITY COUNCIL BUDGET HEARING MINUTES TUESDAY, AUGUST 20, 2024 ( @, 7: 30 P. M. The City Council of the City of Papillion met in open and public session in the City Council Chambers at Papillion City Hall, 122 E Third St, on August 20, 2024, at 7: 30 PM. City Clerk Nicole Brown called the roll. Present were Councilmembers Tom Mumgaard, Jason Gaines, Jim Glover, Dave Fanslau, Lu Ann Kluch, Bob Stubbe, Steve Engberg, and Mayor David P. Black. Councilmember Steve Sunde was absent. Also present were City Administrator Amber Powers, Deputy City Administrator Mark Stursma, Finance Director Nancy Hypse, Recreation Director Tracy Stratman, Parks and Facilities Director Tony Gowan, Police Chief Chris Whitted, Assistant City Attorney Carla Heathershaw Risko, Planning Director Travis Gibbons, Fire Chief Robb Gottsch, Deputy Public Works Director/City Engineer Alex Evans, Human Resources Director Carrie Svendsen, Library Director Matt Kovar, and Communications Manager Trent Albers. Mayor Black led those present in the Pledge of Allegiance. Affidavit of Publication: Notice of the meeting was given in the Sarpy County Times, the designated method of giving notice, on August 7, 2024. A copy is available in the office of the City Clerk. Incorporated herein by reference as if fully set out herein is the audio and visual recording of the council meeting. Public announcement that a current copy of the Open Meetings Act is posted in the Council Chambers. ORDINANCES SECOND READING AND PUBLIC HEARING: ORD. 2030— An ordinance to approve the FY2024- 2025 Budget— Nancy Hypse— 597- 2020. Mayor Black briefly explained legislation from the State requiring the budget hearing to be held separately from a regularly scheduled Council meeting. He then provided a presentation of the FY2024- 2025 Budget, which presentation is attached hereto. Mayor Black provided a brief update on the State' s Special Session and the legislation that passed. Mayor Black opened the public hearing and called for proponents and opponents. No one came forward and the public hearing was closed. Councilmember Stubbe asked when the new legislation would be in effect. Mayor Black explained that his understanding is that it will not be effective until FY2026. Councilmember Stubbe asked if there was an exception for public safety. Mayor Black said yes but the definition of public safety is not entirely clear, so the City will need to obtain clarification. Councilmember Mumgaard thanked staff for their work on the budget and briefly explained his disagreement with the new legislation. Councilmember Engberg echoed comments from Councilmember Mumgaard. ADJOURNMENT: Motion to adjourn by Councilmember Glover, second by Councilmember Gaines. Upon roll call vote, Mumgaard, Gaines, Glover, Fanslau, Kluch, Stubbe, and Engberg voted yes. Voting no: none. Absent: Sunde. Motion passed. Meeting adjourned at 8: 13 PM. 1 August 20, 2024  CITY OF PAPILLION DAVI . LACK, MAYOR ATTEST: f tAi- L) PAP/ 4 NICOLE BROWN, CITY CLERK 06, r'•02\ SEAL P J... 2 August 20, 2024  CrIY OF P: PII. LIO 40, A David P. I2 - `=- laeor 122 East Third Street il 4 Papillion, Nebraska 68046 Phone 402- 827- 1111 Fax 402- 339- 0670 July 26, 2024 Papillion City Council Members: I am pleased to provide you with the proposed budget for fiscal year 2024/ 2025. Thank you for the foresight and planning of you, our Councilmembers, over the last six years with the passing of the Sales Tax and Use Reserve Fund Policy", the City remains in a healthy position despite anticipating not receiving any sales tax dollars during the fiscal year. Despite those unknowns and the several unknowns with the State' s current property tax reform efforts, the City will be able to reduce its property tax levy for the fourth year in a row. I have a few additional comments on the State' s Special Session and this budget at the end. I am pleased to share with you that we are able to reduce our Property Tax Levy 8. 48% over the current year. Papillion' s City levy continues to be the lowest levy of all the communities in both Sarpy and Douglas Counties. Our ability to reduce our levy four years in a row( the same period as the high valuation increases) and continue to maintain the lowest levy is due to the Council' s strong financial planning and long- term fiscal policies over the past several years, the professional staff' s management of the City' s daily operations, and the community' s continued growth. As we have been doing each year, we continue to focus on our continuing growth to keep up with services while at the same time retaining our strong sense of community. To achieve this, this year' s budget focuses on continuing the street improvement plan without the use of financing, hiring of some additional staff as we manage the City' s growth, maintain necessary equipment and vehicles, and continuing to focus on creative non- staffing software solutions where possible to have systems in place as we grow and mature. After several years of not issuing new bonded debt, this budget does call for the City to issue a public safety bond to pay for a portion of the Police Department' s building remodel and expansion project. Additionally, each department has budgeted approximately a 3% increase to account for inflation. The budget plans for the City to use sales tax reserves to off- set the State' s economic development reimbursement incentive program. Withholdings began in 2023 but will continue through at least this entire fiscal year and most likely longer, based on preliminary notices from the State. I cannot thank you enough for the support and prior planning that put us in a position to be able to have sales tax withheld while still allowing for us to reduce our tax levy and plan for continued growth into future years. In line with the budget meetings we had, here are the highlights of the FY2024/ 2025 Budget: REVENUE Due to the State' s ImagiNE Act incentive program which GENERAL FUND REVENUE Interest ty rebates all of the City' s anticipated sales tax back to Other Sales Tax fees and Income i approved State 0 companies whose agreements are by the Permits® 5. 9% , i 0. 0% without the City' s knowledge, the use of Sales Tax Reserves 12. 3% 63cct pat°o is our largest source of revenue at 31. 3% of total revenue in Tax the General Fund. We are projecting the use of sales tax I reserves to offset $ 13. 2 million in general funds and $ 4. 1 million in half- cent sales tax funds. Fire The Property Tax Levy will be reduced by approximately Street Contributions 8. 48% compared to last year' s levy, lowering the levy to Allocation 19. 7% I approximately $ 0. 37 per $ 100 of valuation — again, this b Sales Tax Reserve 5. 8% continues to be the lowest City levy of all communities in 4 31. 3% both Sarpy and Douglas County. The preliminary assessed valuation is approximately $ 4. 324 billion, which generates $ 8. 29 million in general fund revenue. This is a 12. 5% valuation increase over the prior year and includes both revaluations and organic or new growth. Most other revenues are projecting conservative increases. GENERAL FUND Combined departmental personnel costs represent the single largest expense in the General Fund at approximately 70. 5% of total expenditures. The proposed budget accounts for wage increases and health insurance benefits consistent with the union agreements the Council previously GENERAL FUND EXPENDITURES approved and a 4% wage increase for management- exempt employees, plus increases for job performance and as Police necessary due to job comparability studies. Also included µ. 1 25 1% in this budget are wage increases for part- time employees, to be consistent with State- wide minimum wage increases passed by voters last year. This budget also continues to offer vacation and holiday pay to regular part- time employees, in order for the City to remain competitive in the current hiring market. Health and dental insurance for full- time 15%. Library, premiums employees are projected at 4. 1°I° Workman' s Compensation is projected to increase based Building, 112 4. 0% IT, 2. on the change in the City' s Modification ( MOD) factor. As Recreation, Adman far as staffing, this year' s budget includes one full- time Planning 21 3' Public Works Department general mechanic, one part- time 1, 6% Fire Department secretary, and the restructuring of the Community Development position from Coordinator to Director. The proposed budget also continues to invest in supervisor and leadership development. As with previous years, Public Safety includes the two largest General Fund budgets. The Police Department retains its professional CALEA certification. Closely working with Council over the past two years, the needs at the police station have been assessed and this budget sets aside$ 4. 5 million in CIP and federal CARES Act dollars for a future renovation and expansion project. This year' s budget anticipates using those previously set aside dollars for the project, plus issuing up to$ 4. 5 million in public safety bonds. The Fire Department, through the partnership with the City of La Vista and the Papillion Rural Fire District, willsee our two partners funding 54. 1% of the Fire budget, with fees covering an additional 8. 2%. The budget includes funding for new radios, HVAC improvements to Station# 4 and partial funding for the purchase of land for the future Station# 5. This will be the sixth year in a row that we are making a serious investment in Streets through the development of the long- term Pavement Management Plan to keep all streets at, or above, an acceptable standard, primarily using and ultrathin bonded asphalt surface ( UBAS) product to keep moisture out of good streets to slow down their deterioration. This year' s budget proposal calls for$ 2. 467 million( inflation factor) for the UBAS program, which will be managed based on the Plan. Additionally, we continue to retain over$ 240, 000 for general pothole and street repairs, which includes concrete and asphalt repair costs. Like the last three years, both the plan and the repairs are fully funded without debt financing. The Street budget also includes software upgrades, drone software, traffic signal upgrades, funds to maintain aging infrastructure, and additional equipment to manage the new growth. More generally, the budget also includes funding for: the remittance of a portion of the City' s collected PILOT fees to the Sewer Agency to help fund the expansion of sewer south of the ridgeline; the annual support to the Papillion Community Foundation, Grow Sarpy and the Mayor' s Youth Council; carryover funding for downtown revitalization; software program costs for building and permits; the annual audit; budgeting and auditing software to make both processes more efficient; funding for new Motorola radios in the fire, police, public works and parks departments to ensure the radios are intrinsically safe and properly updated; the annual replacement of computers per the City' s IT rotation plan; the annual computer licensing and contract with Sarpy County for IT services; a space needs study at the Library; a new glow forge and other equipment at the Landing; the design of a new bike trail to connect the City' s trail to the larger Metro trail system; re- staining and caulking at First Street Wage Plaza; ballfield fence replacements; upgrades at several restrooms within the City' s parks system; new Parks equipment; and, some consulting funds for minor updates to the City' s Comprehensive Plan. In addition to the Pavement Management Plan, the Capital Improvement Plan( CIP) contains$ 2. 8 million in additional funding for a replacement wide- area mower, a Bobcat trickster with attachments, three police vehicles ( replacements), traffic signal upgrades, replacement of Fricke Field parking lot, funding towards a building expansion at public works, Schram Road Parkway, reconstruction of East Lincoln to the Halleck Park entrance, and funding towards a salt storage building expansion. Additional CIP projects are being reviewed and considered for either this budget or a future budget. The percentage of the total levy being dedicated to the Bond Fund is approximately 21. 1%. Outstanding debt for the Bond Fund is $ 83. 88 million, which includes $ 60. 015 million for the voter- approved Papillion Landing. Total annual debt service, excluding Papillion Landing, is$ 4. 1 million, which includes principal and interest payments. The cash reserve of the bond fund is approximately $ 7. 2 million. We continue to hold a high- grade investment rating of Aa1 from Moody' s with our general obligations ( upgraded from Aa2 in April 2018). This strong rating has allowed us to refinance in the past when rates are favorable. We do not anticipate refinancing in the upcoming year; however, we evaluate the eligible bonds periodically throughout the year to determine if there are cost savings to the City. OTHER FUNDS As with previous years, the Recreation Fund includes the Papillion Landing and Fieldhouse complex, along with non- revenue generating recreation programs, such as the Farmers Market, community activities, kid day camps, the race series, free events and movies at SumTur Amphitheatre, and other civic uses. The non- revenue generating programs of the Recreation Department are budgeted through the General Fund at approximately$ 860, 218. A major portion of the Landing complex is supported by revenue from memberships, user fees, donations and other non- tax revenues; however, consistent with prior years' Council guidance, there is a portion of staff that is allocated to the General Fund for broader community recreation programming and services. Most of the Recreation' s expenses include regular programing, operational expenses, and maintenance expenses; however, the budget does include funding to purchase several large fans at the Fieldhouse to move air around during the summer months to increase usage during those periods, which the additional rentals will off- set the costs. The Water and Sewer Funds are proprietary funds and are both budgeted to operate within the guidelines established by the previously approved rate studies. A rate study is currently being conducted to determine new rates for both funds effective January 2025, covering rates for the next five years. We did not account for new projects ahead of the new rate studies. A budget amendment will be submitted after the new rates are adopted by Council in order to implement projects and authorize operational expenditures that will be accounted for in the first year of the rate studies but are currently unknown. With that in mind, the budget does include projects for both of the funds that were anticipated in the previous rate study. The Water Fund includes funding for painting of the north water tower, the installation of a booster pump at the Summit Ridge station, hydrant replacements, and fiber communication upgrades at the wellfield. The Water Fund' s outstanding debt is$ 7. 085 million with annual debt service at about$ 920, 000, which includes principal and interest payments. The Sewer Fund includes funding for the replacement of some aging equipment, trenchless pipe repair equipment, software upgrades, one new fleet vehicle, and sewer relining. We continue to maintain a high- grade investment rating( Aa2) from Moody' s for this proprietary fund. The Golf Fund is also a proprietary fund with revenue from normal operations. The budget includes the use of$ 250, 000 in reserves for the funding of projects at both Tara Hills and Eagle Hills. The budget also includes $ 242, 000 of annual revenue going towards the bond payment associated with Eagle Hills. Based on the current budget projections, the estimated ending golf fund cash balance at the end of the FY24/ 25 will be$ 2. 9 million with the last bonds being paid December 2028. The budget includes funding for design work for a new irrigation system at Tara Hills, pond erosion control at Eagle Hills, a new range ball cleaner for the Eagle Hills driving range, minimal tree work at both courses, phase three of cart path installation at Tara Hills, cart path work at Eagle Hills, and minimal irrigation repairs at both courses. These projects and improvements follow the Golf Capital Improvement Plans for both courses that the Golf Ad Hoc Committee of the City Council reviewed last year and provided guidance on. The voter-approved 1/ 2 cent sales tax is by law dedicated for parks and recreation and cannot be used for general operations. Wage The primary use of the 1/ 2 cent is for the bond payments on Papillion Landing. The proposed budget fully funds our bond obligations, and the required reserve remains fully funded. This budget allocates $ 2. 5 million of the 1/ 2 cent sales tax to be used to make needed upgrades to the Halleck Park Road System and Parking Lots. The Community Betterment Fund includes funding for Veterans Park, annual B- Cycle Station fees, payment to the Arts Foundation per the Council- approved MOU, Winter Wonderland expenses, a community survey, downtown revitalization, and the underlayment at Hickory Hills Park and Halleck Park. Funds for Community Betterment are not property tax but instead are generated through keno and by law are restricted to community projects. In an effort to avoid needing a" carryover" budget amendment, we are showing the requested carryovers as part of the original budget. As a result, you will see on the detailed budget documents that are provided with this letter, two columns related to the FY24/ 25 Budget: Newly Requested 9/ 30/ 2025 Budget and Requested Including Carryover 9/ 30/ 2025 Budget. Items being requested to carryover are fully funded in the FY23/ 24 Budget and include some general operational expenses, community betterment projects, capital improvement projects, and equipment purchases that we are anticipating will not be executed prior to the end of the current fiscal year. CLOSING I want to thank our employees that serve our residents. They faithfully, professionally, and diligently serve the community and support the established mission, vision, and goals of the Council. Their dedication to successfully keeping this community moving forward amid so many uncertain external factors is why this City is such a great place to call home! I also want to personally thank each of you for your support as we continue to manage our growing community while retaining the lowest city property tax levy in the metro, despite having our sales tax withheld due to State incentive programs. All of this while continually providing high levels of service delivery through effective management, on- going growth planning, and technology upgrades. I want to thank City Administrator Amber Powers and Deputy City Administrator Mark Stursma for their strong leadership and balance of everyday pressures with long- term vision and sustainability. A special thanks to Finance Director Nancy Hypse for her fiscal management, insights, and wisdom. Thank you to the Department Heads who are true professionals in their fields. We are fortunate to have a great team that truly cares about Papillion. I want to reiterate that the Cash Reserve Policy you approved in 2010 has played a critical key role in our ability to maintain our strong fiscal position despite having to navigate the last few years, which have included Covid, high inflation, and unknown national economic conditions, all while also having our sales tax withheld due to State incentives. Thankfully, we have a high level of confidence that the reserve policy has set us up to continue to grow without increasing our tax levy in order to continue to maintain the small- town services that make us' feel like home." I am grateful for that; however, we will continue to manage conservatively as we navigate through the unknown future of the national economy and the Legislative Special Session. For perspective, the median home price inside Papillion' s City Limits is$ 269, 600( US Census Bureau). With the proposed$ 0. 37 levy, the median household would pay$ 998 a year. That is$ 83. 17 per month in Property Tax, which is less than most choose to pay for their home internet service or their cell phone plan. For that$ 83. 17, they receive the highest levels of Police and Fire services along with professional Public Works, Streets, Library, Parks, Recreation, Planning, Building, and Administration. As you can hopefully see, the Mission that you created at the 2020 Council Retreat, and reaffirmed at the 2023 Council Retreat, continues to be displayed in the budget priorities: To preserve our small town feel and promote quality of life, while delivering exceptional services for our residents, visitors, and businesses, and to sustain an environment( physical, social, and economic) that people are proud to call" home". The Goals that you set to achieve that Mission were strong guidelines for the Department Heads as the budget was developed. As you know, we once again were awarded the Certificate of Achievement for Excellence in Financial Reporting( COA) by the Government Finance Officers Association ( GFOA). The COA recognizes governments that go above and beyond the minimum reporting requirements of Generally Accepted Accounting Practices ( GAAP) by preparing a Comprehensive Financial Report and then voluntarily submitting if for review by a professional Board. A goal of the COA is transparency in financial reporting. Wage Thank you to Ms. Hypse and her team for participating in the program for a decade. I do not want to take for granted the efforts that go into maintaining this certificate. It takes a lot of dedication and effort. Thank you! I thank you for your leadership that continues to allow Papillion to thrive as a place that" feels like home". I do have a P. S. regarding the Legislature' s Special Session. P. S. GOVERNOR' S LEGISLATIVE SPECIAL SESSION This budget letter is being sent at the start of the Legislature' s Special Session that the Governor called regarding property tax reform. As of this writing, the Legislature still has two days to introduce Bills and no Committee Hearings have been held. Depending on what may be passed and the effective date of those changes this proposed budget could be impacted. Ideas from the Executive branch continue to evolve and discussions are within a small, closed working group that we do not have insight into. In visiting with Senators, we also do not currently see a consensus on a common plan. With those unknowns, we did not make any guesses of what the future tax policy of Nebraska may look like or what the impact to a local municipality may be. This budget is being presented to you under the current tax policies. We understand tax policy regarding Property Tax needs to be modernized; however, fundamental issues that we have raised to the State over the last ten years appear to not be considered. These issues become more critical as the State shifts local municipalities from a stable and auditable revenue source( property tax) to a variable, unpredictable and un- auditable revenue source( sales tax). Let me remind you of the fundamental issues that we continue to raise to the State, to no avail. Sales Tax: Submission: When businesses submit sales tax to the State, many businesses use postal city or zip code to determine city jurisdictional boundaries when there is no tie between the two. We proposed modernizing the submission process to use GIS, accurately tying the address to the jurisdiction. Errors in submission lead to the Department of Revenue sending Sales Tax to the wrong jurisdiction. The City is not involved in the submission, and the Department of Revenue considers it confidential, so we do not have a practical way to verify or correct errors. Receipt: There is no detailed backup documentation from the Department of Revenue when they send the local jurisdiction its monthly Sales Tax check. Without documentation, fundamental audits and forecasting are impossible. We know large mistakes occur in the State' s process from Submission by the business to Receipt by the City. The current Sales Tax process prevents sales tax from being audited locally. These items can be solved; however, neither the Legislature nor the Department of Revenue have acted to- date. Until these issues are fixed, shifting from a stable, auditable source ( Property Tax) to an unsuitable, variable source ( Sales Tax) is a major concern. If the Governor or Legislature would include those two fundamental items in their plans, and the Department of Revenue does not object to the modernization of the system, it would reduce much opposition from the local level. Valuation: Many State policy makers claim there is not a valuation issue while lowering property tax across the board. This oversimplifies the issue, deflecting serious policy discussions. Structurally, there are two specific concerns, both solvable if the Legislature desired. A significant amount of the state' s agricultural, industrial/ commercial, and residential properties in urban areas are owned by out- of-state individuals and entities. Lowering property tax across the board directly benefits out- of-state owners, thus shifting the burden to Nebraska residents. While they contribute to school funding with property tax, they may not contribute as much through sales and income tax. We have proposed to Senators to keep the valuation at market level and maintain some level of levy, so everyone pays a baseline amount of property tax. The State could then use the Homestead Exemption process to provide credits to lower the valuation. Multiple credits would be allowed and be used to incentivize in- state property ownership and other desirable activities, such as lower property tax for elderly, disabled, low income, or for business properties that invest in capital or create additional jobs. This method would prevent the tax shift and increase from the out-of-state property owners to Nebraskans. State Business Incentives: The State offers incentives under ImagiNE Act, or the former Nebraska Advantage Act, to allow businesses( generally out- of- state) to receive a rebate on their sales tax if they make certain investments. Two issues arise, the City is not a party to the incentive agreement, and the State considers it confidential, so we are not informed when an SIPage agreement is made. Under the Governor' s plan, lowering property taxes for out- of- state businesses while removing many sales tax exemptions could lead to double benefits to those businesses through the State incentive programs and having a direct impact to the City of Papillion Sales receipts, due to the newly proposed sales taxes subsequently being refunded back to the incentive businesses. In this scenario, the local jurisdiction not only realized a lower property tax but then also lost the potential for the offsetting sales tax benefit. Again, because both the initial incentive agreement is confidential, and the subsequent sales tax is un- auditable the City has no mechanism to reasonably plan or forecast. Modernizing the sales tax system to provide for accuracy and auditability, including a method to not shift the tax burden from out-of-state to residents as part of property tax reduction; fixing the State incentive programs to allow cities to know when an agreement is signed; and removing the unintended consequence of the businesses receiving unexpected double benefits, are all easily solvable; however, to- date the Legislature has not acknowledged the need or the impact to local municipalities. Over the years, we have had many " unknown unknowns" from Covid to the national economy that we do our best to plan around. The Legislative Special Session is another of these unknown unknowns at the time I present you the 2024/ 2025 budget. Depending on what bills are passed and the effective date of that legislation, there is a possibility a budget amendment could be required to account for 2024/ 2025 impacts. Once again, I thank you for your leadership that continues to allow Papillion to thrive as a place that" feels like home". I want to thank our employees that serve our residents. They faithfully, professionally, and diligently serve the community. If you have specific questions on the budget, please feel free to reach out to Ms. Powers, Mr. Stursma or myself. It is an honor to serve alongside you. Sincerely, David P. Black Mayor 6IPage