Informational Meeting

MINUTES Informational Meeting Tuesday, May 9, 2023, at 4:00 PM Carnegie Town Hall, 235 West 10th St., Sioux Falls, SD 57104 1. Call To Order Council Members Present: David Barranco, Sarah Cole, Rich Merkouris, Marshall Selberg (arr. 4:11p.m.), Curt Soehl, Pat Starr Council Members Absent: Alex Jensen, Greg Neitzert 2. Committee/Commission Reports A. Siouxland Heritage Museum Board: Thursday, May 4, 2023 (Council Member Starr) There was no report. 3. Councilor Remarks There were none. 4. Presentations A. Mid-Year Financial Outlook by Shawn Pritchett, Director of Finance Presentation: Approximately 30 minutes followed by discussion Pritchett provided opening remarks regarding feedback and requests from City Council Members. Based on that feedback, the financial updates encompass three main areas which are 2023 Updates, Inflation and Supply Chain and Planning Ahead. Pritchett stated that the 2023 Updates include Budget Amendments, ARPA (American Rescue Plan Act), LGA (Local Government Assistance), and Capital Program. The 2023 Council Budget amendments are: $100K for Façade Easement. Several proposals have been received and one has been approved and will be coming forward at a future Council Meeting; $75K for Pedestrian and Bicycle Improvements – this was a proposal from Councilor Greg Neitzert. Engineering has been engaged in a pilot program and data is being collected, neighborhood input received, etc. and all are being reviewed; $1.7M for Transit Hybrid Service Model. The plan has been submitted and approved by the Council, plan is continued to be reviewed including resource limitations and is still under review; $68K wage reduction for the Arts Coordinator Position, still looking to move forward with this position doing the final articulation regarding duties for this position; and $550 for Police Support to fund for public safety, crime prevention and intervention, some of which has been used for equipment and recruiting campaigns for communications. The 2023 ARPA and LGA Updates include: $7.3M Commitment for Partnership Agreements; $6.7M Commitment for Housing and Neighborhood; and $59.2M Commitment for Construction and Debt. The city is on track for all these areas. Mark Cotter, Director of Public Works reviewed the 2023 Capital Program updates that included: Highways and Street Programs Maintenance and Engineering Budgets. The Maintenance budget is 65% encumbered and the Engineering budget is 68% encumbered. Cotter reviewed the significant overlay programs that are in the process for highways and streets; and he also reviewed the engineering street improvement areas. Pritchett reviewed slides regarding inflationary indexes and supply chain indexes. He explained the impact on inflation indexes relative to low employment numbers, and conditions that are impacting lower supply access. Cotter reviewed the inflationary impacts on core capital programs. He noted the chart that lists 17 core impact projects in the works and shows the average weighted cost summary. He discussed the jump in costs between 2021 and 2022 for surfacing and utilities. Cotter reviewed the inflationary impacts regarding the maintenance program from 2019 – 2022 including actuals and projection. Pritchett spoke about rolling stock with equipment and the challenges that have been experienced. The current 2023 rolling equipment budget is $30M. Updates include: Motor Grader Leases has a budget impact of $1.2M, an almost 90% increase per unit; For police vehicles, hybrids are difficult to obtain. There is a 6–8- month lead time and a $5K increase in cost; For class 8 trucks (Sander), any new orders are now into 2024; Construction Equipment requires an 8 month lead time where previously it required 4 months; Commercial lawn mowers require a 12 month lead time; Fire Trucks require a 12-18 month lead time with a 25% increase in cost. 2023 Supplements passed by the City Council include $3.3M for wage adjustments (Ordinance No. 10-23, March); $0.1M Network of Care (Ordinance No. 12-23, March); $0.5M streets and potholes (Ordinance No. 11-23, March); $0.2M Homeless Outreach (Ordinance No. 17-23, April). Pritchett noted that the following supplemental items will be coming forward to the City Council for approval: $3.0M Provisional Winter Street Maintenance; $0.4M Pass through BID and Lodging Taxes; $0.1M Art’s Coordinator; $1.0M Other Department Inflation and Maintenance Impacts; $1.7M Transit Hybrid; and GASB 87 & 96 – Lease and Software Subscription Accounting. The Planning Ahead section includes: Revenue Outlook; General Fund Forecast Factors; and General Fund Forecast Reserves. Revenue Outlook included a review of interest rates, building permits and property taxes. Pritchett talked about the Federal Reserve’s impact on raising interest rates with inflation control. Pritchett provided an update on building permit valuations from 2014 to 2023 and also reviewed the building permit revenue updates. Property taxes generally include a two-year lag with a 4% property tax growth rate for 2024. Pritchett stated that for the 2023 budget, the sales tax revenue, the forecast was for 8% for 2022 and 4% for 2023. The 2022 actuals came in higher and 4% increase growth rate for 2023 going  into 2024 in the general fund. Staying at 4% rate. The sales tax revenue for 10- year annual average is at 4%. Pritchett reviewed debt service regarding sales tax support items and percentage of sales tax revenue from 2023-2028. General Fund Forecast Factors included: 4% Sales Tax Revenue; 5% Property Tax Revenue; 1.5% Other Revenue; 4% Personnel Expenses; 2.5% Other Operating Expenses; 3% Transfers. The average annual new revenues are $10M and the average annual new expenses is $11M. General Fund forecast updates were received regarding fire stations, Quality of Life III projects and the impact of 1x revenue loss (2%) and 1x Revenue loss (0%). The 2024 Budget Timeline is as follows: June 30 - Capital Program Submitted to Council; July 20, 3pm - 2024 Mayor’s Recommended Budget Presentation; August 1, 8 and 15 - Council Budget Hearings; August 22 - Joint Meeting with Minnehaha County; September 5 - ESF BID and 2024 Budget Presentation; September 5 - Budget Public Hearing and 1st Reading of Appropriations Ordinance; September 12 - Council Adoption of Budget. Discussion followed regarding: what are the top 1-2 items that are the most concerning; appreciation was expressed for providing detailed information to the Council; review of the funds received for state housing funding and who is advocating and watching these funds for the City; the availability of ARPA funds; what is the update as to whether or not the Council has approved the Arts Coordinator position; stress testing on the revenue side; the projects impacting the quality of life bonds and prioritizing economic returns; additional operational expenses and cost recoveries projected for Jacobson Plaza, Midco, and the Multiple Generation Center; timeline for current road construction projects; the modeling/cost assessment for Fire Stations; cost changes in construction materials; considering the Arts Coordinator position at the same time that other city positions are being considered (in the Fall); and a future budget consideration for the housing fund. 5. Public Comment There were none. 6. Adjournment The meeting adjourned at 5:15 p.m. Tamara Jorgensen, MMC, Assistant City Clerk