Tempe advances $50.3 million sales tax increase to April 30 voter call vote

All right, good afternoon everyone. Welcome to the Tempe City Council work study session. Just a note, the Microsoft Teams audio is down. So if you are online right now, please visit tempe.gov/temp1 and you can click on watch live to listen to the meeting. So once again, I'm going to repeat that again just for you know transparency sake.

The Microsoft Teams audio is down that we normally use to broadcast these meetings, but please visit tempe.gov/temp1 and then click on watch live to listen to the meeting. Uh we're going to have folks from our team continue to monitor everything on team. So please make sure to do that so you can tune in. We want to make sure that folks can actively watch this sort of take place. So with that said, item number one is called to order.

Council meetings can be watched in real time via Cox cable channel 11 and at tempe.gov/temp1. Item number two, announcements from the mayor and or city manager. I'm going to first see madam city manager. Any announcements this evening? Nothing this evening. Thank you, mayor. Okay. Thank you so much. Uh I've got a couple of announcements here. All right. First of all, item 2A, our neurodyiagnostic week proclamation. I want to see if uh and Anna can come join me in the front here.

Good afternoon almost. Good evening to you. Good to see you as well. All right. So this proclamation reads, "Whereas neurodyiagnostics is the practice of analyzing and monitoring central and peripheral nervous system function to promote the effective treatment of neurological diseases, injury and impairment.

And whereas neurodyiagnostic technologists play a paramount role in the diagnosis and treatment of variety of neurological conditions including epilepsy, unexplained coma, sleep disorders, and spinal cord injuries, bettering the lives of those affected. And whereas a chapter of ASCT, the neurodyiagnostic society, is a nonprofit organization committed to representing, educating, and promoting neurodyiagnostic professionals.

And whereas neurodyiagnostic week organized by ASCT, the neurodyiagnostic society points out the many ways in which neurodyiagnostic professionals work to ensure the health of all Americans through advocacy, education, and research. And whereas during this week, hospitals, schools, and other institutions acknowledge the year-round efforts of neurodyiagnostic technologists.

In addition, many Duro diagnostic departments organize creative and innovative activities in their communities to educate and excite people of all ages about the profession by holding open houses, sponsoring special activities for the public and hospital staff, and performing community events.

And whereas the city of Tempe is proud to recognize neurodyiagnostic professionals for their dedication, expertise, and vital contributions to improving the health and quality of life for individuals in our community and beyond. Now therefore, I, Corey Woods, mayor of the city of Tempe, Arizona, do hereby declare April 19th, 2025 through 2026 as Neurodyiagnostic Week in Tempe, Arizona. Thank you. That sounds good. Thank you. All right. Next up here, item 2B, week of the young child proclamation.

I'd like to invite Lisa from First Things First to come down and join me for this. Good evening. So, this proclamation reads, "Whereas all children deserve access to early care and education environments. And whereas quality child care programs build children's lifelong learning skills during the critical years from birth to age five. And whereas ECE teachers and child care providers are the essential workforce that carry forward this commitment, helping Arizona parents to get to work or school.

And whereas investing in promoting quality child care is a smart investment that improves family well-being, strengthens communities, and grows our state's prosperity.

And whereas organizations like First Things First, the Arizona Association for the Education of Young Children, the Southern Arizona Association for the Education of Young Children, among others, in conjunction with the National Association for the Education of Young Children are celebrating the 55th anniversary of the Week of the Young Child.

And whereas this week serves as an opportunity to celebrate early learning, young children, their teachers, families, and communities while recognizing the organizations working to improve equitable early childhood opportunities that provide a strong start for children across our state. And whereas the city of Tempe recognizes the value of policies that support ECE for Arizona's youngest learners to help our families, communities, and the economy thrive.

Now therefore, I, Corey Woods, mayor of the city of Tempe, Arizona, do hereby declare April 11th through the 17th, 2026 as the week of the young child in Tempe, Arizona. Okay, just a note here, uh, guidelines for conduct at city council meetings are on the table to the entrance. For those in attendance at tonight's meeting, we will now play a video with the proper protocol for ensuring the appropriate conduct at city council meetings. The city of Tempe welcomes public comment at this time.

Disruptive behavior will not be allowed. Continued disruptive behavior will lead to removal from the council chambers. We need to be able to hear everyone in the room. Behavior that disrupts, disturbs, or otherwise impedes the orderly conduct of any city council meeting is not helpful and is not permitted. This includes behavior both inside and outside of the council chambers.

Should individuals inside the council chambers become disruptive so that city business is not able to be conducted, the mayor will first ask that the individuals allow city business to be completed. There will be time for public comment during the call to the audience portion of the meeting. If no cooperation, the mayor will issue a verbal warning and let them know that the continued disruptive behavior will lead to removal from the council chambers.

If there is still no cooperation, the mayor will issue a second verbal warning and let them know that the continued disruptive behavior will lead to removal from the council chambers. If there is no cooperation after asking and two verbal warnings, then the mayor will ask security officers to remove only those individuals who are causing the disruption. Security personnel should not engage in any way, but only escort them from the council chambers.

If individuals refuse to leave, security personnel shall warn them that they are trespassing and that the next step will be arrest by a Tempe police officer. Tempe officers may have to arrest if individuals refuse to leave. Charges for trespass and disorderly conduct may apply as well as other charges. Should anyone be asked to be removed, the mayor will recess the meeting. All right.

So, before we move into the call to the audience portion of the meeting, I want to take a moment to address campaign related activity, especially as we are now in the 2026 election season. City council meetings are open to the public and are a vital forum for civic engagement. We welcome all individuals, including candidates, to speak on matters of public concern during the public comment portion of the meeting.

However, because this is an official city council meeting that is both televised and livereamed using city resources, we ask all candidates, including any current council members to refrain from electioneering or campaign related activity while participating in this meeting. That means no discussing your candidacy, asking for votes or signatures, or displaying campaign material such as signs, t-shirts, or literature while speaking.

So, thank you for helping us maintain the integrity and neutrality of our public meetings. That brings me to item number three. Call of the audience. The city council welcomes public comment at this time for the issue review session and committee of the whole items on this work study session agenda. There is a threeminut time limit per speaker. Uh let's see. First of all here I do have one card this evening and it's from Kelsey Files on item 4B. Please state your name and city of residence.

All right. Kelsey Files, resident of Tempee, Mayor Woods, Vice Mayor Garland, Council Members Adams, Amber, Chin, Hajj, and Keading. Thank you for your time this evening. While I know many of you personally, I felt it was best to be transparent and have my sentiments be on public record. I am here tonight regarding the proposal to increase the transit tax by onetenth of a cent by call of election resolution on April 30th, specifically without prior presentation to the transportation commission.

So the scope and duties of the transportation commission include advising and making recommendations to the city council and assisting city departments and the city manager on transportation plans, projects, and ordinances, including but not limited to specifically advising and recommending to the city council and assisting city departments and the city manager annually on the elements of prioritized unified operating and capital improvement plan budgets for transportation. That's a mouthful.

First, I must start off. I fully support the expansion of our city's transit tax, but the reason I'm here today is because at no point has our city's transportation commission been briefed or informed on this effort at this point in time. Now, again, as you know, the exact statute about the scope and the responsibilities of that commission, the council and and and city manager are not obligated to do so. Success of these initiatives often require citizen engagement and partnership.

The record of this is actually reflected in the origin of the transit tax itself. So the original transit tax was approved by Tempe voters by 52% of the vote in September 1996. Um my own dad was actually part of the citizen engagement effort that allowed that to pass. So behind it there was a strong group of citizen stakeholders who believed in the future of transit in Tempe. That same year Phoenix had their own ballot measure for transit. Theirs did not have a robust citizen engagement group.

It failed by about 12 votes. While I appreciate the urgency of this matter, we have 180 days prior to the election to get on the ballot, which requires that vote to occur on April 30th. Um, the main impetus of this loss of the rental tax revenue has been known for about 2 years. I believe there's ample opportunity to float at minimum a concept of this tax extension to relevant citizen boards and commissions.

To ensure the success of this, I implore that the council and city staff properly engage the transit commission in the next week prior to its appearance before the council on April 30th and potential um its its potential sending to the ballot in in November. Um I would like to work together with you to ensure a robust transit future for Tempe together. Thank you. Thank you, Mr. Files. Appreciate it. U quick question on madam city manager.

Can we have the transportation division or some rep actually have a conversation with the transportation commission within the next week before the Thursday meeting? Thank you mayor. I've already spoke with the chair Don Hawking and she is well aware that we're going to be attending a meeting. Okay. Wonderful. Thank you so much. Appreciate it. Right. That's all the cards I have this evening. Is there anyone else in the audience wishing to address the city council at this time?

If so, can you please get my attention? Okay, seeing none, I will close that portion of the meeting. I just want to note too, uh, next up was originally going to be item 4A, Tempe Water Resources, but due to the late start, we're actually going to punt on that item this evening to get to the other item that I know folks really want to talk about this evening. So, thank you uh, Tara and Craig. I guess you got an unexpected night off.

So, um, but we will definitely reschedule that for a future issue review session. dry agenda. I'm Wow. She said, "Now it's just a dry agenda." Um, okay. All right. Next up, item 4B, fiscal year 2026 27 budget review session. And I see Lette Kamacho, our deputy city manager and CFO, and Robert Bayer as well, municipal budget director. Good. Ah, good evening. It's 502. I can say that now. I was gonna gonna say good afternoon, but you made me second guess myself.

Good evening, mayor, members of the council. Lette Kamacho, deputy city manager. With me today is Robert Bear, our municipal budget director. We have a lot of information to cover today. So, first I'll provide an overview of the information that we'll presenting we'll be presenting today. There are four sections to our presentation. First, we'll go over an update on the capital improvement program since you last saw it in March.

We're also going to go over the proposed fiscal year 2027 operating budget. Then we'll move on to a discussion on proposed strategies for long-term financial stability and also we'll close with the proposed updates to our council adopted financial policies. We are seeking council direction and the proposed strategies for long-term financial stability, but no funding decisions are being made tonight.

Department directors are here to answer any specifics any specific questions you have about their operating and capital budgets. Before I turn over the presentation to Robert, I want to thank the departments and our budget team for all their efforts and putting together the budget before you today. I want to specifically thanks Scott Gruber, Kevin D. Dominico, Marian Lee, and Benia Benson. With that, I'll turn over the presentation to Robert. All right.

Good evening, Mayor Woods and members of the city council. Robert Bear, municipal budget director. Tonight's presentation on the budget supports the strategic priorities of strong community connections and financial stability and vitality, specifically performance measures 2.11, financial reporting award, and 5.05. 05 unassigned fund balance.

As we near the end of the fiscal year 2627 budget process, we have a placeholder for a budget review session on May 4th, followed by the formal adoption process for the budget and property tax levy. Tenative adoption is scheduled for May 14th. Final adoption is scheduled for June 4th and the property tax levy adoption is scheduled for June 25th. We will start with an update to um the recommended capital budget we presented last month on March 23rd.

The proposed um recommended capital budget is $6.5 million higher than what was proposed on March 23rd due to an adjustment to the reappropriation budget for the water utility building asset management project. So this was a project that was budgeted um this current fiscal year. Um it is not going to be completed by June 30th. So we are um reappropriating that budget to the fiscal year 26 27 budget.

Additionally, we have adjusted the funding split for the citywide regional radio system maintenance and replacement project to reflect which areas of the city currently have radios. Overall, the fiscal year 2627 CIP is an 18% decrease um from the current um adopted budget due to the completion of um significant projects like T-Moach and significant improvements to the water um wastewater system.

And as a reminder of some of the significant projects included in the current um proposed 5-year CIP, um you can see those listed here. Now moving on to the operating budget. The recommended fiscal year 2627 operating budget is 2% higher than the fiscal year 2526 adopted budget. The budget includes compensation provisions for employee groups um with memorandums of understanding as well as increases um associated with the class and compensation study.

On this slide, you will see changes in the budget for the city's operating funds. Compensation um does impact all of these funds. Um on the next slide, I'll go through a little bit more on general fund, water, wastewater, and ambulance. I do want to highlight the increase to transit um is driven by valley metro costs for providing light rail, street car, and bus service. And the decreases you see for solid waste and transportation are um associated with their vehicle replacement cycle.

Um there are less vehicles anticipated to be replaced in fiscal year 2627 than there are in the 2526 adopted budget. So in this slide you can see a summary of the supplemental requests and OP CIP operating impacts that are included in the recommended budget. In this budget cycle, we limited non costneutral supplemental requests in the general fund.

We do ha include the advanced hiring of six additional fire positions for the novice fire station that was previously included in the longrange forecast we presented back in February. Um the additional temp employees you see on here um were are associated with the tempe prekid zone and converting some of the contractual services they have for those programs to wage employees and is costneutral.

The increases in water wastewater are for the operation maintenance and startup costs associated with recently completed capital projects. And the additional positions in the ambulance fund will um help assure that we maintain coverage requirements and will be partially offset by decreases in overtime. Long-term revenue losses from legislative actions will require additional budget balancing measures.

In the past few budgets and this recommended budget, the city has limited supplemental funding, um limited cash funding of capital projects, reduced interfund transfers, and utilized reserves uh for PSBRS and OPEB um for a discussion of strategies for long-term financial stability. I will hand off the presentation to Lette. Mayor, members of the council, as you all know, recent state legislative actions have significantly reduced revenues available to cities like Tempee.

These changes are outside of local control, but have a direct impact on our ability to fund our core services. As a result, we are taking proactive steps to ensure financial stabil stability while continuing to serve our community and deliver the high level of service our residents expect. We are focusing on long-term sustainability over short-term fixes. Um, today we are seeking council consensus to move forward with the proposal which I'll go over in the next few slides.

However, I I the ultimate decision for the proposals that we're making today will reside with the voters and residents of Tempe. We do have a lot of information to cover in the next few slides and I I can respectfully ask that we wait and hold for questions until we finish the um this section of the presentation. The state legislative changes in the incorporation of Santen Valley have resulted in measurable revenue loss for Tempe.

As you can see on this slide, um when I go over the first um chart that you're seeing here, the repeal of residential rental resulted in a total of 21.7 million in revenue loss across three funds, primarily the general fund at 14.4 million, the transit fund, 6 million, and 1.3 million in revenue loss in the arts and culture fund. The proposed federal income tax conformity is also expected to res result in 2.4 4 million in revenue loss for the general fund.

In addition to that, the incorporation of Santen Valley lowers the city of Tempee's share of state shared revenues. Um the impacts are 1.3 million in revenue loss for the general fund and the highway use revenue fund will incur a 300,000 loss. The losses I've talked about on this slide are annual losses. Um the combined losses um from the external factors I talked about reinforces the need for proactive long-term financial planning.

Our goal with the proposals that we have here today is to act early and responsibly rather than respond later with more disruptive measures. Last February we presented the long range forecast and this is the same scenario you saw for the general fund. Um before I move on, I do want to orient you on the information on this chart. There's a lot of information here, but you've seen this before.

The chart to the left is the um the chart on projected revenues and expenditures for fiscal year 2026 through fiscal year 2030. The red line that you see is um the line for expenditures and the line the blue line you see is the line for revenues. to the chart is uh to the left is the chart of the um unassigned fund balance uh as it compares to the city's policy of 20 to 30% of operating revenues in the general fund.

Beginning in the middle of this this slide, you can see the revenues and expenditures actuals for fiscal year 25 and again projected for fiscal year 26 through fiscal year 2030. And then at the very bottom, the last two rows, you'll see the the city's unassigned fund balance, the dollar value, and also the percentage. The percentage is percent of revenue. Again, is to measure how we compare to our council adopted financial policy of between 20 to 30% of the revenues in the general fund.

Um, the revenue losses from state legislative changes have created a funding gap in the general fund as you can see in this chart. And without any action, we will face a structural deficit. While we do have strong reserves, and you can see here that for fiscal year 25, we're well above our fund balance policy at 38%. We're also above our fund balance policy for fiscal year 26 and 27 at 35% and 31%.

Um, the strong reserves that we have reflects Temp's long-standing commitment to sound financial planning and fiscal responsibility. However, reserves are meant to be a bridge. They're not meant for long-term solution. Um, they can help us sustain services in the short term, but they do not support future growth or new initiatives.

also wanted to go over some of the proactive step steps we've taken to preserve our reserves while also maintaining essential services for our residents and reducing cost. So, this is our second consecutive year with no new budget additions. Um, as Robert mentioned, we've added firefighters and we've only added to the budget any needs that are contractual obligations of the city. So the firefighters that we have funded is um required under our our agreement with ASU.

We have also implemented midyear budget reductions in the general fund, transit fund and the arts and culture fund in fiscal year 2025 at the last quarter. So from a April to June, we reduced budgets by 10%. Um and this resulted in total budget savings of 12.4 million across the three funds. general fund, transit fund, and the arts and culture fund. I also want to um recognize our procurement division of financial services.

They actually ex executed a flawless negotiation of the um security services contracts that we have. Um they were able to hold the line on pricing resulting in a 2.5 million savings um to that contract. They have also successfully negotiated uh 300,000 annual saving to various softwares around the city. As Robert mentioned, we're also focusing on completing projects already included in the current 5-year capital improvement plan.

And for fiscal year 2027, we're we also budgeted 8 million of salary savings in the general fund. Um for all budget for all requests to fill the vacancy the vacant positions they do come to me for review and it does require conversations for our department directors. It's not a hardline you know um denial we have a conversation about what is the impact to the services that we provide and then we have a conversation about whether or not we we post those positions.

So it's um it's a review for each position. But again, there is a conversation with our department directors when we go through those decision-making processes. Even with the actions that we've taken, as I mentioned, a funding gap remains that must be addressed in the general fund and the transit fund.

So to address the ongoing revenue losses from state legislative actions and ensure long-term financial stability, we are proposing targeted revenue strategies focused on public safety and enhanced transit services across Tempee. The first proposal is a new 4/10en of a percent or 0.4% 4% local sales tax dedicated to public safety and strengthening the overall security of our neighborhoods and public spaces.

This proposal reflects um the feedback from the 2025 community and business surveys where residents and businesses consistently identified police, fire, parks, neighborhoods, and the safety of homes and businesses as top priorities. This investment will also help sustain tempi as a community of choice where people want to work, live, and play.

Again, in our 2025 survey, 77% of residents who responded reported being very satisfied or satisfied with the overall quality of city services far exceeding the national average of 43%. Ultimately, this investment will help maintain and enhance the highquality services our residents and community and businesses rely on as the city grows while ensuring Tempee remains a safe community. This proposed tax is projected to generate approximately 40.3 million annually.

It would first offset the 18.1 million in lost general fund revenues from state leg legislative actions. The remaining funds would be used to enhance safety and quality of life through strategic investments in police and fire services, park rangers, and critical safety infrastructure including facilities, vehicles, equipment, and technology. Some some examples include maintaining safe and effective police and fire staffing levels to improve response capabilities as the city grows.

Um extending the park ranger coverage across all parks including nighttime coverage. So our park rangers are unarmed city staff who assist visitors, provide information and support community programs and outreach. The park ranger program is based on a simple idea that a visible and approachable presence helps people feel safer and more comfortable in our parks.

Um the funding will also be used for additional community responders to handle appropriate calls for ser calls for services to free up sworn officers for higher priority incidents. Additionally, fire inspectors are needed to to support high-rise and mid-rise inspection as as well as annual inspection of high hazard occupancies and more regular inspections of medium and low-risk buildings.

Lastly, I want to touch on crime prevention through environmental design, which is essentially creating safer public spaces throughout through thoughtful design. So this includes improving light lighting and visibility, maintaining and clean and well-kept green spaces, clearly defining public and private spaces, and encouraging positive activity in our parks and neighborhoods. So when spaces are visible, active, and well cared for, um they people feel safer, and this also helps deter crime.

Our second proposal is to increase the transit tax by onetenth of a percent so 0.1%. This increase would support Temp's continued commitment to multimodal transportation. Um, this tax in increase would generate about 10.1 million annually and it would help offset approximately 6 million in transit revenue loss from the repeal of residential rental. The proposed funding will be used to enhance transit services and mobility throughout Tempe.

And key investments include improving regional connectivity through the street car expansion to Tempi marketplace and to Mesa. Supporting the grant funding to create a safer, more seamless pedestrian and cyclist crossing over the east bank of Tempe Town Lake. expanding safe, convenient options for biking and walking citywide.

And the additional and additionally, funds will support multi-use paths that better connect neighborhoods to jobs and key destinations as well as as well as improvements to rider comfort, safety, and accessibility at transit stops. The two proposed strategies um replace loss revenue from state legislative actions are designed to reflect Temp's economic activity while minimizing impacts on our residents.

Sales tax is a key revenue source that captures spending from visitors and non-residents helping to distribute the financial burden beyond the local population. to our local residents. Importantly, we are not proposing to change the food tax rate or the tax on groceries. We recognize that this has a direct impact on our residents. So together, these strategies aim to stabilize revenues, protect essential services, and support investments in a safe, connected, and resilient Tempee.

Um, if both proposals are approved by the voters, Temp's total tax rate will increase from 1.8% to 2.3%. And I'm going to point you to the bar graph to the right. Tempee's current tax rate of 1.8%, you can see the bar um the gold bar. And then if voters approve the the total 0.5% tax increase, um the new tax rate will be 2.8% 8% which is reflected in the gray bar on the chart to the left. Also wanted to point out that other cities have also reacted to the lost revenues from legislative actions.

City of Phoenix um establish a new tax. They increased their tax rate by 0.5% beginning um July 1 of 2025. Gilbert also um had a tax increase of 0.5% that began January 1, 2025. There's were more to address um funding gaps for projects for parks and police and public safety. So, police and fire services. Also wanted to point out that other cities have um public safety s sales tax. So, the cities on this chart, Scottsdale has a public safety sales tax of 0.1%.

Mesa Mesa has a public safety sales tax of 0.25%. Phoenix has um Phoenix's public safety sales tax is 0.5%. Glendale's public safety sales tax is also 0.5%. And Prescott's public safety sales tax is 0.95% so almost 1%. Um again as I mentioned earlier um this this decision if um the council moves it forward for a call for election will be made by our v voters. Um, you know, this will ensure that community input is is um is on the path forward.

Again, we're not recommending any changes to the food tax. It will remain at 1.8%. This decision recognizes the direct impact on our residents and recognizes the current inflationary increases and um rising costs of living. So in summary, overall the proposal before you today addresses revenue losses from state legislative actions while prioritizing equity and affordability, ensuring that essential goods remain accessible while leveraging broader economic activity in Tempee.

These strategies aim to stabilize revenues, protect essential services, and support investments in a safe, connected, and resilient Tempee. Um if council has consensus to move forward with the proposals before you tonight, um the proposed measures would go uh with the call of election will be held on April 30th. Um and also we will do public outreach in from August to October. Early voting will begin October 7th and election day is on November 3rd.

um ordinance ordinance updates will be in November and December and the new tax rates would take effect January 1, 2027. So in closing um the proposal pro promotes transparency, supports meaningful public engagement and ensures that the decision ultimately rests with our voters. So that concludes this part of the um the section of the presentation.

I will pause for for questions and also and just as a reminder we are seeking council consensus of moving forward but we'll open it up for questions right now. Okay. Thank you Lette. Thank you Robert. Appreciate the presentation. I've got a couple of council members already in the queue. I'm going to go council member Hajj then council member Keading. Thank you. Thank you for the presentation. Um I have a a qu u I have several but I think that I'm only going to ask a couple right now.

My first question is we did a a tax like this a few years ago um past tense but it had a sunset on it. Um can you give the reason why we're not trying to do a sunset tax this time around and it's more permanent? Um that's my first question. So um the the tax um that we had increased a few years back and it's before I joined Tempe was really to address um an economic downturn. um I believe it was during the um 2008 recession.

So recessions are different than the revenue loss that we received from the loss of residential rental recessions with recess with recessions um for the 2008 recession that actually lasted about 18 months. So eventually the economy you know gets back to normal and as you can see now our economy has rebounded significantly. Um with that in mind um those tax rates as as you as I mentioned sales tax captures the economic activity of tempp.

So when the e economy rebounds your sales tax revenue also will rebound. The repeal of residential rental um the city was preempted from taxing those activities. There's not a way for us to gain those those revenues back. they're completely lost unless the state legislature puts another, you know, approves another legislative action to say that cities can continue to tax those categories. So, that's the main driver for that. Um, the 18 million I mentioned in the general fund.

There's really no way for the city to recapture that through economic growth. That category is no longer taxable. Thank you for that question, Pencer.

Um and my second part is I know we um we're looking at you know the taxes and and putting taking that to the um to the voters but um have we done all our resources on making sure that we have looked at all our programs all of our um you know everything that we have programs and or things in the city that we can like is I would say cut the fat not I'm not talking about like employees but I'm talking about maybe looking at how we can make sure that we are at, you know, at cost at everything we're looking at in our programs in the city.

So, you know, that can aside some of the tax on that. Mayor, members of the council, the general funds budget is about 341 million. And what I will say is that 54% of that is public safety. And your next highest category will be you know community services which is your parks and recreation and then you have community development which addresses permits planning and so on. And the next large would be your community health and human services.

So all the other um departments within the city, the total um the non-large departments, they only amount to about 36 million of the total 341 million budget. So in order to to look at all the services um yes we can certainly look at the services that we deliver and prioritize core services but I do feel that we're not quite there yet because as I mentioned for fiscal year 25 um fund balance is above you know the policy and so is fiscal year 26.

Really the intent with the proposal today is to act early um before we have to take those drastic measures like cutting services. Thank you. I will uh give the rest of my time to my colleagues because I have other questions but I want to just see they might I don't want to replic the same questions. Thank you councelor Bhaj uh council Biti. Thank you mayor. Uh thank you Lette. Um can we go back to slide 14 please? Thank you.

So, this is a confusing slide and I've seen it for years and years and it's still every time you see it, it's kind of like what exactly am I reading here? So, I just kind of want to go through some stuff for the benefit of of the public and maybe anyone um else that isn't quite understanding because I'm I'm not sure I am. Right. So, we're in fiscal year 2526. Correct. Correct. Okay. So, it's the council policy to maintain an unassigned fund balance of between 30 and 20% of annual revenues.

Is that between 20 to 30% of annual revenues? Correct. So, right now we're at 35%. We're estimating to land the end of the fiscal year at 35%. Correct. 35%. Okay. Um, so it's looking like we have to me, and tell me if I'm wrong, it that we have two years before we drop under 30%. And then we hit the 26%. Correct. Two years from today, year and a half. A year and a half from today. Okay. So, but that 26% would still be within our our policy of of 20 to 30%. Correct. Okay. Thank you.

Um, sorry, I'm not trying to put this all together here. So we could in theory then go to fiscal year 2930 and still I if if projections play out and still be within the council policy of of our fund balance without without taking any action. We would as the chart shows yes we would be within fund balance policy but that requires no new additions to the budget for the next five years. So that would be no no hiring anybody, no addition to the the CIP to correct.

And we'll continue to maintain the vacancy savings throughout this forecast. As I mentioned for the general fund, we already budget 8% I mean 8 million of vacancy savings. That's around 5 to 7% on an annual basis. So we're going to need to maintain frozen positions to be able to achieve those um vacancy savings. So we wouldn't be be at total um you know hiring. we we wouldn't have fully staffed departments and and also um for for 2030.

So after 2030 you you will be below the fund balance policy and we would be utilizing um most of our reserves. So thank you for that that explanation. Um does that include like council not council raises but staff raises too? Would there be a total freeze on on spending at the levels it is today? the um the forecast includes um the the agreements that we have the memoranda of understanding that we have with our labor groups those agreements are in play.

So those the agreements are include those increases. So for nonsworn employees so that would be 3 and a half to 4.4% on an annual basis depending on where they are in their classification and where they are in their steps for their um job. Thank you. Um I I see that you know it kind of our our unassigned fund balance drops rather rapidly after next fiscal year uh more so than it did the previous years it goes down by by five as opposed to four or three and then it kind of slows down again.

Is there any moving forward in the future is there any point where that kind of comes to zero where it's no longer dropping and we're maintaining whatever balance that we have if no action is taken? Um, mayor, members of the council, the deficit would not go down to zero. So that the what what's happening here is that the utilizing of the other reserves that you see that you heard Robert mention.

So what we're doing to balance the budget in future years is utilizing more of our public safety um reserves. So that's to fund pensions for our police and fire and also for our other post-employment benefit reserves. And we would um be utilizing so all of those reserves above and beyond what we have in the unassigned fund balance and and so those would be draw down to zero. So then we would be most likely be outside the unassigned fund balance policy. Okay. Thank you.

Um you talked about a public safety tax and other cities have such a tax that's dedicated to public safety. Ours is not like that. So then public safety is kind of at the whim of economic conditions. Is am I understanding that correctly? Um they they are currently funded by the general fund. So they are our sales tax is our largest revenue source for the re the the general fund.

So yes any um reductions in sales tax revenues or or if you miss our forecast that creates those deficits that you see here. So they would be part of those discussions if we are going to be recommending any reductions. Would it make sense to move to a dedicated public safety tax so that this kind of stuff doesn't come up in the future?

With regards to public safety, I understand that we may have to cut services, but if we're talking about not hiring police officers and firefighters, that that's where it becomes a larger issue. Yes, it helps stabilizes the funding for public safety. That's correct. Right. But are we is there any thought of looking at like a dedicated public safety tax as opposed to just having it come out of the general fund, which is to your to your point funded by largely by sales tax.

So that is the proposal we're moving forward, the 0.4% 4% um would be dedicated. It is for public safety primarily but we are adding in park rangers to to for the overall improvement of safety in the city. So that is the recommendation the 0.4 and to just to give you an idea public safety um budget right now when I say it's 54% that amounts to about 184 million annually. Okay. Thank you. Um, someone someone said to me that this is double the the proposed tax would be double our shortfall.

I'm not seeing that. Can you explain that perception and if that's true or if that's not true? So, the deficit is 18.1 million in the general fund that could be coming from that. But the the proposal for the 0.4% is really to help offset the public safety cost that you and I just discussed. If we just talk about public safety, as I mentioned, their total budget is $184 million. It's, you know, 40 million doesn't cover that.

Um, but again, the the loss of revenues in the the general fund from the repeal of residential rental federal the proposed federal income tax conformity and the Santan Valley Incorporation, it's in the slide here, is about 18.1 million. Okay. Thank you. I, you know, and I'm not I'm not skeptical. Well, I mean, maybe a little bit, but I'm not trying to be like overtly.

I'm just trying to to me, you know, find a way to address the the shortfall that that's now built in that we're going to have to deal with somehow, but in a way that's not essentially shifting the burden to to residents. And I'm not sure how to do that. So, I'm not like up here saying what you've said is bad or anything like that. I I'm I'm working through it as I'm talking. Um, I guess I I do have a concern with is it not true that 60% of the voters would have to approve this?

Uh, mayor, members of the council, that is not correct. It's just the majority of the voters and um I can confirm that with our city attorney. Just majority uh mayor uh council member King, yes, it's a majority vote. So, there is a certain state um things that require 60% but that's not applicable to the city. Okay.

I asked I remember during preK discussions you we wanted a dedicated onetenth of 1 cent to fund universal prek and it that was considered outrageous and and that the voters would never approve it because we needed a 60% threshold. But I could be misremembering. So I'm glad that um that's not the case because that would that was a really big concern of mine. And I guess another thing I I would quickly just ask is is there any way to to recoup the funds in other ways, right?

Like I and I don't know like maybe maybe it's an increase in the bed tax so it's not the residents paying for it, it's visitors. Maybe it's a one-time property tax levy or something like that or maybe over a couple of years that then sunsets once things have been more sorted out. I I'm just trying to think of a way that it's not just the everyday public as I just tried to buy a $5 candy bar and it it the cost of a living has gone up so precipitously in the last 10 years.

I'm just trying to figure out a way to to to to square that circle. Um yes. Have we looked at any of that kind of stuff? Uh mayor member city council, no. The bed tax would not work because the bed tax is a dedicated funding for um tourism. So that's embedded in state law. So would not be be able to use for public safety. And then the other piece that you mentioned, I'm sorry, I forgot like a secondary property tax. Secondary property tax.

Um secondary property taxes can only be used to repay um general obligation debt and then also for the primary property tax which we can use for general fund. That is limited to a 2% increase every year and the city takes advantage of that 2% increase every year. So we're already doing that as a part of our budget process. And and if you don't mind, I I as we're you you're asking your questions, I forgot to go over the um the consumer impact of this tax increase.

And I if I can just forward to the slide here. Um you see a chart here to the left. Um the consumer impact of the um if voters approved the 0.5% increase um you know, our tax rate would go from 1.8% to 2.3%. And that would mean that for every $100 that is spent here in Tempee, um it it would require an additional 50 cents in taxes. So a 1.8 tax for to $100 is $1.80. And then a 2.3% tax on $100 is $2.30. The difference is 50. So for every $100, um there would be new taxes of 50. Right. Right.

Yeah. Yeah. I get it. I'm thinking about perception and things like that as we move forward and you know there's been considerable amount of push back already. So I'm just trying to think of are there any other ways to possibly recoup some of this money. So uh you've answered my questions and I appreciate it. Thank you. Thank you. Thank you Council Keing. Uh Council Chin. Thank you mayor. Council member Keading. I appreciated your questions. Thank you.

Embedded in those were some things that I had questions about. Um, and your question about have we talked about a dedicated public safety task? I don't know that it would come directly from staff, but maybe you introduced an idea that we need to think about because that's concerning with um this whole topic right now. Um, so I just want to level set to see if I understand this correctly. this as you do and thank you for the team for doing the long-term analysis.

This is never a um it's always a very squishy and difficult very challenging to crystal ball and look at big numbers for things out of our control. And council member Keading, your question helped uh answer something for me. On previous taxes that were sunset, it was because uh things were predicted to change. Whereas this one cannot be changed because we didn't do it. It was state and federal action, the rental tax, the uh federal tax alignment and the um state shared funding.

So not of our control, which is why you and your team have had to look at options. So I have questions related to options. So this exercise was largely born out of the need to cover a deficit that we didn't create but was created for us of approximately 25 to 26 million total. Right. Correct. Roughly. Okay. Um so the proposed and thanks this slide is what I was looking at earlier.

So the proposal is that for every $100 spent by visitors, non-residents, some residents, but we get people coming into Tempee spending quite a bit. So it would be 50 cents for every $100 spent. Okay. Um, and if I may, the decision you're asking for tonight from us is not, it's more of a consensus of asking the residents to provide their input on whether or not this is a proposal they want to move forward. Right. Correct. Okay. So on their behalf, I'm going to ask you this.

If not this this um point 5% 4%, what other strategies would we consider to cover the deficit? We would have to be discussing the reductions and that would happen in a couple of years as council member Kading pointed out. um the reductions would not would not be um you know would not be isolated into one department. As I mentioned earlier, the largest general fund operating cost is our police and fire. Um the next largest would be parks within community services.

Then you have community health and human services. Um we have community development. um financial services also have a larger pro um budget but again the other departments within the city their annual budget is less than 7 million a year in some cases they're less than a million a year. So in order to to look at reductions across the board in order to balance the budget and essentially um you know reduce the deficits you're seeing on this slide in the middle of the page.

So for fiscal year 26, it's almost 15 million in deficit. We would need to um you know come up with reductions that looks at overall citywide it would be staffing and also services um amounting to um to to make those um deficits to be equal to zero. Thank you Lette. I think what I'm hearing in a in my own simple way, we would need to look at cutting services for residents and that's where we would have some impact there. Okay. Yes.

Um and one of the first areas would be public safety, which is what in our surveys of our community and business surveys has been listed as one of the priorities for our businesses and residents. Yes, they've ranked um the top priorities over the last five years. Yep. I and I agree, Council Member Keading, this is a tough topic for us. Um and as you mentioned, there's perception, but we're at reality here. Uh we're trying to make the numbers work.

And in order to make the numbers work, this increase looks like a reality. So darn. Thank you, Council Member. Do you mind if Council Kitty responds really quickly? Council Kitty. I agree. Council member Chen and I, you know, Jennifer told me that her her parents said I sound like a lawyer when I'm up here. So I wasn't trying to cross-examine anybody. I'm sure you've done all your homework.

These are just questions that I've had as not someone who's a financial professional looking at it thinking maybe they were somewhere else. Right. So I I totally agree and you're great on message as far as state action causing this deficit. Um it's, you know, you've done a good job of um making that very clear. So, Council Chin, if I may, not a response, but more an observation. We have people watching. We have people that ask questions.

I'm always uh educated by my colleague, Council Member Amber, on why it's important to speak up to our state legislators also on these topics. We didn't do this. We didn't create the hole. It was created for us. We're trying to figure out a solution and we're left with a very difficult task. And this is where we need our residents to weigh in also and speak to our state legislators. Can I can I speak to one level of frustration about the residential rental tax repeal in general?

My biggest frustration with that is that of course as a person who is a renter and has been for the last six years just for members of the public. The the fact of the matter is I am all about the notion of giving people rent relief, especially folks like myself who are renting for the purpose of trying to save money to eventually buy another home.

But the frustration about the way that that was actually crafted, that piece of legislation, is there was nothing in it that actually then made sure that the savings were going to be passed along to the people who were actually renting. And so all it does is end up creating a windfall for the people who own the apartment complexes or renting to people who are just frankly trying to keep a roof over their heads or trying to get ahead.

So that's my biggest frustration about the fact that we're sitting here right now regarding this rental tax thing is the people that I feel that that initially was that it was supposed to help. If the legislation had been written better, I might have felt better about providing that relief. But at the end of the day, I don't think anyone has been passed along any kind of reduction due to the fact that this actually was repealed. So mayor, in fewer words, so your rent didn't go down. It did not.

Okay. Thank you, Council Bl. Well, just before I start going into this, um I will say that during the debates at the legislature whenever they were talking about the residential rental that was brought up that there was absolutely no enforcement in that bill to require these uh folks to actually lower rent.

So basically what they did was they took $20 million out of Tempy's budget out of money that was going to stay in our community and shipped it to California and Minnesota because that's where most of those firms uh where most of those firms are from. So having said that um I spent a lot of time at the legislature.

Uh, I did a lot of budget negotiations while I was there as a staff member and we did have to go through years where I mean with the recessions where we had to figure out how we were going to come up with the difference between this is how much money you got and this is how much money you're supposed to be spending. And there's two ways to do it. There is to create a new revenue source to fill that gap.

And the other way is to go in and maybe start tightening your budgets and um looking at programmatic cuts. Uh, and what we tried to do at the time and what I'm still in favor of is not necessarily, and I've talked about this in other council member uh, council meetings, is I'm not a big fan of just going in and saying, "Hey, everybody stop hiring. Hey, everybody's going to take a 2% cut. Everybody's going to do this." You referred to as earlier our core services.

And I think that definition means something different to every person that you talk to. Everybody's in favor of public safety. Everyone wants clean water whenever they turn the tap on. People want to get their trash picked up. But once you get beyond what those kind of charter services are is when I think we really need to start doing some soularching as to what it is that we need to be providing the city whenever we have this kind of kind of shortfall. Um I will talk about the sales tax.

Uh, Council Member Kitty and I actually think that in my personal opinion, this is the correct, if you're going to do this, a sales tax is the right way to do it. I'm hoping that I'm getting this right. We have 200,000 people that live in the city of Tempee. We have another 200,000 that come in every day to work. We have to staff from a public safety standpoint 400,000 people a day. It's not the 200,000 that are paying the property taxes.

It's the four the other 200,000 that are coming in as well. So, yes, I think that once they come in here and they go and they have lunch and they go to Tippy Marketplace and they buy something for their mom for Mother's Day while they're here, um, they should have to pay for part of the public safety personnel that we're having to put on our books for that. So, I absolutely think that the sales tax is the right way to go. I'm just not convinced that 4% is is where we need to be.

I'm thinking there's got to be some type of middle ground. I do have a question about the transportation one. I don't know if it's for you or if it's for maybe Eric. Um most of that money is going to go towards a couple of projects. The street car and the city's portion of a lot of people know this. We got a $25 million grant from the federal government to build a pedestrian bridge over the east side of the lake.

So this would be a way of generating uh tax revenue to build, you know, for the city's portion of that. Those are one time, which is usually what we go for bonds for, right? Whenever we want to pave the streets, when we want to build a building or something like that, it's not sales tax. It's going to be, you know, bringing in money in perpetuity for us once those actual projects are being done and they're built. Why would we still need to have that tax?

Mayor, members of the council, for the street car, for example, there's going to be an operating maintenance cost that will come with the extension of the street car to Mesa. Um, and and I believe the prel preliminary estimates from the transport transportation and sustainability department at the time when we were reviewing this through the budget process was around 10 million. Okay. Right.

So why would we need to if So we're going to take the money now that we're collecting now to build it and once it's built then we're going to use the money that it's collecting to maintain those projects because it it I it's just not computing in my head right now that the amount of money that's going to come in to build the project is a lot more than what we're going to need to maintain it.

The 10 million annual um maintenance is going to be the staffing for for the street car and also any other security and also replacement of you know maintenance and replacement of the capital assets and okay thank you. Just one quick note. Um Eric Iverson, transportation sustainability director. Uh mayor, council member Amber. Uh, one thing to mention, the operational costs are indeed high. I think it was mentioned for for public transit.

It was also mentioned um, I can't remember if it was Robert or uh, Lette about increasing costs for operating service. We all know this like from all the services we provide, but Valley Metro who is our partner for operating transit service in the valley um, and for Tempe as well. those costs keep going up. Um and so the um proposal, the 0.1 proposal for transit would include maintaining and being being able to keep up with all of our transit service as well as street car for operations.

That was the question I was having. Is it going to not just maintain the street car and the pedestrian bridge over Tempeetown Lake, it's going to help with orbit and our other existing transit services. It would it would help us maintain those services. Okay. Thank you. Thank you. Okay, next up, Council Member Adams, then Vice Mayor Garland. U I'll be quick. I just I'm always concerned about raising taxes. I It's something that I I really don't like doing at all.

And uh so it's, you know, struggling. I'm struggling with this. You know, the state really hurt us when they took away our rental tax. And renters should pay taxes because they use our roads, they use our sewers, they use our our stop lightss, they use our our sewage. um and they enjoy our parks, they call 911, they should be paying taxes just like the rest of us do.

And uh and if they didn't use any of our services that we provide, um it's really um disheartening that that they don't pay taxes and that the state did this to us. Um but at the same time, I really want us to look at is there anything else we can do to cut any fat at all um so we don't have to raise taxes. Thank you. Thank you. Uh, Vice President Garland. Thank you.

I think a number of my questions have already been asked, so that was really helpful to have someone else ask them and then I can kind of noodle on the answers. So, I really appreciate that. You know, one of the things that I um we I had been looking at and then you had mentioned it here also is that as soon as the that um rental tax was taken away, as soon as that vote happened, I remember there was a huge discussion um um with among staff about what are we going to do?

And instead of waiting for the January 1st date when it happened, we started making adjustments in advance. So when people have asked us you know why don't you guys cut services why don't you cut people why don't you cut programs um we had already started doing that as soon as this thing was taken away from us so I think it's it's hard for people I don't know how many people under knew that but you had said it here it was 12.4 $4 million in savings.

We did a 10% reduction before those things even started happening um and before they really hit our budget. So, I just want to say that we have been taking those um those positions. So, I just want to make sure that we're we're clear that we have then done that and I don't think it's it's bad for us to continue to look at those things.

Um, one of the things, um, you know, the freezing of the positions that we had, um, you know, our population is continuing to increase and it's going to continue to increase every year as we go on. And we have to be thinking about what we're going to be doing to cover those services. Um, and I'm specifically specifically thinking about our um, our public safety um, services and our human services that we have.

We want to be able to continue to care for our residents in emergencies and we want to care continue to care for those people um who are the most vulnerable in our community and in order to do that we need to have those fundings for our um our public safety and for our human services department. So that is just something that's not going to change.

Um and again the population is increasing and so cutting services and cutting programs is not going to help us if we continue to get a larger population as we go. Um I do appreciate um uh Mr. driver coming up and talking about the transportation because um originally reading this I did not grasp um all of what this is going to be doing for our community moving forward.

So I would just suggest um in these open forms that you're going to be having and discussing with the public that we make sure that we that they understand that also because if you have council members that don't quite get it, it would be helpful to be able to have that. Um, the other one is, um, I just want to reiterate, I I'd looked at this and I'd written it down a couple times here on my little notes. Um, that it is 50 cents.

If we do this full number, it's 50 cents on $100 for the people that come into our community or people that are um, for that tax itself. Um I don't have an issue about the 4% but if that's something that the public is if we talk about lowering that I don't know how that would work and what that number would be but um I'm comfortable with where we're at right now.

Um the last thing I want to say is um I I know we keep saying it and said it many times cutting positions is cut services and that that harms our community and I don't want to be don't want to do that.

Um, I do want to say that I I was really surprised that we hadn't taken the transportation information to the transportation committee um um for the commission because I do think that one of the things that I've been talking about since I literally got on council was about our boards and commissions and how we really need to be using those residents that are on there um to be able to help guide us a little bit better. So, um I just think that we need to do a little bit better job at that.

And I'm not pointing fingers at anybody. I could be doing that same thing. So, thank you so much for the presentation. And I know it's not easy and I know you're taking a lot of darts and arrows from us up here, but it's important that we understand what we're doing moving forward because we want to be able to give this to our residents and have them understand it as well as we're trying to understand it now. So, thank you. Thank you, Vice Mayor. Uh, council. Uh, thank you. Thank you, mayor.

I guess this kind of a followup then from what I said earlier and council members Chin's suggestion of maybe looking at a broader policy of a public safety tax and since we have four years of fund balance to maintain just our goal just our savings goal it's not like then you know we're the city's broke but just our savings goal we probably have another 10 15 years before the city savings would be gone if if those numbers stay the way they they they have been could we not then punt this for a couple years and kick around the idea of doing a dedicated public safety tax.

I think that might be easier to sell to the voters as far as we're we talking about the state legislator state legislator's actions that that cause these structural deficits that we have to deal with every year is more uh nuanced and convoluted in a tougher cell I would believe than say hey we want to make sure as a city keeps growing we have the best police officers and the best firefighters so please approve this and we can separate public safety from from the general fund um dedicated funding source alto together and like I said we could do that in the next couple years and still maintain our our policy direction.

And even if we went under our policy direction five, six years from now in order to get that done that way, I think that would be something that I would be fine with. I don't know. I guess that's more of a question for my colleagues if there's any appetite to to do something like that. Do you could I Yeah. No, please.

Go for Mayor, members of the council, I failed to explain this properly most likely, but this is going to be segregated from the general fund because the that this tax itself will only be used for public safety and other safety initiatives for the city. But, you know, we included park rangers. The revenues will not be comingled with the general fund.

We will create a separate fund for this because the ballot language is what what's going to guide the use of these funds and it doesn't include I'll make it up human resources, financial services and so on. So the the ballot language that you'll see I don't have it in front of me um that you'll see at the call of election specifies funding for police, fire, um you know other programs that would enhance safety in our neighborhoods, parks and public spaces.

So it can be used for their operating and also capital. So that would include vehicle and equipment and so on. So thank you for that explanation. So in the in the code then in 10b law not a lawyer. Um so it then we could not touch it for anything else. Correct. Even if we wanted to if we got a seven people up here that said I want to build something different. That's correct because it's it's not the city code. It's the ballot language that will guide this.

And we will also update our city code to reflect what the voters voted on. Would there be a way to divorce public safety from the the general fund altogether and have be funded through a dedicated tax? It would require a greater uh you know percentage increase because this would generate 40 million but we would be lowering I'm saying we would be taking we we're not I'm saying we're mixing around the sea shells of money here.

or not, our our tax obligation would be less because public safety would be out. But then we would raise that money through a different method to make sure that public safety always stays whole without having it be affected by things that is done at the state legislature is what I'm trying to say. I don't I don't maybe I'm not communicating right. I don't know.

It seems so in order to do that um again because the the existing tax that we have is a general fund tax and then you know the voters also increased approved the increase of the general fund tax and that that 1.2 is what we have right now for the general fund that can be used for any purpose. It's it's already established, right?

So that includes public safety and other general operating funds to fully, you know, like you said, divorce public safety from that, you wouldn't just be able to transfer that tax to public safety because it has its own purpose per the ballot language of the voters and when they approved it. So that's why they they are all segregated depending on the uses when we take it forward for voter approval. Thanks. I I just don't think I'm explaining myself well. That's on me.

So, I will send that an email. Thank you. Council member, do you have a followup to that? Yeah. I mean, I guess would we be able to pose a ballot question? I guess this is more for our city attorney saying, "Hey, if the 1.2% sales tax that we have right now, five of that is going to be dedicated to public safety." I think that is what council member Keading is trying to go after, right? Yeah.

But I'm assuming we would have to go back to the ballot and ask voters if they were okay with that because they've already voted on just the general purposes. Well, and that what kind of was my point is I think if we did it later under a different structure, it might be an easier sell to the voters like that. It's saying I'm saying we have longer of a runway than a week to decide whether we're going to do this. We have years before it really becomes a severely pressing issue.

Mayor, members of the council, um, Robert just reminded me that our sales tax rate of the 1.2% is actually lower than the public safety expenses. We we have state shared revenues and other revenue sources to supplement all of that. I I was going to and I'll go back to Council Member Adams in a second. I was going to actually say something to Council Member Keading's point, but a little bit different.

The way I'm reading this from the way it's been presented is that if we're able if the voters actually pass what's being proposed this evening and they stabilize the sort of public safety portion of the budget which you said is roughly about 54% of the entire budget.

That would also allow us to ensure that we can take care of the other critical functions of the city from those employees who are performing those functions because now we basically know we've got a revenue stream to address police, fire, park rangers, things of that nature.

But that means now the other things we talked about community services, community health and human services and all of those things, there's more freed up money to now take care of those services because we've basically taken care of the public safety side of the ledger. It creates some flexibility in the general fund. That's correct. Okay. Um, one thing, one quick question I had here too, um, and then I've got a couple other statements and I do want to go back to Council Member Adams.

So, um, and I I know we've we had a couple of conversations here. I know council member Hajj mentioned some things earlier regarding, uh, the, um, the earlier sunset and things of that nature and not talking about that here because I do understand the issue with that back then. It was a situation cuz I was on council at that time.

I know council member Adams, you were an employee here at that time, but I remember the the biggest issue at that point was the thought was this was a great recession and that the staff at the time who were kind of running the finance department, the perspective was once the economy kind of levels out in three or four years, the revenues will return back to pre-recession levels. And so that's why there was the sunset at that point in time.

But in this situation, I know as you talked about, the issue is this is a permanent loss of revenue. I remember when this whole thing first happened, there were some conversations down at the state legislature about is there some way for these folks to tweak the state shared revenue formula to try to make up and backfill some of the revenue that that we lost from losing residential rental tax and those conversations have just completely stopped.

I haven't even heard any conversation about that during this legislative session. So, I definitely think we cannot rely on that when it comes to our funding streams. Um, but one thing that w that was brought up just as one idea and I want to see kind of what your take on this is that did happen in 2010 was I know we at one point had a buyout plan for employees. It was not a layoff situation but it was one for certain employees if they were further along in their careers.

Uh we offered sort of a very a very nice package to folks whatever if they decided hey I'd like to forego my last year and a half and and take that. I'm just curious, is that something that we might consider now as sort of a separate item? Is that too expensive to do? Did that frankly work the way that it was intended, you know, 15 years ago or so? And I know you weren't here. So, but I'm just curious. That's just one thought.

Mayor, members of the council, um, you know, there is a financial impact to that. I believe when we did that back in 2009 2010 um there were some incentives for employees to retire early but you know for that retirement early there was more payouts for sick sick um sick leave also additional um increases for their time here in the city. So I think what I saw was if you've been here 20 years in the city you get an extra.5% um above your salary. So, so that those were some of the proposal.

Those are not costneutral. We would c certainly have to look and um you know do a financial analysis and what that impact would be. Um but from what I've heard in talking to staff is that it wasn't the most um successful way of balancing the budget. Um but we would have to if if that's something that council wants us to look into, we can certainly look into that. But we would have to create some parameters and what that would mean for um the you know retirement incentive program.

No, and I appreciate you saying that about saying there is no kind of one thing that would solve this entire problem. A buyout plan is definitely not a means to solve the issue that we're talking about. But would council be okay with let at least kind of looking into it and bringing something back to us at some point? Yeah. Okay. Sounds good. Okay.

I just wanted to ask about that but obviously not expecting any kind of final final answer this evening but I but I will I will make a uh quick statement about the notion of kind of reducing services which obviously is very important and I remember this because there was a period of time probably 10 or 12 years ago where the public works department at the time made a decision that they were going to reduce bulk trash pickup.

I remember this like it was yesterday even though I was probably 12 years younger than I am now. And the assessment at that point in time was only about 25% of the people in the city of Tempe are actually utilizing this program. So if there's something that we could actually scale back from a services perspective, let's do that. So we went to reduce that program from once a month to twice a year and sort of by appointment. And I can tell you for myself who was here at the time, it was messy.

I mean, I remember residents calling and saying, "I'm looking at this toilet that's now sitting in my alley because my neighbors been remodeling their home and it's now sitting out there for days, if not weeks." Uh, there were situations where people would take a sofa outside because a group of, you know, people would leave a house and they would leave it in the alley and we didn't have that same consistent schedule.

And so therefore, I remember residents at that point being furious about the reduction in services just about that program that we figured only about a quarter of residents are actually utilizing. But it had a real impact on people's lives because they were frankly seeing things like, you know, discarded furniture and things of that nature that really bugged them because they felt like the sort of cleanliness and the order of the city that they were used to wasn't being properly maintained.

And once again, that wasn't a city staff issue. It was just simply an issue of we tried to do one sort of service reduction and we were met with a tremendous amount of blowback. I say that only as an example because I know our residents one of the reasons why they live here in the city of Tempee is because of the exceptionally high quality of the services and of course that means therefore by the employees that are performing those services.

Uh, and I know that what you said when you looked at kind of where to levy this tax, you looked first at the community satisfaction surveys that we do each and every year and looked at the things that people frankly rate highest and of most importance. And that's how you made the decision to say, I think we should go in this direction and go to the public safety tax.

So I appreciate the fact that you use the data not just that we had internally but frankly data that's provided by our residents as to not what's important to the council but frankly what's important to them and and and so you know from my perspective I understand exactly why we're doing this. We can have conversations about the rate.

I will tell you the 0.1% on transportation I think makes complete and total sense given the fact that that rate has been in existence for about 30 years without an increase and our transit system continues to expand.

When I think about trying to find ways to reduce congestion and also combat the effects of climate change, the street car and and the pedestrian bridge are all very much critical tools and for some of those things like the pedestrian bridge, we have to provide a certain financial match in order to get that. So I see that as absolutely money well spent. Um if we want to talk about the other portion like I I can I understand why the point4 is being suggested.

If there's some conversation the council members want to have about that I'm totally happy to entertain that. But but I will say I definitely want to my my my caution is is the notion of severely reducing services at some point in time. You know, because I really do think I remember as a just that one change to bulk trash pickup, which none of us thought at the time who were on council, was going to be a firestorm. It absolutely was.

And I can imagine if that caused big issues, if we started having drastic reductions in police and fire and community health and human services and community services, there would be an absolute uproar. Uh, as a matter of fact, I should note, especially when it comes to public safety, we noted a few weeks ago that we've had approximately a 21% reduction in violent crime over the last 6 to9 months in the city of Tempee, which was the highest reduction of any city in the entire East Valley.

And if all of a sudden we have fewer police officers, fewer park rangers, fewer firefighters, that number is going to probably start ticking up again. And I think our residents are going to be none too happy about it. So I I think it is really critically important. I think it is important to look for, as council members have talked about, to look at um efficiencies and things that we can do internally to see if there's ways where we could uh make a little bit of a dent there.

I would love to see if we could kind of take a look at a buyout program if if that we think after your financial analysis if that might be effective in being a piece of a solution, but not the full solution. But I definitely understand why this is being proposed. The reality is this is a city of choice. People live here because of the high quality of the services.

And if we don't have that high quality of services, I think a lot of people are going to make a mass exodus from here, which I know none of us up here support. Uh, Council Browns. Thank you, Mr. Mayor. Um, a couple things. Uh, well, you brought up that horrible situation with the trash, the bulk trash pickup. That was actually uh the public works director director's uh decision at the time, and he did not include any of the community in the decision.

They just laid it out twice a year we're going to be doing bulk trash and the community of course had a you know a really harsh reaction and and they should have because there was no communication that is why when we have to talk to our neighbors hoods and and get their input about how often they do do it. I think bulk trash is picked up a lot more than 25% personally what I see in neighborhoods and I've been to a lot of neighborhoods and people are leaving it out almost every house.

So that is I think the every other month is working out really well and uh I would continue to support that. I don't want to change that but um but the neighborhood inclusion is so that's that's what went wrong with that project because I was telling or I was in public works at the time so I remember it and I I advised against it but what did I know?

So, um, also, um, I'm really glad to hear that you are including park rangers in public safety because fire and police and park rangers are public safety and that is so important. Our people in our parks are feeling much safer. They love the rangers. They love seeing the rangers. The second they see the ranger, they feel safer. So, it just is really um I'm just really happy about that. Um, so thank you for that.

Uh, also, uh, have we looked at AI, using a more AI, um, to try to, um, make it a little bit more mayor, members of the council? We are using a lot of the AI tools right now as long as they've been approved through our IT department. So, there is an initiative to um, to expand on that use. We do have, we were one of the first cities to have the AIC a AIC AI policy guidelines, the responsible use of AI.

So it is something that is um we continue to leverage and um as you know we're going to be implementing a replacement for peopleoft new softwares out there too having AI embedded in their their programs. So again but we have to work with it to make sure that the city's data and infrastructure remain safe. I was thinking that might be a way to reduce costs also. So thank you very much for the presentation. Excellent. And you did a great job filling in these questions tonight. Proud of you.

Good team. Thank you, Council Adams. Um, well, okay, I'm down a couple of members here, so I I I probably need to wait until they return so we can Does anyone else have anything they'd like to add though right now on council other than what's already been said? Okay. All right. I will Okay, one. Let me do this then just to make sure. Um cuz I think you know all seven of us definitely need to be here for this.

Uh let's just take a quick 5m minute recess and then we'll come back and we will kind of give direction to staff about what is there? Oh, she is. Yeah. Okay. Yeah. Yeah. Something about trash. No, I was not. No, there's no more comments about bulk trash. I promise. Um, I bet you can watch the video. All right. So, let's let's do this here. Let's take let's just uh it's it's 6:16. Let me see if uh let's see what happens here. What is going on here? All right.

Let's let's take a quick 5m minute recess. We'll come right back at 6:22 p.m. and we'll give direction to staff. So, we're journ for 5 minutes. We're going to go ahead and reconvene this meeting at 6:22 p.m. Um, I think I can summarize what's been said so far, but council, any last comments and I'm going to try to see if I can summarize this. If not, okay. So, excellent conversation. Really appreciate once again the presentation, Lette and Robert. Very, very thorough.

Um, what I'm wondering about here, I mean, obviously we are not this evening taking a formal vote on this measure. We're simply getting a presentation and seeing if we're okay with at least forwarding this to the April 30th meeting, which would be next Thursday, where the council actually would ratify things. So, I just want to once again confirm to people who are either in the audience or watching this evening.

Nothing is final as of this evening, but my suggestion would be that we move forward here with the existing proposal it and and put it on the agenda for next Thursday.

Obviously council members have time between now and next Thursday to ask additional questions of staff if they would like and also even to make changes from the dis if there are things that people at that point in time say I've still got a burning issue with this I have additional questions or I'd like to make an adjustment or a tweak but I think for now given at least what I've heard you know I think it it would probably be useful for us just to say staff please go forward and and prepare this for the uh April 30th RCM.

Does anyone have any issues with that? No. Okay. All right. Sounds good. So, it sounds like you've got consensus to go forward and prepare the uh uh prepare the item, whatever, uh for April 30th. And if there's any questions, once again, council members can ask offline or we can obviously talk about this again next Thursday when we actually have the formal vote. Okay. Thank you, Mayor. We do have one more slide. Oh, you do? One last one. Yes. But wait, there's more. Wow.

You you you sat on that this whole time. But wait, there's more. It'll be quick. Yes. Mayor, go for it. Take your time. So, um, we do have one item that's going to be on the agenda for June 25th, and that is going to be a consolidation of the city's financial policies into one document. Uh, this follows best practices. Um, so right now we have financial policies that are in multiple different resolutions.

So, we're looking to consolidate those all into one easily referenceable document that's adopted by city council. Uh this document will formalize and codify our budget transfer rules that are in city charter and what we use for practice. Additionally, the um two big changes that will be in these financial policies is we will be establishing a fund balance policy for our ambulance or emergency medical transport fund. Currently that fund does not have a minimum reserve policy.

Um and the second one would be a modification to the water wastewater um fund balance policy. So that fund currently has a 25% minimum reserve plus 1% 2% of capital assets. We would be changing that to 90 days of operating expenses which is um close to that 25% plus establishing a rate stabilization fund um to help counter any cyclical trends with water wastewater revenue. Um so this will be on the agenda for June 25th. Thank you. Uh, Council Redberg. Thank you, Mr. Mayor.

I do have a question because I really I have absolutely no idea what the difference is, but in the packet that you gave us, it was going 25% of current year operating revenue to 90 days of current year budgeted operating expenses. What is the difference between those two? Is it the same and you just said it differently or? No. Uh, revenue and expenses are different.

So this is following um best uh practices and a recommendation from our rate study consultant of having 90 days of operating expenses as the basis for our fund balance. So um you know when you think about having money in the bank, it's not that oh we need to have money in the bank because of a certain percentage of our revenue, but it's more of to cover our expenses um that can happen on a day-to-day basis. That's what we need to keep those reserves for. Okay. Thank you. Thank you very much.

Uh, Vice Mayor Garland, by doing this, does this um help us with our bond ratings? Yes, it does. Okay. Thank you. Okay. Thank you. Uh, any other comments or questions from council? Question. Yes. Council member Adams. Can you tell us the difference between I know we're uh bond rating is two right now, but we're going to go back to three, right? Um, right now our bond ratings are for general obligation bonds. They are actually all AAA. So we're rated by fish and S&P.

Oh, I thought we had gone down to double A's. Um there there was a methodology change that affected it, but for fish because there's a legislation that passed and it allows us to go one notch higher, but we are still AAA for F and S&P. Great. That's important to know. Thank you. Okay, thank you. Any other comments or questions? Okay, thank you so much. Appreciate it. Very informative. Thank you.

So basically once again to recap uh they will go forward to prepare uh the resolution for next week uh based on the feedback that we got and the current proposal but obviously uh nothing is final until it's final and changes can be made if necessary. So thank you everyone. Appreciate it. That means I'm going to move on here to item number five call to the audience. The city council welcomes public comment at this time for the committee of the whole items on this work study session agenda.

There is a threeminut time limit per speaker. Uh madame clerk, do we have anyone wishing to speak? No cards submitted. Thank you. Okay, thank you very much. I'll look into the audience. Uh is there anyone in the audience right now who uh wishes to speak? Okay, seeing that I'll close that portion of the meeting and move on to item number six, committee of the whole. Uh first up, item 6A, proposed council subcommittees. Are there any proposals for new council subcommittee at this time? Okay.

Seeing none, I'll move on to item 6B, council subcommittee status updates as needed or recommendations for council direction. And I will just go down the list here. Hold on here. Give me one second to get to that part of my other agenda. All right, here we go. Uh item 6B1, Animal Welfare and Cruelty and Tempee Council Subcommittee. Uh Council Member Hajj, any updates? Um no update. Um um we are waiting on a meeting date because we are actually in negotiations and looking at contracts.

So we want to make sure we get that out there. But I will give you the soonest date when I get it. Thank you. Thank you. Next up, item 6B2, Community Engagement and Connection Council Subcommittee. Vice Mayor Garland, thank you so much. Our next meeting will be May 21st at 4 PM at the Tempe Library. We've got some information um and um uh data from our forums that we had going across the community. So, we're looking forward to sharing those. Thank you very much.

Next up, item 6B3, drink spiking, education, and prevention council subcommittee. Council Biti. Uh thank you, mayor. We've started uh engaging in focus groups with citizens uh throughout the city and various stakeholders to really develop a more robust education policy with regards to this. And we've also had another um uh testing kit vendor reach out to us about a possible uh donation to the city. So um things are going well. Thank you. Thank you.

Next up item 6B4, federal and state advocacy review council subcommittee. Council member Hamburg. Yes. Thank you, Mr. Mayor. Um, we have met once uh to start on our revision of the documents and we're going to our next meeting is going to be this coming Monday on April the 27th at 11:00 in the third floor conference room. Thank you very much. Next up, item 6P5, Mixed Use Space Council Subcommittee. Council Member Chin. Thank you, Mayor.

Uh the next mixeduse subcommittee meeting will be on May 7th at 2:00 p.m. on the third floor in the third floor council or conference room at city hall. Thank you. Thank you very much. Next up item 6B6, motorized and electric mobility device council subcommittee. Council member Adams. Yes. Thank you, Mr. Mayor. Yes. Uh we just finished up our third meeting and uh subcommittee meeting and which featured both our scooter vendors Bird and Lime.

We did a field view with Bird and Lime and it's very very informative and they both provided insightful presentations that will help shape us to a new ordinance to make our city safer in the very near future. So I'm I'm looking forward to that. And they're really improved a lot about the bike corrals and and how you can where you need to park it and the communication is up there. So, it was quite impressive. Both of both companies have made great progress. Thank you, Mr. Mayor. Thank you.

Next up, item 6B7, revitalization of Tempe Town Lake Council Subcommittee, Council Member Amber. Yes. Uh, thank you, Mr. Mayor. We uh had our last meeting this past Monday where we heard directly from Holly Street and Dig Studios. And it was really quite exciting because we no longer have to refer to them as an RFQ or an RFP. We actually have names to them now. So, baby steps. Mr. Craig Hatton over there. I know. See you. Hi, Lauren.

Um, we dove into the kind of results that came out of the Northshore openhouse on March the 24th. Uh, and we're going to be probably not meeting again until June to give Holly Street and Dig a little bit more time to go through uh, the survey results that they're getting right now. Thank you very much. Next up, item 6B8, Tempe Term Limits Policy Review Council Subcommittee. Council Berti, no update at this time, Mayor. Thank you very much. Next up, item number seven, future agenda items.

Members of the city council may request that an agenda item be added to a future issue review session. But in accordance with the Arizona open meeting law, there should be no discussion on the item other than to clarify the request. Would any council members like to add an agenda item to a future issue review session? Okay. Seeing none, I'll close that discussion and move on to item number eight, which is adjournment. The next scheduled work study session will be on Monday, May 18th, 2026.

We are journed at 6:33 p.m. Thank you so much, everyone. Sorry about some of the technical difficulties.