City Council Minutes 2022 07 21 SP

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City Council Meeting Minutes July 21, 2022 Page 2 of 5 shifts in the labor market. In addition, the Marshall Fire has substantially impacted the budget process and our community. This meeting is a chance for the Council to provide guidance and direction on the operational budget and capital improvements plan. There will be further meetings beginning in September for detailed budget discussions. Director Watson stated that today's meeting will would cover the 2021 Year in Review; Revenue and Expenditure Projections; the Capital Improvement Plan; and the Financial Forecasts. He reviewed the budget calendar highlighting the anticipated adoption on November 15. For the Year in Review Director Watson noted all of the actual numbers and fund balances as of the end of 2021. These balances are the basis for setting the 2023 budget. Mayor Stolzmann noted that the budget numbers have changed quite significantly since the end of 2021 due to various issues, including the Marshall Fire. Finance Director Kevin Watson stated staff has begun work on the revenue assumptions and expenditure targets for 2022. He noted the impact of the fire on assessed property valuations but added that this is expected to rebound quickly. He reviewed how the assumptions are set, how they affect the budget, and how inflation may affect the numbers. He noted the move to the new state sales tax program will likely have a positive effect on sales tax revenue but a reduction in licensing fees. Director Watson noted that the information presented today is not reflective of what will be the City Manager's requested budget, but is merely the base information for that. Members reviewed and discussed the draft assumptions and the various factors that impact them. They asked for some changes to the sales tax assumptions for the next budget iteration. Mayor Stolzmann noted that the Council has given staff direction to look for a way to rebate the Use Tax for those rebuilding from the Marshall Fire. She stated it will have to be done strategically and within the budget, but we are figuring that out. She noted that in general services are expensive and they are the largest costs the City has. Services are tax funded and in the end the expenses need to balance with the taxes brought in to pay for those services and if changes are made to this process they need to be very thoughtfully. Mayor Pro Tern Maloney noted the Use Tax is a Sales Tax on materials purchased outside of town. Without the Building Materials Use Tax, those funds would be paid as Sales Tax to other communities. We need to do a better job of explaining that.