 And we're live. Good morning members of council. And welcome to our second of four budget retreats. I am John all or I'm the assistant budget director. And. What I'd like to do this morning. If, unless there are opening comments. Is. To. Well, perhaps Mary, did you have anything you wanted to offer to begin with? I don't. Thank you, John. Go for it. Okay. Mayor. I'll remember Reese does. I think we're, I've got a number of colleagues who are having a hard time finding the right link. So I know a council that Pierce just, just texted me about it. I don't see Mark Anthony on the list. Mark Anthony has to come a little late today. Okay. But I think. Get him the link as well, just to make sure, but we are, we are live on YouTube right now. Is that right? We are. Okay, great. I'm just going to take a minute, Mr. Mayor, if that's okay to, to thank. Mark Anthony for going yesterday and getting his first vaccine shot. I'm Mr. Mayor. I know you've already had yours, which is fantastic. And I think I just want to encourage all of my colleagues. To, to maybe reach out to the health department. Mark Anthony got vaccinated as part of an effort. To, to increase the vaccination rates amongst our black and brown neighbors. Right now, those rates are lagging quite a bit. And it's my understanding that his, his vaccination was part of an effort to encourage folks, specifically in the black community with, with Mark Anthony to, to get vaccinated when they are eligible to do so. And I spoke with Mark Anthony just a moment ago and he said, he was comfortable with me saying how happy I am that he was, he stepped up to do that. I want to encourage everyone else in the group to do that. Because it's just super important that we get as many people vaccinated as possible. I know there's a lot of reticence among certain parts of our community. I just want to encourage y'all to do that. So anyway, that's that as for me, I'm not in a community where, where I'm an instant rate or the vaccination rates are lagging and so I'll be waiting for whatever my group is called. Thank you. John. It looks like there are five of us. We know that Mark Anthony is in a North Carolina League municipalities presentation. He's making a race equity and I'm not sure. Do we know for sure that Javier knows what the right link is? We, we had a little trouble with that this morning. Um, was sent about five minutes ago to all council members. Yeah. Okay. So hopefully she'll have that. Thank you. Go ahead, John. I think we're ready to roll. Yeah. Excellent. Well, good morning, everyone. And thanks to the second FY 22. Council budget retreat. Budget year. I'd like to kick things off. First, my name is John, a law assistant budget director. And I'd like to. Kick things off by just. Um, displaying on the monitor our agenda for today and briefly going over that, just so everybody. As a refresher of what that looks like. Um, so our first presentation will be a presentation on. Um, the use of the budget equity tool and budgeting gave engagement within the budget department. Um, followed by the financial projections and budget outlook. Presentation. We'll take a short break around noon. Um, and then we'll follow up with the, the CIP and debt discussion, leaving ample time. And then we'll take a short break for the mayor. I know yesterday that was mentioned. It was a priority. You might want to talk a little more about capital in infrastructure and potential for a bond. And then at one o'clock, Dr. Michael Walden will join us from North Carolina State. Uh, university, the economist. And give us an economic outlook. We'll have closing remarks and we certainly this agenda has been extended based on the mayor's. Comments yesterday, uh, And then we'll take a short break. And then we'll take a short break for the mayor. Um, to 30 this afternoon, allowing for a robust discussion around, um, uh, for members and for everyone to get, um, anything they feel needs to be expressed with, uh, what will be a lot of financial information today. So with that, I'd like to kick things right off and move. Right. To our first presentation. And, um, racial are the rate, racial equity budget tool. And then a brief, um, presentation on, uh, budget engagement. I have some, uh, partners in this that I'm going to hand things off to joining me here, uh, is, uh, from our office, office of budget and management services, uh, Tony Thompson and from the, uh, office of budget and management services. Um, I'm the director of the API office, office of performance and innovation, Aaron Parish, and I will turn things over now to Aaron. Thank you, John. My name is Aaron Parish. I'm a design and performance strategist in API. Um, so I'm just so happy to be with y'all today. I wish I could be chatting with everyone in the buffet line, which is my personal favorite part of budget retreat, able to spend this time together talking about racial equity budget tools. So we can move on to the next slide. I will talk about the overview of the day. Yeah. So this is a two-part presentation. So the first part is going to be about the racial equity budget tool. We're going to talk about what it is, how we got to this point developing it, and how we're going to implement it in the FY22 budget process. And the second piece will be about our budget engagement efforts outreach of recent educational outreach and future engagement plans. So the next slide is going to talk about what this tool is. But before I get into the kind of meat of the presentation, I was really inspired by yesterday's musical theme and I was trying to think about how to carry it over. And instead of music, I kept hearing this line from a Spanish poem, which is also the title of a book of conversations between education activist Paulo Freire and civil rights activist Miles Horton. And that line is, we make the road by walking. So the work of building justice is a continual process that works best when we work together. And the racial equity tool is really just one step of how we're trying as a city to walk the talk towards greater racial justice. And there have been a lot of people who have been walking this talk and building this road before us through far more treacherous terrain. And this got me thinking about Durham's hometown St. Pauli Murray, and she has a great quote that I love. And she says, and not one single one of these little campaigns was I victorious. In each case, I personally failed. But I've lived to see the thesis upon which I was operating vindicated. I have lived to see my lost causes found. And it's our task to pick up the causes of others who have done the work of racial equity in the past, and find places for them in our lives, in our work, and in our community. And that brings us back to the wonderful mural that manager page put up at the start of the retreat yesterday, which is a really great theme for the retreat. And I think it's a north star for the racial equity work that we do, because we're always building on the work of those who came before us, such as leaders featured in that civil rights mural. We're walking on paths that others have cleared for us in some way or another. And it's our responsibility to make that path easier and extend further for those who come after us. But I hope the fact that we are talking about racial equity on the same day that we're talking about the money would make Saint Pauli smile down on us just a bit. So what is a racial equity tool? And first, you know, what is racial equity? So racial equity is when race is no longer a predictor of life outcomes and outcomes for everyone are improved. So equity is about outcomes. It's not about intention. It's about the work you do to move the needle towards racial justice. And a racial equity tool is one part of that work. It's a decision making model used to integrate equitable considerations into our policies, practices and procedures. And it's basically a structured critical thinking tool that asks us to purposely consider race to use data in our decision making and to encourage to encourage community involvement in that process. The next slide, we'll talk about why we use a racial equity tool. And this is BMS's contribution to help the city operationalize our racial equity mission statement, which is the city of Durham intentionally identifies racial inequities, engages the community, and uses a collaborative approach in creating solutions to ensure race no longer stands as a determinant of outcomes and opportunities. And a racial equity tool really targets this first piece, you know, it's a tool for helping us identify where racial inequities are in practice in our organization and gives us a structured way to think about how we can think about solutions. So this is part of our larger model for embedding racial equity within our organization. So we're using the government alliance for racial equities model, which is normalize, organize, operationalize, and that's a mouthful. And really what it is is the talk, planning the walk and walking the talk. So normalizing is normalizing conversations of how we talk about race in our organization through things like training, organizing is building the capacity to make change happen through things like our racial equity organizational team and operationalizing is how we make that change happen. So much of this work was done as part of our organizational racial equity team within our tools and training subcommittee. And I really just want to take a moment to talk about the people who were on this team who did this work. So sharing Williams and equity and inclusion and Michael Pullum and community development led this team. Adria Graham Scott and OEWD, Henry Burwell, the police department, myself and Mary Grace Stone King was our fabulous intern. You know, we work together to build this product collaboratively and a lot of the people on the team were facing unparalleled challenges in their work this summer. And they showed up, they did the work and we have a really collaborative product as a result of it. So I'm proud of the work that we did together and I'm proud to call everyone on this team colleagues. So the work that we did, we looked at tools that different municipalities were using and we conducted interviews with selected municipalities. And we also drew from the technical existence that we received from GAIR over our year-long participation in our North Carolina cohort. And that included training in results-based accountability and in using the GAIR tool. So some of the cities that we examined in detail are Seattle, Grand Rapids, Michigan, San Antonio, Minneapolis and Portland. And we interviewed people in the first four of these cities. And the cities used tools in different ways. So some used equity tools just for budgeting. Some used them as a larger organizational decision-making model for policy decisions and programming decisions. Some used them to help guide COVID-19 rapid responses. And some used them for a mixture of all of these. So I'm going to take a moment to do a deeper dive on two of the cities that we learned a lot from. So Seattle is really a national model. They were early adopters of this racial equity work. They've had a racial equity tool for 12 years. They've been doing this work for 16 years. And this model that you see, this six-step model, is really what most cities across the country use some version of this. And GAIR also uses some version of this for the tool that they teach. So setting outcomes, if equity is all about outcomes, it's a really great place to start. So the tool asks you to think about, what do you want to achieve through this action? And how will this go further racial equity? The second is how do we involve community in the process? How do we use data and especially racially disaggregated data to guide the decisions that we make? The next two are really the core of the critical thinking component of this tool because it asks you to take a moment and think about the consequences of your actions. So thinking about who benefits from this decision and who would be burdened by this decision. It asks you to think about what are unintended consequences that could occur as a result of this action? What are ways that we could mitigate harm from those consequences? And what are ways that we could use this as an opportunity to further racial equity? And then the last two steps are really about evaluation and accountability. And how do you evaluate the impact of your decision and how do you share those impacts back with the community that's affected and with your city leadership? The next one is Grand Rapids, Michigan. And this was a good example really for the process that they took. They had a staged rollout in which each step built onto each other and built capacity along the way. And I'm going to brazenly steal my colleague Monica Chapara's local government love language concept and say that clear actionable goals would be my local government love language. And that is all over the Grand Rapids, Michigan process. So in 2018, they completed a racial equity action plan. And in that plan, they laid out how they were going to use a racial equity tool along with many other things. In 2019, every department shows a project to pilot using that racial equity tool. And so that could be a budget request. It could be a program decision or a policy decision. And they offered a lot of structure on how to prioritize thinking about this analysis. So there were opportunity areas that were prioritized for this racial equity analysis, such as education, environment, criminal justice, housing and jobs. They offered even more specificity around impact areas to prioritize like construction equity, workforce equity youth initiatives. They also looked at specific geographic areas to focus efforts on. And multiple municipalities do this where they take a series of indicators like race, ethnicity and income. And they focus the highest, they focus on the highest level inequities in geographic areas as areas to focus resource allocation. And then they also provided department's training and a manual explaining the context of how to use this tool. And they were doing this all while they were also developing a new strategic plan. And in their strategic plan, they had a value section for the goal section. And in the values section, equity was their first named value. And they also had really clear, measurable goals of what it meant to achieve equity. And then the following year, there was an official mandate for an equity tool to be woven into the budget process that was tied to the strategic plan they did the year before. So some common aspects of racial equity tools that we saw across different cities where that city started slow with phase rollouts. They had analyses that focused on key impact areas for racial equity. They needed a leadership mandate for real success. And they had racial equity teams that were oftentimes multi departmental that supported departments in using these tools. And they supported them in a variety of ways. They offered training on how to fill out the tool. They offered supportive material, including glossaries of key terms and data and engagement resources. They offered one-on-one consultations if departments wanted extra help in completing the tool. And they had an evaluation of how well the tool was built out afterwards. And so in the fall, the racial equity tools and training team, we shared our learnings with BMS about these national best practices that we saw. And we shared a recommended model for what an equity tool should include. Good morning. My name is Tony Thompson, budget analyst for the Budget and Management Services Department. And following up on Erin's presentation, I'll be talking to you about how the budget department took the learnings from the racial equity team and developed the city's version of the equity tool. So when we started this work, we wanted to use the tool to help us achieve three primary goals. The first, providing BMS and city leadership analysis of budget submissions from an equity lens. Second, a prompt for departments to think critically about their role in advancing racial equity. And third, for the tool to provide additional analysis for city leadership when prioritizing budget decisions. And the work of creating this tool and all of the supporting resources were done by the team members that you see on the slide. And I just want to personally thank them for all the amazing work and effort that they put in to make this possible, as well as Anise Vance and Laura Biediger, who helped provide valuable insight for us as we developed these materials. So our equity tool follows from the benefit burden model that Erin just spoke about that was used in Seattle and Biediger and has six overarching sections. The first section asked departments to state the intended outcomes they hope to achieve if their budget requests were to be approved. Then we asked departments to provide information on what specific areas are during populations their request is intended to impact. Next, we asked the departments to critically think about who will benefit or be burdened by this request if it were to be approved. Fourth, if a burden group has been identified by the department, we want them to brainstorm alternatives and additional actions that can be taken to minimize harm on the burden group identified. Then we want to know if any equitable community engagement has been conducted to inform the proposed budget request. And if the requests were to be approved, how do they intend to engage those most impacted by the request. And last we asked departments what accountability mechanisms they intend to put in place to provide progress updates to city leadership and stakeholders if needed. So in addition to the equity tool, our internal team also developed a set of reference resources to aid departments in completing the tool. Similar to Grand Rapids and San Antonio, we created a manual on how to successfully complete the tool. The manual discusses adopted terminology that should be used, instructions for completing the tool, how to use and where to find racially disaggregated data to support their equity analysis, how departments should perform equitable community engagement, and an example of a completed equity tool that they can use themselves. We also provided multiple training sessions for departments curated data sources that provide racially disaggregated data, and a list of key city staff that departments can leverage for assistance if they need to. This has been mentioned already in various ways, but a successful equity analysis will rely on the use of racially disaggregated data, the equitable community engagement blueprint created by NIS, and collaborating with other departments and community stakeholders for support. So the process for using the equity tool that we implemented in FY22, we asked departments to identify their budget requests that may have an equity focus, a set of equity criteria were provided to help identify those requests, and then requests that had the strongest equity focus were selected for analysis. This was an initial set of eight requests totaling just over five and a half million dollars. Departments who had those eight requests were provided additional time to formally submit their requests along with the equity analysis. And different from most recent fiscal years, each department was asked to submit a budget reduction plan. In addition to the plan, we asked those departments to analyze the proposed set of reductions from equity lens as well. So in terms of next steps, our internal team will and internal team will review the completed equity analysis and provide recommendations for BMS and city leadership to consider. Once the FY22 budget process has been completed, the internal team will evaluate the completed equity analysis and process to determine if any improvements need to be made for future fiscal years. And Aaron and I will take any questions that you may have. Thank you so much, Aaron and Tony. Great, great report. And very exciting. And I'll now throw it open to my colleagues for any questions that they might have. Colleagues? Adriana? Thank you. I truly appreciate the work and laying it out so clearly why race equity is important in our budgeting process, which is why I was such a strong supporter of the participatory budgeting process because we didn't have racial equity in our current budgeting process. And so I just wanted to ask one question. How helpful would it be to have an ordinance in place that actually explained exactly what you did around race and equity and why we're pulling the data the way we are as we move forward? I mean, I think that our residential racial equity task force gave us a really great blueprint for a lot of the things that we're doing and that we're trying to operationalize as a city. And so the focus on data and racially disaggregated data, you know, a lot of that is trying to operationalize what residents are asking for. And there are definitely ways that we could institutionalize that more as an organization. The process of how we collect racially disaggregated data, and then the skill set that we need to be able to analyze it is a growth area for us. And it's, I think, something that we're building that road as we go. Thank you. I appreciate that. Thank you. Pierce? Yeah, just a really quick question. I remember a couple of months ago we got a presentation from the water management team where they had analyzed some of the fees that folks are charged, and they put an equity lens on it. Was that a part of this program? And my follow-up question for them really was like, is that going to go, is that going to apply to everything in the department? Because like the Grand Rapids model, or I forget, I didn't write it down in the name of it, where you said they picked like one thing and studied that one thing. And I guess to what extent will that be scaled department-wise and across the whole city after you picked that one thing, you know, and where is our capacity to do that, like at a macro after we kind of micro-tested? So I can speak to the first part of your question. So the water fines and fees work was as a part of a grant that we got from the National League of Cities to study and assess a fine and fee in the city of Durham. And so that's been part of our CAF project that just wrapped up in January. So that's why the Water Department was doing that work in collaboration with the Budget Management Services Department. And what we discovered in that work has definitely helped inform the work we did when we were putting this equity tool together. And I think building on that, we're a part of a policy link cities and counties for fines and fees, 10 municipality national cohort that's trying to expand that fines and fees work with this racial equity focus across other fines and fees and ideally across the organization. So what we've had, you know, we've been doing racial equity work in this organization for years and a lot of people have been doing this equity work before we were calling it equity work. And I think where we are now is saying, you know, let's have clear actionable goals. Let's have this structured operationalized and institutionalized. So I think where we're at in the next couple of years, I'm hoping is really putting all of these pieces together and rolling it out in a really structured and thoughtful way. I see our city manager has popped up to add some comments. Yes, I would just very briefly say that we actually, you know, have a racial equity enterprise wide plan that we are in the process of implementing, you know, from a from a city enterprise, but some of our next steps would include every department having a racial equity plan that is designed for the work that they do and the residents that they serve. So that is how racial equity gets operationalized across the enterprise because we don't all do the same thing. So sometimes a pilot, one pilot, it may, you know, impact enterprise-wide, say if it relates to employees or workforce or something like that. But some of the other, you know, operational functions that we do, they actually need their own plan to make sure that it's efficient and effective. So I hope that adds a little bit more to how we spread it out in the organization. Thank you very much. The slide with the process for using the equity tool, the criteria, the eight requests, Tony, that you mentioned, the total around five and a half million dollars. So did you choose, I'm a little confused about that, did you choose the, I see the ones with the strongest equity focus. I'm reading that here. But what about the ones that didn't have a strong equity focus? Did they, you know, did they receive feedback as well about an equity focus or how does that, how do you all conceive of that kind of thing happening moving forward? That's an excellent question. So I think moving forward as Erin was talking about our goal as we evaluate the process for this F1-2 fiscal year is to find ways that we can build and expand that capacity in order to do more of this work on more of the budget request that come in for departments. Thank you. All right. Other questions? Jillian? Thanks, Steve. And thank you, Erin and Tony, for your presentation and for all this work. It's really exciting to see all these ideas that we've been talking about for the last few years actually get implemented and see the organization moving forward to, I guess the operationalized is the word in that, in that word, in that word cloud to use for that. So thank you. I am wondering, so I don't think we've seen, maybe we'll see this as part of a future budget conversation, but it would be great to get, to be able to actually see how departments filled out that tool and like dig in a little bit more to the details. I don't know if that's already planned, but if not, if we could get sent that information, that would be great. And then I'm wondering how the information that we're getting from this tool is then informing our future decisions, if it is, since we only, since we piloted it on a small number of budget requests, it'd be hard to compare, like to compare across the entire universe of budget requests, but like within those few that we looked at, are we using the racial equity tools results in any way to help us make the actual decisions about which budget requests get funded? And if we are, then how are we doing that? Okay, I'm sorry. So with those requests, they just came in and we're going to have a team, a small multi-departmental team, that's going to analyze how, how they filled out the requests. And so we need to build a criteria for thinking about, you know, how good of a job was done in this? How thoughtful was it? Where is more work needed? How strongly is racial equity really centered in this request? And I think that there are two ways that we can build on that information. One is having it inform how, how things are funded. But the other, and I think a much longer term way of thinking about it too is seeing, you know, where we are as an organization, you know, where do we need to do more work? How do we need to make more connections and using it in a way as a diagnostic tool for thinking about how do we need to build more capacity in departments and across the organization in order to roll this out in a really systematic way? And we're happy to share that information with y'all once it's all collected. Great. Thank you. Yeah, I think more, I mean, it's, it's been clear from the beginning that we need more capacity to do this work that, you know, where we've been adding capacity as we go. But the more we get into it, the more we're going to need people who, for whom this is like their, their dedicated work. So I'm sure that we're going to be in the position soon of needing to put some more resources towards this and very excited about having the opportunity to do that. Thanks y'all. When you, so how is race? How do you think about race here? When we, when, when you're defining racial equity in these discussions, are you thinking about African American, how it's, how it affects African American people and our Latinx community or what is the way in which you are when you're evaluating these proposals for racial equity? What is the, how are you thinking about race? I mean, we're, I think we're currently looking at our Black and Latino communities. But you know, I mean, I think the council member Freeman's point, these are spaces that, you know, do we need to clarify and have these be really specific about what we're talking about when we're talking about race and why we're having these conversations. I mean, terminology questions are complicated too. So, so I think there are definitely spaces for more, there, it's a space to decide, do we want really clear delineations or is there strength in leaving things more up for interpretation? And I think that that's, that's really a decision at the leadership level to think about. Thank you. Javier. Yeah, a couple questions. I know, you know, within the presentation you talk about the community engagement as far as decision making, but then how are we communicating this internal work? Because I think it's really important for people to the community at large, our residents to understand, you know, even if it's just an example that's shared out, right, like this is how this pilot was worked, so that I think there's a little bit more trust in it. So we're not just saying, well, staff did it. And then, you know, out in the community people are like, well, what does that mean? So it's one thing. And then within this, are you also, when we think about equity, are we also going to get to the place around, okay, or how are we thinking about folks with disabilities? How are we thinking about other communities that are often left out in our conversations around equity? And I know that that might be more than we can get into today, but I do want to raise it. Yeah, I think to take that second question, I think that's a really important issue and thinking about equity intersectionally is really important. I also think that a big part of racial equity is centering race specifically and being really specific about that and saying, when we lead with race, that we create better outcomes for everyone. And so I think this also speaks to the mayor's point of, you know, how clearly do we need to define what we're looking at? Because when things get fuzzy, there can be problems. And it's, you know, it's an ongoing conversation. And I hear all of these points. Here, the first part of your question, from a budget department perspective, I think one of the clearest ways that we can do that is through the budget book and having departments talk about how they implemented our integrated equity considerations in their transmittal letters and in the work that they put in their measures that they put in the budget book. Deidreana? Thank you. Aaron, I know you mentioned at the leadership level, I just wanted to clarify, did you mean the administrative leadership level or did you mean the council level? I think I meant both either or, so you can choose your poison. And then I just wanted to note to Javier's point, I mean, it's so critical to make sure that we acknowledge how the bookends of all the otherisms is that race, the black and the white, kind of hold them all together in the systems that have been created across the country, the world. I mean, it's kind of expanded. And as we break it all down, it does create better outcomes. And so as we start to track at least by race, and you get to the point where you're including, because it's inclusion as well, you know, people with disabilities, LGBTQ, like all of those things I think should be built in. And as we move forward, I would love to have more conversations about how we structure an ordinance that lays that out. So it makes it simpler for staff to continue to push on this issue. All right. Other questions or comments at this time? Thank you so much. We, you know that we want to be supportive of this work. And I think that we're going to need guidance from you all to let us know how. And you've heard from colleagues that we understand that this may be taking more resources. And we'll be looking forward to hearing from the administration about what that might be. We want it to succeed, and we want to help provide what is necessary for this to succeed. It's such a huge priority. And I just want to express my gratitude to you, Erin and Tony, and to the whole team that has worked on this. And there's so many aspects now of this equity work within the city. And this is a really critically important one. So our appreciation to you. Thank you so much. Thank you, Erin. Thank you, Tony. If we could move to the next slide, I will give a brief synopsis of where the budget department is headed with budget engagement and I would say that this, this is all, this conversation is encapsulated around outreach and evolving from budget education into budget engagement. And you, you need, you need both. So a little, a little background. In the spring of 2020, it was our, with our best intentions, we had planned to have a budget academy. And that event was planned actually for March 12th or excuse me, March 16th, 2020. We were going to engage the community in city hall with a budget simulation exercise about how the budget process works. It's a game and the game is rigged, as you know, there are many priorities and not enough money. And we were going to take residents through that exercise. We had planned to have tabling with other departments at the event and get them engaged and, and get them certainly aware of other opportunities to engage with the city, whether that was through the participatory budgeting process, the neighborhood improvement services, the clerk's office opportunities to serve on boards and committees. And certainly at that time, the comprehensive plan was just rolling out and we were working alongside with the planning department on that and wanted to have them there at the table to talk about the comprehensive plan and transportation plan. And so with the best of intentions in mind, I think we all know what happened. If we move to the next slide, the event was canceled. And then as a city, we all literally went home and were quickly needed to adapt and improvise to work in this environment. That didn't mean we stopped, we did adapt and thought, well, what can we do in this isolation environment? And we quickly assessed that we could continue to do some outreach. So we, not myself, a couple of Pat Mora and Lindsey Benot in our department quickly developed some, some outreach and education videos about the budget process, two videos, one of which we'll share here. So you may have already seen some of them. What is, what is the budget? And the second is budget development timeline. We've already promoted these on social media in our website. But we'd like to take a brief moment, if you haven't seen them, to show them to at least one of them to you right now. One of the most important tasks of a city government is preparing an annual operating budget. City Council establishes budget priorities in the form of policy decisions, budget guidelines and recommendations. This means that the budget document is a representation of community values and also serves as management and planning tool for city staff. In essence, the budget helps us plan how much funding the city will get and where it comes from, as well as how much the city will spend and on what. More than half of the city's revenues come from taxes, including property and sales tax. The city makes up the rest of its funding for operating revenues we collect from various services, as well as one of the most important taxations. This means that the budget document is a representation of community values and also serves as management and planning tool for city staff. In essence, the budget helps us plan how much funding the city will get and where it comes from, as well as how much the city will spend and on what. More than half of the city's revenues come from taxes, including property and sales tax. The city makes up the rest of its funding from operating revenues we collect from various services, as well as other sources like license and permit fees and grants from the state and federal government. Almost half of the city's expenses are budgeted for personnel, the nearly 2,500 staff who provide services like waste collection, parks and rec, public safety and more. Additionally, the city pays for the cost to operate these services like materials to test and treat our water supply. The city also pays down its debt each year. This largely helps cover the city's 10-year capital improvement plan, or CIP. The CIP helps the city plan for large capital items like new buildings, fire trucks and stormwater improvements. The rest of the city's expenditures cover transfers between funds, restoring the city's fund balance, or rainy day fund, and more. The state of North Carolina requires that all municipalities create a balanced operating budget. This means that revenues must equal expenditures. The city can't appropriate more than it plans to receive. Each year, as they develop a new operating budget, council and staff consider future needs and priorities while ensuring that the city can maintain existing service levels. If you'd like to view the current fiscal year's budget, please visit the City of Durham's Budget and Management Services website. Like we mentioned at the beginning of this video, the city's budget helps actualize community priorities by allocating funding to city services, projects, and initiatives. We invite you to make your voice heard on the budget by joining a board or commission, signing up to speak at a city council meeting, or emailing City Council with your thoughts. We look forward to your future participation in the budget development process. Thank you so much for that. So I'll close with just a couple of slides here. So where are we now? And where are we going with this? Well, we certainly know we can't simply show videos. It's not our intention to do that. If we could have the presentation restored. So the first thing we're going to do, the folks at Durham can reached out to us and asked if we would come and do a virtual presentation for them. They were quite disappointed that the budget academy was canceled last year. And so they asked us, could you do a virtual version of that? So Bertha and I had a discussion, I believe it was last week with Durham can. And in their words, what they wanted to see was an understanding of the dynamics and the mechanics of the budgeting process. So we decided to move forward with that. That event will be with the folks at Durham can on March 3rd, where we will go through that and go through a virtual budgeting exercise with them. And then from that, we certainly want to build on that event on your budget calendars. You know that we're going to do a larger engagement event. We haven't set the date yet, but it'll probably be at the end of March. Using a lot of these virtual tools as we're still in isolation. And as you can see, we're learning a lot here with this. It's certainly new to us. And we saw it as a great opportunity with even our budget retreats to be able to show them on YouTube. We saw that as an opportunity. Many of you have been to the retreats before. We've opened them to the public, but we typically we had a round table in the back where we invited the community to come. And we were lucky if we got Mr. Erkart to sit at that table, but not too many more people. So I see here today, we currently have 33 watching, but that's better than none. And we certainly want to expand and grow on that. We see a lot of opportunities with this. I'm sure a lot of people sitting in this event today and yesterday find it tremendously helpful to be able to see Council's faces and not the back of their heads. So we are learning very, very quickly about this. But as I said, we don't we're not going to be in a virtual environment forever. It's very hard to do engagement in the heat of a budget process in the months of February through April. So we want to build on what we're learning and we're aiming for a fall engagement exercise, possibly a hybrid of both in-person and virtual, something that is flexible if we're lucky enough by the fall. Building on what we learned, we have partners both in planning and in the participatory budgeting and NIS who are using a tool currently called Social Pinpoint to interact with the community. We're very excited with that and we think we'll have the capacity in the fall to use that for budget purposes. And then continuing to with education efforts and to solicit input and get feedback from residents as well as from Council. And with that, I will close and certainly turn things over to any questions Council members may have on this presentation. Thank you very much, John. Colleagues, any questions for John about this presentation on the process? Mayor Gillian. Thanks, Steve. So weird. And thank you, John, for the presentation. This was really helpful and informative. I have an engagement question broadly. A couple of years ago we did these in-person community conversations around the budget with the county and the school district and we were planning another round of them right before COVID hit. But had also been thinking maybe it would be better really to do them in the fall than in the spring because it actually gives people the opportunity to weigh in on the budget process in advance of even departments submitting their request. So it felt like there was an opportunity for more authentic community engagement at that point. Are we are y'all thinking at all about using that model in the fall with bringing in the county and the school district to do these bigger conversations? I don't know if they could be in person, obviously, hopefully they could be and that would be great. But if not some kind of virtual engagement that involves the other governments? Thank you. That is an excellent question. Yes, we are very aware that you wanted to continue community conversations last year and like our budget academy, it wasn't possible. That is certainly on the table for the fall and if that were council's expressed wish to do that, we would prefer doing that in the fall. Again, we feel we would have much greater capacity. We feel it is a better opportunity for residents to participate in the budget process than in the spring of a fiscal year. Yeah, I would love to see that happen. I am glad that y'all agree that the fall would be better timing. When we do things in the spring, we get a lot of feedback from residents that it feels like the cake is already baked, essentially. We have already been through all of this work and they are coming in at the back end and getting feedback but that feedback doesn't have as much opportunity to actually be incorporated in the process. I think it would be awesome if we could do that again in the fall. I really enjoyed it when we did it a few years ago. That is certainly why currently with what we have coming up, we don't want to be disingenuous and really call it engagement. We want to call it communication because we don't want to oversell or overpromise something that we can't deliver. I don't ask for a thumbs up. John sounded like John wanted a little guidance from us. Are people favorable towards having the community conversations in the fall? Assuming that COVID allows us to do so? Looks like you have that support, John. Javier? Yeah, I want to say that while I know we yearn for the days of in person, I think that there is going to be a place for virtual conversation and communication. I hope as we build, we don't just take away these options because for a lot of folks, being able to join a Zoom meeting, especially now that people have gotten more used to it, is actually easier so that we create opportunities in those mediums. That certainly too. I would say at the beginning of the week, we did not know that this was going to be live on YouTube. We realized about midweek that once we offered that, the cat was out of the bag. We're okay with that. We're definitely okay with that. It's a great opportunity. Thank you, John. Are there questions or comments for John on this presentation? All right. I think we're ready to... Didriana? I was just going to say thank you, John. I appreciate you laying it out. I know that the process itself kind of aligns with where the previous presentation is going and the line and the race equity. I think for this year, acknowledging how difficult it will be, I didn't get the thumbs up, but yes, of course. All right. Thank you very much. John, thank you. I believe we're ready for what's next. So I'm going to turn things over to Bertha Johnson, and she's going to take us through the budget outlook and financial projections. Good morning, everyone. Bertha Johnson, Director of Budgeted Management Services. I was going to jump in a few minutes ago. John is so efficient with the time to thank Erin and Tony for their work on the racial equity tool. It is hard work, and they've done a lot of work with the team. I also want to thank Sharon Williams. She is definitely the support for all of this work, and with her limited capacity, she is always available to support us. And to the point that was made, I think if we're going to start anywhere, the budget is a critical component of the work that we do that supports all of our programs and services that we start there. And so just thank the team who worked on this, and it is hard work. It's challenging. As you heard some of the comments that I've heard from the team, as you all were making your comments, is that you really share some guidance with us and ask some thought-provoking questions that will be helpful to us as we move forward. So thank you, and thanks to John for his presentation. So next, we're going to move into the numbers. I'm going to present the financial projections and budget outlook. I want to thank the team. This is a long presentation about 35 slides. And so obviously, this was not my work. A lot of analysts worked on this. We had a meeting this morning, and one of the things that we mentioned is that we are probably at the point today that we would be much further into the process. In other words, we have worked really diligently on the numbers because of what's at stake and because of all the changes that have happened with COVID to try to give you the best numbers we could give you today. And so we are really excited about sharing our projections with you today. And you'll also hear from Dr. Walden later today. So the presentation outline is that we are going to have a brief budget recap. The actual video that you saw before John actually had a lot of the information and I was going to share that's in my presentation, but it's good to have some redundancy. We will also talk about financial projections and budget outlook and then where we are in the budget development process and what's next. So just as a reminder, our current fiscal year budget 2021 is 502 million, which was adopted on June 15th, 2020. The major components of that total budget are our general fund, water, sewer and debt service fund. You'll hear a lot about the general fund today. You will hear about the water sewer fund at a later date and you'll hear later today about our debt service fund projections and some of the other funds here will come at our next budget retreat. So our current property tax rate is 53.17 cents per 100 of assessed value. A penny on the tax rate is 3.477 million, which means that for every penny we raise the tax rate or we add to the tax rate generates 3.47 million in revenues. Also as a reminder, when we think about raising the tax rate or when we think about the tax rate itself, that that rate is allocated among several different funds, including general debt, solid waste, transit and dedicated housing. So here's just a brief look at our general fund revenues that are in the current budget. The real takeaway here is a reminder that the majority of our revenues, 82 percent in the general fund comes from property taxes, sales tax, hotel motel tax, and that the only tax that we really have control over is our property tax rate. On the expenditure side, just as a reminder, as we always mentioned, at the majority of our expenditures are related to personal services and that includes our salaries and benefits. So just another way to look at this, if you look at the 2021 general fund revenues, when you look here, you see property tax, 51 percent local taxes, which is our sales, hotel motel, 31 percent, all other 12 percent in our state funding at 4.7 percent, which is mostly our power bill, which is our gas tax and our beer wine tax revenues that we receive from the state. So where does it go? Look at it by function. Public safety, of course, 51 percent of the budget is allocated to public safety. That includes police fire, emergency communications and emergency management. You see another 25 percent, which is our public services. Community building is 8.8 percent and then governance is 4 percent. And so the biggest chunk is public safety, but I always want to point out that it's not just police, as some people immediately think. So this is where we really want to take some time to try to explain where we are. When we actually look at our quarter to comparison from the prior fiscal year to this fiscal year, there's only about $185,000 difference. Now, that is significantly closer than we predicted, obviously. We are doing better than we projected. One of the reasons we're doing better is because our revenues are coming in better. We'll talk about many of those later. But I do want to point out here, because we talked about this when we came back to you in spring and we adjusted our revenues. If you look at the power bill revenue, you can see that we almost received the same amount of power bill revenues. That's in the purple this fiscal year as we did last fiscal year. When we came to you in the spring, we were told by the state we would probably see a 25 percent to 50 percent reduction in the gas tax. We did not experience that. We know that some cities, the largest cities, Raleigh and Charlotte, did experience some significant reductions, but we did not. So to play this out throughout the entire presentation, here's an example of a $3 million revenue collection that we did not anticipate receiving that we did not budget. So when we talk about where we are with fund balance and our revenues, this is one example why we are better off than we thought we would be. Property tax, similar story here. As you can see for 2021, we actually budgeted $110.9 million. Our actual, as of December 31st, and this is December 31st, is $83 million. And actually, if we look at where we are today, we're at about $107 million. So we had conversations about the unknown and what would happen with property tax. We're doing well there. We anticipate meeting our budget with property tax. And as a fact, we anticipate going over budget when it comes to final collections. Sales tax, which was the most challenging revenue to project for a number of reasons. One, it tracks with the economy typically. Two, there's a three-month lag in the collections. And three, we're making projections in March for sales tax that we would not see our first payment until October because of the lag. So when you look at this presentation, you only see the one-quarter of collections we received this fiscal year. And I'll talk about the projections and future presentations, future slides. So sales tax, the COVID effect. So to explain what has happened with sales tax and how it has impacted not only last year's budget, but the current year budget because the budget, of course, is based, the current year's budget is based on where we end at the prior fiscal year or where we thought we would end. So last year, we actually collected $68.2 million. Our budget was $68.7 million. But when we came to you when we were making projections for the next fiscal year, this current fiscal year, we thought we would hit $72 million. That was precode. So that change that happened when we had to reduce our revenues, this is where we were. We were really excited. We said we were on track to collect $72 million, which is the red line. Even though our budget was only $68.7 million, which was very conservative because of the issues we had with the revenue collections from the prior fiscal year. So we thought based on what we heard from the state, we would see about a 20% decline in those projections and we only actually experienced 14%. And so our sales tax numbers, again, we came in at the end of the fiscal year. Now remember, when we say the end of the fiscal year, we don't receive our last sales tax payment until three months after the fiscal year ends. So we are really making projections far in advance. And the fiscal year has ended before we know what the actual numbers are. So this year, we're looking at the 21 actuals. We have collected our sales tax for the first quarter, which we received three months later. What is significant about this is that we seem to be rebounding very quickly. If you look at the fourth quarter of 2021, we received $15.6 million. And for the quarter this year, which is July, August, September, which we didn't receive until later, obviously, $18.5 million. So we're roughly $2.5 million ahead of our budget for FY21. Now again, we were making projections in March and we were using not only our forecast as well as the state forecast. So we are doing much better than we anticipated. So our January revenue status, we again, total tax collections, I've given you an update on that as listed here, property tax collections, $108 million. We're at 97.8% of the budget, sales tax, one quarter, 36%, hotel motel, 24%. License improvements, which we'll talk about, which is obviously a driving force in all of this, 144% of budget. Looking at our planning development fees, and we usually don't include this in our presentation. This is usually part of the departmental presentation. But here's part of the why. If you look at where our budget, our budget for the current fiscal year, and then if you look at our actual year in projection for the end of the fiscal year, inspection fees permits, another way to look at what's going on in the economy, just as a reminder, the largest portion of our sales tax comes from construction. So it's really important. When we think about Duke and other nonprofits, obviously their sales tax is refunded. So we're not talking about those sales tax collections from those organizations that get a refund of their sales tax. We were talking about real development here in the city and county when we look at inspection permits. So this is this chart that we always share with you that is actually compiled by the city of Raleigh after each budget is adopted. Raleigh is in green here because it's your chart and they send it to us in a graph and we can't really change it. So we're not highlighting Raleigh here. You'll have to, if you go and you look at the first quarter of that is Wake County municipalities and then not really a quarter. And then you look at the other municipalities and you see Durham in there. It's really small here probably so most people can't see it. But actually when we look at the property tax rate, you know, for me, I don't necessarily focus on the rate. I actually like to look at the actual property tax, the bill. So what people actually pay versus what the rate is because we know what they pay is based on the rate times their home value. So if you're in a city that has a medium home value high, you're going to have a high bill low, you're going to have a lower bill. So going to the next slide, we'll look at that in another way which you see Raleigh here at the 3431 in Durham at the 3,115. So we always want to look at how, where we are in terms of our other cities but it's information but really you have to look at the components of the city organization and where they are and where they're trying to go and also the medium home values. So I move on to our budget outlook. Based on everything I just shared with you, our forecast is that we will have a $674,000 deficit or we have that at this point and that's basically based on what we've already built into the model. Known revenues which will be updated, you know, program revenues by department, our projections around sales and property tax and then our known expenditures. We have received 78 budget requests from our departments totaling 17 million and we received 11 budget requests from city council over 2 million. And just as a reminder, we have strong fund balance but we typically try to use fund balance for one-time expenditures because when you have current expenditures, you have to find those resources in future years. Budget development process, the schedule, we talked about that earlier, early yesterday but you know, just to point out, there are some opportunities for you all to receive additional information as you will continue to receive your quarterly reports. We will have two other budget retreats on the 25th and 26th and I've talked about some of those topics yesterday. John mentioned our budget engagement activity which we are planning for March 3rd as well as some other opportunities that we are thinking about with our residents. Our public hearing on June 7th and then we have our council work sessions on the budget. We have not, you know, planned what those look like in terms of, you know, what the presentations look like as well as, you know, how much time we want to spend on those presentations and then there are some other milestones here. Most important, the city manager presents the budget to city council on May 17th and obviously we have to adopt the budget by the June 30th. We have mentioned that our department budgets, the intact package is due on February 27th which includes that transmitter letter and some other components that we use to bring forward the city wide budget. We also will focus on, you know, funding requests that are prioritized based on our strategic plan objectives and a lot of that is around equity and some of the other goals that are important to the city council and the community and then you'll hear much more about our CIP later today. So BMS, our role is basically to review the budget request and prepare the analysis. Just a reminder, we are not the final decision makers in the budget process. You know, our job is to provide an objective analysis of the request and make a recommendation. We will also look at performance measures and look at the data that supports those measures and we will prepare those recommendations to submit to the city manager for her final approval. So in summary, it's good news. We don't target to meet our current revenue projections, actually exceed those. We obviously projected our departments will end the fiscal year within budget. In some cases, they are projected to spend less than their budgets obviously because at the time we were developing the budget, we didn't know how long COVID will last. We didn't know what our programs and services were going to, when they were going to get back to normal at that time. And so we budgeted it based on, you know, what we knew and what our departments were projecting and hoping for in the next fiscal year. Our revenues are projected based on assumptions in our multi-year departments as part of their budget submittal will update their program revenues. Expenditures are projected in our multi-year and departments will provide expenditure updates, of course, as part of their budget submission. And again, we have a $673,000 budget gap. So we're going to talk about our multi-year and it's unfortunate that we don't have the big spreadsheet so that you can, you know, you can see all the numbers and click through the tabs as we sometimes do at the budget retreats but we are where we are. If you look in the first column here, 2021, that is the current year's budget and we plug that current year budget in and we do that after the budget is adopted. When you look at 2022, you see the 673 number that I mentioned earlier and we will talk about what's in the numbers and what's not. And when you think about this multi-year, it's almost like, and we were talking about this earlier today, like we're starting from scratch. There's nothing really in and we're having to reset all of our revenue projections because we were very conservative last year based on the projections and now we had to go back and reset our projections as well as think about how we prioritize what goes back into the plan. If it wasn't for a major risk contribution we had to make out of the general fund, that we have to make out of a general fund next year, that number, that surplus number would be zero. We would actually be balanced without, obviously without a lot, many other things that this council and the administration and the departments are going to want to add to the general fund budget. So the assumptions, the revenue assumptions are that we go back to 3% property tax projection. Our sales tax, 1% increase over FY 22 projection. We are rebounding in the area of sales tax and that may be an adjustment there. I can see tax, I would see zero increase. We're not doing as well in that area of this current fiscal year and not sure when that will get back to normal and charges for services. We are projecting a 3.6% decrease over FY 22. So other major assumptions, we are continuing the general services maintenance. Those, which is part of the operating budget, we will increase that. We're trying to increase that to 1.2 million by 2023 and so we are adding 100,000 to that as we've done the last few years. Streets, the original 6 million and for streets, same budget as FY 21. Continuation of some of the items that we supported out of fund balance and additional 4 million for streets, which brings that number to 10 million. As a reminder, the request for street funding is 20 million and so we're still that 50% of what's requested. Then we obviously are adding back an election cost for 2022 from fund balance. Benefits, health insurance. We have gotten an updated number on health insurance from finance, so there's no increase projected for FY 22. That was about a $2 million savings. Now that's a one-time savings because obviously when we need to program back in an increase, we need to find the funding. No changes to dental insurance at this point. No change to 401k contributions for employees, which is at 5%. The local government increase, of course, is not controlled by us. It's controlled by the retirement board. That increase has been built into the multi-year. We also have maintained the property tax rate at 53.17 and also maintains those allocations for those other funds at where they were in the current fiscal year. This model does not include any pay adjustments. We mentioned yesterday that will we bring in back some recommendations at our next budget retreat. Fund balance. I mentioned earlier that our fund balance is going to be better than we projected. This is the number we're rejecting when we adopted the budget. We are now projecting that that number will be around 24% based on our second quarter numbers. That is because we have additional revenue coming in that we did not anticipate and where we are in terms of where we are projecting our expenditures to be. That is contingent upon all of those things coming to fruition as we are projecting them as of the end of the second quarter in December. What's not included? Again, pay adjustments for employees are not included. New budget requests. Any new budget requests from departments, city council, or otherwise. New CIP requests that are not included in the 10-year plan, which we will hear about next. Play plan structure adjustments. Water hardship fund increase. As we mentioned before, whenever we increase our water hardship fund, that has to be paid from another source outside of the water rate model. The tax increase for the housing fund is not included. Obviously, there is a discussion. We mentioned about that later today when we discussed the CIP and debt. Our future challenges, when we look at the numbers, we have to think and continue to want to make it clarified that when we are making decisions about the next fiscal year, it impacts future years. Whatever decisions we make about pay is not just a one-year. The pay is always built on the base of the previous year. Whatever decisions we make about any type of recurring expenditure program or services have an impact on the multi-year. Again, the multi-year looks great now, but as we add additional expenditures into the multi-year, that impacts future years. Again, we mentioned how do we get to the number we want for street maintenance, and that's going to be part of the discussion later today. Additional needs for deferred maintenance, and how to be fund our police pilots from the RTS study. We believe that we have some funding for some smaller pilots, but obviously based on what you hear at the retreat and what this council wants to see implemented, there will be some resource needs there, not only from the perspective of the pilots, but how those pilots are actually implemented and managed. We have some challenges. We are at a good place. I think it's good that we are basically building our budget from scratch again because it gives us an opportunity to prioritize where we're not coming to you, and there are some one-time costs that are built in like the streets, but we're coming to you with sort of a clean slate, and we can prioritize whether it be around our strategic plan, racial equity, and some of the other important factors that are of interest to this council as well as our community. So those are their challenges, but we definitely have. We are in a great position to meet those challenges. I'm happy to take any questions. Thank you, Bertha. Can we take down the slides? Thank you so much. Bertha, what a great presentation. It was fun to see your picture in Triangle Business this week, a great portrait of you. I'll just note that the cover story on Triangle Business was how cities across the country are in bad fiscal shape, but then when they got down to talking about our city as well as Raleigh, they talked about how we were in good fiscal shape, and I was really glad to see that. This was a tremendous report. I think we're all just thrilled that we didn't tank like we thought we would, that the revenue had really held up much better than you all rejected and that we all thought, and so we are in much better shape than we might have been. I'm going to now throw it open to questions, and I see Charlie and then Pierce. Thanks, Steve. Just want to welcome Mark Anthony into the chat. How's it going, buddy? You got those superpowers yet? The mutations? Are they happening? What's the report? Just over here moving things with my mind. Oh boy, good times. All right, I didn't have any specific questions, but I just wanted to highlight for my colleagues what an incredible report this is. So I pulled last year's budget outlook from the budget retreat where we were all so excited. The budget was in great shape. At that time, Bertha came to us and near the end of the presentation was the slide that talks about the deficit as we enter the budget development process. And last year, at this time, it was $753,000. This year, as we are pushing through and maybe seeing the light in the tunnel through a global pandemic that has wreaked havoc with federal, state, local budgets all over the country, we go into this process with a deficit of $674,000. And that is unbelievable, but here it is. But I appreciate the fact that Bertha has tempered my excitement with the long list of challenges that we have ahead, the needs in the community, the things that we want to try to do this cycle. And obviously staring us right in the face is the need, in my view, the need to begin to make the investments under the affordable housing bond that will require increasing the tax rate for that. And so I'm so grateful to our staff for keeping us cautious for helping us navigate these incredibly difficult and unprecedented times, as I think Bo Da Vinci said yesterday, hopefully soon we'll get back to precedent in times and I'm going to try to use that at least once a day from now on. But as we approach the possibility of more precedented times, it's amazing to see this work and this report. It gives me a little bit more hope, and I hope that my colleagues feel that as well, but also a sense of responsibility about the work ahead and how while we are in, while from a deficit perspective we're in slightly better position, we know that that tax increase for the bond is going to have to be, in my view, part of what we do. And so I think that tempers maybe some of our, some of our ambitions with respect to some of the other things we can do in the budget. And so we're going to have to make part of the choices. I just want to thank staff for getting us in this enviable position. And that's all I had, Steve. Thank you very much. Pierce. Thanks, Steve. Thanks, Charlie. That context is really helpful for me as a new council member, because I wasn't plugged in this time last year, but kind of building on what was said earlier about the 30 people who are joining us and folks who are joining us on social, for whom this might be their first time in a budget retreat space. I just wanted to make sure that I'm hearing correctly, because I recall kind of throughout the year being told, you know, we're potentially looking, I can't remember if it was a $17 million shortfall or a $7 million shortfall, there was a 7 in there somewhere. But now we're being told that we're actually, we're like coming in where we thought we would come in. Is that correct? So, so I'm not really sure exactly which number you're referring to, but you received a first quarter financial report and you received some projections there. And this, we have just completed our second quarter financial report. And so these numbers are based on where we are at our second quarter financial report. So at the first quarter we would not have had, you know, our significant amount of sales tax and we, I don't think we received, we knew what our power bill number was, was going to be, because I think that came in October. But we've updated the numbers, we've updated the numbers with our departments, we get all of our departments submit their updated projections on the expenditure side, as well as revenue, which is what you see from inspections and planning. And so at this time of the year, we always go, we do this, we go through this process to make sure we come to you all, we can give you the most up to date numbers. We've also given you some numbers from major revenue sources as of January 31st, like for our sales tax and our property tax. We actually received another sales tax payment yesterday. I think we're about 2.4 million ahead of budget at this point. And I just remembered that because Pat sent us the email yesterday with the updated sales tax number. So these are the most updated numbers. And we have updated our multi-year financial plan with our projections for sales property tax. And so we're, we're, this is where we are at this point with that updated information. Okay, maybe, maybe this will be a better, a question for Steve. I don't know if we're, if that's appropriate right now, but I guess I'm trying to understand in context. So for example, you remember a couple weeks ago, we were talking about, you know, whether to go big or super big on, on violence interrupters and you were concerned about the budget. I thought I remembered you bringing up like, Hey, we're looking at a budget shortfall that could be, you know, in the millions. So I really want to be conservative. And there were other reasons why, you know, you had other good reasons for that. But I'm curious about understanding if we're doing much better than we thought with this information kind of a couple weeks ago, is this what you were referring to? And were those concerns somewhat addressed now that we're doing much better than we thought? Does that question make sense? I see. Yeah, let me address that. And then I see the city manager also has some comments. That's a great question. So when we look at the multi-year, we say that, or, you know, even just next year's projections, we see a $674,000 gap that needs to be filled. But it doesn't include these things. It doesn't include a pay increase for employees. It doesn't include any other work we might want to do related to our, you know, the police reform work that the 911 call analysis might bring us. It doesn't include any increase we might want to have in the Water Hardship Fund. And a normal year, I'm going to ask the manager to confirm this. But if we were to give the pay for performance that we were planning to give, that we would normally give, I believe that would be in the range of $7 million. But I'll ask the manager to confirm that. So that's not in the budget. And so the $674,000 is good if you don't have any of those other things in it. And so thinking about, like, let's say, I'm just, you know, there are all sorts of options here. I don't want to, I don't want to presume because what usually happens, Pierce, I can tell you, is that our budget department takes this back. They work a whole bunch of magic. And, you know, that's still to happen. But if we were, if we were in the present situation, we've got all of our, we've got $2 million in city council budget requests also on top of that, and $17 million budget request for new initiatives from our departments. So if we did all those things, you know, we won't fund all those new initiatives, but we'll fund, we'll want to fund some of them. And, but just raising the pay would be a two-set tax increase if, you know, if we were everywhere else that we are. So, you know, just to raise the pay for performance, as we normally do, would add another two-set tax increase. So, you know, we did much better than we did on, than we expected on the revenue side. But, and we are showing for this year, a, you know, as Charlie pointed out, a very, you know, low budget gap from what we often get. Some years would come in, we have millions of dollars in budget gap we have to fill. But this year's budget gap doesn't include key decisions that we have to make going forward about possible expenditures. Do we want to raise our employees pay? I know that we all want to. You know, how much can we do that? How many of the new budget requests that the departments have come in? How much of their $17 million are we going to be able to meet? How about the council's budget request? What do we want to do in funding the police reform work? I know we want to try to increase the water, you know. So, these are things that are still on the table. I don't know. I'll ask the manager if she thinks I put that in reasonable context or birth that either of you all would like to contact. Mr. Mayor, you did a wonderful job. I was certainly going to go back to council member Reese's point about us sort of being at the same level, you know, same place we were last year, but certainly, you know, remind very specifically that last year this time we did not anticipate removing pay and, you know, pay increases. So those pay increases were included in that very low deficit number that you saw when you saw it for the first time, and it's not there this time. So that is a, you know, there's a lot of other good news about actual performance here, but when you look at budget to budget, that is just one thing we can point to that you may be, you know, kind of having numbers in your head about because we've always talked about, you know, our full implementation of our, you know, of our pay plan is about $7 million. So hopefully that's helpful. Thank you for explaining that. Bertha, did you want to add to that at all? I just want to add one component of looking at the departmental budget request. Just it was mentioned earlier today we have as our departments to submit budget reduction plans where there are opportunities to look at the way they work now to make the decisions about how they move forward if they can make reductions in some areas to support priority programs and services. And so that will be some of the offset with that. Hopefully we don't know what that looks like yet because we're going to look through those reductions as Erin and Tony met also through an equity lens where departments may put up reductions that we're not willing to sacrifice based on who is served by those programs and services. You know, I'll say Bertha, I've just taken about the council's reductions that we submitted with the help of the clerk. Most of those reductions would still stand. I know they're related to travel that we won't be doing and that kind of thing. So I think, you know, ours is just a very small portion, but I bet there are probably some other departments are in similar situations. Thank you. Jillian and then Javier. Thank you and thanks Bertha. This is always my favorite part of the budget meeting because I get to nerd out over all the numbers. I'm wondering if you have a sense of whether we can anticipate any additional federal aid that might help balance the budget from any of the bills that are, you know, working their way through the federal government or any new initiatives that the new administration might be considering. So the one that I would prefer to use what the mayor sent out to us earlier this week. And I, you know, that would be absolutely awesome if we were to receive those resources. But, you know, anticipating what they got, it's maybe around those resources in terms of how they utilize. So that would be, you know, that that is what's key really is how, you know, if it's important that we get the resources, obviously, but how we're able to use those resources in terms of not being in supplant or not using them for revenue losses or whatever that is. So I'm excited to see and I anticipate we'll get something. Just don't know what that is and what the guidance around the utilization of those resources are. And I would, you know, the mayor may have some additional information. Thank you, Bertha. So the current federal legislation that is past the House or is about to pass, I think it has passed the House. I sent this out in the email and can't quite remember, but it either has or it's about to pass the House. No, I think it's just come out of House Committee is what it is. And it's in front of the House. But it came out of a favorable report with the House Committee would give Durham $47 million. This hasn't obviously, this hasn't gone through Congress. It hasn't passed the House. I expect it will. But the Senate, you know, could be very different. I don't, I'm saying I don't think we should necessarily anticipate that amount of money. And as Bertha said, it's we don't know exactly what the constraints will be. And so, yeah, that I think that's where we are. And I mean, my thought about this is we ought to plan this budget now as if we get zero of that. And then I think in a month, we'll know how much of that we're getting and what the constraints are that our staff can help us. I will say I'm very optimistic that we will have a significant positive impact because it looks like the Democrats are pursuing reconciliation as the method of getting the legislation passed. So, but there may be compromises with, you know, some of the Democratic senators who don't want to give that much to cities and counties and states. So I think, you know, it's quite possible that we'll have, you know, I think it probably will have less than that, but we should still have a very positive impact. Awesome. Thanks, y'all. Steve, you said you sent an email earlier this week. Yeah. I can't remember what it said, but it said something like something about the federal budget. If you can't find it, let me know and I'll try to resend it. And the spreadsheets were helpful. The spreadsheets were helpful as well because you can go in and see what our factor is and see what amount that Durham has slated to receive. So hopefully we'll receive some portion of that. Exactly. Yeah, I know in the original CARES Act, the cities that got that funding, it was incredibly flexible. Like they were able to use it in all kinds of ways. And it was, yeah, really disappointing that we, that, you know, that smaller cities, mid-sized cities were excluded from that. So I'm glad to see that there's something coming through us, something coming our way, hopefully. A couple other questions. Bertha, you mentioned that a lot of departments are under budget because they haven't, like they haven't spent what they anticipated to spend on things like travel or probably like meetings, events, food, that kind of stuff. Do you have a sense of whether any like new department initiatives might be able to be covered by rolling over some of those savings to the next year? Yes, we did not do a carryover process this year. We hope to do that to, you know, do that again at the end of this fiscal year. We also are not dismissing department's ability to ask for funding, additional funding during the year. So if there are departments who have been continuously, you know, doing their work the way they've always done it, they come to us because of whatever COVID or whatever issues and need additional funding for their programs, we are still entertaining those and implementing those when we can. So we anticipate that we're also, when departments have needs, we are allowing them to use their budgets to implement those needs in a current fiscal year versus waiting through the budget process if it's something that's needed now. So we're definitely being flexible and being in communication by departments. We certainly don't want any department not to move forward with their programs and services because, you know, their revenues are slow or for whatever reason. So yes, there's opportunity. We hope to have a carryover process at the end of this fiscal year. And that usually does occur when we have, you know, additional, when we understand the budget. Awesome. And one last question, the property tax chart for other cities in North Carolina, I've always found super helpful just to like see where we are. Do we have any kind of resource like that that looks at cities, like other cities are sized around the country? I feel like lately I've just been hearing a lot from resident and I'm sure, you know, the economic situation is, is rough now. And so people are concerned in general about their personal finances. And everyone always thinks that their taxes are high, but I feel like I've heard a lot from residents recently claiming that their taxes are high. And I'd like to be able to, I personally think our taxes are very reasonable, but I think it'd be helpful if I had something to compare them to also across the country, because I think North Carolina's taxes overall are actually low, like we're in the middle of North Carolina, but we're North Carolina in the Southeast in general, our rates are lower than lots of other areas of the country. And I'm just wondering if anyone has data on that. We can certainly work on that. I mean, we have a lot of resources in terms of our peer city group list, as well as the groups that they use for ETC survey in our, in our population size. So we definitely can work on something for you and bring it back to council. Thank you. Yeah, I, I, especially if we're going to be, if, and I think that we need to raise taxes for the affordable housing bond and potentially for other needs, that it would be good to show folks kind of what people are paying all over the country in addition to in North Carolina. Thanks. I think that's a very good point. I know I was, I had called on Javier, but Javier, do you mind if I make one quick comment before I get to you? That's fine. I can't even talk right now because the dog's freaking out. Okay. Life under COVID. I think with Mark Anthony's new powers, he can probably take care of that just remotely. I can see he's doing it now. I just wanted to say, and mainly for Pierce's benefit, the slide with the municipal services that Jillian is referring to, these, these would be slides 18 and 19. They don't just show, people say sometimes Durham has high taxes. What we have is two ways, two ways of funding our government. We have middling taxes and we have low fees compared to most other governments in North Carolina and everywhere. And so the thing that puts us, this chart is really about total local government revenue, not just taxes. And I think that's really important because some people say, well, you know, you're going to look on this chart and you can say that our property taxes, you know, are higher than, you know, I don't know, pick your city. You know, several of these cities, but our total, totally what we ask for residents is lower than a whole lot of these cities because we keep our fees very low. So we don't have a solid waste fee. And a lot of cities have a big solid waste fee and we don't have it because a solid waste fee is regressive. And we would, it's more regressive than a property tax. We'd rather pay for solid waste through a property tax. Our water fees are, you know, relatively low. In fact, as I was looking at this, Bertha, our water charges were some of the, actually may have been the lowest or one of the very, very lowest on this entire chart. And so we, and I think this is a good thing, that we want to fund our government as progressively as we can. We don't have a lot of real progressive options. We don't have the income tax, for example, as an option. But the property tax is definitely more progressive than a lot of the fees that we could institute. So what I like about this chart is it doesn't just show taxes. It shows the full range of things that we charge people for. And we're about in the middle of the pack in North Carolina, which I think is a good place to be. I agree with Jillian that um, yeah, but when people say to me, my taxes are high, I like to send them this chart and say, here's the total cost of government for you from dirt, you know, as a, as a, as a Durham taxpayer and rate payer. But I think the Jillian's point is well taken. It would be good to have some other national context as well. Okay. Javier, are you ready? If the dog barks, I apologize. I just wanted to say my basic interpretation is if we're, we're in the deficit, which is rather small, if we do nothing, we just replicate what budget we had last year, which did not include pay raises for employees. And I'm just saying that because I know folks are watching. So if we want to do exactly what we did last year, which is, which I think, you know, we did it because we knew we had to, but I don't think any of us were pleased with it, especially with that we couldn't increase employee pay. Um, so I appreciate this. I think we are in a better place than we thought. I think if you'd asked me in August, you know, it was definitely the, the sky is falling kind of moment. And I know it's because city staff worked really diligently and we're very, very conservative and I appreciate that. And I know we have a lot of really difficult challenges in the next few months to make. I do want to know, and it may be something that we don't have an understanding of yet, but the county commissioners decided not to do the reval in 2023, I think. And so just wondering if that hasn't, what impact is that going to have for us? Have we even been able to think about it yet, but just curious to know more? We do not factor in the reval. It was scheduled for 2023 into the multi-year, because we make those decisions based on when it actually occurs and then when we get some projections around, you know, what the percentage increase may look like. So it's not factored in the multi-year and we never included. And so we have, we get closer to the, the year that we're actually doing the budget for, for which the multi-year will be included in the revenues. Thank you. Adriana? Thank you, Steve. I, I, I appreciate that Council member Reese, Charlie noted in the chat exactly what I was thinking, just responding to Gillian and acknowledging that as long as we, when we're doing the analysis that we're looking at exactly the resources, because it's not also not just at the, the options they have for revenue, but also what state specifically in like California, there's like state credits that are assigned for folks that aren't here in North Carolina. And so just noting the North Carolina tax system is very arcane and doesn't allow any flexibility. And so it's, yeah. And anyway, I, I just also wanted to, to just note, I really appreciate the presentation. I think that, that you really, I mean, consistently over the last four years, I've seen the budget and management department really come up with, I mean, you can see like all of the hard work poured into making sure that the entire organization is looking at exactly where we are and how we cut as much as possible to, to not raise taxes. And so that three, three cent increase seems very conservative. And I appreciate at least putting it forward and not like trying to hold us back to say that we're not going to do an increase. I'm almost sure we're going to do an increase, but how much of an increase is the issue. And so just noting on the side of the, the conversation that John Allure mentioned, the game is rigged. Just coming all the way back to that race equity aspect of this, noting that if there isn't a real, you know, tax relief plan in place, the game is still rigged and it hasn't changed. And so for people who are fixed income, regardless of race, these shifts and changes can be the difference between whether they have food or, you know, food or prescriptions, because they have to pay their taxes to stay in their homes. And so I'm always tempered by that aspect of the conversation and, and, you know, looking at the projects or the, you know, different initiatives that folks want to bring forward. And so I'm mindful that there, we cannot do what we did last year to Javier's point. I think it's going to be really important to do not only the pay increases, but to move forward in the pay structure shifts. And so I know if there's a way to have a conversation about where those pay increases occurs, I would love to dig deeper into that because it doesn't necessarily have to be across the board. It's not, it's not as pressured for me at the top level. I'm just going to say that outright. But I do know that it's important that we do do the pay increases. And then also just noting the, I know that I mean, about 19 million and just requested items. I really feel, I really want to hear similar to how Jillian explained earlier what the race equity kind of lens looks like around the 19 million that's being requested. And so I'm really looking forward to seeing an analysis or even just giving us the tools so that I can use it for an analysis on the items that are coming forward, because I think that's going to be really helpful to kind of break down who benefits and, you know, who's harmed. And I would also note one more thing, there was one more, hold on, had a note. The police and fire pay plans and the additional appropriations for street maintenance. And I mean, I think all the future challenges areas are my priority. And the areas that were kind of not included, like I said, before the pay adjustments for employees, some of those new budget requests, the CIP, I mean, I could see how we could end up well over 7 million and deficit. And so I wanted, I really want the staff to take a stab at prioritizing based on the equity lens and really giving us just the real lens of or real sense of what should be the priority in the next year, because this is only one year, and there will be another year. And so noting, we came out pretty well, I think I attribute it to to the work of the budget management staff in kind of tempering us enough last year, so that we didn't come out worse and worse shape. And so I appreciate that. I can't say, yeah. And so I'm just thinking through, I'm similar to Jillian, I really want to look at all the numbers together and kind of over the years. Yeah. And I'm also very interested in what the police, the RTI study returns. So it's a lot here. It's a lot. It's almost like, what are we taking off the list? I don't see it. I don't see that yet. So that's always the big, that's always the big difficulty issue. There are always so many good things. Thank you for that. That was a good summary. Mark Anthony. Thank you, Steve. And good morning, friends. It's good to see all of you. I want to thank you firstly for giving me a leave and pardoning me for my tardiness. I was at a meeting with the North Carolina League participating in a racial equity thing presenting there. I have to tell you how gratifying it is when I'm in these other contexts and they, particularly with other electives and folks start asking, well, what are some data points or examples of things that are going on in other cities that you think are replicable or worth replicating and how Durham constantly comes up amongst our colleagues from race equity to the budget to where's the coolest place to hang out and what kind of innovative cool things they're doing. And it was no different this morning. So I just want to say how deeply gratifying it is. And I know that's reflective of our staff, this incredible staff, maybe a little credit for us colleagues, but we know it's really this staff. It's incredible. I mean, this is what we're working for. So I want to thank Bertha and Wanda and the entire team, the entire apparatus that goes into keeping us in the black. And, you know, a city that operates in the black has options, has different options and we approach conversations differently. So I want to also associate myself with just about everything my colleagues have said prior to me speaking. I think each of you have touched on an important aspect of how we need to guide this shift moving forward. I'm encouraged by the revenue, the lower impact on revenue that we had thought that COVID would bring about. But I do want to, particularly for those that are watching who are not government heads or who aren't like into this stuff, I do want to point out the tension of a disconnect between how a government can be doing well and folk are still hurting and folk are still feeling pressured. This was a devastating year for a lot of people in our city. We've lost businesses in Durham and we've lost some institutions in Durham. So for the lay person, it's almost like the stock market when folks say the stock market is soaring. And that's a good indicator for a certain sliver of people. But if you're not in the stock market, you know, stock market may be soaring, you can still be having really hard times. So to hear that the government, we did better than we thought we were going to do, may translate to some people listening, oh, we did all right. That means we can do more for COVID, we can do more for folks that are unemployed, we can do more for all kinds of communities. So I want to say to the folks that are watching that it's possible for us to have a good year as a government, but we also don't want to downplay or mute our understanding how tough a time of a year this has been for so many people in Durham. And sometimes there's that disconnect. And I know we get that and I'm not saying we don't get it, but for those listening, we still have some choices to make. I think Charlie was spot on in terms of us needing to honor our commitments in terms of the housing bond. That's something that we're self imposed upon us amongst the voters. And I think that by the voters, and I think that a pay raise for our staff has got to be top of mind. I'm not telegraphing now how that's ultimately going to play out, but I think that's got to be top of mind for us, which has not been factored in yet. So I just want to acknowledge to those watching that, although we may as policy heads as wonky government types, maybe a bit excited about our revenues being better or revenue short for not being as bad as we thought it was going to be, we still understand how painful and how tough a year this was for so many of you watching. And we've got some tough decisions to make as a city moving forward. And the position that we're in up strength is directly attributable to, as someone said, and forgive me for not remembering who it was, the strength of our budget team. I think it may have been you, DeGirana, the strength of our budget team and the guardrails that you guys put in front of us, no matter how wide-eyed our ideas are, no matter how noble they are, and they are noble. You continue to provide us with with very sober guardrails and solid math, which is hard to argue against math for us to move forward. So I just wanted to put those things out there and acknowledge, I think, all of the important things that my colleagues have said, and let folk know that Durham is a well-run city, and we're blessed for that. But we also understand that it was a tough year for a lot of you, for a lot of us. And we're mindful of that. And we're not overly giddy about where we are as a government, because we understand that ultimately, how you're doing in your homes right now, where you're watching this from is the ultimate measure of how we're doing as a city. So let's get to it. Let's get it on. Thanks. Mark Anthony, I want to put a period on what you just said. Before this meeting, we had a meeting of the Recovery Renewal Task Force, and we heard the latest economic statistics for Durham. Total sales were only down, and I'm going to not sure the exact time period, I think it was the last year, about 3% better than expected. But 33% of our small businesses have gone under, 33%. And we heard from Susan Amy an estimate that unemployment in our hospitality sector, which is mainly made up of low-income workers, is up to probably around 40% still. So we know that not only do we know that from people that we know who are suffering the unemployment or whose businesses are gone, and have lost the work of a lifetime, but we also now, you know, we have the statistics to confirm what you say. So I want to appreciate, and second that it's really important to keep that in mind. Deejana. Thank you, Steve. I could just third that I would even harken and even think about what the numbers look like when you disaggregate by race. And so I fully want to thank Middleton. I'm not going to be able to do for just a noting, just specifically, just what's kind of like my heart is beating faster right now. It's like, I don't know how we're going to get to the end of this, but I know that I trust the process and we've done it before. And of course, you know, not without scars, but you know, we managed to get through it and passed it. And so the city is always better for it. But I do want to just make sure to also note that this pandemic has caused death in our community. And, you know, there are many families that are now single-parent with children or, you know, single senior now home alone. And this, I mean, it's the devastation that we're not seeing in our numbers is definitely felt in our hearts. And so I do appreciate Middleton making sure that we censure that aspect of this. Thank you. Thank you. And I was just looking through the attendees. I see Ryan Smith is here. And I'll just ask Ryan if he could make sure that council members receive the report that we got at the Recovery and Rural Task Force on those economic. Thank you, Ryan. Colleagues, other questions and comments for Bertha at this time? We're going to take a couple of these issues up during the CIP presentation. Bertha, let me ask one other question. The multi-year, so the pay, no pay raises are built into that. Are there any pay raises built into the multi-year after, yeah, they're not this year, but are there in future years or any pay raises built into the multi-year? Yes, we actually built in the pay raise back to restoring it to its previous level in 2023. So it is built in future year. Part of what I was going to say is that to, you know, the sentiments around, you know, what's going on in our community, you may recall that in previous years, we've come to you with the pay increases already built into the multi-year. Yeah. Because we did not have pay increases last year, we did not presume that we would restore those to 100%, you know, full level. We didn't know what our numbers were going to look like. And so we did not restore those. So if we had have done that, you would have seen that, you know, that huge deficit. But again, as I said before, you know, because we stop, you know, pay increases and a lot of, didn't do a lot of things we normally do in the current fiscal year, we're kind of starting from scratch and we're building that budget. So we are very much aware that there are hard decisions that need to be made. And we want to be transparent in making those decisions with you all. And you will hear, you know, lots of other presentations that are going to, you know, make us think about, you know, what our priorities are, including some that you've already mentioned. But I'm glad you brought that up because we did restore the pay increases in 23, but did not, we did not include those in the multi-year as of yet. Thank you. Colleagues, any other questions or comments for Bertha before I ask Bertha if she wants to make any concluding comments about this section? Bertha, would you like to make any, after hearing the council any concluding comments, any other observations you might have for us? I just want to thank you all for your feedback, for your questions. Of course, my team is on the meeting, they're taking notes, continue to give us your feedback, your guidance. We have to do additional research that you may need for decision-making. But this is really helpful, the feedback is helpful. You all making sure that you reiterate those things or lift up those things that you think is important for the community because a lot of times we do, we do this all the time and we gloss over things that maybe that's really important to pull out or point out for our residents. And so continue to do that with us and we really appreciate your support. Thank you Bertha. You have our support. We are so respectful and grateful for the budget work that always goes on in this city. I just am amazed and impressed and I know my colleagues share that. Thank you. I think maybe we had some of the discussion that I was concerned that we might not have time for at the end of the day. So maybe we'll be able to end it too. We'll see how that goes. So we're scheduled for a break, 15 minute break. How about colleagues and Bertha, I'll ask you, can we make it a five minute break? Absolutely. All right. Colleagues, are you okay with a five minute break? I see a thumbs up from John and I see colleagues. Okay. Can we make it? I just want to get the kids straight. All right, well, let's make it 10 minutes. You want to make it 10, Adriana? Is that enough? Thank you. Yeah. We'll be back at 12, 10 everybody. Thank you so much for those of us that don't have kids and don't have to worry about that. I'm glad that you said that. Well, I have them, they're not here. Thank you everybody. We'll see you at 12, 10. Thank you. Thank you everyone. Just a reminder that as we break for 10 minutes, your mics are still live. The feed is still live on YouTube. So please be mindful of that and mute your screen and your sound. All right. It's now 12, 10. Let's see if my colleagues were able to make it back. I see Adriana. You made it with the kids. Everything cool? Right. Yes, I have to make sure he's ready for his test. Yes, you do. Your house is not on fire, so things are going fine. I remember those days. Oh, and I see that we have the cat with us again, which is awesome, the legal cat. You're killing me, dude. You're killing me. All right. John, we'll turn it back over to you for what's next. Good afternoon, everyone. John Allure, Assistant Budget Director for the City of Durham. And we're going to kick off the afternoon with a CIP depth presentation for you, if we could have that pulled up. And just before I begin this, if I may, sometimes you're asked to give praise, and sometimes you want to give praise. And I do need to take a moment to acknowledge Vivian Cruz from the Public Affairs Office, who has been a tremendous help to all of our staff through this week in basically taking us all to Public Affairs School and teaching our office how to be really good stewards with public information. So Vivian, thank you so much for all your help. John, can I second that emotion? Vivian has had a lot of extra duties this year through COVID, and she's just done a fabulous job for us. So thank you for doing that. So to begin the presentation on the capital improvement plan, I'm joined by the finance director David Boyd, who will be joining me about Midway through this presentation. I think if I can presume the best thing here would probably be to get you through this information as quickly as possible. And I think it will be very helpful to you in having a discussion about future capital needs, et cetera. So if we could go to the next slide. To begin with, just a refresher for you. So we have a general fund CIP funding plan that was created in about FY 2017. And it involves looking at CIP through the lens of a 10-year time horizon, included in your package was a spreadsheet of what we call the 10-year plan. Sometimes it's called the fundable CIP. I won't ask anybody to project it. It's very fine print, but all of the information that we have planned out for capital projects is within that plan. We try to maintain a contingency reserve of cash of between a half million to $1.5 million every year. And I'd say that the plan is very dynamic and fluid. It's subject to annual review. It can change. It can be reprioritized to more accurately reflect future needs, changing circumstances. And certainly that was the case in FY 21. Probably the most, as you all know, substantial difference in FY 21 is we suspended the CIP plan. We stopped the plan in the spring because we didn't know exactly where we were going fiscally. So we suspended things and we did not adopt the CIP until the fall of 2020. So a lot of what we built on from the fall has not really changed, but this will tell you where we're going forward from what we adopted in late 2020. So in December, we started something new, which I'll get to in the coming slides. We conducted our first stat governance meeting. This is a project we hope to do on a reoccurring basis with city management and project managers to review CIP projects that have already been approved and to review the progress of those plans, those projects. The CIP was kicked off in December of this year. The requests were due on January 29th. Through the month of February, departments will be presenting recommendations and doing internal scoring. In April, recommendations will be made to the city manager. And then of course, the city manager will bring those recommendations to you in the proposed budget, which will be presented on May 17th. So with our partners in technology solutions, we have over the last couple of years been developing what I would call a more robust, more visually pleasing tool for looking at CIP projects. If you look at this first slide and I'll ask Christina Tux, who is our CIP project coordinator or CIP budget coordinator, to just share the link to this in the chat would be helpful so people can go to it. Christina is the real person behind all of what I'm presenting here today. So another thank you, which I have no problem giving a thank you to Christina Tux for all of her hard work. So the project viewer, as you can see, it's a more attractive overview of all of the active projects, what's on hold, what's delayed through bar graphs, which is again a more pleasing way of seeing the information. A tool that I think everybody will agree is again a more pleasing way of seeing things is the ability to look at capital projects geographically, so to have a geographic data representing where the projects are. And if you go to the next slide, you can certainly scroll down to this on an individual basis to see projects. So there's a lot of geospacing. We worked hard with the folks in GIS to develop this with an internal team that included not only project managers throughout the city, but again technology solutions, the finance department and the budget department. You can see the link there on the bottom of the slide if you want to go live to the to the project viewer. The status project updates, we show this slide every year and it's to show you where we're at in the process. We have, as we say, CIPs were due at the end of January and we are in the process of evaluating projects. Anything bold represents something new. Anything in italics represents a revision to something that had been previously planned and the thing that probably sticks out to you the most here is the street paving and Bertha alluded to. Currently in the financial model you saw previously we have 10 million allocated, 6 million from operating and another 4 million from fund balance and the department again, the public works department is requesting a total of 20 million. And with that I'm going to turn things over to the finance director David Boyd and he can take you through the debt model. Good afternoon. Thank you, John. I'm David Boyd. I'm the finance director and as a refresher for most of you but perhaps the first time for council member Freelon. How do we pay for all of this? So we have a 11 cent fixed piece of the tax rate that goes into a fund to pay for our debt service on new capital and previously constructed capital as well as using some of that to cash fund new capital projects. The financing scheme we use includes a line of credit where we pay interest only during a construction period and then once we've got accumulated a significant amount of borrowed funds then we do a fixed rate refinancing of that over 20 years to pay for that accumulated debt. We tried to fund 10 percent of our new capital with cash as opposed to debt and we are only talking here about projects that are for general fund general fund fleet and the non-self-supporting enterprise funds like the ballpark and the parking fund. This does not include any of our enterprise funds, water, stormwater, those types of projects. Next slide. So John alluded to the the other exhibit that you all have in your materials that is the 10-year CIP. That's the same CIP that you saw in fall when you all adopted the delayed CIP plan. We have not changed that and that plan results in kind this outcome. So this is for the mayor and the mayor to protest so they can get their dose of spreadsheets. What we've got to do is keep that bottom line above zero and so we're trying to maximize the projects that we can fund during this 10-year planning horizon without running out of money between the amount of projects that we're paying for with cash and and those projects that we are going to pay for with debt. And as you can see during this 10-year planning horizon we have we have used up all of our capacity with the existing 10-year plan. What we have not yet done yet, I'm sorry, what we have not yet done for this year's budget is re-evaluate financing assumptions or incorporated any of those new project requests or changes in the plan to see what we can move around within this plan to fund as many priorities as we can. Next slide. So how can we get more capital? Well the only way we can do that is with additional taxes pushed into the CIP. If we wanted to do it all at once depending on on interest rates and how we structure things we could get about 45 or 50 million dollars for another penny on the tax rate but currently we're maxed out. What's not on here and a piece that we've still got to do some work on is what does a penny on the tax rate mean if we just added it into the 10-year plan? So as opposed to taking that penny and issuing debt right now if we just increased funding from 11 cents to say 12 cents roughly that over the 10-year time period we would get probably double the amount of capacity compared to just issuing debt right now and funding it with the tax rate. What else are we doing on the borrowing side? Switching to the enterprise side we do have a large line of credit on the water and suicide to fund their extremely large capital improvement plan. We'll need to refinance that line of credit this summer. We are looking at when do we need to borrow our next amount of money for the existing 10-year plan because within the existing 10-year plan we are intending to issue a significant amount of debt to pay for that. It's non-voted debt. It's installment financing debt that does not require a referendum but the existing plan already anticipates a large amount of debt to fund it and we're just trying to maximize the resources in the CIP by making sure we're doing it only when we need the money and structuring it such that we get the biggest bang for our buck. And then obviously we're thinking about when and how much of the affordable housing bonds do we need to issue and I know you all want to talk about that as well. I think we've got a couple more slides and then we can tackle those topics if there aren't any other questions. Just rounding things out, we spend an awful lot of time talking about the general fund and the tax rate and that impact on what we call the multi-year financial plan. There are other funds with other capital projects, primarily enterprise funds and they sort of are islands unto themselves. They have capital needs in this and so what we've seen this year come forward are solid waste, stormwater, transit fund and water and sewer fund needs and all of those are individual funds and of course their debt capacity, the way to pay for that revenue is dependent not on necessarily on a tax rate although some of these funds are tax rates subsidized but on increases in fees, stormwater fees for example or water and sewer fees. And then the final slide is just a reminder that we also have fleet request needs. That's for existing fleet needs and fleet replacements. We have much like the 10-year plan, we have a about a five-year time horizon for fleet replacement needs and this is just showing you in the current proposed fiscal year what the needs will be for those fleet requests, all of which as I say has been there's no surprises here in what we're seeing despite you may look at a number like 8.5 million dollars for general fund. That was anticipated, we knew five years ago that we were going to be at that horizon and here we are and the debt fund is capable of, has the capacity to provide for that. And with that David and I are happy to answer your questions. Thank you, John and David, much appreciated, always a great and important presentation and colleagues just to remind you you do have in the packet we received the CIP exhibit for the 10-year CIP which has all the specific items in it. I don't know that we want to discuss those today but of course that's fair game and I know staff would be happy to respond if you have any specific questions about that you know after the meeting as well. It is in, it's in pretty small but still readable, still readable type size on our on our iPads. So I'll just first ask if there are questions or comments by colleagues. Anyone have any questions or comments to begin with? All right, so I do have a question about the fleet numbers that you showed us, John. Remind me about what our policy is on, I thought we had a fleet commitment that we kind of built in and we're trying to remember what that is and do these requests exceed that? So we have a commitment to replace what we already own, so to speak and we do have the the means to provide for that and and what we want to avoid in that scenario is what we call fleet creep is is that we don't want new requests to start without bleeding into the the replacement program because then we cannot provide for it so any new vehicle requests need to come essentially as a new budget request. Okay, and then once we make that replacement do we then then build that into the following years? Correct, correct. And the the the exhibit the 10-year exhibit that we got that I just referred to matches up I'm assuming with the the tax rate for capital slash debt cash funded ballot sheet that David showed us. That's right. Yeah, and so just again you know I think for Pierce's benefit, Pierce when you look at that slide that's the David mentioned that chart I think that this is always something that was always hard for me to understand because in the in the first years we show a whole bunch of money at the ending fund balance so we show 14 million dollars of fund balance for capital but then when we see what our commitments are up through year 2026 we realize that just with the commitments we already have we're down to basically zero dollars and so that's why I think that it can it's easy for that to be misleading when we see that because we think we have capital money but we really come truly we've actually committed it already. That's an excellent point Mayor because we are borrowing for our capital over a 20-year time period the decisions we make today have a very long implications and that's why we've got a 10-year plan and and we make sure that we're looking at it on a long-term basis. So I could go ahead and approach this well let me just ask this David I'm assuming that the interest rate environment you're thinking that next year's interest rate environment is still going to be extremely favorable. Yes okay all right colleagues any questions I want to I do want to think there are a couple things that we know we want to talk about one is the affordable housing bond what tax rate we would need to finance that this year and I know that we are interested in talking about the possibility of a green infrastructure bond and how we might get some guidance from our staff about how to think about that and there may be other issues but before we hit those two issues I want to ask if there are any other questions or comments my colleagues I see DeGriana and then Mark Anthony. Thank you I appreciate the level of detail that's always included in the CIP process but I'm not sure if I'm maybe I'm missing something but the debt that we carry I know I think last year asked about whether we have like a spreadsheet around that and I guess like in the same framework do we have a spreadsheet that displays how much debt we're carrying in that and I guess in that 10-year fashion or 20-year fashion because I think some of the bonds are that long so that we're also balancing not just against the projects that we're looking to implement but also what we're carrying because I know that the number is there but it doesn't quite spell it out so like specifically like on the parking decks that we just built I know that we didn't fully pay for them up front but I don't know how much we're like I don't know what we're carrying right now. Sure so councilmember the the the summary spreadsheet there that I'm showing you anticipates that we are already paying for any of our current obligations and we have most definitely built them in to what capacity we have and what tax rate we need to pay for the existing debt and on any future debt that would be associated with any new projects in that 10-year 10-year time period and again the what you're looking at here and where we focus kind of most of our attention because it's got that 11 cent tax rate attached to it is is just the debt that's that's covered by that 11 cent tax rate and so so for instance you make reference to that the debt we issued for the parking deck that debt is carried in carried carried in the parking fund and paid for within the parking fund there is a certain amount of of old debt in the parking fund that is funded from from the 11 cents but any new any new debt is carried in the parking fund but but I think I think the key takeaway for you is that that we've already made sure that all of our existing debt is is covered and that our projections are are are taking into account anything we've already issued and need to pay for and I would like a detail on on the outstanding debt we've got a number of publications that that that have that that I can point you to yeah that would be helpful I just noted that the there were two at the bottom of the sheet and I can't I can't pull up the slide right now but I'm thinking there were two at the bottom that were kind of low and the listing of uh I guess current I'm trying to find it but there were two that were really low and I was just wondering so what happens when they hit zero so if that fund if the park so say for instance that parking fund we're not having anyone parking right now so they're not necessarily bringing in parking funds in a way that they would normally so what happens when it hits zero does it go up against the general fund does it go up again like so so so that is another one of those those topics that that we'll have to talk about throughout the budget process is you're absolutely right the parking fund is is challenged with getting revenues we do have a multi-year model for the parking fund and part of what we're going to have to do in balancing the budget this year is look at that that exact problem and to the extent the parking fund can't cover its operating expenses and its debt service then we'll have to have a conversation internally do we have a way to cover that and if not you know what decisions do we need from council about how do we deal with it but so that's that's a separate a separate but important conversation that we'll need to have and I think I appreciate that I just really wanted to make sure that I wasn't going crazy because I'm like I know that these things are here and we're going to have to come up with some strategy because I know the funds are not there but I get you it's separate I think the place Mark Anthony do you mind if I just make a quick comment before I get to you of course of course go right ahead please I think that what DeGiorna is saying is important and that we all have to keep it in mind that what we're really looking at here and David described it is really only a portion of our debt and so I think we tend to think about it because what we have to raise taxes for is the is the debts that's described in David's chart and that we actually have a whole lot of other debt for example in water in water and sewer we're really I believe David our largest debt probably by far exists is that right it will be shortly yeah and so maybe it would be useful as you said David to provide us with just a piece of paper at some point you know that gives a little snapshot of that so everybody gets the big picture be happy to just a note Mr. May I'm sorry Steve the the number that Bertha shared earlier which is why I'm pointing it out where she said that we had 56 as opposed to the like the the reserve amount that we have like it's as much as I felt like that was a really good number I still felt like we have a lot of debt outlined and I don't know what's going to come up the next 18 months but I'm hopeful I'm very hopeful I'm optimistic that we'll get back to everything but if not all of that debt still has to be covered so I was and I think what I want to reassure you is is that that the 11 cent tax rate that we have currently is sufficient to service all of our debt and that the the rates we have in our our utilities are sufficient to cover all of our existing debt and and that that there's nothing that you all need to do at this particular time to to be concerned about our ability to repay any existing debt that we have thank you David Mark Anthony thanks Steve and John and Dave good to see you both thanks your math is always on point so my question isn't so much about the math but something's kind of a undergirding philosophical thing and it goes to equity I apologize that I missed John the equity presentation at the beginning firstly I want to say I John and Dave I think I owe your shop a bit of an apology and a clarification I was looking at a previous meeting that's what I do because for whatever reason you guys have not put my Netflix expense in the CIP so I watch all the meetings probably racism so I watch all the meetings and I asked them I asked you talked about questions we can ask contract these potential contractees about their demographics and the workforce and I don't think I struck the right tone in my questioning because it seemed that it could have been interpreted some of the things I said was minimizing the importance of that for going after bigger fish for you know not just white companies that have a few black employees but actual black companies and wealth building and that's not the tone I wanted to strike I don't want in any way minimize the incredible work that you did because we asked that all the time as a council and you guys were spot on and delivering something that we have telegraphed as a council time to time again when questioning potential contractors for the city so I wanted to apologize for that tonal I think error that I may if it can in any way have been interpreted as minimizing what you guys work for if I want to go on record clearly and without hesitation today and without qualification that you guys did exactly what we wanted to it's critically important work and it's going to make us a much better city I think in terms of furthering our goals for equity and inclusion so please uh accept that and I want the record to reflect that um secondly with the cip and this might be better a question better suited for the uh the exhibit next but if if so you can tell me from an equity point of view John and David how much are we agile enough if from an equity point of view we came in one day and said we wanted to just shake the cip up like literally just start moving things around in it from an equity point of view as opposed to from an equity point of view adding things to the list within already existing algorithms and equations which you know sometimes may in and of themselves have systemic stuff baked into them in terms of who gets on the list first how much have it would that we can even foresee a time we'll have that type of agility from an equity point of view to to literally just go in and start moving things in the cip even if it's by years if that question makes any sense to I think I'm going to let David answer that but before he does I just want to tee it up with one thing and that's to say so the mapping tool that was displayed earlier the cip stat that is potentially a powerful equity tool and and it can tell you where the capital assets are so um I mean with that as to using that tool as a is a potential means of reallocation I'll let David speak to the the how nimble the cip is to to reallocate they see deputy city manager Ferguson popped up here maybe you as a comment before I can talk about the mechanics of how that might work thank you both Ferguson deputy city manager for operations uh very much appreciate the question council member and just wanted to offer and and I think this is a common thing that we put forward each year when we talk about the cip this is a this is a policy document this is a reflection of the city's values and your values and so I think the whole reason we created a 10-year plan was to get more clarity about what the council's expectations were about what the organization's um work plan looked like over that time I think to the extent that council's priorities change that our organization's priorities change the cip does need to change and each year we put a great deal of effort and put a great deal of pressure on departments to update this document uh with their desired changes in availability of funds or prioritization of projects um I would say so that that's the philosophical piece is that this ought to change it ought to reflect your priorities that being said I would say that within the first three or four years of the plan a lot of work is being done now to plan those projects and so that doesn't mean we can't change those priorities it's just that I would want council to be aware that we may be stopping work in progress uh to reprioritize and to the extent you know the more notice you can give us the better uh people in public works people in general services in other departments that deliver projects are constantly laying the groundwork for projects that you see in those first three or four years and as David will mention shortly you know we are then calibrating the financing of those projects and the cash flow of those projects so so yes it can change the more advanced notice we have the better and to the extent that the equity lens is changing our priorities now I think that absolutely this cip is you know is a is a clear expression of of that I think to the extent that we get messaging from council where you see specific projects you want moved sooner and suggestions for what projects would be moved later I think all those conversations are very appropriate I know I appreciate that Bo and I think that's that's deeply helpful and I hear and appreciate your your admonition as well respectful but in admonition nonetheless I mean I'm I'm a fiduciary of the city the last thing I want to do is wreak havoc by you know if we've got sunken costs and some stuff that's already going on we want to be certainly be responsible uh in our pivot um so I appreciate that greatly both Dave did you want to add something to that where you uh uh just just briefly we have the tool to do it but I don't want to uh to mislead folks it would be a big undertaking and and as as Bo said it would be um the early years would be would be difficult to make changes in um but but we would have a great deal of flexibility further out but but it would be a it would be an effort but we do have the tool built right now with the fact that we're already looking at it over 10 years to be able to evaluate what those changes might look like I think the other thing that that that Bo um didn't mention was you know there's there's some of these projects you know I I think you can kind of capture characterize them perhaps in kind of the discretionary and non-discretionary type projects you know the the stuff that we kind of have to do to to take care of what we had versus kind of the the the option kind of like at your house you know what are the what are the things that you that you have to do just to keep keep the house in order versus what are the things that that you might want to do and I think we'd have we have to parse out you know kind of what are those things that are kind of necessities um and and see where they need to fall and then see what kind of flexibility we have within the entire plan but we have the tool to be able to do it no absolutely thank you so much and uh thanks uh mayor I'm going to yield now I'll just say this final point by way of dismount um I think you you you've kind of shown some light on some of the the challenge of race equity work is that it it can be disruptive sometimes when we've got institutions and almost by inertia we've been doing things a certain way you know for decades sometimes and they're efficient but but sometimes the work of racial equity is going to be disruptive and uncomfortable sometimes but but your admonitions are are well well stated and well taken as we move forward thanks for your time guys I appreciate it thanks to you I wanted to try to make some of the specific just by looking at the chart that we have you know in front of us uh the the exhibit when I think about something we have to do you know we've got fire station 18 funded for the next over the next three years and I think that's one of those we got to do fire station 18 but when you look at the we've got also got a I think a five-year plan for paving unpaved streets if we decided that you know that's discretionary in a different kind of way I think and if we decided we wanted to move that up to the first three years to get the job done on a racial equity basis that's we'd have to move something else but I do think that you know that's the kind of thing that we could look at I also think that a lot of the prioritization of the capital projects is done within these large grouping so when you see sidewalk repair on the exhibit I can't remember how much it is but it's a tremendous amount of money um one aspect of the sidewalk repair would be or is and I know that we try to do this now we have a racial equity factor in the in the in the decisions about where we're repairing and putting new sidewalks that a lot of the prioritization around racial equity can be done within the larger categories of of capital improvement so I just wanted to offer those a couple of observations absolutely thank you um I do have a question about one specific item on the exhibit and I'm not sure this might be both for you but I'm not sure uh which is we've got the long meadow pool construction is a large amount of money in the plan over a period of gosh all the way and we don't have anything in here for the wheels um of course we we wouldn't have anything in here for the wheels redevelopment are we thinking that some of that money or is this premature that the money that we have allocated for that facility which I don't think we really knew where it would be at the time would that money be kind of moved towards the wheels redevelopment over that period of time or have you all had a chance to think about that so at this time the direction we've given staff is that the the money that you have seen for the long meadow pool replacement needs to reflect the cost of that project specifically about creating that regional aquatics facility that has been in one shape or another been part of the cip since council adopted the aquatics master plan to that effect the staff is working on long-range plans for wheels and I expect there will be a cip submission in this year a first submission to reflect that project we're also working on how to reflect and show funding for any facility that goes back into long meadow park when the pool that is currently in long meadow is decommissioned so those are three related projects I think for transparency my direction to staff has been to try and keep those projects separate in the cip so that we see the different funding buckets and again so the council can help us make priority decisions about when each of those phases are delivered thank you very much Bob that was great colleagues other questions uh at this point about the presentation didriana thank you I just for clarity um I just want to make sure that it's clear at note you're hinting at and acknowledging that long meadow is the only pool um located in eastern and the conversation around taking it offline I don't think I don't know that that's been as public as it needs to be um but I'm hopeful that folks are aware that it's going offline for the summer and that it that is the hope that wheels will come online and that'll be in place of or alongside of a splash pad or whatever comes up that folks decide so thank you that is in fact the plan uh I've you know long meadow pool is beyond the end of its useful life I think we uh have tried but will continue to emphasize with uh stakeholders and community groups that that is that is the case a lot of work went in years ago to determining if that facility could be lengthened and improved and because of a number of factors site constraints there uh we can't build the type of facility that uh esterm deserves and that the aquatics master plan called for the the a broad search for a replacement property that could serve the same geographic area was underway when the wheels opportunity presented itself and so we were able to sort of merge those two needs and so the facility that will go in at wheels would be a significant upgrade over long meadow but it is a still a relocation and so that's why the conversations about the splash pad at long meadow or or some replacement facility that serves an aquatics purpose have been underway I will continue to message that that I want to reiterate the short-term uh effort is to continue to operate long meadow over the summers for as long as we can make that happen it is year to year given continued failures in some of the infrastructure there and but we are making every effort to make sure that that facility continues to operate until the replacement is ready to go thank you for thank you very much bow um colleagues i want to point us now to two discussions if it's okay john are you ready for me to move on um and do we need to do a time check steve can i can i ask one quick question yeah of course charlie sure thank you i'm sorry the um on the slide that has the general fund fiscal year 22 project updates can you just give me like a sentence on what microwave upgrade means i'm sure that's not the microwave in the kitchen so um or if it is that's a really pricey microwave go ahead it's that's a radio system improvement thank you for that okay thanks we have uh dr walton i don't know if he's here yet but joining us at one so depending on his arrival and his i can check on his time commitment we can we can and paulus definitely get him in at one yeah i mean we we thought he's he's coming to to be with us at one let's let's let's make sure we do that very good um we have dr walton at one and that's really other than closing remarks in our discussion and we need to have some i think that's the the the last thing on our agenda but we do have a few minutes now to discuss us at least one of the uh aspects of the of our potential uh you know this debt discussion and that why don't we go ahead and talk about the affordable housing bond and i'll first ask david david uh could you uh let us know what you think the tax increase lift would be this year uh to finance the 95 million dollar affordable housing bond sure so um as as recently as as last week we got the latest projections from community development on their spending plan towards towards accomplishing the goals of the affordable housing plan and it looks now like um the first tranche of debt um would not be issued until late fiscal year 2023 so uh and it's looking like that would be about uh 45 million dollars so so that's less and later that than when we talked about this last year and then the second tranche of debt would be um fiscal year 2025 for for the balance uh of the 95 million so 45 million in 2023 very late in 2023 and then 50 million dollars in 2025 um based on um what i think are are conservative but reasonable interest rate projections um if we were to raise taxes in fiscal year 2022 to cover both of those tranches of debt and this is kind of using what we talked about previously to kind of the set it and forget it tax rate you know we just could set the tax rate once and then that should be sufficient to to cover all the all the debt throughout the life of both of those issuances um if we did that in fiscal year 22 uh the tax rate needed is currently projected at 1.38 cents um so that's less than what we had talked about last year um if we wait until fiscal year 23 so that first option is we're gonna we're gonna we're gonna increase the taxes before we issue debt and kind of bank that money now knowing that we're gonna need it uh when we do issue the debt if we wait until fiscal year 23 and and increase the taxes in the same year that we first issued debt um that tax rate would be one and a half cents to to cover both of those tranches of debt um like i said we we got these um most recent projections last week um so uh as we work through the budget process it's it's possible that that those projections might change a bit but i think you can see kind of order of magnitude it's obviously lower number if we do it this year higher if we wait till next year 1.38 in 22 1.50 if we do it in 23. David thank you that's exactly what we needed i appreciate that um holly uh i i wonder yeah i just wanted to say one thing right right quickly the affordable housing plan as we all know would have multiple funding sources so what we're talking about right now is just the debt component but it is not to be you know conflated with the overall plan that the community and the council has become aware of and will be bringing an update on that plan at an appropriate time thank you thank you for that very important clarification jillian thank you um david i'm just wondering how like why those projections have changed like what's happened to change them sure so so um number one interest rates are lower than when we were talking about this a year ago um and that's kind of one of the things that we that i've talked about before you know the sooner we impose the tax rate in advance of us actually issuing the debt kind of the more conservatism i need to build into the the the expectations on what we'll be able to borrow at um as opposed to doing it closer to when we actually do the borrowing so that's the first piece and then the second piece when we talked about this last year we were talking about the first trance of debt being 50 million dollars and now we're talking about the first trance of debt being 45 million dollars i'm sorry it was 55 million dollars when we talked about this last year now it's 10 million dollars lower at 45 million dollars for the first trance so it's kind of flipped that so we're borrowing less later and that's what's driven down the the tax rate okay that's and the and the 10 million dollars less that we're borrowing is that just because we have a better sense of the timing of the projects exactly okay thank you thank you colleagues i know that we have more to discuss about this of course um and we want to try to give some guidance today but um uh dr walden is with us and i'm going to ask um and david thank you we'll be back to do this in a minute and i'm not sure who's introducing dr walden uh but john are you or bertha uh introducing right i'm happy to do so good afternoon um and welcome uh michael walden um for those of you don't know uh dr michael walden is a william neal reynolds distinguished professor and extension economist at north carolina state university and a member of the graduate faculty with the pool college of management his phd degree is from cornell university and he has been uh nc state since 1978 he's also been a visiting professor at duke university uh dr michael walden can be frequently seen heard and read in the media he's appeared in nbc cbs the fox report on the news hour with jim larer and is frequently quoted in usa today the news and observer the charlotte observer boston globe wall street journal and the washington post is by weekly column you decide is carried by over 40 newspapers in the state i'm very welcome very happy to welcome back michael walden take it away sir well thank you john and a technical point are you showing my slides or am i sharing them we have a crew here who are going to show them for you sir okay so when i want to go to a slide i or next slide i just say um next slide okay all right well very good well thank you uh once again for inviting me i was thinking back i think this might be my gosh 15th consecutive year in speaking to the retreat council so um i must be doing something right or i come cheap one of one of the two uh but um i think it's good to see all of you i did see most of you virtually on the top of my screen uh look forward to if you ask me back next year look look forward to seeing you all uh in person um what i want to do with you is obviously talk a bit about where we've been in the last year with the virus how its impact to the economy particularly the the Durham metropolitan economy uh at the start of this year are we share with you what what i think it seems to be a consensus feeling economists as to whether this is going to be a better year we hope the answer is yes how fast we will recover and i'll give you some information on that and then the last part which i think might be the most important at least in my mind is uh what has our experience of the last year with the virus the covid recession etc what has that done to our what we call it what economists like to call structural issues in our economy how has this um how is this recession how has this virus made some permanent changes to our economic future so i'll go through that and and i will give you a teaser here um i i am very very optimistic uh particularly about our local economy uh the Durham Chapel Hill metropolitan economy as well as the rally uh rally carry um so to jump ahead uh in case you were we're going to close your eyes and worry about if i was going to get a lot of bad news uh i think we are lucky to be where we are here uh in the greater triangle we have a lot going for us and as i'll talk about i think indeed the structural changes that i'll allude to might even increase our potential for for economic growth all right that said next slide one of the reasons in fact i was thinking about um what i told you last year i think last year i had very little time because of of time constraints but um even even though the virus was creeping into our discussion i think we had already had the first cases uh in the U.S. by this time last year um we obviously did not know what it was going to come to and i suspect that i was optimistic about the economy in 2020 and and there was good reason to be optimistic if you look at some of the bullet points here we had had a record uh length of economic growth in our economy we had a very consistent very reasonable growth rate of about two percent we saw wages adjusted for inflation were rising across the board that is the all rungs of the economic ladder seemed to be improving we had a 50 year low in our employment and the top all this off we had very low inflation so so we really had the best best of all economic worlds next slide and then the virus uh came and it's in a state and the um medical experts quickly assessed that the COVID-19 virus was um contagious highly contagious and it was deadly and you put those two together you really have our worst nightmare and um the the conclusion was that we had to treat this as a very very serious um um a threat to our economy which is as we saw was indeed the case next slide so the the medical people told us that we and i and i say that with with all respect but i want to emphasize it's not me or economists speaking the medical folks said we needed to to to control or contain this virus because of its contagious aspect because of its deadly aspect we could have a situation in the country that we hadn't seen in over 100 years you had to go back to the so-called Spanish flu which incidentally was miss misnamed like i tell you a story about that but the so-called Spanish flu that my my grandparents lived through neither of my parents were born yet 1917 and 1919 that killed somewhere between 500 and 600 thousand Americans and we we literally if you read read books about about that horrific event which i have read a couple we literally had hospitals overflowing uh people had to be sick people had to be put in warehouses you had cemeteries filling up you had people dropping dead on the street i mean it was an it was an awful awful situation and i i think that um those people who were aware of it uh knew this could prop could potentially morph into that so the conclusion was made early on that we needed to contain the virus unfortunately by containing the economy and so most of these decisions if not all were made at state levels and and you may recall i think it was march 19th and the reason that that date sticks in my mind is that's the day after my wife's birthday and um march 19th i believe it was the case governor cooper issued the the orders the state home orders and the shutdown orders for for selected economic sectors and again the whole reason for that was to try to slow down person person contact so that we could get a handle on the cases get a handle on the hospitalizations and the deaths and then hopefully be able to to reopen to some degree uh layer now when this happened these orders were issued here i'll bring in economists we knew this was going to cause a recession because if you if you restrict the uh face to face contact a lot of businesses can't operate and if you tell people to stay home unlike fortunately my job where i can pretty much and have done pretty much my job consistently um using this technology with students and meetings and research etc i'm lucky a lot of jobs can't be done that way so economists uh left forward and said all right we understand the medical situation reason for this but the economic situation is not going to be pretty next like john and so we knew there was going to be a recession i call it the mandated recession because it's i think now i've been at nc state 43 years and i think this is my eighth official recession and this is unlike any other recession in the sense that it was and as created by public policy but obviously created in order to deal with the health issue um we we had the biggest the worst numbers were in the second quarter so april may june again the shutdown orders started at the uh mid march uh you may remember some of these headlines and when the numbers came out for the second quarter of 2020 uh most the headline said one third of the economy lost um actually that's a little bit of a misnomer and i mean if this makes you if this makes you feel better i'm glad just a little background here um a lot of federal numbers are quoted on what's called an annualized basis meaning that in this case they take what actually happened in the second quarter they being the bureau of economic analysis what actually happened in the second quarter and they said what if this continued for a whole year what would it do the economy and that's where we got the 32 that's where the 32 came from actually the decline in the economy actual decline in the economy in the second quarter was nine percent they might say we're walled in nine times four thirty six not 32 other seasonal adjustments and going from the quarterly to the annualized now that was still bad in fact it was uh i believe i'm practicing the worst on record whether you look at annualized or actual so this was a very very bad downturn next slide and and we can see it probably people can relate to and i apologize for getting the economic leads there people can obviously relate to jobs that's what most people understand they know it's the easiest economic data to communicate so i'm showing you on this slide the change in jobs on the left hand side at the u.s. and u.s. and right hand side of north Carolina and obviously april pops out we lost over 20 million jobs in april um last year in north Carolina we we lost 600 000 and i can remember i got a call from um my my local senator in the general assembly and he said mike can you can you put some numbers together that would would show that i can that i can communicate with my colleagues about uh perhaps this was before any of the stimulus packages came out of washington he said i'm worried about people being unemployed not having enough money to pay the light bill pay for food etc so i can you generate some numbers some estimates what it would take uh to carry people who are in an unfortunate situation for maybe six months and i said sure and i can remember um i i i took some time in doing this a couple weeks so the one tried to get it right but every time i return to it uh the forecast got worse they kept getting worse and worse and worse i think i remember starting at thinking well it's going to be a 200 000 drop then 400 000 as you can see it all only came almost 600 000 so just an unbelievable uh month of carnage in the economy now you can see in may we had a recovery and it was actually the start of a multi um month recovery and if you remember that is the month and i forget where it was in the month i think was toward the end where governor cooper pulled back some of those orders and most states did so so we were able to see a little bit of a job growth in may and you can see onward now if you look at the national level in november december and we do have january numbers for the nation we don't yet have for north carolina you don't see a lot of grain there above the zero line um in fact we did eke out a slight increase in jobs in november we actually lost jobs at the national level in december and then we came back and added a very few in january and i think this is because of the resurgence that we've seen uh after after last winter which is hopefully getting under control now and that caused some states to reinstitute some some uh closures in the economy but even there's been research on this even if people are not ordered to stay home or even if people are not ordered to to to go out and go to their job many people will still do that they're cautious my wife and i are like that we barely done anything outside the house um because i think you get there some people who who simply say this thing is scary i don't want to get it i don't want to pass my family members i don't care if the governor says we can go out uh we're going to stay home and so we've we've seen i think that come back in november december and in some sense in january now if you look at the right hand side of the slide you see north carolina has done a little bit better in november december we actually gained jobs again we don't have the january numbers out but clearly we had a slowdown in the economy uh in the end of last year the beginning of this year with the resurgence of the virus which the numbers now are telling us it looks like that's uh that's being contained and pushed back a little bit i might say my biggest worry and again i'm totally outside my lane no medical background at all my biggest worry right now is these variants get going and and i'll read one article where one medical expert says yeah the vaccines will work with the variants i'll read another article where expert says we don't know so um and again i want to be optimistic here but that does that does bother me uh next slide let's go listen to me okay all right are we okay uh okay uh so let's uh look at the unemployment or the employment market in a little different way and here i introduce term chapel hill on this slide when i'm showing you is job change on a percentage basis where the percentage the base of the percentage is the february job numbers which were pre-pandemic so so for example you look at april and you see for the nation that turquoise number you see 14 what that means is the job loss at the national level in in april was 14 of the jobs that we had pre-pandemic in february and you see it was actually a little bit less for north carolina and a little bit less for germ chapel hill but still these were big percentages germ chapel hill was around 11 percent and then if you look the other months you can see in most cases gains although germ chapel hill actually lost some more in in may but then i came back in june etc and then you can also see on the far right hand side november december where those percentage gains were um were um much less um we've we've recovered a little bit if you if you want to take a big picture here today we we we be in the economy and we're pretty much just as consistent across whether your national state or local we've recovered a little bit more than half of the jobs we've lost so we're not back in total but but we've moved certainly in the in the right right direction and i show you this slide in part because even though germ chapel hill economy is very strong very vibrant one of the best economies in the country i'll show you some data on this later same same where i am charlotte chapel hill um raleigh that's so the whole triangle but clearly we were impacted and again look at that look at those april numbers and and also they extended through through may next slide john uh saying again all this a little bit differently with the unemployment rate uh notice the big jump in the unemployment rate in april now interestingly in uh germ chapel hill the unemployment rate didn't peak until may i'm not quite sure why that's the case but the peak was in may and then there have been improvements uh since then and germ chapel hill's unemployment rate in general for most most months has been under the national and under the uh state now i do want to pause here for just about 30 seconds and say that economists are fairly united in saying right now these unemployment numbers are actually understating actual unemployment and you might say well walden why well um the unemployment numbers uh do not come from people filing for unemployment compensation that's that's a myth that's out there i don't know where it got started these unemployment numbers come from a separate survey that the federal government does over 100 000 people are served every month and they break it down by state and to be counted as unemployed you have to meet three tests you have to number one tell the surveyor you don't have a job number two you have to tell them you want a job obviously we don't want to count people who like retired people my wife who doesn't want a job uh she told me that the day after she retired and then thirdly though they have to say in the last month they have been actively looking for work sending out resumes visiting potential employers etc now always there's some people who who who don't have a job want a job who in the last month don't look for work usually there are people who have been looking they just can't find anything and so they've stopped for a while we actually call them to scary workers but we think that number is bigger now because of the fact that many people who lost their job they want a job but they're not looking for work because maybe they they're afraid of getting the disease the virus uh maybe they've had the virus the recovering or they have a family member who's recovering or very importantly and this gets into another issue that I know you're uh every every county is debating they have children that are home from school and they need to be home to look after those children so as a rule of thumb this is a rule of thumb this is not something scientifically based these are estimates uh economists think that these unemployment rates are actually about two percentage points higher right now so rather than around six percent we're probably dealing with around around eight percent so unemployment is worse uh than these numbers would would indicate next slide john all right you know this because i'm sure you you are all engaged in the community and you follow the community you know that the virus has not impacted uh economic sectors equally it's been hardest on those sectors that rely on a lot of face-to-face contact so look on the left you see hospitality leisure personal services it has not impacted as much jobs that quite frankly can be done remotely like again the one I met a lot of professional jobs can do that technology jobs financial service jobs some education jobs particularly of the higher education and so if you actually look at the numbers uh on the three that I have here financial service professionals and technology yeah they lost some jobs initially but they're pretty much fully back so those those industries are fully back on the other hand hospitality and leisure personal services they they've come back some although they were they took a couple steps backward with the resurgence in the last part of the year uh but they they are still down uh significantly 20 to 25 percent from their pre-pandemic levels the other the other issue with this dichotomy is if you look at the jobs on the left hand side and the right hand side you you you can understand or you know they differ in terms of average pay hospitality leisure personal personal services not every job of course but on average those are low-paying jobs on the other hand financial services professional jobs technology jobs on average they tend to be higher paying so one of the things this pandemic induced recession has done it's exacerbated it's exacerbated income inequality and hopefully that's something we can deal with on the other side of the pandemic next slide John all right let me talk a little bit about uh governmental help and most of governmental help has come from the federal level and there's a simple reason for that only the federal government has the power to borrow the money that was deemed necessary to prevent the economy from from crashing and prevent households from enduring enormous paying businesses the same way so right now the federal government has borrowed if you look at all the the various programs and I think we've had three big big programs that came out of washington uh to date they've borrowed about four trillion dollars and they pushed that into the economy in terms of various programs like stimulus checks uh uh increasing unemployment compensation uh PPP payroll protection plan etc all that money's been borrowed so I often get a lot of questions from people who are walled in uh isn't that going to sink us in the future well as as your your budget expert was talking prior to me one of the benefits of borrowing right now is the low interest rate environment and actually if you look at federal interest rate payments on the national debt as a percent of the broad economy we're lower now even with all this borrowing than we were in the 80s and 90s so uh this this pandemic if there's anything lucky about it and I put that in quotes it is it is that it came at a time when interest rates were very very low which is allow the federal government to borrow and and help question the blow of the pandemic now to date north carolina has gotten about 39 billion dollars out of that four trillion it's and most of its head strings attached it hasn't been dumped into the general fund it's had strings attached now as you well know I'm sure you're following the Biden administration's 1.9 trillion proposal would have well I think uh 300 350 billion dollars that would target it to state and local governments uh I'm not I don't know that anyone has seen the details but my my expectation would be there'd be many fewer strings on that so they could go into general funds and allow allow decision makers like you the option of deploying that to your um to your um um high shoes um now the the one when people say well them well aren't aren't we gonna isn't china gonna gonna call us and want all their money back or some no most this money has actually been borrowed from the federal reserve and how how's the federal reserve paid for where they print money and i'll talk about them in a moment so no don't worry about china knocking on our door and saying give us our money back that that's not going to happen um but what economists are pretty well settled on is is what what borrowing from the future means is you're really borrowing from future growth and so the cost here is not that we're going to be able to pay the bills it's not that we're not going to be able to uh even borrow more money in the future it's that our economic growth will be slower in the future than now and to put some numbers on this I just I just got a study last week from the Wharton school in at University of Pennsylvania they calibrated that due to the the borrowing that has been done uh this last year and probably into this year economic growth I think they went into 2023 and 2024 they were assuming those would be growth years will be 0.2 percentage points under and if you go back and remember on the first slide the economies are growing about 2 so that's about a 10 hit to economic growth so I think that's the best way if any of your constituents asked you that question I think that's the best way and again you have to say well if we weren't going to borrow what are we going to do we're going to let the economy burn and crash and people just gal in the street so I think this was this was necessary I'm concerned about the amount but I think was absolutely necessary next slide John federal reserves also gotten in the act as I said they bought a lot a very high percentage of the debt that the federal government has taken they lowered interest rates early on effectively zero and there are two worries right now that you'll hear people talk about one is that as I said federal reserve has done has done a lot of the buying of federal debt and they pay for that by creating money that's one of their big powers I've always told people the only job that will regard me to leave NC State since I've loved my career here was to be put on the board of the federal reserve as they can create money and I don't know anyone else that can do that I somewhat jokingly say that but it's true and I was taught some 53 years ago and I had my first economics course that inflation results when you've got too much money chasing too few goods and services and there are people who are worried about that in fact two very prominent people Larry Summers a Democrat in the Clinton administration Treasury Secretary Phil Graham a Republican former U.S. Senator ran for president 1996 they have each issued public statements in the form of op-ed articles that they're worried that all this borrowing and all this money that's been created once the economy gets back and people start spending more the capacity economy at least initially won't be able to keep pace and we would very well see higher inflation now are we talking about 1015 percent inflation no we're probably talking about going from one and a half percent inflation which is roughly where we are now and maybe three percent but that's noticeable so that is that is a risk the other concern here with federal policy is that the the various programs the stimulus programs that have been pumped into the economy actually the if you look at the data that's been collected it's now about a year old on what people did with their stimulus checks those what were they $1,500 $2,000 stimulus checks you recall what did I do with that what what researchers and the Federal Reserve researchers actually have found is that as you move up the economic ladder that is of higher income now there were cutoffs these but they were fairly high cutoffs as you move up the economic ladder people saved a lot of that money they didn't spend it they saved it and in fact if you look at the total amount of the stimulus checks and you say what percentage was saved it was about a third and now saving means you're going to invest it somewhere and if you look over the last year what has been the investment market that has just continued to chug along and almost set records every day it's been the stock market and the concern is that that a lot of that money made its way in the stock market has been up to stock market and the question is is that setting a speculative high for the stock market well we have a pullback I learned long ago not to try to to forecast the stock market it's very very iffy but I will I do want to throw that out that is something that economists are least concerned about it is one of the casualties of this economic policy we've gone through going to be that we will have at some point a significant pullback in the stock market as well as the issue about inflation next slide now state local governments there's been a lot of concern obviously about state local governments who don't have the ability like the federal government does to just about borrow for anything you can borrow but you're constrained and what you can borrow for with the with the economy in such a bad recession will your revenues go down will you have to lay off people etc well for North Carolina at the state level at least we've had two pieces of news one of which just came out yesterday but the the first piece of news that was has been out for about a month is the the state controller reported in their most recent report I think it was that North Carolina has about four billion dollars in unspent funds the state that's that's let's see general funds around 25 I mean that's the second part of the general fund and this is a result from two things one money in the rainy fund and two the fact that the governor Cooper and the general assembly not been able to get together on a budget I think over the last two budgetary sessions now in the old days remember how old I am how long I've been here the old days say in the 80s and 90s that would have meant I wouldn't have gotten paid but there was no budget literally if North Carolina couldn't agree on a budget between the executive and the general assembly there would be no money spent now that was changed about 10 15 years ago so we go on what's called a continuing budget and that's that's essentially what has happened in North Carolina at the state level continuing budget now you might say okay so what what does that mean what that means we're spending out levels that are now two or three years old meaning that revenues pre-covid were coming in at higher levels based on the on the bigger economy and that's generated additional savings now the other piece of news that just came out yesterday I think afternoon which people like me have been waiting for because the last report on this was in May was the joint budgetary forecast between the fiscal research division of the general assembly and the office of budget management of the administration they finally they finally issued outlook budgetary outlook which I think is this is only at the state level now very very optimistic very very optimistic mainly due to the fact of that 39 billion dollars that's been pushed into the economy over the last year from the federal government the forecast for I think this fiscal year in terms of revenues is is almost 18 percent over what was forecast last May which means I think the general fund is going to be around 28 billion rather than what was forecast much lower so this is very very good news now you know I'll let your your budget experts have already talked to you about your budget so I won't I won't talk about that but things are looking better and then on top of that of course watch the 1.9 trillion whether that gets through and if it gets through with the money going to state local government so it looks like the governmental sector is is looking a little better here particularly for folks like you who have to deal with these issues every day right next slide john all right now let me get into talking a little bit about where I think the economy is going I do this thing called a leading index for the state uh all the only the only takeaway here is if the no if the line's going up it's good it's going down it's bad and notice that in the last couple of months it's been going up for the state so that suggests that the state economy is going to improve growth rates are going to be higher next slide john uh this is my forecast track for north Carolina is what we call real GDP um real always means you take out inflation and GDP in this case gross domestic product just think of that as aggregate production where we put everything that everyone does every business does in the one one number and if you look at the left hand side you can see the big drop in the second quarter you can see an equally good strong rebound in the third quarter uh fourth quarter a little bit slower now first quarter which we're in I actually think we could see a little bit of a retreat because of the resurgence and the fact that people are not going out as much but then after that once the vaccines get going and people's optimism goes up and and and we we feel like we can go out and do more things notice I'm looking I'm I'm forecasting continued growth for the rest this year and then on to the next year in the year after and and also you can see by the third quarter this year I actually think we'll be back to create pandemic levels our economy and suddenly these numbers are annualized GDP numbers so for example in the third quarter I'm forecasting the state economy will be 515 billion on annualized basis which is greater than the 512 we had in the first quarter of 2020 so so this is a this is a optimistic forecast and and you can look at other economists around the state uh John Connaughton, Charlotte, Mark Bittner, at Wells Fargo their their forecasts are are similar next slide John a little bit different though with the the job market um and I think this is going to be a real challenge uh these these are the unemployment rates the official rates so I'm not ahead of the 2% here but I told you you really need to do to get real unemployment these are the official rates and you can clearly see the big jump in the second quarter a good improvement in the third and fourth quarters now notice first and second quarters uh 7% I'm showing actually an increase you might say what's going on there I thought you said the economy has been improved this is where what I told you before about people who are sitting on the sidelines they're not looking for it even though they want work this is where once they do to come back they feel safe to come back their kids are back in school they're the relative who had covid's all well maybe they they now go out and they hear the job market's better they start to go out and look before they get jobs they will now be classified as unemployed so I think we're going to see that in the first and second quarter we may very well see a bounce up in in the unemployment even though jobs are increasing but then after that I'm looking for the unemployment rate to to fall on trend but notice by 2023 I'm looking at an unemployment rate in the state of still over 5% much higher than the 3.8% we had in the first quarter of 2020 so what I'm saying what I what I think is behind that is that one of the big challenges uh that that this that the the post pandemic economy will present to us is that there's going to be what economists call a lot of disruption the job market there are going to be businesses who come back and say and look at their structure and say you know what I had to shut down because some of my employees got sick if I can do anything to reduce my reliance on people and instead use machines and technology I'm going to do it and I'll give you a quick example of this I got a call probably it was April or May from a national reporter who went on to talk about talking to me about the North Carolina economy we were chatting about various sectors and I was talking to her about the food processing sector which we we have a very large food processing sector as you most you probably know in North Carolina in fact we have the largest food processing plant in Tar Hill North Carolina in Bladen Bladen County in the world and and uh that that sector had problems with COVID because there are a lot of people working in or in close contact now it's been deemed an essential service so people continue to work but businesses food processing businesses had to struggle to deal with outbreaks etc and I told the reporter I said now this is a perfect example in my mind of where we could probably say totally different food processing sector in the future that after COVID's gone owners and managers are going to look at those factories and say you know what if we can bring in technology like robots and replace people then we don't have to worry about another outbreak of whatever in the future and we can continue working and I told the reporter I think that's in our future but it's not in our near future no sooner almost than I said that well about two weeks later I read in some national publication of a food processing plant in the mid midwest Nebraska Iowa one of those states that was actually introducing robots and replacing people on the food processing chain with with robots so that's the that's what I'm talking about here I think we're going to see a big move and it could be even down to the restaurant level we're an owner of a restaurant looks around and says you know can I can I do things are there some machines I get that can actually cook or at least do some of the kitchen work and I can I set up a system where I don't have to have as many waiters and waitresses etc so this I think is a concern and I think it's going to keep our unemployment rate elevated for several years and it also is going to present a challenge for our educational institutions particularly community college because I think people who get take a food processing worker who loses his or her job and they've got a family and that's all they've done is food processing they don't have time to spend going to a four-year college like nc state or Duke or Chapel Hill they need to get retrained in something fast because they got bills and so I can see that our community colleges are going to be very very key in and stepping up and dealing with this I think this reskilling challenge next line all right now let me finish up here by talking about some of those structural changes that that that many predict one that I at least I've read about is there's been a lot of pushback primarily because we think the virus we think I'm not 40 on this the virus came from China we obviously have a lot of economic interactions with China and there and there's been some who said you know we we need to pull back with trade international trade we need to we need to become more self-sufficient I don't think that's going to happen I think world trade is is too embedded in our in our global economy they're they're clearly benefits to world trade the triangle has a lot of international connection so this is important for the triangle so I don't think we're going to cut ourselves off from world trade I do see however a couple of changes here which could very well be beneficial North Carolina let me take the last bullet point first and that is that even before the virus came here so we're talking the winter of 2019 we were feeling some of the impacts of the virus in one province in China because a lot of our companies in North Carolina as well as around the country by inputs from China so their supply chain as its term goes back to China and and one was shut down so they were scrambling to get their inputs so I've read a lot about companies saying you know what we need to start thinking about at least having a backup supply chain here in the US now if that happens that could be very beneficial for North Carolina the second bullet point is that and many most of you know this we got caught the country got caught when the virus took off with not having enough medical supplies ventilators masks gowns and I have not seen anything yet from the Biden administration but now they've not submitted their budget I would not be surprised to see the Biden administration say you know we don't want to be in that position ever again we need to replenish our our key medical supplies with American producers and so I could see a plan to finance maybe through the government masks gowns and ventilators other things North Carolina is well set up to do that we're manufacturing state we can do the ventilators and where else would you go if you need a textile product maybe Georgia South Carolina but clearly we're in the mix there so I think this is this is actually good news for North Carolina that we could see some additional economic activity here next slide I talked about this war labor market disruption this is something economists have been talking about for 20 years as technology becomes more adept so I'm not going to dwell on this but I do think that we need to be I think we need to be proactive in the state by frankly we can't wait to see that oh we've got 10,000 more people unemployed this month um and then let them figure out what to do I think we need to go out and find them and help them and tell them okay here here's what you want to look at here's the training and have that all thought out and that's something that I think we need to hopefully be thinking about in the months ahead as we get past the pandemic next slide uh education um of course you all every county is dealing with this that a lot of remote learning learning has been imposed on k through 12 I think k through 12 is taking up my opinion a bad rap on this in terms of people complaining about well in person at home education not the same as in person I get that but um there are a lot of wonderful programs that I've become aware of that can be teach young people through remote learning that are marvelous we just our school systems just didn't have time to do this this was thrust on them so the bottom line here is I don't think remote education is going to go away I think most kids are going to go back in person schools but I think there is a place for for parents who want it and maybe for certain kinds of children who who special needs or whatever I think there is a place for for remote education and and again I think there are some great great programs that that do this if you're interested in this just contact the school of education at NC State because they've been doing a lot of work on this next slide now teleworking uh this probably has been the the biggest change that we've seen in our economy that affects most people prior to the pandemic if you look at the first bullet point nationwide about eight percent of people work at home at least one day a week at the height of the pandemic it was up to 40 percent 40 percent of workers work at home at least one day a week now it's it's pulled back from that obviously as things have changed but I I think and a lot of people who agree with me that teleworking is here to stay at an elevated level we're not going to go back to the eight percent we're going to stay higher uh if you read about teleworking uh it's like there's nothing in the middle I read stories about people in business who absolutely love it and I read about people in businesses who hate it so but I think the option is going to be there I think the option is going to be taken by by more people and so I think this is going to be one of the long-term sustaining impacts of a virus that teleworking is here to stay at a much elevated level than we had pre pre virus next slide things like drum drum delivery of services I have a neighbor across the street who's a young person he's a banker and he has been having all of his food delivered and his meals and he said to us of course properly distanced he said to us that he loves it he's going to continue doing that he said he never liked to cook and now he doesn't have to cook so there are a lot of experts who think that ordering things online more so than what we did pre pandemic but we're going to be ordering more things more services meals etc that's probably here to stay and you've probably read a lot about drone delivery of things that's going to come I think in fact the FAA federal aviation administration which which has control over this just made the initial approval for drone run now you're going to see not going to see drones in the sky yet but there are several stages here but I think that that is coming and I think that's going to be a challenge for cities in particular obviously because of the space and another thing is there may be some tax opportunities there for local governments if you have drones flying around delivering things I think there might be some using your airspace if you will there might be some tax opportunities tax revenue opportunities I should say next line all right reconsideration of residential location there are two parts of this first you hear that that people are reconsidering living in the New York New Jersey metropolitan area in fact I think they've lost between 100 and 150 thousand households in the last year or people are reconsidering living in LA or San Francisco so there is a geographic part of this which if true if this if this is more than a blip if there is going to be a movement of people out of those highly dense highly expensive areas I think North Carolina and I think especially the Triangle is a great destination for them in fact there was a study done of people leaving the New York New Jersey metropolitan area and they ranked the top 10 metro areas where those folks went and Charlotte and Raleigh were in the top 10 I think Austin and Nashville were the top top two I still don't get national lets because I'm not in country music but I just don't get why Nashville's there but we're there the Triangle's there Charlotte's there so I think that we may very well gain out of some of those relocations now the second part of this though is where within a metropolitan area will people live are they going to go downtown and Durham you've had great downtown development Raleigh has had great downtown development is that going to continue or will people say well you know I don't know about living in these really dense areas maybe I want to be in the suburbs maybe I want to be in the excerpts right now the experts are saying that they do they don't think downtowns are going to dry up but they do think that in the long run more people are not going to maybe going to choose the suburbs and the excerpts now I think an extension of this is whether you are going to see people move beyond the metro areas and maybe back to not back to but into rural areas now for that to happen we're going to have to have high speed internet in rural areas so I think that's something to to watch and next slide which might be I think we may we may stop here all right let me let me wrap this up by talking about implications for the triangle and specifically for for Durham Chapel Hill uh first point I've already hit I think we're going to continue to grow in other words I don't have the worries about this area that if I was an economist in New York New Jersey area or Los Angeles San Francisco I wouldn't have some words we're going to continue to grow we're may actually going to continue to grow at an accelerated rate and in fact you might say where's the evidence for this well and are you just thinking off the top of your head well I think the evidence is if you look at what investors are going particularly investors in space look at what's happened in Raleigh we've had four four major developments downtown south the innovation center at north hills what it's called park park place south which is going to be adjacent to to um Dix park and then just today it was announced they're ready to break ground soon on the second phase of the union station which is going to have some commercial property I think when you tally all those up we're talking north of three billion dollars of of investment I don't think people who are smarter than me uh are going to do that unless they see a market there even with more remote working I think what these investors are seeing is we're going to get enough people come in here that we can still fill up these buildings even if more people are going to stay home working remotely so I think I think I'm going to bet on this area continuing to grow and probably an accelerated pace second point I think north Carolina is as an entire state is going to possibly see accelerated growth because if you look at the two major metrics that indicate the medical costs of um COVID and then the economic costs uh if you look for example at deaths per capita from COVID and then job loss per capita we look very good on both of those relative to other states I think we're in the lower least lower third if not lower 25 for states so another way of saying that I think north Carolina is going to come out of this and being viewed as a safe state yeah we have problems just like every state our problems with COVID but we managed it fairly well um and if you look at those two metrics now specifically for Durham the Durham Chapel Hill Metro uh if you look at the 380 metropolitan areas in the country um since 2000 uh Durham's growth rate was 35th highest 35th highest and and so clearly you are in the upper echelon of economic growth and prominence in the country and I think that that will that will continue um so let me stop there although John maybe uh go a couple more slides uh for uh yeah push on push on oh yes a moment for advertising I have two new books out that I wrote last year one is a policy book called Real Solutions looks at all the solutions poverty um um healthcare environment taxes national debt income inequality pay difference etc 500 pages worth of uh but but people tell me it's well written it's easy to read 500 pages worth so I commend that to your attention and the next slide John if you want a little diversion uh I wrote this book last year in the midst of all the political issues going on which have only been accelerated this year I call this a political thriller so it's fiction but if you like fiction and you like political thrillers uh I recommend this to you so let me uh stop John and do we have time for some questions or you can read me questions I'll be happy to try to address them thank you so much Michael I really really appreciate it and turn it over to council and see if there are some questions okay good thank you so much Dr. Walden it's always great to hear your presentation and it was a different year but and really interesting to hear the way in which the ways in which we have recovered and the ways in which we haven't recovered along the unemployment front which I think are things we know but really interesting and important to see the numbers that you put to it it's very very helpful so and always so grateful to hear your ideas about the future trends uh and glad to see that you continue to have confidence in our region uh and in a particular not just our region but in the Durham Chapel Hill area so thank you for that colleagues questions or comments for uh Dr. Walden didriana thank you Dr. Walden and thank you Steve I'm getting there uh I I really appreciate the the breakdowns and uh value the the kind of walking us through all of us I really just have one additional question around acknowledging that the boomers are aging up quite quickly did you have any predictions around that area acknowledging I mean that's they're they're not likely to show up in our economy in the same way um well that that's uh councilor that's uh that's that's an excellent point I'm I'm now 70 so I classifies me as an old boomer I guess um it's interesting to bring this up because I did a program uh I forget with what tv station recently uh talking about demographics and of course those of us 65 and over that demographics actually increasing in relative size and so I think one implication for the aging boomers is that they may even become more prominent as a class of consumers as a segment of our economy that that um that that will have attention um and I I do see for government um some tension here between the boomers who of course what's one of our most important factors healthcare access to healthcare expensive healthcare and then for younger people the the young people I teach the well the the younger millennials but also the gen zers mostly who are obviously focused on education that's what they're worried about and if you look at the state budget um those are the two biggest chunks of the state budget and so I could I can see potentially over time those two groups coming to loggerheads in some sense because they're both going after programs that that impact them but the broader and more positive statement is if you're a business any business you need to have a plan for reaching the the the the older boomers you need to have a plan to reach the the senior citizens because they they have a large still a continuing and growing relatively large share of commerce so you need to know how they shop and what ways they shop I think we shop maybe a little differently although I've been forced into into the computer world my wife is still in the uh write a letter make a phone call world uh she's not been dragged into this but but I do think they're um um an important part of the economy now probably less so around in this area where we are because we're relatively younger area with all the students here the young people here coming to take the tech jobs the pharmaceutical jobs etc thank you if I could follow up I I'm thinking along the line so I had a presentation yesterday on smart and resilient cities and just thinking about how I think the conversation was moving towards the unmanned not just unmanned drones but unmanned vehicles on the road what infrastructure might look like and how all of that's going to play in I'm mindful that uh the the conversation today or yesterday started with you know I wrote it down too uh never let a good crisis go to waste and trying to figure out what those investments might look like do you have any suggestions there um well interesting question I just I just spent two years on the NC first transportation commission and our our tasks there and we've issued a report I'm not sure that it's available to everyone but it's been sent to the General Assembly or will be our our task there was to look at North Carolina's transportation future and how we're going to finance that future and this this issue or this question or comment could come up because many think that transportation is probably going through its biggest changes since the invention of the automobile and one argument can be made if we do go to a smart city smart vehicle situation we may actually need less space and expenditures on roads because smart vehicles can can be managed better on on highways without instead of people driving them and weaving them out etc so that's one issue another issue of course is public transportation in large metropolitan areas if we continue to grow and add density that's probably going to become more more viable and more valuable again I know more about Raleigh than I do you but we have these high-speed bus lanes that are being planned and promoted and probably will come into progression in the future the big issue we faced on the commission though was how we got is the gas tax going to and this is I know not a decision you all made but as the gas tax going to continue to provide us with the revenues we need and the answer universally was no because people are moving to hybrid vehicles are moving to electric vehicles they're moving to better gas mileage and so we we talked about what are some alternatives a mileage fee was one of those maybe going to a sales tax addition that would some of which would be earmarked to to transportation and maybe looking at some ways to recapture value from commercial activity that is built and benefits from from a good transit nearby so yeah I think I think the transportation commuting part of our economy particularly in metropolitan areas is going to be in a big state of flux over the coming future Dr. Walden thank you we have I think time for one more question and there was a good question in the chat from our director of office and economic and workforce development Andre Pettigrew Dr. Walden small minority and women owned businesses have been greatly impacted by COVID-19 what do we have to do as a city to accelerate and sustain the recovery of our small business community and I agree if you look at the data on not just that but if you look at employment data women have gotten hit harder in general than men during COVID in terms of business recovery I would I recommend this for that group but I think generally one of the things that I'd like to see discussed maybe at the state level since we've got some money but may also at the national level and I won't talk for cities cities tend to be your budgets tend to be a little tighter is recognized and a lot of people went out of business not because they were bad business people not because they weren't doing what they should they're in a profit they just couldn't sustain themselves when people weren't out there buying in normal fashion and of course we had PPP to try to keep businesses going that work in some cases didn't work in others of course there have been a lot of stories about about the equity of the distribution of those funds one thing that I think might we might think about and this is not original with me is setting up some capital funds that would be available to businesses it could be at the federal level but it could be at the state local state or local level that businesses that maybe can't get funding from traditional sources banks could come to and say look I used to have a business on a particular location here in Durham and I had to give up the virus that killed me I had to give up but you know I mean this is the business person talking you know I know how to run a business you know that I put out a good product whatever it is I can't get finance and can I get financing from the city so that's something might be worth discussing thank you doctor Walden and I want to say how much we appreciate hearing from you every year thank you so much thanks for thanks for asking me it really is a pleasure and you always give us such an important perspective and I was really interested in what you were going to be saying this year because it has been such a different year and just want to express my appreciation again for you being here for the for the the light that you always shed so thank you so much and even though I have all these since-day red tats in back of me I still root for the Durham Bulls and we're really glad to hear that thank you thank you and hopefully we'll be at ball games together again yes yes can't wait thank you all right colleagues that was really interesting and very valuable and I think John or Bertha are you all with us here and David yeah great so I'm gonna without and there's Bertha too great without any I think I want to just go ahead and take us back to the discussion that we were having prior to Dr. Walden and so we can go ahead and move through our afternoon we have a couple of other things to do and just to begin so just to just if I'm going to try to outline what David said and David you can tell me if I got it right if we raise taxes uh for the $95 million affordable housing bond in the next budget that it would cost us about 1.38 the tax rate would be about 1.38 cents I get that right if we did it in a future year it would be a 1.5 cents or the following year that's right all right and um I think that that was the most important those were the important facts that we heard colleagues I want to try to give our administration some guidance on this we've already heard from Mark Anthony earlier and Charlie both about going ahead to you know their voters have already told us what to do on this and I agree and I'm actually really glad to hear we when when the housing bond when we were campaigning we were we were using a number 1.6 cents and so the fact that we are nicely under that I think is really good but I want to try to go ahead you know I like during these processes and I know our administration likes it too if we can give them as much guidance as early in the process as we can so I want to hear some discussion about this and then I'd like to try to give them guidance hopefully to go ahead and and put the tax increase uh in the budget and we can work from there did your honor I just one question I'm trying to just make sure I understand we're talking about on the 11 cents going up to 12.39 versus or are we talking about something completely separate uh councilmember this would be completely separate the the 1.38 cents would not would not go there it would be accounted for elsewhere and not part of that at all it would just be strictly to service the debt for the affordable housing bonds and so it would essentially create a separate like fund that would be created because we haven't spent the money yet right it would be kind of fenced off in the dedicated housing fund where we would pay the debt from thank you good question other questions anybody have any other questions for david or for john colleagues uh uh charlie go ahead um mr mayor I don't I don't want to throw too much of a sand in the gears here but um hearing uh david tell us that the difference between starting this year and starting next year was a 0.12 cents on the tax rate is that right david did I get that right yeah 1.5 or somebody 38 I have to say I had expected a larger difference than that um and uh I think it makes sense for us to consider uh waiting until next year and so I know that I said I wanted to do it this year but that's because I thought we were borrowing this year um and I clearly had the wrong impression about how this was going I totally understand as the as as madam manager said earlier that um there are lots of different funding sources for the uh five-year plan but I I guess I just assumed that since we didn't borrow last year we'd be borrowing this year and that obviously isn't the case um and so I'm not sure anyway that's that's where I'm at right now so okay um yeah mark anthony thanks even uh thanks colleagues and I uh I definitely see definitely see uh uh virtue and merit um neither doing it this year awaiting I I argued rather rigorously uh last year for going ahead and doing before COVID struck for going ahead and doing it um because I I think I think we should just take yes for an answer um and that is voters said yes um and and they they overwhelmingly said yes to this this bond which to me I think can at least in one way be interpreted as there was preparation and willingness to do what was necessary to fund it now I understand our desire to want to uh ease it or or maybe make it more palatable but I think there's something uh to be said in going ahead and getting that money and not letting it be lazy I mean you know banking it and and and letting that money work because we know this is debt that we're going to have to pay off and and go ahead and integrate it into the taxpayer's worldview now if you will um and and go ahead and take yes for an answer so so and they said yes so I I um I'm leaning more towards going ahead and doing it we know it's we've already said yes to it we know what's coming um I certainly understand the the the desire to defer impact but um you know we can only speculate as to what conditions will be then even the best minds you know it's still speculative so I I'm I'm inclined to just go ahead and take yes for an answer you know voters and go ahead and lock it in now uh and take action and bank that money uh and be in position um hopefully ahead of the game when we start servicing this debt um now so that that's where I am brilliant thank you uh so yeah I also came into this conversation thinking that we needed to raise taxes for this this year or that we would be in trouble next year essentially that if we didn't do it now that we would have a much bigger increase in the future um and was prepared to go out to the community and sell a tax increase um during the pandemic for that purpose because it would be much worse if we waited after hearing from David the difference between this year and next year I feel like it's actually not as you know it's not that much worse if we wait um so I don't feel as concerned about um about doing the increase now I feel like it would be um I feel like it wouldn't be unreasonable to wait until next year given the fact that we're still um in a pretty that a lot of our residents are still in a pretty precarious economic situation and that we're not really um picking the can too much farther down the road if we're only looking at a you know one percent and a and a small you know increase in the in what the tax rate would have to be if we did it this year um versus next year and then also thinking about some of the other things that we want in the budget like potentially being able to raise employee pay or um fund some of our departmental or council initiatives I feel like if we were to raise the tax rate for the bond spending now that it would be much harder to integrate um a pay rise or any of the other things that we might want to do whereas if we deferred the bond increase for another year that we would give a self give ourselves a little bit more room to think about um that you know two cent pay rise two cent increase for for raises or any other um things that we want to do so I'm feeling less urgent about the race for the housing bond now after hearing um the report from David and think I want to if we're going to raise taxes this year I think there are some more urgent priorities that we could put could put that increase toward David did you have a comment or you just are showing up or in case there are questions I'm just available under and answer any questions okay yeah I just I feel really strongly we need to do it this year the voters told us to do it we put it all for a year I just think that people fully expect it I feel like if we start getting away from it uh we're um the the farther we get from that vote the less I think we're keeping faith with our voters and I am very prepared to do whatever tax increase we need to do to raise pay and do this as well and I think we all ought to be I also think if you know I can't imagine uh this year uh you know or planning for the next year uh for a green infrastructure bond which is going we're going to say to people hey vote for this and you know raise your taxes for this if we haven't already done that for the housing bond that people have agreed to uh so yeah I think you know to me this is the year but clearly we don't have consensus on that so we'll have to have some more discussion uh and a couple of our colleagues aren't really with us here able to be heard uh did you on thank you I had hoped to not rehash last year uh it was kind of painful I think I was the only one who was leaning away from raising taxes or initiating the bond and yes like yes Charlie and I and just acknowledging I think that just harkening back to to Middleton's comment around how folks in the community are experiencing COVID right now I think we just want to I mean for you know from 0.38 to 0.5 I lean more towards just holding for another year I think that voters would understand clearly that we're in a pandemic and you know all that's happened in the last year and not knowing what's going to happen the bond is here it's going to move forward it's it's not going to change but um the difference and and and the stories that I'm hearing about folks and their their fear around taxes uh I am mindful that there will need to be an increase in how much that increase will be if we could alleviate 1.38 percent uh right on that recent that's already on on the table I am leaning in that direction thank you all right colleagues um I see council member Caballero is with us I'm I'm here too miss and council member Freelon okay good yeah are we do we need to make a decision on this today I know you said you wanted to give guidance to council I would like to I would like to give guidance but I'd like to give the guidance that I'd like to give yeah well um I just had a quick question about the difference um what is that what do those numbers mean it's 0.5 or 1.5 whatever the difference is what does that mean in terms of dollars for folks if we wait what would the difference be David give me one second I got a spreadsheet I think it has that on there so 1.38 is $31.64 for the average homeowner and 1.5 is $34.39 okay thanks for that uh three dollars thanks thanks for that info um I guess I'd be uh splitting things down the middle I I'm leaning towards uh Mr. Mayor and council member Middleton's uh proposal to go this year thanks thank you council member council member Cobbier I'm not sure if you'd been able to hear the discussion so far those were the fastest orthodontist appointments ever um I have driven there and back uh with two kids so um I'm home now I was able to hear um one of my questions is what Pierce just asked and then I guess my other question is what's I'm I want to understand the risk and I feel like I want to hear from community development folks about if we don't borrow I know we're borrowing for projects coming but like what does that do to their work plan they have created a process based on an assumption and so if we decide okay we're going to punt for another year what does that do to their plan I don't feel like I can make a decision I'm leaning towards going ahead and raising the rate I think we are um risking a lot uh one of the things we know is interest rates are really uh I know we're not borrowing until next year but what if we push I feel like if we push it out one more year I am concerned about what the potential domino effect is and I don't have a clear sense of that so if I might council member um the decision on the tax rate will have no impact on the funding available for community development to deliver on the plan it's just when we increase taxes to start accumulating funds to pay back the debt once we issue it thank you David Mark Anthony thanks and I really appreciate the spirit of the discussion for my colleagues it goes right to the heart thing of who we are and you know of course we want to you know harm the folk but I think it would be helpful to view this in a larger context and that is our values as as a city I mean affordable housing isn't something extraneous to our values it goes right to the heart of even what some folk are struggling with in COVID that is um you know housing housing is impacted by lack of employment uh income and and you know one of the things we talk about all the time in Durham so having a safe warm dry place uh safe warm place a dry place to to lay your head uh is absolutely uh essential to you know everything everything else you do being able to get a good night's rest before you go to school or go to work the next morning um so I it resonates deeply with me um you know wanting to to forego you know any hardship on folk now but one one of the things that's impacting us and we talk about root causes and doing things that will you know strategically impact things at the root and at some point you got to get in and do that work um and and and start you know making commitments to that and it's uncomfortable sometimes uh at first but again and I don't want to sound like a broken record um we you know we we've been given permission and anybody that supported the affordable housing bond supported a tax rate increase so it's a matter of of when not if so you know so so all of us supported the tax rate increase on us if we supported the affordable housing bond uh and I think that you know for the reasons I've stated previously but also I just want to add that this this goes to our values I mean affordable housing was perhaps you know the biggest thing that shows up time and time again or you hear time and time again when you talk to residents and whether it be in our survey or be it anecdotally uh just interacting with constituents in the street this is where the rubber meets the road for Durham uh you know the affordable housing issue so I would I would uh um again say let's let's let's take the yes that we've been given there's sometimes things are a lot of uh quite ambiguous but this is one of those uh few instances in government where we have a clear indication from uh constituents as to what to do I think as reflected by uh their vote um so I I again I I think we should go ahead and do it this year uh and still do the other things that we you know there's some other things we need to do as well this isn't a totality of our decision but I think this is an important piece I'll yield thank you thank you Mark Anthony Charlie I have to say I don't 100% understand the the thrust of those remarks but let me just make it clear to everyone who's watching whether we vote to increase taxes this year to start accumulating money to to borrow the debt necessary for the affordable housing bond or we start borrowing next year will not change one iota of the work that the community development department is doing around affordable housing between now and then not a single affordable affordable housing will be built if we vote to approve it this year versus next year um not one addition there's nothing nothing changes with community development's work plan that's been clear from staff so I want to make sure that folks who are watching and also everyone in the sit in this council understands that this is not a vote about how much we value the issue of affordable housing um that's that's not what we're talking about here uh what we're talking about I'm sorry council what did you say Mark Anthony neither was I okay um but so the an argument that says we should vote for it this year because affordable housing is important to our community I don't really understand that because it's important to me too it's important to everybody that's why we're going to do it bond past uh with the voters we're going to we're going to fund the bond the question is only one of timing of the borrowing and and had community development come forward with a plan that required borrowing during this next fiscal year of course I would support increasing it for the next fiscal year because that's what the plan requires and I'm fully supportive of the plan it doesn't require that we can accomplish every single goal in the affordable housing plan uh whether we start start start the raising the tax for this year or next year this is not a barometer of how much we care about that value it's a question of do we want to raise taxes for this year or next year um and there are good reasons on both sides uh but but that's that's the question that faces us and I for me I would prefer to wait till next year but it sounds like there are four votes for this year and I'm perfectly happy with that so um that's I just wanted to make sure that that was clear to everybody um so thanks thanks if I might respond and I think your comments are a refute in search of an argument um I didn't say anything that even rhymes with community development or their work I don't think I said anything around community development my value comment was about taking what the voters have said and and and and considering that a a an indication of their willingness to accept the discomfort of the tax increase be it this year as opposed to last year I didn't say anything that even remotely suggested that not raising taxes this year is and and that's quite a stretch it somehow suggestive that we're not operating within our values my point was that because we value affordable housing and because we voted for it it could be viewed as an indication of the willingness and readiness of our residents to deal with the tax increase because they in fact voted to deal with the tax increase and that even if that even in in our earnest desire to minimize impact by by deferring it to next year as opposed to this year because we value it we have collectively said with our voice that we are willing to deal with the discomfort because it aligns with our values that's what I meant any other interpretation is I out of out of I'm sorry if it came off that way but they had been in nothing you said even remotely resembled what I was talking about awesome glad to hear that in that case then we get to decide how the community pays for it that's our job that's what we're doing because we've it's not because the voters voted for it we have to raise taxes this year that's all that I meant didn't say either how are you I didn't say thank you I'm actually the one who mentioned community development so I appreciate the clarification Charlie um um I just want to share again I think that we my position is that we should just go ahead and do it otherwise we're raising taxes this year and next year um so because we're already I think I feel like I've heard some consensus on everyone understands that if we want to do anything different than we if our budget is going to be any different than what we passed last year the only way to do it is through a tax increase uh that includes employee pay etc and so it's it is a difference of when we choose to do the affordable housing bond but all we're doing I mean it's just a two-year in my mind consecutive tax increase because we will raise taxes this year to do the parts of the budget that we know we want or at least that I heard that I think we want and we will do it again for the affordable housing bond um I also just think that and this is a conversation that came up with taxes and during our previous presentation we don't print money there's very few ways we can increase revenue and we consistently hear from our community about the things that they find important at a certain point people have to align what they tell us they want and and they have to understand that that comes through taxation unless we cut services that's the only other choice um so again I think we should just go ahead and pass the bond increase or the tax the tax rate for the affordable housing bond um thanks thank you other comments did riana just the question um because I'm still trying to align how we or I guess where we are right now and so with the four of you saying you want to increase so we move from the three cents to the 4.38 cents and then does any of that include that doesn't include any of the items that we've been talking about today in the challenges and current kind of like projects that are all being proposed and so that's an addition that's an addition to that I think that the the three percent that you're referring to was not a tax increase uh it is the percentage by which the administration is anticipating that the property taxes property tax uh amounts will increase but I'm going to ask john allure that you all haven't built any tax increase into this at all am I correct yes that's property tax growth the three percent it's that's the growth in the assess value okay so so then um just to make sure um that I understand and uh that the this 1.38 would be all we would have decided on in terms of tax increases now what did riana ask about would still be decisions we would need to make if we're going to increase taxes for pay and those things there's no there's not a three cents we're already starting with correct okay thanks for the clarification yeah all right colleagues any other questions or comments and are we ready to uh try to give some direction or no uh jillian do you want to make some comments uh no I think that it's clear the majority of the council wants to move forward this year and so I'm happy to give that guidance to the staff all right uh colleagues uh do you agree are we comfortable with that uh do yes I'm I'm hearing uh pierce are you are you good with it yep I'm good with it all right it looks like we have four people at least maybe more uh who are ready to uh support the tax increase for this coming year in our budget 1.38 cents uh or it may change a little david has let us know as we get even closer to the actual knowledge all right do you want to show thumbs everybody shall we all right okay we're we're saying pierce's thumbs up all right thank you very much for that I I feel we made the right decision but you knew that already okay the next uh item that I would like to discuss and I said we would try to do this all about 230 and let's just see how we do here is at least get some uh thought from people because this has been uh mentioned uh didriana talked about at the last council member meeting we've talked about it several of us have had some discussion about it I know the staff has talked some about it um do we are we interested in having on the ballot this year a green infrastructure bond and if we have some interest in that this year um then I think we should hear a little bit about the staff front about what uh time milestones we would have to hit which I know that uh david is prepared to let us know um and if we're if we're not interested in putting it on the ballot this year we don't have to have that discussion so I'm interested in hearing from from colleagues if if you have any thoughts about whether or not you want to want to seriously consider a green infrastructure bond uh for this year and I think didriana had her hand up yeah thank you um you lay on that I just wanted to clarify did we say there was going to be green because I was thinking it was going to be more gray and resilient well that's a that's a uh I use that terminology but we can certainly talk about what I mean one of the so there several things are we interested in it and then what's exactly in it and you know that would have to be the process we'd have to go through and what's in it yeah and I'm thinking more about the aging infrastructure that we have and some of the failed infrastructure um in addition to greening so yes and there's other areas so yeah just making sure that that's clear yeah and we may be uh we may be using different terminologies for the same thing um you know I think that that when I say green I'm not necessarily talking about new I'm talking about infrastructure that is uh supports a sustainable community there we go yeah this thing yes okay um so colleagues uh would anyone like to give any thoughts about your thinking about whether or not we should consider this for this year we don't have to make a decision obviously we can't make a decision on that now but uh should we is this something we should pursue should we try to move it forward should we try to get our staff to start thinking about it um I can certainly imagine um a very exciting uh bond that would include lots of things that our community wants and needs uh in in terms of infrastructure that is supporting a sustainable community uh but we need to think some about the timing and I'm interested in your thoughts and if I could share a little bit of a foreground and that just acknowledging how we've been saying today you know don't let a good you know crisis go unused acknowledging that there I mean just in a previous few um planning and zoning cases that we've seen the conversations around you know traffic and some of the roads that need to be repaired some of the sewer lines and water lines all of those things are factoring into what what I envision a bond with would definitely address but I think on the other side of that is acknowledging that that also creates jobs and opportunities for contracts to be brought online as well and so I'm mindful that it's it's it's an additional tax but there is a lot of benefit to that um and around workforce development and around many other areas especially around sustainability and aligning that with our education uh educational system you know acknowledging that youth uh will need to kind of have some some plans in place to to kind of get up to speed or trained in very new technologies and services that will need to be available in order to do do whatever's next I'm gonna just see that wander yes she has thank you um for recognizing me I would just like to ask mr boy to speak about the enterprise uh improvements and how they are funded uh in totality compared to a geo bond referendum if you wouldn't mind doing that mr boy I think that would be helpful sure I'm happy to so just like our previous conversation about the um the 11 cents that that we use to fund our general capital plan that's um that's the same type of thing we're kind of talking about here a geo bond would would be appropriate for the same types of improvements um the water and sewer lines are all funded through the water and sewer enterprise fund which is supported by rates and and the types of bonds that we issue there are revenue bonds that don't require a vote and um we have a financing plan uh within our current rate projections to cover that needed infrastructure uh likewise any need to have a stormwater improvements are included in the stormwater enterprise fund and are projected to be covered by current and expected future stormwater revenues so the types of things here would be you know capital improvements transportation related parks and rec facilities those those types of things as opposed to anything related to any of our our enterprises would would be where we would be looking for for some geo bonds we do not need a referendum to borrow money for any of the other enterprise funds if we if we need to borrow funds for for that type of infrastructure so so David um I'm going to list some things and you can let me know if these are things that would be includeable if that's a word in in the in the in a geo bond in a general obligation bond sidewalks park improvements trails yes if the city had some energy improvements it would like to make you know solarization um the construction of of that type of stuff yes not the operations of it but the constructions of construction of it um uh so a bicycle infrastructure um how about stormwater stormwater uh we're currently projecting our ability to fund all of our stormwater needs through the stormwater utility rates and we would have access to stormwater revenue bonds non-voted debt if we did need some uh within the stormwater utility so I would not include stormwater improvements generally in that category can I accept pavement markings um traffic lights um I mean once once you get to things that that are are you know operational um I think you could make the argument that paving the streets is an operating cost not so much a capital improvement um you know and so there's there's kind of some some uh some give and take on certain things like in the pasture recall we did we did a bond in 2011 to repave streets um you know I think if you looked in the book of financial management that they wouldn't suggest that paving is necessarily the best thing to borrow money for that that is an ongoing expense that you need to pay for every year and you need to find a way to pay for it every year and and borrowing money um to do that it is it's not the best way to deal with paving needs but also understand that you know sometimes you get way behind and it's the only way you can get caught up so there's there's you know some um some gray areas what about about bus shelters David yeah yeah sure an urban forestry so acknowledging that there are some areas that need to be addressed you mean like planting trees the other like pruning cleanup um that that I mean if you buy some some expensive equipment perhaps but but not the operating costs for that type of thing programatic things wouldn't wouldn't be wouldn't be things that we could borrow money for sorry colleagues um any any questions or thoughts at this point Jillian thank you uh I think it's worth considering for this year specifically for things that um advance our sustainability goals like as you mentioned Steve sidewalks trails transit green energy um those are pieces of infrastructure that I know our community wants and needs and that is part of our long-term plan to cut our emissions as a city um and our sustainability you know what did what did we say 100 percent um carbon neutral by 2050 and um so I would be excited about investing in a bond to do those things um I'm not I feel like I'm not as clear on what other infrastructure pieces we might do outside of street paving um that wouldn't be part of an enterprise fund that we could do with the bonds um so if if folks have other ideas I'm interested to know what they are I think the street repaving has some real opportunities related to sustainability as well with being able to put in protected bike lanes and generally um make our streets implement our shared streets model so I think street repaving could um fit well into our general um goals around around sustainability and green transit whether we put it on the ballot this year I think depends a little bit on like timing and what the economic situation looks like I'd want to put it on the ballot if we think that this is um something that can't wait and I I do think that you know investing in these sorts of green infrastructure projects to fight climate climate change can't wait um but that we are in a position to really make the argument to the community that we need it now um and that and so that we can get it passed I think we did a really great job making the argument to the community that we really needed the affordable housing bond and that um and part of that part of making that argument was work by lots and lots of organizations and people around the city who'd been fighting and talking about affordable housing for a long time I think we would need to make use of those same sorts of like organizations and networks who have been fighting for um environmental justice and sustainability in order to really um sell this need to the community and get and get the bond um get people to be excited about about this kind of bond and I know that the county is probably going to be looking at bonds soon too for schools and um other kinds of development so um yeah I think it's uh Durham's growing we gotta we we need to do we need to do a lot more of this kind of work um and we but I yeah I just want to make sure that we're that we feel like we're in a position to really get out there and and sell it and make sure that we get our community on board. Other thoughts? Mark Anthony? Thanks Steve and thank you Jillian uh I uh I associate myself with everything you said I um I mean viscerally yeah green infrastructure definitely um you know and I think that there are some things and choices and decisions we can make as a city to start um codifying and institutionalizing our commitment to green infrastructure sans bond even as we're operating now within our budget choices now and with our contracts now we can begin to to incorporate that into our culture uh our decision making culture our our money spending culture even before we get to the bond I I just don't know and I'll just be very you know just be very blunt like I'm not normally um let me I just think I don't know if the educational piece has been done yet um in the public I remember the Lyft and and Steve and others will remember some of the meetings we sat in trying to sell the affordable housing bond to some constituencies and I imagine it probably would have been an easier lift if we had a year of education before the year that we were actually voting on the bond um I think there's a lot of communities um in the city that they hear green infrastructure I think the work needs to be done particularly when you talk about it from an equity point of view to to to demonstrate and instruct how that's going to directly impact your your particular street and your particular neighborhood um and I and I don't know given the the engagement challenges we've had with COVID on other things the the work that would need to be done to to educate and to sell and to to um not in all communities but in some communities to to get folk to coalesce around this I just don't know if that that's um a lift we should try and do this year we should definitely begin talking about it I don't know that and I support it at you know 100 but I just don't know all things considered if if we want to put it on the uh on the ballot this year asking folk to commit us to more debt for something I'm not sure we've done all the work in fully explaining uh to our constituencies into the city um and even with that without that there are still some things we could be doing and should be doing as a city to incorporate green into how we spend money right now so it's not like we can't do stuff now without this bond but I definitely think that there needs to be a massive conversation and part of that conversation has to be you know telling folk in certain communities how we're not just going to take money again and we're going to build up infrastructure in those neighborhoods the neighborhoods that normally get it uh or or once again we're going to you know when to raise money and you know uh what's in it for your neighborhood and and I just think that you know just drawing from some of the lessons in the affordable housing bond I'm wondering if we should take some more time to build up knowledge and goodwill before trying to put it on the bond on the ballot this year and if we do put it on the ballot this year I'll vote for it and I'll support it but I'm just wondering about the timing thanks I think that those are good those are really good questions and I think that those are yeah I mean I think that's really the question we face is do we feel like we could do the education necessary in the time frame and I think those are important questions colleagues I said we would say till 230 and now it's already 240 and I don't want to presume on you and the staff I could keep going for a little while but let me make another suggestion that we asked David to give us what the potential timeline might be if we so that we could make a decision about this we would know what the timeline necessary timeline would be and then we if you know one of the things that we could do after that is we could ask our administration to help us think about this a little bit once we know the timeline and we can also talk about it some more and figure out what we think about the timing does that suit everyone I don't want to try to shut this down but I am cognizant of the fact that we have our staff here and you all are here we're all here and would you know be on time so I'm just trying to be mindful of that is everybody okay with that process that I outlined okay I see some thoughts so David could you please let us know what some of the milestones might be that we would need to hit sure that's a quick conversation assuming you all take your normal July recess to get it on the ballot for November it would take three actions the first of which would have to happen in May so you'd have between now and May to decide whether or not you wanted to take the actions necessary to get it on the November ballot if you want any more calendar I can certainly have one drawn up but but that's kind of the first action you all would need to take May council meeting to to hit the November okay okay good so that's important knowledge um Javier uh just real quick and it's either we do it 2021 or we wait till the next municipal election in 2023 or does it matter and it can go on the 2022 ballot because there's always an election under them I mean every year anyway I would need I need to confirm that with our bond council in the city attorney's office because there is some intricacies to that that I just want to make sure I don't give you the wrong answer on that piece I can that can get you all an email about if we don't do it this year do you have to wait two years or can you do it in 2022 thank you good question I hadn't thought of that okay uh so let me then ask um our staff our our city manager and our uh to like maybe give us some guidance not today but to give us some guidance on what some of the categories we've already discussed some of them to you know check in with the departments what are some of the need what are some of the unfunded infrastructure needs that we're talking about so that we could actually take a look at what this might be with with more particulars and with with the equity considerations that we know you all will apply um we want to make sure that these equity considerations are top of mind as I know that they will be for our staff and is that enough guidance for you uh Wanda and company it is mayor it is you can see that we we we need your guidance to help make a decision about this both what what the content of a bond might be and then we'll have to decide about the timing and whether or not we think this is something that we can do on this ballot want to do on this ballot or that we need to wait and we'll have the information about what how long we have to wait colleagues um other thoughts and ideas that you might have that you want to convey to uh the city administration on this again i'm not trying to shut down discussion so if there's anyone who has any other thoughts to offer any other hands okay um all right i will i will uh turn it back over to john or bertha uh or or wanda not sure who's giving us our our send-off today so i believe mayor that we are at the end of the day am i correct john correct and we would be um i don't know if you've finished the council and mayor have finished closing remarks i do have a very few remarks um to close the i don't have any remarks but i'm let me ask my colleagues want and then we'll turn it over to you for the final remarks colleagues would you like to make any final remarks before wanda okay wanda it's all the floor is yours all right well after presenting these budget projections and budget outlook the cip update as well as the economic outlook today we are always hopeful that these topics and real time updates that we've selected provide the important information you need to begin to provide budget guidelines to us later this month uh that will move us another step closer to a proposed budget for 2021 2022 again i would like to thank the staff here today who are experts and do this work as good as anyone and actually better than most they have been recording questions and insights they've been monitoring the chat for issues requiring additional information and follow up as we prepare to close this two-day session i once again call upon an ancestor an american poet and a civil rights activist maya angelo for inspirational words as we continue to work on this budget that reflects our policy and most importantly our heart as we look for hope and light until we return at the end of the month and i quote this excerpt from on the pulse of mourning lift up your eyes upon this day breaking for you give birth again to the dream women children men take it into the palms of your hands mold it into the shape of your most private needs sculpt it into the image of your your most public self lift up your hearts each new hour holds new chances for a new beginning thank you awesome fantastic ending to today madam manager i have one more thing i'd like to do before we go which is just to ask the members of our budget staff and if there are other members besides david of our david and members of our finance staff to make yourself visible on the camera i know we have several of y'all here erin and tony and christina and if there are other members of the budget staff here uh we are we know that behind the scenes usually we get to hang out with you all in this day uh and we we get to go over to the tables that you're madly taking notes at and we get to shake hands and share a few words and maybe a meal and we're not able to do that today but i just wanted you all to be on screen so we could also thank you you we are so grateful to you you are unbelievable thank you and you heard you heard pierce um you're not just uh better than most you're better than all and uh our gratitude to you is is without bounds so thanks for doing doing it all so incredibly well thank you and colleagues thank you for hanging in there for a couple of long days and uh i guess we'll see you on monday night is that right monday night seven o'clock be there be square i'm going to declare this meeting adjourned at two fifty p