 Good afternoon, Alan. Good afternoon. How are you? I'm good. I see John and Tom. Let's go ahead and call to order. Madam recording secretary, can you please call the roll? Chair Rogers. Here. Member Schwedhelm. Here. Member Sawyer. Here. Thank you so much. So as, uh, as we've been living in for two years, this is a virtual meeting. So folks will be able to participate. We'll start with our public comment for non-agenda items. Those are items that fall within the jurisdiction of the long-term financial policy and audit committee, but are not on today's agenda. So I'll go ahead and look to zoom first and see if you're interested in providing a public comment for non-agenda item. Go ahead and hit the raise hand feature on your zoom. Seeing none. I'll look to see if we had any emails, uh, public comments on today's non-agenda item. No emails were received. Excellent. Let's go ahead and move on then to approval of the minutes. We have special meeting minutes from November 18th, 2021. Council members, did you have any amendments to those minutes? I didn't have any amendments, but, um, uh, I was happy to see for the last time the acting title being in front of Alan's, uh, name. So congratulations, Alan, on your new promotion. And it'll be the last minutes with acting. Chief financial officer. So congratulations. Thank you. You've had enough experience with acting and it's good to have you in the chair now. Congratulations. Yeah, and I've remissed in not congratulating you right off the top. Congratulations, Alan. And I know this committee knows you well and we're really looking forward to working with you without the acting title. I think no amendments to the minutes. I'll see if there's any public comment on the minutes. And madam host, do we have any email? No emails were received. All right. With that then, uh, Alan, our chief financial officer, if you move on to item 4.1, our mid-year budget performance. Thank you, chair Rogers. Going here, we can move over to the, uh, next slide, please. So this is the, our, uh, second quarterly update, which is our mid-year, uh, review. And, uh, we're focusing mostly on the general fund with this, uh, we'll go over our general fund revenues and our expenditures. I'll talk a little bit about what we are proposing as a mid-year budget adjustment or amendment, um, that will be in front of the council on February 15. And then we'll talk about the next steps coming forward, uh, both, um, at the council and in this committee. And then, uh, have time for some questions. So next slide, please. So this is a slide that, uh, we, we put together for the, uh, first, um, uh, uh, we're going to move on to item 4. Um, uh, uh, first quarter presentation, it's a visual representation of our revenues. And basically what it does is it shows that, uh, most of our revenues, 53% of our revenues are actually with self tax and property tax, uh, which is an important distinction as we go forward. Next slide, please. So this is the, uh, the major categories, our, uh, second quarter actual. So this is rolling up to be our, our mid-year and where we are in terms of revenues to go forward. So, uh, it's the year today for all of these amounts, uh, we will take a deeper dive on the three main revenue sources in the, in the upcoming slides. Uh, I will point out a couple of things here. Uh, that's a venture. Some of these you'll see that, that have, um, uh, low percentages. Uh, those are typically either in sales tax because, uh, um, our, our receipts are on a lack. Uh, utility users tax, we, we, um, we tend to get some later in the year. Uh, I know with our, um, our permits, uh, licenses and permits right now, uh, they are trending extremely high. Uh, those are business license or our, uh, building permits, uh, encroachment permits and, and those things. So that is booming. Uh, we are still working on, uh, trying to come up with good trending, uh, uh, information data with that to see if these are just front end project revenues or, or if these are actually really good trends going forward. Regardless, we are going to, um, uh, go past our revenue estimates for, uh, this year. Um, and then with intergovernmental revenue, uh, this looks high to begin with. Uh, this, this reflects a, uh, the Roseland annexation revenue that we get in from the county to help pay for, uh, um, our costs in maintaining the county. Uh, we get that in the first part of the year. So, uh, that will trend out through the rest of the year and can look more normal as we go on. Next slide, please. So moving into property tax revenue. So our first installment, um, well, let me say that, uh, we, we typically get, uh, have the installments, the first one being about 55%. Uh, and the second installment in the springtime being 45%. That's how it, it, it, it, it will, um, add up. Our first half installment, our first part of installment was at, uh, 57%. And with that, we looked to it to be, uh, about one and a half million dollars ahead of schedule. And so part of our, uh, budget amendment that we'll come to council with is recognizing that additional revenue. We'll say looking at trends, we've typically been off about that much. So what this should do is, is start, uh, getting us in line with, with where we are on an annual basis with property tax coming in. Next slide, please. This is the biggie with sales tax. So, um, what we're trying to do here is show a visual representation of how we are receiving tax. And we're looking at it, um, on an average basis going back to try to, um, uh, match up with our actuals to see where we're trending. We go back a few years, develop an actual for, or an average for where we would find things at either mid-year or the second quarter and see where we are. So with this, the, the first two bars, uh, show the amount of sales tax collected year to day through the second quarter. So it's showing the actual versus the average. Um, so what we would, uh, um, what this is showing is that our progress is going over our actuals and that we're looking as we project out through the end of the year. Uh, we are expecting sales tax to be about $6 million higher than what we originally estimated. And what this does is falls in line with A, where we ended last year where we were severely underestimating sales tax. It does show that our sales tax is continuing to, um, come in at a strong pace. Um, and it also fits in line with what we're, with our sales tax consultants are looking at, uh, their most likely scenario. So, um, we do know that there are some issues that, that can, uh, impact sales tax. One of it being, uh, some, uh, is the way Amazon and their fulfillment centers are now, uh, uh, are now reporting their revenue. In other words, we used to, uh, be able to benefit more from the fulfillment center revenue within the county pool. Now, unfortunately, the, uh, cities or counties where there's fulfillment centers are located, they are, are actually keeping the, um, more of that revenue. That said, it's not affecting us that much. And we think that this is a reasonable amount to be able to bump our revenue up and make it, uh, more realistic online number or year in numbers. Alan? Yeah. Are we looking, what sectors, what, what, what's propping this up? Do we know what sectors are kind of out or skewing up as opposed to flat? Yeah. And if you don't have it, I can, you know, it's, it's curiosity. So we are seeing things going up more in retail. Definitely online sales are still, uh, um, really helping us. Uh, um, the, uh, honestly, it's, it's one of the things that, that I, that I hate. We, we don't like it when, when gasoline prices go up really high, but it really does propel our sales tax because there is tax or sales tax associated with that. Um, those are a lot. Those are some of those areas we are starting to see the areas along the line of tourism and leisure starting to bump up. This morning there was a, uh, economic, um, outlook, uh, where the UCLA Anderson, uh, the person that, that does that, um, forecast was, uh, giving a perspective of Sonoma County, uh, economic forecast. And what he was talking about in terms of those industries starting to come back online are a lot of it go along the lines of what we're seeing in our revenue. And I'll talk about TOT a little bit later. Uh, but we're seeing, uh, things with, uh, our retail areas, our, uh, construction and restaurants are starting to go well. But the one thing that, that is, uh, that we just need to, um, uh, we can't really pat ourselves on the back. But we've been very fortunate that in Sonoma County and our sales tax in general, we have, uh, really rebounded quickly from whatever recession that there was related to the pandemic. Uh, we snap back really fast and, and, uh, are more so than, than a lot of other communities. So we're very fortunate in that regard. Oh, are we, are we able to separate brick and mortar from online sales? Is that, is that an easy? Yeah, absolutely. Cause it might be, I just kind of, it concerns me that our, um, local retailers are wondering where they're standing as far as their sales taxes and whether or not they're rebounding as much, uh, as they, as we, as we would hope. Right. And we do expect to see more of that and we are starting to see more going into brick and mortar. It's, it's the thing that, that, uh, the last couple of meetings that I've had with our consultants that we sort of go back and forth on is, is, is the expected trend is that, uh, online sales will, uh, um, will not necessarily go down but level out. And we should expect to see more, uh, retail brick and mortar retail sales happen as folks, uh, um, are more comfortable going into those establishments. So that is what they're expecting to see. I look at it kind of anecdotally. And, and I happen to love the convenience of just being able to order whatever it is on online. So what I've challenged them to do is let's, let's really dive into that and try to make sure that we are, uh, that we have good analysis of that going forward. Thank you. Uh, next slide. So these are our other taxes that we've, uh, it, it rolls into one, uh, large category, but, uh, we've broken them out here so you can kind of see where we've gone on. And what we can see here is that our, our BLS swap, that's on track and that makes sense because that, uh, that is linked with our property tax. So we are, are good with that. Uh, there's a substantial amount of franchise fees from PG and you that will come in in April. So that is low now, but that'll pick up in the latter half of the year. The motor vehicle license fee, we received that in March. So then that will, will bump up there. Our historical trends with candidates looking at things on a quarter basis shows that they tend to come in more in the spring in the latter part. So we, while that is low, lower than, than, uh, what we would like, we don't expect that fee that it's going down in revenue. We'll keep an eye on it, but we expect to see that revenue pop up in the latter part of the year. Uh, the majority of our business tax will come in in February and March right now. We're just in the, in the filing period. So we, we never expect to see that at this part, uh, at this, for this report. Um, and, uh, real property transfer tax is, uh, doing phenomenally well. Again, that that is a function of sales price and, and volume of sales, uh, which are both, uh, going really well and was, uh, uh, mentioned in the forecast as well. Uh, the, the Anderson forecast, Sonoma County, um, that this, uh, continues to be a trend moving forward. Uh, so, uh, uh, you know, that way it continues, we are going to adjust our revenue, uh, accordingly, uh, at the mid year, uh, to, uh, be better in line with what we're actually seeing. So we'll bump that up 2 million to, uh, about five and a half million and that should, uh, uh, be fine. And then occupancy tax, which is a really good sign to see is that it is on track. Um, that was hit hard, uh, between that and, and recreation programs. Those two tax sources were hit extremely hard during the pandemic. So to see that coming back is, uh, it's a very good sign. Um, in, in addition, uh, and I think we talked about it, uh, later, but I'll mention it now. Uh, part of what we should be able to see an occupancy tax is also a result of the short-term rental ordinance that we put in place. Uh, we have seen, uh, between 75 and 100, uh, more to TOT registrants as a result of that program. So we've seen the revenue and I think the revenue, uh, in short-term rent, uh, short-term rentals is about a little over $200,000. Uh, um, that, that came in, that's people that came in and pulled their permit and did all that. So they're starting to see revenue there and part of that process is that those folks that pull that revenue need to register for TOT. So now we have them in our system and we will expect revenue to come in from those short-term rentals that we weren't able to, uh, catch prior to this ordinance. So all of that is good news now and even better news going forward in the future. Next slide. So moving on to expenditures. So where we are, uh, we are right about where we would think that we would be at this year. Uh, the, um, these expenditures do include, uh, the one-time signing bonus, uh, payouts that were part of the labor agreements that were recently approved by Council. Um, those happened in November and December, so they're part of this. What, what these expenditures don't include, uh, or we're not really seeing yet are the, uh, uh, COLA increases that will start seeing in the latter half of the year, um, as, as we get more reporting on that. Uh, the general fund, uh, uh, some departments, as I was saying, they're expected to run high in the latter part of the year and they continue on and I'll talk about that in a little bit. Uh, services and supplies, uh, uh, these costs are a little bit less timely. Sometimes there's a, there's a lag on the invoice is being paid and posted in our system. So these are things that we just all kind of look at, analyze on, uh, a micro level, but as we kind of pull back, we're seeing that we're right about where we thought we would be. There are some expenditures that will occur more in the spring, uh, such as the animal control contract and things like that. So we'll see those pick up a little bit later. And some of the other anomalies that go on from, uh, from, uh, lag in either, uh, expenditures or folks charging out, uh, their time being reflected in our system. And those things will start to catch up as we go along. So we look at things at, at that macro level and then we, we dive down into the, uh, into more of the, the prettier numbers. And then we, uh, uh, do our analysis based off of that. So right now I would say that we're looking fine. We do, there are some things that we are going to adjust at mid year. I'll go into that in a minute. Uh, but for right now at that high level, we're doing fine. And I should probably, uh, talk about non-departmental, um, you see that as a negative. I'll just, uh, um, I would assume there would be a question about that, but generally is. It's, um, it's a function of, of a large, uh, negative number that we have in for general government, um, administration. Non-departmental includes our, our general fund liability and fire insurance, uh, separation expenses, which are those things that we pay out. Uh, and we reimbursed the general fund departments that have, uh, a retirement, um, or somebody exits the city and they have a payout. We hold all that money in non-departmental and then, and then, uh, make them whole by the end of the year. Um, we have some, uh, some other, uh, county admin fees and, and some other things like that. And the animal shelter, like I mentioned, but the big part in there is the general fund administration costs. And this is something that we've done for about five or six years now. The total amount is 13.1 million dollars. So all of these other expenditures, and there haven't been a lot, but it's hard to outpace that, that huge negative number. So to kind of explain what general fund administration is, is it reflects the share of the general government admin costs for the police department, fire department, public works, uh, planning and economic development and recreation parts. And like I said, this is something that we put into place about five or six years ago and it was a way to, uh, show what that cost is, uh, in those departments. The enterprise funds, uh, um, pay the general fund back for that cost through our overhead, through our cost allocation plan. Well, the cost allocation plan looks at all departments and looks at those general fund departments I mentioned and it calculates what the general government overhead costs would be for them if they were a business department. So think of it this way, think of it like the police department is a business and there's typically an overhead that a business would need to have. Um, and that's to, uh, uh, you know, um, higher positions, you know, HR is in the admin department, finances and admin department, city attorney's office are, those are general government admin department. So what we wanted to do, what we started doing those years ago is showing what that cost is reflected in even those general fund department of what that general government overhead was. So as a result, uh, we, we do, we put the positive amount in the department budgets, but we don't want to double count that. So we have a large credit in the non-departmental to offset that cost. So either I put you all asleep or you are contemplating questions on that. I'm happy to answer them to the best that I can. It is a little wonky. Uh, I don't know of very many cities that do this. But again, it was the idea of trying to be transparent and we've been doing it for a while. To back it out now probably wouldn't make a lot of sense. So we just kind of run with it. Uh, it doesn't, uh, it doesn't impact the general fund in any negative way, like I said it next to zero, but, uh, but it is just sort of representing it from a reporting thing. Yeah. Alan, does interdepartmental cost recovery, is that embedded in this or is that a completely different situation? Uh, that's a, that's a different, that's not in this. That would be, um, well, it, uh, hold on, let me look in here. These are, if you're talking about, yeah, this is just general funds. So, so no, the, the, um, uh, the enterprise funds aren't included in this. And that's where the cost becomes through intergovernmental revenue to us. It is a little wonky, but you can, I'll make an appointment. You can explain it to me in your office. I, I could, I could spend a few minutes and, or a few hours with that or writing all up. We'll try to keep it to a, to a half an hour. Alan, if we're going to, if we're going to get wonky in any committee, long term finance makes the most sense. So keep going. I thought I'd give it a shot. All right. So next slide, please. So here is what we are proposing that you will see in February on 15th. In terms of budget adjustments or amendments to our current year budget. So as I mentioned before, we are seeing at least three major tax revenues that are that we feel comfortable. Bumping those up to reflect where their, where their current trends are. So those three will total nine and a half million dollars. I talked about those before and what our methodology isn't going into that. This just provides a summary of where we are. So, nine and a half million of extra revenue. And again, this is something that we, you know, we heard very clearly during the labor negotiations and before of, you know, we want to make sure that we have the most realistic and most likely revenue numbers that are out. So, unfortunately, the way that we develop our budget, we don't know what those year in numbers are going to be. So we kind of do it as the best educated guess that we can of what the revenues are going to be in the current year. I think when we see that we are significantly off, that it makes sense that at mid year, if we could justify that to adjust those revenues in a way that that again is more reflective of what we believe we're going to get. It shows to to our constituents and the departments and to you and council of that realistic it just basically gives us more transparency as we go through. Next slide please. And in addition to the revenue adjustments there are some expenditure adjustments we need to make. So, on the one hand, while we are being transparent with our revenues, we also want to be transparent with our expenditures and we do know that there is a cost associated with the labor agreements that we just approved. So, we are that cost estimate on the general fund side for those labor groups is going to be about 7.5 million. Now, there is potential for some of that come back in turn back and spend appropriations at the end of the year. When we come up with our labor agreement costs, we base it off of all of the approved positions in whatever labor group that there is. We cannot get down to the individual. So if there is a vacant position which we do unfortunately have a lot of vacant position within both general fund and city wide. Those unspent appropriations will come back to the fund at the end of the year. However, that cost eventually those positions will be filled. That cost will move forward. But for right now what we need to do is we calculated what the cost would be at to have the current year cost, which if I remember correctly it was the 3% COLA and then another 2.5% COLA that we'll get in April. So the cost of all those is what we are trying to capture with that 7.5 million dollar amount. We also will add back to our budget of vacancy credit. So I mentioned before unspent appropriations related to vacant positions. Typically what we try to do is put a negative amount of credit in so that our budget isn't overly inflated. So we know that we're not at full employment. We know that we probably won't be at full employment. And so we can bump off, bump down that the full cost of salaries and benefits with this vacancy credit that realizes that we are not at full employment. So it's a way of offsetting those unspent appropriations at this part. Last year we have removed that from the budget. It makes sense again from a transparency standpoint to have that in there. So we are including it now at midyear. There are some staffing changes and these are partial appropriations of funds for that and I'll explain later what the full cost will be. But there is a critical need and while we didn't solicit this information, we were told loud and clear by some of the department when we met with them that they are struggling in certain areas that that made sense to deal with these positions. And now is not wait through the normal budget process and then add those positions if we were to do that beginning in July. So what this is is the development review coordinator building plans examiner examiner and a civil engineering test. So we're all in the planning and economic development area. These are all folks that are dealing with our development process and will help support reducing that backlog that we've had there. We are actually and we will be throwing some contract cost help for them on that as well with our one-time monies discussion that will also be on the 15th. So what we are really trying to do is recognizing that there is a significant need for support both on an ongoing basis and on a contract basis. And we are trying to address that early in the process and not through the normal budget process. We're also Chris can I ask a quick question. Yeah, go for Alan. I appreciate those. What about the fire department and some of the plan checkers with the fire department. I know chief Westrop is shared with us. They several week backlog and I know we had done some funding to try to address the immediate concern but more of the long term. I'm surprised we don't see any fire department assets here. Right. Well, we will be appropriating funds on the 15th with the one time money appropriation that should help with the fire plan review. That was was given the green light by council and study session and we'll do the actual appropriation for that there. Again, we what we wanted to do is is we have a normal process. And we wanted to try to stick to that process as much as possible. I think the way that we are looking with it and and I hate speaking for the chief on this but I think the thought is that we can put some of the contract in there and then if there are positions or whatever more that would come in we would then augment that initial contracts that through the positions going through the normal budget process. So that's the thought that the thought process with that. Yeah, my only interest is that if we're doing these and I agree with all these ones. I hate to see one part of the system, you know the fire check fall behind so we do these investments but yet we're not doing the system as a whole so it sounds like hopefully, we're getting that worked out. And then the other one on this would be the human resources analyst. And I mean if you think about it, we do have an issue with both reclassifying existing positions, hiring, doing that recruitment, or those that there needs to be bodies on hands to be able to do those things. And this will help us be able to move through as the positions and reclassifications are approved by the council through the normal budget process that's put the human resources department in a better place to be able to meet those needs from the department. We're looking at about a three month cost for for those positions at about 150,000 figuring that if approved in on the 15th, February, that it would take a little bit of time for them to get on that most likely we would only see about the final quarter of the year of expenditures in that So that's why the small amount there. There's a boiler line that has from the leak and public safety building. That is water is leaking out from that that is not a good thing that we need to address urgently so we are putting money at that. And then finally the fire department overtime. So, what this amount will do will bring up the overtime expenditure budget for that department to be more in line of where they are normally trending. And this is their normal overtime. This is not strike team reimbursed overtime, but for when folks are out on injury or out for whatever reason. There, we need to bring people in to backfill that that is done generally through overtime. And their overtime for the last few years has been significantly higher than what was budgeted. So we are trying to make a more realistic budget and this will do that. So we expect this cost to be able to bump up to their normal overtime amount and I think it will probably be around $2 million. I'm not sure exactly what they have been right now. And that is an amount that we would expect that we would see in future budgets going forward. This is essentially bringing them up to where they need to be and where they will be going going forward. And they will need to manage to that more realistic. And Alan, I guess I'm always asking the same similar question whenever we talk about overtime. Do we have the analysis of what the nexus point is in terms of the cost to hire additional staff versus the cost of overtime at the city. Yeah, I don't have that right now that is something that we can work on. And I have. Yeah, well, obviously that is, it's a balancing act that we've been doing for a while of that it costs less to bring people on an overtime versus the cost of not only the salaries that the benefits as well. So, but off the top of my head, I don't have that where that tipping point is where we say, you know, we just need to hire a bunch more people and and have that work out. Yeah, I appreciate keeping an eye on that and continuing to do that analysis and in particular be helpful for me, I think. And I suspect that the new city manager would find it helpful also to see as our overtime budget has gone up as we've been required to have more more firefighters and police officers on an overtime situation. Have we also seen an increase in terms of burnout, turnover, injuries, other types of, I don't want to call them hidden expenses because we're not particularly hidden. But I want to make sure that the long term savings that we're having by having the fewer pensions and fewer benefits that we're paying in perpetuity that that cost isn't actually negated by the immediate impact that we have. We're seeing and also the well being of the employees as a result. Yeah, I, I, these are, that is a critical analysis that we need to do and we will work with the fire department and other departments actually that are filling the same thing we do the same thing with police and another area. So this is, it's, it's, and you're correct. I know that also something that city manager and so want to see as we start moving in at this, this first budget and into future budgets there to have that those types of metrics be able to support going. However, we're going to do it, but to have that backup our strategic decisions going forward. And I use fire and police, but, but obviously I also, the more that we get into this, the more that we use the data driven approach, the more to make sure that we're including other departments where we know that we're having turnover having a lot of out on injury. Yeah, absolutely. And if I could just add to, I know it's, it's a meet and confer, but I think another data point is the overtime rate, whether it be FLSA rules or what the state currently pays because I think Mr. Mayor does play into what you're saying. If people are working the 40 hours and then doing overtime above and beyond that, but if someone takes a week off 40 hours, and then they get paid overtime that issue that she just described may not be present. And it'd be it just again additional data points to see which way future councils want to go. Next slide. So we also have, there are some costs and revenue that we need to recognize for other funds. So, just as sales tax is doing well for the general fund, our special sales tax for measure O is is also trending well. And so we need to recognize that revenue as well. And so which we, we are doing. And which is shown here. We also have additional expenditures that that we are for the labor contracts. So what we've tried to do at least with these funds is that from the point of the labor contract and the revenue. We recognize the revenue and the amount that will cover the cost of labor contract. That's why you see that that that the revenue increase doesn't coincide with our normal 4040 20 split on revenue. The other thing is that we, we know that they're that it's doing better than what it should do, which is great. And so we knew that we had these labor costs and we just went and took a one for one offset to be able to help out. One additional item that's a measure O related item that's not on this list, but you will see it in at the council meeting and that is there was some specialized radio equipment. And so what we're trying to do here is by buying this is an enhancement over what is currently we currently have to the extent where it would it's such an enhancement that it does make sense to come out of of the measure O fund. And that is about $650,000. They did have significant fund balance to be able to cover that. If you know that that our that one of the one of the things a fire has been able to do is not only cover the cost of their employees with measure O but also be able to buy specialized equipment and other things through that is in that fund. So they are using some of that for for this. Those items went to the measure O Citizen Oversight Committee on January 19, and they were approved by them to go forward to the council so we will, we will bring this item along with budget amendment. We will bring them together. So those implement implementation plan changes will happen at that point. Also, we have a couple of increases due to MOUs for the water enterprise funds for water and the regional enterprise funds of those amounts there. Next, next slide. So next steps. We, as I mentioned, and non we are taking an item on the 15 to you guys that will deal with your budget adjustment. We will also have an separate item that will do the appropriation and spending plans for our one time fund. And finally, we'll have a our budget priorities public hearing that's our charter required public hearing where the community can give the council their budget priorities in advance of goal set. So the very finance heavy that night. I apologize in advance for that. And then in April, we will come back for the end of April around the same time period that we are now. We will come back for our Q3 budget performance and be able to provide more outlook on where we are with our revenues and expenditures at that point. So let me sum up before we get the question. So our revenue trends are in the general fund are are looking good. They are. We're seeing that the tourism and leisure industry is starting to rebound. And that's reflective in not only our sales tax but our TOT as well. The short term rental ordinance as I mentioned has resulted in additional TOT registrations, which will increase revenue in the future, both from the short term rental permit side, but also in the TOT side, as we will start being able to get whatever TOT that we had previously not been able to get through short term rental. Let's see here are our housing prices and sales volume continue at a very strong pace and building permits related and related fees are also strong. They seem to be continuing from where they were last last year. We, that is, we are working with planning and economic development to be able to develop a good sense of tracking mechanisms that should be able to allow us to predict those revenues going forward. And then expenditures. So from a budgetary perspective, we still have a deficit. And again, I make a distinction between budgetary deficit and end of year deficit and that's largely due to our vacancy rate and our ability to our, how our revenues come in. So as you remember, we ended last year with with an operating surplus when we thought that we had a significant deficit. Well, budgetarily we do have a deficit, but operationally, because revenues have been coming in stronger. And we've had vacancies that's resulted in an annual surplus. Surpluses are great. I am, I am big favor of surplus is where ultimately where we want to be is where we have a recurring operating surplus. And we're not worried about vacancies helping not along. I will add that that if you look at what the ongoing MOU costs and the general fund. So when the when the all of the contracted increases are done. It's about a $9.2 million cost to the general fund that's ongoing. And the fire overtime total about $2.7 million. Again, those are ongoing expenditures. So what you're looking at is about a $12 million. So what's our challenge? Our challenge is to be able to one predict our revenue as well as we can, but to add revenue to that, and we've already started working on some of those areas where where we could do that to strategize that moving forward. So committee will be heavily involved in that as we as we move along. We'll also look at wherever fees that we can increase and things like that that we can help address this on the revenue side. And then we'll also look at efficiencies that can happen on the extended. So with that, that's my parting doom and gloom that that's what you have to do the negative knowing. So there you go. And for that, I any questions that you have, I will do my best. I appreciate that Alan, and obviously it's media topics and we've been able to ask some questions as we go through it. So let me check and see. John, if you want to kick off questions first. Thanks, Mayor. So one thing I had a question about is in slide seven, we, as far as how granular we might want to get with the STRs as part of the occupancy tax. Just like we did with cannabis industry, even though we are treating it like any other retail business in essence, as far as our approvals. It is a, it is a line item on that slide. And I'm wondering, given the changes in STRs of people registering and it's kind of, it's new that we would be with those revenues would be starting to increase. Is there any value in adding a line line item for STRs to kind of track this newly blooming industry in Santa Rosa, or is it just something that you can, you know, mention anecdotally, or even put on a side panel like you did with the RPTT. I'm just wondering if there's any value in separating the STRs from occupancy. Yeah, absolutely. And, you know, with anything that we get that's a root new revenue that comes in, we're going to want to take a look at it and we go I don't. And we have the ability, I believe to, to segregate that that revenue out. I know we do, we've done it before. So we can do that. And I think that it's an important data point to go forward. Not only on the permit side, which we absolutely have a line item for with that, but also to break out the TOT revenue as well. Quite honestly, I think that we would see probably more revenue on the TOT side than on the permit side. So we, we can put one of those side bullets there and we will do that in the third quarter and going forward. I appreciate that. Thank you. I'm not looking to get more granular. We're not where it isn't really necessary, but this one I think deserves a little extra attention given the all the attention it's getting in our community. Absolutely. Thank you. Tom. Thanks, Mr. Mayor. Hey, Alan, can we use this as an example based on just doing the quick math from slide nine and 10. We have revenue increases of 9.5 million adjustments of 8.2. So if we're at your end, and this is tied into what do we do if we have a budget surplus. So if you're going to be the negative Nancy, I'm going to say, okay, optimistically, we have more revenue. And we had talked about those different buckets of money. So if at the end of the year, let's just say, would this mean we have 1.3 million of unallocated funds. And then we can make the decision. Do we want to pay down the pension obligation or those other buckets cap improvement? Is that what we may be having done at the end of the fiscal year? Absolutely. This is, that is the point of it. And sitting manager and I have talked about this, and I think going forward increases, whether they be for in our fiscal stability buckets, or new programs that the council may want to do or need from the department would happen, you know, from a tiny standpoint, it would be around the October timeframe when we have our books closed, and we know exactly where we ended the year. And we would be looking at that operating surplus from that year as the fund that would drive all those decisions. And when would we have more discussions about how many buckets and I know we talked about some percentages. Okay, the first 50% goes to pension obligation, whatever, when would we be having those discussions? Right. So, shortly, very shortly, in fact, the next item on this agenda, I'll give a brief update of where we are with one of those. And then it's going to be on future agenda is going forward. So that is, I've set the goal of having those in place by the end of this fiscal year. So, but I think that I really do think it's doable, because it's some of the things that you've talked about before of leveraging existing policies that deal with replacements that deal with things like that, and to be able to see how those fit with, say, large capital replacements, or, you know, infrastructure deferred infrastructure maintenance and how we do that. The challenge is going to be deciding how much goes in to those buckets, and then what stays there for that just goes into the unassigned reserves that can then be used by the council and to go toward other types of projects that don't fit in those three buckets. And it may end up only being two buckets. We are, we are cognizant to not hamstring the council on this, we think that it's important that we be strategic and look far into the future and to be able to set ourselves up for that. But we also know the reality of programs and projects that come up and we need to have the flexibility with the council to be able to respond to that. So that's how we're trying to do that. And you will see on future agendas where those those will be. Okay, now look forward to those conversations. Thanks. Yep. John. Well, what Tom just said I think is really important and I think we all share the, the value of those strategic decisions and policies and even though not unlike the real property transfer transfer tax that got slowly but surely eaten away from what some believe was the original intent and were less, less certain, but if we are able to impress on future councils, the importance of those strategic decisions and kind of suggest in a way that these dollars are, you know, are think twice before you invade those buckets, because not having the buckets that money sitting out there, there isn't there is a great likelihood that councils will find ways to spend it. And I think if we if we can impress on on future somehow on future councils through our through our language and policies that in that stresses the importance of funding these buckets, maybe they will tend not to so quickly. We can remove certain funds from those buckets because we can't control future councils so it all we can do is in language in policy language and recommendations try to keep their in essence keep their hands off of it for and these are the reasons why because it'll, if it's there, and it looks like it's, it's available, it'll get spent. Yeah, and just taking backing off that, I think one of the things that I was particularly interested in hearing about was some of the bigger ticket items. And we'll get into that discussion but obviously infrastructure is a lot like weight loss for the average person. It takes a long committed effort to actually be effective and most people don't have the impulse control and that includes other councils in making sure that their spending is right. So anything we can do to lay out what is sort of the long term expectations, and how do we try to keep our baseline there through this type of system on equipment recovery or equipment maintenance on infrastructure on all of those long term liabilities. It's helpful in the mid year adjustments and I really appreciate the time that you're taking Alan to walk us through it really lets us see it on sort of the micro level but I think what I'm hearing from is there's also going 50,000 feet and having the broad conversation as well, because it's important. So I'll go to public comment and see if anybody has any comments and or question. I'm not seeing anybody raise their hand on zoom. So Madam host, did we have any voicemail. There were no emails received. I'll bring it back for any last comments or thoughts from Tom or john. Just thanks. All right, thanks Alan let's go on to the next item. Alan you muted. That's my trick. Yeah. So, a brief update on where we are with our fiscal policy, specifically related to pension. So we, we have sought proposals from the two firms in California that does section 115 trust. We reviewed those analyze them had meeting with both firms, and we've selected one to move forward and we're starting the contract process with that. So that's just a quick update. We expect contract process to go rather quickly, or at least hopefully go rather quickly. And then we will And then the question will be with them is helping us craft how much we put into it initially understanding that we have that that fiscal stability money to be able to go in and seed these buckets initially. And then to develop the policy that will, that will deal with future investments into that, and also what our investment strategy would look like all of those things as we're going along. So there's still a lot of work to do, but I wanted to let you know that we've one big chunk of that has been done and that we've selected a firm. We're starting the contract process, we will get through that as quickly as possible and then start into the of making the finally that that trust happen. That's all I have. All right, we included some of the discussion in the last one, but I'll be a Tom and john if you have anything. Go to public comment. Anybody has public comments for this item going to hit the raise hand feature on your zoom. I'm not seeing anybody raise their hands. Madam host, do we have any emails or correspondence. No emails were received. Okay, I'll bring it back and I'm just looking forward to being able to have this conversation more broadly and with the rest of the council as well. I know that there's a lot of interest not just from the long term finance committee members but I do hear that from other council members as well. I wanted to know when sort of this coming back. Overall, really appreciate your effort and your attention on it Alan. And do you have any final comments on it, john or Tom. No, I appreciate the information keeping us up to date. Yep. Let me pull back up the rest of my agenda. Here Alan I'm having internet issues. I think I think that was that was all that we had on it if we wanted to talk about future meeting. Yeah, next meeting agenda item item number five. Go for it. So I'm not sure what we, you know, given the item coming up on the, on the 15th and I think our regular meeting would be on the February 9 or something like that. It's the 10th. The 10th. I'm almost thinking unless we do a special meeting later in the, in the month that we forego that meeting. And then in March we focus on the fiscal policies and really look at the, the other two, and coming up with some methodology to to discuss with the committee. I think it would be an opportunity for us to put something forward and to get the comments back and see if, you know, if we're on the right track or or not. And, and go from there so we get a month will give us time as staff to be able to put some stuff together to be able to have a good fruitful conversation with y'all. Yeah, that works for you too. Works for me. Makes sense. You know, I'm due to be in Paso Robles on the 10th. Is there a way to to bring it to have it happen that the day before on the Wednesday is that how what does that do to people schedules. So, hold on. There's no internet and pass rolls. Well, I'm probably going to be on the road. John has issues when he has the same setup. I don't want to try to move them and have it work. We can do it as a special meeting and and have it either on the 17th. We'd have to wear green, but for one of the other days around that we're not tied to the test. It's our normal meeting days. We could do a special meeting on it on a different one. The 17th works for me. I mean, just throw it out throwing it out there. The 17th does work for me that following week. The 17th doesn't work for me. The ninth does the night. Yeah. How about you, mayor. I have the climate action committee that afternoon on the night. Allen, what about the eight? I don't think we're doing a special anyway. We do not have a council meeting set for Tuesday the eight. The respect council members probably have that time reserved on their calendar, just out of hand. Yeah, we could do that. It is unfortunately reserved for that for for something special like you're suggesting. I would agree with the out, but you know, it's like, I can't be picky now that I'm, I'm screwing it up in the first place that I apologize. All right, so we will shoot for a special meeting on the eighth. Appreciate the accommodation. Let's go ahead and go and see if there's any public comment on future agenda item. And now this discussion of the rescheduling to make sure that we can accommodate on. All right, I see no hands. Madam hosted the emails. No emails were received. All right. With that, then we'll go ahead and thank you Alan really appreciate the presentations and thanks to the members to be in here. Thank you, mayor. Congratulations once again Alan to good job. Excellent. Thank you. All right, take care.