This, by the way, is for the City of Delray Beach workshop meeting this Tuesday, June 9th. Clerk, call the roll, please. Deputy Vice Mayor Markert. Here. Commissioner Mollica. Here. Commissioner Cassell. Here. Vice Mayor Burns. Here. Mayor Carney. Here. Thank you all very much. All right, we're going to start off with public comments. If there are any members of the public wishing to speak to the commission on the items which are going to be covered by this workshop, please come to the lectern, give your name and zip code, and you will each have three minutes. Seeing none, public comment is closed. Mr. Moore. Thank you, Mr. Mayor. Good afternoon, ladies and gentlemen, and to members of the audience. As we've committed, going back a few weeks, the interest in today's workshop meeting is to offer a proposed budget scenario analysis, while recommendations from the Office of the City Manager pertaining to a fiscal year 2026-2027 balanced budget consideration are anticipated next month, circa the July 14th workshop meeting. We felt that it was imperative for the City Commission to have a kind of metric exercise in terms of specific considerations regarding millage rate as well as economic activity, not to mention the various experiences we've had with the modified budget process that took under consideration the information presented by various departments going back to the month of April. So for that reason, we are here today to provide an opportunity for City Commission to not only have an experience in understanding and witnessing some of the associated analysis and data analytics, but to also be in position to offer your expectations so that we can have a productive proposed budget recommendation process beginning next month in July as we look to conclude the process in September. And by the way, ladies and gentlemen, we are compelled to update the budget adoption calendar, likewise the City Commission work schedule for the month of September, originally scheduled between September 1 and September 15th, which would be the first and final hearings, that now needs to take place between September 8th and September 22nd. So everyone's calendars are being updated to that effect. And for that reason, that is also a function of acknowledging the 65-day requirement beyond July 1st associated with the property appraiser and tax assessor's offices, as well as not to conflict with the school district and Pine Beach counties of option processes as well. So I just thought I'd provide that background so that we can proceed. In addition, this afternoon we'll talk a little bit about municipal service taxing units. That did come up in a recent discussion relative to what that looks like. So this afternoon's presentation does include a summary as to what it would take for any municipality to get to that place, and I'll offer a few words about that as we conclude the dialogue. Meanwhile, the principal this afternoon will be Chief Financial Officer Henry Dakowicz, a number of scenarios related to fund balance, military policy, as well as overall expectations based on departmental considerations having been discussed recently. Mr. Dakowicz, if you would please. Thank you, Mayor, Commissioners. City Manager, City Attorney, City Clerk, thank you for your time and attention. Let's talk about the most likely budget for 2027. We did do a zero-based budget exercise in which we looked at minimum amounts required by each department for their operation, a most likely scenario, as well as a third scenario, which was for increased level of service. To summarize, we put the most likely budget, which incorporated some of the increased level of service items, a handful, which were approved by the City Manager. So on this, we're looking at, let's start with our revenues. So the revenues, our taxes last year in the adopted budget was $132.3 million, going up to $140.4, an increase of about 6.2%. This projection is based on the fact that the assessor estimated that our assessed, our taxable values will go up by about 6.9%. We're not looking at an increase in millage rate in this, but there are other factors in that tax line. So we're up by 6.2%. The important numbers, significant judgments, fines, and forfeitures, going down from $1.2 to $721,000, a decrease of $520,000, 41%. The understanding is that based on decreases in parking tickets, parking late fees, and school crossing guard revenues, we'd like to explore that a little bit more as we move forward to get a better understanding. Other sources, the decrease is really because it excludes the drawdown in fund balance in the most likely budget. So we will discuss that separately, but that's the only reason why on this chart it looks like a significant decrease. Next, we'll look at the expenses. So we have police going up by 10.8%, which is based on the fact that they have contractual obligations and all sorts of other additional certifications, contracts that go up 10.8% from $56 to $62.8 million. Fire, we have, they usually go up about the same pace, police and fire, but we are also entering negotiations with the fire union, and consequently we have conservatively budgeted for an increase. We may not need all of that. The other significant increases we have, in many departments we have increases in fleet expenses. We're looking at the rise of oil expenses, Strait of Hormuz and the war with Iran, anything that's petroleum-derived, lubricants, et cetera. So we see increases, especially in the fleet department. Again, I'd like to take a closer look because our budget is 4 to 16 months from now, and I'm not sure that the oil price today is what will be there for that period of time. We may have been overly conservative there. We have the other major portion is miscellaneous transfers up by $5.7 million. That's because when our real estate revenue goes up, we have to pay the CRA more money based on our formulas, and that's why there's an increase there. So it's an offset. Any questions so far? If you don't mind, because I was meeting with Mr. Moore the other day talking about, you know, when we received the worksheets and we were looking at the varying level of services, right, what's current, you know, what people, there were four levels. How, when you incorporated, you said you incorporated these increases based on Mr. Moore's recommendation. The increases in level of service, which were item by item, they were looked over. He approved a handful of them, and we included them. Because we discussed some of them, but we didn't, you know, basically do the whole thing. So, okay. I just want to make sure the level of services, as I said to Mr. Moore, I went through, but my packet was gigantic, and I'm still working on it. I want to make sure that, you know, we're all clear on what level of service we're meeting under these assumed numbers. The increased level of service, knowing that this was going to be a very tight budget year, there were very few items that were approved. We're basically looking at the current level of service continuing with increased costs because of personnel increases or contracts. Okay, but here's a few concerns that I have. When you say it's the current level of service plus some small increases, that would mean that $500,000 necessary to continue the road paving program that Ms. Barletto discussed, which we all think is absolutely necessary or there will be a much greater cost in the future, maybe isn't included in this? No, we do have a scenario to talk about what that does look like. So if we continue the presentation, we'll be able to touch that. Okay, thank you. You're welcome. Going back to your vision, 2035, and goal-setting initiatives, also included in the most likely scenario are the COLAs that you recently approved, both for current employees and for retirees. For current employees, the cost was about $1.3 million, and for retirees, about $600,000. So that's $2 million of what was included. What was left were these items in the different categories, economic development, education environment, historical preservation, and strategic development. Now, there may be some funding available that doesn't impact the general fund. We have a tree fund. We have some other funds that are in reserves but segregated and identified already. So there may be some funds available to include some of these items in the budget. This is the heart of the presentation. If you look at the adopted budget last year, this current year that we're in, $201.1 million in revenues and expenses, a balanced budget. When we go to the 2026-2027 proposed most likely budget, our revenues from the prior page was $202.1 million. We assumed a 6.1611 millage rate, no change from the current year. Our revenues, though, go up by $6.5 million because of that 6.9% increase in the assessed values. We have to deduct the impact of additional funds to the CRA of $1.9 million. So our net increase in revenues is $4.6 million. On the fund balance, we started, based on the ACFA and the certified financials we received two weeks ago, $47.13 million in that unallocated, undesignated fund balance, sometimes called rainy day fund, $47.13 million, which is 22.47% of our expenditures. Knowing that our minimum on our current policy is 21%, that would allow us to draw down $3 million. So if you take the $4.6 million and the $3 million, those would be additional revenues of $7.6 million, and that would be added to the 202 on the top line. So when you get to the bottom two lines, total revenues were now at 209.7. Additionally, to get a balanced budget, we would have to look at expenses where $229 million, we would require efficiencies to be identified and implemented, $19.5 million. Taking that from the total expenses of 229, we would get to the 209.8, and we would have a balanced budget. We're basically looking at three factors. Increased real estate tax revenue by changing the millage rate, increasing revenues by drawing down on our fund balance, and efficiencies in our operations. If we looked at the proposed budget option number one, we said, what if we increase the millage rate by 3.25%, or 0.2 mils? The 6.1611 would increase to 6.3611. It would throw off tax revenues of $10.6 million. However, we would have additional costs to the CRA of 2.8. So our net revenue increase would be $7.7 million. The city manager and I explored alternatives to our current policy, which we might want to change. We looked at the Government Finance Officers Association recommended minimum, the GFOA, which is two months of expenses, which gets you to 16.7%. So we took the fund balance down to 17.42%. That would entail a $9 million reduction from our most recent $47 million. So now we've increased revenues by $7.74 million and the 9. That's $16.4 million with the revenues of 202 above get you to $218.9 million. And therefore, the amount of efficiencies we would have to identify would drop to $10.4 million. Going to the next column, we increased the millage rate again by 0.1 mil, which is a 5% increase. It generated $12.7 million, $2.7 to the CRA. That would be a net revenue to the city of $10 million. We looked at the fund balance. There are two limits to what the fund balance could be drawn down to. We got this one was $10 million down to $16.71. So we've now increased our revenues by $20 million. So the next to bottom line is $222.150. The amount of efficiencies we need to identify drops to $7.15 million for a balanced $222.15 million budget. The last option, we increased the millage rate again by 0.1 mils. Total gross revenue, $14.7 million minus the payment to CRA. It throws off $11 million of revenue to the city. We took the fund balance down to 16.12%. That gave us $11 million. So in essence, we are increasing our revenue by $22 million. $202 plus $22 gets us to $224. And the expense efficiencies we need to identify would be $5.2 million. So we have our baseline. We have several options playing with the different alternatives. We just wanted to try to explain how these different alternatives either generate revenues or reduce our expenses to arrive at a balanced budget. If I may, Mayor. Yes, you're okay. Thank you so much. Well, first of all, operating efficiencies is we have a deficit under those circumstances. Because how do we, if we're providing the current level of service that we're providing currently in this fiscal year is what our staff called bare minimum. And then we want to increase our level of service from bare minimum to slightly more than bare minimum. And at the slightly more than bare minimum level of service for our residents, if we keep the current rate, we have a $19.5 million. You're calling it expense efficiencies, but that's a very polite term for deficit. We don't have $19.5 million. We have to find it elsewhere. That's what you're saying. And where are we going to find that? Those would be cost cuts throughout the organization. Right. Mr. Dagwitz, I'm not fighting with you. It's your presentation. I'm not disputing it. This is for the residents because I know that you were asked to give us this presentation. But people need to understand, $19.5 million is coming from somewhere else. Where is it coming from? It's coming from paving our streets. It's coming from our park maintenance. It's coming from other places. Because the staff has already gone in and found their efficiencies. And that's what they all presented to us. So beyond what's already been presented, you're saying we need, with those levels of service, we, if we keep at the $6.1611, need to find $19.5 million. And that concerns me greatly. And I would say to you, I appreciate the GFOA's argument that you need $16.75, but that's the baseline. That's the minimum. That is not now. There's so many other factors that need to be considered, correct? So if you're a coastal community, you need additional revenues because you could have a storm that could decimate your city. But if you have a lot of residential, as we do, you could offset that. But another thing that we need to factor into is we run our own utilities in revenues required for utilities companies. Forgive me, Mr. Hajimiri, if I'm recalling this incorrectly. But they look for you to have approximately, is it, nine months of operating expenses? Yeah. Put that on top of that number. Because you're just talking with that GFOA number of general operating expenses. You're not talking about the fact that we have utilities. You're not talking about the fact that we have our own reclaimed water. There's other factors that need to be considered. And I caution my colleagues on reducing that number. I don't think that is the way for us to modify our budget. I appreciate the comments. I would just point out that the water utility is not in the general fund, and they set rates separately to cover their operating expenses. I understood that. Including principal and interest. I understand, but it's a factor to be considered. And have the reserve that they committed to when they issued the bonds. I agree. Again, I'd like you to finish your presentation because I think we're all going to have some questions for you. I would expect. If you could just please finish your presentation. Okay. So what we tried to do here is identify, if you would, three different techniques, if we could, to either increase our revenues or decrease our expenses so that we would have a balanced budget. And we showed you three different alternatives. I would just remind you of the millage rate history that, over the cost of the last 10 years, we have reduced our millage rate each year, especially with the rollback in 2025. And last year, we went up slightly for the current year. So, especially when I read about the governor's proposals, I would object and say, we've been good stewards that, as our assessed values had gone up, we gave back some of them to our citizens. And we didn't tax fully the increase of assessed values. Okay. We're not even back where we were before the rollback. Here's an example we tried. There's a lot of information here, but we're trying to talk about property tax and the homestead values. So, residential properties with homesteads, the market value was $12.4 million. This is last year's data. I didn't have more current information. Non-homestead, which includes commercial and industrial, is $15.6 million for a total of $28 million. The assessed value is $21.2 million. And residential with homestead is approximately one-third of that, 33.5%. There are then exemptions. So, we get to taxable value. That's the number times our millage rate, which generates the real estate revenue for us. So, taxable value, $6.2 million with homesteads, $12.9 for all the non-homestead properties. Again, about a third is with homesteads. Okay. Taxable value to the market value. With homesteads, we're looking at only taxing 50% of the market value, whereas non-homestead properties, we are taxing about 83% of that value. In the bottom left, we have a circle graph, which shows residential with homestead is one-third, residential non-homestead is 46, and then we have 17% commercial, 3% industrial, and other. So, no matter which way you look at it, residential with homestead is about one-third of everything we deal with. When we look at the taxable values in the bottom right, residential with homestead is 41% of our value. And this was prepared several months ago when we were first contemplating the proposed legislation, just to give a flavor of how this would impact Delray Beach. And then we have this chart, which literally 10 minutes before the presentation, we got some updated numbers from the assessor's office in Palm Beach County. But what the budget department did is we took the number, the amount of expenses, that $222 million that we had as expenses originally, and we said, okay, what if next year we have a 5% total expense increase, which given all the factors is pretty reasonable, and then 5% for the year after. So, we would have expenses for the general fund, $240.8 million, and the year following, $252.8 million. And then, according to the proposed legislation, police budgets and fire and rescue budgets would not be allowed to be diminished. So, we take that off the table, and we say, okay, the rest of the budget is $111.9 million and $117.5 million. The next line was what changed most recently, the proposed House Bill revenue reductions. And there's a question whether it's $7 million or $12 million, because the report was a little bit vague, but we can call it, let's call it $12 million. We would have to reduce, call it those efficiencies, find efficiencies for $12 million, which is over 10% of what we're allowed to touch. And then, in the subsequent year, out of the $117.5 million, we're looking at $17 million, which is about 15%. So, this is not trivial, rounding error, easy stuff to do. Some very serious decisions have to be made if this goes forward. Do you want to cover this? I would, as I made a commitment to do so. So, ladies and gentlemen, I'd like to give Chief Financial Officer Henry Dakwis a brief break as we conclude the presentation. And this is to simply offer an overview regarding municipal service taxing units. So, it was discussed during the last City Commission meeting, and at that time, I decided to make it a portion of today's workshop meeting so that the City Commission could have an understanding as to what it would take to consider such an endeavor. So, to create a municipal service taxing unit in Palm Beach County, a municipality must undergo several steps. Number one, pass and adopt a municipal ordinance requesting incorporated properties be opted into Palm Beach County's taxing district via the aggregate cap of 10 mils. Two, define the purpose. For example, if it's beach erosion, street lighting, paving, whatever the case may be, and the boundaries outlining all properties within the district. Three, perform financial analysis to show revenues that will cover capital improvements and ongoing maintenance costs. Four, present to Palm Beach County Board of Commissioners who must then, one, pass a corresponding ordinance or resolution to legally establish the MSTU, which may involve petitions and or public hearings. Two, enter into an interlocal agreement with the City of Delray Beach in this case, as we proceed and engage with Palm Beach County accordingly. Three, adopt the specific millage rate and budget via resolution to support the Municipal Service Taxing Unit approach. And four, notify the property appraiser to apply the taxing unit to affected properties and to notify the tax collector to include taxes on annual property tax bills. Five, of course, this involves very strict timelines. Municipal Service Taxing Unit are normally established nine months ahead of the following fiscal year budget. So if there was an interest to proceed in this regard in advance of the 2027-2028 proposed budget process, we would easily begin in December, January of this coming session to get us to the place in which we could be adequately in position to address this consideration. What also does come to mind, quite frankly, are ancillary fee generating opportunities should the legislation pass in November. There's much in which we need to prepare for, and that would likewise take under consideration any opportunities associated with the Municipal Service Taxing Unit approach as well. So I offer this background information, ladies and gentlemen, to underscore that this is not simply a matter of incorporating a couple simple line items on part of the City of Derry Beach as part of the annual proposed budget process. No, ma'am. No, sir. It is a function of engaging with Palm Beach County via the approach having just been outlined so that everybody can take that under consideration. So to support Mr. Dakowicz, of course, he and I work tandem in these regards, should this become effective in November for the following fiscal year, 2027-2028, this would be a potential consideration we would begin to explore during the holiday season or immediately thereafter. Thank you. Could I ask a question about that? Yes. Because under the Florida statute, I think I looked this up after the last meeting, 12501, we cannot establish these on our own. That's correct. No, it's got to be through the county. Correct. The county also does the enabling resolution and becomes part of the- Right, but we also have to establish advisory boards for the each specific. So say we have a, we do one just for, and look, I think what I'm concluding after all this is this will require a lot and it might not give us exactly what we want out of it. I think our better course of action is to work more on educating once we do the budget on how the specifics break down because doing all this just so taxpayers have a better understanding of how their money is being spent is a lot. And, you know, then we create advisory boards. We have, there's requirements of capping and where's the mill at? And then I'm sure there's going to have to be reporting requirements. It's going to create a whole lot of stuff that I really think if we just did more to educate, I know, you know, we utilize our utilities billing envelopes and sometimes stuff them with information. But I think we would serve ourselves better and maybe we try it this year, Mayor, and then bring this discussion back up, educating people through the resources we have and perhaps even expanding them to mailings and what have you. But I think doing this is going to be a lot of effort for maybe not the reward that we want to get out of it. Well, I will just say that I don't share your view. Okay. Most of the municipalities are having to do something like this. I disagree that I think the taxpayers do have a right to know how much they're paying for each of their services and not have it buried within a big tax bill that they have to go through a budget to figure out. They can figure out if they're paying X amount of dollars for parks and recs, if that would be one you would choose, like, for example, Boca Raton does parks and recs as a separate MSTU. So it allows the taxpayer, the residents, to actually know what they're paying for each line item and actually gives them much better transparency into how their tax dollars are being spent. So I'd never underestimate how important it is for taxpayers to understand exactly how their taxpayer dollars are being spent. The good news is we don't know if we have to do this yet until November. So, you know, we just don't know. But not to be prepared for it would be really ill-advised. So I just think that we need to be prepared if we have to move forward, as all the other municipalities are doing it, because unlike – I mean, as I said, I think taxpayers are going to finally have some understanding of how all their tax dollars are being spent. And so there are special line items for police, special line items for fire, special line items for parks, special line – yes, there have to be guidelines in order for you to create the budget that you're going to have within those taxing units. But it is a much more transparent way for people to understand what they're paying for the various services than just burying it all under a big tax bill. So that's – Commissioner Malika, do you? Thank you. Yeah, I'm absolutely in agreement that we know that we're not allowed to advocate for a ballot question, but we can educate. And letting people know the tax breakdown doesn't have to be on their tax bill. It can certainly be on communication that we're allowed to send. One of the things that concerns me about the ballot question, we keep seeing all these numbers, right, from Mr. Dakwitch, from Palm Beach County, but nobody's talking about the rules in place. And I don't know what exactly the rules are, but they're telling you you can only use tax money on this, this, this, and this. It doesn't include parks and recs. That's not part of what we're allowed to pay for. It doesn't include fireworks or parades or anything. It's limited. It's very limited. And I think that's part of the – first of all, understanding it thoroughly and then educating and letting citizens know that this is part of what can't be funded. Well, I think the League of – isn't the League of Cities taking a position on the ballot question? They're opposed to it. So we are certainly allowed as a city to – I mean, as Commissioner Kassel said, to educate the public about if they vote for this, this is the likely scenario. We must. We must. And because they will lose – the citizens will – this commission would lose control over certain of the budget – our biggest budget. We'd lose control over the police. We'd lose control over the fire. We'd lose control over these budget items. So we can't weigh in on trying to get them to reduce or to expand or whatever. We just lose control over it. So that's a risk. And I think the voters need to understand that their best option for them is to keep your commissions in control of all the expenditures contained within the budget. I'm only saying that if this should pass, we need to be in a position to – because I don't want to wait until November and then say, oh, jeez, we have to be in front of the legislature in January. We're going to need to be a little bit farther along in the preparation process than that in November. I think we do it all. We have to educate and prepare. Listen, I think we need to educate and educate and educate. I still don't think that people go in, they read the ballot question, they think they're going to save money, and they stick the lever. They don't understand that the park that they love may not be as – may only be open three hours a day or that they may not know anything. I'm sorry. Yes, go ahead. No, I just think we need to figure out how the government is – in what capacity can we educate, right, because there are restrictions on what we can say and do about items on the ballots. But back to this, I'm not suggesting that people have one lump sum and they don't know and we're not telling them how their money is spent. I'm saying I think – and we don't have to decide this MSTU thing today, but back to that, as Ms. Mollica said, we can always educate people on – and we do. I mean, we have our budget up online. There's a pie chart. There's a lot going on. But we could always be, you know, more involved. The more education, the better. But I just think this is an extreme measure if our goal is just to have people identifying what amounts of money in their bill are going to what place. I'm not suggesting there's – I'm sorry. There's not a risk thing to it. But I think that the – most people don't go online to look at the budget. Most people get their tax bill and they say, whoa, we're paying this for that, whatever the item is. I mean, school, whatever, anything. So the first line of where they understand what they're spending is when they get their tax bill. I'm sorry. Go ahead. No, it's just a question. So an MSTU isn't just carving out a portion of the taxes they're paying and identifying it. It's an additional tax, correct? It could potentially become that if that's the outcome. That's the only way I'd want to use it. And it can get more expensive. And if I may, ladies and gentlemen, my overview, I'll talk a little bit about the general opportunities municipalities may have should the legislation pass to adopt payment in lieu of taxes, fees in lieu of taxes, those types of strategies. That would be applicable in this model, which while I thought it made sense that we talk a little bit about this today so as to provide some sense of education what this may look like, because not just in the context of breaking down what we specifically have in place, but in the event that we have to consider other opportunities to generate revenue due to the inabilities caused by this legislation passing, this would be a potential format. In section two of the overview, I gave a few examples, beach erosion, street lighting, whatever the case may be. It would actually align with whatever we come back to you all to recommend in terms of a payment in lieu of taxes program, public safety fees, whatever we end up having to figure out to fill the hole, so to speak. So this would be worthy in that regard, in my mind, professionally, far more than it would to simply educate people what they're already paying for, because there needs to be another mechanism to address the financial impact that we resolve. If this referendum passes, there will be a lot of holes to fill. And this is an appropriate arrangement. Commissioner Malik is correct. You know, for example, parks and rec. Correct. You would probably have to do something like this in order to ensure that you would have sufficient funds for the operation of parks and recreation. That would be correct in that scenario. I mean, your roads are probably safe. There are certain things that are going to be fine because they're directly. But your entire special events category is, I have no idea what we're going to be able to do with special events. I mean, maybe 4th of July is a national holiday. You probably get away with that. But you don't. Right. Could I ask, Mayor, you had indicated that other cities are moving in this direction. Which cities are doing that? Well, the counties. Counties have, this is commonplace in counties, though, across the state. That's typically in counties. But you don't see it in municipalities. And you said other cities are doing it. They are. I am told that the people down in Fort Lauderdale, they already have a whole slew of them. They're already in their tax bill. That's correct. They've already, they're preempted all of this by having like four or five items. Fort Lauderdale is a notable example in Fort Lauderdale. Enough. South Florida, pardon me. That's the case. But there are others. You'll see, if you go to the Fort Lauderdale tax bill, I mean, they have some, they have a lot of them. The Mayor, if I may. So, given the avenue to proceed with education. So, as we discussed during the June 2nd meeting one week ago today, that was the date in which the legislature decided to proceed with the referendum question. And, at that point, many of us convened myself with the Florida City County Management Association. I was at the annual conference the week before for a few days, working closely with the Florida Government Finance Officers Association. We even have municipal communications professionals. Gina offers a leadership role in that particular capacity, so she's waving her hand because, of course, she and I have had an opportunity to talk about different strategies in which we can educate our community. Of course, we cannot advocate, tell people how to vote, yay or nay, or any of that. But we are compelled, as a municipality, as is many others, to do as much as we possibly can to educate residents and stakeholders in terms of what the realities may become as a result of this consideration. So, there'll be more strategies, updates being provided throughout the community, electronically and otherwise. So, be on the lookout in that regard because that's direction the Office of the City Manager has already initiated and empowered appropriate staff to proceed. I'm not seeking permission from the City Commission in that regard. That is appropriate direction, and, again, it does align with what the Florida League of Cities is doing, the Florida City County Management Association, in partnership with those organizations to get to that place. Otherwise, the main purpose today is to get a sense of the expectation from the Commission so that we can prepare an adequate proposed budget consideration for fiscal year 2026-2027. Thus, the different scenarios and the different options we've outlined because the one to the right that does consider a military adjustment does take under consideration many of the requests coming from departments based on the zero-based budgeting approach we've executed over the last few months. So, given some of the feedback I've heard from you all individually as well as collectively here before this session, I would be comfortable proceeding with some considerations and will strike a balance in that regard. So, it also harkens me back to a presentation I offered two years ago in which I offered a metric known as the municipal rate of inflation. The municipal rate of inflation, definitely in the city of Derry Beach, at least the last five years I've been on board and even a couple years prior to that, the municipal rate of inflation exceeds the rate of revenue increases that have been experienced really in each year. So, that is definitely the case in that regard and what many municipalities do is make millage rate adjustment recommendations to keep in sync with the municipal rate of inflation. The city of Derry Beach, quite frankly, has done a better job than that, so to speak. We've been able to identify efficiencies while maintaining a healthy fund balance position. So, the interest to do as much as we possibly can to maintain as healthy of a fund balance as we possibly can while recognizing the municipal rate of inflation, that's the basis of this dialogue so that we can get ourselves together over the next few weeks and be timely during the July 14th session. Mr. Markert, do you wish to be recognized? Yeah, just quickly, I've had a chance over the past couple weeks to talk to a number of municipalities around us. The meeting that we're having today, everybody's having. There's a lot of anxiety. No question about that. I agree with some of the comments earlier. I do think education is going to be very, very important so that our voters know, you know, what we're all voting for. And it's a new thing, and it's kind of complicated. And, you know, there are some difficult things, if it all passes, that we may have to do. But, Henry, one of the questions I'd ask is, given there's so many municipalities that are involved in this, are there any work groups forming where we can learn from others' ideas, which in this situation might be a good idea? I don't know. I haven't heard of that. What I've been exploring is I really believe we need a robust, accurate cost accounting of all of our operations. And it's good for both positive and negative. It's important for us to understand what are our total, fully loaded costs to provide fire service, police service, neighborhood and community services, parks and rec, public works. And it's good for two purposes. One is, I'm a firm believer, if we're good at what we do, we should go out to these other municipalities, especially the smaller ones, and say, let us offer you services. Now, if it's fire or police, it might have to be contiguous, and we have to make sure we bill and collect accurately. But I think there are opportunities for the smaller villagers who are going to have a tough time. On the other side, when you start to identify those costs, you can benchmark them and say, I thought we were doing well, but we're in the 80th percentile here. So we could look on both sides. I've discussed this, obviously, with the city manager. I've talked with Alina Georgiev, our internal auditor, who has expertise in this area, about doing cost accounting. We just have our ACFER. We're just getting through the budget. We have the numbers. We have the statistics. Cost accounting is an area I have some experience with, and we want to, you know, the art is allocating shared expenses and how you do that. But you're going to see trends. You're going to see identifiable elements. And what's positive is that instead of just sitting here saying, oh, my, we don't have revenue, we might be able to market ourselves and look at different ways of generating revenue, which help the other smaller towns who are facing challenges, and at the same time take our expertise and allocate it over a broader base, and therefore maybe gain some efficiencies that way. It's been in the press that smaller municipalities are really going to struggle with this. And they won't be able to afford our services. Well, there's that. Well, but I go to the fact that there are smaller towns who go to the county to get fire or police services. But then on the other hand, I hear that they're picking off our personnel with a 20% premium in compensation. So I wonder, that's not the cheapest mode around. So I think we might be able to offer quality service at a reasonable price with enough demand to share that. And maybe there are others who can provide services to us. We should look at it both ways to get the most efficient operation to provide for our citizens the services they require, they desire, at the most efficient way we can. And by the way, just to let people know about these MSTUs, I am not suggesting that's the only option we have. I mean, other cities are also looking at creating a parks and rec fee, which is not an MSTU, or a fire fee, or a public safety fee, or this, where we are still in control of our own budget because we're still in control of the own fee structure. And in the event this passes, the city of Delray Beach will have to be in a similar position to evaluate that for fiscal year 2027-2028, just to be clear. I want to be able to have options on the table in case we're not being able to raise any money. And then not put gas in the fire trucks to go out and rescue me when I fall down on the side of the road. Yes, sir. Don't do that. I wanted to agree with both of you because I think Commissioner Cassell has identified there may be hidden costs and burdens and risks with going to the MSTU approach. However, if we do our cost accounting, we'll have the numbers available to charge fees based on cost with a little bit of a return, whether it's internal to our taxpayers or whether it's external to other communities. So I think the exercise is good. We can communicate all of these details so people know here's how much total we're spending and here's how much it is per user or per person. And I think it's down that pathway that makes the most sense. I think, obviously, we'll explore MSTU and if the benefits. I just want to have, I don't want to let an opportunity go. If the benefits outweigh the risk. Some of our surrounding communities are actually pointing to the north. They're looking, they're adjusting some of their public safety fees. That's how they figure they're going to do it. They're going to do things. So, which we have not imposed yet in Delray, but we need to be open to costs are up. We need to be open to things that we've not done before. We have a lot of personnel who are very excited to explore alternatives so that we generate more revenues and cut expenses. Well, I'm for the cutting expenses part, anyway, so, and making more revenue. So, Mr. Mayor, to summarize, given the input, of course, much to be accomplished in a way of education, communication, external outreach, of course, and we go from there. As far as fiscal year 2026-2027, the interest on part of the Office of the City Manager, working closely with Chief Financial Officer Henry Dakwas and his team, Deputy Chief Financial Officer Carmen Aleman, and Budget Manager Ms. Sabra Avery, will be busy to do what we can to strike a balance with respect to advancing services to the extent that we possibly can and providing an option that makes sense in terms of a recommendation as noted. Ma'am, excuse me, are we supposed to give recommendations privately to you with respect to where we want to be on that rate? Actually, this would be appropriate over the next few minutes. We have a little time between now and 5 o'clock to offer that. I need to process the information a little. So, I would love to give you my recommendation, but I'm going to need tonight to think about it and maybe email you tomorrow. I think Mr. Dakwas made the point. We need to get our arms around the real cost accounting aspects before we can decide. Which is the best, you know, which is the best mechanism? The cost accounting approach. I don't think that would be ready. No. Before you're making the decisions for this year's budget. The cost accounting approach would be applicable for 2027-2028. This legislation passed. We start in November, December, January. We'll offer some details in that regard because the accounting method will be applicable as we offer recommendations, payments in lieu of taxes, other free structures, et cetera. So, we'll be able to get to that place to offer feedback and recommendation. However, to address the observation offered by Commissioner Kosal, and I believe a couple of you all shook your head in the affirmative as well, over the next couple of weeks, we'll be in position to accept any thoughts and observations you may have so that I can strike a balance to come back with an initial recommendation in time for the July 14th exercise. This is just regard to the chart to Mr. Dakwitch. On option two, I think, the CRA contribution went down when every other one went up. Why did it go down from the higher rate of revenue? We'll have to check those numbers and understand why. Okay. Just curious. Thank you. Yeah. And you know what's interesting? Your rate is going up, and I'm just looking at this quickly, and you know, Mr. Dakwitch, I need time. Then you have, you're using more of your fund balance when you would think if your rate's going up, you should have more revenues. I think you're saying the fund balance. Your rate is going up. Your revenues are going up, and yet you're utilizing fund balance drawdown at the 6.1611 is $3 million. I really think it's sort of like a Chinese menu. Okay, because I don't think that doesn't. You pick one of each. Right. But if you're. We just, we didn't want to have a 12-column spreadsheet here. No, understood, but if your revenues are increasing, right, and your revenues are higher at the 6.3, then you should be utilizing less of your fund balance. You shouldn't be using $9 million of your fund balance if you're getting more revenues from your ad valorem. We're looking at a gap of $19.5 million. In column one. Yeah. But look at your fund drawdown is $3 million at the 6.1. If you go to 6.3, you have more revenue. So why, then, are you using more out of your fund drawing down? I think the point is we're just showing three different alternatives for millage rates, three different alternatives for drawdowns. Right, but your drawdown should be, you should require less of a drawdown if you're getting more revenue. If you think that we can get $10 million of efficiencies, I think it's a choice. Right. I think getting efficiencies after we've gone through this process is not going to be easy, even at the $5 million level. So my goal was to just try to look at the outer border of how high we could put millage rates, how much we could draw down the fund balance. And then when you get comfortable with what that number is, you then might conclude the balancing number will be the efficiencies required. Right. But, Mr. Moore, we have implemented a fund balance policy. So how can we go below that? We just put that policy in place. If I may. Yes. Thank you. The policy was instituted two years ago, two fiscal years ago, and the policy does include a provision that they said is to be evaluated annually per budget process each year. So the opportunity to address the fund balance policy does, in fact, exist. There is a provision to that effect. And, quite frankly, pardon me. Sorry. You okay? You caught me off guard. Thank you, ma'am. Get some water. So, in any event, so, quite frankly, if there is an interest or insistence to maintain as high of a fund balance as possible, that would be taken under consideration during a proposed budget process. We would have to tweak the policy provision because it does exist, whereby we would have to evaluate that particular provision. In other words, what the fund balance policy should be. And that's very commonplace in municipalities, that that's an exercise that is reviewed on an annual basis. So, the exchange or the converse of that would be a different millage rate, a slightly increase in the millage rate to maintain a higher fund balance position or a reliance on identification of efficiencies. The interesting part of myself and Mr. Dakowicz is to bring back a balanced budget recommendation that takes under consideration what needs to happen in order to maintain level of services without feeling overly burdened, so to speak, based on the presentations you've heard from department directors, while realizing and understanding that the millage rate dynamics over the last few years have not been too terrible. Okay. And, Mr. Dakowicz, I apologize because now I'm seeing your efficiencies have gone down. That makes the – I just had to look at the yellow line to see that. I was going down the green, and I didn't go all the way to the yellow. So, I see why the 9 is higher because the 10 goes down to 10. That's my commentary relative to the converse. That's the relationship. Thank you, Mr. Dakowicz. I apologize. That's why this was the – I know. You know me. I need to look at this and then process. It's a new framework, and it's a different – and I just – we wanted to try to communicate. Okay, I'm going to take a little time on this, and, Mr. Dakowicz, I'm probably going to reach out to you tomorrow and go through this. And then, Mr. Moore, I will forward you in writing where I fall on this – of these 6.1, 6.3, 6.4, or 6.5. Yes, ma'am. And I would offer all elected officials the same opportunity as we prepare considerations for the July 14th meeting. Thus, I think today's exercise was rather productive, and, again, the opportunity to interact with each of you individually between now and the latter part of this month so as to prepare for a formal July 14th workshop presentation on the subject of a balanced budget recommendation to include military policy and other considerations would be a very productive exercise. So, thank you. Could I ask Mr. Dakowicz one more question in light of the future uncertainty, and I know you don't want to give direction because that's not your job. You just provide us the information. But as we sit here today and we look at our next fiscal year as potentially very uncertain, and as the mayor pointed out the other day, potentially losing $21 million in revenue. I don't know what that number is, but the mayor had the chart, and you gave it to us. It was from the county. No, no, I'm not questioning the number. I'm just saying that – That's the second year, though, not the first year. Understood. No, the first year. It's not this year. It's next year. It's $21 million, correct? That's what you were saying, and the following would be $42 million? Yeah, I think it scales up $150 million immediately, then $250 million, and then $500 million. I think the broader question is, are we forced, regardless of the fact that we want to, to go with this higher millage rate because our financial future is very uncertain as we sit here today? It's not a loaded question. Sorry. I know. I apologize, Mr. Dakar. Well, I would say, as just a finance professional, that, you know, and I've been talking about a potential recession coming, might have a currency crisis. You don't raise millage rates when people are losing their jobs. That's right. And they'll say, okay, take my house. Okay, take your taxes and give it back, whatever is left. So, unfortunately, we did the right thing for our taxpayers, and we're getting punished for it. No good deed goes unpunished. I go back to the biblical seven fat years and seven lean years. In good times, people might have said, let me build up that balance and reserve and everything else and maybe invest more in repairs and maintenance and things that we deferred, and then during the bad times, cut back. But we're here, okay? I think there's an argument to be made that we're about to get handcuffed, and therefore, right now is our last opportunity to do the best we can. It's like buying a house before December 31st to get homesteaded. You're playing a game, and you've got to look at the rules and do the best you can for the community. I think hard times are coming. I'm sorry. Taxpayers, when offered the chance to pay less taxes, will generally take it. I could propose that we eliminate sales taxes, and that would affect states and counties and cities, especially states that don't have income tax. And there's a whole governance issue that says, you were duly elected by our taxpayers. You decided on the military in a very fair and reasonable way, yet with a broad bush, we're part of Florida, and we're going to have to suffer like everyone else. I sense, being the newcomer, there's an unfairness with that. So you've got to play the hand you're dealt. So my sense would be, let's look at every source of revenue. Let's look. I mean, I look at that Reserve Rainy Day Fund as mine, okay? That's my protection as CFO, belt and suspenders. And I'll never forget my mayor in Norwalk, Connecticut, after COVID, and he looked outside, and the school board that we had wanted all that money to spend. We had the largest Rainy Day Fund out of all 169 cities in Connecticut. And he looked outside, he said, looks like it's pretty raining heavily today. I'm glad we have a Rainy Day Fund. So financially, it's sort of gather everything, batten down the hatches, get all the reserves, cut where you can, defer and delay where you can, put out more fees, negotiate with other communities, all of it, multi-factor. Because we're going to get one bite of the apple, and come January, it's going to be here. Thank you so much. Did I answer your question? There's only one other person in this room that suffered through what I suffered through back in 2012 and 2013, and that was Christina Morrison, who was appointed to the commission. We went from $105 million in revenues when I just first got elected to the first budget year I had was $103 million, and then it went down to $98 million. We were actually in a declining, that was if people remember back then, we were in a declining value market. And we learned about, you know, cutting. I mean, I do think tightening your belt is – we're entering at the point where we're going to have – some of the tough decisions we make may include, you know, imposing fees, but also may include saying we can't do this anymore. And I don't know what that answer is because nobody's going to be happy with that. Nobody's going to be happy with that answer, including me. I've done this for decades in my career, first in the corporate environment. I've done it in nonprofits. I've done it in government. The first thing, in addition to the cost accounting, is what are you spending money on? What is the objective? What is the goal? Can you continue with that? Maybe you do 10 parts, but now let's only do three or four because we can't afford everything. Then it becomes a question of generating revenue by sharing with other communities. And then it's cost-cutting that says we can't afford to continue to give this level of service with these number of people with this supporting expenses. And, yes, you've got to do everything. Thank you. Thank you very much, Mr. Jock. Anybody have any other questions? Commissioners, no? No, for me. Then this – thank you for all the hard work. Thank you for all the graphs. Oh, I'm sorry. I apologize. Oh, wait a minute. The city manager showed me up. I intended to start by thanking Sabra Avery, our budget manager, who not only was it her first full-year budget, but she did it with zero-base budgeting and getting to know all the departments, and the departments have all unanimously said how wonderful she is, easy to work with, responsive, et cetera. And, obviously, assisted ably by my deputy, Carmen Alleman, and the whole team, Diego. And I just say I feel very fortunate to head a finance department that works hard, works smart, gets along well with everybody. I'm the only one who yells, and I'm learning because I'm a New Yorker. Maybe by the day I die or retire, I'll figure that out. You'll always be a New Yorker. So I'm just – Soft-spoken. Not a New Yorker. I'm from Brooklyn. Brooklyn. Oh, that – There you go. It's a different level. Oh, no. We start in the street, and we move up from there. But thank you all for my team, and thank you for your consideration. Thank you very much. We are adjourned.