Watertown City Council (Tuesday October 14, 2025)

Good evening, this is a meeting of the Watertown City Council of October 15th. This is an in-person meeting with remote access. 14. 14, I'm sorry, yeah, October 14, it says 14 all over. It is being broadcast and recorded by Watertown Cable Access. There is Zoom information and telephone numbers and email available on the city website. Clerk, please call the roll.

Bays, Feltner, Gannon, Gardner, Izzo, Palomba, Piccirilli, Sideris, Watertown, Councilor

I pledge allegiance to the flag of the United States of America and to the republic for which it stands, one nation, under God, indivisible, with liberty and justice for all. Thank you. The next item on the agenda is public forum. If there's any member of the public either here or at home that wishes to speak, please raise your hand. Seeing none, I close the public forum and move on to the next item, which is the examination of minutes. Can I get a motion to approve the minutes of the special city council meeting on September 2nd? So moved. Is there a second? Second. Any discussion? all those in favor aye opposed the ayes have it next is the can I get a motion to accept the minutes from the City Council meeting of September 23rd so moved is there a second second any discussion All those in favor?

Aye.

Opposed? The ayes have it. The next item on the agenda is President's report and I have the proposed resolution for the fiscal year 2027 budget process. Whereas Article 5 of the Watertown Home Rule Charter sets out a process for the development and adoption of the Annual Operating Budget and Capital Improvement Program, and whereas the city council wishes to establish a timeline consistent with the charter by which it will provide guidance to the city manager on the development of the budget and capital improvement program. and whereas such a timeline will also give residents notice of their opportunity to offer input on these important financial matters.

Now therefore be it resolved that the City Council of the City of Watertown establishes the following timeline for the development of the fiscal year 2027 operating budget and capital improvement program. Our fiscal year 2027 preliminary budget overview will be presented to the City Council by October 14, 2025. The City Council will adopt its fiscal year 2027 budget policy guidelines by November 25th. The proposed fiscal year 2027-31 Capital Improvement Program will be presented to the City Council by January 20, 2026. the City Council will adopt its conceptual recommendations on the fiscal year 2027 to 2031 Capital Improvement Program by February 24th, 2026

subject to the availability of funds. Can I get a motion to accept the proclamation? So moved. Is there a second? Second. Any discussion? All those in favor? Aye. Opposed? The ayes have it. And I'm just going to ask Councilor Piccirilli on his process at the budget and fiscal oversight for the first section after the budget, preliminary budget. Go ahead.

You'll be sending something out. Yes. So as we do every year, we will be scheduling budget and fiscal oversight meetings to create the fiscal year 2027 budget policy guidelines. I'll be getting some dates from the committee members about when we're going to schedule those meetings, but I would like to ask each counselor to begin the process of preparing your input for that, which we will request shortly.

Okay. Thank you very much. The next item on the agenda is acceptance of proclamations. And this evening I wanted to take this opportunity to honor three students who helped the Watertown, three Watertown High School football players who helped the Watertown Police Department with an incident that happened on September 25th. So I want to read the proclamation first. It's a proclamation honoring Riaz Khan, Joel Montoya, and Baran Akisic. whereas the quality of a community's character can be defined by the actions of its members and whereas acts of courage and responsibility can be demonstrated by any member of a community.

and whereas on the night of September 25, 2025, Watertown High School students Riaz Khan, Joel Montoya and Boren Akisic witnessed a vehicular hit and run at the intersection of Palfrey Street and Pearl Street. and whereas Kahn, Montoya and Akisik exhibited collective composure by playing a critical role in assisting responding officers by providing timely and accurate information. corroborating the victim's account, locating and reporting key evidence of a license plate and providing detailed descriptions of the offender and their vehicle. and whereas, as a result of their efforts, the Watertown Police Department was able to identify and locate the vehicle involved shortly after the incident. and whereas their willingness to step forward and assist exemplifies civic responsibility and community partnership with law enforcement.

Now therefore be it proclaimed that the City Council of the City of Watertown hereby honors Riaz Khan, Joel Montoya, and Barana Kissick for their commendable actions in service to Watertown and witness whereof, I have here on to set our hand and cause the great seal of the city of Watertown to be affixed on this 14th day of October 2025. And I'm going to recognize the chief at this point if you'd like to come up and say a few words.

I just like to thank the council for recognizing these young men I mean in a time when it's you know at this age it's not cool typically to help the police and for these guys to step up and gave us some key information that led to taking a dangerous driver off the road was really an outstanding act by these young guys. It's something you don't usually see. So I'd like to thank them and thank the council for recognizing them.

Brown.

Use that microphone.

I'd like to thank my family for showing me how to do things well.

Can I get a motion to accept the proclamation?

So moved.

Is there a second? Second. Any discussion? All those in favor?

Aye.

Aye. Opposed? You guys have it. Thank you very much, and thank you for your service to the community. The next item is public hearings and 7a is a public hearing and vote on a proposed amendment to the fiscal year 2026 budget. Mr. Manager.

Thank you, Mr. President. As noted at the last meeting when we did the first reading on this item, this is an amendment to the budget to move funds from the Watertown Square area plan from the Watertown Square Stabilization Fund into Watertown Square expenditure account to cover costs of the area plan for Watertown Square. This includes funding to fund the second phase of the work by Innis Land Strategies on the urban revitalization plan. I'll note the first phase, the demonstration project is separately funded and already underway. some funding for legal services, and funding for Bowman Engineering to do the major engineering design services contract for a total requested amount of $2,072,798. Thank you, Mr. President.

Thank you. This is a public hearing, so if there's any member of the public or hearer at home that wishes to speak, please raise your hand. Angie Kanellis, you're allowed to speak, sorry. Angie?

Thank you so much. It takes a couple of minutes for the prompt to actually come up. Thank you for giving me the opportunity. Most of us know that there were previous plans for a garage in the CVS parking lot. I'm hoping that some of those plans will be reviewed. by the engineering firms so that we are not actually double dipping and looking at new plans when we certainly know that the infrastructure has not changed.

Thank you. Is there anyone else in public that wishes to speak? Seeing none, I close the public hearing and ask for a motion from the City Council.

Mr. President, I make a motion that we adopt the proposed amendment to the fiscal year 2026 budget.

Is there a second? Second. Any discussion? Roll call please.

Feltner, Gannon, Gardner, Izzo, Palomba, Piccirilli, Sideris, Watertown, Councilor Bays, President Sideris.

Yes, thank you. 7B is a public hearing and vote on a proposed loan order that the sum of $1,350,000 is appropriated to pay construction and construction administration costs of Bemis Park as more fully described in the city's fiscal year 2025 through 2029 capital improvement program. This is also, oh Mr. Manager, sorry, I'll go with you first.

All right, thank you, Mr. President. I will note that the fiscal year 25 CIP budget allocated $960,000, costs increased on this project due to the stormwater mitigation in general, inflation on the project. So conceptual recommendation number 18 of the fiscal year 26 to 30 CIP listed Bemis Park at $960,000. However, due to Victory Field 2 coming in nearly $2 million under budget on conceptual recommendation number 32, we believe we can absorb the additional cost for a request to borrow $1,350,000 to complete the Bemis Park project. Before you, I believe you have the two-page letter from CBA landscape architects that indicates The Belco Landscaping had the low bid on this project. It's our intention to include alternate one and two in this project that includes a shade structure. and a portable restroom enclosure. The construction bid including those items comes to $1,227,145. We had a 10% contingency.

The Construction Administration is already covered in an existing contract that doesn't need additional funding from CBA Landscape Architecture, bringing the total cost for this project to $1,349,850,950, therefore the request for $1,350,000 for this item. Our team from Community Development and Planning and Recreation are all available here to answer any follow-up questions you may have. I appreciate the Council's support in continuing to move our parks programs forward. Thank you, Mr. President.

Thank you. This is also a public hearing. If there's any member of the public here or at home that wishes to speak, please raise your hand. Seeing none, I close the public hearing and ask for a motion from the City Council.

Mr. President, I make motion that we approve the loan order for Bemis Park as presented. Is there a second?

Second. Any discussion? Roll call, please.

Councilor Gannon. Yes. Gardner, Izzo, Palomba, Piccirilli, Sideris, Watertown, Councilor Bays, Feltner, Sideris.

Aida's committee reports, and Aida is a committee on education and school system matters report regarding its meeting on September 10th. Councilor Izzo.

Thank you, Mr. President. The Committee on Education and School System Matters convened on Wednesday, September 10th at 5.30 PM in the City Council Office. The purpose of the meeting was to conduct interviews with two candidates for reappointment for Watertown Keyville Access Board of Directors. present were myself, Emily Izzo chair, John Eurasian secretary was present via Zoom. First up was Samantha Henry. Samantha has enjoyed her time on the board so far. She mentioned how hard it has been for local media in today's world, yet she is very impressed with the staff and how they have dealt with various challenges in a systematic and comprehensive manner. Samantha feels she will continue to bring the role of a working journalist to the board, which dovetails nicely with the overall mission of WCAC. She feels the board and staff are very good at strategic thinking and feels they are in a good position to negotiate a solid contract with Comcast in the upcoming months.

Erasion made a motion to recommend the City Council approve the reappointment of Samantha Henry to the Watertown Cable Access Board of Directors with a term expiring September 15, 2028. The motion was seconded by Councilor Izzo and passed 2-0. Next up was James Verschbow. Mr. Verschbow feels he brings a unique perspective to the board being a volunteer at WCAC. He feels a lot of work has been done leading up to the Comcast negotiation and is hopeful that a fair deal will be attained. He expressed that much work has been getting done leading up to the negotiation. He feels more promotion of the station is needed so people can really follow the issues on a regular basis. Raysian made a motion to recommend the City Council approve the reappointment of James Verschbout to the Watertown Capable Access Board of Directors with a term expiring September 15, 2028. The motion was seconded by Councilor Izzo and passed 2-0. The meeting was adjourned and the minutes were prepared by John Aurasian.

Thank you.

Thank you. Can I get a motion to accept the report? So moved. Is there a second? Second. Any discussion? All those in favor?

Aye.

Opposed? The ayes have it. Can I get a motion to confirm the reappointment of Samantha Henry and James Verschbow to the Watertown Cable Access Board of Directors for terms to expire on September 15th, 2028. So moved. Is there a second? Second. Any discussion? All those in favor?

Aye.

Opposed? The ayes have it. Thank you. Next item on the agenda is 8B, which is a Committee on Economic Development and Planning report regarding its meeting on October 7th. Councilor Feltner.

Thank you, Mr. President. This is the report of the Committee on Economic Development and Planning. We convened on Tuesday, October 7, 2025, at 5.30 p.m. in the Council Office. present were myself serving as chair, John Gannon vice chair, and Vincent Piccirilli as secretary. The purpose of the meeting was to conduct a community preservation committee confirmation interview. The discussion focused on qualifications found in our CPC ordinance that in addition to community preservation advocates for open space and land for recreational use, Historic Resources, and Community Housing, residents should also have deep connections to different constituencies within the city to make it more responsive to the needs of its residents. can bring specific skills to the execution of tasks required by the committee, can bring specific outlooks that may not normally be heard through the city's routine procedures,

and value new approaches and ideas to identifying projects outside the city's routine budget priority process. Allison Eck has a dual degree in physics and comparative literature and is currently the executive communications manager for Harvard Medical School. She has lived in Watertown for 13 years and she has been involved in various community groups including Watertown Community Conversations, Live Well Watertown, and the Immigrant Mutual Aid Network which have enabled her to build strong community connections. She happily refers to herself as a Watertown nerd and she loves learning more about the town. Regarding taking a leadership role, she will have to see after spending more time on the CPC She does have some leadership experience from being president of the board of the Cambridge Symphony Orchestra for five years. This leadership experience as well as her experience as a trained facilitator for Watertown Community Conversations will be helpful

as the CPC navigates difficult issues and tries to avoid split votes for projects. With the CPC updating their five-year plan next year, she has experience with this because she was on the orchestra board that she led through their strategic planning process. Outreach to the Watertown community is something she wants to prioritize and her work expertise will be helpful in accomplishing this. She wants to make a broader range of people aware of the funding available and encourage more ideas to come forward for project applications. then we had the action item for confirming her appointment to February 1, 2027 voted in approval three to zero and we adjourned the meeting at six o'clock p.m. and I want to especially thank Councilor Piccirilli this very busy time to getting this report in so quickly so we can get these confirmations for the board. Thank you.

Thank you can I get a motion to accept the report? So moved. Is there a second? Second. Any discussion? All those in favor? Aye. Opposed? The ayes have it. And I get a motion to confirm the appointment of Allison Eck to the Community Preservation Committee as an at-lodge member to a term to expire February 1st, 2027. So moved. Is there a second? Second. Any discussion? No. All those in favor? Aye. Opposed? The ayes have it. Thank you. Communications from the City Manager. A is a request for confirmation of appointment to the Solid Waste and Recycling Advisory Committee. Mr. Manager.

Thank you, Mr. President. Recommending Alana Berman-Gnevke for a position on the Solid Waste and Recycling Advisory Committee for a term to expire May 15, 2028. Alana was interviewed through the process with the Residence Advisory Committee and recommended for this position and I request your support for that confirmation. Thank you, Mr. President.

that gets referred to the Committee on Public Works. 9B is a request for confirmation of appointment and reappointments to the Public Arts and Culture Committee. Mr. Manager.

Thank you, Mr. President. Recommendation to appoint Lei Ma for a term to the Public Arts and Culture Commission expiring November 15, 2027. and to reappoint Matt Hanna and Don Scaltretto for terms expiring November 15th, 2028. All of this process was reviewed and recommended through the Residence Advisory Committee to me, and I appreciate the Council's support for that appointment and reappointments. Thank you.

Thank you, that will go to the Committee on Economic Development and Planning. And C is a request for confirmation of appointment and reappointments to the Historic District Commission. Mr. Manager.

Thank you, Mr. President. Recommending appointment of Brendan Shanahan for a term to expire November 15, 2026 and reappointment of Harvey Steiner and Linda Sternberg to terms to expire November 15, 2028. to the historic district commission. As you may be aware, there is a process by which appointments to this come from certain different entities, including the historical society, following the process that is before the set forth for appointments and following the recommendations of the Residence Advisory Committee. I'm submitting these to you for appointment and appreciate the Council's support. Thank you, Mr. President.

Thank you that goes to the Committee on Economic Development and Planning. Did you have anything else before you wanted to get up for the next item?

No, Mr. President, just the preliminary budget overview tonight. That's all I've got left.

I just didn't want to have to have your talk again afterwards. Nope, this is it. The next item is the most important thing we're here for tonight for, is the... preliminary budget overview for fiscal year 2027. The manager will move a seat.

Mr. President, point of order. In the past, solid waste and recycling advisory had gone to the climate and energy. No? Can you switch the screens? Maybe I'm confused.

Okay. We looked it up. Okay, thank you.

Thank you, Mr. President and members of the Council. Can you hear me okay here? All right, so first thing I want to share with people is in an effort to continue to be consistent with our climate and energy goals, this is the longest in number of slides presentation that I have given. We didn't print copies. If somebody wants a paper copy, you can ask one for me afterwards and we can certainly get one to you. But you can follow along at home. by going to watertown-ma.gov slash FY27, capital F, capital Y, 27. When you do that, it's going to bring you directly to the LaserFiche page that has all of the files related to the fiscal year 27 budget. When you do that, you'll realize that at this point, since it's so early in the process, there is one file on there for the fiscal year 27 budget, and that file is this presentation. So take a moment, make sure you can see that

watertown-ma.gov slash fy27 should get you to a page where you can download the entire presentation slides and have them for now to follow along at home, to follow along on your own computers or any way you'd like from there. If anyone's having trouble with that, I can just give them a moment. I actually just did it on my phone screen and it worked, which was somewhat reassuring for me. I want to give you a little note about today's presentation as we start. There is a lot to cover in this presentation. I'm asking that the council consider everything that's in this package, spend some time thinking about it. We got a little bit of work to do as the budget fiscal oversight committee moves forward with the budget policy guidelines and then the capital plan for next year. to essentially make some decisions similar to the ones we had to make last year or different but relating to the things we had to do last year. So I do want to make sure that we have a chance to think that through. In order to do that,

There are a number of the slides that I placed in here on certain areas that are important to have on slides and to have available, but I'm not gonna dwell on the numbers on a lot of them in a desperate attempt to try to make this session not too much longer than the one I did last year, which may have set a record for these presentations. So as usual, this presentation is an introduction, a closeout of fiscal year 25 that's now been closed by the Work of the Auditor's Office, a lot of hard work to get that to close 25 and move on. An update on where we are in this fiscal year 26, an early look at 27 and beyond 27. I want to begin by just sharing some of the things that the Council President and I shared at the State and City Address, reminding everyone that we ground ourselves always in our home rule petition and its preamble, which discuss a set of guiding principles that drive a lot of what we do.

Safety and tranquility, learning and excellence, equity and diversity, health and well-being, Creativity and Innovation and Accountability and Transparency. Over the course of the last three years, I've been framing a lot of what I do around the strategic priorities and the leadership formula, these two documents that have become very important to me and remain very important to me. but we are evolving into this goal setting system as we start to build budget goals. So the strategic priorities, I've spoken a lot about them. The leadership formula, leading with ethical standards and collaborative departments and including customer service, transparency, and finding unique solutions. All of those things, we took the ideas in the charter preamble, we took the ideas in the strategic priorities, we took the ideas in the leadership formula, and we tried to build a new and simpler goal set to build things off of as we do budgeting going forward at this point.

The reason we did that is because we're aiming towards doing a best practices budget that ties goals and performance measures to to outcomes and to budget decisions. We had a version of this we were doing in the past. We kind of moved away for a while. I'm trying to really rebuild that strategy, and in order to do that, we need to build goals. If you want to know a lot more about how we built goals, about how these things interacted, the video of the State of the City Address is up there. I'm not going to dwell on it here because we spent quite a bit of time when the Council President and I spoke about it there. but essentially we collected the goals out of these documents and pulled them together and we came up with goals in two categories one which is somewhat inward facing about excellent responsive and collaborative operations the other which is outward facing about vibrant and welcoming community. And I just wanna share for everyone what those six goals are because when we look at where we are in 26 and where we're going in 27, I'm measuring some of that off of these six items. The first is effective operations.

The City of Watertown will operate an ethical, efficient, and creative organization that delivers timely and high quality services that meet the needs of the community, We will continue to modernize systems and foster a culture of collaboration to achieve the highest standards of performance. The second is fiscal stability. The City will maintain our finances in a professional and responsible manner to maintain our strong fiscal position. We will operate using sound financial policies and practices to most effectively use taxpayer dollars and ensure we are equipped to weather economic uncertainty. The third one's on community engagement and customer service. The city will prioritize proactive communication and responsive customer service to effectively inform, educate, and empower its constituents. We will ensure that all voices in the community are heard by offering a variety of meaningful opportunities for engagement and civic participation. on the vibrant and welcoming community side. We start with public health and safety.

City of Watertown will enhance the health, wellbeing, and safety of the Watertown community. will provide programs, resources, and professional emergency response services to ensure a healthy Watertown that is safe for all who live, work, and visit here. In the commitment to the future, the City of Watertown will make responsible and timely investments to deliver a resilient and beautiful future for Watertown by enacting meaningful climate and energy policies, implementing thoughtful community design, supporting flourishing businesses and investing in state-of-the-art schools, we will ensure that future generations can thrive. And finally, on a Watertown for all, the city of Watertown will foster a welcoming, inclusive, and accessible environment. We will invest in cultural assets, and provide diverse programming that makes Watertown a desirable community for all to enjoy. So there are our six goals. And what we are doing with these six goals is we're going to build on them. We're now starting to have a conversation with departments about department goals. and then specific objectives for those departments. And then we will build performance measures off of that.

And then we can build performance indicators off of that. An important part of this though, not to be lost, is the budget policy guidelines that also tie into what and how we do our performances, what we're aiming for, what we're working with, and what we're trying to achieve to achieve the council's policy goals. but they all tie into these six categories and that's the way we're going to work on describing it as we move forward. So the goals are the goals, and we're going to talk about them twice as it relates to 26 and 27. But I want to focus for a moment on budget development. This is a conversation we've had before. We want to preserve the city's financial condition and we are committed to providing the highest level of services possible to meet community needs with the most efficient utilization of resources. We ensure annual cost of operations are funded on an annual basis out of current revenues. We do not defer maintenance. Capital Equipment Facilities Infrastructure.

Beyond the right time, we focus on achieving our long-term goal of sound financial management and fiscal stability, and we always present a budget based upon sound business practices. the council through the budget policy guidelines adopted every November. I just want to briefly review that when we did the November of 24 budget policy guidelines, The top two priorities on the category of cost savings and revenues were first of all to focus on a diversified and growing tax base, including a renewed focus on small business retail quarters and emerging industry clusters. and the second was pursuing implementation of the Watertown Square Area Plan with the goal of increasing tax base there. When you look at the program enhancement and expenditure guidelines, I'm highlighting the top seven, there was a longer list. But number one, for the third year in a row that I've been here, the council put the climate and energy plan first on that list. The second item was implementing the comprehensive plan in Watertown Square Plan.

The third was sustainable funding for schools. The fourth, which we'll talk more about this evening, was working on developing a direction and budget plan for the unfunded capital items including the Senior Center, East End Fire Station, DPW Staging, Watertown Square, and Middle School. The fifth was getting the high school project complete. The sixth was funding recommendations of the Health and Human Services Assessment. And the seventh was to provide funding for the plans for streets, sidewalks, water source, storm water, and underground utilities, making sure we're making those investments. So as we build this budget, I want to start by pointing out that we are facing a set of financial headwinds here that grow More and more concerning every year that I've worked on budgets here.

The biotech industry is still growing in the greater Boston area, but at a slow enough pace that it is not resulting in new construction. I do have my set of concerns that when on the national level there are cuts to funding for scientific research, that could result in that industry starting to contract rather than growing at a slow pace. Growing at a slow pace means right now we're still slowly filling out the remaining buildings we've built. And that's a good place to be. and I hope it stays that way. Federal grants, as I've shared before, the issue at the federal level isn't as much direct funding to us as it is funding to the state and how that affects the state's willingness to give us the state aid that they give us every year. as well as concerns that if there are further cuts on the federal side towards higher ed or the type of National Institute for Health funding that funds a lot of basic research for biotech,

that those directly impact the economy in Massachusetts. Tariff costs and inflation costs on new development are also a concern. and we've seen increases in municipal operating costs, inflation in general, department expenses, insurance costs are also a concern. And we're at a bit of a risky moment. We have a delegation at the State House working very hard for us on our home rule petitions. We have a very important one that's just been delivered up there on the commercial residential tax split that needs to go into effect for fiscal year 27 to maintain the system we already have and to maintain the 175% split that the vast majority of communities in Massachusetts have access to. But it is a political process there and our delegation is going to work hard on it but I do want to talk about the circumstances of what happens if if that is not successful for fiscal year 27. The financial headwinds have reached such a point that Mass Municipal Association has produced a report this week.

A perfect storm, cities and towns face historic fiscal pressures. They tell me there's going to be a follow-up with recommendations on their behalf, but this was in the Boston Globe today. The link on the bottom there is actually a direct link to the report. There's been a lot of conversation about that as we as we go forward. And as we look at these financial headwinds, I just wanna say that Watertown is in a better shape than most. We've had the benefit of new growth, first a significant amount of residential growth and then commercial growth. We have built conservative financial strategies in our budget. we maintain stabilization funds for capital projects which reduces our need for borrowing and this gives us options and flexibility and as city manager I am aiming to maintain the options and flexibility and that is sort of fundamentally just consider that options and flexibility is the thing on my mind as I do this particular presentation today. So let's look back at fiscal year 25.

So as we usually do, we'll look at the revenue side and see how the revenue side finished. Taxes, state aid, local receipts, and other sources, all right? Taxes came in pretty close to where we had predicted them at the end of the budget year. Local receipts, I'm gonna point to two things in local receipts. Permit fees again came out higher than expected. And interest income once again came out quite a bit higher than expected. but I will note that that is because interest rates have been high and the other sources numbers are right on and as you look at the total revenue summary what you see is that The revenue overall in fiscal year 25 closed about $10.1 million higher than we had predicted. Most of that being in the investment income, which is basically interest rates on funds.

We currently have a lot of funds on hand because we're borrowing and managing the high school project, and we currently have a relatively high interest rate out there. either of those things are likely to maintain themselves in the long run. I will note that there is a downward slide on this. Last year we were at 11.5 million, this year we're at 10.1. But that is still a pretty significant variance on the revenue side. On the expenditure side, as we look through, departmental expenditures is where we start first. And if you look at the difference between budget and actual here, the thing that's most interesting to me is that on general government public safety and public works, a year ago, in fiscal year 24, We were over four million over in general government. We were a million up in public safety. We essentially, when I say over, we spent quite a bit less than we had budgeted. This year we still spent less than budgeted, but it was a lot closer, substantially closer. And so if you look, so this is the department expenses line.

Debt and capital projects, as you'll see, debt service capital projects is increasing. We're over 36 million on debt and capital projects at this point. That is because of the high school and the projects we've invested in. and if you look over, this is the overall summary with a budget at 216 and an actual at 214.5. that when you summarize all of that, we spent about just a little off from $2 million less than we had budgeted. Now last year we were $9.3 million off. That difference is because we filled the vacant positions, we're running the departments at full you know full force and doing all of the things that we are promised in the council we are doing. So fiscal year 25 was a very busy year with a lot of things getting done and that number closed and I think it's going to close even more in fiscal year 26 but that variance is getting smaller.

Then we take a look at debt as of June 30th, 2025. As you know, we have a five-year capital improvement plan that included general fund CIP at $273 million, including $70 million of borrowing for the middle school. Water and Source CIP at $76 million. So when you look at our debt summary and our balances across all of our bond issues, you'll see our permanent debt balance at about $282,455,000. Beyond that we also have some authorized debt that had not yet been issued by June 30th, bringing us to $302 million. We often put these slides up, but I want to put our debt numbers in perspective with our peers or with the communities of Massachusetts, just for our perspective. I think it's worth looking at this. The number one key analysis of debt that you want to keep an eye on is outstanding debt as a percentage of full and fair cash value of real estate and personal property.

So you look at the entire value of all of the property in Watertown, and you look at how much outstanding debt we have. And you look at that as a percentage. And the state's expectation is that you stay under 5%. My understanding is that there's a special dispensation they can give you to go over 5% and if you look at the top of the list you'll see Worcester, Pittsfield and Quincy appear to have that special dispensation because they are over 5%. We are 46th on this list. We are at 2.45%. That is a good thing for being able to say we are not gonna bump up against the state's requirements that we can't borrow anymore. But I want to look at two other metrics just to put this in perspective. One is debt per capita. Because on debt per capita, this is all data that the state's division of local services has. We rank 13th on debt per capita. We're at $7,773. This is all 24 data, which is the last data the state has up.

By fiscal year 26, we're up to about $8,036. and debt service as a percentage of budget. On this list, we rank sixth right now. About 11.52% of our budget in fiscal year 24 went towards debt service. By fiscal year 26, we'll be at about 15.5%, which will definitely should put us in the top three or four at that point in terms of this number. There is some concern about this. One of the reasons why we have been able to do this is because of the way we have carefully set aside new growth money to cover pension plus OPEB plus Building for the Future. Like that's always been a strategy and that's allowed us to lift this number without impacting services. but I do want to keep an eye on this number. I don't necessarily aim for the number one slot in this particular category and it is a concern, somewhat of a concern, that we're in that range. and that's just something to keep an eye on. We'll go on to enterprise funds.

Water Enterprise ended the year, fiscal year 25 budget and actual pretty much expenditures pretty close, revenues a little high. SOAR Enterprise, again, kind of right on. We didn't have any particular issues with revenues on SOAR came in a little high again. Expenditures came in kind of right on budget. not particularly concerning. Anything extra on the revenue side ends up retained earnings, which we can spend on capital projects. Not too far off. I think we set the rates right last year and it seems to be that that got pretty good. I'm going to go through the fund balances slides. I will just say to you that these are in the presentation so you can peruse them at your own leisure. spending a whole lot of time on them in the presentation. Is that valuable at this point? Overlay accounts have a balance of $2.6 million. That's the money we use if someone's successful on a tax abatement. It is good to have

in declining economic times to have some money in the overlay in case people start really claiming abatement claims. We haven't had a lot of successful abatement claims because our assessing office has done such a good job at assessing. it's good to have the funds available. Special account revenues, special revenue accounts, I mean, the top 14 you see there, the other 139 have about 240,000 in them, so most of them are in these funds. Circuit Breaker, School Extended Day, ARPA, Parking Meter Fund, School Lunch, et cetera. Community Preservation Act. has a certain amount of money set as a minimum for open space for historic preservation and for community housing. The remainder of the money is undesignated fund balance which can go to any of those three categories but has to remain in those three categories.

CPC made a pretty substantial contribution towards the Willow Park project this year, has put funds towards the design of Walker Pond, and I know we plan to go back and ask them to put funds towards the construction of Walker Pond. they have a balance of about 23 million dollars with about another 3.7 million coming in 2026. Capital Accounts. Watertown High School is, you know, we're funding the high school out of that account every day. That's got 21 million. The elementary schools has about 3.3. We're trying to close the punch list items on those projects, and then the remainder of that we were gonna put towards the middle school projects, so that's part of the plan there. Public building streets and sidewalks, ARPA, these are some key capital accounts that we have in place. and then the stabilization and trust funds. As you can see, the OPEB's gonna be the biggest one because that's the one we're trying to fund to have ourselves fully funded on OPEB by 2031. Middle School Stabilization, $15.2 million.

High School Stabilization, we'll be drawing that down as we finish the project. Watertown Square Stabilization, $8.2 million. 8, although I just requested moving a portion of that into the budget. And so you can see the top seven are 119 million. There are 71 other funds, but they're all much smaller. So that is the closeout of 25. That is kind of where we stand as an organization in fiscal year 25. Now I want to look at where we are now in this year right at this moment. So we did our economic indicators. We did these last year. We're adding them to the presentation to give a perspective. Average total employment is up, although unemployment rate is also up a little bit in 24. This is the last year we've been able to add to that data set. residential sales data we have through 23 as you can see there was a decline there while you're also seeing that through 24 median sale prices are increasing This one was a little perplexing to me when we did construction permits.

We got quite a spike in fiscal year 25, but then when you do permit fee revenue, you see it's actually dropped from 24. I think what's happening here is more people are renovating kitchens and bathrooms and fewer people are building lab buildings so what you get is a lot of permits but not a whole lot of revenue and I think that that is likely to continue under those circumstances you can see are declining in new growth. Residential growth is actually a little higher in fiscal year 25, but commercial growth is declining pretty substantially. from where we were in, I mean, 26, where we were in 25. We had some good years in 22, 23, 24 there. And then, total property valuation increasing, but not at the rate it was before. And the residential commercial split has sort of settled at about 28% commercial and 72% residential in terms of our total baseline valuation.

We obviously tax commercial at a higher rate so it picks up more of the tax base total, but that's like the valuations there. So as we look at fiscal year 26, I want to take a moment to look at 26 in relation to the six goals and where we are. Starting with effective operations. We've been filling vacancies. We've been continuing to improve our hiring process. We're filling vacancies quickly and with qualified candidates. I think our police department has the fewest vacancies it's had in a very long time. and our departments here at City Hall. Most positions are filled pretty quickly at this point. We submitted the administration code draft to the City Council on September 23rd. I look forward to working with the Council on that. help with the management of departments and boards and commissions and look forward to getting into that so we can get a final version back to the council. And our departments are collaborating more than ever before streamlining projects and improving services to our residents. on fiscal stability. We continue to fully fund our pension plan.

We have had two years of a blip because of the class and comp study that sort of brought salaries up and we had to put a little bit extra money into there in fiscal year 26 and we'll do it again in 27. and we're back to the number we're typically at, closer to 1.1 million, but we'll continue to fully fund pension. OPEB, we're focused on expecting it to be fully funded by 2031. Once again, we've utilized sound financial practices and maintained our AAA bond rating. On community engagement and customer service, 311 call volume continues to grow as residents learn and gain trust in the service. We're hiring a position at DPW to assist with construction communication. You may recall in last year's budget we shifted a vacant position into that role. instead of what it was doing before. And that position is posted and we're looking to hire for that position. That's going to hopefully have someone very focused on making sure information gets out to residents on construction as it happens.

and our community engagement team continues to add engagement opportunities with the city efforts for our new residents. On welcoming, vibrant and welcoming, we've established the human services, public health and safety, we established the human services department and hired the director. Our health department has increased community programs from sharps collection kiosks to sunscreen in the parks. We have started to fund the second in-house ALS ambulance and rolled out our body-worn camera program with the Watertown Police Department, so a lot going on in the emergency in the emergency response side. And then in our commitment to the future, I wanna talk a little bit about Parker Building, the high school, and the parks projects for a minute. The Parker Building, Construction is underway there in the largest project that's been going on in that building since we purchased it, including a new space to hold meetings, hearings, and events, which is very close to completion. The new food pantry space is under construction and expect to open early in 2026. and the space for community development and planning staff will all be located together in new office space early in 2026.

And I will note that once CDP is all settled over there, Human Services will also be moving over there into space that is now occupied by a portion of community development and planning. So we'll have health department, human services, public buildings, information tech, and the entire community development and planning team together over in the Parker building early in 2026. So that's all. happening this fiscal year and looking forward to having that space complete. If you go over there right now, it is certainly a construction site. Watertown High School remains on budget, $220,338,049. Meeting our sustainability goals, stabilization count is there to ensure we're fully funded. and the budget remains within the confines of prop two and a half in the CIP and we look forward to having that open in calendar year 26 as well. and then Parks. We've completed Arsenal Phase B. Lowell Playground and Upper Saltonstall are near completion. We've finished seven parks since 2022.

Victory Phase 2 is under construction. Bemis Park, thank you for the vote this evening, is next. And we have community meetings underway for Walker Pond. We expect those to be completed this winter so we can move further into design and towards construction there. and finally the last category here Watertown for all. I just want to note the ADA self-evaluation transition plan. The self-evaluation plan was complete by the consultant KMA. The transition plan is being refined by city staff to actually implement what needs to be fixed. Watertown Fair on the Square and Arts Market each yielded over 3,500 visitors, so we continue promoting festivals and events. and I'll lastly note our city continues our commitment to ensuring everyone in Watertown feels they belong and are represented. We've had a lot of conversation about that at the State of the City event. The council president shared a lot about what's going on in the school department and so we still have a lot on that front as well. So as we look at fiscal year 26, the next step in this process is the fiscal year 26 budget amendment.

is actually the second budget amendment because the first is the one you just passed taking money out of the Watertown Square Fund. And I wanna walk through these tiny little numbers on the screen so that I can call some attention to it. The first is on real estate and property taxes, you'll see an increased number of $1,030,620. That's the additional new growth that we received beyond our original estimates. It's interesting. Certainly our assessor can share more about this if you have questions for him at some point. a lot of that new growth came from actually utility company upgrades which is kind of one of the last places you think of when you think new growth but we do get to tax their equipment in our community and sometimes it's a little tough to measure and they did more investments there than we initially had anticipated. So the second thing you'll see is you'll see a number 285456 appearing twice, once in the revenue line under utilization of free cash, and once in the expenditures line under transfer to opioid settlement fund.

This has to do with the the drama that occurred at the state level around the opioid fund where they told us we could create a separate fund, then they told us we couldn't create a separate fund, and then they told us we could create a separate fund. So when they told us we couldn't create a separate fund, it was sitting in the general fund, which means the money that came to us from the settlements actually dropped to free cash in our last free cash calculation. So we have to get that money back in that separate fund and leave it there, where it then becomes accessible to do the opioid programs. not a better time than now to do that so we're moving that's the money up through fiscal year 25 for opioids starting with 26 and going forward we're allowed to put the money directly into that fund So the good news is we don't have to do this again, but we need to get that $285,456 in the correct account. Our human services team is working on strategies for how we're going to spend that, but we need to get that in the right account to make that happen. The third item is a housekeeping item.

We're moving the veteran's office salary to the human services department since the veteran services person is now in the human services department. So that's just an even change between two budget lines. and then the largest thing and the thing we're spending most of the new growth money on is fully funding the second ambulance. As you know, the council moved money to begin funding the second ambulance during the budget process when we created the fiscal year 26 budget, but as we ramp up and we get closer to hiring staff we need to have more funds available in order to do that. I will note that there's been a change in the civil service law that makes it easier for fire departments to select people sort of alternating between in and out of civil service. we have lots of people on the civil service firefighters list. We are working to authorize ourselves to be able to do this alternative path as well because we think that'll get us the paramedics and then we can hire a paramedic off that list a firefighter off the civil service list, and we can speed this up.

I think until this process was in place, it was gonna be very difficult to staff the second ambulance. We now have a path to be able to do that, and now with this, if the council approved this budget amendment, we would have the funding to be able to do that fully as well. The last thing on here you'll see under education is an increase of $211,875. That is because the state chapter 70 fund came in that number higher than what we had initially anticipated when we put the budget together. and we think it's appropriate to move that money to the school department since that was funding that the state intended for the school department. School department budgets are getting pretty tight and the ability to have those funds in fiscal year 26 or something I think will make a lot of sense for them. So that's the budget amendment. Now, if we look at unreserved fund balance at the end of fiscal year 25, this is what we call free cash even though I consider it to be neither free nor cash, but nonetheless, I want to share a little bit of a reminder on free cash.

Free cash represents the amount of funds unrestricted and available for supplemental appropriations. In a given year, it's generated by unanticipated revenue, which we still had in that 10 million range, or unspent funds in budget and expenditure accounts, which is a lot lower than it was last year. Free cash is not available for use until after it's certified by the Commonwealth, but we do think that's going to happen very soon because we are taking the money and the Opioid Budget Amendment, we do think we'll have free cash certified very quickly. Can only be appropriated in the current budget year. It plays an important role in sustaining strong credit. It's a non-recurring source. It should be restricted for paying one-time expenditures, funding capital projects, or replenishing other reserves. Watertown puts $2 million into free cash. of free cash in the annual budget every year, but this is less than the total tax revenue capital expenses budgeted each year. This is important because we're only spending free cash for capital expenses. We will not spend free cash for operating budget. it shouldn't pay for ongoing programs or employee salaries.

And we anticipate at this point the certified free cash number will come out at about 33 million this year. I remember we were at 43.6 last year and we spent a lot of that with the purchase at the Sterritt Lumber site and with the funding for the and the middle school stabilization. Our goal remains to fund and maintain financial reserves of eight to 15% of the city's annual budget. Been through this many times before. Financial reserves include general stabilization account and free cash. with the 33 million number, we anticipate that we will be at 15%. With the things going on with the tax split home rule, and I'll explain that a little bit more in the future, I really think it's important that we maintain 15% this year. We were at 11 to 12 last year, but if things go bad with the tax split home rule and we think that might take an extra year to get it done, having some flexibility and free cash to carry us over that time block may be important to us.

So now we move on to fiscal year 27. and this is not too surprising, annual revenues and expenditures will be estimated by use of objective analysis. The numbers provided are preliminary and subject to changes as the budget process evolves. We're gonna start on the revenue side with the four categories of revenue. Real estate and personal property taxes are increased to 2.5% per year. And then you add new growth, which is estimated at $2,250,000 in fiscal year 27. And then starting to increase back up, 27 is the low point on the new growth estimates. Funding for the tax exemption for homeowners is at 100% of the statutory level, including the overlay adjustment, and state aid is level funded as we do in the budget, although I'm a little concerned that state aid might actually drop in fiscal year 2017. Once again, our forecast is based upon projections that no new biotech lab buildings start construction in 27. That's where we get our new growth number being lower than it's been in the past.

Most local receipts are staying the same. Inspection fees, investment income are set 2.7, 2.7 million. Motor vehicle excise tax, meals tax, there's little adjustments across those. Other financing sources reflect the typical transfers, utilization of free cash at $2 million. We already talked about that. Budget includes $250,000 annually for the Special Ed Stabilization Fund. The transfers from the ESCO Capital Project Stabilization Fund pay off the ESCO debt. When you pull that all together, here's your base revenue forecast. Prior year levy limit, add two and a half, add new growth, adjusted levy limit, take some of the overlay out to cover the cost of potential abatement requests and you get a net levy limit number at the bottom. You'll see 175 in fiscal year 26 going up to 197 in fiscal year 29. We then do state aid flat.

We add the local revenue at the slightly adjusted numbers that we spoke about and local receipts as well. you know, local receipts page one and page two, that's motor vehicle, meals, hotel, cannabis through rental, cemetery, recreation, these are the typical lines here. and then we go through the other financing sources, sale of lots, parking meters, cemetery, water fund, sewer fund, free cash at $2 million. Now one of the things you'll notice with free cash, is in fiscal year 26, that free cash number was much higher. And the reason it was higher was because it included the transfer for the purchase of Waltham, 148 Waltham, the transfer back for the opioid fund that we've proposed. so that when you actually come to the full numbers and you look, it looks like the budget's going down between 26 and 27, the revenue line, the revenue line is only going down because we transferred a lot of money into free cash in 26.

If we pull that out and calculate where we stand, what we see is that the fiscal year 27 revenue is a 3.1% increase over the 26 revenue. It's not a whole lot. A 3.3% in 28 and a 3.4% in 29. That includes that one time transfer in fiscal year 26 so that we can level this. And so that's kind of what we're looking at for revenue increases over the next year, just over 3%. I want to talk for a minute about property taxes. I don't want to bury the news about when we come to set tax rates, but I should say what I don't want to do is I don't want preempt too much of it, but I'm going to right now because I think it's important to have this perspective. Tax receipts excluding new growth go up 2.5% every year. We tax to the cap, we get 2.5%, then we add new growth. We always have 2.5% plus new growth. Between fiscal year 25 and 26, our total budget expenditures across the budget are up 4.2%. So new growth has to cover the difference between those two things.

The other thing is the average exempted residential tax bill when all the numbers are in and we come back to you in November to set the tax rate is probably going to be up about 6.2% this year. So a residential homeowner who takes the residential exemption and has the taxes that they pay is probably looking at a 6.2% increase this year. That is baked into this year's budget as we've already said it. And the reason that is higher than the 2.5% on tax receipts is because residential values are up and commercial values are down. and that means that that shifts across the overall tax base more burden to the residential side. It's not more money we're collecting as a whole. It just shifts that burden back and forth and it's one thing that happens under those circumstances. If you look right now at our projections for fiscal year 26 to 27, what you'll see is tax receipts again, 2.5% plus new growth. Budget expenditures, 3.1%. That's the number I just showed you. It's lower than last year.

and judging from where we stand now, the average exempted residential tax bill will only be up 4.2% rather than the 6.2, even with the headwinds on the commercial side. This is an estimate. We're a year ahead of when this is gonna be done. but the important thing to understand about that estimate is that that 4.2% depends upon the tax split home rule passing at the state level and the state being able to allow us to maintain putting 50% of the tax base on the commercial side and 50% on the residential side. If that does not pass and we fully tax to the cap in fiscal year 27, our rough estimate is that the average estimated residential tax bill will go up about $1,300 or about 18.4%. So this is why the tax split home rule is so important and why addressing it and working with our delegation on it is so important to us because

All I get is a 3.1% budget increase, but because of the split between residential and commercial, the residential homeowner with the exempted tax bill gets a $1,300 tax increase, an 18% increase, and the commercial side goes down by not quite that amount, but also a relatively high amount to offset that. That's the impact. I want to have that out there as we look at fiscal year 27 because I'm building a budget the normal way, but I'm also keeping an eye on that because it's a concern. So as we look now at fiscal year 27 on the expenditure side, we start with policies and goals. So as the council all knows, every year following this overview, the council provides the manager with the budget policy guidelines. That informs a lot of the policy decisions surrounding the budget. This process is developed by the council with administrative support from the manager's office and the auditor's office as well as actually the assessor's office and the treasurer's office and a whole bunch of other folks in city government.

but all of us, my manager's office, I really mean everyone in the administration, auditing team, manager's team, all put this together. As we begin this process, I want us to consider a few things related to the six goals related to fiscal year 27. So in effective operations, going into fiscal year 27, we want to continue modernizing the systems that unlock streamlined information systems for human resources. This is an implementation step for the HR study. It's important for accountability and transparency. We want to complete the City Hall renovations, the office, the break room, the renovations that move the remaining departments into their locations. Right now we're going to eventually be sending auditing downstairs. hold up on getting one piece of equipment to do that, but very soon, and then renovating the space over here for the assistant city manager, and then we renovate space for the HR office. And we wanna get that all done. It'll be a lot easier once Parker's done too.

and we want to complete internal policy development including policies across the organization for best practices for staff to operate under. On fiscal stability, we want to ensure full pension funding. We have the second year of that adjustment due to the class and comp study. In 27, we want to continue funding OPEB with the goal of being fully funded by 2031 with adjustments if recommended to address other needs, and we do need to talk about that. and then under new growth we need to continue to encourage new growth especially around Watertown Square as we adjust to the limited growth in the biotech lab sector. Under community engagement, we want to provide constituents with new ways to access the 311 service center. We need to provide improved communication to constituents so they can better prepare for the impacts of construction. and we need to continue to seek out and implement strategies to engage populations that have been historically underrepresented in civic activity. I want to be clear though that as we look at the response of collaborative municipal operations side of the budget, There's not a lot of budget in here to add staff.

In fact, it would be really tight to do that under these circumstances. So we just have to be aware of that as we try to continue to improve services. I think that There are areas where we should be having conversations about the next three, five years beyond, but as I look at fiscal year 27, I think we have set the staff size right for a lot of things we want to accomplish. And I want to make sure we get the best out of that team as we possibly can. If we want to talk about strategic steps, we can, but this budget's going to be tight on the staff side. as we look at the vibrant and welcoming community side on public health and safety in fiscal year 27 in short collaboration with community partners and provide wraparound services to constituents facing housing instability and food insecurity. Substance abuse, substance use programming, use the opioid settlement funds to invest in harm reduction, community education, and enhanced treatment and recovery services for substance use with the

With the human services team director now here and moving forward with that, we can focus on that more. In fiscal year 27, we want to finalize implementation of the second ambulance and modernize the computer-aided dispatch system. On the commitment to the future, I want to talk a little bit about climate plan, comp plan, Watertown Square, and parks, and sort of break them out each individually on the climate plan. We're continuing to shift the city's fleet to electric vehicles. We want to continue doing that in 27. We want to continue encouraging private investment in solar and heat pumps and home improvements, and we want to address vehicle reduction strategies in everything we do. New developments, street design policies, transit operations, that's a key part of the climate plan. On the comprehensive plan, we want to continue working on the citywide zoning. We want to encourage economic development strategies focused on small businesses, corridors, and emerging industries.

and we want to additionally focus on implementing the historic preservation plan, updating the complete streets policies and a number of other plans that are called out from here to be able to modernize our system surrounding the comprehensive plan. Watertown Square in fiscal year 27. We want to implement the demonstration project plan while continuing our revitalization plan efforts. So building the larger revitalization plan while implementing the demonstration project plan in fiscal year 27. We want to focus on high quality design as we complete phases of streetscape and open space design in the square and develop a funding strategy. One of the keys here is Heading into 27, we should have the full financial numbers on doing each phase of Watertown Square and see how we can phase them and structure them. The nice thing about Watertown Square is it doesn't have to be one big project. It can be a series of smaller ones so we can time, phase, and fund things more creatively that way. and then on parks, construction will be underway in fiscal year 27 at Howe and Sullivan if we stick to our current schedule.

Victory Phase III and Victory Tot Lot as well as Saltonstall Tot Lot will be ready for design in fiscal year 27 and Walker Pond will be ready to move from design to construction. And finally, the last item on this list, the ADA self-evaluation and transition plan will allow us to be able to begin working to increase access. will continue promoting Watertown through Watertown's cultural assets, including folks in the cultural district, and empower developments to prioritize innovative and diverse programs that meet the needs of every resident in Watertown. So from there, those are some basic goals. Obviously, we'll build a set of goals with the budget policy guidelines. But that's where we stand in terms of starting to look at the expenditure forecast and the baseline forecast items.

So we start with this idea that general government expenditures are again projected to baseline case to increase 2.5%, education at 3.5%, snow and ice days flat, waste disposal at 5%, and state assessments at 2.5%. This has been pretty standard. But I want to take a moment before we go too deep into this to think about something here. We've always forecasted the baseline case to increase general government expenditures at 2.5% annually. And yet, When you look at the last few years, when we actually go and we build the budgets, we were at 4% in fiscal year 23. We were at 10 and a half in fiscal year 24. That was when we added more staff. We were at 6.4 in fiscal year 25 as we implemented the class and comp study. We were at 5% last year, not doing any of those things, adding very few staff, although we did add the ambulance team.

So we've been averaging 6.5% in the category of city departments, plus snow and ice, plus waste disposal, plus education. When we budget them, we have budget city departments at two and a half, we budget waste disposal at five, we just budget snow and ice at zero, and we budget education at three and a half. We budget at an average of 3.07. We've actually been at an average of 6.5. I believe that when we look deep into this and you look at these numbers, you're going to come to the conclusion that even though our baseline case starts with 2.5% on these numbers, it's not where we end up, and it's not where we end up because inflationary costs and a number of other things. We do a really good job at building, we've worked very well with our unions to build our collective bargaining agreements at market numbers to make sure that we meet where we need to be.

the ones we've settled so far this year, the cost of living increases are in the two to two and a half percent range. but where we've needed to do market adjustments like adding the tenure step and the police contract, you tend to find that that plus the kind of built-in step increases that are already in the accounts. They're not actually two percent increases. At the end of the day, they're closer to three and a half. Then you get a increase on an operating cost. The study we're doing in the public buildings department about whether or not we need more resources there and we need more investments, certain things, and suddenly the budgets get a little beyond this. I think realistically the city department's number might be better off being higher than two and a half and we can talk more about that but in this base case we've left it at two and a half. and so that's the departmental forecast at two and a half.

Meanwhile, the education appropriation has been at three and a half. and as we head into the budget fiscal oversight committee to talk about budget policy guidelines that three and a half percent usually comes right out of the council to me and I put that number in. As we meet this year, I think what we've seen, we had that number at 5%, and then we brought it to 3.5. There was a lot of federal money that came in on the education side at that point. We are reaching the point where putting 3.5% annually into the school department is going to start causing them to have to cut programs. I don't want that number to escape too high. I think that a conversation about where that is needs to be a part of the conversation as well going into next year. So again, I'm leaving it at 3.5% in this projection, and you'll see kind of where that challenge is. Health insurance costs are at 7.5%, but the reality is the early feedback we're hearing from our health insurance folks is that that's going to be a double-digit number in fiscal year 27 as well. um,

And then debt figures are from our current and projected future debt. That baseline projection maintains the middle school borrowing at 70 million, street and sidewalks increasing at 5%. We left the transfer to the Open Space Stabilization Fund as it is. Now, the other thing I'll note about borrowing is borrowing costs have been creeping up. This is the last four years of borrowing we've done. One step each year to go out to borrow. borrowed $11 million in 22, we borrowed $55 million in 25. The numbers on the right there are our interest rates. Now, if you borrowed for mortgages, those numbers will look low to you because we are able to do tax-exempt bonds. There was a moment where tax-exempt bonds were in the twos. and that was a great moment. By May of 25, we're at 4.2%. So we are projecting our borrowing rates at about four and a half at this point because we think that's probably likely where we're going to end up. I mean, it might slip a little bit with

Fed interest rates coming down, but we're not getting back to 2.4 anytime soon. So just keep an eye on that as we consider the debt service situation. So now on to the standard department funding strategy. Like I said, we're going to do general government, public safety, public works at 2.5%, snow and ice stays flat, waste disposal at 5, health and human services, library, recreation at 2.5, education at 3.5%. Insurance and Employee Benefits. We did the insurance at the seven and a half. Once again, we are sticking with this strategy that OPEB plus pension plus school debt plus stabilization, including the middle school and the senior center stabilization, would stay at a flat number. And at one point we had that flat number, I think around 28 million. Last year we set it at 34 and a half. in this budget it's set again at 34 and a half.

The intention here was to set aside a chunk of money to keep out of the operating budget and into doing these things and have it stable so that we could pay pension, we could pay OPEB, we could balance these things, without impacting the operating side of the budget. As long as the operating side of the budget can operate and we can still afford to put 34 and a half in here, that works. but one of the challenges you'll see is we creeped this number up because we felt we had the chance to but now we're starting to see some deficits on the bottom line and it becomes a little bit difficult to hold that number at 34 and a half but again for this circumstance here. We're gonna keep that number at 34 and a half for a moment and see where it goes. Here's debt and interest. Again, this includes the middle school at 70 million of borrowing. and you'll see it goes 38, 42 and 46 million. 46 and a half million in fiscal year 29 is where our debt and interest numbers reach. Capital projects are pretty straightforward.

And so now you get your preliminary expenditure forecast and there's your bottom line numbers, 226 million and 27, 233 and 242 as you go into 28 and 29. and then if you calculate that against the revenue numbers, what you basically find is deficits. You find a $3.6 million deficit in 27, a $3 million deficit in 28 and a $4.6 million deficit in 29. Now I want to remind you, this is leaving the middle school at $70 million of borrowing and the general government at 2.5% and we have a gap to close. In the past we've noted that when you close the gap for one year you can actually kind of project it forward as not falling into the next year. That works if you close the gap by cutting an ongoing line item.

I'm not necessarily going to move first to do that because I think we should look at some of the stabilization accounts before we look at the ongoing line items to balance this deficit. but I want to look at that deficit in relation to the conversation we had a few weeks ago about the middle school before, wrapping up this conversation. This is a common end slide in this presentation, but unfortunately I'm not quite done yet. I think we need to take a moment to review the next generation challenges discussion we had last year as it relates to the middle school. I will admit I came out pretty strong a couple of weeks ago and said we can't do this and I want to focus on that as I focus on this circumstance. Last year What we were discussing and prioritizing was five items. Senior Center and Recreation, East End Fire Station, DPW Staging Area, Watertown Square Plan, and Middle School.

and when we finished the conversation with the council, what we got to was this. The middle school funded at 70 million in borrowing with stabilization that we've now been able to push up to 17.2. At the time, it was less than that. But taking some of the money left from the elementary schools can get it to 17.2. Watertown Square was completely unfunded. the theory being it would be funded from stabilization accounts and it would be funded from new growth in the square. We talked about the possibility that we could use the district improvement financing tool, but even if we don't use that tool, the general idea was that growth in the square could help cover the costs We could borrow against that for Watertown Square, even if it's not in a formal structured program. The challenge with that is most of the new growth that's in the budget for the next three years, most of the, if you look at the three buildings on the boards right now, they're in Watertown Square. So if we take that new growth and project it to Watertown Square, the new growth that I just projected to cover general government isn't there. So it doesn't completely work. So it's something to consider.

The senior center at 25 million, A number might be a little low, but we put it in fiscal year 30 in the capital plan. We did not fund it. We decided to very aggressively put stabilization funds aside to reduce the need to borrow from it with hope that if new growth expands beyond where we thought it would or we can make some strategic investments, maybe investment income stays high the next couple of years, we can actually borrow against these new numbers or put more into stabilization to reduce the need to borrow. And keeping that senior center number high is key to keeping the senior center happening. DPW staging was unfunded. We're temporarily using the Starrett Lumber site to address this need. The East End Fire Station was pushed off the capital plan beyond 2031 and unfunded as well, keeping an eye on it. Now, as we presented this, in the fiscal year 26 preliminary budget presentation a year ago. I want to remind people where we were when we talked about middle school operation costs.

The first thing we looked at was a tear down and rebuild school option that we estimated at $132 million, and we collectively decided that was too much. We looked at base repair and code upgrades at 76 and passed on that because it didn't create an educational value. We looked at a complete renovation at 127.8 and thought if you're gonna do that, you might as well do the tear down. We looked at a strategy to renovate the 1922 building and upgrade the remaining areas that came out to 120 million. and then there was a replace 1922 and upgrade remaining areas that came out to 84.8. That last one was the one that we sent off to the school building committee as the assignment to figure out how to do. at that 84.8 number. Now, what happened next? Well, in November of 24, you voted to prioritize the middle school renovation. It can be done within prop two and a half. In January 25, we approved a capital plan that repurposed funds to allocate $70 million for middle school borrowing. From January to April, the school building committee selected a design consultant, conducted the feasibility study and envisioning sessions.

and in June AI3 came back with a preliminary cost estimate for the project with two preferred options and both of them exceeded 120 million dollars. from June to August. We worked with AI3 to explore reduced cost options and try to get these as tight down as we possibly could, and we came up with this plan that I shared with the council a couple of weeks ago. that essentially created a construction manager at risk version of a new build building that wasn't 130 million but was 112. Our budget for this project was $84.7 million. So there was a pretty big gap there. And if you do the math, just a step through this again the early 25 plan included 14.7 in stabilization, 12.7 set aside, 2 million from the remaining elementary school accounts and 70 million of borrowing for 84.7. There are additional funds needed to cover rent of the modulars and reimbursement of MSBA. We knew that wasn't complete, but I was looking for a project that was maybe $90 million. This plan substantially squeezed the capital plan.

Like I said before, it didn't cover the ability to get the senior center done without a lot of it being in stabilization. It didn't cover the East End Fire Station, and it depended upon substantial growth in Watertown Square to cover the Watertown Square plan, can't grab our new growth to do other things in that at the same time. In June of 25 there was an additional two and a half million that can be added to the account that we know can be added to the account we have not added to the account it's still sitting in the three elementary school stabilization account but we believe that once we close out the three elementary school punch list we can move two and a half million and that will account for possible costs of modulars and reimbursement. So now there's 17.2 available. So now the total project fund available is 87.2. In August The best plan that matched the original version of what we did was $103 million, and the school department was not interested in that plan because it didn't meet the educational needs of the students. The best plan that met the educational needs was $112 million. So it's a project gap of 25.8 plus.

Any costs due to additional delays, because honestly, we don't have an architecture team designing this building right now. and you know you can't move kids into the modulars without a full construction plan and if we're going to do this project we would need to move pretty quickly to get them back up and running. There may be some costs there. and we have to reimburse the state for some windows and other investments that they paid for in the building that have not extended to the end of their useful life yet if we were to demolish the building. So the question a lot of people ask is can we do the middle school project? And I'm not going to ask the question that way at this point. What I'm going to ask is what happens if we do this project? What are the risks if we do this project? and coming back to the term I used at the beginning of this presentation, how does it impact our options and our flexibility? So to step back, how do we maintain options and flexibility in the budget? One way we do that is by funding pension, OPEB, and the Building for the Future at a set rate.

which we've creeped up from 28 to 34 and a half million dollars. Two is contributing annually to stabilization funds that can be rolled back in a financial crisis without an impact on the operating services provided by the city. and what I mean by that is if we end up with a really tough year, if something goes outrageously wrong, if new growth goes to zero and insurance costs go up 25% and we don't know what to do, in that year, One possibility I have to present to this council is to say, let's not fund the affordable housing trust. Let's not fund the open space fund. let's not fund the general stabilization fund or any of those particular funds in this given year. And we can skip a year of doing that or two years or three years or 10 years and while it impacts the ability for us to achieve key goals that are in the budget policy guidelines, it doesn't impact the day-to-day operations of the city. I don't have to cut an ongoing operational service.

This is what I'm talking about when I refer to the issues of having the flexibility to be able to address these things. We have that. I will say that our ability to do that is the envy of most municipalities in Massachusetts. the ability for us to say wow we just got whacked with a five million dollar unexpected expense we're going to not be able to contribute to the open space fund next year, but I'm not laying off police officers. I'm not laying off city hall clerks because I have the capacity to do that. I have that flexibility built into the budget. and we work to fund our future capital projects out of unstabilization or when we borrow late in the debt service schedule or We borrow at better interest rates and we end up leftover funds. We've always used debt service, leftover remaining unspent funds to fund future capital projects. Again, we do that because we are able to, because we have that flexibility in the way we are conservative in that way. Why do we need options and flexibility?

Well first, department operating budgets have exceeded our estimates year after year as we've gone to implement the Council's budget priorities and focus on being an employer of choice and making sure the salaries match market. Construction costs escalate, material costs, labor costs, borrowing interest rates, insurance costs, especially health insurance are all going up. In the last couple of years, we have been able to not dip into making these reductions at all because new growth has been adequate to fund the additional programs. It's basically allowed us to grow debt. It's allowed us to limit the impacts of these risks. but we're in these low growth years now. There's also the risk if the tax split home rule doesn't pass. I say the risk may not be significant because I have a lot of confidence that we're gonna work with our state delegation to do it but it is worth understanding what that impact is. So in order to do that, the way I want to approach the middle school question is by filling in these four boxes in this particular little chart right here.

The two boxes on the left assume that the home rule petition passes and that we're basically at a 4.2% tax increase in fiscal year 27. what those boxes are, the one on the top is where our financial situation is if we don't do the middle school project and the one on the bottom is if we do the middle school project. What I want to do with the box on the right though is in the event that the tax home rule passed and in the event that the council then said well an 18% increase in taxes is untenable, and therefore we want to provide tax relief by not taxing fully to the cap until or unless we are ever able to solve this home rule strategy. What would happen, and I picked a particular number because I had to pick something to work off of, Again, this is a scenario analysis. You can run these scenarios a thousand different times. I can create a million versions of this spreadsheet. But I created a version with $10 million of tax relief just to see what would happen.

and said, if we did $10 million of tax relief because the home rule petition didn't pass, and mind you, when you do that, by the way, $4 million of that goes to the commercial side just because of the way the commercial residential split goes. But we're offering $6 million of tax relief to the residential side by doing that. what happens and how do we balance the budget? So let's begin with this. This was our base case. This is the circumstance of deficits, 3.6 million in 27, 3 million in 28, 4.6 million in 29, all right? The first thing I'm going to do is I'm going to adjust the department expenses to 4%, including education, just for the sake of doing a scenario. right so I took all the lines in blue that were at two and a half percent and education was at three and a half and I adjusted them to four and I said if budget policy guideline says give education four and if we keep general government nines at four remembering they've been averaging higher than that but if we weren't able to get these to four what would happen I will note that this doesn't address all of the potential impacts of collective bargaining.

Mind you, 26 is a bargaining year which means that 29 is a bargaining year. We seek to cover these costs by increasing council reserve during those years, and I've tried to maintain doing that so that we can offset that. It doesn't increase the insurance costs, and it doesn't address increased capital costs due to inflation and tariffs. I'm just addressing the general government side. If we do that, the expenditures change and our deficit goes now to 4.9 million in 27, 5.6 million in 28, and 8.6 million in 29. Now, with that done, I'm going to add the additional middle school borrowing. I'm going to assume we borrow 30 years. We could do longer borrowing, which would require a home rule petition, and our city treasurer has has significantly explained to me why she believes it's not a good idea to do. But right now, for the purpose of doing this, I'm going to assume that we're not doing that. We're doing 30-year borrowing, which is the Treasurer's recommendation, which is where we have been so far. we're going to assume 98.2 million in borrowing instead of 70 million.

We're not addressing the delay of start costs or the refund to MSBA. There's probably a couple more costs here, but we're just going to do this for the sake of doing that. and we're gonna try to fill in that green box of what happens here, okay? So I take the middle school borrowing, I change those numbers in the budget, which changes the bottom line expenditure line, and here's my deficits now. It's 4.9 million in 27, that doesn't change because the borrowing in 27 wouldn't change. But in 28 and 29, borrowing goes up, Those numbers go up. We're at $6.6 million and about $10.7 million in budget deficit. So now I'm going to try to close the deficit, all right? In 27, you can close the deficit by doing two things. Reduce the contribution to OPEB from 4 million to 2, and reduce the senior center stabilization from 6.5 to 3.6. With those two changes, the budget's balanced in 27. In 28, I've got to reduce OPEB again, this time from 4.6 to 1.5, and I've got to reduce the senior center contribution from 7 to 3.5. Again, with those two changes, that will balance the 28 budget based upon this.

I mean, there are other risks. but it gets us to 4% on the general government lines and it balances the budget. In 29, we reduced OPEB from 4 million to 800,000. So now I've got OPEB pretty low. I'm eliminating the senior center payment for that year and I'm eliminating the open space and the affordable housing payment for that year. By doing those four things, I close the budget line for fiscal year 29. 30 is off my chart, but it's probably relatively close to 29 as well. So the impact of these changes, we still don't have borrowing capacity for the senior center, and now we have less money to work with for the senior center as well. The strategy depends upon new growth to cover Watertown Square, but we've used the new growth to balance the budget. The OPEB payoff is delayed past 31, and by 29, we're impacting open space and affordable housing. So, but what this does, I don't want to lose this fact, this scenario maintains our operating programs without cuts.

and under those circumstances there is a method here where with this strategy you can fund the middle school if the home rule petition remains in place and People aren't seeking tax relief beyond that. So that's what's possible. Now I will say, just to be clear, we had a budget deficit in the version before we added the middle school. So we can't let ourselves completely off the hook here. Even if we don't do the middle school, we still have to reduce the senior center stabilization fund by an average of 3.3 million in each of the next three years in order to balance the budget. And that's probably the fund I would recommend reducing. and, but if we're not borrowing for the middle school in 29, 30, 31, 32, borrowing for the remaining senior center cost remains possible under those circumstances. borrowing for some of the Watertown square costs potentially remains possible. So without the middle school, there's still reductions because this is still a deficit budget.

And it still, by the way, is bringing down numbers that were in that $34.5 billion budget. that we were trying to stick to for those particular items for OPEB plus pension plus middle school, et cetera, in order to fund portions of the general government budget. But I think that that's the likely difference between the two is what's in those two boxes. Now let's talk about the tax home rule for a moment, right? So here's where taxes in Watertown have gone over recent years. This is the average tax bill for a residential owner occupant in Watertown. So fiscal year 22, we were about $7,000. 23, we went up 3.95% to 7,303. In 24, the tax split home rule passed, and we got an average 9.8% reduction in taxes. 25, we went up 4.5, and 26, we're likely up 6.2. Now what I will note, for residents who are concerned about the 6.2% increase is the one piece of good news is the 26 tax bill is pretty much the same as the 23 tax bill. It's about $7,300.

what we've done is we reduced it with the split and we've slowly come back up again and now with the residential side rising faster than the commercial side, we're reaching that 7,300 number. Now, as we said, if the home rule passes, we're looking at probably, and again, this is a very preliminary number, a tax bill of about $7,600. about a 4.2% increase in 27. Without the home rule and taxing fully to the cap, that tax bill in 27 will be $86.56, will be about an 18.35% increase on top of the 6% increase this year. Our delegation is working hard to get this home rule done. And if it doesn't pass, we need to either accept the large tax increase or we need to tax below the cap. Now, if there's a one-year delay, we could use a one-time infusion of free cash, but we don't usually use free cash to cover operating expenses, and I would only suggest doing this if there's a little bit of a delay. That's one of the reasons why I want our free cash at 15%. Otherwise, we need to see what our options and our flexibility is to tax below the two and a half cap.

So like I said, I tried to use an example of taxing 10 million below the cap. what I was told by our assessor is this would still result in a tax increase of over 11%. It doesn't fully blunt the impact. We'd have to go further than this to try to get back down to the four, five, 6% increases. but let's just, again, for the sake of analyzing a scenario, I'm gonna put this scenario out there because I think that it's worthy of running numbers and looking at the options of what's gonna happen, right? So here's the tax split home rule petition impact. Here's the net levy limit. Now I've given residential tax relief at 10 million, gave a little bit of a bump on it in 28 and 29. I then run that and changed our proposed deficits. This still includes the middle school. So this is the deficit including the middle school. and I'm now at 14 million in 27, 16 million in 28 and 21 million dollar deficit in 29.

So now I tried to close that gap. In 27, I closed that gap by eliminating OPEB, Senior Center, Watertown Square, land acquisition, and affordable housing, and reducing council reserve from 3.5 to 1.6 million. In 28, I eliminated OPEB, senior center, Watertown Square, land acquisition, affordable housing, reduced council reserve to 1.6, which I think is about as low as I would ever imagine putting it. And I still have a $1.8 million deficit that I have to close with program cuts. And in 29, Suffice to say the whole thing falls apart. Eliminate OPEB, Senior Center, Watertown Square, land acquisition, affordable housing trust, reduce council reserve to 1.7 in a bargaining year, which is not a good idea, and I have a $7.6 million operational deficit to close. So if I go in this box, what I'm saying basically is substantial reductions in council reserve, no contributions to open space, senior center, affordable housing or Watertown Square, no contributions to OPEB, and I'm cutting operational programs now.

Now, mind you, to be fair, again, as we go into this upper box, we still have to make cuts. This isn't about just the middle school. I still would have to reduce OPEB, I still would have to make no contributions to the senior center over three years, and I still would have to reduce council reserve to balance the budget over those next three years with $10 million in tax relief. But something interesting happens beyond 29 as you start to get into that. If you readjust... the budget that way, you can always make adjustments one way or the other, or you can keep advocating for the home rule petition. So I try to, in just a few words, capture what's in each of these boxes. So with the home rule and without the middle school, we maintain flexibility and options. with the home rule and choosing to do the middle school, we use much of our flexibility and we reduce future options. And what I'm saying here is it is not impossible to do the middle school. I don't want to give the impression that it cannot be done.

I did say it wasn't my recommendation last time because I'm worried about flexibility and options. But there is a path, and I've laid out what that path would be. If we don't do the middle school, we have the home rule petition not passed, we need to make a cut in order to deal with it, that cut will use much of our flexibility, but we still have the option to move tax numbers back when we need to, and so we maintain some options. and I will just say that the last box down there in the bottom right with the middle school and with tax relief, that's substantial program cuts. I don't think that is even a feasible and doable option. I think the more realistic expectation is if we do the middle school and the tax petition doesn't pass, I imagine that we will be talking about an 18% tax increase that following year because that's really that I don't think that lower right box with a reduction. I mean, maybe we can do a little bit of tax relief, but a reduction at 10 million with looking at fiscal year 29 with essentially a

a $7 million, $8 million deficit to have to close on the operational side after we cut all the flexibility out of the budget does not seem appealing to me. So that's the outlook looking forward to fiscal year 29 as I see it. So what happens now? This is where essentially, just like last year, I'm asking the council to make a series of hard decisions. and what I want to share with the council is I think that there are two sets of questions to ask. The second question depends upon the first question and the first question to ask is do we pursue a middle school project or do we hold on pursuing a middle school project? If we pursue a middle school project immediately, one that is using the modulars, one that we want to have the modulars and we want to do something like what AI3 proposed, the $112 million project, Time is money at this point and we need to make that decision very, very soon.

Because if we delay the design process beyond when the modulars are ready for the school children, Now we're renting modulars to sit empty while we're still designing the school. We're already in a bit of a risk period on that. We have been for about six weeks because the bottom line is when this number came out so high we said we need to stop we need to figure out where we're going we need to talk to school building committee we need to come back to the council we need to figure out where we're going so and we've done some of that now but if we're going to pursue this option we need to do it soon So that option is basically restart design for a full school, use the construction manager at risk, borrow 98 million plus, build our capital plan around that, build our operating budget around that. understand that we're probably adjusting down some of the senior center stabilization money and stuff in 27 and those other things beyond 27 in order to be able to get the budgets balanced with the deficits that we have and build around that. That's option one. The other box over here, hold on middle school project and pursue one of four options.

As I see it right now, there are four options and I wanna go through each of these boxes. One is hold the stabilization funds. This is essentially the do nothing option. We release the modulars. We rebuild Moxley Field. We can seek MSBA funding for a middle school at some future date. We have $17 million set aside. We can use that. Towards that, we can do that for something else if we want. The challenge here is we have no swing space for a middle school if we follow this project sometime in the future, but that's to be dealt with later. We can do summer updates. We can maintain the current school for a longer time until future funds are available. This will take a little longer than the next option. We can do some pretty substantial improvements over the course of a few summers, save ourselves the cost of having the modulars and some of the operating costs on that front, and we can use the $17 million to do a lot with the school. A longer list of what that allot is.

I'm not going to put that into tonight's presentation because it was really going to drag out tonight's presentation. But I think that next time we're back in front of the Council talking about this, we can talk about what that list looks like and what that list might cost. but the summer upgrades, updates strategy would allow us to release the modulars, restore Moxley Field and do some pretty substantial increases. We could pack the updates into one year. We talked about this last time. We can maintain the current school for a longer time until future funds are available for a new school. We can do that. by doing a one year, 26 to 27, really intense improvement to the school. We use the modulars for middle school students for one school year. We go in, we do all the things on that list, the vestibule, the HVAC upgrades. Again, we can talk about that. This wouldn't give us a swing space for a future school project, but hopefully it would extend the value of this school and improve a lot of the educational outcomes for a period of time that was long enough to be able to work on it.

There's one other option I just want to put out there, which is we can spend the $17 million and we can buy a piece of land somewhere in Watertown where we could build a new middle school when we're ready to do it. What this does is it releases the modulars and restores Moxley Field, maintains the current school, albeit without upgrades for a longer period of time, and lets us move slowly into the MSBA process. Now, I'll note the council presidents and I had some conversations with the folks at MSBA. I don't think we are... at a moment where we're gonna be on the top of MSBA's list for a new school, but that may come at some point in time, and if we had a site available to do that, the whole issue surrounding the modulars would be off the table. I have no idea what this site is by the way. This is a very kind of big picture question, but I want to put it out there as an option. So essentially what happens now is we're looking to figure out what next. I'm looking for guidance from the council, much like I was looking for guidance from the council last year.

First, to answer this binary question, do we chase into this $112 million project or do we hold and do one of the other four strategies? I think you probably know my recommendation on this, but at the same time, there's a lot of voices and a lot of conversation to have on this. I don't think there's a right or wrong answer here. I think I've done the best to do the scenario analysis to spell out what the potential impacts are. I appreciate the options and the flexibility we have in the budget and I want to make sure we do our best to maintain that. If we choose not to go forward with a full middle school project, I think we should be talking about which one of these four steps we want to do next. and make a decision on that. I think there's an opportunity for input and conversation, but I think it's very important for the council at the end of the day to give manager guidance, to give me guidance, to give the city administration guidance, to give the school department guidance, so that we all know where we're going next with this situation.

But as I said, I'm trying to spell out the best circumstances surrounding what options we have available, where we stand as an organization right now, and where we might go next. I look forward to working with the council as we put together the fiscal year 27 budget, as we put together the fiscal year 27 budget policy guidelines, as we put together The capital improvement plan is as we answer the once again tough set of questions that I have brought to you all in the council this evening. So thank you very much for listening. Appreciate the opportunity to present to you and look forward to the next steps. Thanks a lot.

Thank you, Mr. Manager, for a wonderful presentation and laying all these options out in speaking to the manager. Similar to what we did in November, next council meeting I'm going to call the meeting to order at six o'clock so that we can discuss prioritizations or reprioritizations whatever way we're going to discuss it so we can give the manager guidance the longer we wait if we chose to do the middle school each month is $136,500 and we're already three months, four months behind. So we need to make some decisions, make them quickly and as you can see from this 202 page presentation, this is a challenging time going forward with some options that the manager has laid out here so I think we're gonna come in at six o'clock in two weeks and start that discussion.

We're gonna try to focus on prioritization so that they also, when the budget fiscal oversight committee meets, that the expectations for additional programs and additional staff might be somewhat tempered because of these remarks tonight, so I think it's important. So we will be discussing this and actually taking a vote on the direction that we want to go in. So think about these slides and think about your options and we'll discuss them at the next council meeting. Thank you and your staff for putting that together for us tonight.

Thanks, and I didn't get a chance to say, really, you know, Megan, Melissa, Earl, Emily, Steve, Mark Lang, I mean this group has, and Joanna as well, like there's a whole group that has, this is not me doing 202 slides. substantial amount of work that goes behind this, starting in the auditor's office and running through a whole bunch of city departments and staff. And I really appreciate the assistance that they all give me when I'm in the assessor's office going, What happens if we cut this $10 million? What happens if we cut this $5 million? We're trying to figure out the scenarios, and he's doing spreadsheets, and I'm doing spreadsheets, and Megan's doing spreadsheets. I really appreciate the group effort that comes together. So thank you, Mr. President.

I just want to say from my personal perspective looking at this presentation, looking at the way this has been approached, you've put together an excellent staff working for this community. to work with you to do that and we thank all of you for that because this is good government in action and so we really appreciate it. Good information, things that we need to make the decisions on behalf of the community.

and Mr. President, if I may, Tyler Cody is the one person who's not here this evening who also worked on this. I just want to give him a thank you and a shout out as well. Thanks, Mr. President.

Requests for information. Any requests for information? Announcements, any announcements? Public forum, any member of the public here or at home wish to be heard? Seeing none, can I get a motion to adjourn?

So moved.

Is there a second? Second. All those in favor? Aye. Opposed? The ayes have it.

Thank you.