05-30-23 SPECIAL CITY COUNCIL - BUDGET REVIEW & Exhibit

SPECIAL COUNCIL MEETING BUDGET REVIEW The Special City Council Meeting was held on May 30, 2023, at 6:02 p.m. with Council President Hare presiding. Council members present were Mr. Anderson, Mr. Boggerty, Mr. Neil, Dr. Pillsbury (arrived at 6:39 p.m.), Ms. Arndt, Mr. Rocha, Mr. Sudler, and Mr. Lewis. The Mayor was absent. Staff members present were Ms. Bennett, Ms. Rivera, Police Chief Johnson, Mr. Hugg, Ms. Peddicord, Ms. Gray, Fire Chief Carey (arrived at 6:39 p.m.), Ms. Duca, Mr. Wadell, and Mr. Dill. INTRODUCTION AND PRESENTATION OF THE FISCAL YEAR 2024 RECOMMENDED BUDGET AND HIGHLIGHTS OF THE OVERALL BUDGET Mr. David S. Hugg, III, City Manager, reviewed the document titled “FY24 Budget Highlights,” (Exhibit #1). Responding to Councilman Sudler, Ms. Lori Peddicord noted that she believed the wage study effect to be a significant factor, as the rate study is typically conducted well in advance of budget preparations. She explained that the rate study considers various costs, including staffing, operations, capital investments, and future expenses. Ms. Peddicord mentioned that City Manager Hugg and the team had been diligently working on the rate study up to the point of finalizing the budget book, with ongoing adjustments still being made. She mentioned having another meeting scheduled for the next morning to further refine the study to ensure all costs are covered, a concept known as the revenue requirement. Ms. Peddicord emphasized that one (1) of the key points highlighted in the budget was the electric public utilities page, specifically focusing on the electric fund. With the current rates in place, the revenue generated is projected to be around 81 million. However, when factoring in operating costs, the expenses exceed this revenue figure. She reiterated City Manager Hugg's approach of not striving to have the highest electric rates but rather aiming to align with operational costs, meeting present needs, and considering future expenses. These considerations are essential in conducting a comprehensive rate study for a five-year period. Ms. Peddicord clarified that she was unable to provide specific rate details for various classes at that moment. However, she mentioned that they had analyzed the existing classes and calculated an average cost based on the PPA debit for a portion of the current year and the subsequent three months when the rate was reduced. The aim was to strike a balance between not preempting future changes significantly while ensuring that both current and future expenses were adequately covered. Additionally, they compared these rates with those of neighboring municipalities and electric cooperatives for benchmarking purposes. Ms. Peddicord assured the council that more detailed information regarding rates would be presented for their approval, highlighting the importance of deferring to the subject matter expert who has extensively reviewed these matters. She acknowledged the complexities involved in analyzing KW and KWH factors, noting that this went beyond her accounting expertise. Although specific rates were not included in the budget document, the objective was not to propose a substantial increase in the first year but rather a gradual incremental increase over subsequent years to align with the rising costs reflected in the budget and anticipated in the future.

Responding to Councilman Sudler, Ms. Peddicord explained that the city follows financial policy guidelines that were established many years ago. These guidelines have undergone periodic reviews and amendments over time. While she was unsure of the exact date of the last review of the budget balance rules or guidelines, recent discussions on reserves and associated dollar amounts indicated a need for further examination post-budget approval. Ms. Peddicord referred to the policy document, which she had brought with her, outlining the budget balance requirements for the general fund. According to the policy, the city aims to maintain a minimum budget balance of at least 8% but no more than 12% of the current year's operating revenues for the general fund, excluding any carry-forward balance. This budget balance serves to address temporary fluctuations in cash flow and provides a buffer for potential revenue losses under operational changes that can be implemented in the future. Ms. Peddicord stated that if something significant were to happen that would reduce the city’s revenues unexpectedly, they have the budget balance to fall back on and continue operations and continue paying vendors and continue paying staff. So again, the other night, when they displayed the operating revenues versus the operating expenses, and again that was only for the general fund, they saw that they were not covering operating expenses in full with operating revenues. They are using one-time funding from the sale of property or not necessarily grants, but as she had said, just other revenues that really are not current operating revenues. So not only does the general fund have this budget balance policy, but all of the other funds do also. Water and wastewater also have the 8% budget balance that they are supposed to maintain. Then the electric fund she believes is 12%. So again, there is a cushion if there was a stop in the continuous revenues that they anticipate, they would not stop business entirely. Responding to Councilman Sudler, City Manager Hugg stated that he had indicated, personnel is the biggest impact on the budget. The city has made major steps to improve its ability to recruit and retain employees across the board and to eat those costs kind of upfront. He has said that a couple of times and they try and balance what the impacts on the budget are. They are having he thought a fairly good response from a hiring standpoint now as a result of them being a much more competitive employer. They frankly just felt that limiting the number of new employees was something that they could deal with. So, he had said that the couple positions that they approved in halftime, part-time, would allow them to make some improvements in those two areas but not have the full budget effect that a full-time position would, and the stormwater manager position would ultimately be compensated out of the stormwater fund. So in essence, it is pretty much a zero game at this point. Responding to Councilman Sudler, City Manager Hugg stated that had not said this out loud, particularly to the Department Heads meeting, but part of his thinking is that this is an opportunity or maybe it is a mandate to all of them to seriously look at how they are staffed, look at some of the issues that they have identified, things like career paths and some of those things. Let the city take this year with the benefit of the wage increases, which makes it more attractive, and let them just really come to grips with what appropriate adequate staffing should be. Having said that, he suspects that in Fiscal 2025 they will see a fair number of requests because he knows of some that he would like to have done this year, but they decided that they are just going to hold the line. Responding to Councilman Sudler, City Manager Hugg stated that they do assess properties every five (5) years.

Responding to Council President Hare, City Manager Hugg stated that yes, Kent County is doing their assessments now. Responding to Councilman Boggerty, City Manager Hugg stated that no, it is not bad. Nobody likes to pay any more taxes than they have to, including himself, but he also wants high-quality services and the city has prided itself on being able to deliver high-quality services and they have to pay for those services. When someone calls a police officer, their electricity goes out or the water is running down the street or whatever, the city does not want to say, "Well, we hired the lowest bidder. We got people nobody else wanted," or whatever. He will promise them when the city does the electric rate thing this year, they will tell people well in advance. So there will be no surprises. They will be delaying the implementation for one full billing cycle into the new fiscal year just so that they do not have the problem they had this last year, where people were surprised and did not really know. Responding to Councilman Boggerty, City Manager Hugg stated that next week they are going to present all of the billing information in significant detail. So they will see what the rates are and why they did what they did with them. Responding to Councilman Neil, City Manager Hugg stated that his understanding of the assessment law in Delaware is that when properties are reassessed, the burden is on the local jurisdiction at the time of the reassessment to adjust the rates to be revenue neutral. An action to raise additional revenues is a separate action. So they cannot just do the assessment as a way to get more money. The assessment is to correct the values and then to the values they apply an appropriate property tax rate. Mr. Hugg continued to state that he has said this for years, that he thought that the money they spend for an assessment and then make it revenue neutral makes no sense. They are spending all that money to reassess property, raise their taxes and then bring it back down so their taxes do not change. Mr. Hugg noted what he just said made no sense and he never did understand it. Responding to Councilman Anderson, City Manager Hugg stated that his understanding is that he is correct in saying it will be an next year issue. It will not affect this budget. This budget, if they increase the property taxes, will be based on the current assessments that they have during the tax year. Responding to Councilman Anderson, Ms. Peddicord stated that she is not sure that have the answer to that. He struggles with this whole budget balance percentage and where they go with it. He thinks they have been struggling with this process for at least two years. Mr. Hugg stated that though this budget balance has a policy driver of 8% and is supposed to look to cover shortfalls in revenues or cash flow issues again, they have not considered the inflation rate when they are talking about needing a budget balance to fall on. He believes that it goes back to, that they really have to consider long-term planning, strategic planning, and determining the priority of things in order to eliminate the need to utilize the budget balance for things other than what it is established for. Again, maybe they need to look at the operating revenues versus the operating expenses more frequently because, in this significant-sized budget book, that idea might get lost. There are a lot of numbers and financial numbers in there. Mr. Hugg thinks that when they broke it out the other day, it only displayed the lines that they needed to look at, which are the tax rate or the fees that they generate for services that they provide.

He thinks that the other couple of things that they need to consider, and they have talked about this too in the past and most recently at the retreat, was the stormwater utility. There are some large ticket items in there. Those large items get lost in all of these financial numbers. They have citizens subsidizing those costs, whereas if they broke that out as its own fund, they could have it more self-sustaining and then probably see a clearer direction as to what the tax rate really needs to be to cover the actual services just provided by tax rates and fees and things separate from stormwater or separate from sanitation. So although that is a lot of work for staff, he thinks that they really need to start down that path because he does not imagine those costs are going to get less and less. They are going to get more and more. Responding to Councilman Anderson, Ms. Peddicord stated that they are continuously generating revenue and paying payables. So that is a churning pot but they can see the numbers. So for example, if they turn to page 22, she could let Jeff speak on this because, again, there are formulas within his sheets that keep him aware of what the guidelines are. So as they can see on page 22 that they are not meeting their requirement within the general fund by $2.8 million. Again, the budget balance is really just a churning pot of revenues in, and expenses out. They want to keep that cushion per se to say, "If I did not collect all my revenues, I can at least pay my expenses for a two-month period that they estimate it for.” So not only does the general fund have that short- falling, but the electric fund does also, which is why they backed that transfer down from $10 million to eight million. So they both have the same negative result in their budget balance by that amount. Before, when they were pushing $10 million over to the general fund, that one went down, but the budget balance on the electric fund was four or six million in the red. Responding to Councilman Rocha, Ms. Peddicord stated that he is correct that they would want to keep that 8% in there and still cover their expenses. Ms. Peddicord also stated that he is correct in saying that they are unable to do that and are still at a shortfall. Ms. Peddicord noted that this formula that he has in this cell tags all the operating revenues and all the operating expenses and he comes out to a negative because it is not supposed to take the beginning budget balance as a starting fund either. Responding to Councilman Boggerty, Ms. Peddicord stated that by looking at these numbers and formulas, she would say that none of them would be up there suggesting that they raise a rate if they had 17% or more in the budget balance. Responding to Councilman Anderson, Mr. Paul Waddell, Electric Director stated that NACE manages Van Zant, the CT over there, and they are on duty to dispatch when called upon by PJM. Responding to Council President Hare, Mr. Waddell stated that he believed that NACE’s budget is $1.9 million, and that includes all operations and salaries. Mr. Waddell noted that he believed that a study was done on doing this themselves and getting rid of NACE. He would have to go back and try to find what the dollar value was or what the dissuasion from going that route was. That, he does not have an answer to. Responding to Council President Hare, Mr. Hugg stated that this is Councilman Anderson's fund that he is talking about, a community and economic development fund. There is a couple of things that they will do once they have an opportunity. As they remember, a year or so ago, he came to the council with the idea that they were working with Kent County. The city desperately needs additional development property in the city, economic development property. So funds could be used for basically Garrison Two if they want to call that a new industrial development. It could be

used to perhaps buy and rehab or grant out to owners for rehabbing, they have a number of old and not particularly efficient commercial and industrial spaces throughout the city that could benefit from being rehabbed or even replaced. Essentially, it is a fund of money that council could use to enhance the community, particularly in economic development. Responding to Council President Hare, Mr. Hugg clarified that the additional proceeds from Garrison Oak would not simply be given to taxpayers. The funds are primarily intended for industrial and commercial development, with the potential for other uses as well. While a specific fund has not yet been created, Mr. Hugg brought up the idea to the council some time ago as something to consider moving forward. The fund would serve as a holding pot for the extra proceeds, ensuring they are not all spent at once. Council would have a significant role in determining how the funds are ultimately utilized. Responding to Council President Hare, Mr. Waddel stated that yes the $3.5 million was for full staffing for McKee with it being an older, more maintenance-intensive unit. He believes at one point they had 10 or 12 employees out there. Now, with Van Sant, they have four and that is mainly to cover the majority of the day. Then they have an eight-hour span at night where there is no coverage there. They do have an on-call person in case they do get dispatched because they still have the 15-minute response time. The unit can be remotely started from another location, but they have 15 minutes in order for somebody to get there once the unit starts spinning. Responding to Council President Hare, Ms. Peddicord stated that there are two thoughts. While his comment was about a fire apparatus or fire equipment, the city appropriates funds for that piece of equipment, but they do not take on the loan for that piece of equipment. The city does assist in obtaining the loan and getting the financing, so the fire equipment would not fall under the idea of a line of credit. The line of credit was again geared towards heavy equipment for the general fund and yes, to eliminate the lead time in some cases. Hopefully, in borrowing a larger amount of money, getting a lower rate overall. Responding to Council President Hare, Mr. Hugg stated that the one position that the fire company specifically requested, which is the one that Mr. Hare identified, that position at one time was the city employee. The position was transferred to the fire company. If council wanted to address that problem, his recommendation would be that it would be a city employee that had come back under the city management. Responding to Council President Hare and Mr. Hugg, Fire Chief David Carey stated that they initially requested six employees in this year's city budget. One of them is an Administrative Fire Manager, which would help manage the fire department with him. As they had before, would do their payroll, would manage their duty crews, would manage the city employees that they have at the fire department. Then that individual would report to the fire chief as the department head. So they are looking to bring that back and give them several other duties on top of that. One is to help staff fire apparatus during the day when they are short-staffed. They want someone that can drive and they want someone that can ride the front seat or ride in the back. Someone that is universal, well-rounded, trained to the national level, which is what they are pushing towards in Delaware and even in Dover right now, to give them someone that is a well-rounded, qualified person administratively and on the fireside. Fire Chief Carey explained that the other five positions were basically firefighter positions. So they would have one firefighter 24 hours a day, seven days a week at station one that would assist

with staffing during the 24 hours a day, of course. Then the next person would be another firefighter to work day work at station two. They already have a person out there right now that is classified as a dispatcher that works and this person would work opposite of them. So there would be someone out there seven days a week during the day. It is getting harder and harder to get volunteers and they are doing the best they can. They just got a recruitment and retention grant through the AFGE and the intention is to push their marketing, work on bringing volunteers into the fire department, getting them trained and putting them on the trucks. Downtown is their biggest problem right now with staffing. There is no one that lives around the downtown firehouse anymore. They have all moved away, or it is the older members that have just, as Council President Hare said, aged out. Fire Chief Carey stated that they went through the attendance last week, and there are about 10 that live close to station one now, that respond regularly. So they are hurting. The people that do ride downtown are, he calls them transient. So they live outside the City of Dover, and they come in and they do a duty crew time from 6:00 to 6:00 and then they go home. Once they go home, they do not come back because they live too far away. So they are making efforts to do incentive programs through these grants to bring volunteers in and give them the incentive to be there and hang out and ride their fire apparatus. They are doing recruitment and retention efforts with these grants and also marketing to help alleviate the burden of losing volunteers. That is where they stand with that but their main person right now that they could really use, if they cannot get them all, which obviously everybody wants everything they can get, but let them be realistic, is that Administrative Position to give the staff at the fire department a little bit of help getting some administrative duties done and helping staff in a fire truck once in a while. Responding to Mr. Anderson, Chief Carey stated that explained that the SAFER Grant is something that the department would need to apply for. Although obtaining one (1) position this year may not qualify for the grant, future positions could be eligible. By applying for the grant now, the department could potentially receive funding for five (5) additional positions by February of next year. If awarded, the grant would cover 100% of the salaries and benefits for these city employees. The grant's current rules stipulate that the funding would last for three (3)years, after which the municipality would need to decide whether to retain the employees or lay them off. Chief Carey noted that while these rules could change, this is the current arrangement set by the federal government. Responding to Mr. Anderson, Mr. Hugg stated that confirmed that using the remaining funds from the land acquisition of $1.1 million would indeed be a viable option. He mentioned that it would be a decision for the council to make, and he expressed readiness to support such an amendment. Mr. Anderson also added that the department had reviewed the job classification and wage study, estimating that the cost for the position, including benefits, would likely be around $100,000. Responding to Mr. Hugg, Mr. Anderson expressed his support for the proposal, citing previous discussions with the chief on the matter. He emphasized the need for due diligence and obtaining the necessary financial figures before moving forward. Mr. Anderson highlighted the importance of prioritizing essential services such as police and fire departments in the city, noting that maintaining quality and commitment in these areas is crucial. He stressed that investing in these departments is necessary to retain high-quality volunteers and avoid the potentially higher costs associated with transitioning to a fully paid fire department. Responding to Mr. Neil, Mr. Hugg mentioned that some municipalities, including Smyrna, levy a

fire impact fee on new building permits. He explained that this fee, which is not substantial, is directed towards the fire company for capital investment purposes. Mr. Hugg suggested that considering such a fee could be beneficial in ensuring adequate funding for the fire company. He pointed out that new developments would bear the cost, with each new property contributing a small amount towards the fire company's needs, similar to other impact fees charged for services like water, sewer, and electricity. This could be an additional option worth exploring. Responding to Mr. Hugg, Mr. Hugg, Mr. Anderson expressed his support for the proposal and suggested that it be brought forward for consideration, along with exploring the fire run proposal. He acknowledged that these may not be immediate budget priorities but indicated that they should be on the committee agenda for future discussion and evaluation. Mr. Anderson moved that council recommends a positive recommendation of the budget for the first meeting. The motion was seconded by Mr. Sudler and unanimously carried. The meeting adjourned at 7:42 p.m. ANDRIA L. BENNETT CITY CLERK All ordinances, resolutions, motions, and orders adopted by City Council during their Special Meeting of May 30, 2023, are hereby approved. ROBIN R. CHRISTIANSEN MAYOR /AB Exhibits Exhibit #1 - 2023-2024 Draft Annual Operating Budget

EXHIBIT #2 Special Council Meeting of 05/30/2023 FY24 Budget Highlights Special City Council Meeting – Budget Review May 30, 2023

Introduction ▪ Presenting the DRAFT FY24 Budget for Council consideration. ▪ Significant effort was made by all members of the City of Dover Team: – Scrutinized revenues; – Evaluated expenditures as related to expected level of service; – Recommended savings and deferrals. FY24 BUDGET HIGHLIGHTS 5/30/2023 2

Thanks to Budget Team & Department Heads ▪ Budget Team ▪ Department Heads – Dave Hugg – Mike Hamlett – Robin Eaton – Lori Peddicord – Andria Bennett – Mary Ellen Gray – Jeff Dill – Patricia Marney – Thomas Johnson – Sharon Duca – Paul Waddell – Mark Nowak – Yvonne Martine – David Carey – Jason Lyon – Naomi Poole – Larry Josefowski – Brian Sylvester FY24 BUDGET HIGHLIGHTS 5/30/2023 3

Budget Overview Decription FY23 Budget FY24 Budget Variance % Increase Budget Total $194,325,794 $201,039,336 $6,713,542 3.5% Operating Budget $170,610,894 $175,211,136 $4,600,242 2.7% Capital Budget $23,714,900 $25,828,200 $2,113,300 8.9% 250000000 200000000 150000000 100000000 50000000 Note: Inflation year to 0 date still high at over FY23 FY24 6% (vs. 10% last year). Total Operating Capital FY24 BUDGET HIGHLIGHTS 5/30/2023 4

Budget Overview by Fund Decription Beg. Balance Revenues/In Expenses/Out End. Balance General $11,960,000 $55,966,900 ($63,499,400) $4,427,500 Water $8,412,800 $11,139,900 ($13,029,400) $6,523,300 Wastewater $11,594,750 $13,297,800 ($13,488,900) $11,443,650 Electric $89,367,900 $97,779,404 ($116,400,654) $70,746,650 140000000 120000000 100000000 80000000 60000000 40000000 Note: Numbers above 20000000 include reserves. 0 General Water Wastewater Electric Revenues Expenses FY24 BUDGET HIGHLIGHTS 5/30/2023 5

Budget Overview – General Fund Revenues Expenses POLICE FINES GRANTS FRANCHISE 3.2% COURT OF & FEES FEES CHANCERY LIBRARY & 1.8% 1.2% DEBT SERVICE TRANSFER TO OTHER FEES RECREATION 1.1% CAPITAL 0.4% 3.5% FEES PROJECTS LICENSES & 0.5% 5.9% PERMITS STREET LIGHTS INSURANCE CITY 6.2% 1.5% 1.7% ADMINISTRATION TRANSFER OTHER 4.8% TAXES MISCELLANEOUS RETIREE PENSION 4.0% RECEIPTS LIBRARY, CONTRIBUTIONS 6.9% RECREATION & 3.5% GROUNDS SANITATION RETIREE MEDICAL 6.3% FEES 7.6% CONTRIBUTIONS PLANNING & 4.5% INSPECTIONS 6.2% INTERFUND SERVICE PROPERTY PUBLIC WORKS FEES TAXES 16.4% 12.4% 34.8% FINANCIAL ADMINISTRATION UTILITY FIRE POLICE 7.4% TRANSFERS 1.4% 38.7% 17.9% FY24 BUDGET HIGHLIGHTS 5/30/2023 6

Budget Overview – Water Fund Revenues Expenses INTRAFUND TRANSFER TO WATER IMPACT SERVICE FEES GENERAL FUND TANK SPACE FEES MISCELLANEOUS 6.0% 13.7% LEASING 3% SERVICE FEE TRANSFER TO 6% 1% RETIREE MEDICAL CAPITAL PROJECTS CONTRIBUTIONS 18.5% 2.7% DEBT SERVICE 8.4% MISCELLANEOUS ADMINISTRATIVE EXPENSES EXPENSES 0.7% 10.9% MATERIALS & PERSONNEL SUPPLIES SERVICES 6.0% 33.1% WATER SERVICES 90% FY24 BUDGET HIGHLIGHTS 5/30/2023 7

Budget Overview – Wastewater Fund Revenues Expenses TRANSFER TO INTRAFUND GENERAL SERVICE GROUNDWATER FUND TRANSFER TO FEES INFLOW IMPACT FEES 4.6% CAPITAL 8.1% ADJUSTMENT 2.1% PROJECTS 20.8% 20.9% MISCELLANEOUS EXPENSES 0.3% PERSONNEL KENT COUNTY SERVICES TREATMENT FEES 10.6% 43.5% WASTEWATER WASTEWATER MATERIALS & SERVICES TREATMENT SUPPLIES 43.4% SERVICES 1.4% 33.3% RETIREE MEDICAL CONTRIBUTIONS DEBT ADMINISTRATIVE 1.0% SERVICE EXPENSES 6.4% 3.2% FY24 BUDGET HIGHLIGHTS 5/30/2023 8

Budget Overview – Electric Fund Revenues Expenses POWER SUPPLY DIRECT SALES TO & GENERATION CUSTOMER 76.2% 96.8% ADMINISTRATIVE TRANSFER TO EXPENSES GENERAL FUND 1.4% 7.4% MATERIALS & SUPPLIES 0.7% INTERFUND SERVICE FEES 3.9% MISCELLANEOUS PERSONNEL SERVICES REVENUE 5.2% DEBT SERVICE 1.5% UTILITY TAX 1.4% 1.7% MISCELLANEOUS EXPENSES STATE RETIREE MEDICAL 1.3% UTILITY CONTRIBUTIONS TAXES 0.9% 1.5% FY24 BUDGET HIGHLIGHTS 5/30/2023 9

Key Principle - BALANCE ▪ Financial Requirements – The City Charter requires that total expenses not exceed total revenues in the annual budget. – Financial Policies require that anticipated revenues equal or exceed budgeted expenditures, less capital transfers, for each fund. – Financial Policies require maintaining a minimum budget balance in the General Fund, Water Fund and Wastewater Fund of at least 8% to meet temporary fluctuations in cash flows. The Electric Revenue Fund requires 12%. FY24 BUDGET HIGHLIGHTS 5/30/2023 10

Key Principle – BALANCE (continued) ▪ All funds need to take full responsibility for associated needs by adjusting rates and fees regularly and appropriately. ▪ General Fund options include establishing a Stormwater Utility Fund and making Sanitation a full enterprise fund. ▪ Including additional revenue sources will not negate the need to increase existing revenue sources. ▪ The impacts must be spread across residents/property owners and customers to ensure fairness, remain competitive and minimize risks due to economic conditions. FY24 BUDGET HIGHLIGHTS 5/30/2023 11

Key Principle – BALANCE (continued) ▪ A $0.04 tax increase is proposed with the FY24 budget. Even with this increase, property taxes do not cover the expense of the Police Department, let alone any other GF operations. FY24 FY23 FY22 Note: A $0.04 increase is 9.2% over FY23 and 0 10000000 20000000 30000000 generates about $1.4M. Police Expense Tax Revenue FY24 BUDGET HIGHLIGHTS 5/30/2023 12

Personnel ▪ Personnel remain the largest expense for the City and are the key reason that we are able to maintain current levels of service. ▪ In order to improve the City’s competitiveness as well as recruitment and retention, the Wage Study was implemented at a projected cost of $4.2M to the FY24 budget. ▪ In addition, an MOU with the FOP was established to adjust the pay scale and allow for quicker advancement of corporals. The cost of the MOU, which includes certain contractual obligations, is $2.2M. FY24 BUDGET HIGHLIGHTS 5/30/2023 13

Personnel (continued) ▪ Included within the budget are thirteen (13) position reclassifications, such as the reclassification to bring back the Community Development Manager title officially, and some contractual obligations. ▪ Personnel growth was limited in FY24. Two (2) part time positions (Police and Library) and one (1) full time position (potential Stormwater Utility related) were included. ▪ Twenty-one (21) requests, including promotions and new positions, were put on hold. ▪ Negotiations with all four (4) unions will be required during FY24. FY24 BUDGET HIGHLIGHTS 5/30/2023 14

Capital Budget ▪ Water, Wastewater and Electric Fund – No adjustments were made to the capital budgets from that requested. ▪ General Fund – Some capital projects were rescheduled or restructured based upon updated costs, current status of the project, capacity to complete (resources) and available funding. – Two (2) vehicles/equipment and five (5) projects, totaling $5.9M, were rescheduled. $4.3M of these projects would not be ready for implementation in FY24 due to pending design work or due to limited capacity to complete in conjunction with pending FY23 projects. FY24 BUDGET HIGHLIGHTS 5/30/2023 15

Funding Options ▪ Property Taxes ▪ Fees and Charges – includes Sanitation Fees ▪ Rates – includes Electric, Water and Wastewater ▪ Carryover and Reserves ▪ Land sales / one-time revenues ▪ Rate Stabilization Reserve FY24 BUDGET HIGHLIGHTS 5/30/2023 16

Funding Recommendations ▪ Sanitation Fees – Base fee increase to $27/month. ▪ Water Rates – Base rate increase to $2.88/Tgal. ▪ Wastewater Rates – Base rate increase to $3.25/Tgal. ▪ Tax Rate – Increase by $0.04/$100 assessed value. ▪ Electric Rates – Electric Rate Study to be discussed at the June 13th Council Committee of the Whole Meeting ▪ One-time revenues – GOBTC/ROI FY24 BUDGET HIGHLIGHTS 5/30/2023 17

Funding Controls & Policy Adjustments ▪ Electric Fund Transfer to General Fund – $8M (from $10M) ▪ General Fund Revenue Reserve Policy – 3.45% (from 8%) ▪ Pension Contribution ▪ Capital Deferrals ▪ Limiting Staffing Growth ▪ Line of Credit – utilization for heavy equipment purchases ▪ Reserves – manage to protect bond rating (use only for purposes intended) FY24 BUDGET HIGHLIGHTS 5/30/2023 18

Looking FY25 Forward - The cost of service (personnel, materials, supplies, equipment) will continue to increase over time. - Need long term policy to balance the General Fund. - Need long term plan to catch up on vehicle and project deferrals. FY24 BUDGET HIGHLIGHTS 5/30/2023 19

Recommendation - Approval of the FY24 budget as presented, to be effective July 1, 2023. FY24 BUDGET HIGHLIGHTS 5/30/2023 20