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minutes meeting date 2026-05-14 · fetched 2026-09-17 · 19030 characters · read by OCR, check numbers against the source · official file · plain text
CITY OF CITY OF POCATELLO, IDAHO CITY COUNCIL BUDGET DEVELOPMENT MEETING MAY 14, 2026 AGENDA ITEM NO. | 1: ROLL CALL Mayor Mark Dahlquist called the City Council Budget Development meeting to order at 1:31 p.m. Council members present were Dakota Bates, Corey Mangum, Brent Nichols, Hayden Paulsen, Stacy Satterfield and Ann Swanson. Chief Financial Officer (CFO) Rich Morgan opened the Fiscal Year 2027 budget development process by introducing Finance Department staff members Chantelle Macy and Theron Hill, recognizing their significant roles in preparing the City's proposed budget. Mr. Morgan provided an overview of the implementation of the City's new OpenGov financial software, noting that although implementation is still underway, the vendor has allowed the City to begin using the system prior to the official contract start date. He thanked department heads for their participation throughout the implementation process. Mr. Morgan reviewed the FY2027 budget development calendar, explaining that the Council would receive departmental budget presentations during four consecutive budget meetings in early June, followed by additional meetings to review the budget by fund. He noted that OpenGov would provide Council with greater access to budget details throughout the process. The tentative schedule calls for adoption of the Fiscal Year 2027 Budget on August 20, 2026 with opportunities for revisions prior to adoption. Mr. Morgan recommended adding a budget debrief meeting or series of meetings following budget adoption to evaluate the process and establish goals and improvements for the following year's budget cycle. Mr. Morgan reviewed the City's current financial outlook. He explained that significant variances between Fiscal Year 2025 actual expenditures and projected Fiscal Year 2027 expenditures were primarily attributable to major capital projects, including the Airport runway project and the Water Pollution Control (WPC) facility improvements. In response to questions from Council, Mr. Morgan explained that prior budget projections anticipated utilizing approximately $611,000 in reserves due to expenditures exceeding projected revenues. He noted that budgeting the use of reserves is an accepted practice when planned appropriately, but emphasized the importance of monitoring long-term structural balance between revenues and expenditures. Mr. Morgan provided an overview of Idaho's property tax levy process, explaining the purpose of the L-2 property tax certification form and the statutory limitations placed on annual property tax budget increases. He explained that while the City Council adopts the budget, the County calculates the actual levy based upon assessed property values. Idaho law generally limits annual property tax budget increases to 3 percent, while also allowing adjustments for new construction and annexation. He noted those values remain estimates until certified by Bannock County later in the year. Council members held discussion regarding the proper use and availability of forgone property tax authority. Mr. Morgan explained that when prior councils elected not to utilize the full allowable property tax increase, the unused taxing authority is tracked as forgone authority and may be utilized in future years as permitted by state law. He advised that the City currently has approximately $5 million in accumulated forgone authority. He stated recent legislative changes allow local governments to utilize up to one percent of forgone authority for ongoing operating expenses while maintaining additional forgone authority for capital expenditures. In response to a question from Council requesting clarification of the meaning of forgone authority, Mr. Morgan CITY COUNCIL BUDGET DEVELOPMENT MEETING 2 MAY 14, 2026 explained that it represents property tax revenue the City was legally authorized to collect but elected not to levy in prior years. In response to a question from Council regarding the types of expenditures which qualify as capital projects eligible for forgone funding, Mr. Morgan explained that qualifying expenditures generally include buildings, vehicles, equipment, major infrastructure improvements and other assets that increase the value of City facilities. Routine maintenance and operational expenses would not qualify. Mr. Morgan added that capital expenditures are defined through governmental accounting standards. Mayor Dahlquist added that significant roadway construction or system expansion could qualify as capital improvements, while standard maintenance activities would not. Mr. Morgan confirmed that construction of new streets would qualify as a capital expenditure for forgone use, while routine street maintenance would not. Mr. Morgan discussed the impacts of recently enacted House Bill 976, explaining that the legislation significantly altered the distribution of state Highway User Revenue funds. He advised that reductions in state transportation funding would negatively affect the City's Street Fund and could require the City to reevaluate priorities and available funding sources. AGENDA ITEM NO. _ 3: FISCAL YEAR 2027 REVENUE FORECAST: Chief Financial Officer Rich Morgan presented the proposed Fiscal Year 2027 revenue forecast as part of the ongoing budget development process. The forecast incorporated projected property tax revenues, state shared revenues, enterprise revenues, grant funding and other anticipated revenue sources. Mr. Morgan explained that revenue estimates would continue to be refined throughout the budget development process as additional information becomes available from state and local sources. Council members discussed several projected revenue assumptions in conjunction with the earlier discussion regarding property tax limitations, transportation funding reductions and the use of forgone authority. Mr. Morgan reviewed projected revenues by fund, noting that current allocation percentages were based upon prior-year distributions and could be adjusted during budget discussions if desired. He also reviewed several funds showing projected deficits, explaining that some funds, such as the Cemetery Fund, involve both operational and perpetual care components that are accounted for separately. Council discussion focused on major capital projects, including Airport improvements funded primarily through federal grants and the Water Pollution Control facility project, which will be financed through utility reserves and planned utility rate adjustments established by the City's adopted rate study. Mr. Morgan stated that future utility revenues generated under the adopted rate schedule are expected to adequately support those planned capital improvements. In response to a question from Council regarding Highway User revenue distributions, Mr. Morgan confirmed that the Street Fund receives state transportation revenues and is separate CITY COUNCIL BUDGET DEVELOPMENT MEETING 3 MAY 14, 2026 from the City's enterprise utility funds. He confirmed that General Fund revenues could be used to offset projected Street Fund shortfalls. General Funds may be transferred to support other governmental funds, but enterprise utility revenues cannot legally be transferred to support General Fund operations. Mr. Morgan emphasized that while General Fund support is permissible, one-time forgone revenues designated for capital purposes should not be used to support recurring operating expenses. He stated that no final decision was required at this time and recommended continuing to develop the proposed budget utilizing the maximum allowable budget authority while allowing Council the flexibility to make final decisions later in the budget process. In response to a question from Council, Mr. Morgan explained that previous councils may have chosen not to utilize the full allowable property tax increase as general policy choices intended to limit tax increases while recognizing that unused taxing authority could be preserved as forgone authority for future needs. AGENDAITEMNO. 4: FISCAL YEAR 2027 PROPOSED FEE INCREASES: Chantelle Macy, Budget Manager, presented the proposed Fiscal Year 2027 fee schedule. She explained that staff had undertaken a comprehensive review of City fees and consolidated them into a single document for Council review. She noted that an updated version of the fee schedule had been distributed to include corrections, newly identified fees and additional proposed adjustments. Ms. Macy advised that approximately 188 existing fees were proposed for adjustment, in addition to several newly established fees. She reviewed the summary of proposed changes and explained that enterprise utility rate increases were based upon the City's adopted Raftelis rate study, which established recommended utility rates for the period of 2026 through 2029. Public Works Director Tom Kirkman explained that the City utilizes an independent third-party consultant every five (5) years to evaluate utility revenues, operating costs, reserve balances, projected growth, capital improvement needs and long-term financial sustainability. The resulting analysis provides recommended utility rates designed to adequately fund operations and future infrastructure improvements. Mr. Kirkman explained that annual rate adjustments help accumulate funding for major projects, such as the Water Pollution Control Facility improvements, and are based upon detailed capital improvement plans prepared for each utility. In response to questions from Council, Mr. Kirkman explained that reserve funds have accumulated over several years to help finance the Water Pollution Control project and that annual utility rate adjustments of approximately three percent are intended to maintain adequate funding for long-term capital needs while keeping increases moderate for rate payers. Ms. Macy explained that Idaho law requires publication and a public hearing for proposed fee increases exceeding five percent or for any newly established fees. Accordingly, a public hearing will be held August 6, 2026 for those proposed fee changes, as required. Rich Morgan, CFO, reported that the current twelve-month Consumer Price Index (CP!) average was approximately 2.4 percent and noted that the proposed three percent annual utility rate increases are generally consistent with inflationary trends while supporting long-term infrastructure funding needs. CITY COUNCIL BUDGET DEVELOPMENT MEETING 4 MAY 14, 2026 AGENDA ITEM NO. _ 5: FISCAL YEAR 2027 BENEFITS AND EMPLOYEE COMPENSATION: Jay Seedall, Human Resources Director, Holli Harnsberger, Benefits Coordinator, and AJ Argyle, representing GBS Benefits, were in attendance to present information on the proposed Fiscal Year 2027 employee benefits and compensation package, including the City's medical and dental plans, proposed compensation adjustments and a request for one additional full-time position. Mr. Argyle reviewed the City's employee health insurance renewal process and provided an overview of the City's recent claims experience. He explained that although the initial renewal proposal reflected an increase of approximately 12.5 percent, the City's claims experience has improved significantly over the past year, with medical claims decreasing substantially compared to previous years. He noted that staff continues to negotiate with insurance providers in an effort to reduce the proposed increase before final rates are finalized. Mr. Argyle reported that the City conducted a formal request for proposals (RFP) for medical insurance coverage. Several major carriers either declined to submit proposals or did not meet the City's requirements, leaving PacificSource and SelectHealth as the two viable options. Reviewing the proposals for Council, Mr. Argyle explained that PacificSource would maintain the City's current plan design with an increase in premium costs but does not provide a second-year rate guarantee. He noted that unusually high-cost medical claims during the past year, including several catastrophic cases, significantly impacted PacificSource's renewal rates. Despite the increase, he stated that staff has generally been satisfied with the level of service provided by PacificSource and continues to negotiate additional concessions. Mr. Argyle encouraged employees experiencing concerns to contact his office directly so that issues could be addressed individually. He stated that recent improvement in claims experience could positively affect the final renewal rates and that updated claims information has been provided to the carrier to be considered as part of the ongoing negotiations. Mr. Argyle reviewed the SelectHealth proposal, explaining that it included a second-year rate cap and expanded access to the Intermountain Health network while maintaining local provider access. He noted that the proposal offered improved coverage for certain prescription medications and additional provider options without reducing access to local healthcare providers. Some facilities would remain outside the network, although many physicians would continue to participate. In response to questions from Council, Mr. Argyle explained that Idaho providers remain available in-network and that the expanded network simply provides additional options rather than requiring travel outside the state. He explained that staff continues working to expand provider participation and improve employee education regarding network options and associated costs. Mr. Argyle concluded the benefits presentation by reviewing the City's remaining employee benefits, including dental, vision, life insurance and related programs. Council members discussed overall healthcare cost trends, noting that inflation and high-cost claims continue to impact employer-sponsored health plans throughout the region. In response to questions from Council, Mr. Argyle explained that the City's relatively small employee population results in greater volatility in annual claims experience than larger organizations. He explained that the past two years have included several catastrophic claims exceeding $1 million, significantly impacting renewal costs. Mr. Argyle confirmed that the City’s rating is based primarily upon its own employee group and claims history. CITY COUNCIL BUDGET DEVELOPMENT MEETING 5 MAY 14, 2026 Ms. Harnsberger advised that updated claims information would continue to be evaluated over the coming weeks before final recommendations are presented to the Council for consideration. Mr. Seedall reviewed the proposed Fiscal Year 2027 employee compensation recommendations. He presented historical compensation adjustments, Consumer Price Index (CPI) comparisons and the City's current pay structure. Mr. Seedall stated that for the purpose of budget preparation, staff has prepared a proposal that includes a 1.5 percent salary table adjustment in addition to a one-step advancement for eligible employees. He explained that the proposal is intended to maintain competitive compensation while remaining fiscally responsible within projected revenues. In response to questions from Council, Mr. Seedall explained that seasonal positions are budgeted separately and that any approved percentage adjustments would be incorporated into those budgets as appropriate. Regarding employee retention trends, Mr. Seedall reviewed employee turnover data, noting that the City experiences its highest turnover during employees' early years of service, with retention improving significantly as employees advance through the salary schedule. Ms. Harnsberger advised that the compensation proposal includes budgeting for an estimated 7.5 percent increase in employee healthcare costs and currently reflects approximately 608 full- time employees, in addition to approximately 200 seasonal employees throughout the year. She confirmed that the City is currently the fourth-largest employer in Bannock County. Parks and Recreation Director Anne Butler presented a proposal to establish a Natural Resources and Trails Supervisor position. Ms. Butler explained that the City currently lacks a dedicated employee responsible for managing its growing trail system, urban forestry program and natural resource maintenance. She stated that trail maintenance responsibilities are currently shared among multiple departments without centralized coordination. Ms. Butler explained that the proposed position would oversee trail maintenance planning, coordinate seasonal maintenance crews, manage tree maintenance activities, pursue grant opportunities and coordinate partnerships with organizations such as the Portneuf Health Trust and the Greenway Foundation. She emphasized that the position would also provide the City with greater capacity to leverage outside funding opportunities for trail improvements. In response to a question from Council regarding the possibility of having paved trail maintenance responsibilities to be assigned to the Street Department, Public Works Director Tom Kirkman explained that state transportation funding is restricted to roadway maintenance and generally cannot be used for trail maintenance. While the Street Department has assisted when possible, competing roadway priorities and limited staffing make it difficult to assume responsibility for the City's expanding trail system. Mr. Kirkman acknowledged that many City trails are reaching an age where significant rehabilitation will soon be necessary and that proactive maintenance would reduce long-term replacement costs. Mayor Dahlquist discussed opportunities to partner with the Portneuf Health Trust through matching grant programs that could offset future trail improvement costs if the City demonstrates a financial commitment to trail maintenance. Council members expressed support for the concept but requested additional information regarding long-term funding commitments and potential matching contributions from community partners before making a final decision. They expressed concern that while the CITY COUNCIL BUDGET DEVELOPMENT MEETING 6 MAY 14, 2026 proposed position addresses staffing needs, additional operational funding would also be necessary to accomplish trail maintenance projects. Ms. Butler acknowledged that additional maintenance funding would ultimately be required and stated that the proposed supervisor position would significantly improve the City's ability to coordinate projects, manage available funding, supervise seasonal trail crews and pursue additional grant opportunities. Mayor Dahlquist noted that Fiscal Year 2027 department personnel requests had undergone significant internal review before being presented to the Council and explained that this was the only new full-time position recommended for Fiscal Year 2027 budget consideration. AGENDA ITEM NO. 6: ADJOURN There being no further business, Mayor Dahlquist adjourned the meeting at 3:17 p.m. APPROVED: MARK DAHLQUIST, MAYOR ATTEST AND PREPARED BY:
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