City of Pocatello | minutes | meeting 2026-06-18 | Budget Development Meeting Agenda (9:00 AM) source: https://pocatello.gov/AgendaCenter/ViewFile/Minutes/_06182026-1921 CITY OF CITY OF POCATELLO, IDAHO oc : BUDGET DEVELOPMENT MEETING JUNE 18, 2026 AGENDA ITEM NO. 1: ROLL CALL Mayor Mark Dahlquist called the City Council Budget Development meeting to order at 9:00 a.m. Council members present were Dakota Bates, Corey Mangum, Brent Nichols, Stacy Satterfield and Ann Swanson. Council member Paulsen arrived at 9:18 a.m. AGENDAITEM NO: 2: FISCAL YEAR 2026 BUDGET PRESENTATION Chief Financial Officer Rich Morgan presented the proposed Fiscal Year 2027 budget and facilitated a discussion regarding the City's overall financial position, departmental needs, reserves, property tax revenue, interest earnings and the long-term financial challenges facing the Street Department. Mr. Morgan reported that the proposed budget was substantially balanced, with approximately a $47,000 difference between revenues and expenditures. The proposed budget includes funding for employee benefits and wage increases and represents an approximately three-percent increase over the prior budget, along with one percent of forgone property tax authority. The proposed budget also utilizes reserves in several funds, including the Water Pollution Control Fund and certain other funds with sufficient reserves available for one- time expenditures. The overall proposed City budget is approximately $185 million. Mr. Morgan emphasized that the proposed budget largely maintains existing operations and services and does not incorporate all of the additional needs identified during the departmental budget presentations. Council members reviewed several departmental requests that are not currently included in the proposed budget. These included: An updated electronic records management system for the City Clerk's Office; A Human Resources compensation and staffing study; Improvements or replacement of the City's payroll system; Police radio, body camera and in-car camera replacement; Police facility improvements, including fencing and a covered garage; A crematorium at the Animal Shelter; Fire Department equipment and facility needs; Additional GIS staffing; A Fleet market-rate study; A City motor pool; An electronic vehicle key management system; Hybrid or electric vehicle purchases; Parks and Recreation staffing and equipment; Golf course irrigation improvements; Fort Hall Replica roof repairs; Outdoor Recreation equipment and trailhead improvements; Team Sports parking improvements; Ross Park Aquatic Center filtration and pool-cover needs; and Community Recreation Center parking and deferred-maintenance projects. Mr. Morgan explained that the proposed budget represents current existing services and that incorporating additional requests would require corresponding reductions, new revenue or use BUDGET DEVELOPMENT MEETING JUNE 18, 2026 of reserves. He noted that department heads had previously been directed to maintain essentially flat budgets and that departments had limited flexibility remaining after funding wage and benefit increases. Council members discussed the 2014 compensation study and the importance of conducting an updated study to provide information necessary for future compensation and staffing decisions. Council members generally supported identifying a way to fund the study. Council members discussed the City's payroll system. Mr. Morgan reported that several vendors had evaluated the City's needs but had been reluctant to provide a solution because of the complexity of the City's compensation structure. Mr. Morgan explained that approximately $4 million in interest revenue is generated from the City's cash balances. Historically, the interest revenue has been deposited in the General Fund. He recommends that Council evaluate whether interest should instead be allocated to the individual funds which generate the interest, consistent with generally accepted accounting practices. Mr. Morgan explained that allocating interest to individual funds would affect not only the Street Fund but other City funds as well. Council members discussed the potential impact of such a change on the General Fund, noting that moving interest away from the General Fund could create an additional funding shortfall. In addition, Council members discussed water rights revenue. Mr. Morgan explained that revenue from leased water rights is appropriately budgeted within the Water Fund because the revenue is generated by the City's water assets. Council members reviewed several Parks and Recreation requests that were not included in the proposed budget. Anne Butler, Parks and Recreation Director, explained that a proposed full-time Urban Forestry/Trails position would cost approximately $105,000, including wage-related expenses. She explained that the proposed budget already includes a 10 percent increase for Recreation seasonal wages and a 20 percent increase for Parks and Cemetery seasonal wages. Other Parks and Recreation needs discussed included: Golf course irrigation improvements, estimated to be a multimillion-dollar project; Approximately $30,000 for Fort Hall Replica roof repairs; Approximately $30,000 for an Outdoor Recreation UTV; Approximately $70,000 for Phase 2 of a trailhead project; Approximately $204,000 for paving the NOP Park parking lot; Potential lighting improvements for additional sports fields; Poky Tennis Court improvements; Approximately $27,000 for Ross Park filtration and pool-cover needs; and Additional parking for the Community Recreation Center. In response to Council discussion regarding the use of departmental reserves, Ms. Butler explained that some needs could potentially be addressed through one-time funding, while others represented ongoing needs or deferred maintenance that would require a longer-term approach. BUDGET DEVELOPMENT MEETING JUNE 18, 2026 Council members expressed interest in addressing deferred maintenance incrementally rather than continuing to defer necessary improvements. Council members held a significant discussion focused on the Street Department's financial position and the reduction in State highway user revenue. Mr. Morgan explained that the Street Department is facing a substantial revenue shortfall and that Council must determine howto address the issue in the current budget while also developing a sustainable long-term solution. Several potential approaches were discussed, including: Allocating interest revenue to the funds that generate the interest; Reallocating a portion of property tax revenue among City funds; Using Street Fund reserves as a short-term solution; Using General Fund reserves; Utilizing forgone property tax authority for eligible capital projects; Reviewing service levels, schedules, and hours of operation; and Identifying reductions or efficiencies within the General Fund. Mr. Morgan emphasized that using reserves should generally be reserved for one-time expenses and that relying on reserves indefinitely would not resolve the underlying structural issue. In response to Council discussion regarding the possibility of changing the allocation of property tax revenue among City services, Mr. Morgan explained that the City currently allocates property tax revenue among several funds according to established percentages and that those allocations could potentially be adjusted. In response to questions regarding creation of a separate library district, Mr. Morgan explained that such a change would require significant legal and organizational work and would ultimately require voter approval within the proposed district. A separate district would have its own governing board and taxing authority. Council members agreed that the Street Department's funding issue will require a multi-year approach rather than a single budget-cycle solution. Mr. Morgan explained the City's use of forgone property tax authority under Idaho's Local Government Property Tax provisions. He stated the proposed budget includes three percent growth in budget authority and one percent forgone property tax authority. He explained that the one-percent forgone amount becomes part of the City's ongoing budget authority, while additional forgone amounts used for capital purposes do not become recurring revenue. Council members discussed the possibility of using forgone authority for Street Department capital projects and discussed the long-term implications of using forgone authority and whether it would be preferable to preserve that authority for future years. Mr. Morgan clarified that a specific capital project would need to be identified and that a resolution would be required for the use of forgone authority. The current forgone balance was reported at approximately $5 million. Tom Kirkman, Public Works Director, reported that the Street Department has approximately $750,000 in capital equipment needs, including approximately $700,000 for a vacuum truck. He emphasized that the funding problem is ongoing and that a one-time solution would not address the long-term need. BUDGET DEVELOPMENT MEETING JUNE 18, 2026 In response to Council discussion regarding the Street Department’s reserve balance and use of the balance to address the immediate shortfall, Mr. Kirkman reported that the Street Department has approximately $5 million in reserves after mandatory obligations. He explained that the department has historically attempted to build reserves because of the volatility of highway user revenue and the need to maintain a consistent level of service. Council members expressed differing views regarding the appropriate use of Street Fund reserves. Some members supported using the reserves as a short-term measure while developing a multi-year plan to address the underlying funding issue. Others emphasized the importance of beginning to redirect interest revenue or otherwise changing the City's funding structure rather than continuing to rely on reserves. Council members generally agreed that the Street Department's financial position should be addressed as a City-wide issue rather than as an issue isolated to one department. Mayor Dahlquist stated that the City should avoid continually deferring the issue and should begin developing a plan that addresses both the immediate budget and the long-term sustainability of Street operations. Mr. Morgan agreed to develop additional proposals showing the effects of reallocating interest revenue, using Street Fund reserves, and identifying potential General Fund reductions or other funding mechanisms. Council members discussed salary savings resulting from vacant positions and whether those savings could be used to fund other priorities. Council Member Bates suggested establishing a process under which salary savings would be reviewed quarterly and reported to the Council. The concept would allow salary savings that are not needed for personnel expenses to be identified and potentially used for other approved priorities. Mr. Morgan stated that the concept was reasonable but cautioned that departmental budgets must retain sufficient flexibility for departments to manage normal variations among individual line items. He explained that salary savings generally remain within the applicable fund unless otherwise directed through the established budget process. Council Member Swanson noted that substantial salary savings have occurred and suggested that a flat budget could be adopted with subsequent budget amendments or other mechanisms used to address identified priorities as salary savings become available. Council members discussed current vacant positions and emphasized that vacancies should be evaluated carefully, recognizing that some positions are critical to maintaining City services and cannot simply be eliminated. Mr. Morgan stated that staff could prepare a proposal addressing salary savings and the potential effect on the General Fund. Roger Schei, Police Chief, presented information regarding a proposed Police communications equipment replacement project. The proposed project would consolidate radios, body cameras and dash cameras into a single Motorola system. The estimated total cost is approximately $1.7 million, with approximately $838,000 currently identified as available funding. Chief Schei BUDGET DEVELOPMENT MEETING JUNE 18, 2026 reported that staff is pursuing grant opportunities that could provide additional funding. He explained that purchasing the equipment before the end of the fiscal year could result in a significant discount, although grant timing remains uncertain. Chief Schei offered to return to a future Work Session with additional information regarding the project, available funding, grant opportunities and implementation options. Council members discussed the possibility of using Fund 78 reserves if grant funding is not received and discussed selling existing equipment and returning proceeds to the reserve fund. Mayor Dahlquist noted that purchasing approximately 110 radios at a discount of approximately $750 each could result in approximately $82,500 in savings. Staff was encouraged to explore whether bundling the equipment could provide additional savings. Council members identified several additional priorities for further consideration, including: The Human Resources compensation study; Parks deferred maintenance; The Fleet market-rate study; Potential savings or efficiencies associated with GIS; Beautification improvements along Center Street; The Ross Park pool cover and filtration needs; and Other one-time capital or deferred-maintenance projects. Council Member Satterfield emphasized that the Council must distinguish between projects it wants to fund and projects it cannot afford to fund. She acknowledged that the process would require difficult decisions but emphasized the Council's responsibility to establish priorities. Council Member Mangum recognized the Street Department's willingness to work with other departments and emphasized that any reductions or reallocations should be considered from a City-wide perspective. Mr. Morgan reviewed the remaining budget schedule. The next Budget Development meeting was scheduled for July 9, 2026, as the proposed budget must be published by July 29, 2026, followed by the required public hearing on August 6, 2026 and final budget adoption anticipated for August 20, 2026. Mr. Morgan explained that once the budget is published, reductions may be made, but increases cannot be made beyond the published amount. Council members discussed the potential need for an additional Budget Development meeting. Members agreed that additional discussion may be necessary as staff develops proposals and evaluates options. Mayor Dahlquist characterized the budget process as evolving and directed staff and department heads to continue reviewing expenditures and identifying opportunities to reduce costs or reprioritize resources. Mr. Morgan also recommended beginning the next budget cycle earlier and conducting more frequent reviews and reallocations during the fiscal year. He suggested that October through March could be used to evaluate reallocations and adjustments before the next budget is developed. BUDGET DEVELOPMENT MEETING JUNE 18, 2026 Council members discussed the importance of developing a more comprehensive and ongoing budget management process rather than addressing financial challenges only during the annual budget cycle. AGENDA ITEM NO. 3: ADJOURN There being no further business, Mayor Dahlquist adjourned the meeting at 11:19 a.m. APPROVED: “yr. (dhititien—— MARK DAHLQUIST, MAYOR PREPARED AND ATTESTED BY: