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ARDEN HILLS CITY COUNCIL — SEPTEMBER 23, 2024 6 Finance Director Yang explained the general fund balance was currently at $3 million on an annual basis. Councilmember Fabel discussed how an 11.87% tax levy includes more deficit spending in 2025. Finance Director Yang indicated the proposed budget projects a budget deficit in 2025. Councilmember Fabel questioned if the Finance Director recommended the City continue with deficit spending into the new year. Finance Director Yang stated ideally, the City would want to adopt a balanced budget, but she has seen the Council has adopted a budget deficit in the past, noting some of the budgets have outperformed the projected deficit. She indicated there was some risk in adopting a budget that was not balanced. Councilmember Fabel commented in order to approve a balanced budget cuts would have to occur or the tax levy would have to be increased to 15.5%. Councilmember Holden stated the City only receives property taxes twice a year, so the numbers from July 26, 2024 were deceiving. Finance Director Yang reported this was correct. Mayor Grant commented on the July 26 year to date versus actual numbers. He discussed the amount of funding that was transferred out in 2020, noting these additional funds were due to CARES dollars. He indicated the City maintains a 50% fund balance. He reviewed the transfers that were made in 2021 and 2022, noting the Council has tried to budget well, while funding extra projects that may not have been included in the budget. He did not believe it was realistic to believe staff would spend 100% of every single cost within the budget. He indicated Arden Hills was not unique when realizing it will not spend 100% of every dollar within the budget. He explained the budget was a plan and not a determination that every dime within the budget would be spent. Councilmember Monson indicated in 2022 there were concerns with the fact the Council was relying on revenues to balance costs knowing the City was going into a high inflationary period. She explained there was some under spending but there was also more revenue that came in that was not anticipated. She commented this year and last year, staff made it clear no additional revenue was anticipated other than what was budgeted. In fact, the revenues projected for 2024 may not come in as planned. She stated last year she supported under funding the levy. She explained she was hesitant to approve another budget with deficit spending given the fact there were no large developments on the horizon for 2025. She commented on the great investments the City would be making in its staff in the coming year, noting this investment would assist with retention and recruitment. She also reported one of the main comments she hears from residents was that they want the trails and parks maintained, which led her to believe the City should be investing in its parks for the betterment of the community. Councilmember Rousseau explained the majority of the Council supported franchise fees to assist with the construction expenses for the fire department. She discussed how the Council