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ARDEN HILLS SPECIAL CITY COUNCIL WORK SESSION — JULY 14, 2025 24 Discussion ensued regarding how the percentage rate could be staggered with less of an increase next year. Finance Director Yang said 3% is light. Mayor Grant said maybe we go 4%, 6%, 6%, 3%, 3%, 3%. Councilmember Rousseau asked what value a percentage point has. Finance Director Yang calculated going from 6% to 4% would decrease the fund by 1.1 % in 2026. Councilmember Rousseau asked if every 2 points is about 1.1%? Finance Director Yang confirmed. Councilmember Weber asked what that does to the 2028 ending balance. It's projected at $573,000 at 6% for the next three years. Councilmember Rousseau said we underfunded last year. Finance Director Yang said if we do 6% for the next three years the fund balance will be $1.1 million in 2029. Councilmember Weber asked what 4%, 6% and 6% will do. Finance Director Yang said in 2029 the ending fund balance would be $868,000. In 2028 it would be $372,000. Councilmember Weber said the 2028 ending balance would be about $200,000 less than what is shown on the graph in the agenda packet. He asked if there is a reason Finance Director Yang chose 6%, 6%, 6%. Finance Director Yang said no. She is just trying to ensure we have enough funding available, moving forward. Mayor Grant asked if it was from a rate study from years ago, or if she came up with that number. Finance Director Yang said the rate study indicated 3% moving forward. Councilmember Weber asked for confirmation that the funds affected by that rate are sewer, storm and water and the lowest is surface water with an ending balance of $325,000 in 2028. Two percent will bring that down to $200,000. Mayor Grant said these are estimated expenditures. Councilmember Weber understands that. This is what we're basing our decision on. We wouldn't want to see any of them zero out.