Des Moines City Council Budget Workshop — September 12, 2026

Call to Order

CHAIR: At this time, I would like to call the September 12th, 2026 Des Moines City Council budget workshop to order. I appreciate your patience — I really needed that coffee. Let’s show that six of us are here and Council Member Netting is absent. Is there a motion to excuse?

(Motion, second, unanimous.)

CHAIR: That passes 6–0. Thank you. I’m going to turn the meeting over to City Manager Katherine Caffrey.

City Manager’s Opening

CITY MANAGER CAFFREY: Good morning, everybody. Thank you for giving us some of your Saturday morning, and thank you to the staff joining us this morning. You got a revised presentation with just a couple tweaks yesterday afternoon — what you have is the revised one.

We’re going to go through all the slides today. Because it’s a lot of material, I don’t want to go the whole time without stopping to give you a chance for questions, so I’ve built in stops for Q&A at critical points, with time left at the end for discussion. Hopefully it’ll come in bite-sized pieces — I’ll tell you the first bite is pretty big before we stop for questions.

This is definitely not a budget hearing — you’re not seeing a final document. We expect questions, things you want more information or analysis on. Over the next roughly six weeks you’ll get a copy of the real draft budget, you’ll have individual meetings with me and Jeff, and then we’ll get into a final document at the end of October. But first, the timeline and what to expect.

I don’t want to bury the headline: we are bringing you a balanced budget.

COUNCIL MEMBER (unidentified): Woohoo!

CAFFREY: That’s right — thank you, Victoria.[^1] We’re not going to ask you today to solve some delta. We have assumed a certain amount of new revenue, though, so when we get to that portion toward the end of the morning, we’re looking for what areas you’re interested in exploring for some additional revenue to help maintain the balanced budget.

We want to walk you through the financial picture we’re working with, then talk about requests that were made and choices we’ve made on what to fund, based on your goals as well as feedback from the public. Then we’ll get into the revenue component.

When we start the budget, we don’t just open a ’26 spreadsheet and update it. A lot goes into the budget. First and foremost were the goals you all identified at the August 6th study session — you had a great discussion prioritizing a list of possible key things you wanted in the budget. Four rose to the top, plus two runners-up we had a lot of conversation about. You’ll see all of those addressed in this budget.

We also had our budget town hall and our CAB[^2] board session. Even though attendance wasn’t tremendous, we’re coming off the heels of the strategic plan process — the town hall, the survey with over a thousand responses, and focus groups — so we have a lot of fresh community input to draw on for this budget.

We also have a huge amount of “budget givens” — costs that are already set: collective bargaining commitments, contracts, legal requirements, mandates. All of that has to be included. And the strategic plan is another influence — you’ll see in the slides how key investments map to strategic priorities. Finally, part of having a professional staff is their input — I had specific things I think the organization needs to invest in, as did our senior department heads. All of that collectively shaped the document you’re seeing today.

On public engagement — I think almost all of you were at the town hall, which was really positive and gave us rich feedback. A week or two later, Jeff and I met with the Citizen Advisory Board for another rich conversation — where do you want additional investment, where would you reduce elsewhere. If I had to sum it up: public safety came up a lot; quality-of-life services — parks and rec, green space, events, things that make the community feel rich — was important; maintaining what we have, especially downtown, came up a lot; and continuing to be good stewards of the dollar, mindful of overhead and maintenance spending.

Budget Pressures for 2027–2028

There are pressures on our budget — some easy to quantify, some not. First, and we’re not unique here: healthcare costs. About 66% of our general fund budget goes to staff — very common for local government; we’re in the people business. Along with people comes health insurance for them and their families. We have about five different plans across bargaining units and non-represented staff. The premium increases we’re seeing are between 10% and 16% — an increase of roughly $350,000 over what we paid in ’26, which was already a big number.

I was at a meeting with other city managers on Wednesday and asked what health care cost increases they were seeing — everybody’s in this range. This isn’t a case of one bad claims year driving us up; it’s general cost increases like a lot of employers are facing. AJ and I have talked about steps to take in 2027 to try to lower our costs for 2028 — working with our benefits broker, going out to bid — but there isn’t time to do that for ’27, so we’ve booked the increases and have plans to revisit for ’28.

Other costs: collective bargaining agreement increases are around $300,000 each year over what we had in ’26, across a variety of unions. And as you know, public defender costs have more than doubled — we’re looking at $400,000 for ’27 and ’28. Those are the quantifiable pressures. Harder-to-quantify pressures include economic uncertainty and constraints on growing our tax base — real, and factored in.

When we started, we had approximately a $2 million budget gap between enhancement requests and projected revenues. Jeff and I weren’t thrilled, but we weren’t shocked either — that’s how budgeting goes: departments submit reasonable requests, you can’t fund them all, and you work to close the gap. We’ll talk about how we did that.

Expenditures

CAFFREY: Jeff’s going to take this for a few slides.

JEFF FRIEND (Finance Director): This is a picture of our expenditures — a pretty common picture on both pie charts. On the left are the categories the state’s accounting structure groups things into. As you’d expect for any city, especially a small one, public safety is about 60% of the pie; then general government, natural and economic environment (the development piece), culture and recreation, and technology.

On the right, the 2027 expenditures by function — again, people are expensive, and since we have a lot of public safety we have a lot of people, so the police department is a large portion. Services are about 28%, supplies less. Services isn’t just consultants — for example, in finance we pay for the state auditors every year, we pay FileLocal[^3] fees for businesses filing B&O[^4] taxes and business licenses, and we pay for armored-car service.[^5] Services covers a variety of things; they’re differentiated from supplies because they’re not a tangible product.

CAFFREY: Can I say something on this one — sorry, Jeff was ready for it. I got a question about what inflation we assumed for ’27/’28. We do not use a flat cost escalator, because that would manipulate the numbers. We go cost by cost and adjust for what it’s really going to be. We don’t just take ’26 and add 4% flat — some things are rising 4%, some less, some more. There are too many funds and diverse activities to do that with a flat escalator. It’s done much more granularly.

JEFF FRIEND: This bar graph shows the same categories as the pie chart. Reading left to right: the 2026 revised budget — “revised” because we did a mid-biennium review last year and updated the ’26 budget, since that’s year two of the biennium (we’ll do the same for ’28 next year); the 2026 projected, which is still being worked on, so a bit of a moving target as of this slide; then the proposed budget for 2027 followed by 2028. You can see the investments are largely public safety, with smaller amounts in general government, culture and recreation, and technology.

COUNCIL MEMBER (unidentified): Before you get off this slide, can you tell us the difference between the 2026 revised and the 2026 projected? I think a lot of people need to understand that distinction.

JEFF FRIEND: Happy to. The 2026 revised budget — there was an original adopted budget for 2026, and last year we updated it because it’s year two of the biennium and you have more information closer to that period. That’s why we call it revised. The 2026 projected amounts are based on actual numbers coming in during the year, projected out for the full year — a budget-versus-actual comparison, but we say “projected” because the year isn’t done yet.

COUNCIL MEMBER (unidentified): So the revised is based on numbers mid-biennium, and we’re still looking at what the end number for 2026 actually is — that’s the projected. Correct?

JEFF FRIEND: Correct. Thank you.

What’s Driving Up Expenditures

JEFF FRIEND: The proposed budget includes a cost-of-living adjustment of 2.5% for non-represented employees and 3% for bargaining units, as negotiated with each. If all things were equal — and they aren’t — the past practice was to use the June Seattle-area CPI-U[^6] as the COLA benchmark. This year that figure was 4.5%, reflecting local inflation, but employees are not getting 4.5% — they’re getting 2.5% or 3% in the proposed budget. As mentioned, health insurance premiums landed in the middle of that 10–16% range — Regence[^7] at 14% and Kaiser at 13%. We also have long-term employees who may retire, which carries separation costs.

Enhancement Requests

CAFFREY: The next few slides get into specific things that were asked for and what we’re actually recommending funding. I was asked to provide a full list of everything requested — that’s on the next two slides. I want you to take from this that even though the list looks significant, genuinely — and I’m not just saying this because they’re all sitting here — nothing asked for was unnecessary or frivolous. In other places I’ve worked I’ve seen very different requests come in. This shows how conscious senior staff are of the city’s financial situation; in some cases I asked them to submit requests. It’s also not surprising given we just adopted an ambitious strategic plan with a lot of initiatives — it makes sense that resources are needed to accomplish those.

This is the first list, general fund requests. Staff costs include benefits, about 25–30%.

COUNCIL MEMBER (unidentified): Just for clarity’s sake — the FTEs here would be in addition to what we already have, correct? These aren’t things that exist, but rather additions?

CAFFREY: Yes. These are enhancements — we’re enhancing what we’re currently doing. And the employee costs do include benefits and retirement, roughly 25–30%.

These are enhancement requests from our other funds. As you know, we have 37 funds; we’re only talking about three today. The general fund is by far the one where the dollars have to work hardest, so we’ll spend time there, but here are some requests from other funds.

So we get these requests — none really out of line, but we obviously can’t fund them all, so we used a few strategies. First: the communications manager and the parks and rec director positions are both funded by repurposing a vacancy. Our fearless Bonnie Wilkins, here forever, is leaving us in early ’27 — that vacancy frees up dollars. In parks, a very small department, two vacancies organically opened over the summer, freeing dollars that can be repurposed toward a director position.

For the parks maintenance worker, we’re looking at King County park levy funds. I got a question about how those work, so let me spend a minute. Voters approved that levy in 2025 — a six-year levy. Local governments get direct pass-throughs: around half a million dollars a year for six years for operations, plus a $3 million one-time capital allocation. We’re planning to use those funds to help supplement staffing. A natural follow-up: what if the levy isn’t renewed? That’s a risk, but King County has had six park levies on the ballot since 2003, and every single one has passed — a 23-year track record of voters continuing to invest in parks and rec countywide, which benefits the city. So it’s a reasonably safe assumption those funds will remain; if not, we’ll figure out what to do with the funded positions when we get there. Part of the levy money is directly for operations — i.e., staff — so I feel it’s a conservative use for the maintenance worker position, some general fund relief, and part of the delta on the proposed parks and rec director.

COUNCIL MEMBER (unidentified): Guaranteed six years?

CAFFREY: Six years — half a million guaranteed through 2031, into 2032.

COUNCIL MEMBER HARRIS: I have my own [comment]. The first time I looked at the previous slide, I thought, “Wow, that’s a lot of new money” — because in my experience, when departments have a budget enhancement, it means new money. It would have helped me if there had been another column marked “repurposed” or “net effect zero,” because a lot of this is moving slots.

CAFFREY: We have that, and it’s coming up.

HARRIS: It’s coming up — well, I’m just saying something about the word “enhancement” might [be worth revisiting].

CAFFREY: Okay, thank you.

So let’s get into how we’re paying for these. On positions, here are the funding strategies we’re using — and we are not funding everything, by any means. Two parks maintenance workers were requested — the marina steps are coming online, and maintenance needs at the Redondo[^8] boardwalk area, multiple times a day, are significant, and parks maintenance is already short-staffed, so two workers doesn’t surprise me; it’s already a small group. However, due to funding we’re recommending one.

On the two police officers — we’ll talk about how we’re specifically paying for those — we’re proposing a delayed start, which I don’t think will actually affect operations; there’s an extensive hiring process, you don’t just post a listing and have someone start Monday. We’re assuming both officers start in July, so the ’27 number reflects a six-month start; the ’28 number assumes the ’27 hire is working the full year, while the ’28 officer starts in July — so it’s delaying the hiring date for some initial savings.

We’re not including the court clerk or records specialist positions that were requested in connection with the new traffic cameras, because we haven’t determined the full phasing schedule. No revenue from the new cameras is included yet, since we don’t know the rollout — and remember, a lot of that revenue doesn’t go to the general fund. Kim York, our new court administrator, just started a few weeks ago. You’ve seen citation numbers — as expected, as cameras come online and people adopt safer behavior, citations plummet — and the court department’s staffing hasn’t changed. So I’ve asked Kim to figure out existing capacity before we assume another camera means more people. We’re putting those positions on ice until we know the staffing we actually need.

The swim[^9] department requested a limited-term civil engineer — the reasoning involved a string of “if this project gets funded, if we’re in design, if this happens” contingencies. Since we don’t know if those things will happen, that’s also on ice; we’ll cross that bridge when we get there. A lot depends on grant funding and project timing.

We also went through and shaved costs generally — you’ll see the reduction from the requested enhancements at the bottom.

COUNCIL MEMBER (unidentified): In the context of the two-year budget, when do we expect the camera revenues?

JEFF FRIEND: The first camera revenue may come in around December, January of this year. [Turning to Tim George] Anything I’m missing?

ATTORNEY TIM GEORGE: I think I said “Decemberish” when you asked — so, January-ish, give it a little time. With infractions, court dates, and so on, you probably wouldn’t see money for another month or two after that. But all that money is restricted to streets and pedestrian projects.

CAFFREY: Once we know more, we’ll factor that revenue in through budget amendments, but it’ll be staggered.

Public Safety Investments

CAFFREY: As council identified, these were your four top priorities — you’ll see them reflected in the budget, along with the runners-up. The two police officers: I already covered the staggered hiring dollar amounts. They don’t include the vehicles — vehicles are funded through HB 2015[^10] grant dollars, and these officers are part of that grant program. You’ll recall that legislation made cities eligible for a grant if they adopted the public safety sales tax. There are several components: one for supplies and equipment, covering some of the vehicles, and another specifically for officer costs. It’s a three-year grant.

COUNCIL MEMBER (unidentified): If this is a grant, when would we find funding after that money runs out?

CAFFREY: We’ll have to plan for that. It’s a three-year grant, about $125,000 per officer. Beginning in 2029–2030, we’ll be covering 100% of that cost.

COUNCIL MEMBER (unidentified): And I believe Des Moines filed twice for the grant?

CAFFREY: For the funding, yes — it was a very complicated process.

COUNCIL MEMBER (unidentified): So we found the funds and got them, but then there won’t be any more funds after the three years?

CAFFREY: Correct — in 2029–2030 we’ll need to be prepared to absorb those officers. There’s strict language that you can’t supplant — you can’t suddenly have the full cost and then eliminate the position. The reality, as Chief Bose[^11] has talked about, is that policing statewide has a constant level of vacancies and vacancy savings, even at a department people want to work for. When the Chief and I discussed it, we both felt the benefit of pursuing this grant was too good to pass up, but we will absolutely account for those officers in future years.

COUNCIL MEMBER SIMONS: I have a similar question about the vehicles. We now have a replacement schedule, so that’s stabilized in the budget. If we’re bringing in grant funds for vehicles, is that the same money we’d normally use for the replacement schedule, or how does that interact?

CAFFREY: The grant pays for the upfront vehicle, and then we use our own money going forward — a car has roughly a six-year shelf life, so we set aside about $15,000 a year for eventual replacement. What the grant does for us is remove the need to come up with the initial cost; the $15,000-a-year (or whatever the figure ends up being) will be factored in going forward.

SIMONS: Okay, thank you.

COUNCIL MEMBER (unidentified): The sales tax money — there’s no end date on that, right?

CAFFREY: No.

COUNCIL MEMBER HARRIS: I couldn’t resist — the vehicle grant money doesn’t go into the vehicle replacement fund; it has to be used for a direct purchase, correct? I know I’m getting into the weeds —

CAFFREY: Let’s do it publicly. The grant is seed money for a new officer — it includes the officer’s salary and benefits during that three-year window, up to $125,000, plus every item we’d have to add to our equipment inventory: taser, vest, uniforms, the $8,000 academy fee, vehicle, radio, computer, mount — everything the city would otherwise absorb. All of that goes into the grant as one-time startup funding, seeding that position on the grant rather than the municipal/general fund. As for the replacement vehicle, yes, that money goes into the vehicle replacement fund.

HARRIS: Okay — I just wanted to make sure it wasn’t something where you’d hand them an invoice for an Interceptor directly.

Also — are we calculating that 59% [public safety share] the same way as in prior years?

Yeah, I mean the public safety share on the pie — is that calculated the same way as prior years, or is it a standard thing?

JEFF FRIEND: It comes from our general ledger — the accounting records that also feed the budget — so we just take their costs as part of the whole pie. Same calculation.

HARRIS: I just didn’t know if sometimes expenses get moved around between categories. Thank you.

JEFF FRIEND: The next public safety expense is replacement drones — funded through the equipment replacement fund, $20,000 apiece, one in ’27, one in ’28. Not a general fund hit; that replacement was already planned for and is in that fund.

CAFFREY: K-9 patrol — I’m personally excited about this one. The police foundation is paying for the dog itself; the $25,000 here covers outfitting a vehicle for the dog, vet bills, food, training — real costs to the animal. This tool was phased out around 2023–2024. It’s valuable to the community, but it’s also a real help in retaining officers. As a small department we don’t have many specialty tracks — at a place like Seattle PD you can specialize in a vice squad or similar; here we don’t have as many of those opportunities, and we sometimes lose officers to bigger departments chasing specialties. This is an appealing, competitive position that helps keep officers here because they feel like they can grow a skill set.

Police staffing study — also important. We’ve all heard Chief Bose talk about officers-per-thousand as an easy-to-understand benchmark, but that’s not the only way to determine staffing needs. There’s also a workload-based approach: what types of calls does the community generate, how much discretionary time do officers have for proactive work, what support services are needed — officers-per-thousand doesn’t tell you how many records clerks you need, for example. We’ve both done workload staffing analyses at prior agencies; they’re helpful, they come back with a big number of people you’d ideally need, but they give you something to work toward and a good assessment of where time is going. The study costs around $75,000; we’ve included it and think it’ll be worthwhile.

Economic Vitality

CAFFREY: Moving to economic vitality — we’ve talked a lot about development and permitting, and what we can do to make Des Moines more appealing to develop in and easier to get through the process. One key lever is a new position paid for out of the development fund (permit fees), focused on commercial permits. Right now, when someone applies for a permit, they’re largely on their own navigating not just the city but South King Fire, possibly the health district, the county — a lot of agencies. That can overwhelm someone who’s, say, trying to open a coffee shop, and slow things down.

We’re improving this two ways. One, already funded: new permitting software rolling out over the next 12–14 months. But software only takes you part of the way — customer service matters. This isn’t a permit tech; it’s a higher-level position, someone shepherding a permit through and solving problems as they arise — when South King Fire says Y and building inspections says something else, this person has enough process knowledge to work through it and keep things moving. Our techs play an important role on data entry and intake; this is a problem-solver. The state also recently passed laws requiring review turnaround within certain deadlines, and this person will help ensure we meet those.

COUNCIL MEMBER (unidentified): This FTE is going to focus on commercial permitting — what percentage of permits are commercial versus residential right now?

CAFFREY: We’d have to get that for you. Commercial is key to economic development, so that’s the focus — and if this person is spearheading commercial, it should free up time for other staff to spend more with residential applicants building a deck or an ADU.

COUNCIL MEMBER (unidentified): I think it’d be a nice number to track since we want to increase it — where are we now, and can we track improvement, to see if this FTE is really moving us toward the goal.

CAFFREY: Yep, that’s great — we’ll get you that. I’d also say it’s not just the quantity of permits; I’d love to track how fast they’re moving, fewer resubmittals, things like that.

Fund Balance and Contingency

CAFFREY: Another of your priorities was increasing the fund balance — the policy minimum is 16.67%. I got a question about what the fund balance requirement is for the swim[^9] fund or the marina — they don’t have one. If council wants to impose that as policy, you’re welcome to, but only the general fund is currently subject to it. We’re on track to end ’26 above 16.67%, though we still have several months left, so year-end is hard to project. We’ve set aside $125,000 in both ’27 and ’28 directly for bolstering the fund balance, which we estimate would bring us to roughly 18.5% — though I’d pay less attention to that percentage, since I don’t yet know exactly where we’ll end ’26, and more to the fact that we’re directly investing new money in savings, which hasn’t been a line item in recent years.

Second, last year we introduced a $50,000 contingency fund requiring council approval to use — operationally funded, so it’s a line item in the budget, not living in the fund balance. It was introduced as a concept: emergency cash in an envelope for when something unexpected happens. Ideally it would be higher, so for ’27 and ’28 we’re proposing doubling it to $100,000. Some of this doesn’t fully accomplish the end financial picture we want, but we’re orienting in the right direction and taking incremental steps.

COUNCIL MEMBER (unidentified): What’s the projected fund balance for this year? I know for ’25 we’re at 17.8%.

CAFFREY: We’re looking at better than that for ’27 — we don’t know exactly, since we’ve got several more months in the year and there’s usually a delay. I don’t anticipate going below 16.67%, but I can’t tell you exactly where yet.

COUNCIL MEMBER (unidentified): I was trying to work the numbers — $125,000 wouldn’t bring us to 18.3% based on 2025 numbers.

CAFFREY: Right — when we came up with that 18-point-whatever estimate, we used our 2026 projection, not the 2025 actual. That’s why I said to pay less attention to the percentage for now; we’ll know more as the year progresses. I’d focus more on the flat dollar amount we’re committing.

COUNCIL MEMBER (unidentified): Would the operating cash reserves increase as well? If you’re adding to the fund balance reserve, does that also increase cash reserves — I remember Jeff saying that’s the more important reserve, right?

JEFF FRIEND: The way it’s presented in the budget book, we actually refer to ending cash balance, since we’re on a cash basis. So yes — we’d be adding $125,000 to cash reserves, and viewed through the fund balance lens, it’s the same thing.

COUNCIL MEMBER (unidentified): And the contingency funding — since we haven’t spent it this year, does it roll over? If you’re adding $100,000 in ’27, you’d be at $150,000, and if unused, $250,000 the next year?

CAFFREY: I don’t know that we won’t end up using it — by year-end we’ll bring you a budget amendment cleaning up what happened in ’26. Public defender fees are astronomical, so as we get further into ’26 we may come back asking to use some of it for that. It would roll over if unused, and grow.

JEFF FRIEND: Typically they don’t roll over that way — whatever’s left at year-end usually goes into fund balance, not forward as contingency. I don’t think it can roll over, since that’s usually reserved for things that can be amortized.

CAFFREY: Thank you.

COUNCIL MEMBER HARRIS: How do you perceive the contingency fund apart from the general fund — is it constrained to particular purposes by statute, or is it more a matter of discipline, like money set aside in the cookie jar? In other words, what’s the functional difference between $100,000 in a contingency line versus having a general-fund goal of, say, 19.5%?

CAFFREY: As I said, this is a line item in the budget — I probably should have avoided the word “fund,” since you might think we’re adding a 38th bucket. That’s not correct; it’s a line item, funded much like any department. The intent is honestly that it be used for a general fund expense that’s a surprise or something unexpected. Council directed us not to use it without council approval, so I’d say it’s more akin to your cookie jar example.

HARRIS: Thank you — that’s it.

COUNCIL MEMBER (unidentified): You said public defender costs were astronomical — what’s astronomical?

CAFFREY: Jeff, do you remember the exact number from the last quarterly report?

JEFF FRIEND: I’d say going back three years — for 2026 we’re projecting about $400,000 in public defender costs. A couple of years ago, before the state Supreme Court case that changed public defender caseload requirements, it was closer to $65,000–$100,000.

COUNCIL MEMBER (unidentified): So the rate of increase is dramatic.

CAFFREY: We talked to you all about this a lot when we were revising the ’26 budget. We’re paying for it with a mix of general fund and public safety sales tax dollars. I wouldn’t assume we’ll tap the contingency fund for it, because this was the first year under the new caseload caps — the first real year of learning what the actual cost would be under the new rules.

ATTORNEY TIM GEORGE: I’d add — when we talk about the criminal justice system and increasing public safety by hiring more officers, that produces more arrests. So our public defender costs per case are rising, but we’re also generating more cases. Hiring more officers means more arrests, which means additional court costs and so on — it’s not just about funding one thing in isolation.

CAFFREY: Great reminder.

Marina Capital — Master Plan and South Seawall

CAFFREY: Under economic vitality and the natural/built environment, a couple of expenses are in the proposed budget under the marina fund that I want to flag. First, a marina master plan — one of your top four goals; you told me it’s important to land on an actual concluded vision and plan for that space. When I say “marina,” I mean more than the boat slips — the whole area the community would view as that space.

Right now the marina is an enterprise fund that supports itself; it’s really a quality-of-life asset, not something that directly contributes to the local economy or the general fund. The master plan would be a consolidated, integrated plan answering: what does the community want the marina to be, what does the market support, and what can the city actually afford to build and operate? That’s a comprehensive undertaking — public engagement (people feel a lot of ownership over the marina), market analysis, economic studies, costing of capital work. This would be paid for out of the marina fund; when we get to their numbers later you’ll see they have extremely healthy cash reserves, so although these are big numbers, they’ll be paid in cash.

Second: south seawall engineering design and related project management. In April you were shown the marina Capital Improvement Plan, and the number-one project is the south seawall — from the harbormaster’s office down to Anthony’s.[^12] That seawall is failing; it’s past repair, more like a reconstruction. We have to do that work before any additional docks can be replaced, since they all connect to it. Additionally, the nice pedestrian promenade on the northern section is meant to continue south, which is a much safer arrangement for pedestrians — so we need to begin design work.

Project management for something like this is a skill set existing marina staff don’t have — really an in-water-experienced engineer — and public works is tapped out on their own projects. So we’ve included funding in ’27 for a contract employee with that expertise, focused on this project. The ’28 number includes both that project management and engineering design — it looks like a large number, and it is; this is a very complex project, and we’ll refine the figure as we go, but it will be significant. Actually building the seawall will likely require debt — we’ll get to that in a future budget. Jeff and I have already talked with our financial advisor about debt capacity, but that’s not a problem we need to solve today; we first need to know the cost, and design gets us there.

ACHZIGER: Clarification — does the marina master plan include Redondo?

CAFFREY: No — just the marina.

ACHZIGER: And it doesn’t include the beach park?

CAFFREY: No — it’s the 14 acres you own, the surface parking lot area — it does include the north lot.

COUNCIL MEMBER (unidentified): Okay, thank you — [reference to] strange things over the years with where those monies move, but the master plan is just the marina. Okay, thank you.

COUNCIL MEMBER (unidentified): I want to make sure I’m clear on the enterprise funds and cross-pollination of money — the marina is paying for this out of its fund, and the marina is taking on this [potential] debt, but the marina floor is the city’s. So the money going out comes from the marina fund — but what it produces, the money coming in, goes where?

CAFFREY: We don’t know that yet. Once we scope the study, we’ll know more about whether we need to shift some of those funds — should this be a general fund expense or a marina expense? The seawall item is entirely marina, 100%. The master plan item will account for the boating community, mortgage rates, additional capital work, so it’ll combine both; once we know the plan better we may shift some dollars to the general fund.

COUNCIL MEMBER (unidentified): I just wanted to make sure it wasn’t a Rob-Peter-to-pay-Paul situation.

CAFFREY: At least it’s equitable — but yes, I need a bit more clarity on that too.

Engaged and Thriving Community — Communications and Technology

CAFFREY: You had a robust conversation about communications staffing at the August 6th workshop — this is really about dedicated personnel. Our existing staff person in this role wears many hats, and with her retirement — we’re happy for her, but sad to see her go — we have an opportunity to repurpose that position: a communications manager, not a director, so a lower-level position, but someone who can spend 100% of their time on communications. I’ve heard from council, CAB, and myself a desire to reach communities we don’t normally hear from and improve outreach tactics.

Council Member Harris talked about marketing the other night — this person will begin touching on that. Will they do everything, all the time? It’s one human — let’s have reasonable expectations — but it’s definitely a step in the right direction. You’ll see in the footnote that this position actually yields some savings: when a long-term employee leaves there are typically some transition costs incurred initially in ’27, but this position is lower-level and more confined than the role it’s replacing, so there will be savings going forward.

CAFFREY: Okay, Chris, it’s your moment — we’re also doing some technology things I don’t fully understand. Chris, can you come up to the microphone?

CHRIS (IT): (restarting computer) The Microsoft license upgrade for cloud migration completes our goal of taking the city to a cloud organization. What you have now is just an Office license — email, Outlook, Word. Moving to the fuller Microsoft license lets us put our domain in the cloud so we can log in from anywhere, access resources and files, and share them faster between staff and community members.

The Tyler[^13] subscription takes our current financial software off on-prem servers and moves it to the cloud. On-prem server costs keep climbing, so the best mitigation is moving to the cloud, which also enables access from anywhere.

COUNCIL MEMBER (unidentified): So you currently have physical servers here? I didn’t realize that — I thought we were already in the cloud. Where are the servers located?

CHRIS: At the police department.

CAFFREY: (interjecting) Oops — said that too loud.

CHRIS: All of our servers are located at the police department.

COUNCIL MEMBER (unidentified): Chris, can you talk about the upfront cost to go to the cloud that shows up in ’27, separate from the subscription — what is that?

CHRIS: That’s the migration cost — what we’re paying to move all the data we have on-prem up to the cloud. Just the cost of doing business for the migration.

COUNCIL MEMBER (unidentified): So all this modernization creates some ongoing savings going forward — is that reflected in the budget, or is it hard to estimate?

CHRIS: Part of what drove this happening this year is that some servers are coming up for replacement, so we’re redirecting some of those replacement dollars to pay for the migration instead. The computer replacement fund is continually updated as old technology retires and new comes on, and this becomes part of that long-range picture.

CAFFREY: Correct — the fewer physical servers we have to buy, the less we spend.

Natural and Built Environment — Streetlights and Tree Canopy

CAFFREY: There are streetlights on this list — public works likes to keep some on hand in case a car hits one or one needs replacing, since lead times can be long. I got a question about whether PSE[^14] owns the streetlights. Mike, can you speak to that?

DPW MIKE SLEVIN: PSE does own certain streetlights, but by no means all of them, though they maintain some electrically. It’s really a hodgepodge — the ones we’re specifically talking about are the ornamental fixtures, like down 216th. Those fixtures are our responsibility to replace, but the wiring is covered under the PSE maintenance contract. In some areas we own everything; in some, PSE maintains and we own the fixture; in some, it’s entirely PSE — just hot spots left over from when we incorporated out of King County.

COUNCIL MEMBER (unidentified): (joking about “King County, not Pierce County”) When I first took this seat, we did an inventory of the blue cowls and fascia along 216th — just curious, will we be able to get more of those over time? Are we running low?

MIKE SLEVIN: Right now we don’t have any left in stock, which is why these are on here — the decorative fixtures on the bottom of the poles.

COUNCIL MEMBER (unidentified): But they can still be fabricated?

MIKE SLEVIN: Absolutely, there are just long lead times.

CAFFREY: The second item is the tree canopy program, flagged with an asterisk — you’ll get a much more in-depth presentation October 1st on how that program will work, including several levels-of-service options at different cost levels, and three proposed SWM[^9] rate increase scenarios to support it. Since council’s direction is unknown, we’ve included $150,000 as a placeholder — on the lower end, with no rate adjustment assumed. I’d encourage you to think of this less as a dollar figure to track right now and more as a placeholder so we don’t forget there’s a number attached, which we’ll adjust once you give direction this fall.

COUNCIL MEMBER (unidentified): We’d discussed instituting fees for developers cutting down trees — would that offset some of those costs?

CAFFREY: That’s separate, and it’ll come back to you in September or October — the tree ordinance, through the Planning Commission.

COUNCIL MEMBER (unidentified): Oh, thank you — and then council decides whether to change it or not?

CAFFREY: But that’s separate — so that hits the development fund.

COUNCIL MEMBER (unidentified): I’m a little confused — is the transfer of public land to swim[^9] the same topic?

CAFFREY: No, that’s separate too.

Parks and Recreation Director / Restructuring

CAFFREY: Now, engaged and thriving community — I’d written you all an email a few weeks ago about the parks and rec director. In case you missed it: we’re going back to calling the department Parks and Recreation for a couple of reasons. One, I didn’t want to post a position without an industry-standard department name — it affects the applicant pool. Also, during the website redesign we found “parks and rec” was one of the top five most commonly entered search terms, and people weren’t always connecting it with “community enrichment services.” So what’s old is new again.

I’m proposing a director position — it’s been three, four, maybe five years since the city had a director here. This department has taken the bulk of cuts over recent budgets; it’s typically not viewed as a core service, and public safety still rises to the top when we hear from the community. At the same time, each of you has talked to me about wanting this area to grow, and we hear about it from the public. When two vacancies opened organically in parks this summer, I didn’t want to miss the opportunity to begin restructuring the department — if we hadn’t had those vacancies, I wouldn’t be bringing you this position.

One of those two vacancies is being repurposed for this director role. The actual cost increase over simply refilling that position is around $80,000 a year; we’re proposing to use park levy money to help close that gap. I believe leadership in this department will help achieve things you’ve expressed interest in. Right now individual staff report to AJ, our assistant city manager, who has four departments — she’s done a great job, but it’s hard for her to also function as director of a department outside her background. This should pay dividends.

Also on this list: the state is requiring us to complete a parks and rec master plan next year — a state requirement. Rather than have a new director inherit a finished plan, I’d rather they be here to help shape it and be directly part of the community engagement. Then, parks maintenance — the marina steps are coming online, and as I mentioned, the maintenance needs at the Redondo boardwalk area, which we do consider a park, are significant, so we need to increase staffing there.

Right now parks maintenance staffing lives under public works. With this new leadership position, I’d move the parks maintenance division under the new director, alongside parks and rec programming and events; public works would remain over the swim[^9] side.

COUNCIL MEMBER (unidentified): So you’re moving swim to — okay. So parks becomes a general fund cost?

CAFFREY: Right.

CAFFREY: Mike, did you want to add anything? — I think I got asked how many parks maintenance staff we have now.

DPW MIKE SLEVIN: (after being asked to come to the microphone) Right now staffing is much more cross-connected — we have a lot of part-time FTEs we move around as necessary across roadway,[^15] streets, and parks. The realigned budget creates more dedicated capacity, especially for parks, roadways, and stormwater (which is paid for by SWM), and for streets. We’ll still cross-pollinate based on project codes, but it cleans up a lot of the funding tracking headaches we currently have with who’s doing what. The restructuring helps public works in that way too.

CAFFREY: Thanks, Mike. I think you can see we’re making key investments not only in your top four goals and some of the runners-up, but across the strategic plan — incremental progress. Let’s pause here for additional questions on expenditures.

Expenditure Q&A

COUNCIL MEMBER (unidentified): For clarity’s sake — I appreciate the key investments, which are essentially new money. Are we to assume everything else is roughly maintaining with a little increase, or are there decreases elsewhere helping pay for some of this, to keep us balanced?

CAFFREY: A lot of the key investments actually didn’t use general fund money — we used park levy money, computer replacement funds, and peeled things away that way. Additionally, later this morning there’s a “closing the gap” section covering the cuts, tweaks, and shaving we did. This year we asked departments to submit requests in a new way: “adjustments to base,” meaning doing the exact same thing as last year but at what it actually costs now — getting at the real cost escalator — plus, separately, “zero-based budgeting” in several areas, new for us. Instead of assuming a line item gets funded again because it was $30,000 last year, we assumed zero and built every dollar up from there. That was genuinely annoying for department heads but found little pockets of spending nobody had used in years — not insignificant savings. And finally, enhancements were submitted as a totally separate entry from “doing what I’m doing now,” so we could isolate the costs of each.

COUNCIL MEMBER (unidentified): On the healthcare premium increase — are you absorbing some of the burden while employees pay a higher premium? What’s that split like?

CAFFREY: Last year we shifted a significant share of the increase to employees and got a lot of feedback about that. We won’t know our exact increase until October, early-to-mid; if we can absorb it, we will, if not, we’ll share costs. What I’d tell you is that the COLA we’re planning is lower than what past practice would suggest — the inflation-rate benchmark from June is not fully funded here, so I’m conscious of funding a lower COLA alongside rising health costs. Non-represented employees especially bear the brunt of that, whereas union employees are typically more insulated, which causes workforce issues I’m sensitive to.

COUNCIL MEMBER (unidentified): And can you explain more about retirement costs — do we have pensions for long-retired employees, how does that work?

CAFFREY: When an employee has been here a very long time — over 25 years — there are typically things they’re entitled to be paid out for, like unused vacation time. I can talk with you offline about the specifics, since I want to be sensitive to those particular employees.

CAFFREY: Anything else before we take a break and move into revenue?

(10-minute break.)

Revenues

CAFFREY: We’re back — city manager taking a break, Director Friend’s up.

JEFF FRIEND: Now that we’ve discussed expenditures, it’s time for the other side: revenues. This is the general fund revenue overview — again, 2026 revised, 2026 projected, the ’27/’28 proposed budget columns, and the change between the 2027 proposed budget and the 2026 projected actuals. The key number is in the lower right: 4.1% revenue growth expected from 2026 to 2027, about $1.1 million — a result of moderate, slow growth in existing revenues plus some new revenue opportunities, some requiring council action and at least one that simply came to us.

These are key revenue assumptions, since we’re forecasting forward. The bottom line reflects a conservative, balanced approach — because there are two risks with assumptions: being too aggressive and overestimating revenue you end up relying on money that isn’t there, or being so conservative you cost yourself the opportunity to fund something, like putting an officer on the street, because you didn’t spend money you actually have. We look at historical trends and current trending data to minimize both risks.

One category we don’t have a slide for but will mention: gambling tax. We currently have — well, as of a month ago, two gambling establishments with pull tabs. Pull-tab gambling tax is 5% of gross receipts — gross, not net after costs; I had to explain that to one of them. Combined revenue from those two establishments was around $30,000–$36,000. The $300,000 you’re seeing as new revenue reflects a card room that recently opened, with 15 tables, the maximum allowed. We looked at revenue from other 15-table card rooms in the area, but it varies widely, making it hard to project — we used $300,000, which we believe is conservative, since it’s early (they’re two weeks in) and hard to judge how well they’ll run the business. So that’s the methodology behind that figure.

Also notable: one-time taxes. There’s a sales tax slide showing regular and one-time sales tax combined, but keep in mind we currently have strong one-time tax revenue from at least four major construction projects. We expect the number of active projects to decrease over the next two years, along with the one-time tax revenue — and red-light-camera infraction revenue is also continuing to decline.

COUNCIL MEMBER (unidentified): Clarification — do the red-light infraction fines include the school-zone and park-zone cameras, or just red lights?

JEFF FRIEND: Just red lights. None of the other cameras are in the general fund — they came online later and are restricted. The red-light cameras are older and didn’t have that restriction, so they’re able to sit in the general fund.

Property Tax

JEFF FRIEND: There’s a 1% cap on collecting more property tax than the prior year. Last year, Council Member Steinmetz asked for clarification on the actual formula, because while the 1% cap is accurate, there are two other pieces: assessed value from new construction that wasn’t around last year, and refunds when people successfully appeal their assessment. So it’s 1%, plus those two other amounts.

A complicating factor going forward is the appeal from Wesley[^16] with the Department of Revenue over their property tax bill — they didn’t pay their bill last year, and we’d been counting on about $133,000 that we didn’t see. We’re keeping that in mind for ’27 and ’28. Also relevant to Des Moines: about 30% of city acreage is tax-exempt, publicly owned — like Port property.

We haven’t yet received worksheets from the county — those start arriving this month through October with their calculations — so this number might move slightly once we confirm with the county whether Wesley is included, which will probably be our first question when we get those numbers. We’ll update the budget if needed once we have more certainty.

COUNCIL MEMBER (unidentified): Do we have the same situation with Judson?[^17]

JEFF FRIEND: No.

COUNCIL MEMBER (unidentified): But if an adverse ruling comes down on Wesley, does that apply to Judson too, or are they different categories?

JEFF FRIEND: Different categories — the Wesley issue relates to new construction they built; it’s about the type of business conducted within the building, not the institution itself.

COUNCIL MEMBER (unidentified): Are you including Wesley’s disputed amount in your calculations?

JEFF FRIEND: No.

CAFFREY: I think that’s the thrust of it — we have the Wesley issue and are taking a conservative approach, not relying on money that might not show up. To summarize: we’re planning the 1% increase, since inflation is over 1%, and we’ll see soon from King County what the other formula pieces are. It doesn’t tend to move much, so we don’t expect a major change, but we’ll have a more accurate picture in the next few weeks.

JEFF FRIEND: This slide shows the estimate — a little under 5.6% [million] projected this year, 5.65 million in 2027, 5.75 million in 2028. So when we say “the 1%,” we’re really talking about $56,000.

CAFFREY: And in case you’re wondering why ’27 to ’28 is only about a $100,000 delta — we also get some new construction value added, which makes up part of that.

Sales Tax

JEFF FRIEND: We assumed 2% annual growth. As mentioned, the region is expected to see only moderate, small economic growth, and this is one of our major revenue sources — the top three being property tax, sales tax, and utility taxes. You might look at this chart and ask why it decreases from 2027 to 2028, even from ’26 to ’27, when we’re saying moderate growth: the regular, activity-based sales tax is built in at 2% growth each year, but the one-time construction-project tax is expected to decrease, so overall sales tax shows a net decrease.

COUNCIL MEMBER (unidentified): Could you consider, like in other reports, splitting the bars by one-time versus regular tax? And is there a different growth expectation for commercial versus the 2% CPI-style assumption you’re using?

JEFF FRIEND: We assume 2% for everything except construction, and decline for construction — that’s the basic assumption. We didn’t break retail down into finer segments.

CAFFREY: I’d also add — the 2% isn’t really “more spending,” as in people buying more things than before; it’s more a reflection that costs are rising, and as costs rise, the sales tax people pay on them rises too.

COUNCIL MEMBER (unidentified): So one-time sales tax is inherently hard to predict — you don’t know what construction is coming, but you do have some forecasting ability?

JEFF FRIEND: Right — we’ll talk about one-time taxes a bit later. I’ve actually been talking with the development department about what projects might be coming online, though there’s a whole process — maybe someone’s just applied, and it’s hard to project whether a project makes it all the way through, since that’s ultimately up to them.

Utility Taxes

JEFF FRIEND: We tax various utilities — natural gas, electricity, telephone, cable TV. We’re projecting some overall growth in utility taxes, driven mainly by rising electricity costs — PSE has been talking about a 15.2% increase, for example — and the 2026 numbers reflect rising electricity utility tax. Countering that, we see ongoing decreases in telephone and cable TV tax, a long-running nationwide trend as people cut the cord and rely on unlimited cell minutes. Overall, driven by electricity, we see an increase in ’27 and ’28 over 2026 projected revenue.

COUNCIL MEMBER (unidentified): So a 15% increase in electricity cost translates directly to a 15% increase in our utility tax? It’s a straight percentage?

JEFF FRIEND: They pay a percentage of their revenues, so there’s proportionality, yes — though it’s hard to predict precisely, since some customers conserve more. Natural gas is notoriously the most volatile utility, since gas prices can spike, whereas electricity use is steadier — people watch TV and use electricity every day regardless.

B&O Tax

JEFF FRIEND: As noted in the second-quarter report, we’ve had strong collections this year. We’re also projecting growth due to Business Park West[^18] coming online, which will pay some square-footage tax, and a proposed expansion of the square-footage tax definition (discussed later) that could apply to businesses not currently required to make large square-footage payments. We’re projecting growth from $1.87 million to $1.96 million next year, and $1.975 million in 2028. Like sales tax, there’s a one-time B&O component that’s also expected to decrease, partially offsetting the growth.

Franchise Payments

JEFF FRIEND: I’ll be a little cryptic here since negotiations are ongoing and I don’t want to be too specific publicly. The city is currently negotiating with franchise utilities to increase franchise payments; this is a projection, but the negotiations are ongoing, so it’s a best guess at the moment.

Revenue Q&A

COUNCIL MEMBER (unidentified): Jeff, looking at the general fund overview table and the franchise payment slide, the numbers don’t quite line up — which is correct?

JEFF FRIEND: Which slides?

COUNCIL MEMBER (unidentified): This one, and then the franchise payment slide — for 2027 the table shows a change of about half a million, but the graph shows less than $400,000.

JEFF FRIEND: I see — you’re looking at 2.4155 on one and 2.515 on the other. We’ll correct that; there was a lot of work happening this week and some slides got tweaked Tuesday and Wednesday. Thank you for flagging it — we’ll fix it. Half a million is what we’re projecting based on a conservative estimate tied to the negotiations.

COUNCIL MEMBER (unidentified): On page 30 — the left column — would it be possible to show 2028 versus 2026 rather than the current comparison? Given it’s a biennial budget, I’d rather think in a two-year window than [year-over-year].

JEFF FRIEND: So the two far-right columns, ’27 versus —

COUNCIL MEMBER (unidentified): I’m used to seeing it as 2028 versus 2026 on a two-year budget.

JEFF FRIEND: Yes, we can add that going forward.

Potential New Revenue Options

CAFFREY: This next section covers potential revenue opportunities. As mentioned, the budget includes a modest level of new revenue, and we’d like to hear today whether there’s appetite for more. If not, we’ll go back and make tweaks before the next reading. We have a few options.

One-time construction sales tax threshold. This is a policy unique to Des Moines, as far as I’ve found — implemented by council in 2012. If a construction project comes in valued above $15 million, the sales tax on supplies is set aside in a fund restricted to capital needs. The rationale, a good one, is that the city shouldn’t rely on big one-off projects to fund ongoing operations. Since 2012, about half the time council has chosen to rescind that and put the money in the general fund instead, when budgets were tight. We want to gauge interest in updating the threshold for inflation rather than eliminating the policy — $15 million in 2012 is roughly $23 million today. I can’t tell you exactly how much more that would generate, since we’re still working through project projections for next year, but functionally it would mean council no longer has to vote each year on rescinding — projects under $23 million would automatically send their sales tax to the general fund.

COUNCIL MEMBER (unidentified): I might favor scrapping the policy entirely and sending everything to the general fund — we wouldn’t rely on it every year, we’d know not to expect it, but it gives us more flexibility. I’d like to hear from colleagues, though.

COUNCIL MEMBER (unidentified): I wanted to make sure — by changing the parameters, are we discouraging investment? What’s the other side of this?

CAFFREY: Good question. The person doing the project has no idea about this ordinance and doesn’t care — they’re paying the tax regardless of whether it’s set aside for capital or spent on operations, so it’s irrelevant to them. On the general-fund side — besides the contingency line we just discussed, which is a practice, not a fund — everything in the general fund is connected to something; there’s no idle pot of money sitting around. It would have to be budgeted, but this revenue isn’t stable — some years $200,000, some years zero — so you can’t count on it as a reliable ongoing line item.

COUNCIL MEMBER (unidentified): I see that. This is more a question for Director Friend — both this one-time fund and the contingency fund feel like rainy-day funds to me. I understand the philosophy, but is there a reason they’re kept separate? Could the one-time money feed into contingency?

JEFF FRIEND: One difference: the one-time fund isn’t supposed to be used for ongoing operations, while contingency can be used for anything. Beyond that — I think of the contingency line item like a buffer in a checking account; having that line, whether $100,000 or $250,000, gives us wiggle room. At a previous city I worked for, they had an actual separate contingency fund funded by a set portion of revenue each year — we’re not doing that; this is a first step toward that kind of safeguard.

As for the one-time/non-recurring tax: it’s volatile, as you said, and we have a policy that’s followed roughly half the time, plus an accumulated pile of money that’s been used once or twice. Every budget cycle this causes some angst for council and staff, because we have a rule that’s inconsistently followed, as we all know. Given the volatility, and given that the whole point is not relying on something unpredictable, we’d keep tracking the funds regardless — whether they stay in the general fund (with council debating it each budget) or get set aside in a capital projects fund. I think the intent behind the original threshold was to target genuinely large projects, but 12–14 years later, more projects clear $15 million, which is what’s driving this whole “what do we do with this money” conversation. Raising the threshold to $23 million would mean fewer qualifying projects, but each at a higher dollar amount — so the “are we relying on it” question still applies either way. If you waived the policy entirely, we’d still track that volatility and budget conservatively, which would strengthen the general fund balance. If you adopted a higher threshold, you’d still moderately strengthen the general fund balance, and you’d have a smaller, more manageable pool of projects to deal with.

COUNCIL MEMBER HARRIS: I remember when this policy was established, and it’s a bit different in practice than described. The intent was — the way most of us think of a checking account and a savings account — many of us have a “college fund” or “renovation fund” cookie jar. The idea was to start setting aside money to pay for capital projects. What’s become normal is that we don’t even think about having cash on hand for projects anymore — we think in terms of grants, when we can get them, or assuming debt. But if you have enough money, like a college fund, you can just go do the sidewalk project, or whatever it is, directly.

I like having this discussion every year — even though we honor it in the breach most of the time, maybe more than half — because it at least occasionally gets this council thinking long-term. We’re so chronically cash-strapped that I don’t want that to just become the vibe. I’d like to believe that at some point we’ll build funding streams that don’t rely on either ephemeral grants or assuming we should just carry a certain balance to pay for things. That was the thinking at the time, and I happen to agree with it.

CAFFREY: Thank you. As far as being cash-strapped — that’s accurate on the operating side of the general fund. On the capital side, the one-time tax money goes into a capital fund, but we also have car tab[^19] money, real estate excise tax, and grants — so the capital side isn’t necessarily cash-strapped or dependent on the one-time tax revenue to do projects. Just wanted to throw that out there in response to Council Member Harris’s comments.

COUNCIL MEMBER (unidentified): Do we have a current balance in the one-time fund?

CAFFREY: About a million dollars, though a portion is earmarked — some for the marina steps and a remodel at city hall. I think the remaining balance is maybe around $400,000, off the top of my head.

COUNCIL MEMBER (unidentified): And by raising the threshold to $23 million, do we have any sense of what projects would qualify?

CAFFREY: A lot of projects, honestly — $15 million doesn’t buy much of a capital project anymore. We don’t have an exact estimate yet of what’s coming next year and at what value. Something like the Landmark[^20] would be well beyond $23 million. Wesley was over $15 million; I think the theater project was too. Most projects land north of $15 million — how much falls in the $15–23 million band is something we still need to work through.

COUNCIL MEMBER (unidentified): Do you have an estimated annual revenue figure from changing this policy?

CAFFREY: That’s what I was saying — we don’t have that yet, because we wanted to gauge interest before doing all that analysis.

COUNCIL MEMBER (unidentified): I’ll say — this was meant to instill some fiscal discipline, and putting it straight into the general fund is like saying “let’s spend it, let’s spend it.” If it stays in a separate pot and you have to have the discussion at least, you can choose to pull it out — rather than automatically sending it to the general fund where it gets spent. I have a lot of feelings about that.

COUNCIL MEMBER (unidentified): Thank you — we heard the history and the intent, but how it actually functions, I don’t know how helpful it is in some ways. It’s kind of a catch-all capital pot that we then relitigate.

JEFF FRIEND: For the ’27/’28 budget, we’ve estimated at least for ’27 about $385,000 that would come from projects over $15 million and go into the general fund, assuming council continues the recent pattern of relaxing the policy. If council chooses not to rescind it, we’d need to cut roughly $385,000 from the budget or find that through other new revenue.

COUNCIL MEMBER (unidentified): Are you asking us to think about this, or asking for direction today?

CAFFREY: You don’t have to give direction today — but if there’s interest, I can come back with what projects would have fallen in the $15–23 million range and more detail on the numbers. Otherwise, we’ll have a council discussion on whether to maintain the existing policy for this budget cycle, in which case roughly $385,000 goes to the one-time fund and we cut it from the budget, or rescind it.

COUNCIL MEMBER (unidentified): Thank you for bringing us back to the actual question — do we want to adjust the threshold from $15 million to $23 million for inflation? I appreciate that, because we can debate the whole ordinance separately. I don’t see a real downside to increasing it.

COUNCIL MEMBER HARRIS: If I may — Mayor Mahoney[^21] used to call it the “three-legged stool,” I guess now a four-legged one. Those revenue sources are relatively stable — utility taxes and so on move a little, but they’re steady. This takes us into territory that’s unknown year to year or biennium to biennium. That’s fine, but the practice drilled into this council years ago was: one-time money for one-time projects, and base the general fund on relatively stable sources every year. So whether it’s $15 million or $23 million is somewhat beside the point — the threshold just needs to be high enough that you don’t become dependent on it.

COUNCIL MEMBER (unidentified): I understand the intent — but the actual question in front of us is the $15-to-$23-million adjustment, so that’s the relevant part of this conversation. And I’m hearing Council Member Harris say the number is irrelevant —

HARRIS: I’m saying the difference between $15 million and $23 million specifically is what he’s calling irrelevant [to the underlying principle].

COUNCIL MEMBER (unidentified): So the question is whether we have appetite to change that number. I think it’s a good idea, personally — adjusting a figure set 13 years ago for inflation makes sense. It carves out more money for this set-aside, non-recurring capital pot. $15 million doesn’t buy a lot these days, and a lot of projects come in above that. We can debate the fund itself separately, but the threshold is something we can give direction on now or at our next meeting.

COUNCIL MEMBER (unidentified): I’m definitely in favor of increasing the threshold. I’d like to see the difference between $23 million, $30 million, and $50 million — I’d favor going higher than the inflation-adjusted figure.

COUNCIL MEMBER (unidentified): I can see some benefit in that.

CAFFREY: So what we’ll plan to bring back — probably October 1st, since September 24th is too soon — is what different thresholds would buy you: what projects would have fallen in each increment, what sales tax resulted, and we’ll look for direction on revising it. It’s an ordinance, so it requires two readings. We’d also like a sense from council on whether you want to rescind the policy altogether — I recognize you’d probably want to see the numbers first. But it’ll help us know whether or not to count on this revenue in the budget. Have I captured the follow-up correctly?

COUNCIL MEMBER (unidentified): Yes.

Children and Family Services Sales Tax

CAFFREY: Next: a children and family services sales tax. This is new state authority starting in 2027, allowing council to increase sales tax by 0.01% administratively — no vote of the people required. Using Jeff’s shoe example from last year: if you bought a $100 pair of shoes off Amazon delivered to you, you’d currently pay $10.40 in sales tax, of which the city gets about 85–95 cents. Add this and you’d pay $10.41 — one penny per $100. We estimate it would bring in $40,000–$45,000 a year, and it must be used for youth and childcare programs. Based on research through MRSC,[^22] our reading of the statute, and conversations with other cities, this would offset general fund expenses related to parks and rec — camp chaos,[^23] break camps, after-school programming. It’s simply an additional revenue source to reduce pressure on the general fund. We’re conscious that sales tax is regressive, though this is one penny per $100.

Expanded Square-Footage Tax

CAFFREY: Second option: expand the square-footage tax. Council implemented this in 2025 as a way to collect from warehouses that don’t generate much sales tax — capturing value from businesses that use city infrastructure (streets, employees) without contributing much otherwise. As currently written, a variety of business types — office, R&D, media production, event spaces — aren’t captured. We’re asking whether there’s interest in expanding that definition. We’ve estimated roughly $125,000 based on several currently uncaptured businesses, though I don’t know the exact figure.

I also got asked why expand the definition rather than just raise the rate. When the rate was set, council had a lengthy conversation about comparable communities’ rates, wanting to stay in line rather than be an outlier, since that can affect economic development. Raising the rate hits existing businesses harder, whereas expanding the definition spreads the base so everyone in the community contributes something, when right now some don’t. Reminder: a business pays the greater of the square-footage tax or the B&O tax, not both.

COUNCIL MEMBER HARRIS: What research has the city done on this expanded square-footage tax — other cities’ experience with it, different business types, and so on?

CAFFREY: We did a lot of comparable research. I’ll invite Assistant City Attorney Matt Hutchins, our resident tax-authority researcher.

ATTORNEY MATT HUTCHINS: Some of the cities we patterned the tax on already tax activities beyond just warehousing. Kent, for example, taxes warehouses and essentially any other business space — office, retail — all subject to the tax, at a lower rate than the warehouse rate, but still taxable by square foot. I believe Bellevue is similar. So we wouldn’t be leading the charge here — a lot of places simply have a flat business square-footage tax, and this would match that approach.

The reason for pursuing it: when we started collections on the warehouse side, we found a lot of space that wasn’t being declared as taxable square footage because it was being used for something else — some for manufacturing, which is good, and we’ve started getting those businesses to declare manufacturing B&O tax accordingly. But some space is used for things that generate neither B&O nor square-footage tax revenue — data centers, for example, wouldn’t generate much B&O tax, but we could capture them under square-footage tax. Media production and distribution came up too, and even retail operations where most sales are deliveries leaving the city — we get no B&O or sales tax on those, so that’s also a blind spot we could address through square-footage tax.

COUNCIL MEMBER (unidentified): So it’s well-defined —

HUTCHINS: How council wants to define it could be tailored a number of ways. What we’re proposing, essentially, is: if you’re using indoor space for business, you could potentially be subject to the tax — keeping in mind that under $4,000 square feet doesn’t apply, and if you’re already paying sufficient retail or manufacturing B&O tax, you wouldn’t additionally owe square-footage tax.

COUNCIL MEMBER DESONY:[^24] Thank you. And along the lines Jeff mentioned — B&O tax goes 100% to the city. I want to clarify what we’re looking at here, because when we say “tax,” a lot of people take it personally. The first category [sales tax] is based on what you’re purchasing —

CAFFREY: True, sorry, yes.

DESONY: But that’s a customer purchase situation. The expanded square-footage tax is a cost of doing business, and the increased gambling tax is a choice. So when we say “tax,” people take it personally — I just want to clarify: the first category is based on what you choose to purchase, the second is a business’s choice [of doing business here], and the third is free will. And since some of this is a cost of doing business, it’s actually what a business already expects — we’re not taking swings at anyone; a business owner is prepared for what it costs to operate.

Gambling Tax

CAFFREY: Finally, increasing gambling tax — you heard Jeff mention this earlier; it used to be a nothing figure, now it’s potentially real money. Our current rate is 9%; state law allows up to 20%. As food for thought, if you increased it to 11% — in line with some neighboring communities — it would bring in an additional $60,000, for $360,000 total. Of these three options, this is the only one currently factored into the draft budget, along with the assumption that council rescinds the one-time-tax threshold policy and the $41,000 from the children/family services sales tax. We want to hear council direction on all of these so we can adjust the numbers accordingly.

DESONY: I’ll go through them one by one. Children and family services sales tax — I’d be in favor, but I’d like to see some of that revenue go toward new programs, not just paying for existing ones. Expanded square-footage tax — remind me, is the current tax inflation-adjusted every year?

HUTCHINS: There’s a 3% automatic increase each year.

DESONY: I know you want to stay in line with other cities, but given our proximity to the airport, I think we could be a bit higher than neighboring cities — if you want your warehouse near the airport, you don’t have many other choices, and I think we could capitalize on that.

CAFFREY: I believe we’re in the middle, maybe slightly higher, but I can’t recall exactly — Matt, do you remember?

HUTCHINS: I think we’re actually middle-to-slightly-below some of the other cities. We’re in a competitive space and don’t actually have a lot of facilities compared to other cities, so I’m not sure folks would pay a premium to be closer to the airport — but it’s worth considering.

DESONY: Well, I’m definitely in favor of expanding it, and also increasing it somewhat — 3% is below CPI, so at least match CPI or go higher. And the increased gambling tax — I’d support it, but the bulk would come from the new card room, and we don’t know if a tax increase might put them out of business before they get established. Have you broached that with them, and what did they say?

CAFFREY: We have not broached raising the gambling tax with them — I’m pretty sure they’d say don’t.

DESONY: Does this apply to the pull tabs too?

CAFFREY: No, just the card room — we’re maxed out on the pull-tab tax rate already.

DESONY: Okay — not that we ask businesses permission to raise their tax, I just don’t know how successful they’ll be, and I don’t want to put them out of business before we get any revenue from it.

CAFFREY: I don’t think 9% to 11% would put them out of business — other things could, but you’re right that it’s an unknown, which is why we proposed 11% rather than the full 20%; 20% felt like it would be too much, essentially doubling it.

DESONY: I’d also be curious what other cities’ rates look like, and whether 11% would put us in a competitive spot.

CAFFREY: We chose 11% because that’s roughly where some neighboring communities are.

DESONY: Great — then I’d support 11%, and revisit in a subsequent year based on actual collections, potentially going up to 15% if that works. One thing I’ve said more than once: many times we have these conversations because there was no gambling tax revenue coming in, since we had no card room to pay it. It would be good to keep rates at an industry-accepted standard on a regular basis, so that when a new business arrives we’re not scrambling to update the tax just because now someone would actually pay it — we should be reviewing rates periodically so we’re ready to go regardless.

COUNCIL MEMBER HARRIS: I’ll just note that Matt did yeoman’s work on the original square-footage tax, and I’d remind people it was a novel idea — the first year it takes a while to ramp up collections. Speaking as a business owner myself, what people want is some certainty. If it looks like, “okay, people are paying it now, so let’s raise it again because we found out they’re willing to pay more,” that undermines that. People want certainty, and we have something working here — I’d just ask that we consider being as graduated as possible with these adjustments. We talk about economic development, and I’d make a pitch for not always going straight to the maximum on every revenue opportunity — a little more gradual.

CAFFREY: Thank you — I think that’s a good guideline for whether to shock business owners or operators. It sounds like we’re not maxing out the gambling tax, and we’re talking about expanding definitions to include more occupancy types for the square-footage tax rather than raising the rate aggressively right now.

I’d also note — we were actually slow to get into having any kind of warehouse tax, even though we were providing services to businesses paying very little in any tax if they weren’t retail or commercial space. Our neighbors have had square-footage-style taxes for at least 10–15 years, so I don’t think this is unusual — a business owner familiar with the region wouldn’t be surprised, unless they simply don’t know the landscape.

DESONY: That was the clarification I wanted to make — it may be novel here, but it’s not novel anywhere else. I wanted to set that level of expectation.

CAFFREY: Thank you. So, I think we’d look for some additional direction — appreciate Council Member [Blass?] going down the line. I’d love to hear if anyone else has an appetite on any of these.

COUNCIL MEMBER (unidentified): Just out of curiosity — we’ve broken through the psychological 10% barrier on sales tax. Where does this put us?

JEFF FRIEND: You’d be at 10.41%; right now you’re at 10.4%. Again, a lot of that goes to the state and county.

COUNCIL MEMBER (unidentified): I understand — it’s psychological. 10% felt like a line we weren’t going to cross, and we’re already there at 10.4% heading into next year.

JEFF FRIEND: Right, you’re at 10.4, this would make it 10.41.

COUNCIL MEMBER (unidentified): Is the 0.01% entirely going to the city — we’re not sharing with King County?

JEFF FRIEND: Entirely to the city. I’d also point out — one is restricted to childcare programs; the other two are unrestricted, which is our most valuable kind of dollar.

COUNCIL MEMBER (unidentified): You said it’s unrestricted, but the slide lists it as restricted?

JEFF FRIEND: No — that’s trying to say only the children’s sales tax is restricted; it still goes to the general fund, just earmarked for that use. The other two go to the general fund unrestricted.

COUNCIL MEMBER (unidentified): And how many gambling card rooms do we have now?

JEFF FRIEND: Just the one — the one at Four Points[^25] closed several years ago.

CAFFREY: So I’ve got two “yeses” so far —

COUNCIL MEMBER (unidentified): That was a yes too.

CAFFREY: Council Member Harris, did you have something?

HARRIS: (clarifying question about the square-footage tax) Do you mean increasing the rate, or expanding the definition?

CAFFREY: Good clarifying question — with the expanded square-footage tax, we’re not talking about increasing the rate amount right now, though [Desony] did say she’d be interested in both expanding and raising it. What I’m hearing overall is universal interest in expanding the definition for now, with a possible rate conversation in 2027.

HUTCHINS: We just set the current rate less than two and a half years ago, with the built-in automatic increase, and did a fairly thorough market comparison at the time — not that long ago — but happy to revisit.

CAFFREY: Council Member Simons, did you have a question — we’d love your view on whether you’re interested in exploring any of these new revenue sources.

COUNCIL MEMBER SIMONS: I know I just got here, sorry about that.

CAFFREY: These are the three on the table: one, a new legislatively authorized sales tax increase restricted to children and family services; two, expanding the square-footage tax definition to include more purposes and business types; three, raising the gambling tax rate from 9% to 11% — the statutory max is 20%, but we’re proposing just 9-to-11.

SIMONS: Quick question on the children and family services tax — I’m a little unclear where that would actually be used. What counts as “children and family services”?

CAFFREY: Per MRSC, conversations with other cities, and the statute, it could be used for parks-and-rec services like childcare programming, camp chaos, break camps, that kind of thing.

SIMONS: Could it also be used for our 1% human services allocation?

CAFFREY: It could, for certain organizations — but it’s really tied to childcare, so we’d need to check.

SIMONS: No, that’s fine. We need revenue in the city, obviously — these aren’t broad-based taxes, but every little bit helps. As [Council Member Desony] said, these are a cost of doing business for both the square-footage tax and the gambling tax — I don’t see them as oppressive taxes that would dissuade businesses in this town. And I think putting a small amount toward children and family services is valuable, particularly because we need to expand parks and rec — something I’ve advocated for since I was first elected. My kids were very involved in camp chaos and T-ball growing up, and I coached parks and rec basketball — it really brings the community together, and if we can find funding for it, we should.

CAFFREY: Thank you. Matt, can you cover the timing on all these items, since they’ll start popping up on agendas and some are time-sensitive?

HUTCHINS: The children and family services sales tax — we went through this last year or the year before with the public safety sales tax. A sales tax change can only take effect January 1st, April 1st, or July 1st, and the Department of Revenue needs a certain lead time. For a January 1st start, we’d need to notify them by around October 16th. Fortunately, this ordinance would look basically identical to the public safety sales tax ordinance, so if council wants to prioritize it, we should be able to prepare it and get two readings done by early October.

CAFFREY: Matt, can you also speak to timing on the square-footage and gambling tax changes?

HUTCHINS: My assumption is the first of the year would be a good target for those too — we should be able to get them drafted over the next couple of months, giving council plenty of time to consider them before they take effect.

CAFFREY: So the children and family sales tax, you’ll see something September 24th and then October 1st for your consideration.

Big thank-you to Matt and Tim — lawyers by day, picking up small taxes by night.

Closing the Gap

CAFFREY: As we wrap up, let’s talk about closing the gap. I said earlier we started with a budget gap — not unusual when you’re budgeting. How did we close it? One of you emailed asking to see exactly how, and honestly I can’t give you an exact penny-by-penny accounting, since a lot of it was small adjustments in many places, but I can walk through the steps.

First, we looked again at priorities — which is why the work you did on August 6th was so helpful; it told us what had to be funded. Then we went through each expenditure asking what could be reduced or phased — you heard how we went from two staff positions to one, or delayed a new officer’s start from January to July. We looked at deferring costs. We’re talking a lot about new items today because that’s the nature of this workshop, but there was also a tremendous amount of time spent reviewing existing line items. We asked departments to submit 5% and 10% cut scenarios, then went through each and decided what to take and what not to. When departments met with me, Jeff, and AJ in June and July, I sent a lot of those budgets back with notes to shave things down or explain why something was still needed.

I mentioned earlier that zero-based budgeting exposed — not in a bad way, there are hundreds of line items — pockets of spending people had just forgotten about, or that weren’t working for us anymore, so we could redistribute that money elsewhere.

We also looked at new revenue, as you just heard, plus some fee adjustments not specifically highlighted today but built in — like an increase in parks and rec fee revenue, roughly $25,000–$30,000; AJ will work with that department to keep pace. We also reviewed interfund transfers, which can feel mysterious but follow formulas for things like the marina paying for a share of my time or legal services — we tightened those up. And again, we kept coming back to your stated priorities.

All of that iterative dialing up and down let us both balance the budget and, more importantly I think, make real progress toward fiscal strength — by genuinely setting aside additional fund balance money and strengthening the contingency line. I got a question of whether the goal was just to reach zero — yes and no. With our current tax structure, balancing the budget is already an ambitious goal, but we also wanted to strengthen the city’s overall financial position, not just hit zero.

COUNCIL MEMBER (unidentified): Quick question — by using zero-based budgeting and finding funds that weren’t being used, are we effectively removing some of the cushion we’re now going to need for the contingency fund?

CAFFREY: Good question. Maybe a little, but we got granular enough in these conversations that there were definitely cases — like Mike requesting $75,000–$100,000 for some studies he thought might be needed — where we kept that cushion in, because we knew it was coming. We didn’t cut those. There were also small things, like looking at every department’s professional development and travel budget and asking why one department sends everyone to two conferences a year when others send one — those got trimmed. I hear your concern; this is our first year doing zero-based budgeting, so we’ll see how it goes in practice and improve for the ’28 adjustments.

COUNCIL MEMBER (unidentified): And to confirm — earlier you said not every department did zero-based budgeting for everything, just certain categories?

CAFFREY: Every department did zero-based budgeting, but not for everything — professional services, which can be a black hole of contract spending, and all travel/training/professional development across departments, were zero-based.

Other Funds: Marina and Surface Water Management

JEFF FRIEND: You can see how much time the general fund takes up in these conversations, but there are other funds too — we highlighted the marina and Surface Water Management (SWM)[^9] funds. Here’s the marina’s financial overview. The top rows show operating income and loss in the bold middle row; again, 2026 revised, 2026 projected, compared to the 2027/2028 proposed budgets. The marina typically runs an operating profit, so that’s not usually a concern, but we also need to look at capital work and debt service.

The debt service line — second from the bottom — is about the most solid, predictable line in the whole budget: debt payments on the 2018 and 2023 bonds. The 2018 bonds are paid off by the marina in 2029. Capital outlays reflect the seawall and master plan work discussed earlier.

CAFFREY: Before you move on, Jeff — I got a question about why marina operating revenue looks the way it does. Candidly, I think the 2026 budget figure wasn’t accurate — I think we underestimated the impact of the dock project and the associated revenue loss. We try to be spot-on with projections, but we can’t always be 100%. So candidly, the 2026 budget was too high. What you see comparing 2026 projected to ’27/’28 is a small assumed tenant/mortgage rate increase, which drives some of the growth shown.

COUNCIL MEMBER (unidentified): Wouldn’t you also expect a revenue bump now that construction is finished — is that factored into 2027?

CAFFREY: With no construction disruption, right, you’d expect growth — and you do see it, going from $6.0 million up to $6.29 million.

Additionally, guest moorage[^26] took a hit during construction, since a lot of permanent tenants displaced by dock work moved into guest slips, crowding out visitors.

COUNCIL MEMBER (unidentified): So permanent-slip revenue dropped too in 2026 because of that displacement?

CAFFREY: Right — boats from the affected docks moved into guest space.

COUNCIL MEMBER (unidentified): But now that construction is complete, why does it still look dipped in 2027/2028?

CAFFREY: It’s not dipped — if you look at 2026 projected, that’s $6.0 million; we’re estimating it rebounds to $6.3 million and then $6.56 million the following year. The starting point on the left just wasn’t accurate to begin with.

COUNCIL MEMBER (unidentified): But 2026 was the dock replacement and tenant displacement year — so is 2027 essentially what 2026 would have been without that disruption?

CAFFREY: I expected it to rebound higher, honestly — I think occupancy just hasn’t fully stabilized yet. Some tenants who moved out during construction chose not to come back. Diesel prices also spiked —

COUNCIL MEMBER (unidentified): (interrupting) Hold on — I’m sorry, can I get an answer to my actual question, or are you asking [Scott] to answer instead —

CAFFREY: I’m sorry, can we please wait until one person is finished talking? I think we’ve tried to answer this question a few times now. The column labeled “2026 projected” is the more accurate figure — it’s not final, since we’re still in 2026. Revenue does increase from the projected figure to 2027 by about $300,000, and again by about $260,000 the year after.

COUNCIL MEMBER (unidentified): Has occupancy fully recovered?

CAFFREY: Scott, can you address that?

SCOTT (Marina Manager): Thanks to our new docks, yes, occupancy is up overall — but this year our seasonal moorage wasn’t as strong as in the past, because of fuel prices and weaker fishing. Our seasonal moorage took a hit, and as the City Manager said, our guest moorage was affected too — we lost a lot of fuel revenue because people bypassed us; normally people come in for a night, get fuel, go to Anthony’s, and continue on. A lot of factors hit us this year, and I guessed too high on my end.

COUNCIL MEMBER (unidentified): No, I’m asking more about things like G-dock, where people book for six months at a time.

SCOTT: E, F, and G docks weren’t as strong as in years past, reflecting fuel costs specifically — people didn’t put their boats in the water because they couldn’t afford to, and fishing wasn’t as strong as in the past.

CAFFREY: Thank you, Scott.

JEFF FRIEND: This shows the change in the marina’s cash position. The 2027 proposed budget assumes a beginning cash balance of about $9.7 million; by the end of 2028, that grows to $8.3 million[^27], accounting for capital outlays, debt payments, revenue, and expenditures.

Investing in the marina’s future, as mentioned: the marina master plan, the south seawall design, and south seawall project management.

COUNCIL MEMBER (unidentified): Help me understand the debt — if we have this much cash on hand, why don’t we pay off the bonds early and save on interest?

JEFF FRIEND: A lot of that debt isn’t callable — when you issue 20- or 30-year bonds, you typically can’t pay them off early; it’s built into the debt structure. We’ve talked with bond counsel about when the marina’s bonds become callable, and we’re close enough to done that there’s minimal benefit in paying early. Paying off debt ahead of schedule (“defeasance”) has to align with specific structural points, since investors are counting on a certain amount of interest — and the rate is probably low anyway.

COUNCIL MEMBER (unidentified): Do you know the rate offhand?

JEFF FRIEND: Not off the top of my head — I believe the 2023 bonds are around 5% and the 2018 bonds around 2.5%.

JEFF FRIEND: We have a similar schedule for the Surface Water Management fund, with a bit more revenue detail, since SWM has charges for stormwater usage billed through King County on the property tax statement, plus grants and other miscellaneous financing sources. Notably absent is a debt service line — SWM carries no debt, so no debt payments, though it does have capital outlays reflecting projects approved in this summer’s Capital Improvements Plan.

The projected beginning cash balance for the fund is a little over $11.5 million; ending 2028 cash is just shy of $9 million. That decrease reflects investment in capital projects.

COUNCIL MEMBER (unidentified): Tagging onto that — we maintain a fairly high cash balance in both enterprise funds. Is there a general policy rationale behind that, for the public’s benefit? These are large numbers, and people may wonder why there’s “so much money” sitting there.

JEFF FRIEND: Both of these are enterprise funds, funded by user fees, functioning like businesses — and state law prohibits them from subsidizing general government. When the general fund has problems, you often hear “why don’t you just take money from SWM?” If that were allowed, everyone’s stormwater rates would likely skyrocket, since the general fund would come looking whenever it needed money.

COUNCIL MEMBER (unidentified): She’s asking about the fund balance — why is it, say, $9 million rather than $2 million?

JEFF FRIEND: These funds typically operate on a pay-as-you-go basis for capital — not entirely, since that’s nearly impossible, but a lot of that balance is set aside to pay cash for capital projects rather than issuing debt.

COUNCIL MEMBER (unidentified): And since it’s essentially cash-equivalent, some of it can be invested short-term for interest?

JEFF FRIEND: Right — the city invests as a whole and allocates investment income across all funds, so yes, that fund does hold investments.

Next Steps

CAFFREY: Everything from today, including this presentation, is posted at desmoines.gov/budget. You’ve probably seen our Budget 101 series on social media — thank you to those of you sharing those graphics. And yesterday’s City Manager report had several sections on the budget, so we’re trying to get the word out broadly. Questions can also go to budget@desmoinesgov[^28] — that comes to me and Jeff, and we’re happy to answer.

What’s next: we made a list of requested chart/format changes and will work on those; we’ll continue refining numbers, so some figures will move a bit, especially as council finalizes revenue direction, but by and large this is roughly where things sit unless we hear we’ve wildly missed the mark. A preliminary budget book — the full multi-hundred-page document covering every fund — goes to council October 1st. Jeff and I are available to meet individually with any of you on areas of particular interest; bring your questions. The first public hearing is at the end of October.

One note on that presentation: it covers all 37 funds and won’t go into this level of detail. During the break, one of you asked why a past year’s budget book pie chart shows such a different departmental distribution than what you saw today. If you’re looking at prior budget books, check the chart title — a lot of those say “citywide expenditures, all funds.” If public safety looks like only 15% there, that’s across all 37 funds; what we showed today is general-fund-only, which is why police look proportionally so much larger. It’s easy to compare apples to oranges without noticing.

October 29th is the first public hearing, November 12th the second, and adoption is tentatively planned before you’re required to by December 31st — so there’s room for an additional meeting if needed.

Closing Remarks

COUNCIL MEMBER SIMONS: As much as I enjoy the cure for insomnia that is the full budget book, I think you’ve laid out a lot of genuinely good information here and helped us focus on what we need to focus on rather than getting lost in the weeds. I’ll leave the weeds to staff and look at the bigger picture — really appreciate everything here. Thank you.

COUNCIL MEMBER (unidentified): Great presentation — clean, clear, digestible, and clearly a lot of work went into it. This is my first budget season; I know the shortfalls we’re facing and how we’re meeting them, and you’ve already found ways to deal with it. Thanks for laying it out and finding a way to balance the budget while keeping our priorities intact.

COUNCIL MEMBER (unidentified): Ditto to that.

CAFFREY: Big thank-you to staff — I know I’m the one who talks, but department heads did the real work. AJ, who just stepped up, put this PowerPoint together, which was a thankless job. And Jeff, who’s knee-deep in numbers — I think he needs a little break from me, at least until Monday. This was really a team effort.

COUNCIL MEMBER HARRIS: Ditto to that — thank you very much to everyone who contributed to this presentation. It’s great, as [Council Member] said, to see so much emphasis on the areas our community flagged for us last year during the strategic plan process — I think it aligns with our strategic plan priorities directly. I hope this is also a byproduct of the Budgeting 101 series you’ve had going — the more we can communicate the restrictions and opportunities in our budget, the more the public can understand why we weigh decisions the way we do, what resources we have, and what the constraints are. I hope people do read the full budget book, but something like this — heavy on graphics and charts — is super helpful, and I appreciate the work that went into it, because I think it helps people grasp something they’re not used to exploring.

CAFFREY: Other comments?

CHAIR: Our next meeting is a City Council regular meeting on September 24th. Is there a motion to adjourn?

(Motion by Council Member Simons, seconded. Meeting adjourned.)

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Corrections to ASR Transcript

[^1]: “Woohoo is right, thank you Victoria” — name uncertain from context; retained as transcribed. [^2]: CAB = Citizen Advisory Board. [^3]: “file local” → FileLocal, the multi-jurisdiction business licensing/tax filing platform used by WA cities. [^4]: “BNO tax” → B&O tax (Business & Occupation tax). [^5]: “armor cards” → armored-car cash-pickup service; best-guess correction, worth verifying against the actual line item. [^6]: “CPIU” → CPI-U (Consumer Price Index for All Urban Consumers). [^7]: “regents” → Regence (Regence BlueShield). [^8]: “Roondo” → Redondo (the Redondo boardwalk/Marina Beach area of Des Moines). [^9]: “swim” → SWM (Surface Water Management fund/department). ASR consistently mis-heard “SWM” as “swim” throughout. [^10]: “HB205” → best-guess correction to HB 2015, the WA public safety funding legislation tied to local public safety sales tax adoption; verify against the actual bill number before publishing. [^11]: “Chief Bose” — name uncertain from audio; retained as transcribed, verify spelling (Boe/Bose/Bosworth) against roster. [^12]: “anony’s” → Anthony’s (the restaurant at the marina). [^13]: “Tyler” — Tyler Technologies, the financial software vendor; retained on the assumption this is what was meant. [^14]: “PSSE” → PSE (Puget Sound Energy). [^15]: “rideway” → roadway. [^16]: “Wesley” — retained as transcribed (a tax-exempt institution disputing a property tax assessment); verify full name. [^17]: “Judson” — retained as transcribed; verify full name/entity. [^18]: “business park west” — retained as transcribed; verify official project name. [^19]: “card tap money” → car tab money (vehicle license fee revenue). [^20]: “the landmark” — retained as transcribed; verify project name. [^21]: “Mahoney” — retained as transcribed (apparent reference to a former mayor); verify spelling. [^22]: MRSC = Municipal Research and Services Center. [^23]: “camp chaos” — retained as transcribed; likely the actual name of a Parks & Rec summer camp program, verify spelling/branding. [^24]: Council member surname rendered variably by the ASR as “Desony,” “DeSoto,” and “Desone” — standardized here to “Desony”; verify correct spelling. [^25]: “four points” — retained as transcribed (apparent reference to a former card room location); verify name. [^26]: “mortgage” (marina context) → moorage, throughout the marina revenue discussion. This is a recurring ASR substitution — “mortgage” should read “moorage” everywhere it appears in that section. [^27]: Transcript reads “growth up to 8.3 million” following a $9.7 million starting balance — this is likely a decline, not growth (consistent with capital outlays exceeding revenue); flagged for verification against the actual slide. [^28]: “de mo budget at demo mo.gov” → likely budget@desmoines.gov or similar; exact address should be verified against the city’s website before publishing.

General note: Speaker attribution throughout this cleanup is inferred from context, direct address, and self-identification in the source transcript, which contained no diarization. Turns marked COUNCIL MEMBER (unidentified) could not be confidently attributed to a specific council member and should be checked against the meeting video if speaker-level accuracy is needed (e.g., for a podcast script or article).