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ARDEN HILLS CITY COUNCIL WORK SESSION — AUGUST 29, 2011 City Administrator Klaers stated he asked Staff to carefully review their expenses with the goal being no increase in the levy; all the Directors and Managers did a great job in evaluating their expenses, looking at available revenues, and holding costs down. He added that he understood that was the Council's direction, to be very careful and conservative when preparing the 2012 budget. He stated that Sue did a great job and worked very hard to get the budget document completed on time. He further explained that Staff does have some concerns; the $70,000 for TCAAP with no revenues for it and which, if utilized, will result in the Planning Department not having funding for planning studies they need to do. Councilmember Holmes questioned what is budgeted for Professional Services. City Administrator Klaers explained that those funds are spread throughout the budget in various departments. He also referred to the shift of EDA funds out of the General Fund while being a big savings, was one of the main reasons they were able to present a budget with a zero increase. He pointed out, however, that the Council will have to deal with the EDA expenses in the future because there is currently no funding source other than TIF monies. Mayor Grant commented that there is a tendency to want to keep things at zero, but over the longer term that won't be possible because costs are escalating. He stated that he believes some increase is needed to be safe, but he doesn't want to overburden the homeowners. Councilmember Holden commented that the public safety cost increases constitutes the largest percentage of increases every year. She stated the taxpayers need to understand that no levy increase affects the level of service they will receive from public safety. She then stated that she is comfortable with a 2% levy because that will give the City a $60,000 cushion. Mayor Grant stated he would not be comfortable with a preliminary levy of more than 2 %. He also stated he doesn't think we should allow our reserves to go below our policy level of 50 %. He stated he would like to keep the impact under $25.00 for the median valued home. Councilmember Tamble commented that if the public safety increases would consume the additional resources created by a 2% levy, and knowing that the levy can be reduced when set in December, he would recommend a 3% levy. Councilmember Holmes stated she would not want to go beyond 2% but she would also like to see that as the final levy. Councilmember Werner asked if we have any information regarding the County's proposed budget. Director of Finance and Administrative Services Iverson stated she didn't have those figures with her but anticipated that Arden Hills would be impacted more than other Ramsey County cities because we have a higher home valuation. Councilmember Werner stated he would be comfortable with the 2% levy.