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ARDEN HILLS CITY COUNCIL September 13, 2010 8 7.A. Adopt 2010 Operating Levy Payable in 2011 and Establish the 2010 Truth -In- Taxation Hearing Date (continued) of months before the final levy needs to be finalized and the City may make cuts in that time. The amount being presented is a conservative number and until the budget is reviewed further the City should be sure to err on the side of caution. Finance Director Iverson clarified the average residential property owner of the City would have a $32.00 per year increase even if a flat budget is approved. She also clarified that last year the Council used $41,000 in reserves to balance the budget and that the proposed increase includes funds to reestablish a zero based budget. If the levy is approved as presented the total increase on the average residential property owner would be $49.21 per year. Councilmember Grant stated $49.21 is an 8.1% increase to the average homeowner and this is too high. Mayor Harpstead stated he is in favor of the motion. The City has acted responsibly in the past and throughout the year and this is reflected in the lower increases the residents have seen. He recommended rather than making marginal cuts at this time, the City approve the preliminary levy amount and further review the budget at a future work session in order to set the final levy. Councilmember McClung stated he agreed the City has been prudent over the last three years but today's economic environment is different and calls for the City to be more prudent than they have been in the past. MOTION: Councilmember McClung moved and Councilmember Grant seconded a motion to amend the amount of the levy to $3,016,465. Councilmember Grant stated the City has been wise and prudent but they need to go back through the budget to find additional cuts. This is not a good time for residents and reducing the amount of the impact to the residents would be a good idea. Councilmember Holden stated the budget should be looked at again but the Council needs to be able to look at the consequences any changes in the budget may have. The City has a couple of months to review the budget and look at additional areas that could be cut without impacting the City negatively but the City needs to have the ability to evaluate the decisions it makes. The preliminary levy can be lowered if the City determines there are additional cuts that could be made. She stated she would not support the amendment at this time. Councilmember Holmes stated this is a preliminary levy not the final levy. The taxes are going to increase for the residents and the difference between the two motions is $17.00. The preliminary levy needs to be set at the higher amount to ensure the City has room to cover existing expenses and once the budget is reviewed and all the contract amounts for City services have been determined the final levy may be lowered, if it is appropriate. Mayor Harpstead agreed and stated he would vote against the amendment to the levy amount. The City needs to be sure they are covering the City's expenses and not setting the residents up for higher increases in years to come.