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City Manager's 2004 Budget Recommendations ante the budget for 2005. No further use of City reserves to balance our budget would be necessary either. On the other hand, if the state does not restore state funding to Roseville in 2005 in any significant amount, by cutting $350,000 in 2004 we would at least be half -way toward the $700,000 in structural changes we need to make in City operations to balance the city's 2005 budget. V. Specific Cuts To reduce City spending by $350,000 we have to cut staf "f and ra rams. . programs. Items like travel, conferences, and training are small items in the big Pic- ture. gp e have colt those items too, but you can't achieve significant cost savings by just cutting those kinds of items, We have to cut much deeper - into staff and programs affecting the public - to reduce the budget b y $350,000. Remember, too, that cutting or delaying capital items does not help bal- ance our operating budget. capital items - like vehicles and street irn provernents - are not funded out of operating revenues' Replacement p g vehicles, for example, are funded out of reserve savings built up h depreciation expenses that have been put aside in special accounts over the useful life of the vehicle. Thus, delaying replacement of a vehicle does not help our operating p g budget i it reduces the drain on our reserves, not on our operating p g e - p ense s . In fact, in many cases replacing a. vehicle actually helps our op- erating budget because new vehicles usually have lower operating n costs than older vehicles. projects Similarly, large capital improvement projects - like street + ects - are . k. p paid for with a combination of special purpose federal grants andspecial purpose state funds along with dedicated city reserves. Delaying a capi- tal project, them, affects these special grants and reserves; it does not help our operating budget. Hence, to reduce spending in the City's operating budget b y $350yOOO7 I estimate we would have to cut staff by 6 FTE's. Because most City staff serve a number of programs, many programs will be affected. But the major cuts are as follows: 5