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City Manager's 2004 Budget Recommendations ance the budget for 2005. No further use of City reserves to balance our budget would be necessary either. On the other hard, 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 7001000 in structural changes we need to make in City operations to balance the city's 2005 budget. LYOUIT-= To reduce City spending by $350,000 we have to cut staff and programs. Items like travel, conferences, and training are small items in the big F ic- F ` F ture. we have cut those sterns 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 by $350,000. Remember, too, that cutting or delaying capital items does not help bal- ance our operating budget. CapiW items - like vehicles and street im- provements - are not funded out of operating revenues. Replacement vehicles, for ,example, are funded out of reserve savings built up through . g depreciation expenses that have been put aside in special accounts over the useful life of the vehicle* Thus, it replacement of a vehicle does not help our operating budget -� t reduces the drain on our reserves, not on our operating ex- penses. In fact, in many cases replacing a vehicle actually helps our op- erating budget because new vehicles usually have lower operating costs than older vehicles. Similarly, large capital improvement projects ects - like street projects - are paid for with a combination of special purpose federal grants and special purpose state funds along with dedicated City reserves. Delaying a capi- tal project, then, affects these special grants and reserves; it does not help our operating budget. Hence, to reduce spending in the City's operating budget by $350,000, 1 estimate we would have to cut staff by 6 F TE's. Because most City staff serge a number of programs, many programs will be affected. But the major cuts are as follows: '61