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Regular City Council Meeting Monday, December 05, 2011 Page 9 Looking at the siphon issues of residents even with some credit for usage cost; and does the CIP look at repairs/replacements to address those At the request of Mayor Roe, Finance Director Miller responded that future CIP projects would address those installation issues; however, he noted that those corrections may also require residents to replace their individual lateral service lines that would add to their homeowner costs. Mayor Roe noted that another resource for funding sewer and water infrastructure was the property tax levy. Finance Director Miller concurred. Mayor Roe noted that some of those costs would be programmed into the next twenty (20) years' CIP to address siphon issues for the City's portion of those lines. When will cost show up to taxpayers for bonding Mayor Roe noted that there was a bond issue proposed in 2013 and another in 2014; and current estimates were $3 per month for the fire station and $7 per month for the park and recreation portion for an average single-family homeowner Why not use reserves and why was the City using the most regressive form of taxation Mayor Roe noted that the legislature dictated or mandated how a City could fund its op- erations; and further noted that the City would need legislative approval to impose a local option sales tax. Mayor Roe also noted that state law prohibited cities from levying a lo- cal income tax, which some consider a more progressive form of taxation than property or sales taxes. At the request of Mayor Roe, Finance Director Miller briefly reviewed the purpose of re- serves; one of which was in the frequent review by bond rating agencies of the City's credit rating status. Mr. Miller noted that the City of Roseville currently ranked among the top 5% nation-wide for its financial strength; and by keeping itself in that position, it commanded lower interest rates when issuing bonds, based in large part on the strength of its reserves. If the City was to draw down reserves for operating costs, Mr. Miller ad- vised that it would put itself in jeopardy; as the reserves did double duty in the City's day-to-day operations reliance on using interest earnings from those investments to pro- vide for current operations in the General Fund. If the funds were spent, Mr. Miller noted that there would be nothing left from which to earn any interest. Mayor Roe further noted that there were some funds (e.g. Water Fund) that had insuffi- cient reserve levels to spend on any CIP projects; and even if the Pavement Management Program (PMP) Fund was spent down, projections were that it could be spent down with- in five (5) years with money no longer in reserve for street projects, requiring a tax in- crease simply deferred until that time. $3 million expenditure policy and voter referendum on higher expenditures Mayor Roe advised that the City Council had made the decision to proceed with the bond issue based on timing; and noted that while the City Council did have a policy in place, it