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City Council Regular Meeting -11/14/05 Minutes - Page 17 in 2006. Councilmember Maschka opined that, while it had fundamental flaws with reductions in reserves and spending deferrals, it appeared that the Council consensus was for a 5% levy increase. Councilmember Kough opined that reserves were not necessary, except for emergencies, and suggested funds be transferred between departments as indicated. Finance Director Miller advised that the City Council didn't have unilateral discretion to transfer funds, due to state statute and legal restrictions, except in the General Fund for core services (i.e., police, fire and streets). Mr. Miller reiterated that the interest earnings from reserves were used to fund the current year's budget, with an estimated $1.5 million in those interest earnings being used to provide current services. Mr. Miller cautioned that spending of the reserve would have a dual effect with the overall financial condition weakened, and the revenues removed from sustaining current services. Councilmember Kough spoke in support of eliminating club dues, and cost of a community survey; and opined the need to use reserves only in an emergency. Councilmember Schroeder, for the record, noted that he had not been in favor of a 5% levy increase; and was still proposing a 3.7% levy, and would continue to do so. Mayor Klausing also clarified that he had only consented to a discussion of a 5% levy increase, and did not interpret the vote at that time as "unanimous" for that percentage increase. Ihlan moved, Kough seconded, setting the 2006 budget at a levy increase not to exceed five percent (5%). Mayor Klausing requested clarification by Finance Director Miller on what action the Council could take tonight; with Mr. Miller indicating that the Council had discretion to signal, by motion or resolution, at tonight's meeting their intent, but that formal action by resolution would be required at the December