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City Council Special Study Session - 09/09/04 Minutes - Page 4 inflation. Mr. Miller noted that the approximate $335,000 in structural cuts applied last year were still there, but with inflation of approximately $300,000, the City was faced with the same $700,000 deficit. Mr. Miller cited several examples, using those items identified by Councilmember Schroeder (i.e., $50,000 in city-wide reduced phone costs eroded by increased inflationary expenses from the various phone vendors). Mr. Miller noted that the 2005 Budget, as recon1mended, restored inflationary/structural costs back in. Mr. Miller further noted that the cost-of-living adjustments to salaries in itself represented an annual expense of approximately $300,000. Counciln1ember Maschka opined that the Council needed to take the cost-of-living-adjustment (COLA) into effect, noting that government is becoming more efficient; and further opining that adoption of a zero-percent annual levy actually represented a cut over the last three years due to inflation. Councilmember Maschka noted that, during his 12 year tenure on the City Council, the general guiding principal had been that as addressed in the City Manager's budget recommendations, specifically Item #2 in the Action Items, in property tax rates paralleling inflationary costs. Counciln1ember Schroeder sought specific clarification regarding the $40,000 Fairview Community Center lease. Parks and Recreation Director Lonnie Brokke responded to Councihnelnber Schroeder's question regarding the Fairview Community Center lease and savings of $40,000. Mr. Brokke noted that those savings were absorbed by the City's responsibility, as per joint contract with the School District, to become responsible in 2005 for maintenance of several of the area gynmasiums; and provision of supervisory personnel on the City Hall calnpus on evenings and weekends to facilitate rental use activities. Mr. Brokke further noted that the City was continuing to lease two spaces at the Fairview Community Center: one for storage and one for the dance studio due to the availability of the stage.