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Regular City Council Meeting Monday,July 22,2013 Page 20 While there may theoretically be a time when those levels are reached, Mr. Miller advised that the City's Reserve Policy was tied to a specific percentage of its an- nual operating budget, and as that budget increased, the size of reserves needed to increase as well to maintain that same level of financial strength. Mr. Miller not- ed that there may come a time when the City felt it had reached a substantial point for its reserves and anticipated no major draw downs in the upcoming years; and suggested that at that point,it may be time to reconsider them. At the request of Mayor Roe, Mr. Miller advised that the current reserve levels are basically due to collections exceeding projections, with some created by vacant positions, lower expenses that those projected, and additional revenues realized. Mr. Miller opined that the City remained quite disciplined in keeping a balanced budget, often through remaining somewhat conservative in projected revenues, preferring to err on the side of caution. Mayor Roe opined, and Mr. Miller confirmed, that the only general exception was is replacement funds were used for additional budget funding in certain years to build funds to accommodate higher years. Councilmember Willmus noted that 2012 reserve levels were $1 million higher than those of 2011; and while the City had experienced some major events (e.g. heavy snowfalls in the spring and tree pick-up as a result of the July storms), he questioned at what point in the budget calendar Mr. Miller could provide the City Council with a forecast of where that reserve would be for 2013. For planning purposes, Mr. Miller advised that he would not reach a comfort level in providing those forecasts until November or December of 2013. Mr. Miller advised that part of his rationale in not forecasting earlier was due to Department Heads holding off on certain purchases until they were confident of where the re- serves would end. Mr. Miller clarified that this was not just his projection or es- timation, but would require the cooperation of all Departments near year-end 2013, based on the City's current decentralized purchasing model, and without their input, he could possibly provided a general projection before year-end, but no accurate projections as early as July. Councilmember Willmus expressed his interest in receiving that information at the earliest time possible. As noted in on page 1 of the today's RCA, Mayor Roe referenced the calculation refined for the levy limit, and net potential increase from $175,000 to $198,000; with savings related to sales tax exemption estimated at $225,000, of which $70,000 is property tax supported. Mr. Miller confirmed the accuracy of Mayor Roe's observations until more re- fined information was made available in late August or early September. Mr.