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Regular City Council Meeting Monday,July 17,2017 Page 7 Councilmember Etten agreed with Councilmember McGehee in not being ready to tie into a 3% levy increase target until it was determined what a responsible percentage may be. Councilmember Etten asked Mayor Roe if his 3% target in- cluded new CIP or if that was a separate issue. If the 3% includes addressing on- going expenses and CIP, Councilmember Etten noted that in past decades, the City Council still hadn't addressed the CIP sufficiently and it remained an area to further discuss and take action on. Mayor Roe responded that he hadn't thought that far ahead beyond the $160,000 identified by staff as an increase in the CIP (Pavement Management Program). In response to Councilmember Etten, Mayor Roe stated that he would be open to considering improving the CIP deficit on top of the 3% figure. Councilmember McGehee emphasized her alternate funding options for water and sewer funds similar to bonding as as an alternative to fees, providing estimates of the minor differences with her proposed option. If there was sufficient interest on the part of the full Council, Councilmember McGehee suggested looking into residential base rates, with the Public Works, Environment and Transportation and/or Finance Commissions taking a look at it to see if relative contributions of residential and commercial base fees lined up. Councilmembers Willmus and Etten agreed with Councilmember McGehee; and without objection, Mayor Roe indicated that the council so directed staff to re- view the balance between commercial and residential contributions to water and sewer base fees. Specific to reserve monies, Mayor Roe noted that these were already taxes col- lected from city taxpayers; and opined that those taxpayers would rather have that money put to use versus stockpiled in the bank. While recognizing that projec- tions may come in higher or lower and expenses may also vary, Mayor Roe opined that any tax levy impacts that can be mitigated, including the use of re- serves, should remain on the table. Along those lines, Councilmember Willmus opined that it was important to strive to maintain the midpoint reserve level policy goal. Councilmember Willmus fur- ther opined that what was proposed for the future actually served to wean off those reserves in some areas when the city didn't over-levy. Councilmember McGehee agreed that the city shouldn't over-levy, but if using reserves, they should be allocated toward the CIP. Councilmember McGehee ad- dressed the increase in taxes as a result of not setting aside funds for the Pavement Management Program (PMP) as was directed and creating a large impact for tax- payers. Councilmember McGehee noted that if such a deficit should occur again during a recession or when the legislature changes city levy limits again, it could again cause trouble.