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Regular City Council Meeting Monday, September 25, 2017 Page 3 Finance Director Miller reported that the projected impact on residents with the City Manager Recommended Budget was relatively small due to a significant growth in the city's tax base, presenting an opportunity to address several struc- tural budget challenges before the city. Mr. Miller noted that several of those op- portunities involved addressing the city's continued reliance on the use of cash re- serves for the General Fund budget and also addressing the long-term funding gap in the city's capital improvement plan(CIP). Mr. Miller referenced Attachment E providing a variety of tax levy options, along with their impact on median single- family homes. Mr. Miller encouraged the City Council to consider moving to- ward a structurally-balanced budget in the short term prior to addressing longer- term concerns. Mr. Miller noted that Councilmember McGehee's advocacy to re- structure utility fees by transferring utility CIP funding from the base rates to tax levy was included as Option E. At the request of Mayor Roe, Finance Director Miller reviewed the schedules as presented. 2018 Recommended Tax Lew& Budget As outlined in the RCA (lines 19 — 54), Finance Director Miller summarized rec- ommendations and highlighted spending areas (lines 39 —43) as addressed previ- ously by City Manager Trudgeon in the initial budget presentation. With Option E in shifting utility charges to the property tax, Councilmember Willmus requested how that would impact tax exempt properties. Councilmember Willmus asked if that had been taken into consideration in Attachment E's spreadsheet or spread city-wide. Finance Director Miller responded that there would be public policy considera- tions requiring additional conversations including that impact and whether to leave those exempt properties alone or address changes on those property bills ac- cordingly. Mr. Miller clarified that the spreadsheet addressed city-wide distribu- tion across taxable properties only in Option E. At the request of Councilmember Willmus, Finance Director Miller confirmed that the Finance Commission had not yet reviewed any of these options (A — D), having only reviewed shifting the utility base rate from residential to non- residential properties,but not specifically analyzing Option E. Councilmember Etten asked what the percentage of increase was for a median valued home for every $100,000 added to the levy. Finance Director Miller cal- culated that it represented an approximately 0.25% increase in the levy for a me- dian valued home. With tonight's action to set a not-to-exceed preliminary budget and levy, Mayor Roe suggested that more detailed discussions about specific policy choices within options A-E occur at a future meeting.