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Regular City Council Meeting Monday, December 17, 2007 Page 16 Mayor Klausing, as a more substantive objection, opined that the rate of inflation was only helpful to a certain extent when considered over several budget cycles, particularly over the last several years, with reduction in local government aid from the State of Minnesota, and past deferred capital expenditures. Mayor Klaus- ing further opined that using reserves was not a prudent, long-term sustainable practice, and only served to put the Council in a position similar to this year; and opined that it was time for this City Council to make decisions to correct the "ship of the City," and in the future closer adherence to the rate of inflation could be followed. Councilmember Kough expressed concern that his written suggestions related to specific department expenditures, were not addressed by staff. City Manager Malinen advised that, to his knowledge, Councilmember Kough's suggestions were considered as the budget was crafted. Mr. Miller concurred, noting that Councilmember Kough's earlier suggestions (i.e., motorcycle patrol) had been considered by the Council, and voted down by the body. Further discussion included definition of the equipment and vehicle replacement fund as a mechanism to allocate tax dollars annually and on an ongoing basis to avoid spikes in budgets and levies, noting that for several years, those funds had been deficient, and could not sustain the level of replacement needs (i.e., squad cars, service vehicles, snow plows, fire equipment), and that this $250,000 was an attempt to stabilize these programs. Additional discussion included the $50,000 set aside for information systems for the computer infrastructure in City Hall to facilitate and enhance communication with residents, and historical reliance on non-tax related revenues, but current needs outpacing that ability. Clarification on the preservation of a capital asset schedule and annual funding was discussed for current and future needs; eliminating the reliance on reserves each year; issues created with deferred maintenance and replacements impacting the ability to maintain a minimal fleet; and the high priority of this budget in es- tablishing and maintaining regular reserve funds according to Council-adopted policies. Councilmember Roe spoke in support of the original, but spoke in opposition to the proposed amendment, based on his preference to not spend down reserves. Councilmember Pust concurred that it made sense to replenish internal reserve funds for asset replacements and to anticipate annual expenditures; while recog- nizing Councilmember Ihlan's intent.