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City Council Regular Meeting— 04/24/06 DRAFT Minutes - Page 8 4.a Approve Amendments to 2005 Budget to Conform with Council Spending Decisions (former Consent Item 3.#`� At the request of Mayor K�ausing, City Manager Beets briefly reviewed the request for annual year-end adjustments to the 2005 City Budget for reallocating funds for actual costs that are covered by unbudgeted grants, fees or other revenues. Councilmember Ihlan sought specific information as to why the General Property Tax Revenue received was less than the final budget; as well as why investment income was less than the final budget as adopted. Finance Director Chris Miller clarified that the City was seeing an increase in valuation appeals to Ramsey County; with the County withholding tax payment funds from municipalities for up to three years until the petition is heard and a final settlement reached. Mr. Miller noted that, thus, the City wasn't realizing revenues in the current year on those appealed valuations. As to a reduction in the investment income, Mr. Miller advised that this represented an amortized discount, a non- cash calculation, of what a security would earn today if the City were to sell it prematurely. Mr. Miller noted that this was a common occurrence to see investments drop when interest rates increase and their market value declines; but even though the City was holding the investments, under General Accounting Principals, it still needed to be "booked" as negative interest even though the case remained; representing a market-to-market adjustment. Councilmember Ihlan questioned whether reserves were being drawn down to make up for the budget loss. Mr. Miller noted that for cash-related accounts in the General Fund, the City did require an additional draw down from their General Fund reserves. Removed from the Consent Agenda Approve Amendments to 2005 Budget to Conform with Council Spending Decisions