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However, the 2006 Budget called for the use of $� 28,OOD in reserves to plug the budget gap. To eliminate this reliance, we must apply all new tax monies here first. Therefore, our available funding now becomes: Maximum allowable increase (a� 3.5% tax levy increase $390,945 Less amount needed to eliminate on-going use of reserves (128.000' Amount available for new spending $262,945 Thus, our available resources from additional property taxes are actually $262,945, not $390,945. 2007 Recommended Budget For the City's tax-supported programs, my 2007 Recommended Budget proposes to spend these additional monies in the following manner: Estimated 3.0% COLA for City Employees Estimated �ea�thc�'e increases for City Employees Additional fuel and energy related expenses $230,000 10,000 22,9�5 Total $262,945 As is evident, the available funding of $262,945 is projected to be consumed by these 3 major spending categories. To stay within a 3.5% tax levy increase, all other spending increases for City programs and services would need to be offset by reductions elsewhere. In addition, if we adhere to a 3.5% tax levy increase we fall further behind on our asset replacement programs. You will recall from an earlier Staff presentation that the City's current funding mechanisms for asset replacement are insuff'icient to replace those assets at the end of their useful lives. This has already caused us to defer some replacements. Bear in mind that all of these assets are used each and every day to provide the very programs and services that our citizens have come to expect. If we want to honor our original commitment to the community when we acquired or constructed these assets and facilities, then we need to have sustainable funding to maintain and replace them when necessary. Thus, The Citv Mana�er recommended Bud�et includes a reauest for an additional 1% increase in the city's property tax to strengthen our ability to replace these important assets. This additional 1% will generate $111,000 in added funding. The recommend budget specifies that these monies be allocated as follows: Addition to Asset Replacement (Police, PW, P&R} $86,000 Addition to Parlc Improvement Program �.�,�p Total $111,000