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Regular City Council Meeting Monday, November 16, 2009 Page 16 Mayor Klausing closed the Public Hearing at 7:56 p.m.; and thanked citizens for their interest in the budget and for their time and input. Discussion among City Councilmembers and staff included responding to those questioned raised by the public during comment; including clarifying the 2009 ad- justed budget and the 2010 City Manager-recommended budget and total expendi- tures and revenues that factored in program revenues; with staff tasked with clari- fying those items representing apparent discrepancies (i.e., program net costs ver- sus levy). Further discussion included rationale for listing some program revenues, but not others, based on dedicated programs and/or functions, or those spread over the en- tire budget (i.e., interest earnings); explanation of internal accounting fund charge backs (i.e., water/sewer funds) for individual employees and City Councilmember allotments performing functions for more than one department; and clarification that the City's General Fund held approximately $3.2 million in reserves, which would cover approximately 3-4 months of operating revenue, as common prac- tice, but not at the 50% policy level guided by City Council policy; with no re- strictions on those funds, but earmarked for the General Fund and discretionary. At the request of Councilmembers, City Manager Malinen reviewed salaries and employee contract negotiations, with the 2010 City Manager-recommended budget assuming zero percent increase in COLA for staff; 1 contract renegotiated to that effect, with the others in process; and assuming step adjustments for those employees not having reached their highest step adjustment in their respective job classifications. City Manager Malinen further clarified that budget discussions to-date assume that the City is on track to fund the full Preliminary General Fund and HRA Lev- ies, as detailed in Attachment B, including some of those programs not property tax or completely property-tax supported; with previous priority discussions not- ing that only a portion of the global city-wide priorities being addressed in this first BFO process; and with no discussion to-date on relying on reserves to dimin- ish the impact of the tax increase, or staff review of a potential 1-2% cut across the board and related impacts. At the request of Councilmember Roe, Mr. Miller clarified the City Council- adopted policy related to operating reserves, based on receipt of tax settlements from Ramsey County twice per year and to facilitate the City's cash flow; and the City policy stating that reserve levels should be at a level of six months, or 50% of the annual budget, with the current practice not adhering to that policy, but un- derfunded. Mr. Miller advised that some years, the City has come close to ex- pending all of those reserves, and even some years have run negative and bor- rowed internally from other funds, while awaiting replenishment of funds from Ramsey County tax collections for operational costs.