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Regular City Council Meeting Monday, November 16, 2009 Page 17 Further discussion included the status of the Pavement Management Plan (PMP) set up as an endowment fund with the City basing annual maintenance and recon- struction on the interest earnings, as it was set up to do in the 1980's by previous City Councils, with contributions diminished or eliminated at some point and in an effort to avoid issuing bonds for repairs and replacements, a common practice in many municipalities, with the fund currently at approximately $13.6. Councilmember Roe noted that while it may be legal to use reserves, the City was only deferring future capital improvements by transferring that money for opera- tional costs and not meeting short and long-term capital needs. City Manager Malinen, in response to public comments about the BFO process, admitted that it was not a pure BFO process at this time, but had been used as an initial step in identifying and prioritizing those things that were important to the community, recognizing that the current budget process was no longer sustain- able. Mr. Malinen noted that the 2009 budget had essentially no increases from that of 2008 other than personnel cost increases; and that the 2010 budget did es- sentially the same thing, freezing adjusted 2009 spending, other than newly- mandated items. Mr. Malinen advised that the City was doing what the public speakers suggested, working off numbers and budgets several years old, in addi- tion to the 2009 cut of $450,000 when the MVHS was "unallotted." Mr. Malinen noted the $900,000 in obligatory funding to pay back the State of MN for 2009 and 2010 tax credits; with limited remaining funds being directed toward capital improvements (i.e., vehicle replacement); while attempting to deal with the ongo- ing structural issues from past budgets. Mr. Malinen sought the public's patience in improving the BFO process for the next budget cycle, with staff keeping notes on how to achieve that improvement. Mr. Malinen thanked the public for their comments and their attendance; and encouraged them to ask questions of the staff whenever. Councilmember Ihlan questioned what the next iteration of the budget would look like, noting that the Truth in Taxation Public Hearing was coming up soon, and line items should be available. Mayor Klausing advised that the Council and staff would continue moving toward a final budget; and suggested that if Councilmember Ihlan was supporting a zero percent levy, she provide staff and fellow Councilmembers with her specific pro- posals to accomplish that, expressing his interest in seeing those recommenda- tions. Councilmember Ihlan opined that a zero percent levy was not coming from one person, and if the Mayor was looking for someone to step forward with alterna- tives, she could not do so, but could come back with ideas, if she had line item de- tail. Councilmember Ihlan opined that it would be a team, not individual, effort;