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increases in the tax levy are for general Parks and Recreation <br />programming and Police services funded through the General F�,tnd. <br />Every other tax levy category is either proposed to remain the same <br />("park improvements," "streetscape improvements") or is proposed to be <br />REDUCED ("parks maintenance," "pathways maintenance," "pathways <br />construction," "general vehicle replacement," "general debt service"). <br />So if Councilmembers want to cut the tax levy between now and budget <br />adoption in December Councilmembers may have to target police and <br />parks and recreation, which are the only spending categories where we <br />recommended increases. Or Councilmembers may have to cut even <br />further some or all of the other programs THAT HAVE ALREADY BEEN <br />CUT as part of your preliminary budget resolution on August 19. <br />Finally, as we have said all along, cuts in the tax levy in the range of <br />$425,000 would almost certainly entail some reductions in staff -- in <br />addition to those reductions in staff that are occurring as a result of us <br />not filling positions such as the Assistant City Manager. This is because <br />the t� levy primarily supports personnel. Most capital and equipment <br />used at the City are subject to depreciation schedules that fund savings <br />reserves. So the reserve funds basically support most of our capital and <br />equipment needs while the tax levy mostly supports staff positions. <br />Thus, cutting the tax levy by $425,000 would be difficult to achieve <br />without impacting staffing levels, and subsequently service levels. The <br />City could use reserves to minimize this potential impact, however, this <br />represents a temporary solution. What do you do after you've spent your <br />savings? <br />Spending reserve savings is also counter-productive in the following way: <br />We earn money on the investment of our savings; earning money through <br />investments helps the city avoid raising taxes. Hence, spending savings <br />reduces those savings AND reduces our ability to earn money on our <br />savings at the same time. It is a double-whammy. Spending reserves <br />can lessen our ability to stabilize and reduce taxes in the long run. <br />Let us know if you have any questions or wish to talk about this further. <br />� <br />