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Regular City Council Meeting Monday, November 15, 2010 Page 21 City Manager Malinen advised that he was not expecting this problem next year, expressing hope that a positive refinement had finally been achieved. Councilmember Pust suggested that an additional column be inserted to provide a brief explanation of the major, flagged items. City Manager Malinen requested City Council discussion at tonight's meeting about their thoughts on, and to find consensus on, the relative size of the budget and consequent tax levy; and if that is the level desired or for less than the prelim- inary approval to allow staff to return on December 6, 2010 with recommended changes based on the City Council's priorities to achieve that desired tax levy. Councilmember Roe noted the City's receipt of over $1 million Tax Increment Financing (TIF) proceeds through close out of one of the TIF Districts; and opined that it would be appropriate to use a portion of those funds for one -time 2011 capital needs of the City. Councilmember Roe clarified that he was not supportive of using reserves for operating costs; however, he noted that the City's reserves had been increased due to the close out of the TIF District, and some of these proceeds could facilitate the $236,000 needed for CIP funding and thereby reduce the levy by that amount, but not the budget. Councilmember Roe moved to use the Tax Increment Financing close out funds to reduce the levy from the proposed $757,015 to $520,640; and reduce the proposed levy increase from 5.3% to 3.6 representing an approximate 1% property tax increase for the average household. Councilmember Pust suggested that, since the windfall was due to early payout of a TIF District, why not use the entire $1.1 million even if on operational ex- penses; questioning the rationale in building it back into reserves while raising taxes at the same time. City Manager Malinen reminded Councilmembers that the City's reserve levels were already 15% below the City Council- adopted policy level for General Fund reserve levels. Councilmember Pust recognized the need to build up reserves; however, she ques- tioned why if it was being used for CIP, the same argument couldn't be used for operational items and defer property tax increases by a significant amount. Mayor Klausing opined that there were good arguments for or against; but opined that recapturing those unexpected funds served to put the City's reserves less be- hind that they otherwise would be. Councilmember Pust opined that the City Council still had the authority to raise property taxes for 2012.