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Regular City Council Meeting Monday, November 15, 2010 Page 22 Councilmember Roe spoke in opposition to using windfalls to cover operating expenses, allowing the City to become dependent on them; when it was better to set aside annually for future capital expenditures. Councilmember Roe advised that, in his judgment, it was not fiscally responsible to use reserves or windfalls to reserves for operating expenses. Councilmember Ihlan opined that this was not a windfall, but that if not for the TIF District, the City would have collected the property taxes years ago, and in- stead of making snap decisions, the City Council should have further discussion. Councilmember Ihlan clarified that she was not promoting the use of reserve funds to reduce budgets; however, she spoke in support of reviewing the CIP carefully item -by -item, as well as the budget itself upon receipt of the work pa- pers. Councilmember Ihlan questioned where the TIF proceeds should be allo- cated. Mayor Klausing asked Mr. Miller, from a fiscal management standpoint, whether bonding agencies reviewed a city's consistency between actual reserve levels compared to their reserve policy and /or industry standards when considering bond ratings and interest rates. Finance Director Miller responded affirmatively, advising that a city lost bonding integrity with rating agencies when those inconsistencies were evidenced. Mayor Klausing noted that, considering a potential bond referendum for Parks and Recreation purpose, therefore the City may then be borrowing at higher rate of interest. Mayor Klausing sought Mr. Miller's perspective in using a portion of the TIF funds to reduce 2011 CIP needs. Finance Director Miller advised that it was not unreasonable to take the $236,000 to fund 2011 CIP needs; however, he advised that he would not recommend using those funds for day -to -day operations. Mr. Miller noted that using any of the funds lessened the structural fix that staff continued to advocate for over many years; and that using the reserves to plug a gap only pushes off the structural fix to future City Councils and budget cycles. Councilmember Roe noted that the City Manager- recommended budget already did that by freezing vehicle replacements at 2010 levels. Councilmember Roe spoke in support of applying $236,000 of the TIF monies to 2011 vehicle and equipment funds to provide some short-term relief to taxpayers in the current eco- nomic climate, while not being totally irresponsible or substantially impacting structural budget considerations. Further discussion included what the $236,000 in capital expenditures represented compared to 2010; review of the $100,000 set aside for future Emerald Ash Borer