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Regular City Council Meeting Monday,June 13, 2011 Page 23 a. Partial Capital Funding Plan and Preliminary Subcommittee Report The CIP Subcommittee, made up of Mayor Roe, Councilmember Johnson, City Manager Malinen, and Finance Director Chris Miller, presented its preliminary report and partial capital funding plan. Mayor Roe reviewed the purpose of the subcommittee, as part of the City Coun- cil's work plan, to determine a path to a sustainable city-wide capital funding plan for the City in light of the ongoing under-funding of capital replacement needs; and to make the community aware of the concerns faced by the City and its elected officials. Steps taken during this daunting task, and detailed in the subcommittee report dated June 13, 2011 and included in the agenda packet included extending the projected time frame out to twenty (20) years for capital needs; and fine-tuning those things that were anticipated, those that were no longer applicable due to pol- icy changes; and separating out the fire station and park/pathway needs. Regarding streets, Mayor Roe noted that the Pavement Management Plan (PMP) was sustaining and the subcommittee's recommendation was to look at that over the next few years to determine if any adjustments were indicated. Mayor Roe advised that all an overall review of tax-supported capital needs and utility fees indicated estimated capital needs of$218 million over that twenty (20) year period, with an estimated $148 million (68%) of that unfunded by current sources. In reviewing tax-supported capital needs and reviewing three (3) areas covered: vehicles/rolling stock, equipment, and facilities, the subcommittee estimated a $16 million shortfall or gap (57%) in the estimated $28 million projected in gen- eral vehicle, equipment and facility needs, using current funding levels and pro- jected costs over that twenty(20) year period. Mayor Roe summarized the subcommittee's recommendation in shifting approx- imately $300,000 (approximately 2% of the current $14.7 million levy) from cur- rent operating budget funding to capital funding in 2012; and maintain that shift permanently. An additional recommendation of the subcommittee is to increase the annual property tax levy by$500,000 (3.4% of the current $14.7 million levy) in 2012, and to also maintain that increase permanently. The third recommenda- tion was to transfer a $750,000 endowment from the General Fund to the Equip- ment Replacement Fund, currently with a $-0- balance) in 2012, creating a sus- tainable fund balance in that fund. Mayor Roe noted that this would create a sus- tainable funding mechanism for at least the next twenty (20) years, with approx- imately 40% of the funding coming from operating spending cuts, and 60% from increased property taxes. Mayor Roe provided additional detail on how the funds were recommended for allocation; inflation factors not included in the calcula-