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Finance Director Lund stated the preliminary budget is currently $156,000 greater than can be levied for so staff will be working to reduce that amount and create a balanced budget. She presented the staff report and updated General Fund revenue, and expenses. Mayor Strommen noted the road needs are not met in this budget. Finance Director Lund stated that is correct. She completed review of the General Fund expenditures, EDA Fund, and HRA Fund. Finance Director Lund provided an overview of the 2014 Levy and General Fund Budget that will be presented at an upcoming City Council Work Session. This information included a General Fund budget expenditure comparison, bar chart comparison of total levy from 2001 to 2014, proposed levy, change in tax levy, local tax rate, and calculation of 2014 tax capacity rate. Mayor Strommen stated this underscores the importance of having a strong commercial/ industrial base and would be a good point to bring out because it provides tax stability over time. Finance Director Lund continued review of budgeted expenditures and pie charts depicting where funds come from and expenditures by type and function. She stated staff is still working to bring in a balanced budget for adoption at the City Council meeting of September 10, 2013. Open issues relate to determination of use of HRA County funds to help offset budgets and whether to merge the EDA and HRA. The Committee discussed the anticipation of LGA and impact of levy limits. Chairperson Riley asked if the City can increase taxes to pay for roads. Finance Director Lund stated the City cannot increase taxes in 2014 to pay for roads. The only option is to issue debt. She stated the budget will be discussed during Council Work Sessions until decisions are made on HRA, EDA, and budget cuts to get below the levy limit. City Administrator Ulrich agreed that at this point, it is a discussion of concepts. Councilmember LeTourneau noted it would create a higher degree of transparency to show the process the Council goes through. Mayor Strommen suggested including a future agenda case to update on the budget process and to layout some of the parameters, such as changes to LGA and levy limits, and indicate it will be discussed during City Council Work Sessions. The Finance Committee supported this suggestion. Mayor Strommen stated a conversation also needs to be held on unmet needs, such as road reconstruction projects. Councilmember LeTourneau stated the Council is currently waiting for additional information on pavement condition and an updated cost estimate. Finance Committee / July 16, 2013 Page 5 of 6