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Motion carried. Voting Yes: Councilmember Johns and LeTourneau. Voting No: None. Abstaining: Chairperson Riley. 5. COMMITTEE BUSINESS 5.01: Discussion and Review of 2014 Proposed General Fund Budget and Five -Year Budget: 2014 -2018 Finance Director Lund reviewed the staff report and presented the General Fund budgets, current tax capacity rate and impact of Tax Increment Financing District #2 coming back on line. She stated the 2014 budget will be adopted on December 10, 2013, so this item will first be considered by the Council at a Work Session on November 26, 2013. Finance Director Lund stated she would like to focus on whether the Finance Committee is comfortable keeping the tax rate at 45.095% or would support making budget cuts to lower it to 44.29% so it is comparable to 2013. She explained that the City's share for property tax dollars went down, based on 2014 proposed tax numbers coming in, from 36.7 cents on the dollar to 36.3 cents on the dollar, which is an estimate. Finance Director Lund stated the budget can be increased; however, funding would have to be found since the levy cannot be increased at this point. Chairperson Riley stated he does not want to see the numbers go up and the Council has already talked about it, televised that intent, and indicated taxes would not be raised so he supported making budget cuts. Finance Director Lund stated cuts of $350,000 would be needed to get to the 2013 level. Councilmember Johns noted there is a difference between the tax capacity and levy. Finance Director Lund explained how the tax capacity rate is calculated. Councilmember Johns asked if the percentage could be increased but not necessarily increase the dollars. Finance Director Lund explained that the City cannot increase the levy at this point. Councilmember LeTourneau asked if the Council wanted to lower the budget to a tax capacity rate of 43% or 44 %. Finance Director Lund stated that needs to be determined. City Administrator Ulrich stated if the Council wants to keep the levy as advertised at 43.37 %, it needs to know the impact in order to make a rational decision. If wanting to keep the tax capacity rate at no more than last year (44.29 %), it would be another answer and impact. He stated if the Finance Committee agrees, staff could put some numbers around those questions for discussion at the next Council Work Session. Finance Committee / November 12, 2013 Page 2 of 7