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Chairperson Riley stated that is the first $45,000 he would be willing to cut. He stated the Council may be more comfortable with having the lawyer attend fewer meetings to lower that budget. Councilmember LeTourneau agreed that conversation should be held with the Council and staff could provide scenarios on what that would save the City. Chairperson Riley stated the legal retainer was at the request of the Council and the City Attorney had indicated a willingness to revisit it. Councilmember LeTourneau asked about engineering revenue, noting several years ago there was robust revenue being generated by engineering. Finance Director Lund stated it is engineering's 1% share of the 18% overhead costs from street maintenance projects and/or private projects that are inspected. She stated in the past there was more development. She explained that for the 2014 budget, she used a conservative approach. Chairperson Riley asked about the expenditure reserve. Finance Director Lund stated that is a $123,000 Council Contingency and is attributed to pay back internal loans from the Water Fund for the Municipal Center building loan. She explained that several years of commitment remain. The consensus of the Finance Committee was to direct staff prepare a report on the budget cuts required to reach a 43.37% and 44.29% and include the option of EDA and HRA funds and resulting implications. Five Year Budget: 2014 -2018 Finance Director Lund stated the five -year budget, 2014 -2018, was prepared based on past history, proposed 2014 budget, strategic planning items, inflationary factors, and capital equipment requests. The off - setting tax capacity rates were calculated based on conservative . growth estimates from Anoka County, Tax Increment Financing (TIF) decertifications (TIF Districts #4 and #7), and additional proposed debt service in 2016 for Fire Station #2. By 2018, a new Public Works facility comes on line and results in driving up debt service and tax rate. Finance Director Lund stated in today's budget, capital equipment requested in the CIP results in the Equipment Revolving Fund going to zero in the next couple of years. This is because the equipment revolving fund is paying for the capital and that cost is not being offset by tax dollars. Finance Director Lund reviewed the proposed purchases, noting it includes a new telephone system. She presented the cash flow of the Equipment Revolving Fund based on the next five years of equipment purchase requests. She explained that the five -year budget, as drafted, does not factor in the tax capacity rate if there are still funds in the Equipment Revolving Fund. She explained that the capital equipment purchases contained within the five -year budget will not factor into the calculation of the tax capacity rate until year 2017 when the current funding source — the Equipment Revolving Fund, will be depleted. Finance Committee / November 12, 2013 Page 4 of 7