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a Public Information Officer to work on a community-wide newsletter program and coordinate website administration. He said the budget includes a compensation pool for management and confidential employees with a floor of 2% and a ceiling of 4% and funding effective November 2008 for an increase in Council stipends, which would require a separate action. He said general fund total reserves were $20.5 million in the first year and $17.4 million in the second year. They were being reduced because staff was implementing the planned use of accumulated capital projects reserve fund and moving some monies into the CIP as planned. This adds $2 million and $3 million to the on-going $5 million annual transfer to the CIP for a total of $7 million in the first year and $8 million in the second year. It maintains a 10% reserve for economic uncertainties and the temporary recession reserve. Regarding enterprise funds, he described numbers for water, sewer, storm drain, golf, and sanitary. He noted the water and sewer master planning efforts are completed, water and sewer infrastructure replacement and expansion needs analysis is underway, sewer rate study is being conducted and a water rate study will begin, which will include conservation incentive recommendations. Cemetery improvements were substantially completed; golf course rounds continue to exceed estimates and includes advance funding for two years of debt payments in both years. In summary, Mr. Culver said the City is in a good financial position, the future is not without significant challenges as sales tax is low to moderate growth, retail competition is increasing, state take-away's were still a threat, health insurance costs continue to increase, the City was bringing on many capital projects, there are financing improvements for the balance of the Bernal property, and infrastructure maintenance and pre-funding retiree medical benefits. The Council agreed to hear the Capital Improvement Program budget prior to taking questions. Assistant City Manager Steve Bocian presented the CIP, said this portion of the budget deals with major one-time projects, there are no personnel costs and a number of dedicated funding sources. The first two years are funded, the final two years are for planning purposes, expenditures are estimated to be at $50 million for the four years, balanced against revenues of $66.8 million. He noted staff goes through an in-depth process in order to make recommendations to the Council and for this particular CIP staff worked hard to incorporate City Council priorities. They took the CIP to Commissions, who identified five projects of the highest priority. All except for the permanent ACE Train Station have some level of funding to them. Regarding revenues, Mr. Bocian presented how the $66.8 million was spread throughout the four years, described a pie chart on the many revenue sources, comparisons of CIP expenditures, listing of CIP projects, previously funded projects, listing of reserves, completed projects of the last CIP, new projects, and City Council priority projects. He said staff was requesting the Council adopt resolutions for both the operating budget and CIP. Councilmember Sullivan requested discussion on the longer term fiscal planning in looking toward build-out in the finalization of the City's general plan. Mr. Culver said they were in the process of finalizing along-range financial model, in conjunction with the general plan and land use modules, and it takes into account how the City will be changing over the next 10 year period in terms of residential and commercial and projects out the revenues and expenditures. It is generally in a positive condition in all years, but it needs to be updated with numbers City Council Minutes 9 June 19, 2007