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economy and a belt tightening approach to city operations; and incorporate the goals and objectives of the Council as reflected in their Work Plan. Mr. Fialho noted that while Pleasanton is in a better fiscal position than most communities, it is not immune to the influence of the State and national economies or the potential impact of the State budget. Director of Finance Dave Culver explained the adjustments in greater detail and noted that the recommended actions do not call for reductions in services and are consistent with adopted fiscal policies. He outlined $4.9 million in revenue reductions, the 10% reserve adjustment of $470,000, and the offsetting $4.4 million in expenditure adjustments comprised of reductions in replacement plan contributions, position vacancies, department budget adjustments, and updated charges to enterprise funds. Councilmember Thorne asked if the $43,590 in updated charges to enterprise funds represents real money for the General Fund. Mr. Culver explained that the General Fund currently bears 100°/0 of the cost for the Economic Development Fiscal Officer. Staff has decided that as the position is tasked with developing water and sewer rate increases, it is appropriate for the enterprise fund to carry 20% of the position's cost, or $43,590. Councilmember McGovern asked if the Replacement Plan contributions adjustment will result in a delay of replacements that might otherwise have been done sooner. Mr. Culver explained that the Replacement Plan involves various sinking funds with a collective balance near $25 million. Staff is suggesting that the City reprioritize its expenditures over the next four years so that equipment in good operating condition with an existing warranty is not injudiciously replaced. Councilmember McGovern questioned and confirmed that adjustments are being made, based on the economy, to postpone the replacement of equipment to a later date than would have occurred under normal circumstances. Councilmember McGovern questioned if the position vacancy target is a calculated number, and Mr. Culver confirmed and further explained that it is seven positions plus some additional hours on a part-time position. Councilmember McGovern asked and confirmed that this adjustment does not affect overtime payments. Councilmember Sullivan referred to the Replacement Plan, adding that it is the basis of the City's sustainable budget, and asked if the contributions reduction is a short or long-term strategy. Mr. Fialho said that it is too soon to tell, but staff is also anticipating a decrease in the contributions made to the plan in the next two-year budget. He noted that it is not uncommon to make lesser contributions to that plan. Mr. Culver noted that this is an important financing tool that most cities do not have available and explained that as this is a twenty to thirty year replacement plan, the City can increase contributions in times of positive cash flow and conversely curtail them in times of economic uncertainty. Councilmember Thorne expressed concern that there is not an established balance threshold on the reserve and Councilmember McGovern agreed, stressing the importance of the fund's availability should a high ticket item need replacement. Mr. Culver reviewed the operating transfers to the Capital Improvement Program, including a $5 million annual transfer from the General Fund and cone-time transfer of $3 million to the CIPR. City Council Minutes Page 4 of 11 January 20, 2009