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government finance require on -going adjustment to plans and projections. Property tax <br />"reform" may enhance and limit the future ability to use property taxes. <br />• Planning must account for the likelihood that the ability to levy general property taxes <br />will be subject to some focus of limitation in future year, such as Levy limits. <br />Other Revenues Policy: The City will endeavor to maintain a diversified and stable revenue <br />system to shelter it from short-run fluctuations in any one - revenue source. The City will <br />conservatively estimate its annual revenues by an objective, analytical process. All existing and <br />potential revenue sources will re- examine annually. The following considerations and procedures <br />will be used to comply with this policy. <br />• The total sum appropriated for the General Fund shall be less than the total estimated <br />revenue by a safe margin. It is the policy of the City that this "safe margin" be no less <br />than one to two percent (1 - 2 %) of the Proposed budget. <br />• Financial planning should consider the instability of intergovernmental sources and the <br />the limits and demands on property taxes. Therefore City must continue to make effective <br />use of fees, charges and other non -tax revenues. <br />• Planning must recognize the relationship between finance and community development. <br />Significant fee revenue associated with redevelopment and commercial expansions <br />should not be considered reoccurring in nature. Given the City's substantially developed <br />status the revenue from development related charges, such as building permit and plan <br />check fees should be based on reasonable levels of repairs and renovation activity so as <br />not to build in non - sustainable new construction revenues in the Levy. <br />• The City will establish all user charges and fees for General Fund program activities at a <br />level related to the cost of providing the services, or as adjusted for particular program <br />goals. Each year, the City will review the full cost of activities supported by user fees to <br />identify the impact of inflation and other cost increases and will review these fees along <br />with the resulting net property tax costs with the City Council at budget time. <br />• Transfers shall not be used as a source of revenue in order to balance a shortfall in <br />another fund. <br />Utilities Revenue Policy: User fees that support utility enterprise operations or other enterprise <br />operations will be established at a level sufficient to fund operating costs and provide for a <br />reasonable level of replacement cost for infrastructure and equipment. Enterprise operations will <br />be managed as financially self - supporting services that should breakeven on a cash basis. The <br />following considerations and procedures will be used to comply with this policy. <br />• All utility rates should be adjusted on an annual basis to account for inflation. An annual <br />rates review of neighboring cities with similar utility systems will be done to confirm that <br />the City's rates are at a competitive and reasonable level. <br />• Replacement (or bonding for replacement) of enterprise infrastructure will be paid for <br />from accumulated (or annual) earnings of the particular system via the water sewer <br />capital replacement fund. <br />• A transfer of equity from an enterprise fund to the General Fund should only be done in <br />extreme circumstances to fund an unusual, unanticipated expense. In no event shall such <br />2 <br />