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total costs associated with the position. A police officer position is being held open until at least the middle of next year. This position could be postponed for the entire year if necessary. The savings created from this decision would result in a savings of $35,000. The savings created by postponing the hiring of these positions will help offset the potential loss of LGA. Franchise Fees: In my "one on one" discussions with the Councilmembers, I suggested placing this topic on the list of policy topics for the near future. Generally the Council seemed open to this course of action. I believe the Council understands the impacts of repealing the Franchise Fee during the next three years. There were increased fee charges that occurred this past year, however they were not due to franchise fees. They are for the costs of undergrounding / burying of powerlines. This temporary fee was charged on the Xcel bills to our residents and will last for 12 months. It is one of the two undergrounding phases along Highway 8. Undergrounding / burying of powerlines is endorsed by Section 7-126 of the city code which finds this activity to be in the City's interest. General f=und Budget Recommendation: Direct staff to prepare for the Truth and Taxation Hearing and final budget adoption based on the City Manager's 2009 budget and tax levy. Additionally, direction needs to be provided on council salaries and health insurance. The salary decision, as mentioned earlier, will not affect the 2009 budget, providing health insurance to the Council would have an affect on the 2009 budget. Utility Rates The annual Utility Rate Analysis was reviewed previously at the worksession. Finance Director Dan Maiers presented a different perspective for assumptions for inflation per my request. Various "what if' scenarios were reviewed as requested by Councilmembers. The emphasis and objective of the model is to ensure the long-term financial stability of the City's utility funds. We will continue with the same long-term approach and policy as used in the past, that is, striving to provide a stable, dependable rate structure, providing for the maintenance and replacement of the capital assets & infrastructure and to keep a minimum cash balance. Projections will be used in an attempt to keep cash balances within established parameters while accepting short-term variances. I felt that it was an effective discussion in that various scenarios were explored, the Council appeared to gain a better understanding of the rate modeling and overall policy direction was received and confirmed. Policy Position on Utility Rates: Establish utility rates under the following conditions 1) minimize the volatility of the rates, 2) consider adjustments to rates (up or down) in light of the long term (10 years or more) affects on utility rates and 3) maintain a fund balance that is not lower than the targeted fund balance. H:\ om pondcncc\City Council\Budget and Policy\Budget and Policy Directives with Dan.doc