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3) Current year revenues will match or exceed current year expenditures, loans and transfers (balanced budget). 4) Reduced costs and improved productivity will be implemented through the use of efficiency measures, or elimination/reduction/privatization of services. 5) It is assumed that normal revenue inflation will go to pay normal expense inflation. Any new or expanded programs will be required to identify funding sources or will be offset by cost reductions through cutting back or eliminating other programs. 6) Non -recurring revenues will be used for discretionary expenditures only. 7) Some governmental programs will be subsidized, such as those that have intrinsic quality of life value. 8) The costs of all internal service functions will be allocated to line departments. 9) When internal support charges are distributed to external service providers, it will be done on an equitable basis. 10) Proprietary fund (Enterprise and Internal Service Funds) activities must be self-supporting. 11) Capital improvements will be financed through the most cost beneficial method, including cash payment, private financing, public/private partnerships, direct charges, etc. 12) Financial management at departmental and project levels will be utilized to ensure control over expenditures. 13) All departments will know costs of services, monitor cost center trends, and continually evaluate their revenues and expenditures. C. Fund Balance Designations and Reserves Management 1) The City will maintain fund or working capital balances of at least 20% of operating expenditures in the General Fund and Enterprise Funds. This is considered the minimum level necessary to maintain the City's credit worthiness and to adequately provide for: (i) Economic uncertainties, local disasters, and other financial hardships or downturns in the local or national economy. (ii) Contingencies for unseen operating or capital needs. (iii) Cash flow requirements. 4742*JL 2