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7 0-3 <br />Scenario B <br />FY 02/03 <br />Estimated deficit $3.5M* Expenditure cuts = 33% of deficit <br />Draw down from reserves = 66% of deficit <br />FY 03/04 <br />Estimated deficit $6.3M* Expenditure cuts = 50% of deficit <br />Draw down from reserves = 50% of deficit <br />FY 04/05 <br />Estimated deficit $10.4M* Expenditure cuts = 66% of deficit <br />Draw down from reserves = 33% of deficit <br />FY 05/06 <br />Estimated deficit $14.3M* <br />Expenditure cuts = 100% of deficit <br />No use of reserves <br />Scenario C <br />FY 02/03 <br />Estimated deficit $3.5M* <br />Expenditure cuts = 33% of deficit <br />Draw down from reserves = 66% of deficit <br />FY 03/04 <br />Estimated deficit $6.3M* Expenditure cuts = 67% of deficit <br />Draw down from reserves = 33% of deficit <br />FY 04/05 <br />Estimated deficit $10.4M* Expenditure cuts = 67% of deficit <br />Draw down from reserves = 33% of deficit <br />FY 05/06 <br />Estimated deficit $14.3M* Expenditure cuts = 100% of deficit <br />No further drawing down from reserves <br />( *Please note we have shown the deficit each year as if we have not made ongoing <br />expenditure reductions the previous years for ease of analysis.) <br />There are obviously an unlimited number of combinations or possibilities. Staff has chosen <br />three that seem most logical to us. <br />Reserves <br />The Council developed reserves for two primary reasons: a) to handle a major natural <br />disaster /crisis, and b) to help soften any economic recessions. Your policy is to have the <br />reserve fund fluctuate between 15% to 20 %. So the important question is what do these <br />three scenarios do to our reserve fund at the end of this four year period, i.e., June 30, <br />2006? <br />Page 3 of 5 <br />