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4O Mr. O'Connell said that if the interest income is increased by $250,000 then he would like to cut an equivalent amount in the budget. Mr. Cox said he has been hearing fi`om people about taxes going up and the surplus, and feels it is hard to build an argument that the tax rate cannot be lowed by one cent. Mr. Cox said he would support decreasing the capital budget. Mr. Toscano asked where $250,000 could be cut in the budget. Mr. Caravati said he would support reducing the merit pay increase by 1%, use the interest income this year and reduce the rate more next year. Mr. Cox said he would support reducing the merit pay increase. Ms. Richards said that the real estate tax is the City's only non-volatile revenue source and she is very hesitant to cut the rate and substitute it with interest income. Mr. Toscano said that if there is support for cutting the tax rate, he recommends that it be discussed at Council's retreat so that the City Manager can be instructed to find $500,000 to cut in the FY 01-02 budget. Ms. Daugherty said she thinks the City should study increasing fees in the future, but does not feel it is something that can be done now. Ms. Richards said that equity issues need to be looked at with regard to increasing fees and reducing the real estate tax as some low and moderate income citizens may end up paying fees that are higher than their tax decrease would be. Ms. Richards noted that the City has tax relief programs for low income residents. Mr. Toscano said he feels that the tax cut would benefit -wealthier property owners, and decreasing the pay for performance pool would be funding a tax decrease on the backs of Police, Fire, Social Services and other City employees. Ms. Richards noted that an average homeowner in Fifeville would save $t2 with a two cent tax cut, and a large property owner would save $10,000. Mr. Caravati said he is more interested in the signal that cutting the tax rate would send, and feels it would generate additional economic development. The majority of Council agreed to maintain the current real estate tax rate. It was the. consensus of Council to increase the interest income by $250,000 and designate it for the capital fired. Additional Fnnding with Council Reserve Regarding the request by the Bayly Art Museum for art festival funding, Mr. O'Connell suggested that Council ask to look at their proposed venues for the event. Mr. Caravati said he would like to make an argument not to fund the Bayly Festival, and instead suggested that it form and then have them request funding from the City and County next year. Mr. Cox said he is more in favor ofnot increasing the Festival ofthe Book and funding the Bayly Festival as he would rather nurture something new. It was agreed to give the Festival of the Book an additional $3,000. It was agreed not to fund the Bayly Art Festival.