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City Manager Everett stated that staffs role was to submit a policy document with recommendations to the Council based on the organization's values and Council policy directives which will give the Council the opportunity to make choices to achieve a balanced budget. City Manager Everett described the Five-Year Budget Projection document prepared by staff, and its purpose as a tool to be used for making choices in the FY 1995/96 budget to prevent financial woes in the future; it was not a permanent projection of the City's financial future, but a very conservative scenario of what possibly could happen if the status quo was maintained. City Manager Everett advised that these statistics and projections incorporated in the Five-Year Budget Projection will change continually as new economic indicators and government released financial performances are released, and as the City makes new budgetary choices. Finance Director Ponty presented a series of overheads illustrating the past, current and projected economic conditions for the San Mateo/San FranciscolMarin Counties, grouped together as a primary metropolitan statistical area: job growth statistics; median home prices; building permits; general fund revenues; general fund expenditures; sales tax revenue; property tax revenue, building permit revenues, transient occupancy tax; and the Five- Year Financial Plan Assumptions. Finance Director Ponty elaborated on the projected inflation and sales tax growth rates, and answered Council questions regarding apparent anomalies in the reported revenues and expenditures as represented on the overhead graphs. City Manager Everett asked Council not to focus too much on the specific numbers, but focus on the trends that Director Ponty's presentation identified. City Manager Everett stated that the growth and spending of the '80's are gone forever. He added that with careful planning the City has ample time to make necessary adjustments to strategically plan for the future economic stability that this City has enjoyed and will continue to enjoy. City Manager Everett noted that the state's $3.4 million takeaway is about the amount of the projected deficit (a deficit that will not occur with Council's prudent fiscal policy decisions in the FY 1995/96 budget.) City Manager Everett advised that the trends indicate change is needed which will involve mergers, consolidations and new partnerships, and reviewed the recommended guidelines as listed in his subject report. 1. All departments will develop a base line budget (without any new programs or service levels.) The departments will develop their budgets and justify all cost increases whether those are above or below the expected 2.7% inflationary factor. -~ MINUTE BOOK NO. 53 Page No. 086 Special Council Meeting Minutes March 6, 1995 Page 2