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7.A - Page 23 personal taxes, limiting deductions for state and local income taxes, and limiting mortgage interest deductions. The effect of the new legislation could spur economic growth. It is also expected to significantly increase the federal budget deficit. The Congressional Budget Office estimates that the deficit will increase nearly $1.5 trillion over the next ten years. Efforts to balance the federal budget will most likely include cuts in expenditure programs, which in turn, could put a greater burden on state and local governments to fund these programs. It is worth noting that the City expended, or passed -through to community partners, a total of $2.6 million in federal funding in FY 2016-17. The President's proposed budget includes reductions to CDBG and HOME funding, as well as the elimination of funding for 21 st Century After School grants. Higher costs of issuing debt are another likely outcome of the federal tax reform. Banks and other large investors will see a decline in their income tax rates. Municipal (tax- exempt) bonds could become less attractive because investors will not need to shelter as much income from taxes as before. Therefore, issuers like the City may have to offer higher interest rates to make their offerings more attractive. The new law has also removed the option of employing the technique of advance refunding of outstanding debt in order to take advantage of a favorable interest rate environment. (Advance refunding is a refunding that occurs more than ninety days prior to the call date.) The City has participated in advance refunding of wastewater bonds in the past. This tool is still available but the resulting interest income on these bonds would then be taxable to the investor, thereby eliminating the tax advantages of investing in municipal bonds. While the discussion at this point is mostly speculative, there are also some economic factors, such as a significant decrease in the municipal bond market supply, which could offset some of the expected negative impacts of the new tax laws. Update on Goals Implementinq Strateqic Initiatives The City's seven Strategic Initiatives are: Community Building and Communication; Community for All Ages; Economic Development; Government Operations; Housing; Public Safety; and Transportation. These initiatives continue as enduring statements of the critical, ongoing work of the City to accomplish the mission of Building a Great Community Together, and clearly describe the City's overarching priorities and goals. The goals are used as a framework for guiding alignment of department objectives with the City Council's vision. The City's seven strategic initiatives and their corresponding goals for the fiscal year are included in the City's annual budget document. Progress on the fiscal year goals for each initiative is now