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<br />7A <br />Page 2 <br /> <br />AFFIRMATION OF CITY COUNCIL DIRECTION <br />DEVELOPING A BALANCED BUDGET <br />DRAFT Summary of Feb. 23, 2009 City Council Study Session <br /> <br />GOAL STATEMENT <br />We must balance the City's General Fund revenues and expenditures by Fiscal Year <br />2012/13 to achieve long-term sustainability. <br /> <br />COUNCIL'S BASIC FISCAL ASSUMPTIONS FOR FY 2009/10 <br />1. The City/s General Fund budget has an increasing structural deficit, which is being <br />exacerbated by the current recession. Annual deficits are projected to range from $4.3 <br />to $6.9 million through Fiscal Year 2011/2012 or 4.8% to 7.9% of annual revenues. <br />2. Property Tax growth: Adjusted down to 3% annually. <br />3. Sales Tax growth: Negative from FY 07/08 to FY 08/09" flat in FY 2009/10. <br />4. Hotel Tax growth: 10% decline in FY 08/09" and overall growth is expected to be flat in <br />FY 09/10. <br />5. Development revenues: Updated to reflect current anticipated projects. <br />6. No effects of resolution of State budget or Federal stimulus on GF. <br />7. These assumptions are subject to change and refinement. <br /> <br />DIRECTION FROM CITY COUNCIL <br />1. Use reserves over four years to arrive at a sustainable" balanced GF budget" beginning <br />with covering 100% of the deficit in FY 2008/09. <br />2. As a starting point, use reserves to cover 33%" 25%1 and 10% of shortfalls in subsequent <br />three fiscal years, and plan for no further use of reserves by 2012/13. <br />3. Retain flexibility in the level of reserves usedl for response to opportunities. <br />4. Given the uncertainties ahead, Council would be most comfortable not going below 18% <br />of annual GF revenues as the minimum reserve level. <br />5. Discuss amount of subvention with Port Commission. <br />6. Bring Council Finance Committee recommendation(s) for revenue enhancements <br />forward with recommended budget: Start with proposed business license tax increase. <br />7. Explore modification of existing funding plan for retiree health benefits. <br />8. Provide sufficient expenditure (reduction) options and information for Council <br />consideration. <br />9. Make recommendations for reductions with room for flexibility and further discussion. <br />10. Provide report on Parking Fund expenditures and operational modifications I <br />efficiencies (via the Council Downtown Committee). <br />11. Explore long-term opportunities for shared services / resources with other cities. <br />12. Consider enterprise fund budgets in same light as General Fund: Remember that city <br />utility bills will be affected by rising costs of regional water supply and waste water <br />treatment. <br /> <br />1 of 2 <br />