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8A the previously approved $5.00 for cost recovery) which will generate arfage 4 estimated $75,000 in annual revenues. The clear advantage of this option is that - absent any other changes in revenues - it lowers projected deficits in FY 2010/11 through FY 2013/14 to less than 20/0 of revenues in each year: A manageable level of imbalance, and a closer trajectory to long-term fiscal sustainability. The disadvantage is that the reductions in services and staff positions will adversely impact the community and require more employee lay-offs within the next five months. (Refer to Attachment 1 - Five-Year Projectionsl Sept. 2009 Revision - and the three scenarios describing 1) pre-state take-a ways - adopted budget; 2) post- state take-a ways; and 3) post-state take-a ways with matching expenditure reductions) 2. Participate in the State's [pending] Proposition 1A "Securitization" Program, which could in turn offset the need to implement some or all of the expenditure reductions described in option 1 above. Based on the most current information available, agencies will need to decide whether to participate in this program by October 28,2009. Advantages of participating: a. Could alleviate doubts about the State's ability or willingness to make the required 1A payments before June 30, 2013; b. The City would conceivably be able to receive substantially all of the $2.9 million that will be taken this year - within the fiscal year; c. The City needs the liquidity (cash versus a receivable). Disadvantages in participating: a. Staff expects the State to pay cities a higher rate of interest on the $2.9 million than the City could earn through its pooled investment program (the interest rate that the State will pay agencies is scheduled to be announced on September 28, 2009). b. Deciding to opt out of participation would mean that the City Council has no reservations about the State's willingness or ability to repay the 1-A borrowing before June 30, 2013, and finds that liquidity can be managed throughout the 3-year period. (See Attachment 3 - Analysis of Proposition 1 A "Securitizationll Program) 3. Consider whether the Council wants more information brought back about increasing Parking Fund revenues by increasing hourly rates for parking. Staff has estimated that a range of annual revenue increases between $200,000 and $700,000 is possible, based on current activity levels in the Downtown. If the Council chooses to explore this option, staff recommends that the Council refer this item to the Council Downtown Committee and staff for exploration, vetting and formation of future recommendations. 4. Council could decide to take no actions in response to the State's actions to date, and rely solely on the use of additional reserves to balance the FY 2009/10 budget. As of this time, the known change in the outcome of FY 2009/10 is the loss of $2.9 million in property tax revenues to the General Fund. Should the Council take no further action now or before June 30, 2010, the City's reserve balance is estimated to be $12.3 million (15.50/0 of revenues) instead of the originally projected $15.2 million (19.1 % of revenues). Absent any other changes