AgdaPkt 2009-10-19 - Laserfiche WebLink

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REPORT 78 age 1 To the Honorable Mayor and City Council From the Ci Mana er October 19, 2009 SUBJECT Budget direction for Fiscal Year 2009/10 General Fund amendments RECOMMENDATION Assuming City Council approval to participate in the Proposition 1 A Securitization Program as recommended in a separate, preceding staff report on this date, by motion, direct staff to return to Council on Nov. 9, 2009 with a resolution implementing budget reductions described as "Package 1" herein, and equal. to $943,715, plus additional parking citation revenues of $75,000, for a total deficit reduction of $1,018,715 on an annualized basis. BACKGROUND On July 13, 2009, the City Council approved the Fiscal Year 2009/10 general fund budget. Included in that budget were reductions totaling $4.2 million to reduce the projected general fund deficit. Moreover, this budget also included $1.3 million of salary savings as a result of all City employee bargaining units agreeing to forego salary increases in FY 2009/10. Despite the reductions and salary freeze the adopted FY 2009/10 budget still contains a $2.9 million projected operating deficit, which Council intends to close by utilizing reserves. On July 28, as part of its adopted FY 2009/10 budget, the State of California elected to "borrow" $2.0 billion of property tax dollars from cities, counties, and special districts by suspending proposition 1A and shifting property taxes from these entities to purposes that directly benefit the State. Redwood City's share of this borrowing is about $2.9 million. Also included in the legislation that provided for the FY 2009/10 State budget was a provision to allow entities that are affected by the suspension of proposition 1A to sell the "receivable", or amount that the State is required to repay in FY 2012/13, so that they will not be adversely affected by this borrowing. While this legislation is very helpful it is, however, incomplete and requires additional legislation, or clean-up legislation, so that the sale of the receivables may proceed. On September 14, 2009, staff provided Council with a menu of further potential expenditure reductions to offset the $2.9 million shortfall in revenues due to the suspension of proposition 1A. Proposition 1A securitization clean-up legislation had not yet been enacted at the time of the September 14th meeting, and Council asked staff to bring back more information at the October 19th meeting, as a tool to assist in bridging the $2.9 budget gap and potentially allow for fewer reductions in City services, programs and staff. At the September 14th meeting, Council further directed staff to bring back four expenditure reduction packets ranging from $1 million to $2.9 million to mitigate the projected, further erosion of revenues. In preparing for the potential budget reductions presented to Council on September 14th and in preparing the reduction packages presented in this report, the executive team met for many hours over several weeks' time. The deliberation process in developing