AgdaPkt 2009-12-14 - Laserfiche WebLink

Browse Search

6.1 B - Attachment No. 4 California Public Employees Retirement System(Ca1PERS) CaIPERS incurred portfolio losses of 5.1% and 24% in FY 2007/08 and FY 2008/09 respectively. The combined effects of these losses, in conjunction with the expected annual returns of 7.75%not being met, has been to reduce the funded status of the retirement system by almost 45%. As a result the Ca1PERS governing board has approved change that includes the use of a temporary smoothing method to phase-in the impact of these losses over a three year period. Ultimately, however,the City's employer contribution is expected to increase by 4.8%for non-safety employees and 8.5% for safety employees for an extended period of time. The impacts of these higher retirement system contribution rates have been factored into the City's long-term financial projection model. State of California The State of California has been battling chronic structural deficits for the past several years through reductions in program expenditures, short-term borrowing, one-time only revenues, and by reducing revenues traditionally made available to local governments. Until the State is able to balance on-going revenues and on-going expenditures local governments will remain at risk of having certain revenues eliminated or reduced. Part of the State's adopted FY 2009/10 budget includes shifting $2.05 billion from Redevelopment Agencies in California to the State in FY 2009/10 and FY 2010/1 l. Redwood City's Redevelopment Agency expects to lose about $3.56 million in FY 2009/10 and $733,000 in FY 2010/11. The California Redevelopment Association has filed a legal challenge to this shift. The matter is expected to be decided by the courts before the end of FY 2009/10. Also, during the State budget negotiations this past summer a proposal was made to reduce the highway users' t� subventions to local governments in FY 2009/10($971 million)and FY 2010/11 ($750 million). This proposal was removed from the State budget before it was approved by the State Assembly. Redwood City would have lost$1.2 million in highway users' tax revenues in FY 2009/10 had this proposal been included in the adopted State budget. This proposal could resurface in future proposed State budgets. Downtown Parking Operations With the opening of the downtown cinema/retail complex in 2006 along with the 590 space underground parking garage that is owned and operated by the City, the parking enterprise fund that was formerly financially self- sufficient now requires an annual subsidy from the City. In FY 2009/10 the City expects to transfer $1,000,000 from the general fund to the parking fund to support the parking fund's operations. The length of time that this subsidy continues and the extent to which it continues are a function of how quickly paid parking activity in the downtown area increases and whether such increased demand will justify increased parking fees. It is expected that some level of general fund financial support to the parking fund will be required for the indefinite future. Sales Tages Sales t�is critical general fund revenue as it accounts for about 20%of total general fund revenues. As a result of the pullback in consumer expenditures locally generated sales tax in FY 2008/09 was down $2.6 million or 14.3% compared to FY 2007/08. About 58% of this decline is attributable to the transportation sector (auto sales, auto parts, and service stations)while about 23%of the decline stems from the general retail sector. The City continues to rely heavily on sales t�generated by businesses engaged in selling software. A threat to this revenue stream is the progressive migration of businesses delivering software to their customers electronically (via Internet download or over dedicated phone lines) which then, under regulations adopted by the State of California Board of Equalization,provides that such products are no longer subject to sales tax. Costco, a major big box retailer and one of the City's larger sales tax generators, replaced their former 121,400 square foot store with a 160,000 square foot store and added a gas station with 12 fueling stations. Construction began spring 2009 and was completed by the end of October 2009. This welcome expansion is expected to generate additional sales tax revenue for the City. iii