AgdaPkt 2003-02-03 - Laserfiche WebLink

Browse Search

<6.P - a- To the extent the City is able to reduce ongoing expenditures this fiscal year, such reductions will "carry over" and reduce the projected operating deficits in future years. Potential State Impact Vehicle License Fees - The Governor i s p roposing t hat t he s tate a liminate t he Vehicle License Fee (VLF) "backfill" that the state committed to in 1998 when it began reducing the VLF paid by vehicle owners. Should this proposal be implemented, the City's projected deficits would be as follows: All Figures are Deficits FY02 /03 FY03 /04 FY04 /05 Deficits without State Action 3.5M $5.3M $9.4M Loss of VLF Backfill 1.5M 3.3M 3AM Total "Worst" Case 6.8M 8.6M 12.8M Percentage of Revenues 11.2% 13.3% 18.7% Redevelopment Agency- Although the Governor has proposed several amendments to redevelopment law which would adversely affect the Redevelopment Agency's (RDA) finances, the proposals lack sufficient specificity at this time to allow staff to prepare an accurate forecast. In very general terms, the RDA could find its ability to issue debt restricted or eliminated and /or the RDA's annual tax increment revenue could be reduced. While the RDA is in fact a separate legal agency, any adverse impacts upon the RDA's finances could quickly spill over to the City's general fund. If the RDA's ability to issue debt is restricted or eliminated, the City's general fund would then be the only likely source to issue bonds for the cinema project parking garage. Within the general fund, the only source of funding would be the City's utility users' tax. This would then require the City to eliminate or defer almost 1 /2 of the capital projects that are funded annually from the City's utility users' tax so that sufficient funds could be appropriated to make the debt service payments for bonds issued to finance the parking garage. If the RDA's revenues decline and it is unable to finance its current operations, the City's general fund would then need to a bsorb t hese c osts i f t he C ity C ouncil desired to continue the RDA's programmatic activities. Potential Solutions Staff is recommending a five -prong approval to deal with the deficit: Reduce Expenditures Inasmuch as over 2/3 of the City's expenditures are for salaries and benefits, any reductions will likely translate into fewer employees and a loss of service levels to the community. Use of Reserves The City began the yearwith $17 million in reserves and will probably end this yearwith less than $13.5 million in reserves. The use of reserves will allow Council to take some time to find long -term solutions. Reserves are a legitimate part of the solution;