CC MIN 2013-06-03 Joint w/ Successor

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8. STAFF REPORT(S) - None. 9. BUDGET STUDY SESSION I (501) - City Council/Successor Agency Board 7:25 p.m. City Manager Dr. Beli presented a report regarding the Fiscal Year 2013-2014 budget proposal. This is the second year of a 2-year budget process. Most of the changes in the budget dealt with various reorganizations. Before he went into the details, he brought up the City's aging workforce and he's anticipating the anticipation of retirements. Dr. Bell then addressed each reorganized department and showed the advantages and fiscal benefits (presentation on file). He then expanded on the employee cohorts and organizational efficiencies. Finance Director Ponty made a presentation on the General Fund Reserves and Educational Revenue Augmentation Fund (ERAF) projections. He provided an update on the property taxes and revenue taxes and that these will be tied to the economy in the next few years and that they are the general drivers as the City's source of revenue. He mentioned that it is anticipated that sales tax revenues will also increase. He alluded to the taxability of electronic software. One Council Member brought up other revenues and taxes and what those were. Finance Director Ponty said that it was a combination of revenue such as revenues from other government agencies grants, franchise fees, building permits, etc. He then discussed expenditures, such as the increase in salaries, which overall are 3% more than the prior budget and it includes the City's various reorganizations. Mr. Ponty mentioned that Public Safety has the largest expenditures due to their 24/7 operations. He also discussed City services and employee costs. Mr. Ponty then highlighted the general fund assumptions in the next five years in that property, sales, and transient occupancy taxes. He doesn't see any negative impacts from the federal or state government but that is hard to predict. But, Mr. Ponty said that in FY15-16 he anticipated serious increases in employer retirement contributions and this could be around $3 million in additional costs. He also provided specific information on the Public Employees Retirement System (PERS) contributions. He addressed the assumed rate of investment return and impacts to the general fund. He added that PERS is researching the mortality assumptions. Their report will become public next spring and would go to the PERS Board for approval. Mr. Ponty said that these are estimates and not exact figures. He then spoke about the ERAF refunds and mentioned that there are two broad proposals in the State budget that could affect the City. The first is the increase of school revenue limits and the second is to get rid of categorical grants. Mr. Ponty said that the County of Education is urging the City to be cautious. JOINT CITY COUNCIL/SUCCESSOR AGENCY BOARD June 3, 2013 MEETING MINUTES PAGE 6 MINUTE BOOK NO. 64 Page No. 366