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think this represents a more accurate manner in which development will occur particularly in the Redwood Shores area." Director Ponty said it was obvious the business to business sales tax would not again reach the high established in the 2nd and 3'd quarters of 1996, but some of the gain would remain. "That base will continue throughout the next four or five years, which has increased our sales tax revenues. Also, our property tax has gone up a lot higher than we expected. The County Assessor is now reassessing a lot of the homes that were reassessed downward during the recession, and under law he can bring those back up to the values they were before they were decreased. This year, FY 1997/98 we are seeing about a 4.6% increase in property tax assessments which gives us a stronger base going into the out years. That also was an unknown when the two-year budget was prepared.. .. As the economy has expanded we can now factor some of that good economic news into these projections." City Manager Everett said, "Even 18 months ago we projected a potential deficit this year, which we said we would have to adjust for in 1997/98, and as you can see we are basically balanced this year." Director Ponty showed an overhead of the Uses of Net Increases in Revenues for 1997/98. This graph showed what is being factored in currently versus what was included a year ago, "a net increase in general fund revenues... of $1.4 million." The uses for that net increase appear in the Budget as follows: Paramedic Training start up costs $321,000 Covering NPDES $469,000 Changes to MOUs $ 80,000 New Fire Engine $ 31,000 Maintenance Facility $ 12,000 Miscellaneous $ 10,000 Projected deficit for 1997/98 $235,000 Those increased expenditures will now be covered by the projected increased revenues from sales tax, property tax and transit occupancy tax. City Manager Everett explained that the increased sales and property taxes enlarge the revenue base which is used for out year projections. "You not only get the one time jump that you see, you get an on-going benefit, because you are projecting from the larger base each year. That is why we have gone from almost minus one point something million to looking at year five now, and it is basically in balance. $200,000 is so small compared to our budget, it is basically in balance." In response to Councilman Claire's questions regarding Page 15 of the Report and the projected increase in sales tax, Director Ponty referred to the Sales Tax by Economic Category which showed an increase in business to business sales from $2.5 million to $3.5 million. "We have also seen an increase in our general retail transportation was ADJOURNED REGULAR COUNCIL MEETING MIWJTE BOOK NO. 55 JUNE 23,1997 MINUTES Page No. 412 PAGE 10