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In response to Council questions, City Manager Everett advised that barring anything unforeseen, City departroents will close the fiscal year with a positive fund balance. Director Ponty presented an overview of the state and local economies using graphs to show the state of California economic recovery: net job growth in nonfarm employment; a positive housing recovery with a projected growth of just over 100,000 permits issued, although far ITom the 1988 level of 250,000 permits; personal income will expand in California faster than the rest of the nation; economic indicators are beginning to look bullish with low inflation, and with Redwood City increased taxable sales projections around 3.5%; and average incomes are increasing, but in San Mateo County the largest increase was in the upper income bracket rather than overall growth. Director Pouty explained the significance of retail sales to Redwood City, 29% of Redwood City's revenue comes ITom sales taxes, and described the factors offsetting retail sales: income, interest rates, consumer optimism, national economic trends and demographics (baby boomers are beginning to spend less and save for retirement.) 2) Five year financial picture Director Ponty referred to the "Five Year Financial Projection Assumptions, February 5, 1996" he distributed. These assumptions had been previously discussed with the Council at their workshop on January 13, 1996. Council Members reminded staff about the additional Library Media Specialist's position they had approved for the new partnership with the Chamber and the School District (which was included in the assumptions), and advised they wanted the matter of a fire station in the Redwood Shores neighborhood to be part of the budget guideline process scheduled for the Council meeting of February 26,1996. MEMO 2/6/96 3) Calendaring of budget review dates The Council established the following dates to review the budget: Council meeting of Monday, June 17; a special morning session of the Council on Saturday, June 22; and the Council meeting of Monday, June 24. MEMO 2/6/96 4) Establish a 2-year budget on a trial basis: Council Members expressed their concern about a 2-year budget cycle, citing the previous Council's feeling that a 2-year budget cycle reduces the Council's control and policy making options. City Manager Everett advised that he was aware of the problems that developed in the past and the staff would not make those mistakes during the proposed 2-year trial. MINUTE BOOK NO. 54 Page No. 064 Special Meeting Minutes February 5,1996 Page 12