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j <br />CITY OF SAN LEANDRO <br />MEMORANDUM <br />DATE: January 8, 2008 <br />TO: Department Heads <br />Division Managers <br />Department Financial Managers <br />FROM: John J Jermanis, City Manager <br />SUBJECT: Fiscal Year 2008-09 Budget eparation Guidelines <br />We are at that time of year when we kickoff the development of the City's next fiscal year budget, <br />for 2008-09. Last year we worked well together at "holding the line" on cost increases, with <br />exceptions to required mandates and contract obligations. I would like to again extend my <br />appreciation to the employees and departments for their past contributions and program sacrifices <br />that have allowed us to maintain current operations. <br />During FY 2007-08, however, the City restored many previously reduced or cut services, built up <br />reserves and provided more for capital and maintenance projects. Unfortunately, our current fiscal <br />strength is being challenged by factors including the cyclical State budget deficit, the 911 fee <br />challenge, several lawsuits and the real estate slowdown which is reducing our projected real <br />property transfer tax and sales tax revenues. This combination of increased services (and costs) and <br />shrinking revenues could mean our expenditures/revenues balance may be negative in FY 2008-09. <br />Again, we ask your assistance in developing a responsible City budget which provides high quality <br />City services balanced against our ongoing budget challenges and limitations. <br />The State of California continues to struggle with its projected $14 billion deficit. How the State <br />proposes to resolve its shortfall and its impact on the City remains uncertain. As a result of <br />Proposition lA legislation, the City has gained additional protection against State "takeaways" but <br />may still be affected by changes to the way revenues are allocated to local governments. The State, <br />upon a proclamation of "severe fiscal hardship" and with 2~3 vote from each house, may propose <br />borrowing from City funds. This potential borrowing could begin in the 2008-09 fiscal year and <br />would need to be weighed against the long-term funding of City programs. <br />The FY 2007-08 year end projection process is critical to identifying potential savings and securing <br />program continuance. Each year our Fund Balance carryover is critically important in balancing our <br />budget. As a result, please apply greater emphasis when reviewing current year activity and in <br />developing your June 30, 2008 year end projections. Identified savings will be applied to the 2008- <br />09 Budget and provide greater security to existing basic programs from possible expenditure <br />reductions. <br />G:\BUDGE7~2008-09\Budget Manual\Budget Preparation Guideline Memo 1-8-08.docx <br />