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~~~ y\ ~f~-_y~~= .~o~ ', " - `! City of San Leandro ~`~,.o A-,t~°'/ Quarterly Performance Report Ending December 31, 2007 EXECUTIVE SUMMARY GENERAL OVERVIEW AND ECONOMIC OUTLOOK General Fund Revenues and Expenditures. At the mid-year point the pressing question on everyone's mind is, are we in a recession. In staff's view, the question is academic as we are unquestionably experiencing an economic slowdown. The impact to General Fund revenues has been significant and immediate. For example: • Sales tax revenue has slowed significantly and is not expected to meet budget for 2007-08. Staff is now estimating annual revenue at $22.6 million, down from $24.7 million, a shortfall of $2.1 million. • The Real Property Transfer Tax has also slowed and is not expected to meet budget. This revenue is directly tied to real estate activity in San Leandro. The recent downturn in the real estate market has caused staff to change this revenue estimate from $5 million to $3.5 million, a shortfall of $1.5 million. • The Utility User Tax has also been reviewed by staff and based on collections to date the revenue estimate is being dropped from $10.6 million to $10.1 million a shortfall of $500,000. • All other revenues are generally on budget. • Based on the reductions noted above the General Fund could experience a revenue shortfall for 2007-08 of approximately $4.1 million On the other hand, a review of General Fund expenditures indicates that actual expenditures are in line with budget and that the General Fund may experience a salary and benefits savings for the year. Staff anticipates that such a savings could be 1% to 3% of the salaries and benefits budget and could range from $800,000 to $2.3 million, but is most likely in the $800,000 range. Also, for the year ended Tune 30, 2007, the City was able to establish reserves at the Council directed levels of 20% of Operating Expenditures, or approximately $15.5 million. These funds could be used to address revenue shortfalls in the current or subsequent years. All Other Funds At the mi~~year point the City's Major Special Revenue and Enterprise funds are on target for revenues and expenditures. Staff will continue to monitor all funds, but does not anticipate any significant departure form either the revenue or expenditure budgets. As noted earlier, these funds are discussed in greater detail in the Detail Operating Activity section.