4A Public Hearing 2011 0606 - Laserfiche WebLink

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FY 2011 -12 Budget June 6, 2011 BACKGROUND The City Manager's Proposed Budget for FY 2011 -12 was presented to City Council on May 16, 2011. The budget represents the City's fundamental financial planning and communications tool, describing how resources are allocated to implement Council policies, as well as providing the legal basis for the expenditure of public funds. Overall, the expenditure budget proposed for FY 2011 -12 totals 5120.8 million. The City's General Fund accounts for 571.8 million, the Redevelopment Agency $14 million, Enterprise activities (Water Pollution Control, Environmental Services, Shoreline Fund and Storm Water Fund) 512.3 million and all other activities $22.7 million for 2011-12. The General Fund budget is operationally balanced for the first time in several years — without the further use of the City's Reserves. This is significant after years of operational shortfalls and the depleting of our reserves. In the face of recession- driven revenue losses, the City has made difficult choices that include drastic reductions in personnel, furloughs, and other labor concessions. We have reduced the General Fund budget by almost 59 million from FY 2008 -09 levels, including a 20% reduction to our workforce. However, the City would have faced even greater reductions if not for the infusion of new revenue from Measure Z, a temporary, quarter cent sales tax measure approved by over 60% of the voters in the November 2010 election. Measure Z's passage will bring in about 53.6 million annually in additional revenue, allowing the City to maintain existing service levels and begin to replenish reserves. Even with our reductions in staffing and services, Measure Z's passage, and the beginnings of an economic recovery, we still face economic challenges. Indeed, our five year forecasts for all funds show that sustaining balanced budgets in subsequent years will be difficult. Budget preparation, analyses and revisions have become year -round endeavors. Staff began planning the FY 2011 -12 budget in August 2010, and started discussing it with City Council in January 2011. As part of the annual budget process, the City Council reaffirmed its vision for the City during its annual goal setting session in January 2011. These areas of focus help set the framework for the City's budget development. Since January, we have continued this conversation with the Council Finance Committee and the City Council through a number of budget updates and budget work sessions that focused on budget forecasts, possible State budget impacts, the City's benefit liabilities, and the City's capital needs. Budget Analysis A number of factors influence the Tong -term fiscal health of the City: the slow economic recovery, the ability for San Leandro's revenues to sustain the cost of providing services, and the continued State budget gap. While the FY 2011 -12 General Fund budget sees some revenue growth, it is attributed to the temporary, quarter cent sales tax measure (Measure Z). The City's three largest revenue sources — sales tax (not including Measure Z), property tax, and utility users' tax — have declined dramatically over the past several years. Our initial budget projections indicated a General Fund gap of about $1.1 million, even after accounting for the new Measure Z sales tax revenue. As