10B Action 2010 0719 - Laserfiche WebLink

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Temporary Sales Tax Measure, November 2010 4 July 19, 2010 Further reductions effective July 1, 2011 due to one -time funding: • Closure of small library branches • Further reductions at Manor Branch Library • Possible closure of Boys and Girls Club Pool • Elimination of most recreation programs, except essential youth and senior programs • Potential continuation of employee furloughs or alternative reductions; (Fire employees have negotiated concessions which are anticipated to lower fire services contract costs in future years.) Critical service impacts of these reductions include: reduced neighborhood police patrols; reduced ability to investigate crimes and conduct gang suppression activities; increased 9 -1 -1 emergency and fire response times; reduced program/activities that keep children focused on learning and out of trouble; reduced library programs for children, adults and families; less ability of the City to be a good partner to schools; reduced pothole repairs and street maintenance. Financial Projections Staff recommends that the quarter cent sales tax measure be authorized for seven years, which is consistent with what the poll results demonstrated the public would support. This allows sufficient time for the economy to recover, new potential sources of revenue such as the retail component of the Kaiser development to come to fruition, and for the City to begin to rebuild its reserves. Staff prepared a seven -year economic projection with the quarter cent sales tax revenue which is reflected on Attachment 1. If the quarter cent sales tax measure fails, the general fund must be balanced through significant additional cuts outlined above and reflected in Attachment 1. It assumes slight revenue growth over the seven year period but no restoration of services. If the quarter cent sales tax measure passes, the general fund operating budget will have a positive balance (operating revenues exceed operating expenditures) and this is reflected on Attachment 1. Staff recommends a goal of setting aside up to 25% of the quarter cent sales tax revenues to partially restore reserves beginning in 2011 -12. Staff further recommends no additional staff reductions and the FTEs partially funded in 2010 -11 be reinstated. Council Follow Up • Sunset Clause: Staff recommends a seven year term for the quarter cent sales tax. This is primarily based on the results of the August 2009 voter poll which showed strong support for seven years. As demonstrated by the economic projection, a seven year term provides for only a modest rebuilding of services and reserves and provides the City needed time to withstand continued instability in the economy. A shorter duration of three or five years leaves the City in a precarious financial condition with reduced reserves and services. The seven year sunset achieves the Council's priority of fiscal stability.