Reso 2011-053 Attachment - Laserfiche WebLink

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City operations are also supported by other funds, including enterprise funds. Key enterprise funds include the Water Pollution Control Plant and Shoreline Enterprise Funds. Both of these funds have seen revenues diminish over the last several years. The Water Pollution Control Plant Enterprise fund was established to account for the City's sewers, which protect public health and preserve water quality through collection, treatment and disposal of the community's wastewater and wastewater solids. Program revenues to this fund in FY 2009-10 totaled $10.1 million, a reduction of 3.5% from the prior year. The Shoreline Enterprise Fund was established in 2002-03 to combine the Marina Enterprise and the Golf Course Enterprise Funds. Program revenues to this fund in FY 2009-10 totaled $1.9 million, a reduction of almost 6% from the prior year. While the City has implemented considerable expenditure/service reductions to help balance its budget, it continues to face increased operating costs. For example, the City's contribution rates for employee pensions are rising due to prior year portfolio losses and a change in actuarial assumptions by CalPERS, with additional increases projected in future years. The City has offset some of these increases with reductions in total employee compensation in recent years, and will be working with employee groups over the next couple of years to address this growing cost. The State of California is again forecasting a significant deficit — about $24 billion over the next 18 months. In November 2010 California voters passed Proposition 22, which inhibits the State from taking local revenues such as sales taxes. However, with the magnitude of the State structural deficit, local governments are nervous about how the State will balance its budget and how it might impact local government. Long-term perspective The City adopts an annual budget, but employs long-term planning as the framework for its fiscal decisions. While San Leandro's underlying economy is viewed as positive in the long-term, today's economic challenges, notably in the City's General Fund, must be dealt with now to ensure long-term fiscal stability. The City Council has implemented various cost cutting measures over the last two fiscal years to produce recurring budget savings. Such actions result in unwanted, but unavoidable reductions in service to the community. To help buffer the immediate impacts of additional service reductions, the City has used some of its one-time reserves. City Council designated reserves, total $12.7 million in the General Fund at June 30, 2010. The reserve balance is comprised of $5 million for Economic Uncertainty, $3.8 million for Major Emergencies (reduced by $2.6 million from last year to balance the budget), $3.1 million from an agreement with Kaiser Permanente that is designated in the General Fund for Community Impact and Street Improvements, and $775,000 for public safety expenses (asset seizure funds). As the City continues to implement recurring balancing measures, additional reserves will be needed in FY 2010- 11. However, it is anticipated that beginning in FY 2011-12, the City will begin to rebuild its reserve balance. In November 2010, voters approved a temporary (seven-year) quarter cent sales tax increase. This increase is expected to generate about $4 million in new sales tax revenue beginning with the 2011-12 fiscal year. These revenues will play a significant role in the City's efforts to achieve long-term fiscal stability.