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DESAN(r�y <br />o0 <br />City of San Leandro <br />Mid -Year Performance Report <br />EXECUTIVE SUMMARY <br />GENERAL OVERVIEW AND ECONOMIC OUTLOOK <br />Ending December 31, 2005 <br />Although Better Than Anticipated, Still Deficit Spending ... <br />• General Fund operations end the mid -year utilizing $562 thousand of available reserves. Available <br />reserves are projected to end the June 30, 2006 fiscal year at $10.4 million or 14.5% of the City's <br />expenditure budget, which is better than anticipated. <br />• The City received $1.38 million from 2003-04 vehicle license fee money borrowed by the State, <br />which was repaid a year in advance and will be used to partially offset last year's operating deficit of <br />$1.9 million and extend the life that reserves can be drawn upon. <br />• Expected sales tax growth of 2% appears to be on track and will restore the City back to the level of <br />sales tax revenue experienced during the 2000-01 fiscal year. <br />• The County's Office of the Assessor reported that recorded property assessed valuations have <br />increased 6.9% from 2004-05 to 2005-06, slightly better than the City's conservative growth <br />projection of 5.5% but below the 9.2% Alameda County growth rate. <br />• The local economy continues to show improvement but at a rate that still lags behind the rest of the <br />economy. The 2005 Bay Area annual average CPI of 2.0% is lower than both the national index of <br />3.4% and the Los Angeles regional index of 4.5%. <br />• LAIF's investment yield as of December 31, 2005 is at 3.63% as compared to 2.00% a year ago. <br />The City invests approximately 18.2% of its idle cash in LAIF and 81.4% with Chandler Asset <br />Management. <br />Forecast Crystal But Not Clear ... <br />• City has proposed a June 2006 ballot measure to increase the current business license tax rates, <br />which is anticipated to generate an additional $2 million in annual revenue. <br />• The City's current $3.1 million structural shortfall will be impacted by the following: ongoing <br />revenue growth compared to the increase of ongoing expenditures, outcomes of the business license <br />tax ballot measure and current employee negotiation processes, postponed maintenance <br />needs/ongoing deferrals that have reached necessary replacement status, and the success of future <br />proposed revenue enhancements. <br />• Asa result of Proposition IA, which provides additional safeguards to City revenues from State <br />take -away, the City is obligated to make its final $1.2 million property tax revenue contribution to <br />the State this fiscal year. <br />2 <br />