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Mayor Hosterman asked Mr. Byde to take time to develop this project further. She extended the Council's thanks to everyone who worked on the project and as well as the anticipation of seeing an even better proposal in the future. MOTION: It was m/s by Cook Kallio /Sullivan to continue the item based on comments provided by the Council. Motion passed by the following vote: Ayes: Councilmembers Cook Kallio, McGovern, Sullivan, Mayor Hosterman. Noes: None Absent: Councilmember Thorne BREAK: Mayor Hosterman called for a short break and, thereafter, reconvened the regular meeting. 13. a. Adopt a resolution accepting the 3rd Quarter Financial Status Report and amending the 2008 -09 Operating Budget Director of Finance Dave Culver reviewed the budget year and impacts of State ballot measures, explaining that in anticipation of the economic slowdown, staff has conducted quarterly adjustments and while General Fund revenues have been adjusted to reflect a decrease of roughly $10.5 million, staff has been able to maintain a balanced budget by creating reductions, maintaining vacant position openings, and redirecting reserves. Mr. Culver explained that the State budget still presents an additional wildcard that, depending on the outcome of tonight's vote, may authorize the State to take an additional 8% of local property tax revenues in FY 2009 -10. That potential loss equals nearly $4.7 million in property tax revenues and $640,000 in CIP funding for streets improvements for Pleasanton. Mr. Culver reviewed the recommended third quarter adjustments which will keep the fund in balance and do not call for reductions in services or full -time staffing. Key adjustments include decreasing the sales tax estimate by another $952,000 as a result of further declines in certain industry sectors than previously anticipated as well as a rebalancing of the City's LPFD retiree medical contributions to reflect the 50/50 share with Livermore. CIP budget amendments include updating revenue estimates, closing out old projects, and redirecting those funds to current projects. Councilmember Sullivan questioned and confirmed that sales tax revenues from the auto and transportation sector are primarily related to new car sales. Mayor Hosterman reviewed report and asked how staff was able to maintain revenues higher than its expenditures in the face of a $10 million decrease in earnings. Mr. Fialho said while revenues have been adjusted from $95.8 million to $89.9 million, it is still roughly $1 million in excess of expenditures. He explained that it is possible in part due to some of the adjustments just described and also to the City's ability to put away the annual surplus in various funds since 1992. He noted that with this downturn, the City has been contributing less to those reserves and that this barely balanced budget assumes that nothing else changes in the next 12 months. Councilmember Sullivan stated that it is important for the public to recognize how fortunate the City has been in its capital improvements over the past decade and warned that the climate is changing. City Council Minutes Page 9 of 13 May 19, 2009