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recommended short of cuts to programs and services. This is only a short term strategy <br />and cannot be sustained in the long -term. If local revenues do not experience a <br />substantial recovery over the next few years then it will be necessary to revisit our <br />baseline expenditures, including a review of both staffing and programs. <br />Our General Fund reserves remain intact and the conservative financial contingency <br />planning done in the past year will help us weather any additional unknown wildcards <br />such as further State shifts of local property tax. The FY 2009 -10 and FY 2010 -11 <br />budget includes contributions to the Reserve for Economic Uncertainties that maintain it <br />at 10% of annual revenues, which is consistent with the City's fiscal policies. The <br />budget has a Temporary Recession Reserve with a beginning balance of $10.9 million <br />that can be used to offset any borrowing that may occur if the State should suspend the <br />constitutional local revenue projection provisions of Proposition 1A approved by voters <br />in 2004. <br />THE BUDGET PLAN <br />Overview <br />The result of all these efforts is a budget for fiscal years 2009 -10 and 2010 -11 that: <br />is balanced <br />provides funding to address City Council priorities <br />Y funds the Golf General Fund Debt/Cash Flow reserve as a layer of protection to <br />the Operating budget and CIP, in the event golf course net income is not <br />sufficient to pay full debt service in the early years of operation. <br />maintains the 10% Reserve for Economic Uncertainties, projected to be almost <br />$9 million by the end of the two -year budget <br />maintains the Temporary Recession Reserve at its current balance of $10.9 <br />million. <br />Total Operating Budget Recap <br />The Operating Budget is comprised of the General Fund which provides most day to <br />day services; the Enterprise Funds such as Water and Sewer which are funded from <br />user rates and charges; numerous Internal Service Funds which are used primarily to <br />provide current funding for future replacement costs and liabilities; and Trust and <br />Special Revenue Funds which have specific revenue sources and restricted use. <br />Page 3 of 7 <br />