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Mr. Culver said the recession and weak real estate market continue to impact revenues, which are expected to be 4.6% lower than the budget estimate for a total of 7.4% below the prior year's actual revenues. Specific revenue reductions include $1.5 million in sales tax, $1.1 million in hotel tax, $856,000 in development fees, $300,000 in interest income, and $350,000 in inter fund charges, totaling $4.1 million. To maintain a balance, Mr. Culver recommended an additional personnel reduction of 12.5 positions, for a total of 28.5 positions either eliminated or left vacant. Mr. Fialho noted that these positions are eliminated through attrition and that no one has lost their job. Mr. Culver concurred, stating that staff has reorganized, is working more efficiently, vacancies are being absorbed by existing employees as they occur. He reviewed recommended non personnel reductions, none of which result in reduced programs or services to the community, reductions in operating reserves, and requested use of $415,000 in available carryover funds. Mr. Fialho explained that those funds have been strategically set aside to provide for just this sort of situation. Mr. Culver stated that employee benefits costs are paid out of one fund, which in turn charges all operating funds a percentage of total payroll. For the past two years, the actual cost of employee benefits have been less than the amount budgeted and he recommended returning those residual funds back to the General Fund. Mayor Hosterman questioned and confirmed with Mr. Culver that between economic uncertainties and temporary recession reserves, the City still has roughly $19.5 million set aside. Referring to the operating department adjustments, she commended all department on their efforts. Mayor Hosterman opened public comment. Karen DeBaca Martens thanked City staff for such a well- crafted budget, for making Pleasanton one of the best run cities throughout the state, and said she is extremely pleased to hear the City has such a strong reserve base. She noted the reduction in police services of $544,000 for various position vacancies and reduced overtime and stressed the value of good practice in law enforcement and careful management to the City's public safety. Mayor Hosterman closed public comment. Councilmember Cook- Kallio said the managers themselves have absorbed much of the extra duties before asking anyone else to do so. She said it has not gone unnoticed by this Council or the rest of staff. She has overheard staff discussing how appreciative they are to have secure jobs, attributed that to the leadership demonstrated by upper level staff, and personally thanked them. Councilmember Sullivan echoed her comments. He said City staff and management have done an incredible job of negotiating the current budget crisis. The entire Council has recognized it and hoped the community has, as well. Councilmember McGovern directed the Council's attention to page 6 of the staff report, noting that with the addition of other unused monies, the City actually has roughly $23.5 million in reserves. She also noted the report indicates that the State of California has borrowed $4.4 City Council Minutes Page 11 of 12 March 16, 2010