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Finance Director Culver presented the FY 2010 -11 Mid -Term Budget Update, stating the City is just winding up the first term of its two year budget. He explained that the recommended adjustments are based on current financial and operational conditions. General Fund recommended adjustments for the next fiscal year, acknowledge a $5.7 million reduction in revenue estimates for property tax, sales tax, hotel tax, business license tax, and development fees and are balanced by cuts to operating departments and other limited time measures. Total adjusted revenue estimates are $83.7 million, 0.6% over the current year revised budget. He stated that operating department cuts involve position reductions through attrition. The General Fund has reduced over thirty Full -Time Equivalent (FTE) positions since FY 2008 -09. To maintain a balanced budget, staff additionally recommended strategic use of prior year unspent operating funds, the transfer back of unspent surplus from the CIP in the Parks and Miscellaneous categories, and no use of emergency reserves. The temporary recession reserve of $11.1 million remains intact, as does the 10% reserve for economic uncertainty. He stressed that the adjustments do not represent any reduction in services or programs, and comply with all budget and reserve policies established by the Council. Mr. Culver stated the State of California is facing an almost $20 billion deficit, $7.7 billion in this fiscal year and $10.2 billion in the next. The State borrowed $20 million from local agencies this fiscal year to balance this year's budget, with Pleasanton's share at $4.4 million securitized. There are still a number of local revenues at risk including the gas tax, vehicle license fees, Proposition 172 sales tax, and Proposition 42 monies. The League of California Cities and Association of Counties have submitted signatures for November ballot measures called the Local Taxpayer Public Safety and Transportation Act that would close remaining loopholes and protect all other revenues, including 2004 Proposition 1A revenues. Mr. Culver reviewed Enterprise Fund revenue adjustments, which include changes to golf and water revenues, as well as transfers. Expenditure adjustments involve position reductions through attrition and updated estimates for water purchased from Zone 7. Councilmember Sullivan asked if this is the first occurrence of a decrease in golf revenues. Mr. Culver stated golf revenues are down because general play is down as are the revenues per play and per tournament. Although they have increased the number of special events, people are generally spending less as a result of the economy. Mr. Fialho explained that rounds revenues remain at about $65,000 per year, which is above what was projected but, while the rates are still generally the same for golf, people are spending less in the restaurant and clubhouse. Mr. Culver summarized the major adjustments to Internal Service Funds, noting that the retiree medical trust contribution scheduled for this year was not included in the original budget and so an appropriation for that is recommended at this time. There are additional minor reductions to the Replacement and Renovation Funds and personnel cost adjustments due to vacant positions in Water, Sewer, and Other Funds that float to the Employee Benefit Internal Service Fund. In closing, Mr. Culver referred to the Livermore Pleasanton Fire Department as a Special Revenue Fund whose costs are split with the City of Livermore. There are six vacant positions on the Livermore side, which reduce personnel costs and the need for the academy next year, although that cost is neutral to Pleasanton and the operational impact of these positions will result in a Livermore station closure. City Council Minutes Page 6 of 11 June 15, 2010