RES 03081 - Laserfiche WebLink

continuation. In addition, many of the returned dollars came with conditions auached as to how they could be used. In addition to the current economic climate and State budget impacts, the City has matured to the point that it is nearing General Plan build ont. As indicated in our recently approved Growth Management Plan, over 84% of the 29,000 residential units allowed by the City's General Plan have been constructed and Commercial/Office/Industrial development is also nearing capacity. As anticipated, developer fees will decline in the future, which currently funds some or all of our capital improvement projects. Reductions in construction-related fees that fund many development/construction related operations (e.g. building inspection, planning, public works, etc) have also been anticipated. While the loss of these funds has been planned in our long-term financial projections and our fiscal policies, it is important to recognize that our remaining major sources of revenue -- sales taxes and property taxes - will also not be increasing in the future at the pace they have increased in the past. Sales taxes and hotel taxes will also require careful monitoring in the short term due to the weak economy and State budget deficit. Fortunately, the City has been planning for build-ont for some time now and financial reserves and operational decisions, such as the use of limited term employees, were put in place to address this situation. In addition to the weak economy, State budget deficit, and planning for General Plan build-out, there are three factors that are driving personnel costs upwards over the long- term. These factors are: workers' compensation; medical premiums; and the City's required contribution rates to the State's Public Employees Retirement System (PERS) including the recent improvements to retirement benefits. All three factors are expected to increase at rates substantially higher than inflation. In anticipation of the unknown of the State Budget and lingering economic woes, staff conducted an extensive midyear review of the 2002-03 fiscal year budget, and identified budget reductions that could be made without impacting service levels. Staff updated the City's Replacement Plan and assembled a budget for fiscal years 2003-04 and 2004-05 that is balanced, provides for anticipated Capital Improvement Program (CIP) contributions, and provides a Temporary Recession Reserve of $2.4 million to help offset impacts from the economy and State Budget. III. SUMMARY OF 2002-03/2003-04 OPERATING BUDGET A. OVERVIEW 1. Total Revenue: All Operating Budget Funds Total annual operating revenue for all Funds for fiscal year 2003-04 is estimated to be $151.4 million or 1.6% more than the fiscal year 2002-03 projection of $149.0 million. For 2004-05, the projection is $161.0 million, or 6.3% higher than the 2003-04 projection.