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that the at-large membership be increased by one position from 5 to 6; that the Council allow a change of seats between current Chair Becky Dennis, who no longer serves on the Pleasanton Gardens Board and Dolores Bengtson; that the Council appoint Cindy McGovern to the new at-large seat; and that the Council address its liaison vacancy as a part of ongoing appointments. Vice-Mayor Thorne noted there were no speakers MOTION: It was m/s by Cook-Kallio/Sullivan to approve the amendment to the Kottinger Task Force membership, as recommended and approved the appoint of Cindy McGovern to the Task Force. Motion carried by the following vote: Ayes: Councilmembers Cook-Kallio, McGovern, Sullivan, Vice-Mayor Thorne Noes: None Absent: Mayor Hosterman 21. Adopt a Resolution accepting the 2011/12FY Year-End Financial Report for the Operating Budget and amend the 2011/12FY Operating Budget Finance Director Wagner presented the 2011/12FY Year-End Financial Report for the Operating Budget, which includes the General Fund, Water Enterprise, Sewer Enterprise, Golf Course, and Repair and Replacement Funds. Ms. Wagner reviewed the General Fund, which began the fiscal year with a $25.3 million reserve balance and ended with an excess of $2.1 million over what was projected. Actual revenues exceeded the budget due to increased Hotel-Motel Tax and Recreation Fee revenues, as well as Development Service Fee revenues from the Continuing Life Care and Toll Brothers projects. Property tax revenues; however, were approximately $500,000 less than projected and sales tax revenues also $692,000 less than projected. The sales tax differential is largely due to the City's repayment to the City of Livermore for misallocated tax revenues in prior years. Ms. Wagner also noted that the State Board of Equalization's conversion to an electronic processing system has resulted in ongoing misallocations and there is the expectation for some revenues to be reallocated to the City in this fiscal year. Councilmember Sullivan asked if the $692,000 decrease in sales tax revenues is an accurate reflection of actual sales tax revenues. Ms. Wagner said she did not believe it to reflect a real decline in sales tax revenues, but also did not believe the City would see the revenue numbers it did in 2007/08 FY. She explained that a high percentage of Pleasanton's sales taxes come from business to business sales. While both businesses might reside within California, many times products are shipped from outside of the state and the sales tax goes into a countywide pool that is then reallocated to all cities within the County. In effect, the City loses a dollar and gets back 8 cents and this has resulted in the loss of several million dollars annually. She noted that while this is the current law, there is movement towards changing that as a result of the internet and the projected future of retail sales. Vice-Mayor Thorne said he would like to see a breakdown of sales tax revenues and their source in order to provide the Economic Vitality Committee with some focus and also to show what kind of impact Paragon might be having. Ms. Wagner said that staff has considerably detailed information, shares equal concern about Paragon and has started to look at that. Councilmember Cook-Kallio asked if misallocation of sales tax revenues affected the 2007/08 FY peak of sales tax revenues. Ms. Wagner said no, it occurred in the early 2000s. Councilmember Cook-Kallio asked if the reallocation the City could expect would be at the 8% rate. Ms. Wagner said no, the majority of the $692,000 decrease is for the Vanstar misallocation. There were, however, two other allocations taken from Pleasanton at the end of 2011/12FY that HDL, the City's auditors, are researching. City Council Minutes Page 4 of 9 November 20, 2012