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Temporary Recession Reserve <br /> <br />As part of the yearend financial report for last year (FY04), Council authorized the <br />transfer of $1.1 million to the Temporary Recession Reserve, bringing its balance to <br />$5.1 million. While it is hoped that these funds will not be needed in the coming <br />budget cycles, and can ultimately be used for one-time things including funding <br />existing CIP projects, there are still many unknowns in the economy. For example, <br />the State is projecting deficits for at least the next two fiscal years, and the impacts of <br />Oracle's takeover of PeopleSoft will not be fully known for awhile. Staff will likely <br />be recommending that this reserve be kept in tact through at least the next two-year <br />budget cycle, until the future financial picture is better defined. <br /> <br />General Fund Revenue Proiections <br /> <br />No revisions to General Fund revenue projections are being made at this time, <br />although staff expects to make revisions as part of the Midyear review for FY05 this <br />spring. At that time, the City should have more information about some of its larger <br />sources of revenue including property taxes, sales taxes, business license taxes and <br />hotel taxes. These four revenue sources alone account for three quarters of the <br />General Fund's revenue. <br /> <br />In addition, more information about the fate of the PeopleSoft campus and its <br />employees might be known by then. Furthermore, as was reported in the FY04 <br />yearend report, State budget impacts to the City were about $300,000 more in the <br />final State budget than staff included in the City's budget last spring, which was based <br />on preliminary State budget information. Therefore, a FY05 midyear adjustment in <br />revenue projections will be necessary to reflect that. <br /> <br />Projected State budget impacts for the upcoming FY06 budget are expected to be at <br />least $2 million, as staff has previously reported. Besides this loss to the State, staff <br />will also be working in the coming months on evaluating the impacts of the economy, <br />and changes in costs such as gasoline, energy and personnel, on the upcoming two- <br />year budget. Pleasanton's long-term financial focus will continue to lessen the burden <br />of short term swings in economic factors, and give the City time to make adjustments <br />(if needed) without impacting services. <br /> <br /> 3 <br />SR05:018 <br /> <br /> <br />