SR 05:167 - Laserfiche WebLink

HOW THE CITY IS MEETING ITS BUDGETARY CHALLENGES At the same time that the 2005-06/2006-07 (FY06/FY07) budget was being prepared, staff was updating the current 2004-05 (FY0$) budget as part of the normal midyear financial review process. The results of thc midyear review arc being separately submitted to the City Council for approval as part of staff report #SR05:166. All of the tables contained in the FY06/FY07 budget assume that the FY05 budget has been amended per the midyear report. Due to known State budget impacts in both FY05 and FY06, and increases in PERS rates, it was advantageous to take a multi-year approach in smoothing out these impacts. Thus, staff held the midyear process open until the two-year budget preparation was complete. As a result of this multi-year approach, the prefunding of $2 million in FY05 for FY06 replacement accruals will offset the loss of additional property tax dollar shifts (ERAF lid next year, allowing the City's budget to be balanced without impacting service levels or CIP contributions. In addition, as part of the midyear budget adjustments, funding will be made available to maintain the Golf General Fund Debt/Cash Flow Reserve, as another layer of protection for the Operating Budget and CIP. Other important steps in the FY06/FY07 budget preparation process included updating the City's Replacement Plan, and looking ahead five years to ensure the sustainability of the City's financial plans in accordance with the General Plan fiscal policies. THE BUDGET PLAN Overview The result of all these efforts is a budget for fiscal years 2005-06 and 2006-07 that: ~ is balanced ~ provides funding to address City Council priorities ~' increases services levels by adding four additional positions in the Police Department >' provides for anticipated Capital Improvement Program (CIP) contributions >' funds the Golf General Fund Debt/Cash Flow reserve as a layer of protection to the Operating budget and CIP, in the event golf course net income is not sufficient to pay full debt service in the early years of operation. ~ maintains the 10% Reserve for Economic Uncertainties, projected to be almost $9 million by the end of the two-year budget ~ maintains the Temporary Recession Reserve at its current balance of $5.1 million. For the first time, the Budget Plan contains a five-year projection of General Fund revenue and expenditure trends. The assumptions used are neither aggressive nor conservative. The results reflect projected positive net income for the General Fund through the subsequent five-year period (FY08 through FY12). SR05:167 3