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anticipated to increase in the 5% range. Overall, General Fund revenues are expected to <br />increase 4.7% in the first year of the budget, and 8.8% in the second year. <br /> <br />General Fund Expenditures <br /> <br />Recommended General Fund appropriations represent a 5.6% increase in the first year of <br />the proposed budget (FY06) compared to the current year (FY05), and an 8.4% increase <br />in the second year (FY07) of the budget compared to the first year (FY06). The increases <br />reflect normal inflationary increases, and increases in personnel costs for salary and <br />benefits costs (including retirement) in accordance with existing Memorandums of <br />Understanding (MOUs) with the employee groups. Fiscal Year 07 also represents an <br />increase in replacement funding compared to FY06. <br /> <br />For the coming FY06, two Police Officer positions and one Records Clerk position are <br />added to support increased workloads and calls for service. An additional Police Officer <br />position is added in the second year of the budget (FY07) to help support increased <br />services and program demands on the Traffic Unit. <br /> <br />General Fund Transfers-out <br /> <br />Beginning in FY05 and continuing through the two-year budget, an operating subsidy of <br />$100,000 each year is shown as a transfer-out from the General Fund to the Storm Drain <br />Fund. A transfer-out of $1.6 million is included in FY06 to fund the Golf General Fund <br />Debt/Cash Flow reserve as a layer of protection to the Operating budget and CIP, in the <br />event golf course net income is not sufficient to pay full debt service in the early years of <br />operation. In both FY06 and FY07, a transfer-out from the General Fund to the CIP in <br />the amount of $5 million each year is included. <br /> <br />A more detailed discussion of the proposed two-year budget is contained in the attached <br />Budget Message. <br /> <br />CONCLUSION AND RECOMMENDATION <br /> <br />Despite the challenges of the slow economic recovery in the Bay Area and State Budget <br />impacts, the proposed two-year Operating Budget is balanced, and consistent with the <br />City's fiscal policies and past practices. The budget reflects increases in Police service <br />levels with the addition of four new personnel, provides funding for the programs and <br />goals identified as priorities by the City Council, continues funding to the CIP, maintains <br />reserve levels, and contains mechanisms to protect the Operating and CIP against <br />potential startup impacts from the golf course. <br /> <br />SR05:167 6 <br /> <br /> <br />