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~~'~ INTRODUCTION City Manager's Budget Message • Total City expenditures in 2007-08 are $150.2 million, a 2.3% decrease as compared to the $153.7 million in 2006-07. Appropriations in 2008-09 are $156.7 million, a 4.3% increase over 2007-08. • General Fund operating expenditures in 2007-08 total $91.0 million, a 4.Ei% increase from the prior budget of $87.0 million. General Fund operating expenditures in 2008-09 total $94.7 million, a 4.1% increase from the prior budget of $91.0 million. • The 2007-08 and 2008-09 budget includes contributions to the Reserve for Economic Uncertainties that maintain it at 10% of annual revenues, which is consistent with the City's fiscal policies. The budget keeps the Temporary Recession Reserve intact with a balance of $5.1 million. Staff is recommending that this reserve be kept in place at least through the next two years, or as long as uncertainty exists in the State's budget and the economy. When appropriate, the funds can then be made available for one-time purposes such as capital improvements. • The Capital Improvement Plan budget totals $17.2 million and $16.0 million, in fiscal years 2007- 08 and 2008-09, respectively. A $5 million contribution from the General Fund occurs each year to fund capital projects. • Baseline staffing is increased by 1.54 full-time equivalent positions in 2007-08 to address City Council priorities. • Non-personnel costs remain flat, as compared to the previous budget cycle, after factoring out carryovers and contribution to reserves, replacement and contingency. • Internal Service Funds remain fully funded to assure timely replacement of capital equipment, depreciated technology needs and major facility maintenance. • Benefit expenses are increasing citywide by an estimated $2.1 million in 2007-08, and another $1.5 million in 2008-09, with the largest portion of the increase due to health insurance, pension costs, and increased contributions to retiree medical reserves. CONCLUSION In closing this budget message, I would like to express my appreciation to the City Council for providing the positive leadership and direction on behalf of the community. Members of the City's commissions, through their expertise and input, have also provided valuable assistance in the development of the Capital Improvement Plan. I also want to recognize the City staff for their dedication and effort, not only in the preparation of this budget, but in their commitment to providing the highest quality service to the Pleasanton community. I would like to specifically acknowledge the work of the City's budget team. They have successfully assembled a budget document that is comprehensive, accurate and easy to read. Steve Bocian, David xxiv