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Mr. Brozosky believed the difference between the revenues and expenditures is a deficit for the first year and one-time money is being used to make up the difference. Ms. Rossi said the difference is not a deficit as the City has positive net income, Because the City wanted to maintain a $5 million dollar excess contribution to the CIP, staff ensured so by doing the budget smoothing that made this money available. Mr. Brozosky reported that members of the community had contacted him concerning property taxes. He asked if there is a housing bubble or would the property taxes remain flat? Ms. Rossi said there is a time lag when someone purchases a home. The Assessor assesses the property at the higher new sales price but it takes approximately two years before the City realizes it in assessed value, which is different than sales tax or hotel tax, which occur almost immediately. She noted that the City's budget is very diversified and fiscal year 2007 assessed values would be determined as a January 1, 2006, and any of the sales that occurred in 2005 that require supplemental would be realized in the City's property taxes in 2007. She noted that the value of preperbj taxes has fallen below a few percent in total and generally, the numbers have been rather large. Even at General Plan build-out, staff projects that the City would realize four to five percent in property taxes in a normal market. Mr. Fialho said staff is approximately six months away from knowing what the assessed value is, which is why staff feels comfortable with the estimates as provided in the budget. Generally at the end of the first year of the next two-year budget would allow sufficient time for the City to react to the assessed property taxes. Mr. Brozosky mentioned that staff discussed equalizing revenue with the State and noted that the City of Pleasanton receives a higher percentage than other cities. He asked how significant this is and if the State did something with equalization what would the impact be to Pleasanton? Ms. Rossi said Pleasanton is about the fifth highest in Alameda County in terms of percent. Mr. Fialho said Pleasanton is on the higher end statewide. He noted that the percentage has to do with property tax calculations and where Pleasanton was as a city in terms of pre- Preposition 13 and how that rate was set. The City of Pleasanton was set at a higher rate and reaping the benefits of it. Mr. Brozosky asked how the sale of the City's Vehicle License Fee Receivable (VLF) would affect the budget. Ms. Rossi said the sale of the City's VLF Receivable would bring in some revenue ahead of year projection. Staff has emphasized in the budget that if the City receives the money early, the funds would be used in fiscal year 2007. Mr. Fialho noted that there is rumbling at the State level whether or not the City will get its VLF by the time stated in Proposition lA, which was August 2006. There is discussion now about the timeline being August 2008 and so the item that Council approved under Consent Calendar basically guarantees that the City would receive this money in hand so that the Operating Budget is balanced. Pleasanton City Council 23 06/21/05 Minutes