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BACKGROUND A review of prior year-end and current year-to-date General Fund revenue performance indicates the need for a number of adjustments. The reductions primarily involve property taxes, sales tax, and development services fees. There are a few increases recommended including estimates for interest income and franchise fees. The intent of the recommended adjustments is to keep the current year budget in balance. DISCUSSION Revenue Adjustments Revenue adjustments total $2.2 million as described below and as reflected in the following table of recommended revenue adjustments. Property taxes Traditionally, estimates for secured and unsecured property tax are supplied by Alameda County and track with the growth in assessed values. County estimates for 2006-07 included a 2.2% delinquency factor. However, actual collections in 2006-07 were below estimates by over $500,000. As a result, the baseline number used for the 2007-08 estimate was lower than originally assumed and the increase of 6.5% for growth in the secured roll for 2007-08 provided by the County is being scaled back to 5.5%. Historical property and other tax collections from 1980-81 have been included in attachment 3. The only years where collections fell below the prior year was during the period of State take-aways during the 1990's. Unsecured property tax is being reduced based on year-to-date collections when compared with the prior year. Supplemental property tax is being reduced because the decrease in home sales county-wide during 2007-08 will likely be greater than first assumed. Factors affecting the growth in property tax revenues include declining home sales and increases in delinquencies, foreclosures, and assessment appeals county-wide. In 2006-07 the delinquency rate in Alameda County was 3.51 %, up 62.5% over the 2.16% rate experienced in 2005-06. The foreclosure information shows the number of notices of default filed in Alameda County has increased from 164 in July of 2006 to 1,181 in July 2007. In addition, the apportionment factor for the City of Pleasanton has declined slightly because the growth in local assessed values has not been as great as growth in some of the other taxing jurisdictions in Alameda County. Essentially, the growth in the property tax revenue pie is less than first assumed and Pleasanton's share of that pie has been slightly reduced. Sales & Use Tax The local portion of the sales tax is the remaining 3/ cent after the triple flip formula. In 2004 the State issued deficit reduction bonds and pledged '/4 cent of the local 1 % sales tax as the debt repayment mechanism. These bonds are expected to be repaid by 2011, if not sooner, at which time the local sales tax will revert to the traditional 1% rate. For 2007-08 the estimated sales tax is being reduced by $302,627 due to the slow down in the economy and the relocation of three auto dealerships to another Page 2 of 6