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that are created and asked that they be given an opportunity to prepare a ballot argument in opposition to the Initiative to be put before the voters in the voter pamphlet. He also expressed concerns regarding the Elections Code Section 9212 Report, stating it contains assumptions and interpretations he believes were flawed, which he discussed at length. Sean Lemoine confirmed that the west side of Foothill Road would be included in the Initiative, questioned how the City would transfer units from the hillside down into the valley, said he is 100% opposed to this, said the ridgeline on the west side of Foothill Road is already protected as 99% of the property is already owned by the Park District. Steve Brozosky thanked Councilmember Sullivan for requesting continuance of Item 17a so opponents of the Initiative can be present. He believed the fiscal numbers presented in the report were very lop-sided and it fails to mention expenses to be incurred. He also cited school district attendance assumptions and changes incurred, and asked the Council not to place a competing Initiative on the ballot. Mary Roberts thanked the Council for continuing Item 17a, agrees most initiatives have unintended impacts, but well thought-out legislation also does, citing the recent law on photovoltaics. PUBLIC HEARINGS AND OTHER MATTERS Mayor Hosterman requested the Council hear Item 18 out of the agenda order. 17. Concurrent City Council /Library Board of Trustees item: Consider a resolution approving the Fiscal Year 2008-09 Mid-Term Operating Budget and Capital Improvement Program Update Director of Finance Dave Culver provided a presentation on the Fiscal Year 2008-09 Mid-Term Operating Budget and Capital Improvement Program Update, stating the update incorporates staff's assessment of impacts relating from economic changes since the original budget was approved. He discussed the State Budget deficit. Regarding bridging the $4.5 million gap in the General Fund, Mr. Culver said they address slightly over $2 million of it through expenditure reductions, operating department budget reductions, an additional reduction in the self-insured fund contribution and reduced replacement plan contributions. He also discussed changes in fund balance reserve and carry over funding of current year contingencies. Mayor Hosterman confirmed staff re-balances out the reserve to be 10% of the revenues and questioned that if the State suffers another shortfall, whether this could be adjusted to be 10% of total revenues or could the Council amend the policy on a temporary basis to be 12% or 15% of revenues. City Manager Fialho said staff "parked" an additional $1 million into a temporary recession reserve which was a fixed amount. Vice Mayor Thorne said the League of California Cities put on the ballot Proposition 1A that prohibits the state from taking funds from cities, but the State forced cities to allow funds to be borrowed with interest. If not paid back they can never borrow it again. He asked what the impact would be if they decide to borrow funds from the City, and Mr. Culver said they can borrow from property and sales tax and from VLF fees twice in a 10-year period. Currently, Regular City Council/ Library Board of Trustees Minutes 6 June 17, 2008