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General Fund Transfers Budgeted transfers are being reduced by a net $381,284. The adjustments to budgeted transfers include an increase of $9,368 due to the close out of an old Disaster Relief Fund. This fund was established in the 1980's to account for FEMA reimbursements for work done on flooding at Valley and Bernal. The General Fund was reimbursed for eligible expenses with the exception of this residual amount. Also, budgeted transfers are being reduced by $390,652 due to moving the budget for the Para transit operation to a new Enterprise Fund. Generally accepted accounting principles require the Para transit operation to be accounted for in an Enterprise Fund but for budget purposes the Para transit operation have been included in the General Fund to show all of Parks Community Services budgets together. This inconsistency requires Finance to translate from one basis to another at year end and this change will make budgeting and accounting for the Para transit operation consistent. General Fund Revenues Budgeted revenues are being reduced by $1,001,570. This is due to a combination of an increase of $31,000 for an Office of Traffic Safety grant for automated collision tracking software for the Traffic Engineering program, an increase of $50 to recognize a donation, an increase of $121,064 due to changes in Interfund Charges to Enterprise Funds and the CIP, and a reduction of $952,178 in the budgeted sales tax estimate. When City Council approved the Mid -Year update in January 2009 it included a reduction of sales tax changing the estimate from 0% to -5.8% decrease over the prior year actual. As the economy has continued to deteriorate the City's sales tax consultant has recommended that a -10.3% decrease in sales tax over the prior year actual be used which results in the additional $952,178 reduction in the budget estimate. Approximately half of the reduction is due to revenue trends affecting certain segments of the economy shown below and the other half is due to closeouts, misallocations, and other reporting errors. 25% decline in Autos Transportation 30% decline in Fuel Service Stations 12.5% decline in Building Construction 10% decline in General Consumer Goods 10% decline in Business Industry General Fund Expenditures Budgeted expenditures are being reduced by $1,072,854. This is due to a combination of an increase of $31,000 for an Office of Traffic Safety grant for automated collision tracking software, a decrease of $667,352 for moving the Para transit operation to a new Enterprise Fund, a reduction of $86,502 in the budgeted contingency, and a reduction of $350,000 from the retiree medical contribution for Pleasanton's share of LPFD. The City of Pleasanton contributed $350,000 more to the LPFD retiree medical reserve than did the City of Livermore. This action will keep the contributions on a roughly 50/50 basis as has historically been done and helps to re- balance the budget after factoring in the further drop in sales tax. Page 4 of 6