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Page 3 of 6 <br /> <br /> <br />Findings <br />“In summary, based on the information examined and our related observations we conclude <br />that the City’s financial forecast employs an appropriate and standard methodology common in <br />California local governments. The first step in forecasting is to develop a forecast model, and <br />the City has taken that important step." <br /> <br />“Although the City’s work is not yet complete to prepare a comprehensive financial forecast, <br />based on the information available, we believe that the additional work to be completed in the <br />near-term will only further illustrate that the City’s resources are constrained and that its long- <br />term funding needs are significant." <br /> <br />“Our assessment also indicates that adjustments can be made to the forecast to enhance its <br />detail, particularly in the years beyond, for example, when existing consultant revenue <br />forecasts or collective bargaining agreement information is available. This enhanced detail <br />may or may not change the results of the forecast in those out years, but it will facilitate an <br />additional understanding of how the assumptions in the forecast are determined and why the <br />selected growth assumptions for individual categories of revenues and expenditures are <br />utilized. It should also be noted that the City’s existing short-term property tax and sales tax <br />forecasts are prepared by the most widely recognized consultants providing these services in <br />California, and absent any additional information not previously considered by the consultants <br />we have not observed any reason to deviate from their recommendations relative to property <br />tax and sales tax growth rates. <br /> <br />In the near-term, our assessment does not indicate that further adjustments to the forecast are <br />likely to provide new information that would substantively change the course of the City’s two- <br />year budget process that is currently underway. However, we do propose that the <br />recommendations contained in this report be considered once the budget is adopted, with the <br />City’s Finance Director refining and revising the forecast following the completion of related <br />work such as the infrastructure funding plan. At that time, a refined and revised forecast can be <br />presented to the City Council and the community for further discussion.” <br /> <br /> <br /> <br />Page 5 of 33