FY 2008 – 2009 Mid-Year Budget Update Joint Finance Committee & City Council Meeting Presented by Michael J. Beck, City Manager November 11, 2008

Total City Budget $636.8 M $19.20 $22.70 $ $31.10 $14.00 $12.50 $46.00 $11.60 $51.90 $30.20 $ $24.40 $34.60 Admin DepartmentsFinancePublic SafetyHousingHS&R LibraryPlan & DevHealthPublic WorksTransportation Water & PowerDebt ServiceOther Excluding Operating Companies

Economic Reality State Budget Impacts Banking Industry Collapse New Housing Starts Halted Increased Unemployment Increasing Office Vacancies Declining Retail Sales Slowing Assessed Valuation Growth Business/Vacation Travel Reductions

Revenue Growth FY 2002FY 2003FY 2004FY 2005FY 2006FY 2007FY 2008FY 2009FY 2010FY 2011FY 2012 Property TaxRetail Sales TaxUtility User Tax Trans Occup TaxConstruction Tax Vehicle In Lieu Tax Dollars (millions)

General Fund Revenues (Rounded Millions $)

Expense Growth Dollars (millions) FY 2002FY 2003FY 2004FY 2005FY 2006FY 2007FY 2008FY 2009FY 2010FY 2011FY 2012 PersonnelDebt ServiceTotal Expenses

Growth Comparison FY2004 through FY2012 projected 60% 10% 20% 30% 40% 50% 70% 80% 90% FY2004FY2005FY2006FY2007FY2008FY2009FY2010FY2011FY2012 PersonnelRevenueDebt

FY2004 Actual FY2005 Actual FY2006 Actual FY2007 Actual FY2008 Actual FY2009 Projected FY2010 Projected FY2011 Projected FY2012 Projected Revenues Expenses Revenue and Expense Trends (Rounded Millions $) Excludes contributions to reserves

FY09 General Fund Appropriations M Operating Budget Debt Service $23.7 Library Special Tax $9.9 PCOC Share of TOT $5.8 Public Safety $99.7 Public Works $22.0 Transportation $5.5 Plan & Dev $9.6 HS&R $9.8 Finance $10.1 Admin Departments $17.5 Other $17.27 Remaining Budget $91.8 M (40%)

Key Projects and Initiatives Resolving structural deficit is key to funding Key Projects and Initiatives… –Ice Rink –Urgent Care –Park/Community Center Improvements –Open Space –Transportation Improvements –Public Facility Enhancements

Budget Reduction Considerations Hold vacant positions and evaluate personnel requirements Improve internal processes Reorganize for efficiency Lock in natural gas purchases to take advantage of lower prices Delay investments in large replacement purchases Re-evaluate frequency of services Work with vendors to negotiate reduced rates Identify and consolidate services across the organization Voluntary Furloughs Target 95% expenditures

Summary Historic Budget Estimates: –Revenues generally higher at year end –Expenses generally lower at year end Current Structural Deficit: –Revenues are decreasing –Expenditures are increasing –Resulting in estimated gap (deficit) of $10 million Solutions: –Status Quo – expect history to repeat or spend reserves; or –Correct imbalance – reduce expenditures through efficiencies and reorganizations & use fund balance for key priorities –Increase General Fund reserves to 15% Managing now will avoid fiscal crisis in future.

Understand that the economic climate has changed and the City needs to adapt responsibly Track the State Budget and identify impacts to Pasadena Work with our local legislators regarding the City’s needs Begin the Fiscal Year 2010 Budget process Engage City Council on opportunities to address both the current and proposed budgets Where Do We Go From Here