1. Challenges to Financial Sustainability: Perspectives on FY 2016-2017 Budget City of Santa Fe

2. THE BIG PICTURE: $15 million Structural Deficit Although not sustainable, the city’s financial condition is yet not at a crisis (2-3 years to go) The General Fund is balanced, but related Special Funds put the city in an overall structural deficit Continued heavy reliance on “financial bridging:” Cost shifting Drawing down cash reserves through deficit spending Water Fund reserves are what sustain the current imbalance What’s needed: a 2-3 year plan to achieve financial sustainability guided by clear policy direction

3. FINANCIAL CHALLENGES IN FY 2016-17

4. AVAILABLE OPTIONS FOR IMPROVING FINANCIAL SUSTAINABILITY 1.Continue drawing down reserves but with more control and a strategy to stop doing it in 2-3 years 2.Cut service levels 3.Raise taxes 4.Increase fees 5.Operate more efficiently (i.e. cut costs, better collections, etc.) 6.Adopt new modes of service delivery 7.Increase economic activity 8.Increase property valuation 9.Increase year-round GRT base