1. 2011 Budget Presentation Mandate to Mission City Council William Peduto, Finance Chair Bill Urbanic, Council Budget Director January 11, 2011

2. Present Value and Parking Tax The current worth of a future sum of money or stream of cash flows given a specified rate of return. Future cash flows are discounted at the discount rate, and the higher the discount rate, the lower the present value of the future cash flows. Determining the appropriate discount rate is the key to properly valuing future cash flows, whether they be earnings or obligations The basis is that receiving $1,000 now is worth more than $1,000 five years from now, because if you got the money now, you could invest it and receive an additional return over the five years. The City used 8% to match the Pensions assumed rate of investment return This is what the City Council did in irrevocably dedicating a specific annual amount of the Parking Tax towards pension for a 31 year period, to achieve the effect of $250 Million in present value to be recognized in the fund This also guarantees that the City will deposit at least $739 Million in actual cash into the fund plus its annual MMO and employee contributions This will go a long way to getting the Pensions properly funded

3. What Council Did with Pension Put $45 Million in Pension Fund increasing funding level to near 35% Irrevocably dedicated $13.4 Million of Parking Tax for 31 years and used the present value of approximately $250 Million Dollars to increase funding level near 60% Used $12 Million of the rainy day fund to increase Payments over original proposal in 2011 and 2012 to help meet cash flow needs of the Pension

4. How do we replace the Money? Although the Pension payments are higher in 2011- 12 they are $19 Million less in the 5 year plan – those savings are applied There is also an increase in Parking related fees through an Authority Payment of $1.3 Million in 2011 and a conservative $8 Million 2012-2015 If the Council-Controller rates were implemented there would be an additional $12 Million that could be applied to PAYGO plus more funds could be used from a bond refinancing

5. Debt Service - $57M by 2019 $69 Million $87 Million $30 Million

6. Debt + Pension

7. Difference in Pension Payments vs Potential Extra Parking Revenue

8. Potential Additional Funds for PAYGO if PPA Rates are increased

9. From 2012-2016 City will need $53 Million to maintain a $25 Million Capital Plan This could be achieved through a bond and help from Harrisburg as described in the Act47 Plan – Pension Reform, Non-Profit Payments, Additional Taxing Powers

10. With less than 14 years left of mortgage payments the City has fiscal options with a little bit of State help and proper management $57 Million $87 Million $19 Million $59 Million

11. The Mission Continues: Where do we go from here? Although the short term objectives of balancing the 2011 budget and averting State Take Over were met and even with the creation of a new revenue stream through the potential of additional Parking revenue (via a new PPA agreement) our potential for revenue shortfalls still exist in the short term of the "out years" regarding capital investment Additional annual revenue in the amount of approximately $12 to $15 million coupled with pension reform could provide the City with the funds needed for future capital investment and limit the need for assuming new debt We will need to get to work with our Harrisburg legislators to make this happen