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Published byEllen Herbert Modified over 10 years ago
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FY 2009 Second Quarter Update and FY 2010 & FY 2011 Forecast February 10, 2009
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2 The Update Uncertain Economic Climate State Budget – No Good News FY 2009 2 nd QTR Update FY 2010 & FY 2011 Forecast Budget Process & Calendar Economic Development Local stimulus Council comment on direction
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3 An Uncertain Economic Outlook National economy still failing Rapid financial sector collapse Restricted credit – no lending Property and auto sales dropping Unemployment at 10% soon CA Retail Vacancies 2001 = 6% 2009 = 13%
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4 An Uncertain Economic Outlook 2-3 year recovery? Perhaps a different kind of recovery? V versus L shaped path Personal income for goods down Retail industry shrinking (thousands of shopping malls to close) Property tax growth slowed
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5 Federal Stimulus Hopes The House version includes… $31B to states, local governments & non-profits Investments for infrastructure Emergency assistance to families & individuals $1B in new, 1-time CDBG funding The Senate version may be different No new CDBG funding No meaningful affordable housing funds
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6 Bad News from the State -$17B FY 2009 -$25B FY 2010 -$42B Deficit (23% of budget!) Cash flow problems (funding deferrals) Potential State solutions Cuts to Health & Redevelopment Bond against lottery Sales tax temporary increase Spending cap Need budget reform
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7 More Bad News from the State More State cuts now… Parking Fines – new legislation Loss of $3/citation = loss of $1M/year Increase fines to recoup loss DMV fees & reduced City revenue Frozen CIP & transportation funding Health & mental health grant reimbursements We are managing State cuts through immediate expenditure reductions.
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8 FY09 2nd QTR Results Worsen Overall revenue loss of - $2.4M Property Transfer Tax down 45% (-$3.0M) Sales Tax down 2.6% (-$500,000) Parking Meter revenue down 7% (-$400K) Property Tax growth slowed Permit Activity down
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9 GF Revenue Forecast Declines: Property Transfer Tax Sales Taxes Vehicle In-lieu Tax Parking Fines Increases: Transient Occupancy Tax Ambulance Fees Other Revenue And property tax is still growing…
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10 Property Transfer Tax Decline Real estate market collapsed 45% Revenue DECLINE
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11 Property Sales Tax Decline Changes since last year (FY 2008): Total Property Sales down 45% Commercial Property Sales down 77% Residential Property Sales down 31%
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12 Decline in Assessed Value Growth
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13 Immediate Actions Hiring Freeze Deferring capital projects (pending State $) Limit overtime spending Limiting non-essential expenses Passage of Measure GG helps now fully fund Fire Department staffing prevent fire station closures
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14 How is FY09 2nd QTR spending? Hiring freeze = salary savings Savings help offset revenue losses General Fund - $2.37M revenue +$2.28M savings (-$90K gap) Next 6 months uncertain State budget? Federal stimulus? No budget increases
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15 FY 2010 & FY 2011 Outlook Revenues down State uncertain Economy uncertain Not a time for growth Available capital funding reduced Reductions needed for all funds
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16 Policy Framework 1-time revenue for 1-time expenses Long-term fiscal health 2-year budget 5-year planning (focus on year 3 impacts) Prudent Reserve Control labor costs – minimize layoffs Manage unfunded liabilities No new programs without new revenues or expenditure cuts Balance grant and enterprise funds
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17 2-YR Budget…3-YR Problem PERS rate spike in FY 2012 Need GF reductions over 3 years of 6% Year 3 reflects PERS rate spike Assumes CIP funding reductions
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18 Other Revenue Funds Face Deficits Public and Mental Health Funds Expenditure cuts Streetlight Assessment Fund Possible General Fund subsidy increase Refuse Fund Rate increase in FY 2010: 15-30% Clean Storm Fund Ballot in FY 2010 Permit Service Center Fund Expenditure cuts
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19 What are the Next Steps? Plan for long term Control costs Continued budget review Discuss with labor unions & employees Council workshops focus on… key program areas performance outcomes Prepare for Federal stimulus package
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20 Goals & Values Maintain City’s long-term fiscal health Provide quality services to residents Recognize the exceptional work our employees do
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21 Budget Calendar & Workshops
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22 Program Focus: Economic Development Regional economy is struggling What are Berkeley impacts? Business downturn Job losses What can we do locally? Council comments on direction
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