2008-10-07 5-A Power PointUpdate on Budget Status and
Discussion of Potential Cuts
October 7, 2008
General Fund Appropriations
Fiscal Year 2008/09
$75.9 Million
Transfer to Library
$1.7M
2%
General Admin
$2.6M
4%
Fir
$.
Rec & Parl
$4.OM
5%
Public Worth
$8.6M
12%
28%
Risk Management Human Resources
QA 71111 A~w wow
qty 1079/82
& OPEB
8M
2
General Fund Appropriations
Fiscal Year 2008/09
$75.9 Million
Transfer to Library
$1.7M
2%
General Admin
$2.6M
4%
Rec & Park
$4.OM
5%
Public V~
$8.61
12°/
0
0
Human Resources
$1.1M
Risk Management 1%
olice
t3.9M
32%
Public Safety
= 66%
qty 1079/82
& OPEB
8M
3
General Fund Revenues
Fiscal Year 2008/09
$75.9 Million
Use of Money & Property
$1.7M
2%
Current Service
$5.6M
8%
Francise & In-Lieu Fees
$7.5M
10%
Transfers from Other
Funds
$8.5M
11%
Property
Business License
$1.7M
2% Trancicnt flrri inanrv Tav
Property Taxes
$22.5M
30%
Utility Users Tax
$9.1 M
12%
u Fees
4
$5.7M '~"."
8% 8%
General Fund Revenues Sensitive to
Changes in the Economy
Fiscal Year 2008/09
$75.9 Million
Use of Money & Property
$1.7M
2%
Current Services
$5.6M
8%
Francise & In-Lieu Fee:
$7.5M
10%
Transfers from Othe
Funds
$8.5M
11%
Property Try
$4.'
5°~
Business License
$1.7M
2%
Sales Tax (incl. Prop. 172)
$5.7M
8%
Transient Occupancy Tax
$1.OM
1%
~~.~
8%
property Taxes
$22.5M
30°/a
Utility Users Tax
$9.1 M
12%
=ees
5
Setting the Context:
It's the Economy
National Economy
- No economic recovery on the horizon
- Consolidations and bankruptcies among financial institutions
large and small
- Volatility in financial markets; consumer confidence down
State and Regional Economy
- Foreclosures on the rise regionally
- Potential negative impact from property tax appeals
- State budget problem still not solved
Most Bay Area cities facing budget challenges in the current
economy as a result of declining tax revenues.
State Budget Impacts
• As a result of State actions, Alameda has lost more than
$52 million to the ERAF shift since early 1990s; this is
money that should have been spent in Alameda on City
services.
• FY 2008/09 State budget signed more than 80 days into
current fiscal year.
• No impact on City General Fund or transportation
dollars, but close to $1 million hit to City
redevelopment budget.
• This is a takeaway, not a loan. DSD is developing a
plan to pay the State.
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State Budget Impacts on
Community Improvement Commission
• State imposed $350 million takeaway of redevelopment
tax increment funds statewide, or 7.7% of gross tax
increment.
• Agencies must make payments by May 10, 2009, or City
General Funds will be forced to cover the takeaway.
Alameda's share:
BWIP/WECIP
APIP
$896,883
$19,882
Total: $916,765 s
State Budget Impacts
• State budget structural problem is NOT solved; there
will be new threats to the City's budget in FY 2009/10
and every year thereafter until the State budget is
balanced.
• Recent reports indicate that State may reopen FY
2008/09 budget to deal with cash flow problem and
significantly weakened revenues.
• City General Fund revenues could be at risk in current
year.
9
What Have We Already Done:
Citywide Budget Reductions
FY 2008-2009
• Reduced Police and Fire Departments by 4%; reduced
all other departments by 8%, for $2.9 million in cuts.
• Eliminated 32 positions Citywide.
• Proposed managing Fire Department overtime through
implementation of fire truck company closures to
reduce callback for potential cost savings of $800,000.
• Restructured crossing guard program and reduced costs
by 40%.
• Eliminated in-house Street Tree Crew, for a savings of
$175,000.
~o
What Have We Already Done:
Citywide Budget Reductions
FY 2008-2009
• Reduced weekly Library hours.
• Refinanced debt.
• Planning and Building is now accounted for in a
separate fund to ensure services are self-supporting and
not subsidized by General Fund revenue.
• Continuing to monitor and review revenues and
expenditures.
• Preparing policy framework for FY 2009/ 10 budget as
well as developing list of proposed cuts.
>>
Revenue Enhancements
Implemented/Planned
• Adjusted user fees by consumer price index.
• Increased ambulance service fees by 20%, for a total
of approximately $300,000 in additional revenues.
• Future ambulance subscription service will be
implemented in current fiscal year
12
Tax Measures Considered
• Transient occupancy tax increase
• Utility users tax increase
• Sales tax increase
• New parcel tax for public safety
• New assessment district for maintenance
• Real property transfer tax increase
13
Real Property Transfer Tax
• Rates in northern Alameda County range from
$11.50 per $1,000 of sales value (Albany) to
$15.00 per $1,000 of sales value (Berkeley and
Oakland)
• Requires simple majority when revenues pledged
to general City services
• Increases in transient occupancy tax and UUT
bring in minimal revenues.
• Alameda County sales tax rate of 8.75%
equivalent to highest in the state.
14
What Does the Future Hold?
• Financial market volatility has worsened, and
economists are not projecting a recovery in the
near term.
• Consumer lack of confidence and limited access to
cash will affect General Fund revenues.
• As a result, the City must consider additional,
large-scale budget reductions and revenue
increases.
• All departments are developing plans to reduce
spending in FY 2009-10 by an additional 5%.
15
Budget Balancing Challenges
• Cut the budget by an estimated $5 million for FY
2009-10 in order to balance lower revenues with
increasing costs of doing business.
• City is facing rising costs to maintain streets,
parks, buildings, and trees; increasing fuel costs;
and escalating healthcare costs.
• Public Safety = 66% of total General Fund
expenditures
~~
General Fund Appropriations
Fiscal Year 2008/09
$75.9 Million
Transfer to Library
$1.7M
2%
General Admin
$2.6M
4°/a
Rec & Park:
$4.OM
5%
Public V
$8.61
12°i
Risk Management
Human Resources
$1.1M
1 °/a
yip ~ . v~r~
0
0
~O~IC@
23.9M
32%
Public Safety
= 66%
qty 1079/82
& OPEB
8M
D~0
17
Next Steps
• All departments are developing plans to reduce
spending in FY 2009-10 by an additional5%.
• Development Services Department is identifying
strategies to address the State redevelopment
takeaway.
• City Council to consider budget reduction policies
and specific cuts at meeting on 10/21.
• All programs and services must be on the table.
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