HomeMy WebLinkAboutStaff Report 1.B 02/27/2012 A Worn/#1 .3
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DATE: February 27, 2012
TO: Honorable Mayor and Members of the City Council through City Manager
FROM: Bill Mushallo, Finance Director
SUBJECT: Mid-Year General Fund Financial Forecast Update
RECOMMENDATION
It is recommended that the Council receive the Mid-Year Financial Forecast Update report. No
action is requested at this time.
BACKGROUND
In January, 2011 the City Council reviewed a.five year General Fund financial forecast. The
forecast at that time was based on assumptions regarding cost escalation for the period, and the
best information then available regarding revenues. The forecast predicted a shortfall of $2.3
million in FY 2011-12 which,;if left uncorrected, increased to a deficit of$14.1 million in 2014-
15. At that time the Council was advised of numerous budget balancing strategies that would be
implemented over the next several months in order to reduce the projected deficit.
The Forecast was revised in February, 2011. At that time the forecast had worsened slightly and
a projected deficit of$15.1 million was forecasted through FY 2014-15.
In September, 2011 the City Council adopted the 2011-12 City Budget. The budget was adopted
projecting an ending fund balance of.$708,982 as of June 30,2012.
DISCUSSION
The five-year financial forecast will be periodically updated to provide the Council with a long-
term financial planning tool. It is anticipated that updates will occur twice annually; at mid-year
and year-end. As part of the forecast updates the following items will be considered:
1. The forecasting process/model is constantly in a state`of`development.and.improvement.
2. Year-end results from.the`prior fiscal year are updated and included in the forecast.
3. An economic update is included.
4. Current year revenues.andexpenditures are updated. As actual amounts are realized
during the year projected amounts are analyzed,and validated or revised.
5. Model,assumptions,for revenues and expenditures are analyzed and revised as necessary.
6. Any ongoing structural deficit is identified.
Agenda Review:
City Attorney Finance Di ector `. City Manager
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The five year forecast has been updated as of mid-year 2011-12. The update includes multiple
adjustments that were included in the mid-year.adjustments•Council item presented earlier today.
Those adjustments provide a revised FY 2011-12 year-end projection of revenues, expenditures
and fund balance. This provides abase for calculation of the forecasted amounts over the next
four years.
The national economy is on pace for 2% annual growth by the end of calendar year 2012. An
average of 365,000 jobs have been added nationally for the past six months and unemployment
was 8.3% in January 2012. This was'the lowest rate since February, 2009. Consumer spending
increased 1.6% in Q4 2011 over Q4 2010. There are, however, several uncertainties in the
economy including instability in Europe, lagging consumer confidence, and increasing energy
prices.
The California economy has also showed signs of recovery. Unemployment decreased to 11.1%
in December 2011. This was down from 12.5% in 2010 and 12.2% in 2009. Unemployment is
expected to hover around 10.5%through 2013. Statewide sales tax was up 7.2% in Q3 2011
over the previous year The housing market has'improved and Silicon Valley leads the nation in
job growth. There are concerns, however, that a continued sluggish economy in the Central
Valley and state budget concerns may impact a statewide recovery.
Locally tourism continues to rebound with Sonoma County hotel occupancies up 10% in 2011
over 2010. The local unemployment rate dropped to 9.3%in December 2011. The housing
market is beginning to stabilize and housing sales are increasing. The construction of SMART
and other regional projects are expected to create a positive local impact.
Fiscal year-to-date General Fund revenues have been analyzed and projected amounts for the
remainder of the current fiscal year have been developed. Based on that analysis the following
revenue adjustments have-been made for FY 2011-12:
Budget Mid-,Year Change
2011-12 2011-12
Property Taxes 6,578,700 6,758,740 180,040
Sales Taxes 9,016,000 9,200;000 184,000
Bus.License's& Property Transfer Taxes 1,635,000 1,560,000 -75,0001
Franchise Fees 2;615,000 2,290,000 -325,000
Licenses and Permits 985,000 955;000 -30;000
Finesand,Forfeitures 721,600 514,000 -207,600,
Investment Earnings and Rent 333,000 313,000 -20,000
Intergovernmental Revenue 4,665,000 4,277,389 -387,611
Charges for Services 4,273,900 4,240,550 33,350,
Other Revenues 82,300 65,300j -17,000'
TOT Transfer 1,075,000 1,150,000 75,000
Other Transfers 277,500 318,400 40,900
Total Revenue Changes 32,258,0001 31,642,379, -615,621
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Total revenues during FY 11-12 are projected to be down $615,621 from budgeted amounts. An
updated forecast from Sonoma County indicates that Property Tax revenue should be up
$180,040 over what was anticipated in July. Muni-Services has provided the City with an
updated Sales-Tax forecast. Actual revenues have been received through December and are up
5.8% over the prior year. Annual FY 11-12 Sales Tax revenues have been adjusted up by
$184,000 based on this forecast. Business license revenues are anticipated to be $75,000 less
than budget due to the audit impact being moved out to nextfiscal year. Franchise fee revenues
are being reduced by $175,000 in conjunction with the mid-year forecast. Refuse franchise fees
are down dramatically from prior years. The hauler indicates,this reduction reflects widespread
customer downsizing from larger to smaller refuse containers as more material is placed in
recycling. A compliance audit of the franchise to be performed shortly will indicate whether
other factors are involved in this.trend. An additional $150,000 is being taken out of both
revenue and expenditures for Franchise Fees since the amount is a pass through for the
Household Hazardous Waste program. Fines and Forfeitures revenue has been reduced due to
significantly lower parking, vehicle code;and criminalfines. Intergovernmental revenue is
down mainly due to the loss of Vehicle License Fee revenue. This revenue was shifted by the
state to fund Trial Court functions. Charges for services revenues are lower mainly due to less
than anticipated towing fees and charges. Transfers in from the TOT fund are projected to be
$75,000 higher due to an outstanding transfer due from FY 2010-11.
Total Expenditures are projected to be $268,360 under budget during the current fiscal year.
This is mainly due to vacancies in the Fire Department that are in the process of being filled
along with the Household Hazardous Waste program pass through re-class mentioned above.
The chart on the next page shows a summary of revenues and expenditures as of mid-year FY
2011-12. As mentioned above, revenues,are anticipated to be down $615,621 and expenditures
are expected to be down $268,360. That_has an overall negative impact to projected fund
balance of$347,261. At the'beginning of FY 2011-12 fund balance was $461,418. At June 30,
2012 ending fund balance is projected to be $404,127.
There are some risks associated with the mid-year budget update. They are as follows:
1. The City remains dangerously close to a zero balance in the General Fund.
2. A 1.3%decrease in revenues.or.a 1:3% increase in expenditures between now and the
end of the,fiscal,year would deplete fund balance.
3. All budgets,especially salaries and benefits, remain very tight.
There are also some positives associated with the update. They include:
1. Fiscal year 2011-12 revenues and expenditures remain virtually in balance as of mid-
year.
2. Revenues have been analyzed and trued up as of mid-year.
3. Sales tax growth is,a bright spot.
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-NActual Budget Mid-Year
Revenue Categories '4i2p1jj 2012 '2012
Property Taxes ,41-6773:61251 $6,578,700 $6;758740
Sales and Use Taxes rt,;:m 8,,843821,j 9,016,000 9,200,000
Regency..irrpact Ke :.)--P.: `...I
Business;Lic&Prop Trf Taxes ° j,721 278 1,635,000 1,560;000
Franchise Fees 2,43576791 2,615,000 2,290,000
Licenses and Permits it' ';+968�735J 985,000 955;000
Fines&Forfeitures&F2nalties [Z , ,+_696 1271 721,600 L 514,000
.,..,.
Investment Earnings and Rent 7_s, A 63,865) 333,000 313,000
Intergovernmental Revenues i ° f4165816861 4,665,000 4,277,389
Charges for Services h ,7 41364;644 4,273,900 4,240,550
Other Revenues . ^211 220j639f 82,300 .65',300
Transient Occupancy Tax Trf i.„x?°1?000'000 1,075,000 1,15Q0001
Other Transfers andSources '''432,9001 277-,500 318,400`
iota lReve nuesf 642;
�rµ,�< � ,,� x'$31;942,824,. •532268,000 �E31,642;3781
` �Actu � Budget Mid-Year
Expenditure Categories ti 201;1 2012 2012
_..
Salaries and Wages E a_ ,2r$20,029;F786 $18,107,430 $17,993;490
Storm water in'pact t j',7-..e..1:71,41
f
Benefits rirLS!M016588] 7,684,600 7,655,180
Services&Supplies „'1,,4,761,390 4,947,600 4,822,600
Intragovernmental �r_,-1?4i62501 1,155,200 1,155,200
Fixed Assets&Cap.Outlay M' .1,.'i6 516) 8;200 8;200
Transfers Out PI 49.;053”' 65000 65,000
tl
Total Expenditures 7$33,289;54 $31,968,030 $31,699,670
.�^w..sw - H °,r • :� ins.,� - �.p q -.5-� -
If2e : OvedlJnderiExp,. . ,($1;3467591,I1,'f='�8289,9_70 ti ($BZ,291)
-14-v.. 1as li i ,..
Fund Bali,B_eg of+Year % „$1 aOCi77 I I$461,41i $46918
Fund,BaFEndofYear X3 ilk iii,�. .._ _ � . �- ��p1,;5461'418� '':- �5751;388i, $404,1271
The long termfinancial forecast has also been revised in conjunction with the mid-year update.
As mentioned earlier,in this report, the forecasting model and process,are both constantly
evolving. A new, integrated salary and benefit forecasting model has been created. Salaries and
benefits represent;approximately'80%of.total General Fund expenditures so it is extremely
important to focus:significant energy on this process. This new model allows the results of each
forecast year to roll forward to the subsequent year In the past a separate forecast was created
for each year. The new model:provides for increasingly accurate'forecasting.
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•
Another key component of a forecast update is the,evaluation of all assumptions associated with
revenues and expenditures. Below is a table-indicating revenue assumptions that are used in the
long term forecast:
F.77,./10.-° tst'' 4.::::4 ,� ° °^ Forecast" -e. ,Forecast,' » Forecast .Forecast>' 4, r 4.
,.i as ..,.
�ReveuerCategorres g-�� �'~.v ;t2.514,'„. �' ` t 2014 pt,,C,' , ,; :4015�e1�� X20?5'
Property Taxes 0.0% _ 1.5% I 3.0% 3.0%
Sales and We Taxes 4:5% 4.0% { 5.0% 6.0%
Business Lic&Prop Trf Taxes 2.0% 3.0% 3.0% 3.0%
Franchise Fees 2.0% 3.0% 3.0% 3.0%
Licenses and%rnrts 2.0% I 3.0% I 3.0% j 3.0%
Fines&Forfeitures&Penalties _ `2:0% 2.0% 2.0% 2.0% ,
Investment Earnings and Rent 2.0% 3.0% 3.0% � 3.0%
Intergovernmental Revenues 2.0% 2.0% I 2.0% 2.0%
Charges for Services 2.0% 2,0% I 2:0% 2.0%
Other Revenues I 2.0% 2.0% 2.0% _ 2.0%
Transient Occupancy Tax Trf 0.0% 0.0% 0.0% 0.0%
Other Transfers and Sources 0.0% 0.0% i
i 0.0% 0.0%
Property taxes are projected to.beflat during FY 12-13, increase 1.5% during FY 13-14, and
increase 3% annually thereafter. Collaboration with the Sonoma County Tax Collector's office
was critical during the formulation of this projection.
Sales taxes are projected to increase between 4% and 6% over the duration of the forecast.
Muni-services provides the City with estimated sales tax revenues out several years. Nominal
growth is anticipated in the major sectors over the duration of the forecast. General Retail is
expected to grow between 1.5% and 3.0%; Food Products are anticipated to,grow about 1.1%
each year; Transportation,related sales tax is expected to grow between 1,4% and 2.4%; and
Construction related sales tax is projected to grow 3% to 4% over the duration of the modeling
period. An inflation adjustment makes up the difference Between"the categorical growth and the
total revenue growth projections. Growth projections also vary due to the sales tax in-lieu true up
that occurs annually.
Other revenue categories are growing-between 2% and 3%annually throughout the life of<the
forecast. These small increases,are,mainly driven by anticipated inflation increasesover>tiine:
Expenditure assumptions have also been evaluated and revised. As mentioned earlier, the salary
and benefit model update hasprovided for much more accurate forecast information. In
conjunction with that update: positions, payroll rates, allocations, and current benefits for each
employee were verified. Benefits and retirement expenses were also verified and calculations
were reconciled.with the payroll module. Sal-ben full time equivalent positions were also
reconciled with the budgeted authorized positions.
A.significant expenditure assumption in FY 12-13 and beyond.is the.inclusion of salary and
benefits for six Firefighters.in the General Fund forecast. These costs were previously funded by
5-
the SAFER grant. These costs alone amount to approximately $840,000. Another assumption is
the inclusion of comp time payouts that were not previously budgeted. These amount to
$250,000 annually from 2012-13 on. The health care insurance growth assumption remains at
9% annually. This corresponds with increases realized historically. Services and supplies costs
have been increased by 2% annually to provide for inflationary cost increases. PERS employer
contribution rates have been estimated based on the following;table:
FY 11-12 FY 12-13 FY 13-14 FY 14-15 FY 15-16
I(Actual) PERS proj PERS proj PERS proj
Safety 34.07% 34.48% 34.90% 35.40% 36.00%
10-11 golden handshake 0.43% 0.43% 0.43%
Earnings assumption change from 7.75%to 7.5% l 4.00% 4.00% 4.00%
Total safety rate 34.07%I 34.48% 39.33%1 39.83% 40.43%
Misc l 12.94% 13.30% 13.60%, 13.80% 14.00%
10-11 golden handshake ( 0.29% 0.29% 0.29%
Earnings assumption change from 7.75%'to 7.5% 2.00% 2.00% 2.00%
Total"miscrate 12.94% 13.304 15.89% 16.09% 16.29%
There is a significant likelihood that PERS will reducethe investment earnings assumption from
7.75%to 7.5% in the near future. PERS tells us that such an adjustment would affect rates by
about 4% for Safety and 2% for Miscellaneous employees. That assumption is reflected in the
anticipated benefits costs for FY 2013-14 and beyond.
An analysis is underway regarding storm water costs that have_recently been removed from
utility rates. In order to fund these costs until a permanent funding source can be secured, a loan
from the Drainage Impact Fee fund will be recommended. This loan will pay for storm water
maintenance costs incurred from July, 2011 through December,2014. Those costs are estimated
at approximately $1.5 million. It is expected, by that time,,that.a permanent funding source will
be secured: The loan would be•paid back from the General fund. Further, there is.the'issue of
funds which have,been paid from Wastewater for Stormwater maintenance. These funds must
also be'repaid,over time and are estimated at approximately $2 million. Payment of the $3.5
million total is anticipated,to be repaid and the General Fund is the only funding source
available. $200,000 annually has been forecasted beginning in.2014-15 to make that payment.
The above assumptions have been compiled into the five year forecasting,model. The chart on
the next page below shows the results of the updates mentioned above.
•
Mid-Year Forecast Forecast, ' Forecast Forecast
Revenue Categories 2012 2013 r ;2014 Pr 2015 _' 2016
Property Taxes $6,758,740 $6,758;740 $6,860121. $7,065,925 $7,277;902
Sales and Use Taxes 9;200,000 9,614,000 9,998,560 10498,488 11,128,397
Business Lic;&.Prop Trf Taxes 1,560,000 1,666,200 1,641,186 1;690,422 1,741,134
Franchise Fees 2,290,000 2,335,800 2,405,874 2,478,050 2,552,392
Licenses and Permits 955,000 974,100 1,003,323 1,033,423 1,064,425
Fines&:Forfeitures&Penalties 514,000 524,280 534,766 545,461 556,370
Investment Earnings and Rent 313,000 319,260 328,838 338,703 - 348,864
Intergovernmental Revenues 4;277,389 4,362,937 4,450,196 4,539,199 4,629,983
.
Charges for Services 4,240;550 4,225,361 4,309,868 4,396,066 4,483,987
Other Revenues 65,300 66,606 67,938 69,297 69,297
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Transient Occupancy Tax Trf 1,150,000 1,075,000 1,075,000 1,075,000 1,075,000
Other Transfers and Sources 318,400 277,500 277,500 277,500 277,500
itiitaT Re enueS; ,4 ' '4- $31,642379V;r $32'199,784_0:9531"e9 $341507633 ■5:351205;252
Mid-Year Forecast Forecast Forecast Forecast
Expenditure Categories 2012 r 2013 r .2014 - 2015 r 2016
Salaries and Wages $17,993,490, $19,075,938 $19,224,023 $19;330,814 $19,375,613
Storm water impact I I I I 200,000 I 200,000
Benefits 7555,180 8,673,116 9,675,637 10,057;064 10,446,663
■
Services&Supplies .4,822;600 4,849,052 4,946,033 5;044,954 5,145,853
Intragovernmental 1;155,200 1,155,200 1;155,200 1,155;200 1,155,200
Fixed Assets&Cap.Outlay 8;200 8,200 8,200 8,200 8,200
Transfers Out 65,000 65,000 65,000 65,000 65,000
Total Expenditures $31,699;670 $33,826,506 $35,074,093 $35,861,232 $36,396,529
Rey. Over/,Under�O _ s
_ I v._P a,� .�n57 291),14$1 626'j722)ti($T120924),r($1r853;699n$1,'191;2Z8)
'Fund Ba B e g Of Year• . $
4614 ,8 ','. $440c127.,($1222;595) ( 3343;519)] '($5;197; 181
• �
1,so s0 . i,$0 d $0
IEund BalyEnd of Year -. -- 1$404;127 (St,222;595) ($3;343;519) ($5197;2'18) 4388;494)]
As mentioned,earlier in this report, ending fund balance for FY 11-12 is estimated at $404,127.
An annual average deficit of approximately$1.6 million is forecasted over the next four years.
The deficit is higher in FY 2013-14 due to'increased PERS rates associated with the earnings
assumption change. The annual deficit begins to decrease in FY 14-15 and FY 15-16 as revenue
growth begins to outpace expenditure growth.
Sales Tax revenues have been calculated for the recently approved Regency Center project. It is
anticipated:that stores will begin to+open in the Center in mid calendar year 2013. Sales tax
returns,are filed on a quarterly basis and revenue is received by the City in the subsequent
quarter. This analysis does not reflect other miscellaneous revenues or revenues from small
I
retail outlets. These revenues, in total, are not expected to significantly modify the analysis. It is
estimated that revenues will begin to come into the City in mid FY 13-14. The impact that year
is projected to be just under$200,000 with about$500,000 coming to the City in subsequent
years. The scenario below reflects those revenues in the forecast;
Regency Project Revenues Included
Mid-Year Forecast Forecast Forecast Forecast
Revenue Categories 2012 r 2013 r 2014 r 2015 r 2016
Property Taxes $6,756740 $6,758,740 $6,860,121 $7,065,925 $7,277,902
Sales and Use Taxes 9,200,000 9,614,000 9,998,560 10,498,488 11,128,397
Regency hpact 196,750 511,000 511,000
Business Lic&Prop Trf Taxes 1,560,000 1,666,200 1,641,186 1,690,422. 1,741,134
Franchise Fees 2,290,000 2,336800 2,405;874. 2,478050 2,552,392 ,
Licenses and F2rrrits 955,000 974,100 1,003,323. 1,033,423 1,064,425
Fines&Forfeitures&Fbnalties 514;000 524,280 534,766 545,461 556,370
V
Investment Earnings and Rent 313,000 319,260 328,838 338,703 348,864
Intergovernmental Revenues 4,277,389 4,362,937 4,450,196' 4,539,199 4,629,983
•
Charges for Services 4,240,550 4,225,361 4,309;868 4,396,066 4,483,987
Other Revenues 65,300 66,606 67;938 69;297 69,297
Transient Occupancy Tax Trf 1,150,000 1,075,000 1,075,000 1,075,000 1,075,000
Other Transfers'and Sources 318;400 277,500 277,500. 277,500 277;500
T10ta1 Revenues :,afO1,642379d 33699784' b33-549919rc 34°518,533 "';$35716;252
Mid-Year Forecast Forecast Forecast Forecast
Expenditure Categories 2012 r 2013 r 2014 r 2015 r 2016
Salaries and Wages $17,993,490 $19,075,938 $19,224,023. $19,330,814 $19,375613,
Storm water impact I 1 I I 200,000 I 200,000
Benefits 7,655;180 8,673,116 9,675,637 10,057,064 10,446,663
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Services B Supplies 4;822,600 4,849,052 4,946,033 5;044,954 5,145,853
Intiagovernrriental 1,155,200 1,155,200 1,155,200 1,155200 1,155,200
Axed Assets&Cap.Outlay 8,200 8,200 8,200 8,200 8;200
Transfers Out 65;000 66000 65,000 65,000 65,000
Total Expenditures ,$31,699,670 $33,826,506 $35;074,093 $35,861,232 $36,396,529
Rev Over/.miler Ez " + n ; _ s , ire w - Rar
�,_ ,, _k .a p yry. „ �y($57 291)`si81 626 722);a($1 924 174 (b1 342,,99),�,�($680;276i)
Fund Bal ;Beg of Year .4461),4181 $404127 01 222.595) ($3 146969) ($a,a89 468)I
l P - "` _(,$0 s 40' ' t$0 .. - °'$01
Fund BalsEnd of Yer ` o `$ 4127: •,($1 222 595);; $ 146;769] ji89468 ($5;169;74)
The total deficit at4he.end of the forecasting period is reduced by $1.2 million when the Regency
Project=revenues are:iueluded.
cg
Financial implications associated with the.recentredevelopmentdissolution have been analyzed
over the past several weeks. While formal financial guidelines are not yet available, it is
anticipated that they will be published in.the near future. Estimates have been made regarding
the proposed Administration amounts that will be paid to the successor agency. Estimates have
also been made regarding the property tax increment funds that will be paid to the General Fund.
New funds have been created for,the successor;agency funds'and expenditure;budgets have been
developed. It is anticipated that the administration amounts, along with the property tax
increment will, for the most part, cover expenditures related to the successor agencies and that
there will be minimal General Fund impacts.
Redevelopment Impact on the General Fund Analysis
FY 11-12 IFY12-13 FY 13-14 FY 1415 FY 15-16
Revenues:
Ongoing tax,increment-worst case { N/A 345,121 352,023 359,063' 366,203
Ongoing tax increment- most likely case N/A 439,245 448,020 456,980 466,120
Average of above revenue cases 392,183400,022 408,022 416,162
Administrative payment from County 501,000 330,000 330,000 330,000 330,000
Housing funds 25,0001 150;000 150,000 150,000 150,000,
Total Revenues 526,000 872,183 880,022 888,022 896,162
Expenditures:
I
Adrnin 0/H- PCDC 62,033 155,000 155,000 155,000 155,0001
Admin 0/H- Housing 18,800 36,000 36,000 36,000 36,000
Risk Internal service charges 106,667 204,836 204,8361 204,836 204,836
IT internal service charges 10,900 16,774 16,774 16,774 al
Successor agency expenditures: _
Salaries 210,436 284,514 284,514 284,514 284,514,
Benefits 65,433! 95,884 100,678 101,685 102,702
Services&Supplies 52,018 97,900 97,900 97,900 97,900
MIS
Total Expenditures 526,287 890,908 895,702 896,709 897,726i{
Net Revenues -287 -18,725 -15,681 -8,688 -1,565
Notes:
A one-time potential tax increment payment from the County is not included
T/I valuation increases would help revenues J
Total FTEs go from 6.1 down to 4.9- Risk management and IT allocations are based on FTEs
Continuing projects include Old Redwood, Rainier, East Washington int. and possibly Rivertrail I
9
The worksheet on the previous page shows;projectedrevenues,and expenditures over the next
several years. It is important to notethatthe above projections take into consideration a
reallocation of salaries and benefits for individuals providing less or no longer providing services
to the successor agencies.
It is important to note that the above amounts are all estimates at this point. While a
conservative, most likely estimate has been presented the amounts could change and will be
refined over the next few months in conjunction with the budget process. There will also be a
one-time distribution of the City's share of property tax increment calculated on any amount of
redevelopment funds returned to the County. The amount and timing of this potential one-time
payment is unknown at this time and has not been included in the forecast.
There are several risks,associated with the long term forecast presented herein. They are as
follows:
1. PERS rates could increase more than 2% for Miscellaneous and 4% for Safety in 2013-14
from the investment earnings assumption change.
2. PERS rates could;increase from other factors including demographic changes,
underperforming investments, etc.
3. While it is felt the health care cost growth assumption is reasonable at 9% annually it is
not known what the ultimate impact of the universal health care bill will be
4. Any delays in the Regency'project would ultimately affect projected revenues.
5. Property values could continue to be flat or down after 2012-13.
6. Financial implications of the Redevelopment dissolution remain fuzzy.
7. Economic uncertainty remains.
There are also several positives and opportunities associated with the forecast. They are:
1. The economy continues to recover.
2. A recovery in the tourism industry is underway.
3. Economic development opportunities exist including implementation of the SMART
station area.master plan and other proposed development projects.
4. Continued,absorption of vacant office and industrial warehouse space is occurring.
5. Franchise agreement updates could provide additional resources
There is much work to do in order to balance the FY 2012-13 budget and rebuild reserves over
the longer term. Over the next few months next year's budget will be developed, redevelopment
impacts will become clearer, economic development opportunities will progress, and revenue
generation options will-continue to be evaluated. The deficit highlighted in the forecast will be
approached from all directions and, staff is confident, will ultimately be resolved.
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