FY 2008 – 2009Mid-Year Budget Update

Joint Finance Committee & City Council Meeting

Presented byMichael J. Beck, City Manager

November 11, 2008

Total City Budget $636.8 M

$19.20 $22.70

$102.40

$31.10

$14.00

$12.50

$46.00

$11.60

$51.90$30.20

$236.20

$24.40$34.60

Admin Departments Finance Public Safety Housing HS&R

Library Plan & Dev Health Public Works Transportation

Water & Power Debt Service Other

Excluding Operating Companies

Economic Reality

• State Budget Impacts• Banking Industry Collapse• New Housing Starts Halted• Increased Unemployment• Increasing Office Vacancies• Declining Retail Sales• Slowing Assessed Valuation Growth• Business/Vacation Travel Reductions

Revenue Growth

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

FY 2002FY 2003FY 2004FY 2005FY 2006 FY 2007FY 2008FY 2009FY 2010FY 2011FY 2012

Property Tax Retail Sales Tax Utility User Tax

Trans Occup Tax Construction Tax Vehicle In Lieu Tax

Do

lla

rs (

mil

lio

ns

)

General Fund Revenues (Rounded Millions $)

FY 2008 Actual

FY 2009 Budgeted

Revised Projection

s Property Taxes 35.3 35.6 36.7 3%Sales Tax 35.4 35.1 33.9 -3%Utility User Tax 29.6 30.2 29.9 -1%Other Taxes 27.3 29.0 26.5 -9%Charges for Services 21.7 22.5 21.9 -3%Investment Earnings* 21.6 21.1 22.7 8%Intergovernmental Revenues 13.3 12.2 12.8 5%Enterprise Contributions 18.3 15.0 15.1 1%Other 13.4 14.7 14.9 1%-Licenses & Permits-Fines & Forfeitures-Rental Income-Miscellaneous

TOTAL: $215.9 $215.4 $214.4 -0.5%

*Funds primarily reserved for transfer to FPRS.

Expense Growth

Do

lla

rs (

mil

lio

ns

)

10.0

60.0

110.0

160.0

210.0

260.0

FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Personnel Debt Service Total Expenses

Growth ComparisonFY2004 through FY2012 projected

60%

10%

20%

30%

40%

50%

70%

80%

90%

FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012

Personnel Revenue Debt

150.0

160.0

170.0

180.0

190.0

200.0

210.0

220.0

230.0

240.0

250.0

260.0

FY2004Actual

FY2005Actual

FY2006Actual

FY2007Actual

FY2008Actual

FY2009Projected

FY2010Projected

FY2011Projected

FY2012Projected

Revenues

Expenses

Revenue and Expense Trends

(Rounded Millions $) Excludes contributions to reserves

FY09 General Fund Appropriations

230.8 M Operating Budget

Debt Service $23.7

Library Special Tax $9.9

PCOC Share of TOT $5.8

Public Safety $99.7

Public Works $22.0

Transportation $5.5

Plan & Dev $9.6

HS&R $9.8

Finance $10.1

Admin Departments $17.5

Other $17.27

Remaining Budget $91.8 M (40%)

Key Projects and Initiatives

• Resolving structural deficit is key to funding Key Projects and Initiatives…– Ice Rink– Urgent Care– Park/Community Center Improvements– Open Space– Transportation Improvements– Public Facility Enhancements

Budget Reduction Considerations

• Hold vacant positions and evaluate personnel requirements

• Improve internal processes• Reorganize for efficiency• Lock in natural gas purchases to take

advantage of lower prices• Delay investments in large replacement

purchases• Re-evaluate frequency of services• Work with vendors to negotiate reduced rates• Identify and consolidate services across the

organization• Voluntary Furloughs

Target 95% expenditures

Summary

• Historic Budget Estimates:– Revenues generally higher at year end – Expenses generally lower at year end

• Current Structural Deficit:– Revenues are decreasing– Expenditures are increasing– Resulting in estimated gap (deficit) of $10 million

• Solutions:– Status Quo – expect history to repeat or spend

reserves; or– Correct imbalance – reduce expenditures through

efficiencies and reorganizations & use fund balance for key priorities

– Increase General Fund reserves to 15%

• Managing now will avoid fiscal crisis in future.

•Understand that the economic climate has changed and the City needs to adapt responsibly

•Track the State Budget and identify impacts to Pasadena

•Work with our local legislators regarding the City’s needs

•Begin the Fiscal Year 2010 Budget process

•Engage City Council on opportunities to address both the current and proposed budgets

Where Do We Go From Here