1. W ILLIAM A. R AWLINGS, C ITY M ANAGER “E STABLISHING A SOLID FINANCIAL FOUNDATION WHILE PRUDENTLY PLANNING FOR THE FUTURE ” J UNE 21, 2011

2. O VERVIEW B UDGET : T EAM A PPROACH T HE BUILDING OF A COMPREHENSIVE MUNICIPAL BUDGET R EVENUE B REAKDOWN E XAMINATION OF LONG TERM REVENUES E CONOMIC D EVELOPMENT P LAN B RIDGING THE REVENUE GAP H OW DOES THIS HELP CREATE THE G ENERAL P LAN ? B UDGET H IGHLIGHTS B ALANCED BUDGET, PERSONNEL, EXPENSES 2

3.  B UDGET : T EAM A PPROACH S TAFF IS PRESENTING A COMPREHENSIVE MUNICIPAL BUDGET THAT PROVIDES FOR & PLANS FOR THE FUTURE S TAFF HAS WORKED DILIGENTLY ON A NUMBER OF REVENUE SCENARIOS FOCUSED ON PROVIDING FOR THE LONG - TERM FINANCIAL HEALTH OF THE C ITY R EVENUE GENERATION IS A NECESSARILY KEY COMPONENT FOR M ENIFEE NOW & IN THE FUTURE P ERFORMED A STUDY TO DETERMINE THE C ITY ’ S FUTURE REVENUE & COST RELATIONSHIP P ERFORMED A STUDY TO ASSESS CURRENT & AVAILABLE REVENUE SOURCES 3

4.  R EVENUE B REAKDOWN M ENIFEE ’ S CURRENT REVENUE STREAMS DO NOT SUPPORT ENHANCEMENT OF C ITY SERVICES A S THE C ITY CONTINUES TO COMPLETE ITS SEPARATION FROM THE C OUNTY, IT DOES NOT YET HAVE FULL ACCESS TO THE FUNDING SOURCES “ TYPICAL ” CITIES DO M ENIFEE ’ S TOTAL & PER CAPITA SALES TAX GENERATION IS DRAMATICALLY LOWER THAN OTHER CITIES IN THE REGION *B Y SIMPLY EQUALING H EMET AND P ERRIS, M ENIFEE WOULD GENERATE AN ADDITIONAL $9.5M IN ANNUAL SALES TAX REVENUE *B Y SIMPLY EQUALING H EMET AND P ERRIS, M ENIFEE WOULD GENERATE AN ADDITIONAL $9.5M IN ANNUAL SALES TAX REVENUE 4

5.  S OLUTION : F OCUSED E CONOMIC D EVELOPMENT S TAFF DEVELOPED A DRAFT E CONOMIC D EVELOPMENT P LAN TO CREATE REVENUE & PROVIDE NEEDED AMENITIES R EVENUE WILL BE GENERATED BY RESTAURANTS, RETAIL / COMMERCIAL BUSINESSES AND JOB CREATION – WHICH WILL DRIVE FUTURE BUDGET CYCLES T HE E CONOMIC D EVELOPMENT P LAN WILL DRIVE THE COMPLETION OF THE G ENERAL P LAN BY CREATING SPECIFIC RETAIL / COMMERCIAL AREAS U NTIL THE COMPLETION OF ADDITIONAL FUNDING SOURCE TRANSFERS FROM THE C OUNTY, INCREASED SALES & USE TAX FROM IMPLEMENTING THE E CONOMIC D EVELOPMENT P LAN WILL BE THE PRIMARY WAY TO INCREASE REVENUE TO THE C ITY 5

6.  B UDGET H IGHLIGHTS E CONOMIC D EVELOPMENT IS A MAJOR FOCUS OF THIS & FUTURE BUDGET CYCLES 8 NEW POSITIONS ARE BEING ADDED WITHOUT AN OVERALL INCREASE OF THE BUDGET I NCLUDES FUNDING FOR THE FIRST OF THREE YEARS OF C OUNTY LOAN REPAYMENT I NCLUDES $4.3M IN C APITAL R OAD P ROJECT F UND S I NCLUDES THE FORMAL ESTABLISHMENT OF A 25% RESERVE ($6M) & CONTRIBUTIONS FOR RESERVES I NCLUDES $300K IN CAPITAL REQUESTS ( ADMIN SUPPORT, F INANCE, F IRE S TATION I MPROVEMENTS & E MERGENCY E QUIP ) S TAFF IS PRESENTING A BALANCED O PERATING B UDGET 6

7.  B UDGET P RESENTATION T ERRI W ILLOUGHBY, F INANCE D IRECTOR, WILL PROVIDE A HIGH LEVEL OVERVIEW OF THE BUDGET :  R EVENUES VS. E XPENDITURES  FY 2011/12 S OURCES OF R EVENUES  E XPENDITURES BY T YPE ( I. E. S ALARIES /S ERVICES & S UPPLIES )  M AJOR D IFFERENCES FROM FY 2010/11  S TAFFING O VERVIEW BY D EPARTMENT  C APITAL R EQUESTS  E NDING F UND B ALANCE  O THER F UNDS : S UMMARY  CIP: F ORECAST FOR THE F UTURE 7

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9.  B UDGET IS A FINANCIAL PLAN OF EXPENDITURES C OUNCIL SETS GOALS AND POLICY B UDGET ALLOCATES RESOURCES TO FOLLOW AND MEET THESE GOALS B UDGET PROVIDES A GUIDE TO STAFF TO CARRY OUT C OUNCIL POLICY 9

10.  B ALANCED B UDGET WITH CONTINUED EMPHASIS ON ENHANCING SERVICE LEVELS  E NHANCED FUNDING FOR E CONOMIC D EVELOPMENT PROGRAM  A DDED E IGHT (8) ADDITIONAL POSITIONS  I NCLUDED FIRST OF THREE YEARS OF REPAYMENT OF C OUNTY L OAN  I NCLUDED FUNDING FOR CONTRIBUTION TO RESERVES  C APITAL R EQUESTS TO SUPPORT NEW PERSONNEL AS WELL AS IMPROVEMENTS TO ENHANCE SERVICE FOR RESIDENTS  C APITAL I MPROVEMENT P LAN INCLUDES $4.3 MILLION IN NEW PROJECTS FOR F ISCAL Y EAR 11/12 10

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14. D EPARTMENT B UDGET A MOUNT % OF B UDGET P OLICE $9,116,631 37.1% F IRE 6,962,340 28.3% A DMINISTRATION 4,000,747 16.3% C OMMUNITY D EVELOPMENT 2,151,318 8.7% P UBLIC W ORKS /E NGINEERING 1,181,803 4.8% E CONOMIC D EVELOPMENT 983,993 4.0% C ITY C OUNCIL 185,969.8% T OTAL B UDGET :$24,582,801 100% 14

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17. D EPARTMENT FY 10/11 F UNDING FY 11/12 F UNDING N OTES E CONOMIC D EVELOPMENT :219,200983,993I NCREASED EMPHASIS ON PROGRAM N ON - D EPARTMENTAL -0-366,667 A DDED FUNDING FOR 1/3 OF C OUNTY L OAN R EPAYMENT AND R ESERVE F UNDING. N ON - D EPARTMENTAL -0-333,333A DDED FUNDING TO INCREASE RESERVES V ARIOUS -0- A DDED 8 NEW POSITIONS F INANCE 434,665456,953 A DDED ADDITIONAL MODULE OF ACCOUNTING SOFTWARE P LANNING 1,731,860641,386 O NE - TIME EXPENDITURE OF G ENERAL P LAN PREPARATION INCLUDED IN FY 10/11 17

18. P OSITION T ITLE D EPARTMENT H IRE D ATE A DMINISTRATIVE A NALYST /G RANTS S PECIALIST C ITY M ANAGER 10/01/11 A SSISTANT P UBLIC W ORKS D IRECTOR P UBLIC W ORKS 9/01/11 A SSOCIATE E NGINEER E NGINEERING 1/01/12 A SSOCIATE P LANNER P LANNING 1/01/12 B USINESS L ICENSE C LERK F INANCE 10/01/11 C ODE E NFORCEMENT O FFICER IC ODE E NFORCEMENT 9/01/11 C ODE E NFORCEMENT T ECHNICIAN C ODE E NFORCEMENT 9/01/11 E CONOMIC D EVELOPMENT D IRECTOR E CONOMIC D EVELOPMENT 7/01/11 18

19. D EPARTMENT R EQUEST A MOUNT C ITY C OUNCIL P ODIUM DOORS FOR C HAMBER $5,000 I NFORMATION T ECHNOLOGY C OMPUTER E QUIPMENT 35,000 E MERGENCY M GMT E MERGENCY E QUIPMENT 53,800 F INANCE A DDITIONAL F INANCE SOFTWARE 55,370 N ON -D EPARTMENTAL O FFICE FURNITURE / NEW EMPLOYEES 36,000 B UILDING & S AFETY R ACK FOR PLANS 1,000 C ODE E NFORCEMENT E QUIPMENT /V EHICLES FOR NEW STAFF 87,300 E CONOMIC D EVELOPMENT C ONFERENCE BOOTH & VIDEO PRODUCTION EQUIPMENT 5,000 P OLICE R ADIOS 14,200 F IRE B UILDING IMPROVEMENTS 20,000 T OTAL C APITAL $312,670 19

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21. Fund Beginning Fund Balance- ProjectedRevenuesExpenditures Ending Fund Balance- Projected Gas Tax$71,476$2,392,367$2,460,000$3,843 Measure A1,022,870892,0001,911,3603,510 TCRF433,76150010,000424,261 SLESF0100,000 0 AQMD146,69179,75079,000147,441 RBBD1,269,8451,357,50010,0002,617,345 CSAs2,740,9332,053,0052,177,4022,616,536 DIF3,802,4541,801,62605,604,080 Veteran ‘s Memorial 25,70021,000276 EMPG2,186123,26057,15268,294 LLMD 89-1-C32,86331,52030,00034,383 Total$9,518,655$8,857,228$6,855,913$11,519,970 21

22.  G AS T AX : F UNDED TAX ON FUEL USED TO PROPEL A MOTOR VEHICLE OR AIRCRAFT. A LLOCATED TO S TATE ’ S T RANSPORTATION D EBT S ERVICE, S TATE PROGRAMS FOR CAPITAL IMPROVEMENTS ; AND 44% TO LOCAL AGENCIES. L OCAL AGENCY SHARE CAN BE USED FOR PLANNING, CONSTRUCTION, IMPROVEMENT, MAINTENANCE AND OPERATION OF PUBLIC STREETS.  M EASURE A: V OTER - APPROVED FUNDS FROM LOCAL SALES TAX FOR TRANSPORTATION  TCRF: T RANSPORTATION C ONGESTION R ELIEF F UND  SLESF: S UPPLEMENTAL L AW E NFORCEMENT S ERVICES F UNDS - F ROM S TATE V EHICLE L ICENSE F EES FOR LAW ENFORCEMENT. 22

23.  A IR Q UALITY M ANAGEMENT D ISTRICT : F UNDING FROM VEHICLE REGISTRATION FEES TO FUND PROJECTS THAT REDUCE AIR POLLUTION.  RBBD F UNDS : R OAD AND B RIDGE B ENEFIT D ISTRICT. F UNDING FOR CAPITAL PROJECTS.  CSA: C OMMUNITY S ERVICE A REA : S PECIAL CHARGES ARE LEVIED TO PROVIDE FUNDING FOR VARIOUS TYPES OF MAINTENANCE WITHIN EACH AREA.  DIF: D EVELOPMENT I MPACT F EES : F EES PLACED ON THE DEVELOPMENT OF LAND OR CONDITIONS REQUIRED FOR THE APPROVAL OF A DEVELOPMENT PROJECT TO FUND THE FUTURE IMPACT OF DEVELOPMENT. 23

24.  V ETERAN ’ S M EMORIAL F UND : F UNDED BY DONATIONS.  EMPG: E MERGENCY M ANAGEMENT P ERFORMANCE G RANT. P ROVIDES FUNDING TO ASSIST LOCAL GOVERNMENTS IN PREPARING FOR ALL HAZARDS.  LLMD 89-1: S PECIAL DISTRICT SET UP TO PROVIDE LIGHTING AND LANDSCAPING WITHIN A CERTAIN AREA. F UNDED BY ASSESSMENTS. 24

25. 25 N EW P ROJECTS FOR F ISCAL Y EAR 11/12 N EWPORT ROAD : H AUN TO M ENIFEE $1,150,000 S LURRY S EAL P ROGRAM 760,000 N EWPORT R OAD S IGNAL C ONSTRUCTION 200,000 G ARBANI R OAD R EPAIRS 400,000 S TREET S TRIPING 100,000 M AINTENANCE 1,700,000 A DMIN C OST R ECOVERY 71,630 T OTAL :$4,381,360

26.  S LOW BUT STABLE ECONOMIC RECOVERY  I NCREASE EXISTING REVENUE SOURCES  D EVELOP ADDITIONAL REVENUE SOURCES TO INCREASE DIVERSITY OF REVENUE  M AINTAIN PRUDENT SPENDING PLAN 26

27.  S TATE B UDGET N EED TO “ CONTROL OUR OWN DESTINY ” P OSSIBLE EFFECTS MAY INCLUDE :  P OSSIBLE ELIMINATION OF SLESF FUNDING ($100,000)  B OOKING FEES : T HE C ITY MAY BE RESPONSIBLE FOR BOOKING FEES AGAIN. T HE EFFECT IS NOT KNOWN AT THIS TIME.  N EW L EGISLATION  L EGISLATION PENDING TO INCREASE USE TAX COLLECTIONS ON INTERNET SALES 27

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