1. CITY OF MENIFEE, CA

2. FY 11-12 General Fund Mid-year Review Other Funds Mid-year Review National, State and Local economic conditions FY 12-13 Budget Planning

3. GENERAL FUND

4. REVENUE TYPEAMOUNT Property Tax Revenue (Prior Year Secured, Teeter) $350,000 Transient Occupancy Tax 35,000 VLF (Prior Year Collection) 53,000 Code Enforcement Fines 100,000 Traffic Citations 25,000 TOTAL REVENUE ADJUSTMENTS – GENERAL FUND $563,000

6. Expenditure Reductions: VLF Reductions approved by Council in October 2011 still in force. TOTALREVENUE REDUCTIONS: $3.9 million No additional changes to expenditures recommended

8. REVENUES: Revised estimates – increase of $21,000 Mid-year Adjustments needed: Matching Funds for Safe Routes to School Grant- $25,196

9. TRANSFER BALANCE OF TCRF TO GAS TAX FUND: No new funds-merely an accounting adjustment. TCRF program complete-can use balance of funds if transferred to Gas Tax Fund per State of California. Transfer $377,455 from TCRF to Gas Tax, Alternative would be to return funding to State.

10. REVENUES: Revised estimates – increase of $76,000

13. United States unemployment rate is currently 8.3%, economists predict that the rate will continue to decline. The number of unemployed persons in the U.S. dropped to 12.8 million in January 2012. The Congressional Budget Office (CBO) predicts a $1.1 trillion budget deficit for fiscal year 2012. As a share of the nation’s output (GDP), this shortfall of 7.0% is nearly 2 percentage points below the 2011 deficit, but still higher than any deficit between 1947 and 2008.

14. Per the State’ Legislative Analyst’s office: 2011-2012: $4.1 billion deficit 2012-2013:$5.1 billion deficit Total deficit to be addressed in FY 2012-13 budget plan = $9.2 billion (per Governor’s office under current tax scenario) Legislative Analyst’s office projects $12.8 billion deficit.

15. The Governor’s plan as analyzed by the State’s Legislative Analyst’s office and as unveiled in January, would leave the State with a $1.1 billion reserve at the end of 2012-13. Consists of three major components: Voters approving the Governor’s tax initiative Changes to the Proposition 98 (education funding) formula Significant changes to CalWORKs and Child Care funding.

16. Per State Employment Development Department, the unemployment rate at 10.9%. Economists predict the following: Unemployment rate will continue to drop slowly. Growth in information; professional, scientific and technical services and accommodation and food services industries will continue to outpace growth in the State overall. California’s economy has recently started to outpace that of the United States in terms of growth. Home prices have stabilized but should remain flat through 2012. California has one of the lowest housing vacancy rates in the nation, and residential construction activity should begin to accelerate over the next few years. Housing is at its most affordable in years. CA population on the upswing; 1% population growth in 2012; accelerating to 1.5% growth by 2016.

17. Per the State of Caliofrnia Employment Development Department, the City of Menifee’s unemployment rate is currently 13.3% as compared to Riverside County’s rate of 12.5% Sales Tax Receipts from 3 rd Qtr 2011 are 11.3% higher which compares with an overall County increase of 10.2% and a 9.1% increase statewide. Categories that had major increases were: Consumer Goods-13.8% and Fuel and Service Stations-26.6%. Preliminary estimates for 12/13 project additional increases. These increases reflect the continued efforts of City staff to focus on economic development in order to generate revenue to sustain current and future City services.

18. Net taxable assessed values increased 2.569% from 2010/11 to 2011/12 as compared to County drop of 1.2% in the same period. Median Home Sales Price through October 2011= $175,0000, up from a low of $168,000 in 2009. The median home price of an existing single family detached home in California in July 2011 was $252,000. Menifee’s housing prices make it one of the most affordable in the region.

19. Revenue budgets difficult to estimate due to fast pace of development. Fate of VLF revenue is unclear. Need to balance needs of City with economic realities. City will need to continue to manage any further actions by the State.

20. QUESTIONS?