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Published byJohnny Kindrick Modified over 10 years ago
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FY 2009 First Quarter Update & Economic Impacts on the City’s Budget December 8, 2008
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2 The Update Overview Economic Climate & Trends FY 2009 Budget Update General Fund Revenue General Fund Expenditures FY 2010 & FY 2011 Forecast Budget Calendar
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3 A Challenging Economic Outlook National economic failure Rapid financial sector collapse Restricted credit – no lending Property and auto sales dropping Volatility & Uncertainty! No certain solution in sight
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4 Continued Economic Uncertainty – Bad News from the State State deficit = $28B $10B out-year deficits Round #1 cuts to Berkeley = $1.75M Set aside $1.8M to buffer cuts Not a long-term solution More cuts to come… Public & Mental Health programs Increased fee/charges to cities E.g., DMV Administrative Costs
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5 FY09 1 st QTR Indicates Downturn Overall loss of revenue Property Transfer Tax down 46%(-$1.5M+) Sales Tax down 2.3% (-$500,000 so far) Parking Meter revenue down 10% (-$500K) Property Tax growth slowed Permit Activity down
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6 Updated FY09 Revenue Projections 1 st QTR Report:+$343K Now:-$700K $1M swing = Volatile & Dynamic Updating information continuously
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7 GF Revenue Forecast Forecasted declines in: Property Transfer Tax Sales Taxes Vehicle In-lieu Tax Some Revenue Increases: UUT (offset by like cost increases) Interest Income (up now, but uncertain future)
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8 Property Transfer Tax Decline Real estate market collapsed 50% Revenue DECLINE!
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9 Property Sales Tax Decline Changes since last year (FY 2008): Total Property Sales down 48% Commercial Property Sales down by 88% Residential Property Sales down by 27%
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10 Decline in Assessed Value Growth
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11 How is our FY09 1 st QTR Spending? Generally within budget Some potential General Fund problems: Fire Department Overtime (Measure GG will help offset this) Police Department Overtime Recreation Division cost overrun Other Revenue Fund problems: Refuse Fund Mental Health & Public Health Funds Permit Service Center Fund
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12 FY 2010 & FY 2011 – Getting Ready Proceed with Caution! Revenues down State Uncertain Economy Uncertain Not a time for growth Capital expenditures down Reductions Required for General Fund and other funds
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13 Policy Framework 1-time revenue for 1-time expenses Long-term fiscal health 2-year budget 5-year planning Prudent Reserve Control labor costs – minimize layoffs Manage unfunded liabilities No new programs without new revenues or expenditure cuts
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14 1 st QTR GF Forecast FY 2009 – FY 2013 Deficit growth with flat PERS rates & no action Excludes a number of possible influences
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15 A Delicate Balance What if….. The State takes more local revenue? The economy continues to drop? Transfer Tax declines further? What if PERS rates increase 6%+?
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16 General Fund Reserve
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17 GF 5-Year Forecast GF Reserve balance dips to $7.26M if no action taken to remedy structural deficit
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18 CalPERS Losses Impact Berkeley Dramatic portfolio losses (30% and dropping…) Rate smoothing cannot absorb Rates will increase by FY 2012 2% - 6% of payroll Huge cost increase to Berkeley
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19 PERS Rate Increase = Big GF Deficit GF operating deficit of $4M -$8M if we do nothing Wipes out GF Reserve entirely! Need to plan now!
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20 Capital Improvements - Funding Reduced Reduce General Fund capital funding by 33% Must finish current big projects Animal Shelter Ed Roberts Campus Brower/Oxford Center Center Street Garage Gilman Playing Fields
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21 Some Good News Measure GG: up to $3.6M annually Fire and emergency services FRALS Ensure staffing and no closures Disaster preparedness Measure FF: $26M (1-time) Library bond for branch improvements Measure WW: $4.86M (1-time) regional parks bond
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22 Other Fund Deficits
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23 Other Revenue Funds Face Deficits Public and Mental Health Funds Expenditure reductions Streetlight Assessment Fund Possible General Fund subsidy increase Refuse Fund Rate increase in March 2009: 15-20% Clean Storm Fund Ballot in FY 2010 Permit Service Center Fund Expenditure reductions
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24 What are the Next Steps? Plan for long term Control costs Begin budget review (January – March) Council Citizens Labor unions & employees Mid-year Update on February 10
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25 Council Budget Planning Focus on service areas Impacts and Outcomes Special Council workshops Adopt revised calendar Add some Council dates
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26 Budget Calendar & Workshops
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