Like residents, businesses, and public agencies of all types and sizes, the City has been challenged by the lingering impacts of the “Great Recession” to maintain structurally balanced budgets (ongoing revenues that are greater than or equal to ongoing service costs). For many years, the City has worked diligently without relying on “one-time fixes” to contend with projected deficits of several million dollars. This has resulted in a number of actions taken including the reduction of positions, assistance from all employee organizations toward cost containment, and a number of efficiencies and improvements. This work toward a positive bottom line will need to continue, as challenging economic trends continue into the Fiscal Year 2012-13 budget.

The goal for the Fiscal Year 2012-13 Budget is again to achieve a structurally balanced budget with as few impacts on our residents, customers and employees as possible. It is anticipated this will be accomplished by utilizing all options available including operational efficiencies, focused expenditure reductions, and managing the cost of employee benefits.

As the City assesses the current fiscal year and the FY 2012-13 budget, General Operating Fund (GOF) revenue growth is not matching projections. While some revenue categories are performing better than projected in the FY 2011-12 budget, sales and property taxes are performing below expectations due to the slow recovery from the economic downturn. In addition, City investment earnings are not meeting projections due to continuing low interest rates. Given these challenges, additional corrective actions will be needed. An anticipated GOF gap of approximately $1.1M is forecast for FY 2012-13.

The City will continue to proactively address challenges to the City’s financial health and is currently developing options while minimizing impacts to services. The City Manager will present budget updates and/or recommendations at a City Council meeting on April 10, with the budget hearing on June 5 and budget adoption scheduled for June 12.

For further information on the City budget, please contact the City Manager’s Office at (650) 903-6301.

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