Background

Each year, the City Staff prepares a mid-year budget report that outlines the City's budget performance to date (revenues and expenses), makes mid-year budget amendments and provides a preview of the next budget that starts on July 1, 2008. This year's mid-year budget report was noteworthy since it included a multi-year revenue and expense projection and a discussion of options necessary to keep the General Fund portion of the budget balanced. Here are the highlights and materials from the February 26, 2008 City Council Meeting on the City Budget, the Mid Year Report, the Multi-Year Revenue Model and an overview of the General Fund Budget Challenges.

The Budget "Tipping Point" and Ongoing General Fund Budget Problems - Comments from City Manager Mark Weiss

Prior to the completion of the mid-year budget report, City Manager Mark Weiss released a statement noting that the City of San Carlos had reached a critical "tipping point" in its budget. City Expenses are growing faster than City Revenues and the gap is widening. This will require that the City Council to make additional General Fund Budget service reductions and/or find new sources of revenue in the neighborhood of $800,000 to $1 Million per year in each of the next 3 years. This is true even after the projected revenues from the new San Carlos Marketplace and the future Palo Alto Medical Center are included. Here is a link to the City Manager's comments about the City's General Fund Budget "Tipping Point".

• City Manager and Staff to Review Financial "Tipping Point" with City Council at February 26, 2008 Council Meeting (February 21, 2008)

Budget Challenges Table

During the Budget Challenges and Multi-Year Budget Projection portion of the presentation, slides were shown that outlined the challenges facing the City. Here is a summarized look at the Budget Challenges list. It consists of 3 parts - Annual Budget Challenges in the General Fund ($3.3 Million per year), One-Time General Fund Challenges ($500,000) and Unfunded Capital Projects in the Drainage, Parks and Streets areas (Over $100 Million in needs).

Part 1 – General Fund Budget Challenges (Annual)

Budget Challenges	Cost Per Year
Fund GASB 45 (Retiree Medical) Costs	$500,000
Fund Equipment Replacement	$500,000
Fund Increased Fire JPA Costs	$500,000
Restore Police Personnel (Partial)	$500,000
Restore General Fund Capital Funds	$1,300,000
Renegotiate Labor Contracts	$$$
New Programs	$$$
Total	Over $3.3 Million (per year)

Part 2 – General Fund Budget Challenges (Reserve Funding)

Budget Challenge	Cost
Increase General Fund Reserves	$500,000
Total	$500,000 (one-time)

Part 3 – Capital Project Budget Challenges

Budget Challenges	Cost
Address Unfunded Capital Needs	Over $100 Million
Drainage/Flood Improvements Park Projects/Park Master Plan Streets Building and Facilities Total	Over $100 Million (one-time)

PowerPoint Presentations: General Fund Budget Problems, Multi Year Projections and Potential Revenue Choices

During the February 26, 2008 City Council Meeting, each area was highlighted by a PowerPoint presentation. A copy of these presentation files is linked below:

• Overview & Multi-Year Fiscal Forecast Report - Mark Weiss, City Manager, Jeff Maltbie, Administrative Services Manager & Frank Spevacek, Rosenow Spevacek Group (RSG) (Acrobat File, 70 Kb)
• Revenue Alternatives Report - Jeff Maltbie, Administrative Services Manager (Acrobat File, 98 Kb)
• 2007-08 City Budget Mid Year Review - Jeff Maltbie, Administrative Services Manager (Acrobat File, 54 Kb)

Video: Reports on General Fund Budget Problems, Multi Year Projections and Potential Revenue Choices

A video of the reports on the City's General Fund Budget Problems, Multi-Year Projections and Potential Revenue choices is now available. Click on the link below to watch the video that includes the reports by City Manager Mark Weiss, Administrative Services Director Jeff Maltbie and Frank Spevacek from the Rosenow Spevacek Group on these problems and potential solutions. The video is in Windows Media Format and requires software on your computer that supports this video format.

• Report on Budget Challenges - Mark Weiss, City Manager, Jeff Maltbie, Administrative Services Director and Frank Spevacek, Rosenow Spevacek Group (Watch the Video) 2 hours 23 minutes