HomeMy WebLinkAbout12/12/2006, BW 4 - GENERAL FUND FIVE YEAR FISCAL FORECAST: 2007-12 council 12-12-06
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CITY OF SAN LUIS OBISPO
FROM: Ken Hampian, City Administrative Officer
Bill Statler, Director of Finance & InformationTechnology
SUBJECT: GENERAL FUND FIVE YEAR FISCAL FORECAST: 2007-12
CAO RECOMMENDATION
Review and discuss the results of the General Fund Five Year Fiscal Forecast for 2007-12.
DISCUSSION
The purpose of the attached five year forecast is to assess the General Fund's ability over the next
five years—on an `-`order of magnitude"basis—to do three things:
1. Deliver current service levels.
2. Maintain our existing infrastructure and facilities based on past funding levels.
3. Preserve our long-term fiscal health by aligning operating revenues and costs, and
maintaining fund balance at policy levels.
Consistent with the General Fiscal Outlook presented to the Council on November 16, 2006, the
forecast concludes that we enter 2007-09 facing our best fiscal outlook in many years due to
three key factors:
1. Passage of Measure Y. This '/z-cent sales tax measure was adopted with 65%voter approval
on November 7, 2006. We estimate that it will generate $4.5 million in added General Fund
revenues.
2. Structural Budget Balance. With the actions we have taken beginning in 2003, we have
achieved "structural budget balance" for the long-term. This means that the added revenues
from Measure Y will not be required simply to forestall even greater cuts,but can be used for
service restorations and new initiatives, based on the goals that emerge during the City's
budget process.
3. Strong Financial Condition. Because of our prudent planning and budget balancing
actions, we will go into the 2007-09 Financial Plan process with strong reserves that are
above our minimum policy level. While this is a "one-time" source, it can appropriately be
used for one-time purposes like facility and infrastructure improvements to our streets, storm
drains and parks.
Tough Policy Decisions Remain. These three factors together will go a long way in improving
our ability to fund community priorities. However, tough policy decisions will remain. On one
hand, we certainly have more resources to address community needs; on the other hand, they are
General Fund Five-Year Fiscal Forecast: 2007-12 Page 2
not unlimited. Placed in context, Measure Y represents an increase of about 10% in General
Fund resources. Obviously, this improves our funding capacity, but we still have to identify our
highest priorities and make wise resource choices accordingly.
And in many ways, this will make the policy environment in making resource decisions more
difficult than when times were fiscally tougher: instead of"just saying no," we will be able to say
"yes" to some things—but not everything.
In short, even with our improved fiscal situation, significant challenges remain ahead of us in
answering the fundamental policy questions posed by the budget process: of all the things we
want to do in making our community an even better place to live, work and play, which are the
most important? And what are the resource trade-offs we have to make to do them?
SUMMARY
Along with the three key factors noted above in contributing to our favorable fiscal outlook, we
are also fortunate to have an excellent "fiscal infrastructure" in place as a basic foundation in
making the tough policy decision ahead of us:
1. We are in good fiscal shape.
2. We have good information.
3. We have strong financial systems and procedures in place.
4. We have an excellent organization and capable staff.
5. We have excellent Council leadership..
6. We have a great tradition of responsible stewardship.
This"civic infrastructure" is simply not in place in many other cities. And it will serve us well in
successfully meeting the policy challenges ahead of us.
ENCLOSURE
General Fund Five Year Forecast: 2007-12
G:Budget Folders/Financial Plans/2007-09 Financial Plan/Forecast/Council Agenda Report,12-12-06
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