FY 2021 2122 ADOPTED OPERATING AND FY 2021 2526 CIP BUDGETS

General Fund Reserves The City is fortunate that its General Fund Reserves have accumulated to a healthy level. This is a result of prior City Council actions and better than expected revenue growth in the past few years. However, the projected drastically reduced revenues in the next few years will undoubtedly use up a large portion of general fund reserves. It is worth noting that the projected General Fund Reserve level includes the continuing policy of employees sharing in the employer share of the PERS cost increases. It is assumed that this increase will continue, and approximately 6.12 percent of Safety employee salaries and 5.3 percent of Miscellaneous employee salaries will be paid by employees, to cover their portion of the shared increase in PERS employer costs in FY 2021-22. General Fund – Summary Overall, absent a quick recovery from the COVID-19 public health crisis economic downturn, the City’s General Fund is expected to remain under pressure. During the next few months, staff will monitor economic data as it becomes available and make further adjustments to revenue projections. Staff will bring forward amendments to the Adopted Biennial Budget to ensure the City’s fiscal sustainability. Development Services Fund The COVID-19 pandemic is expected to have a material and immediate impact to development services related revenue. The fund was originally budgeted to end the fiscal year with an operating deficit of approximately $0.7 million, however, it is now expected to run out of cash before the fiscal year end and will require a short-term loan from the General Fund . The revenue estimates for FY 2020-21 and FY 2021-22 are $4.1 million and $5.3 million, respectively, versus our prior estimates of $5.4 million and $5.6, respectively. The cumulative impact for the three fiscal years is approximately $3.2 million. The advent of the pandemic only heightened the urgency to address the fund’s sustainability. Time is of the essence in addressing the fund’s sustainability. A comprehensive development fee study was previously adopted and planned for the upcoming fiscal year. Staff intends to engage a consultant to conduct a comprehensive fee study once the shelter-in-place order is lifted.

Water and Wastewater Funds

ADOPTED BUDGET MESSAGE 17