Subject Revised General Fund Forecast and Revenue Shortfall

Finance Department Memorandum To: From: Subject: Date: Sean Quinn, City Manager Bob Leland, Director of Finance BL Revised General Fund Forecast and Revenue Shortfall December 23, 2008 Executive Summary Sales tax, property tax and other local revenues have declined due to the increasing severity and duration of the global economic recession. Under the revised forecast described in this memo, $13.1 million in spending cuts will be required over the next three years to balance the General Fund budget and maintain a minimum 5% reserve. Of that total, $6.5 million in cuts (or higher revenues) must be effective by July 2009, followed by another $6.6 million over the next two fiscal years. Without such cuts, the General Fund will be in deficit by 2010. These cuts will unavoidably reduce services to the public. Following discussions with department heads, the City Manager has already undertaken the following actions: • All vacancies are being reviewed on a case-by-case basis to determine whether the position should be filled or left vacant; the more vacancies that exist, the greater the flexibility the City will have in making cuts via attrition rather than by layoff. City Manager approval is required for all travel and training involving overnight stays, rental cars or out-of-state travel. To determine the potential for immediate non-personnel savings, staff teams have been created to review consultant and other contract services; non-retainer legal services; size and composition of the City’s vehicular fleet; overtime practices; postage and printing; organization dues; telephone billings; and operation of City facilities. To the extent savings are identified, they will be implemented starting mid-year, and will reduce cuts needed in staffing and services. Community Services and other programs are being analyzed to determine areas where fee increases are feasible, and how much additional revenue might be raised. Staff will also assess options for unpaid staff furloughs, and review alternative work schedules and scheduled wage adjustments, to determine the feasibility of actions to reduce personnel costs that avoid layoffs; such changes must be approved by Council and undergo impact bargaining with affected labor groups before implementation. • • • • At the Council’s goal-setting workshop on January 30-31, 2009, staff will present recommended budget cut ranges for each department, and a discussion of budget-related issues. After receiving feedback from Council, a final plan with specific budget cuts and fee increases will be presented in late February for Council approval. Impact bargaining will then be conducted with the affected labor units, and the final budget cuts and other changes will take effect on or before July 1. 1 State of the Economy National: Since the start of the recession in December 2007, as recently announced by the National Bureau of Economic Research, the number of unemployed persons increased by 2.7 million to 10.3 million, and the unemployment rate is now 6.7%. One out of ten mortgages is either past due or in foreclosure. The stock market has plunged 45% from its highs of mid2007. (See Exhibit A for other national economic trends.) Over the past year the Federal Reserve and the Treasury have guaranteed investments, loans and deposits worth $7.8 trillion (see Exhibit B), which is equal to about half of the nation’s annual economy, and which vastly surpasses the $700 billion plan approved by Congress. This recession will likely exceed the magnitude and duration of any economic downturn since the Great Depression. State: In spring 2008 forecasters assumed improvement in economic growth late in 2008 or the first half of 2009. The leading California forecasts are now much more pessimistic: • UCLA’s Anderson School Forecast says the U.S. economy is in a “nasty recession,” with “four quarters of negative growth (followed by very tepid growth rates) and rising unemployment rates that last through 2010.” Their state outlook calls for “a very weak first three quarters of 2009, with the glimmer of a recovery in the fourth quarter.” They note that the “Inland Empire, Orange County, the East Bay and Central Valley will be hit hardest as the recession provides a double whammy with a generalized downturn in demand and a postponement of a recovery in residential construction.” University of the Pacific’s Business Forecasting Center predicts “the state’s recession should end by the fourth quarter of 2009, but the job market will remain weak through 2010… unemployment peaks at 9.6% in late 2009. Retail sales will decline by $30 billion – 6 percent – next year, and create severe problems for state and local governments, which depend on sales tax revenue.” • Current estimates place the state budget deficit at $42 billion through June 2010. The Governor has declared a “fiscal emergency.” This requires the Legislature to act within 45 days or no other state business can be transacted. Local: The economy in Fairfield and Solano County is worse than the statewide average: • Foreclosures are soaring. The Fairfield-Vallejo area is ranked 10th highest in the nation for the rate of foreclosure filings in November, with one out of every 133 homes. (Foreclosures in Fairfield over the past 12 months ending in September total 1,431, with another 2,021 notices of default.) Home prices are plummeting. The Vallejo-Fairfield metropolitan area had the 5th highest drop in the nation in home prices (33.3% over the past four quarters ending in September) according to a federal housing report. Development is virtually non-existent. In the past 12 months, only 37 new housing units were issued building permits, the lowest level on record. By contrast, over the last eight years the annual average of approved new housing units was 792. For commercial and industrial development, only 109,000 square feet of new development has been approved over the last 12 months, versus the eight-year annual average of 811,000 square feet. 2 • • • Sales tax revenues continue their two-year slump. For the last nine consecutive quarters Fairfield taxable sales have declined over the same quarter of the prior year. In the second quarter of 2008 (2Q08), Fairfield cash receipts were down 17% (Vallejo was down 18% and Vacaville down 15% for the same quarter). Preliminary results for the third quarter of 2008 show Fairfield down 5.3%. Job losses are mounting. Unemployment in Fairfield was 8.5% in October, exceeding the statewide average of 8.2%, which in turn exceeds the national jobless rate of 6.7%. • See Exhibit C for trends in local economic indicators. Adopted Budget Forecast is Obsolete The budget adopted June 17, 2008, included $7.2 million of budget cuts effective July 1, 2008. Together with a spend-down in reserves totaling $38.6 million over the next eight years, these cuts were projected to maintain a minimum General Fund balance equal to 5% of total expense. Table 1 summarizes those adopted budget estimates for the General Fund through fiscal year 2015/16 (FY15/16). The revenue assumptions in that adopted budget were based on the consensus of state and business economists, who in the spring of 2008 were predicting that a recession would be avoided, and that the economy would bottom out by the end of 2008 and start improving in early 2009. The economy has instead gone into a tailspin. Table 1. General Fund Summary-Adopted Budget ($ in 000) Sales & Use Tax Property Tax VLF & VLF In-Lieu Development Income Other Revenue Loan Fund/ISF Transfers In Total Revenue Gross Salary/Wages Pension Costs Health Costs Other Net Expense Total Expense Net Revenue(Expense) Beginning Balance Ending Balance Reserve % of Expense 07/08* 17,796 12,904 8,830 2,357 20,795 3,400 66,082 35,698 12,317 5,555 25,064 78,634 (12,552) 29,050 16,498 21.0% 08/09 18,360 12,711 9,084 1,908 18,302 1,000 61,365 37,277 10,694 6,723 18,335 73,029 (11,665) 16,498 4,833 6.6% 09/10 19,098 13,157 9,448 2,898 18,130 11,400 74,131 38,431 10,801 6,818 19,166 75,215 (1,084) 4,833 3,749 5.0% 10/11 20,268 14,033 10,044 4,252 18,716 13,000 80,313 41,420 11,587 7,300 19,757 80,064 250 3,749 3,999 5.0% 11/12 21,156 15,039 10,736 5,626 19,471 8,400 80,428 41,296 11,528 7,214 20,390 80,428 1 3,999 3,999 5.0% 12/13 22,126 16,325 11,585 4,737 20,222 8,050 83,045 42,686 11,939 7,421 20,859 82,903 142 3,999 4,141 5.0% 13/14 23,171 17,784 12,496 3,956 20,976 7,350 85,733 44,097 12,346 7,634 21,543 85,620 113 4,141 4,253 5.0% 14/15 24,276 19,255 13,480 3,991 21,872 5,300 88,174 45,500 12,723 7,853 21,946 88,022 152 4,253 4,406 5.0% 15/16 25,386 21,674 14,540 4,659 22,514 4,000 92,773 46,844 13,104 8,079 22,059 90,087 2,686 4,406 7,092 7.9% *includes Public Safety Fund prior to its inclusion with the General Fund The tumultuous economic events of the past six months have required wholesale revisions to everyone’s budget forecasts, in both the public and private sectors. To revise Fairfield’s budget forecast, staff identified the most significant budget variables: sales tax, property tax, and vehicle license fee revenues; the level of local development; wages, health, and pension costs; and the magnitude of state takeaways. Staff then developed for each factor an “A” and a “B” alternative to the values on which the adopted budget forecast was based. Both forecast alternatives are more pessimistic than the adopted budget, but the “B” alternative is more pessimistic than the “A” alternative. The following pages discuss these alternatives, explain the assumptions that went into the updated budget forecast, and show the resulting shortfall. 3 Sales Tax Growth The sales and use tax is the General Fund’s single largest revenue source at 27% of total revenue; 75% is paid by the state based on current local sales, and 25% is paid in arrears via the county along with property tax payments (this latter portion is referred to as the “triple-flip” and resulted from the way in which the state secured payment of its deficit bonds in 2004). The state pays monthly advances with quarterly reconciliations to actual collections. This tax is closely linked to trends in the greater economy, and its performance has been bad for the past two years. Hardest hit have been auto sales, construction and home products, but in recent quarters general retail activity has suffered significant declines as well (see Table 2). This is likely due to the extraordinarily high numbers of foreclosures and their depressing impact on discretionary spending in this region. (Declines in sales tax statewide have been worst in those areas of high foreclosures, such as the North Bay, San Joaquin, Central Valley and Inland Empire.) Sales Tax Annualized Perfomance as of 2Q08 ($ in Mil.) $3.1 $3.5 $2.0 $1.4 $5.4 $15.3 % of Tot 19.9% 22.8% 13.2% 9.1% 34.9% 100.0% Autos Food/Gas Business-to-Business Construction All Other Retail Totals Autos All Other Retail Food/ Gas Construction Business-toBusiness Table 2. Recent Changes in Sales Tax Cash Flow and Performance by Sector Actual Cash Flow Fairfield Statewide Economic Performance* Fairfield-Total --Autos --Food/Gas --Business Sales --Construction --All Other Retail 2Q06 7.3% 8.3% 3Q06 (5.1%) 4.5% 7Q06 (3.7%) 2.9% 1Q07 (8.0%) 2.2% 2Q07 (1.3%) 1.0% 3Q07 (5.8%) (2.7%) 4Q07 1Q08 2Q08 (1.6%) (10.7%) (17.2%) 0.0% (2.1%) (3.1%) (11.0%) (28.3%) 3.9% 1.2% (28.1%) (10.5%) 5.4% (6.4%) (1.3%) 1.7% (4.6%) (5.7%) (4.5%) (12.0%) 2.7% 0.8% 4.4% 1.5% (12.8%) (15.8%) (13.6%) (26.9%) 11.0% 6.8% 0.2% 4.6% (4.8%) (5.8%) 3.1% 2.4% 25.4% (36.0%) 5.1% 9.6% 15.1% 13.9% 13.7% 0.4% (10.7%) (15.5%) (12.1%) (13.4%) (9.0%) (9.6%) (12.1%) (23.5%) 5.5% (1.1%) (2.9%) 2.5% (2.7%) (3.7%) (6.9%) (11.8%) *Based on economic activity reported for that quarter, excluding impact of state administrative costs, late payments, and state withholding amounts (which affect cash receipts). In the adopted budget forecast, sales tax revenue was expected to decline through 2008, then level out and begin recovering by mid-2009. As shown in Table 3, the adopted budget assumed retail sales would bottom out in late 2008, resulting in a 5.2% decline in FY07/08, with moderate growth in FY08/09, and the full impact of anticipated new auto dealers starting in FY09/10 and continuing through FY10/11. However, revenue losses for the first three quarters of 2008 were higher than expected, and national retail sales show declines continuing in October and November. Locally, several businesses have announced closures (Mervyn's, Circuit City, Linens & Things, Ford, Chrysler, Dodge and Volvo), which together accounted for $800,000 in tax revenue over the past 12 months; these closures will begin to be reflected starting in the fourth quarter revenue allocation received in March 2009. All of this indicates sales tax losses will continue in the fourth quarter of 2008 through mid2009: the question is whether the recovery begins at that point or whether further declines or stagnation continues beyond that point. In Table 3, Alternative A assumes the decline in retail 4 sales extends through mid-2009, with slow recovery starting in late 2009. Compared to the adopted budget, this results in significantly larger revenue declines through FY08/09 and near zero growth in FY09/10. Alternative B is more pessimistic by assuming larger declines in the upcoming quarters, with recovery not starting until late-2010. (The bottom portion of Table 3 shows actual and projected change by quarter, with actuals highlighted in pink, and future negative or low-growth quarters highlighted in yellow.) Table 3. Comparison of Sales Tax Growth Assumptions Alternative Adopted Budget A - recovery starts late-2009 B - recovery starts mid-2010 07/08 08/09 (5.2%) 3.2% (6.9%) (9.7%) (6.9%) (11.7%) 09/10 4.0% 0.1% (2.8%) 10/11 6.1% 6.3% 5.7% 11/12 4.9% 4.6% 4.6% 12/13 4.1% 4.5% 4.5% 13/14 4.7% 4.6% 4.6% 14/15 4.7% 4.8% 4.8% 15/16 4.6% 4.8% 4.8% Recent & projected quarterly changes in Sales Tax under each alternative (excluding "Triple-Flip" payments) Quarter 1 2 3 4 Alternative A Alternative B Actual 2006 2007 2008 2009 2010 2008 2009 2010 14.9% (8.1%) (10.7%) (6.8%) 3.8% (10.7%) (8.5%) 0.6% 7.2% (1.3%) (17.2%) (2.4%) 4.3% (17.2%) (6.6%) 2.5% (5.2%) (5.8%) (5.3%) 0.5% 4.6% (5.3%) (4.6%) 3.5% (3.9%) (1.5%) (9.6%) 3.2% 5.0% (11.1%) (3.3%) 4.6% The revised forecast assumes Alternative B for sales tax growth. This outcome is reflected in the revised revenue forecast in Table 4, which shows a loss of $2.5 million in FY08/09, growing to $5.3 million by FY15/16. The next meaningful information on sales tax revenue trends will be available December 26, 2008, and March 30, 2009. Table 4. Revised Sales Tax Revenue Under Alternative B ($ in 000) Adopted Budget --Percent Change 07/08 17,796 -5.2% 08/09 18,360 3.2% 09/10 19,098 4.0% 10/11 20,268 6.1% 11/12 21,156 4.4% 12/13 22,126 4.6% 13/14 23,171 4.7% 14/15 24,276 4.8% 15/16 25,386 4.6% Revised Forecast --Percent Change 17,481 -6.9% 15,860 -9.3% 15,313 -3.4% 15,997 4.5% 16,739 4.6% 17,491 4.5% 18,302 4.6% 19,185 4.8% 20,097 4.8% Net Change (315) (2,500) (3,785) (4,271) (4,417) (4,635) (4,869) (5,091) (5,289) Property Tax Growth The property tax is the number two General Fund revenue source at 21% of total revenue. Revenues grew rapidly as market values soared from FY99/00 through FY06/07, often in the double-digit range (see Table 5). Table 5. Percent Change in Property Tax Revenue 96/97 5.3% 02/03 10.8% 97/98 -2.6% 03/04 13.3% 98/99 6.0% 04/05 20.6% 99/00 8.7% 05/06 18.9% 00/01 10.9% 06/07 7.2% 01/02 9.0% 07/08 4.4% Property Tax 2008/09 Assessed Value ($ in Bil.) $8.0 $1.4 $1.0 $0.4 $0.5 $11.3 Other Vacant Land Industrial % of Tot 71.1% 12.5% 8.7% 3.3% 4.5% 100.0% Residential Commercial Industrial Vacant Land Other Totals Commercial Assessed values are established annually by the County Assessor as of January 1. The secured roll tax bills for FY08/09 are based on values as of January 1, 2008. Value changes due to ownership transfers or new 5 Residential construction receive mid- Chart 1 Sample Prop 8 Impact on Home Assessed Value year supplemental tax Prop 13 Value Fair Market Value bills. Under Prop 8, a (solid marker denotes value used for property tax bill) $600 parcel whose fair market (B) Market (F) Tax returns to 2% value is less than its Propvalue rises growth under Prop 13 13 restricted value will at 10% starting year 17 $500 annually receive the lower fair (C) Market value declines for 5 years market value until market 50% over 2 years $400 conditions improve, and then the value can be (E) Market equals raised over time back to Prop 13 value year 16 $300 the appropriate Prop-13 (D) Home now taxed at lower market (A) Home sells for $300K, value, without regard to value, home price grows at 5% rate $200 2% AV growth per Prop 13 Prop 13’s annual growth 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 limitation of 2% (for a Year sample impact on a single family residence over time, see Chart 1). In spring 2008 when the adopted budget was being prepared, the City computed a conservative 1.5% net decline in growth, but it wasn’t conservative enough. By the time all value reductions were processed, over 29,000 parcels countywide that were sold between January 1, 2004 and December 31, 2007, received decreases in value totaling $2.94 billion, which resulted in a projected 5.7% decline in FY08/09 tax revenue for Fairfield. On September 30, 2008, the Assessor warned the County Board of Supervisors to expect further reductions to those parcels due to value declines occurring during 2008, and that another 15,000 parcels would be reduced, for another $2.91 billion loss in FY09/10. As shown in Table 6, the adopted budget assumed property taxes would experience a onetime decline in FY08/09. Alternative B assumes that next year’s losses equal those of this year, in line with the latest county estimates, and that values recover over the next ten years. Alternative A assumes next year’s losses turn out to be half the level of this year, and that values recover sooner, over six years. (All three scenarios show a large jump in revenues in FY15/16; this is due to the expected end of the Regional Center project area in that year, which will direct a share of the former RDA tax revenue back to the City.) Table 6. Annual Growth in Property Tax Revenues Alternative Adopted Budget A - FY10 loss half of FY09 B - FY10 loss same as FY09 07/08 6.5% 4.4% 4.4% 08/09 (1.5%) (5.2%) (5.2%) 09/10 3.5% (2.6%) (5.2%) 10/11 6.7% 3.4% 2.7% 11/12 7.2% 7.6% 6.8% 12/13 8.6% 8.0% 6.9% 13/14 8.9% 9.0% 7.8% 14/15 8.3% 8.3% 7.3% 15/16 12.6% 14.0% 13.6% AV ($ in 000) The revised forecast assumes Alternative B for property tax growth. This outcome is reflected in the revised revenue forecast in Table 7, which shows a loss of approximately $545,000 in FY08/09, growing to $1.6 million by FY09/10 and $3.9 million by FY15/16. The next meaningful information on property tax revenue trends will be available in midApril 2009 with payment of the second installment of tax revenue for FY08/09. 6 Table 7. Property Tax Revenues Under Alternative B ($ in 000) Adopted Budget --Percent Change 07/08 12,904 5.0% 08/09 12,711 -1.5% 09/10 13,157 3.5% 10/11 14,033 6.7% 11/12 15,039 7.2% 12/13 16,325 8.6% 13/14 17,784 8.9% 14/15 19,255 8.3% 15/16 21,674 12.6% Revised Forecast --Percent Change 12,886 4.8% 12,166 -5.6% 11,536 -5.2% 11,844 2.7% 12,646 6.8% 13,517 6.9% 14,591 7.9% 15,639 7.2% 17,744 13.5% Net Change (18) (545) (1,621) (2,189) (2,393) (2,808) (3,193) (3,616) (3,930) Vehicle License Fee Growth The vehicle license fee (VLF) is the number three General Fund revenue source at 15% of total revenue. In 2004 the VLF was split into two components: the state continued to pay about 5% of the city’s former VLF allotment ($468,000) in monthly installments based on population; the other 95% ($8.2 million) was exchanged for property tax, and this “property tax in-lieu of VLF (or “VLF in-lieu”) rises or falls in accordance with changes in assessed value. Because of the decline in property tax noted above, the VLF in-lieu will be falling as well. In addition, new car registrations are falling so much at the statewide level that in October the state allocation of VLF dropped by 80%, and in November and December local agencies were paid nothing; for FY08/09 the VLF is expected to be one-third less than in the prior year. Table 8 compares the adopted budget forecasted growth for total VLF revenue to the alternative forecasts. Alternative B reflects lower secured roll property tax changes under the property tax and lower payments from the state, than does Alternative A. The lower percentage loss figures in FY09/10 assume that regular state VLF payments will resume and thus offset some of the losses otherwise incurred in VLF in-lieu revenues due to assessed value declines. Table 8. Annual Growth in VLF and VLF In-Lieu Revenues Alternative Adopted Budget A - lower loss in FY10 B - higher loss in FY10 07/08 6.5% 6.3% 6.3% 08/09 2.9% (3.6%) (4.0%) 09/10 4.0% (0.4%) (2.7%) 10/11 6.3% 3.1% 2.3% 11/12 6.9% 7.2% 6.4% 12/13 7.9% 7.6% 6.5% 13/14 7.9% 7.8% 7.5% 14/15 7.9% 7.8% 7.8% 15/16 7.9% 7.8% 7.8% The revised forecast assumes Alternative B for VLF and VLF In-Lieu growth. This outcome is reflected in the revised revenue forecast in Table 9, which shows a loss of $625,000 in FY08/09, with an annual loss rising to $2.6 million by FY15/16. Table 9. Vehicle License Fee Revenue Including VLF In-Lieu Under Alternative B ($ in 000) Adopted Budget --Percent Change 07/08 8,830 6.5% 08/09 9,084 2.9% 09/10 9,448 4.0% 10/11 10,044 6.3% 11/12 10,736 6.9% 12/13 11,585 7.9% 13/14 12,496 7.9% 14/15 13,480 7.9% 15/16 14,540 7.9% Revised Forecast --Percent Change 8,815 6.3% 8,459 -4.0% 8,227 -2.7% 8,416 2.3% 8,951 6.4% 9,534 6.5% 10,268 7.7% 11,068 7.8% 11,931 7.8% Net Change (15) (625) (1,221) (1,628) (1,785) (2,051) (2,228) (2,412) (2,609) Local Development Building permits and development fees comprise only around 4% of total General Fund revenue (most development fees are dedicated to capital projects). As previously noted, new development has virtually ceased over the last 12 months. Table 10 compares recent development activity to that of the annual average from 1999 to 2006: the 37 residential units 7 from the most recent 12 months (December 2007 through November 2008) is just 5% of normal, and the 109,000 square feet of commercial and industrial development for the same period is just 13% of normal. Table 10. Comparison of Annual Development Activity New Housing (in units) Avg 1999-2006 2007 2008 Jan 35 94 0 Feb 33 1 0 Mar 130 24 1 Apr 35 11 6 May 46 5 2 Jun 71 2 0 Jul 43 56 5 Aug 146 6 0 Sep 69 0 7 Last 12 months Oct Nov 71 65 0 0 6 5 Last 12 months Oct Nov 224 52 8 44 33 14 37 Dec Total 48 792 5 204 32 109 Dec Total 21 811 21 454 88 New Commercial/Industrial Feb Jan (in 000 SqFt) Avg 1999-2006 38 47 2007 69 57 2008 2 0 Mar 70 36 6 Apr 37 0 0 May 45 1 0 Jun 46 62 1 Jul 64 11 2 Aug 131 120 0 Sep 35 25 29 Table 11 compares the two alternative development forecasts to the adopted budget. Alternative A is based on an updated forecast by the Community Development Department which sees the recovery starting in 2010; that forecast assumed more units in FY10-12, but for this alternative the growth in housing units has been made more gradual. Alternative B assumes about half the level of growth in FY09-11, based on discussion among some real estate analysts that developers will “shelve until ’12” their planned projects. Table 11. Comparison of Alternative Development Forecasts Alternative-Housing (units) Adopted Budget A - CD forecast, smoothed B - "shelve until 2012" Alternative-Comm/Indus (sqft) Adopted Budget A - new CD staff forecast B - CD w/ slower growth 07/08 80 78 78 07/08 123 226 226 08/09 120 32 32 08/09 615 84 84 09/10 403 201 100 09/10 593 473 473 10/11 568 486 278 10/11 940 1,188 588 11/12 705 600 516 11/12 1,200 1,683 683 12/13 760 757 757 12/13 838 732 732 13/14 683 815 815 13/14 532 627 627 14/15 651 821 821 14/15 575 557 557 15/16 655 815 815 15/16 893 776 776 The revised budget forecast for new housing assumes Alternative A, given the prospects for a massive federal stimulus package that may result in more building by late 2010, rather than early 2012. The revised budget forecast for new commercial/industrial assumes Alternative B, which provides for a recovery over the next two years. Resulting changes in development levels compared to the adopted budget are shown in Table 12. Table 12. Comparison of Revised Development Forecast to Adopted Budget Housing Units Adopted Budget Revised Forecast Net Change Comm/Indus SqFt (000) Adopted Budget Revised Forecast Net Change 07/08 80 78 (2) 226 226 0 08/09 120 32 (88) 615 84 (531) 09/10 403 201 (202) 593 473 (120) 10/11 568 486 (82) 940 588 (352) 11/12 705 600 (105) 1,200 683 (517) 12/13 760 757 (3) 838 732 (106) 13/14 683 815 132 532 627 95 14/15 651 821 170 575 557 (17) 15/16 655 815 160 893 776 (117) 8 Table 13 shows the resulting change in projected development-related revenues. The higher revenue in FY08/09 is due to payments received from developers for EIR work to be performed by the City. Revenue losses are expected in the next three years of $800,000 to $1.2 million. Due to development being pushed from the next few years into the future, revenues will be mostly higher than adopted budget levels in FY13/14 and thereafter. Table 13. Building Permit and Development Fee Revenue ($ in 000) Adopted Budget --Percent Change 07/08 2,357 -49.1% 08/09 1,908 -19.0% 09/10 2,898 51.9% 10/11 4,252 46.7% 11/12 5,626 32.3% 12/13 4,737 -15.8% 13/14 3,956 -16.5% 14/15 3,991 0.9% 15/16 4,659 16.7% Revised Forecast --Percent Change 1,849 -60.1% 2,009 8.6% 2,122 5.6% 3,478 63.9% 4,429 27.3% 5,307 19.8% 5,444 2.6% 5,419 -0.5% 5,983 10.4% Net Change (508) 101 (776) (774) (1,197) 570 1,488 1,428 1,324 Other General Fund Revenues All other sources comprise 33% of FY08/09 General Fund revenues. As part of the recentlyadopted budget plan, a significant amount of reserves from the Loan Fund and various internal service funds are going to be drawn down as needed to keep the General Fund’s own reserve level above 5% of total expense. From FY07/08 through FY15/16 these transfers total $62.2 million, although the amounts vary significantly from year-to-year. Table 14 shows that the draw-downs are highest in FY09/10 and FY10/11, and gradually taper off thereafter. There are only minor changes envisioned in the revised budget forecast. Table 14. Loan Fund and Internal Service Fund Transfers ($ in 000) Adopted Budget --Percent Change 07/08 3,400 14.1% 08/09 1,000 -70.6% 09/10 11,400 1040.0% 10/11 13,000 14.0% 11/12 8,400 -35.4% 12/13 8,050 -4.2% 13/14 7,350 -8.7% 14/15 5,300 -27.9% 15/16 4,000 -24.5% Revised Forecast --Percent Change 3,400 552.7% 1,000 -70.6% 11,750 1075.0% 13,000 10.6% 8,400 -35.4% 8,050 -4.2% 6,750 -16.1% 5,900 -12.6% 4,000 -32.2% Net Change 0 0 350 0 0 0 (600) 600 0 All other revenues comprise around a quarter of total revenues on an on-going basis. These revenues include the utility users tax, business license tax, transient occupancy tax, real property transfer tax, golf admissions tax, franchise payments, community services and other departmental revenues, interest income and miscellaneous fees, charges, fines and rents. These revenue sources are impacted to varying degrees by the economic downturn. Interest income in particular is reduced due to the recent reduction in interest rates. Table 15 shows that while these revenues collectively are up in FY08/09 (due to higher interest income and department revenues), this is a one-time occurrence and over time these revenues will not grow as fast as was projected in the adopted budget. Table 15. All Other General Fund Revenue ($ in 000) Adopted Budget --Percent Change 07/08 27,631 22.0% 08/09 18,302 -33.8% 09/10 18,130 -0.9% 10/11 18,716 3.2% 11/12 19,471 4.0% 12/13 20,222 3.9% 13/14 20,976 3.7% 14/15 21,872 4.3% 15/16 22,514 2.9% Revised Forecast --Percent Change 27,001 7.5% 18,687 -30.8% 18,178 -2.7% 18,407 1.3% 18,855 2.4% 19,409 2.9% 20,033 3.2% 20,965 4.6% 21,798 4.0% Net Change (630) 385 48 (309) (616) (813) (943) (907) (716) 9 Wage Costs Gross wages and salaries for all budgeted General Fund positions (including leave time and excluding vacancy savings) totals $37.5 million in FY08/09, which is 52% of total General Fund expense. Table 16 compares the budget assumptions for annual cost of living adjustments (COLAs). The adopted budget assumed no COLA for FY08/09, and 3% thereafter, with no bi-annual labor market adjustments. The three-year labor agreements just negotiated are reflected in Alternative A and highlighted in pink (the two fire units negotiated 0-3-3% COLAs; all other units have the 1-2-3% shown below). The new MOUs increase total costs by 2.8% over three years, or 0.8% over the adopted budget forecast. For FY11/12 and thereafter, new agreements will need to be negotiated, and COLAs may vary from that indicated, but Alternative A assumes annual adjustments are limited to 3%, with no labor market adjustments. Alternative B assumes wage adjustments that are 50% higher overall than under Alternative A; by FY15/16 the annual costs would be $2.8 million higher under Alternative B. For purposes of the revised budget forecast, Alternative A is assumed for wage costs, because granting higher compensation adjustments will not be sustainable given projected resources. Table 16. Comparison of Alternative Wage Adjustment Forecasts Alternative Budget-annual COLA A - lower cost increase B - higher cost increase 07/08 4.29% 4.29% 4.29% 08/09 0.0% 1.0% 1.0% 09/10 3.0% 2.0% 2.0% 10/11 3.0% 3.0% 3.0% 11/12 3.0% 12/13 13/14 14/15 15/16 3.0% 3.0% 3.0% 3.0% limit annual increases to 3% overall 50% higher than Alternative A Health Costs Health insurance costs for all budgeted General Fund positions totals $10.5 million in FY08/09, which is 15% of total General Fund expense. Table 17 compares the budget assumptions for health insurance adjustments. The adopted budget assumed there would be no increase in the 2008 level of City contributions (which was based on 96% of the cost of a Kaiser zero copay plan), with increases limited to 3% thereafter. Since health premiums are expected to grow at a 12% rate, this would have phased in a higher level of employee contribution to health care coverage over time. Alternative A reflects the negotiated MOUs, which is predicted on a percent of a less costly Kaiser $15 copay plan: City coverage starts at 100% of the cost of this plan, and declines to 96% by 2011. This change reduces the City contribution per employee from $1,243 per month in 2008 to $1,001 in 2009; the initial savings will diminish as City contributions increase in future years at the rate of premium growth. The level of City health premiums will have to be re-negotiated for 2012 and thereafter: Alternative A assumes the City contribution percent of premium continues to drop, while Alternative B assumes the contribution level does not drop. Table 17. Comparison of Alternative Health Contribution Level Forecasts Alternative Budget-annual adjust A - lower cost increase B - higher cost increase 07/08 12.1% --08/09 0.0% 100% 100% 09/10 3.0% 98% 98% 10/11 3.0% 96% 96% 11/12 12/13 13/14 14/15 15/16 3.0% 3.0% 3.0% 3.0% 3.0% continue decline in contribution rate no decline in contribution rate 10 For purposes of the revised budget forecast, Alternative A is assumed for health costs, because of the continuing need to reduce the City’s costs of health benefits due to limited resources. Pension Costs The California Public Employees Retirement System (CalPERS) charges member agencies a percentage of payroll to fund retirement benefits. Safety employees are also charged 9% and miscellaneous employees 7% of payroll, but many employers, including Fairfield, pay these amounts on behalf of the employees. When benefit levels were increased to 3%@50 for safety employees in 2001, and to 2.7@55 for miscellaneous employees in 2002, cost sharing was implemented so that safety employees contribute 2.25% of payroll and miscellaneous employees contribute 3.5%. In 2005 the City refinanced $42 million of unfunded liability owed to CalPERS by issuing pension obligation bonds (POBs); the POBs are financed at 5.5% compared to the 7.75% charged by CalPERS, which saves approximately $1 million annually. When local factors, such as pay raises, workforce demographics or disability retirements, or changes in state investment returns, deviate from actuarial estimates, CalPERS increases or decreases employer rates accordingly. The results from the actuarial report for the PERS year ending June 30, 2009, will be reflected in employer rates charged the City for its fiscal year starting July 1, 2011 (FY11/12). Total pension costs as a percent of payroll are shown in Table 18 for both safety and miscellaneous employees. With the recent investment declines, employer rates to be charged in FY09/10 increased over the level previously predicted by CalPERS, which was the basis for the adopted budget estimate. CalPERS has warned of a 2-5 point increase in rates starting FY11/12 as a result of continuing investment losses. Alternative A assumes half the current level of PERS losses, and Alternative B assumes losses at their current level. Table 18. Comparison of Alternative Pension Cost Forecasts (percent of payroll) Alternative-Safety Adopted Budget A - lower PERS loss B - higher PERS loss Alternative-Misc. Adopted Budget A - lower PERS loss B - higher PERS loss 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 31.70% 33.27% 32.63% 32.45% 32.40% 32.45% 32.51% 32.45% 31.70% 33.27% 33.84% 34.74% 37.94% 38.02% 38.02% 38.02% 31.70% 33.27% 33.84% 34.74% 40.12% 40.21% 40.21% 40.21% 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 22.30% 23.00% 22.54% 22.49% 22.44% 22.49% 22.49% 22.49% 22.30% 23.00% 22.99% 23.46% 25.01% 25.08% 25.08% 25.08% 22.30% 23.00% 22.99% 23.46% 26.08% 26.15% 26.15% 26.15% 15/16 32.51% 38.02% 40.21% 15/16 22.49% 25.08% 26.15% For purposes of the revised forecast, Alternative A is assumed for pension costs, because of the potential for CalPERS investment losses to be lower than current levels by June 2009. State Budget Takeaways The approved state budget contains two hits on local government: (1) a redevelopment takeaway of $350 million statewide (Fairfield’s share of this loss is $2.5 million), and (2) reductions of 10% in the state COPS grants for public safety and the county jail booking fee reimbursements (Fairfield’s combined share is approximately $44,000). These are ostensibly one-time losses. With the state continuing to face huge deficits, next year local agencies will 11 still be at risk for the loss of redevelopment funds, and perhaps state borrowing of general fund property tax revenues as well under Prop 1A. Prop 1A permits the “borrowing” of 8% of local property tax ($2.25 million for Fairfield), provided the Governor declares a “fiscal emergency,” the legislature suspends Prop 1A by a two-thirds vote and approves repayment with interest within three years. Only two such borrowings can be done within a ten year period, and only if the prior borrowing has been repaid. RDA funds are not protected by Prop 1A. The state might initiate a borrowing, but then suspend repayment, just as it has suspended reimbursement of mandated costs, despite constitutional protections. Table 19 provides a range of takeaway outcomes. The adopted budget assumed no takeaways of either General Fund property tax, or Redevelopment Agency (RDA) tax increments. Alternative A assumes no General Fund loss and RDA losses for five years (the year already approved by the state plus four more). Alternative B also assumes no General Fund property tax takeaway, but assumes RDA losses that are permanent (which has been recommended by the Legislative Analyst). Table 19. New State Budget Takeaways from Local Government ($ in 000) Alternative-RDA Adopted Budget A - 5-year takeaway B - Permanent takeaway 07/08 0 0 0 08/09 09/10 10/11 11/12 12/13 13/14 14/15 0 0 0 0 0 0 0 (2,482) (2,482) (2,482) (2,482) (2,482) 0 0 (2,482) (2,482) (2,482) (2,482) (2,482) (2,482) (2,482) 15/16 0 0 (2,482) If RDA losses were made permanent, redevelopment projects would be cancelled and Loan Fund contributions to capital projects would be curtailed as needed to shield the General Fund from revenue losses. (If General Fund property tax were “borrowed” the Loan Fund would make up the loss, and its support of capital projects would be cut accordingly to compensate.) Therefore, the General Fund should be protected from cuts, even under an Alternative B outcome relative to state takeaways. For purposes of the revised budget forecast, Alternative B is assumed relative to state takeaways, because permanent RDA losses look increasingly likely. Net Impact of Revised Budget Forecast Based on the foregoing assumptions, Table 20 shows the resulting annual shortfall which is $8.9 million in FY09/10, and grows to an average of $13.9 million annually starting in FY11/12. Without corrective action, the General Fund will be in deficit by mid-2010, and will accumulate a combined deficit of $83 million by FY15/16. See Exhibit D for General Fund forecast, and Exhibit E for the inter-relationships between the General Fund and all other funds and major revenue sources. 12 Table 20. General Fund Summary-Revised Forecast ($ in 000) Major Forecast Variables Alternative Used in Forecast 07/08 Sales & Use Tax 17,481 Property Tax 12,886 VLF & VLF In-Lieu 8,815 Development Income 1,849 Other Revenue 20,400 Loan Fund/ISF Transfers In 3,400 Total Revenue 64,831 Gross Salary/Wages 36,482 Pension Costs 10,057 Health Costs 5,704 Other Net Expense 23,808 Total Expense 76,051 Annual Shortfall (11,220) Beginning Balance 29,050 Ending Balance 17,830 Reserve % of Expense 23.4% Sales B 08/09 15,860 12,058 8,459 2,009 18,835 852 58,073 37,387 10,734 5,930 15,981 70,033 (11,960) 17,830 5,870 8.4% Prop B 09/10 15,313 11,417 8,227 2,122 18,175 11,750 67,005 38,536 11,186 5,958 20,206 75,885 (8,880) 5,870 (3,010) (4.0%) Housing A 10/11 15,997 11,723 8,416 3,478 18,401 13,000 71,016 41,544 12,347 6,483 21,151 81,525 (10,509) (3,010) (13,519) (16.6%) Non-Res B 11/12 16,739 12,517 8,951 4,429 18,849 8,400 69,886 41,593 13,366 7,035 21,662 83,656 (13,770) (13,519) (27,290) (32.6%) Wages A 12/13 17,491 13,379 9,534 5,307 19,402 8,050 73,163 42,920 13,814 7,651 22,021 86,407 (13,244) (27,290) (40,534) (46.9%) PERS A 13/14 18,302 14,431 10,252 5,444 20,025 6,750 75,203 44,265 14,243 8,324 22,572 89,405 (14,202) (40,534) (54,736) (61.2%) State B 14/15 19,185 15,481 11,051 5,419 20,957 5,900 77,992 45,769 14,731 9,060 22,799 92,359 (14,366) (54,736) (69,102) (74.8%) 15/16 20,097 17,593 11,913 5,983 21,790 4,000 81,377 47,168 15,176 9,863 23,167 95,375 (13,998) (69,102) (83,100) (87.1%) Table 21 shows how each factor contributes to the shortfall that has developed since the last budget was adopted. Negative numbers, such as (999), indicate a reduction in resources (either a revenue loss or an expense increase), while positive numbers indicate a resource gain (revenue increase or expense decrease). Of note is the reduction in FY07/08 pension costs, which resulted from not making a planned optional POB pre-payment (to conserve needed cash), and lower health costs than originally projected. Table 21. Components of Net Decrease in Resources: Revised Forecast vs. Adopted Budget ($ in 000) Sales Prop Housing Non-Res Wages PERS State Major Forecast Variables B B A B A A B Alternative Used in Forecast Change in Resources: 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 Sales & Use Tax (315) (2,500) (3,785) (4,271) (4,417) (4,635) (4,869) (5,091) (5,289) Property Tax (18) (653) (1,740) (2,310) (2,522) (2,946) (3,353) (3,774) (4,081) VLF & VLF In-Lieu (15) (625) (1,221) (1,628) (1,785) (2,051) (2,244) (2,429) (2,627) Development Income (508) 101 (776) (774) (1,197) 570 1,488 1,428 1,324 Other Revenue+Transfers In (395) 386 395 (315) (622) (820) (1,551) (315) (724) Revenue Increase(Decrease) (1,251) (3,292) (7,127) (9,297) (10,543) (9,882) (10,530) (10,182) (11,396) Gross Salary/Wages (784) (110) (104) (125) (297) (235) (168) (269) (324) Pension Costs 2,260 (40) (385) (760) (1,838) (1,875) (1,898) (2,008) (2,071) Health Costs (149) 793 860 817 178 (230) (691) (1,207) (1,784) Other Net Expense 1,256 2,354 (1,040) (1,395) (1,271) (1,163) (1,029) (853) (1,108) Expense Decrease(Increase) 2,583 2,997 (669) (1,462) (3,228) (3,503) (3,785) (4,337) (5,288) Net Resource Gain(Loss) 1,332 (295) (7,796) (10,759) (13,771) (13,386) (14,315) (14,518) (16,684) To correct this budget imbalance under the revised forecast, while maintaining a minimal reserve, will require $13.1 million of budget cuts, although they are not needed all at once. The Council’s budget policy is to maintain a General Fund reserve in the range of 7-15% of total expense, although a 5% minimum reserve was allowed in the FY08/09 budget and tenyear financial plan. 13 Tables 22-25 show the reserve level before cuts, the new budget cuts required by year, and the reserve level after the budget cuts, for different combinations of forecast variables. Table 22 shows the “revised forecast” and the impact of $13.1 million in budget cuts, with $6.5 million of those cuts coming in FY09/10, followed by $6.6 million over the two subsequent fiscal years. These cuts would be on-going in effect, just as the $7.2 million implemented in July 2008. The minimal 5% reserve is maintained for the next three years, with gradual improvement thereafter; the 7% reserve level would be reached by FY14/15. Table 22. Reserve Levels Under “Revised Forecast” Before and After Budget Cuts ($ in 000) Major Forecast Variables Alternative Used in Forecast 07/08 Reserve % of Exp Before Cuts 23.4% 13,100 New Budget Cuts = 0 Reserve % of Exp After Cuts 23.4% Sales B 08/09 8.4% 7,212 8.4% Prop Housing Non-Res Wages PERS State B A B A A B 09/10 10/11 11/12 12/13 13/14 14/15 15/16 (4.0%) (16.6%) (32.6%) (46.9%) (61.2%) (74.8%) (87.1%) 6,500 3,800 2,800 0 0 0 0 5.0% 5.0% 5.1% 6.1% 6.4% 7.0% 8.6% To show the impact of an “All Alternative A” scenario (with not-as-severe revenue losses), Table 23 shows the resulting lower shortfall would require $10.2 million in total cuts, with $5.2 million of that coming in FY09/10. Budget cuts would stretch over four years, but at a lower annual level. Table 23. Reserve Levels Under “All Alternative A” Before and After Budget Cuts ($ in 000) Major Forecast Variables Alternative Used in Forecast 07/08 Reserve % of Exp Before Cuts 23.4% 10,200 New Budget Cuts = 0 Reserve % of Exp After Cuts 23.4% Sales A 08/09 8.6% 7,212 8.6% Prop Housing Non-Res Wages PERS State A A A A A A 09/10 10/11 11/12 12/13 13/14 14/15 15/16 (2.1%) (11.4%) (22.5%) (34.2%) (45.7%) (56.3%) (65.5%) 5,200 2,400 1,400 1,200 0 0 0 5.1% 5.1% 5.1% 5.3% 5.1% 5.5% 7.3% At the other extreme, Table 24 shows that under an “All Alternative B” scenario (both highest revenue losses and expense levels), the higher shortfall requires $17.1 million in total cuts, with $6.8 million of that coming in FY09/10. Because the impact of higher personnel costs is deferred to future years, the first year cuts under this scenario are about the same as under the Revised Forecast scenario shown in Table 22 above. However, cuts in the following two years are higher, and cuts extend into FY14/15 to maintain a minimum 5% reserve. Table 24. Reserve Levels Under “All Alternative B” Before and After Budget Cuts ($ in 000) Major Forecast Variables Sales Prop Housing Non-Res Wages PERS State Alternative Used in Forecast B B B B B B B 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 Reserve % of Exp Before Cuts 23.4% 8.4% (4.4%) (18.0%) (35.8%) (52.4%) (69.5%) (86.4%) (102.5%) 6,800 New Budget Cuts = 17,100 0 7,212 4,300 4,100 0 1,100 800 0 Reserve % of Exp After Cuts 23.4% 8.4% 5.0% 5.0% 5.1% 5.2% 5.1% 5.2% 5.2% 14 Conclusion The revised forecast is based on information available as of mid-December. Any new information will be built into the January 30-31 report to Council. If new data significantly changes the economic outlook, then the recommended level of budget cuts in that report will increase or decrease accordingly. This is an especially unsettling time for the economy, and it has already been shown that financial circumstances have the capacity to change very quickly. At the Council’s goal-setting session on January 30-31, 2009, staff will present a budget reduction plan that assigns a range of cuts to each department, and discusses related budget issues, such as the potential for fee increases and savings from employee furloughs. After receiving feedback from Council, a final plan with specific budget cuts and position reductions will be presented in late February for Council approval. Impact bargaining will then be conducted with the affected labor units, and the final budget cuts and other changes will take effect on or before July 1, 2009. Attachments (Exhibits A-E) 15 EXHIBIT A National Economic Indicators 16 EXHIBIT B $7.8 Trillion in Federal Bailout Commitments 17 EXHIBIT C Local Economic Indicators 18 EXHIBIT D General Fund Forecast Alt.→ Sales Tax Prop Tax Housing Non-Res A B B B Budget 10/11 11,723 15,997 4,040 4,089 8,000 322 3,478 2,149 2,222 3,783 0 1,895 57,700 Wages A PERS A 12/23/08 State B 2:48 PM GENERAL FUND (011) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 38 39 36 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 54 55 56 57 58 59 60 61 61 62 63 64 65 66 67 68 (Dollars in Thousands) Revenue: Property Tax Sales & Use Tax (w/ triple-flip) Utility Users Tax Other Local Taxes VLF In-Lieu Property Tax Interest Income Development Fees & Permits Community Service Fees & Rents Other Department Revenue Franchise Payments Water Utility In-Lieu Payments VLF/Fines/Miscellaneous Income Total Revenues (1) Expense: Administration Human Resources Finance Community Services Community Development Police Fire Public Works Subtotal Department Expense County Booking Fees County Tax Admin Fees County Animal Control County Govt Center Plaza Maint. LAFCO Contributions Cordelia Library Legislative Advocacy BGN Neighborhood Cleanup Other Expense/Contingency Subtotal Non-Dept Expense Annual Impact of New Budget Cuts Total Expense Interfund Transfers: Transfer In-Traffic Safety Fund Transfer In-Mello-Roos Safety Transfer In-Intergovt Loan Fund Transfer In-Other ISF Reserves Transfer In-Public Safety Fund Transfer Out-Insurance Funds Transfer Out-Landscape Maint Dists Transfer Out-Rancho Solano Golf Transfer Out-Paradise Valley Golf Transfer Out-POB Fund Transfer Out-Dept Carryover Transfer Out-Park Maint Fund Net Interfund Transfers Balance: Net Revenue (Expense) Adjustment to Cash Basis Beginning Cash Balance Ending Cash Balance plus: PERS Savings Reserve less: Department Carryover Net Available Cash Balance Reserve as % of Total Expense Total Revenue Total Expense Newly-Enacted Budget Cuts Cum Ann Budget Cuts (3% growth) Cum Total Budget Cuts (since FY07) Prior 06/07 12,293 18,778 3,573 4,322 7,587 1,719 4,632 2,647 1,703 3,483 3,207 2,310 66,255 Prior 07/08 12,886 17,481 3,563 3,771 8,364 1,632 1,849 2,368 1,490 3,497 1,374 2,122 60,398 Current 08/09 12,058 15,860 3,770 4,076 8,157 777 2,009 2,156 2,602 3,612 0 1,726 56,804 Budget 09/10 11,417 15,313 3,900 4,035 7,825 358 2,122 2,097 2,213 3,693 0 1,848 54,822 11/12 12,517 16,739 4,191 4,169 8,520 323 4,429 2,203 2,177 3,885 0 1,943 61,096 12/13 13,379 17,491 4,352 4,253 9,088 338 5,307 2,258 2,336 3,998 0 1,846 64,645 13/14 14,431 18,302 4,526 4,347 9,790 381 5,444 2,315 2,290 4,124 0 1,898 67,846 14/15 15,481 19,185 4,712 4,448 10,573 412 5,419 2,372 2,455 4,262 0 1,954 71,274 15/16 17,593 20,097 4,913 4,598 11,419 458 5,983 2,432 2,409 4,416 0 2,008 76,326 Totals to Year 10 133,777 175,243 41,541 42,108 89,324 6,722 40,673 22,998 21,897 38,754 4,581 19,549 637,167 521 791 2,719 6,762 847 25,670 11,865 10,465 59,639 312 235 366 143 36 106 94 52 188 1,534 0 61,173 472 765 2,929 7,255 786 28,816 13,496 10,121 64,639 78 270 426 143 47 86 77 46 241 1,438 0 66,077 775 736 1,455 6,327 834 31,300 14,964 9,878 66,269 40 252 554 147 52 200 19 70 500 1,834 0 68,104 1,028 879 1,512 6,581 849 34,392 15,469 10,894 71,605 1,099 946 1,722 6,832 899 36,893 16,396 11,821 76,608 1,127 926 1,759 7,002 917 38,219 16,802 11,861 78,613 1,076 956 1,810 7,192 948 39,625 17,403 12,230 81,240 1,195 989 1,869 7,387 981 41,100 17,998 12,590 84,107 1,125 1,017 1,912 7,599 1,006 42,698 18,600 12,986 86,945 1,147 1,047 1,957 7,841 1,033 44,118 19,227 13,434 89,805 9,565 9,053 19,644 70,776 9,101 362,831 162,221 116,280 759,471 738 2,776 5,674 1,587 548 1,340 345 707 4,430 18,171 (89,252) 688,390 41 42 43 44 45 46 47 239 245 262 280 302 324 368 565 582 599 617 636 655 675 150 155 160 165 170 175 180 53 55 57 59 61 63 65 120 125 130 135 140 146 152 19 20 21 22 23 24 25 71 73 75 77 79 81 83 500 500 500 500 500 500 500 1,758 1,797 1,847 1,899 1,956 2,014 2,095 (6,500) (10,495) (13,610) (14,018) (14,439) (14,872) (15,318) 66,863 67,910 66,850 69,121 71,624 74,087 76,582 394 0 2,981 0 0 0 (152) (277) (274) (4,643) 0 0 (1,971) 427 0 3,400 0 6,626 (1,940) (155) (270) (279) 0 (2,526) 0 5,283 375 42 1,000 0 (148) (1,253) (161) (262) (253) 0 0 0 (660) 376 57 10,900 850 0 (1,883) (165) (244) (230) 0 0 0 9,661 379 48 12,600 400 0 (2,477) (169) (244) (230) 0 0 0 10,307 382 120 7,600 800 0 (2,548) (174) (244) (230) 0 0 0 5,706 385 194 8,050 0 0 (2,616) (178) (244) (230) 0 0 0 5,361 388 348 6,750 0 0 (2,686) (182) (244) (230) 0 0 0 4,144 391 564 5,300 600 0 (2,739) (187) (244) (230) 0 0 0 3,455 394 807 4,000 0 0 (2,810) (191) (244) (230) 0 0 0 1,726 3,891 2,180 62,581 2,650 6,478 (20,952) (1,714) (2,517) (2,416) (4,643) (2,526) 0 43,012 3,111 (558) 16,116 18,669 0 7,853 10,816 16.3% 69,630 66,519 0 0 0 (396) (443) 18,669 17,830 0 0 17,830 24.9% 70,851 71,690 0 0 0 (11,960) 0 17,830 5,870 0 0 5,870 8.4% 58,073 70,033 7,212 7,212 7,212 (2,380) 0 5,870 3,490 0 0 3,490 5.0% 67,005 69,385 6,500 13,928 21,140 96 0 3,490 3,587 0 0 3,587 5.0% 71,127 71,030 3,800 18,146 39,286 (48) 0 3,587 3,539 0 0 3,539 5.1% 69,998 70,046 2,800 21,490 60,776 886 366 643 1,470 (8,212) 0 0 0 0 (1,001) 3,539 4,425 4,791 5,433 16,116 4,425 4,791 5,433 6,903 6,903 0 0 0 0 0 0 0 0 4,425 4,791 5,433 6,903 FY10-15 6.1% 6.4% 7.0% 8.6% 5.8% 73,274 75,332 78,129 81,527 72,389 74,966 77,487 80,057 Total New 13,100 0 0 0 0 22,135 22,799 23,483 24,187 82,911 105,710 129,193 153,380 19 EXHIBIT E Inter-relationships Between Funds & Major Revenue Sources 20