CITY MANAGER's budget update

5/10/2012

As we near the end of fiscal year 2011/2012, we find ourselves in familiar territory – facing yet another revenue shortfall due to State of California raids on local revenue.  This time the raid is to the City’s Redevelopment Agency funds and will impact our revenues significantly for years to come.  To meet the approximate $1 million ongoing reduction in annual funds, staff has once again been critically looking at all of the City’s expenditures to find ways to meet this shortfall with the least impact to services we provide.  If you have been following my budget updates here over the last few years you know that we have already reduced our spending by $5.5 million, so this round of cuts is especially difficult.

Shortly, staff will be presenting the draft 2012/2013 budget to the City Council.  Some positives that staff has to report going into this next fiscal year is that our Sales Tax has risen 10% over last year and in the coming year the City will see three large new developments that will further add to our Sales Tax base as new residents and employees spend money at our local establishments, and added Property Tax as properties are redeveloped.  These projects include: Hyundai Motor America’s six story new office building that will hold up to 1,300 employees; Olson Company/Ayres Hotel project that will include a 127-room hotel and 88 new dwelling units; and Yakult USA Manufacturing facility that will include a 100,000 square foot manufacturing and distribution facility with 150 new employees. 

While we are excited to report some positive financial aspects for the coming year we must still deal with the new $1 million shortfall imposed by the State.  We are committed to once again working through funding challenges and doing everything we can to maintain our levels of service. 

Sincerely,

Raymond H. Kromer
City Manager