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CC 2018-01-23_12a PP 10 Year Fiscal Forecast General Fund 10-Year Fiscal Forecast 2/8/2018 1 Tonight’s Objectives Present a forecast model that is a “reasonable possibility” for the next 10 years. Receive comments if anything needs to be added or removed from the model. Inform the public of our budget and process. 1/23/2018 2 Overview of Presentation 1. Context 2. The Model 3. The Forecast 4. Discussion and validation of forecast 5. Review next budget steps 1/23/2018 3 Shared Ownership Property is spread around 5.25 square miles 67 miles of roads 88 miles of sidewalks 5 Bridges 48 acres of parks 169 acres of open space Computers, desks, cars, heavy equipment 4 More Property 93 miles of water mains 6 water tanks ranging from 250,000 to 2 million gallons 866 Fire Hydrants 75 miles of sewer lines 789 Storm drains 22 storm drain mains 2,060 man holes 153 trash cans 5 Still More 7 Buildings City Hall Corporation Yard Recreation building Women’s Center Council Chambers Police Station Fire Station 6 Notable Expenses Monthly Yearly $20,000 street lights and stop lights $9,000 - PG&E bill for Soto Field Lights Gas / Oil – $102,200 Software Licenses - $80,000 Public Noticing - $12,000 $500,000 annually for liability insurance $1,200 for dog food 7 http://www.sanluisobispo.com/news/local/article154411449.html 8 https://smartasset.com/taxes/california-tax-calculator 9 Distribution of All Taxes 10 Distribution of All Taxes 11 Distribution of All Taxes 12 Distribution of All Taxes 13 Sales Tax Distribution Sales Tax 7.75% on taxable goods only Total Sales Tax $6.14 State $3.12 County $1.83 City $1.19 14 Distribution of All Taxes 15 Property Tax Distribution 16 Property Tax Distribution 17 Distribution of All Taxes 18 Distribution of All Taxes 19 Distribution of All Taxes 20 Distribution of All Taxes 21 Distribution of All Taxes 22 A Little Perspective Average Arroyo Grande Car Insurance Premium is $1,082. Average cable bill is $103 per month or $1,236 per year. Average cell phone bill is $71 per month or $852 per year. The average household with a 14.9% interest rate on a $5,100 balance will pay $760 per year in interest payments on a credit card. 23 Value 1/23/2018 24 What You Pay For 24/7 Police Services 24/7 Fire Services Parks and Open Spaces Well maintained roads Street lights Neat and tidy places (no litter and graffiti under control) Neighborhood Services Well planned places Accessible and transparent government 1/23/2018 25 What is a Forecast? A series of assumptions about changes in revenues and expenses Long term perspective of revenues and expenses Provides an overview of the economic environment What is the capacity to increase or decrease services? 1/23/2018 26 What Isn’t a Forecast An indication of priorities Perfect prognostication – things will be different Additional CalPERS actuarial assumption changes Rising insurance costs (health, workers’ compensation, liability) County animal services facility Diablo power plant closure 1/23/2018 27 So Why Do We Do This? Updated at the beginning of each budget process as new information is known and trends emerge Helps provide a framework for future discussions about priorities 1/23/2018 28 The Model Assumptions Modest revenue growth – 1.5% annual average Incorporates an economic downturn in 2020-21 New revenues from village hotel 1/23/2018 29 1/23/2018 Current Year +1 +2 +3 +4 +5 +6 +7 +8 +9 +10 30 What Does It Indicate? A continuing trend of expenditures exceeding revenues with the deficit increasing over time The gap between expenditures and revenues of $912,000 in the first year, growing to $3.4 Million in the tenth year If status quo spending continues: We will reach minimum reserve policy level in 3 years We will deplete all reserves in 5 years 1/23/2018 31 What’s Driving Expenditure Increases? Requested increase in Five Cities Fire Authority allocation CalPERS costs 1/23/2018 32 1/23/2018 Alternative – No economic downturn, no FCFA request Current Year +1 +2 +3 +4 +5 +6 +7 +8 +9 +10 33 Conclusion Without intervention, expenditures will continue to exceed revenues Solutions are: reduce expenses, increase revenues or some combination of the two Potential options will be further explored in the budget development process 1/23/2018 34 Next Steps and Key Dates Council discussion about priorities – February 13 Community Outreach Analysis and preliminary direction related to larger budget issues or impacts (115 Trust for pensions and FCFA request.) March 13 Council review of results of community outreach and preliminary budget balancing strategy – March 27 Departments begin developing first draft operating and CIP budgets Preliminary budget presentation – April 24 Budget Adoption – June 12 (June 26 if needed) 1/23/2018 35