FUND OBJECT CODE BUSINESS UNIT DIVISION ... - Moreno Valley

Public Purpose Program 130,000 130,000
Debt Service - 2007 Taxable Lease Revenue
bonds 1,834,883 1,834,883
Debt Service - 2005 Taxable Lease Revenue
bonds 318,338 318,338
Total Expenditures
xix
16,943,624
16,951,973
Net Change/Proposed Use of Fund Balance $1,386,351 $1,378,002
STATE BUDGET CONCERNS
The Governor released his May Revision of the State’s FY 2011/12 proposed budget.
With budget cuts and fixes already adopted by the Legislature in April 2011 ($13.4
billion), some improvement in projected revenues ($6.6 billion), and a targeted reserve
replenishment of $1.2 billion, the State’s budget shortfall for the FY 2011/12 budget year
is $10.8 billion, and the ongoing structural gap is about $10 billion per year thereafter.
The Governor’s proposed revision reduces some of the tax extensions, uses some of
the higher revenue to increases school funding to meet a higher Proposition 98
minimum guarantee, makes fine-tuning revisions to the realignment proposal, and pays
down some of the mounting debt from budgetary borrowing. The Governor is now
calling for the reform, rather than elimination of Enterprise Zones, but continues to
include in his proposed budget the elimination of Redevelopment and a shift of $1.7
billion in tax increment to benefit the state budget in FY 2011/12. Based on past actions
of the State Legislature, it is likely that some of the budget solutions will adversely
impact local government, despite some of the legislative protections that have been
previously enacted. Staff will closely monitor information regarding the impacts of the
State budget actions on the City’s Two-Year budget.
SUMMARY
The prolonged economic recession has resulted in three challenging fiscal years for the
City. After adopting a budget in FY 2007/08 in which General Fund operating revenues
completely matched operating expenditures, revenues began declining; resulting in the
need for significant expenditure reductions to ensure that spending remained within the
General Fund revenues. The next two fiscal years (2008/09 and 2009/10) became
more challenging as General Fund operating revenues continued their decline, resulting
in growing operating deficits that had to be overcome with aggressive cost-cutting
measures including workforce reductions, return of General Fund subsidies previously
made to other funds, and use of reserves. The Fiscal Year 2010/11 has been the first
period after the end of the recession in 2009, which has experienced stabilizing
revenues. FY 2011/12 remains financially challenging because of the depth to which
revenues declined at a very rapid pace during the recession. In spite of our aggressive
cost cutting measures, the City has not been able to reduce expenses at the same rate
as revenues have fallen, resulting in a structural budget deficit of $14 million. The
adoption of a Three-Year Deficit Elimination Plan provided the basis to reduce the