HomeMy WebLinkAbout08. Mitigate Decreased Revenues
AGENDA MEMO
DATE: March 23, 2010
TO:
Mayor and Members of the City Council
FROM:
Office of the City Manager
By: John Michicoff, Director of Finance
SUBJECT: Administrative Actions to Mitigate Fiscal Year 2009-10
Decreased Revenues
RECOMMENDATION
That the City Council receive and file this report of administrative actions taken to
further mitigate the estimated $4,789,000 decrease in revenues not anticipated in the
2009-10 approved budget.
DISCUSSION
On February 23, 2010, the City Council was presented with the annual financial report
for the prior fiscal year and was updated on the projected $4,789,000 decrease of
General Fund revenues for the 2009-10 fiscal year. At the conclusion of that
presentation, a Council subcommittee consisting of Council members David Gaffin and
Mario Guerra was formed to meet with staff to mitigate this significant decrease in
revenues.
On March 12, 2010, the Council subcommittee met with staff and discussed several
reductions to the unexpended portion of the remaining budget. At the conclusion of this
meeting $4,526,000 in reductions were agreed upon. Included in the reduction is a
$40,000 savings attributable to a temporary modification to the operating hours of the
Library by closing 1 hour earlier Monday through Thursday. Instead of closing at 9:00
p.m., the Library will close at 8:00 p.m. No change to the remaining 3 days of operation
is proposed at this time.
Here is a summary of the reductions agreed upon (in thousands):
Labor and Benefits (hiring freeze) $ - 2,000
Liab/Equip Charges - 1,200
Operational Savings - 709
Equipment Purchases - 452
Capital Project - 165
Total Estimated Reductions $ - 4,526
CITY OF DOWNEY, CALIFORNIA
Expense Reductions
Page No. 2
When compared to the projected loss of $4,789,000 in revenues, these expenditure
reductions would offset all but $263,000.
In the 2009-10 approved budget, the General Fund projected the use of $2,734,000 in
reserves. By mitigating the loss of revenues as noted above, the General Fund use of
reserves would be $2,997,000.
At June 30, 2009, the General Fund had $38.5 million in combined unrestricted
reserves available. An adjusted deficit of $2.997 million will decrease available
reserves to approximately $35.5 million.
FISCAL IMPACT
By implementing the above reductions, the City may save $4,526,000 in costs and
increase General Fund usage of reserves by only $263,000.
H:\FINANCE\JMichicoff\Council\2009-10 Budget Reductions.doc