The City Manager has released Foster City’s Preliminary Budget for the fiscal year starting July 1, 2011.

Despite a bleak economic outlook, the City is expecting to end its current fiscal year on June 30, 2011 with a reserve balance in its General Fund of $19.4 million, which is 63% of annual budgeted operating expenses. Foster City, the Estero Municipal Improvement District and Community Development Agency are debt free; all equipment replacement funds are fully funded; and about $1.3 million per year is set aside annually toward long-term capital improvement needs. These are just some of many indicators of Foster City’s sound financial condition as it starts FY 2011-2012.

However, the City is working hard to close the gap on a structural deficit that will deplete reserves in just a few years if not corrected. In FY 2010-2011 the ongoing deficit was projected to be $3.5 million. This grew to $4.8 million in FY 2011-2012 due to lower growth of property tax revenue, lower Motor Vehicle in-lieu Fees, and earlier than anticipated loss of redevelopment funding for staff costs, among other factors.

Securing Foster City’s financial future is the highest priority of the City Council and its staff. The City Council has set as its goal to achieve a balanced General Fund budget, without the use of reserves, by FY 2013-2014 and to maintain reserves above the minimum level of 33.3% of the annual operating budget.

With nearly $1.8 million in expenditure reductions and about $150,000 in revenue enhancements, the structural deficit gap is reduced by nearly $2 million in the proposed budget. An additional $2.8 million in reduced costs or increased revenues is needed to meet the City Council’s budget-balancing goals by FY 2013-2014. The newly seated Council in January of 2012 will develop the action plan for the following two years with input from the community and from the employees and the labor groups who represent them.

“The proposed FY 2011-2012 budget represents a significant ‘down payment’ toward ensuring Foster City’s secure financial future,” said City Manager Jim Hardy. “This proposed budget provides a first step to ensure the long-term financial sustainability of the community while providing the best services possible with the resources available to us.”

The expenditure cuts in the proposed budget mean that some services will no longer be offered; service levels will be reduced or will cost more to users of the service. For example, reductions in the Parks and Recreation Department will mean a change in the number and delivery of adult sports programs and the elimination of the senior bus program. Reductions in the Foster City Television division will mean the elimination of original programming on FCTV. A new $1 fare is proposed for riders of the Connections Shuttle Red Line and the Blue Line is discontinued.

In Foster City, the City Manager makes budget recommendations to the City Council; however the City Council has the ultimate responsibility and authority to adopt a budget that it believes to be in the best interest of the Foster City community. The City Council will discuss the Preliminary Budget at a meeting on Monday, May 9, 2011 at 5:30 PM in the City Council Chambers; 620 Foster City Boulevard. The meeting will be continued on Tuesday, May 10, 2011 at 5:30 PM if needed.

The next several years will not be easy. An informed and engaged public is critically important to the City’s ability to achieve its budget-balancing goals. All interested parties are invited to attend the meeting which is open to the public and will also be broadcast on FCTV Comcast Channel 27 and ATT Channel 99. The preliminary budget documents are available for public review at City Hall, the Foster City Library, the Foster City Recreation Center or online by following the link below.