The City Manager has released Foster City’s Preliminary Budget for the fiscal year starting July 1, 2010.

The good news is that the City is expecting to end its current fiscal year on June 30, 2010 with $400,000 more in the bank than it started with on July 1, 2009.  This gives the City a projected reserve balance in its General Fund of $20 million, which is 65% of annual budgeted operating expenses.  Foster City, the Estero Municipal Improvement District and Community Development Agency are also debt free.  These are just two of many indicators of Foster City’s sound financial condition as it starts FY 2010-2011.

Foster City, however, is not immune to the effects of the current economy.  The City Manager’s Preliminary Budget projects that expenditures will outpace revenues in the fiscal year starting July 1, 2010, by $2.4 million.  Previous years’ forecasts had shown the expenditure/revenue imbalance would occur one year later in Fiscal Year 2011-2012.

The deep and prolonged recession is impacting the budget both through loss of revenue as well as through actions that the State of California has taken to try to balance its own budget.  Just this month, the state is taking $5.6 million from the Foster City Community Development Agency to offset its obligations to fund schools. All major revenue sources - Property Taxes, Sales Tax, Hotel Tax and Investment Earnings – are down significantly and show no signs of recovering any time soon.

Nevertheless, Foster City is committed to ensure that it remains financially stable for the long-term.  In the Preliminary Budget, the City Manager has recommended that the City maintain current service levels in FY 2010-2011 while examining ways to reduce expenditures and increase revenues and balance the budget without use of reserves by July 1, 2013. 

“Years of prudent financial decisions by City Councils and staff have given us the time and resources needed to do a thorough analysis of services and costs,” said City Manager Jim Hardy.  “If we implement limited use of reserves this year to maintain current service levels, we can use the time to make sound decisions that will ensure the long-term sustainability of the community.”

The City has already reduced staffing by 10% since 2001.  The City’s full-time workforce is currently 213, down from a high of 237. An additional 7 positions have been left vacant in the Preliminary Budget.  Overall General Fund expenditures in the Preliminary Budget are $544,000 less than the previous year.

By January 2011, the City Manager will present a detailed action plan to meet the City Council’s goals of balancing the budget without the use of reserves by Fiscal Year 2013-2014 and maintaining the General Fund Reserves at or above 33.3% of annual budgeted operating expenses.  The action plan will include a range of options for City Council consideration.  It will offer recommendations for changes to the type and level of services offered to the community and additional ways to reduce the cost of providing those services.  It will also discuss ideas for short-term as well as long-term revenue opportunities. 

“We will be developing our action plan with input from the community as well as our employees and their labor groups,” explained City Manager Hardy.  “It is our hope that this input will provide important feedback and ideas about the priority of the services we provide and ways to make sure the costs and funding are in line with those priorities.”

The City Council will discuss the Preliminary Budget at a meeting on Monday, May 10, 2010 at 4 PM in the City Council Chambers; 620 Foster City Boulevard. All interested parties are invited to attend the meeting which is open to the public and will also be broadcast on FCTV Channel 27 and ATT Channel 99.

http://www.fostercity.org/city_hall/docs/Preliminary-Annual-Budget-FY-2010-2011.cfm