Less:  Recurring Appropriations                                                                (123,191,941)

      Potential Impact of Anticipated MOUs (BMA, Unrepresented, Execs)    (936,811)

      Impact of Mid-Year Appropriations � Recurring                                           (10,000)

Plus: Savings from Frozen Positions                                                                2,203,981

Recurring Balance                                                                                               (710,866)

Use of PERS Stabilization Fund                                                                          710,866

RECURRING BALANCE                                                                                       .        -0-

Undesignated Fund Balance, July 1, 2005                                                    $7,277,482

      Plus:  Use of UUT In Lieu Set Aside                                                               300,000

Total Available Non-Recurring Sources                                    7,577,482

Less:  Increase in working capital reserves                                                   (1,141,000)

      Increase in emergency reserves                                                                  (374,000)

      Compensated absences                                                                              (800,000)

      Budgeted One-time Items                                                                             (915,353)

      Additional PERS enhanced retirement costs                                             (877,000)

      Anticipated Retiree Medical Trust (Year 4)                                                 (407,610)

      Impact of Mid-Year Appropriations � Non-Recurring                             (1,252,926)

Total Non-Recurring Uses                                                                               (5,767,889)

Plus Available Recurring Balance (from above)                                                           -0-

Plus Available Non-Recurring Sources (from above)                                     7,577,482

Estimated Available Fund Balance, June 30, 2006             $1,809,593

For the first six months of the fiscal year, the General Fund received $49,250,650 in recurring revenue (net of the Utility Users Tax [UUT] In-Lieu Set-Aside), which represents 40.8 percent of the adopted estimated revenues.  For perspective, last year�s six-month report showed the City receiving 38.5 percent of its estimated revenues, or $44,439,005.  Overall, the City�s revised recurring revenue estimates for FY 2005-06 have been increased by a net $558,028 over original estimates as a result of increases in the following categories:  Sales Tax, Service Charges, Interest/Use of Money, Parking/Traffic/Other Fines, and Building Permits/License Fees.  Revenue reductions were made in Franchise Fees and Intergovernmental Revenue.

With the exception of the requested mid-year adjustments detailed in this report, 49.1 percent of the recurring appropriations have been expended as of December 31, 2005 � exactly the same percent for the same period last year.  This is particularly notable since departments reduced their discretionary budgets by one percent from last year. 

In summary, the requested mid-year adjustments for the General Fund will have a total impact of $1,262,926 (net of revenue it is $1,218,752).  Again, the majority of the amount requested ($1,137,613) was disaster-related.  There will also be an impact to the Non-General Funds of $11,769,578 (net of revenue it is $1,600,524).  The total fiscal impact Citywide is $13,032,504 (net of revenue it is $2,819,276). 

Regarding the YES Fund (Fund 130), the Park, Recreation and Community Services Department is requesting $291,607 from the City Grants account to fund previously-awarded YES grants that were inadvertently excluded from the prior year's carryover list. 

The Governor released the FY 2006-07 proposed State budget on January 10, 2006 which now projects that the State will be able to fund much more than a current-law budget and still maintain fiscal balance in 2006-07.  As part of the State�s improving revenue outlook, the Governor has restored funding to many programs, including grants to local agencies.  FY 2006-07 will be the first year after the passage of Proposition 1A that the State can no longer take Education Revenue Augmentation Fund funds from both the City and the Redevelopment Agency, unless a State fiscal state of emergency is declared. 

The City projects a recurring budget deficit position over the next several years due to the increase in our recurring costs, due mostly to negotiated salaries and benefits.  As a result, the General Fund budget parameters for this year are once again strict. 

For FY 2006-07, departments have been requested to present discretionary appropriation reductions of one percent.  In past years, revenue increases, either through fee increases or through volume, could be used towards a department�s reduction.  However, effective FY 2006-07, any revenue increase used towards a department�s reduction will be counted at 50 percent, and not on a dollar-for-dollar basis.  The Executive Team will be carefully scrutinizing the use of revenue as part of any allowed reductions and will review all cost reductions.  It is the intent to use anticipated UUT In-Lieu Set Aside Funds to balance the FY 2006-07 recurring budget to cover any remaining shortfall. 

Although staff plans to provide the Council with a more descriptive five-year forecast throughout this year�s budget process, the following chart will serve to highlight the difficult challenge the City will be facing over the next several years. Clearly, the structural imbalance between recurring revenues and expenditures is a continued focus and will continue to be addressed.

Recommendation: 

Adoption of proposed City Council resolution entitled:

(4/5 vote)

A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK AMENDING THE BUDGET OF FISCAL YEAR 2005-2006 FOR THE PURPOSE OF MID-YEAR ADJUSTMENTS.

Adoption of proposed Youth Endowment Services Fund Board resolution entitled:

A RESOLUTION OF THE YOUTH ENDOWMENT SERVICES FUND OF THE CITY OF BURBANK AMENDING THE BUDGET OF FISCAL YEAR 2005-2006 FOR THE PURPOSE OF MID-YEAR ADJUSTMENTS. 

RECESS to continue the City Council meeting. 

ADJOURNMENT.