PROPOSED BUDGET

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1 OVERVIEW OF THE PROPOSED BUDGET Richard H. Llewellyn, Jr. City Administrative Officer

2 SUMMARY Budget Overview Revenues: Levels and Concerns Expenditures: Staffing, Pensions, and Concerns Financial Policy Compliance Four Year Budget Outlook

3 BUDGET OVERVIEW TOTAL PROPOSED CITY GOVERNMENT Appropriations ($ Millions) Authorized Positions* I.Proprietary Departments Airports $ 6, ,050 Harbor $ 1, Water and Power $ 8, ,262 Total $ 16, ,311 II.General City Budget General Fund $ 6, ,174 ** Special Funds $ 3, ,543 Total $ 9, ,717 III.Grants and other Non Budgeted Funds Total $ 1,438.4 Grand Total $ 27, ,028 ** * Regular positions. **Sworn staff represents 58 percent of General Fund positions.

4 BUDGET OVERVIEW Budget ($ Millions) Authorized Positions* Budget Component Adopted Proposed Percent Change Adopted Proposed Percent Change General Fund $ 5,826.5 $ 6, % 22,967 23, % Special Funds $ 3,465.6 $ 3, % 10,408 10, % Total $ 9,292.1 $ 9, % 33,375 33, % *Regular Positions

5 REVENUES: LEVELS General Fund revenues increased by $339.5 million from Adopted Budget to. Major changes include: Amount Source (Millions) Property Tax $124.1 Assumes 5.78% growth License, Permits, Fees, and Fines Communications Users Tax $65.9 Primarily from increases to special fund reimbursements ($19.0) Continued decline due to loss of subscriptions and price competition Business Tax $56.8 Includes cannabis revenues of $30 million, other economically driven growth Sales Tax $ % growth from current rate Transient Occupancy Tax $ % Growth in short term rentals and hotels; Short term rentals at $52 million, including $3.7 million from new VRBO agreement

6 REVENUES: LEVELS SEVEN GENERAL FUND TAXES (Property (includes VLF), Utility, Business, Sales, Hotel, Documentary, and Parking Occupancy Taxes) 25% 5.5 Percent Change from Prior Year 20% 15% 10% 5% 0% 5% Billion Dollars 10% Fiscal Year Ending 1.5 % change Left Scale 7 General Fund Taxes ($Billions) Right Scale

7 REVENUES: CONCERNS Revenues that are dependent on currently pending and possible policy decisions: $13 million Billboards $52 million Short Term Rentals $62 million Street Damage Restoration Fee $33.6 million Potential repeal of the Gas Tax/Road Maintenance and Rehabilitation Program (SB1); Full year funding is $67.1 million

EXPENDITURES: OVERVIEW USE OF UNRESTRICTED REVENUES ($5.0 BILLION) Police 52.3% Library 4.7% Fire 17.5% Unrestricted Revenues are 50.6% of the City Budget. Restricted Revenues (49.

8 EXPENDITURES: OVERVIEW USE OF UNRESTRICTED REVENUES ($5.0 BILLION) Police 52.3% Library 4.7% Fire 17.5% Unrestricted Revenues are 50.6% of the City Budget. Restricted Revenues (49.4%) include those from grants, fee supported and reimbursed programs, and special funds. Other 8.0% Recreation & Parks 5.7% City Attorney 3.2% Public Works Sanitation Street Services Transportation Engineering Board Contract Admin. Capital Improvements Building & Safety Planning 8.6%

9 EXPENDITURES: STAFFING 40,000 35,000 AUTHORIZED CITY STAFFING* (Not Including Proprietary Departments) 35,879 35,974 35,415 36,156 36,667 37,173 36,971 35,864 32,965 32,274 31,817 31,893 31,875 32,576 33,105 33,375 33,717 30,000 25,000 13,799 13,807 13,805 13,832 13,944 14,244 14,253 14,012 13,740 13,677 13,647 13,706 13,712 13,835 13,875 13,882 13,937 20,000 15,000 10,000 22,080 22,167 21,610 22,324 22,723 22,929 22,718 21,852 19,225 18,597 18,170 18,187 18,163 18,741 19,230 19,493 19,780 5, (Proposed) * Regular Positions All Others Police (Sworn and Civilian) Total

10 EXPENDITURES: PENSIONS COSTS Millions $1,400 $1,200 $1,000 $800 $600 $400 $435 $623 GENERAL FUNDCONTRIBUTIONS TO LACERS ANDLAFPP (Actual Amounts ; Adopted ; Proposed , Projected *) * Projections are based on a study commissioned by the CAO. $666 $639 $653 $725 $793 $848 $944 $1,258 $1,245 $1,177 $1,211 $1,234 $1,037 $1,058 $1,075 $1,086 $200 $ City Employees' Retirement System Fire and Police Pensions Total

11 EXPENDITURES: PENSIONS COSTS 25.0% PERCENT OF BUDGET USED FOR LACERS/LAFPP CONTRIBUTION 20.0% 15.0% 14.2% 15.0% 14.0% 14.8% 16.6% 18.1% 18.6% 19.4% 20.2% 19.6% 19.3% 18.6% 19.1% 10.0% 5.0% 11.0% 7.3% 9.3% 9.8% 9.0% 9.5% 10.7% 11.5% 11.7% 12.3% 12.8% 12.3% 12.2% 11.7% 11.9% 0.0% (PROPOSED) % General Fund Budget % Total Budget

12 EXPENDITURES: CONCERNS Potential Areas of Expenditure Shortfall No funding is included if employee compensation adjustments are approved through ongoing negotiations. Liability Claims funding matches level ($109 million), but remains a risk. Police Overtime of $118 million similar to level, but does not account for current year over expenditures or anticipated compensation increases. $45 million in departmental reductions require department heads to manage within budget.

13 Policy FINANCIAL POLICY COMPLIANCE Reserve Fund at least 5% of General Fund Budget Stabilization Fund contribution if growth of seven economically sensitive taxes is over 3.4% Compliance July 1 at $343 million, or 5.56% 5.6% or $90 million in growth: $5 million contribution to Fund $100 million for capital investment Capital investment at 1% of General Fund Investment of 1.62% or $100 million All one time revenues used for one time expenditures $49 million in one time revenues for $110 million in one time expenditures Debt service ceiling: 6% for non voter approved and 15% for non voter and voter approved of general receipts 4.15% for non voter approved 6.23% for non voter and voter approved Projected to remain below limits throughout projection period, at least until

14 FINANCIAL POLICY COMPLIANCE ADOPTED BUDGETRESERVES (Reserve Fund, Budget Stabilization Fund, and UB Reserves) $ % $450.0 $ % 7.19% 7.80% 7.93% 7.09% 7.56% 8.00% 7.00% Millions $350.0 $300.0 $250.0 $200.0 $ % 5.55% 3.22% 4.05% 4.98% 6.00% 5.00% 4.00% 3.00% $ % $ % $ (Proposed) Emergency Reserve Budget Stabilization Fund Total Percentage of General Fund Contingency Reserve UB Reserves 0.00%

15 FINANCIAL POLICY COMPLIANCE $120.0 CAPITAL INVESTMENT AS PERCENTAGE OF GENERAL FUNDREVENUE 1.80% $ % 1.62% 1.60% 1.40% $ % 1.28% 1.20% Millions $60.0 $40.0 $20.0 $ 1.13% $ % $ % $ % 0.15% 0.15% 0.15% $9.1 $6.4 $6.5 $ % 1.07% $51.7 $54.8 $74.7 $89.5 $74.6 $ (Proposed) 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% Total GF Capital Investment 1% Spending Level

16 FINANCIAL POLICY COMPLIANCE ONE TIME REVENUES VS. ONE TIME EXPENDITURES PROPOSED BUDGETS $200 $180 $160 $140 $120 $100 $80 $60 $40 $20 $53 $103 $18 $35 $66 $83 $146 $88 $181 $110 $156 $156 $118 $121 $31 $70 $49 $110 $ One Time Revenues One Time Expenditures

17 FINANCIAL POLICY COMPLIANCE NON VOTER APPROVED DEBT VOTER APPROVED AND NON VOTER APPROVED DEBT $1,200,000 Debt Service Amount (000's) $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $ 6% General Revenues 4.01% 4.15% 4.07% 3.83% 3.68% 3.04% 2.63% 2.61% 2.58% Debt Service Amount (000's) $1,000,000 $800,000 $600,000 $400,000 $200,000 $ 15% General Revenues 5.68% 6.23% 6.24% 6.02% 5.86% 5.12% 4.63% 4.55% 4.33% Fiscal Year 15% of GF Rev. Fiscal Year Remaining General Obligation Authorization** Convention Center Commercial Paper Judgment Obligation Bonds Current MICLAs & Other Leases Future MICLAs (CP Refundings) General Obligation Bonds** *Includes all non voter approved items from chart on left. ** Voter approved Debt NOTE: Revenue bond and proprietary department debt not included.

18 THE OUTLOOK FOUR YEAR BUDGETOUTLOOK () $6,800 $6,600 $6,440 ($55) $6,507 $6,594 $36 $6,709 $101 $6,810 Millions $6,400 $6,200 $6,166 ($159) $6,281 $6,452 $6,629 $6,000 $6, Revenues Expenditures

OVERVIEW PROPOSED BUDGET. Richard H. Llewellyn, Jr. Interim City Administrative Officer Proposed Budget April 26, 2017 OF THE

OVERVIEW PROPOSED BUDGET. Richard H. Llewellyn, Jr. Interim City Administrative Officer Proposed Budget April 26, 2017 OF THE OVERVIEW OF THE 2017-18 PROPOSED BUDGET Richard H. Llewellyn, Jr. Interim City Administrative Officer SUMMARY Budget Overview Financial Policy Compliance Expenditures: Key investments and concerns Revenues: