HomeMy WebLinkAboutStaff Report 3618
City of Palo Alto (ID # 3618)
Finance Committee Staff Report
Report Type: Action Items Meeting Date: 3/19/2013
City of Palo Alto Page 1
Summary Title: (Continued) Long Range Financial Forecast
Title: Fiscal Years 2013 to 2023 Long Range Financial Forecast (Continued
From March 5, 2013)
From: City Manager
Lead Department: Administrative Services
Recommendation
Staff recommends that the Finance Committee review and comment on the attached forecast
of revenues and expenses and provide direction on assumptions used in the forecast.
Motion
I move to accept the Fiscal Year 2013 to 2023 Long Range Financial Forecast and forward it to
the full Council for review and input.
Executive Summary
The City’s General Fund Long Range Financial Forecast (LRFF) for the next ten years is based on
a variety of assumptions. It is a portrait of the City’s financial condition painted at one point in
time.
Background
The LRFF was presented to the Finance Committee on December 18, 2012 (staff report ID
#3248). The Committee directed staff to revise the forecast to address the Committee’s
concerns and provide additional information. An updated draft of the LRFF was presented to
the Finance Committee on March 5, 2013 (staff report ID #3531). Due to the length of the
Committee’s agenda on March 5th, staff was directed to continue discussion of the forecast at
the next Finance Committee meeting. No motion was made to provide staff with additional
direction or to accept the LRFF and forward the forecast to Council.
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Although the discussion of the forecast was tabled for future discussion and no motion was
made to formally provide staff with direction to update the for ecast, the Finance Committee
raised a number of concerns and issues for staff to consider:
Related tax revenue associated with hotels currently under construction and earmark
revenue streams for infrastructure expense
Calculate the pension savings for 3rd Tier employees
Clarification of CalPERS pension rate estimates included in the base model and
alternative scenario
Reconsider having Utility Users’ Tax (UUT) revenue increase, specifically for the Electric
UUT revenue component
Reconsider sales and documentary transfer tax estimates
Staff is requesting a formal motion with direction on changes/additional clarification requested
by the Finance Committee so that the forecast can proceed to the Council for further
discussion.
Staff would point out that the Long Range Forecast serves as a guide and is expected to be
dynamic and subject to change. Additionally, with the mid -year review each year, the City is
able to adjust revenue estimates and expenditures based on actual experience and the mid -
year allows the Council the ability to make adjustments and spending decisions based on more
current facts. In other words, some conservatism in our forecasts provides valuable flexibility in
the course of any given year.
Finally, Staff would suggest that trends concerns and assumptions can be expressed as “Trends
to Watch” in the report, for example, without necessarily changing the Forecast itself going
forward.