December 7, 2006

City manager presents initial five-year general fund forecast

San Jose City Manager Les White presented his preliminary five-year budget forecast to the City Council on Tuesday at a study session.

The estimated general fund deficit for 2007-08 is $19.8 million, down from the projected $41.7 million based on increased revenues from sales tax, property tax, property, overhead, jail booking fees, card room and 2006-07 beginning fund balance revenue categories.

In addition, there was an expenditure savings of $1.3 million that reflected the change of employee’s maximum contribution for medical benefits and a lower growth rate in the employer contribution rate for the lowest-priced medical insurance.

The budget report indicates continued modest economic growth over the five-year period although a slower housing market will likely impact that growth. Because of the housing market, the preliminary budget indicates slower growth the first couple of years picking up after that when housing begins to improve.

The report assumes there will be shortfalls throughout the five years ranging from $9.5 million in 2011-12 to a high of $38.6 million in 2009-10, with about $20.6 million in 2009-10 resulting from the end of the Emergency Communication System Support Fee. At the same time, “expenditure growth will continue to outpace increases in revenue.”

The general fund five-year forecast is scheduled for release in February. It will include the revenue and expenditure projections.

—By Carol Rosen