WSA - BUDGET DISCUSSION 2011-2012_COLOR

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� Address minor deferred maintenance projects inaUpa[kzand m Ensure the City's long-term financial stability. As a result of the global financial crisis and its impact on local and state reSOUrces,, ensuring the [|h/s long-term financial stability has become even more important. The proposed FY 2011- 2012 budget has been developed to move Santa Ana closer to such stability, while maintaining core programs and services to the extent possible. Economic Outlook The economic crisis at all levels of our country is being felt in many areas such as kzvv property values and high unemployment levels—and Santa Ana is feeling these impacts as a community. Median home prices have fallen over 40 percent, their lowest since 2003. The decline in property values has spilled over into the commercial sector which is negatively impacting the business cornmnunity and local redevelopment efforts. According to the County of Orange Assessor's Office, property tax revenues will finally flatten-out during fiscal year 2011'I2 as housing prices begin to stabilize. A recent report fromn the State of California Employment Development Department (EDD) puts the preliminary Mach 201I unemployment rate in Santa Ana at 14.3% the second highest in Orange County. These economic indicators mean Santa Ana residents have less disposable income due to limited job growth and decreased home values. Discretionary spending has a major impact on both the businesses in our community and the revenues we receive as a City. Although, sales tax revenues are improving, the gains are considered nominal when compared to the losses experienced over the past three years. From fisca|yearsIOO6'O7to2OO9'ZCithe[itv'ssa|estaxrevenueexper\enceda27percent(nver$12 million) drop. Business-to-business and construction sectors contributed heavily to the City's overall sales tax declines. The State of California continues to have its own budgetary challenges, which potentially puts the City's revenues at risk. As part of the cur[ent budget the State proposes to eliminate the current funding mechanism for all Redevelopment Agencies which mxzu|d prohibit existing agencies from creating new contracts or obligations. Existing Redevelopment Agencies vvou|d be disestablished and successor local agencies vvou|d be required to use the tax increment revenues that local Redevelopment Agencies vvou|d otherwise have received to retire debts and contractual obligations. Essentially, local Redevelopment Agencies would be eliminated. This all comes on the heels of a $2.05 billion State raid of local Redevelopment funds of which the City of Santa Ana was obligated to pay the County Supplemental Educational Revenue Augmentation $2l.21VI over the past two years. While the nation 1s experiencing mixed signals that the economy is rebounding, all indications are that the decline in the economy has finally leveled off. However, there are events that are occurring that Could derail any speedy recovery or relapse into a lingering recession. Primarily 2