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CITY FINANCIAL SITUATION AND OPTIONS FOR THE FUTURE

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AGENDA• How are City funds spent?• How are City services funded?• Why do we have a future deficit?• What steps have been taken to reduce

expenditures in recent years?• What are the City’s options for dealing with the

deficit?• Questions/Comments

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CITY SERVICES• Police Department• Fire Department• City Library• Recreation and Parks• Public Works• Planning & Building Safety• Administration• Elected Officials

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HOW WILL YOUR DOLLAR BE SPENT IN 2014?

14% 15%60% 11%

$59,417,000

Salaries – 47%$27,890,700

Nonpersonnel – 22%$13,209,300

Benefits – 31%$18,317,000

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HOW WILL CITY SERVICES BE FUNDED IN 2014?

TAXES41703500

73%

CHEVRON TRA $5,906,900

10%

FEES FOR SERVICES $4,215,900

7%

OTHER REVENUE2799800

5%

LICENSES AND PERMITS, 1477500, 3% TRANSFERS FROM OTHER FUNDS, 400000, 1%

INTEREST INCOME240000

0%

$56,743,600

BLT $10,294,500

UUT $10,026,800

Prop Tax $5,337,500

Sales Tax

$9,726,5

00

TOT

$5,125,000

Residential Taxes 2% $1,200,000

TAXPAYER ANALYSIS OF $41.7M

GENERAL FUND REVENUES

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Business 62%

Consumer

36%

Top 10 businesses pay 1/3 or, $14 Million

TAXES; $41,703,500

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$0.04 $0.06 $0.06

El Segundo Unified School District; $0.11

Educational Aug. Fund Impound $0.14

Los Angeles County $0.53

Property Tax Breakdown

Property Value: $

500,000

Payment to County: $

5,000

City's Tax Apportionment:

X 6.32%

Portion to City: $ 316

* Average assessed value of a single-family unit in El Segundo is $482,000

* L.A. County (88 Cities) Avg: 11%

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$316

How Will Your Dollar Be Spent in 2014?

$88Fire Dept. $102

Police Dept.$29

Rec./Parks

$14Library

$47

Admin.

$36Public Works

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GENERAL FUND FY 2013/14 REVENUES & EXPENDITURES

REVENUES EXPENDITURES$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$59,417,000

$56,743,600

Deficit$2,673,40

0

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WHAT DOES THE FUTURE LOOK LIKE?

2013-2014 2014-2015 2015-2016 2016-2017 56,000,000

58,000,000

60,000,000

62,000,000

64,000,000

Expenditures

2014-2015 2015-2016 2016-2017FORECAST FORECAST FORECAST

REVENUES 57,685,585 59,045,675 60,271,924 EXPENDITURES 61,288,387 62,496,903 63,172,708 SURPLUS/(SHORTFALL): $ (3,602,802) $ (3,451,227) $ (2,900,784)

Increase to Expenditures forCapital Infrastructure 2,000,000 2,000,000 2,000,000 SHORTFALL: $ (5,602,802) $ (5,451,227) $ (4,900,784)

Revenues

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WHAT IS PREVENTING A STRUCTURALLY BALANCED BUDGET? Stagnant Tax Revenues

Price of Natural Gas impacting core tax revenues Slow Property Tax Recovery (Commercial)

No significant projected increases in other revenues

Heavy Dependence on the Business Sector 62% of Tax Revenues come from Businesses Volatility and Risk Revenue needs diversification

Rising Benefit Costs have offset employee concessions

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A BIT OF HISTORYGENERAL FUND

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DEFICIT PERIOD

8-yr surplus: $33 MM

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017 24,000,000

29,000,000

34,000,000

39,000,000

44,000,000

49,000,000

54,000,000

59,000,000

64,000,000

REVENUES, NET OF TRANSFERS EXPENDITURES, NET OF TRANSFERS

GENERAL FUND HISTORY

Beginning Business

License Tax Reductions

Without Chevron TRA

141995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

24,000,000

29,000,000

34,000,000

39,000,000

44,000,000

49,000,000

54,000,000

59,000,000

64,000,000

GENERAL FUND HISTORY

$5.1 Million Reduction in 2010: - Froze 34 vacant position created through attrition - Offered Early Retirements - Negotiated health cost-sharing with employee groups - Outsourced 911 Dispatch - Reduced mandatory staffing in Fire Dept., resulting in a savings of $1.8 Million in OT

$4 million loss on investment portfolio

$ 2.4 million loss from price of natural gas

$2.6 million loss from Sales Tax$1.2 million loss from Franchise Tax

Balanced with:$19.3 million from Econ Uncertainty

$5.9 million in Developer Fees

$4.4 million from Capital Designations

2012: -Negotiated pension cost-sharing with employeesFroze Additional 12 positions, for a total vacancy of 62 positions, or 20% of total staffing

$3 Million Additional Reduction in 2011: - Saved 12.83% in Salaries & Benefits through employee furloughs - Offered Additional Early Retirements - Froze Additional 16 positions, for a total vacancy of 50 positions

2009:Cost of Living (COLA) increase given to all employees

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DEFICIT PERIOD

8-yr surplus: $33 MM

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017 24,000,000

29,000,000

34,000,000

39,000,000

44,000,000

49,000,000

54,000,000

59,000,000

64,000,000

REVENUES, NET OF TRANSFERS EXPENDITURES, NET OF TRANSFERS

GENERAL FUND HISTORY

Without Chevron TRA

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3-Year Forecast

Budget Balancing Options

Raise Revenues (tax increases)

Outsource Services

22 FT positions 28 PT positions= 8% Reduction in

Salaries & Benefits

County FireCounty SheriffCounty Library

UUTTOTBusiness LicenseParking Tax

Option 1 Option 2 Option 3

1% Comp - $440k

Reduce Compensation,

Staffing & Service Levels

Reduce School Support Services

RECOMMENDATIONS TO ADDRESS FINANCIAL STABILITY

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• Ongoing Cost Containment

• Economic Development

• Tax Measures:• Utility User Tax Increase (UUT)• “Hotel Tax” - Transient Occupancy

Tax (TOT)• Business License Tax (BLT)

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0%

2%

4%

6%

8%

10%

12%

3%

GAS, ELECTRIC & WATER UTILITY USERS’ TAX

Average

7%

City of El Segundo Charges Commercial Only; All Others Charge Commercial and Residential

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0%

2%

4%

6%

8%

10%

12%

14%

8%

HOTEL (VISITOR)TAX (TOT)Average

12%

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ESTIMATED VALUE OF PROPOSED TAX MEASURES

1% Increase Value:

UUT:(Elec., Gas, Telecom., Water)

Hotel (Visitor) Tax (TOT):

Residential UUT (Elec., Gas, Telecom., Water):

$1,401,200 $637,500 $342,350**

**ANNUAL ESTIMATED Residential UUT Impact per household: $48.84 (Based on 7010 units not currently paying UUT)

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BUSINESS LICENSE TAX2013 SALES TAX CREDITS (NOT INCLUDING CHEVRON)

TOTAL $1,105,500

Manufacturing Other Retail

254 out of 4,160 businesses take the Sales Tax Credits

ESTIMATED POTENTIAL PARKING TAX REVENUES

ASSUMING 10% PARKING TAX• Airport Parking (Long-term Parking):

$295,000

• Transient (Visitor), Validation, & Valet Parking: $346,400

• Monthly Tenant Parking: $516,900

TOTAL: $1,158,300

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Tax measures

• All would require a ballot measure; must have 50% of the votes plus one to pass.

• Next regular election – April 2014

• Council would need to agendize and vote on tax measures in the Fall 2013

• The earliest we would see any new revenues would be July 2014.