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MAYOR <br />Miguel A. Pulido <br />moulido(a7santa-ana ora <br />MAYOR PRO TEM <br />Michele Martinez <br />Ward 2 <br />mimartinezOsanta-ana ora <br />P. David Benavides <br />Ward 4 <br />dbenavides(asanta-ana om <br />Vicente Sarmiento <br />Ward t <br />vsarmiento(asanta-ana ora <br />Jose Solorio <br />Ward 3 <br />Isolodoosanta-ana ora <br />Sal Tinalero <br />Ward 6 <br />stinaieroosanta-ana ora <br />Juan Villegas <br />Ward 5 <br />ivilleaas(asanta-ana.ora <br />04 searsMY <br />1 SANTA A I r <br />U <br />Iv+rM1@ <br />June 5, 2018 <br />Honorable Mayor and City Council: <br />I am pleased to present the proposed budget for the City of Santa Ana for Fiscal Year 18-19. <br />This budget document provides the foundation for our work plan, and more importantly our <br />commitments to the residents and constituents of the community. As a document, the budget <br />calls out the anticipated expenditures and revenue assumptions for the next year of service. <br />During my short tenure as your City Manager, one of my top priorities was to analyze the <br />current fiscal position of the organization and to provide clarity moving forward. These <br />observations became the basis for the development of this budget. <br />Observations & Fiscal Realities <br />The first observation is that there is a lack of clarity as to the City's current financial position. <br />This, in part, is due to changes in administration and varied budget philosophies. A fundamental <br />value and budget principle is transparency and clear communication. We can do better and we <br />will do better; that is my commitment to you. It is for this reason that I have instituted a <br />directive that the City's over-riding budget principle be "Truth in Budgeting". City government <br />has a responsibility to not only make financial information accessible, but also transparent so <br />that any interested party can review, ask questions, and understand the budget. <br />The second observation is that the problems we are experiencing are actually years in the <br />making. Santa Ana is a community with many opportunities, but also many needs. We have <br />one of the youngest populations; as an older city, we have increased infrastructure needs; and <br />according to industry benchmarks, we are under -staffed in our police department. In short, we <br />are operating with a "service deficit" in relation to the needs of our community. I believe that <br />these pressures, in part, led to the decisions that contributed to a trend where expenditures <br />increased at a rate of 4%, while revenues only increased at a rate of 2%. The result is a <br />structural deficit of $9.3M for our current FY17-18 budget, and a projected $17.1M deficit for <br />FY18-19. Clearly, this is not sustainable. <br />As a result, unfortunately, we are left in a very vulnerable position, potentially unable to <br />weather a downturn in the economy. While a core function of government is the delivery of <br />services, a city must have solvency in order to deliver any services. The City's total general <br />fund reserve balance is $46.1M ($42.3M in general fund reserve and $3.8M in an economic <br />uncertainty fund). This is approximately 17.7% of the total proposed General Fund budget. At <br />CITY ATTORNEY CITY MANAGER CLERK OF THE COUNCIL <br />Sonia R. Carvalho Raul Godinez II Maria D. Huizar <br />20 CIVIC CENTER PLAZA — P.O. BOX 1988, M31 — SANTA ANA, CALIFORNIA 92702 <br />TELEPHONE (714) 647-6900— FAX (714) 647-6954 — www.santa-ana.org <br />