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school district really should bear more of the cost ... just like public charter schools and private elementary schools have found a way to do. However, 50% is a good compromise in year one of change. Then, once the city saves these funds, please do not spend them but instead put it away into a Measure X Stabilization Fund to prepare for the steep decrease in future revenue. Thank you for all of your work that you do for our city. Please also pass along all of my appreciation to those involved with the budgeting process who do not vote but instead put hours into preparing information for you to be able to vote upon after digesting your opinions and guidance while considering public thoughts. The end result may be a vote, but the process is grueling I am sure for those tasked with the day to day job. Tim Johnson, CPA JLK Rosenberger, LLP (949) 860-9892 13 (714) 743-1065 From: Tim Johnson Sent: Thursday, May 11, 2023 12:09 PM To: ecomment@santa-ana.org; Amezcua, Valerie <VAmezcua@santa-ana.org>; Phan, Thai <TPhan@santa-ana.org>; Bacerra, Phil <pbacerra@santa-ana.org>; Penaloza, David <dpenaloza@santa-ana.org>; jryanhernandez@santa-ana.org; Lopez, Jessie <JessieLopez@santa-ana.org>; bvazquez@santa-ana.org Cc: Downs, Kathryn <KDowns@santa-ana.org>; Mendoza, Steven <SMendoza@santa-ana.org>; Ridge, Kristine <kridge@santa-ana.org> Subject: City Budget- Agenda Item (5/11/23) Good day mayor, council, and selected city leaders ... I am writing today about tonight's special council session agenda item 1, Work Study Session on the FY 23/24 Budget. I pray that tonight's session is productive for the council receiving and providing information as well as for the residents and staff. I have a few thoughts that I think are relevant- they may be a little scattered but the theme is that we need to prepare today for the future. We are not as financially stable as many may think. We have a significant reduction in revenue on the horizon with the Measure X rate reduction AND our city has a deficit net position balance meaning that we do not have assets to cover the liabilities that have accrued to date. We need a plan to improve. Disclosure ... I am on the Measure X Citizen Oversight Committee but these thoughts are my own only as an interested and vested resident of Ward 3 in our great city and may not reflect the Measure X Citizen Oversight Committee's thoughts/recommendations. Although some of my thoughts will echo those presented in the Oversight Committee's Annual Report which you received at your April 181" meeting, again, these thoughts are my own. Summary If you think our city is on secure sound financial ground, I ask that you be open to additional information and to look at the long game financially. Our city is able to pay its current bills and provide a level of services according to the revenue being generated presently. However, when you look at the big picture I believe you will see that: • Our city is not prepared for the 1/3 drop in Measure X (MX) sales tax revenue (1.5% to 1.0%; 0.5% = 1/3). In today's dollars, that is around $29.5M (using the proposed 23/24 budget MX revenue of $88.616M). Ask yourself, what our city will look like with reduced revenue of $29.5M. That is what will be coming. We need to prepare today because next year or 5 years from now may be too late and will only make it that much tougher to make meaningful change. Our city has an extreme unfunded debt burden to our residents. Even though we are paying our bills, our city has a deficit Unrestricted Net Position from Governmental Activities of $468.4M as of 6/30/22. That is approx $1518 of debt allocated to each of our 308,459 residents. Let that sink in ... each of us are in debt to the tune of