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State. During the course of a number of months, a compromise proposal was reached and endorsed by the Governor. As a result, Proposition I A was placed on the ballot and approved by the voters in November 2004. Although the passage of this measure limited the ability of the State to divert future local government revenues, it allowed the reallocation of an additional $3.0 million of the City's property tax revenues to the State for the Educational Revenue Augmentation Fund (ERAF) in both the 2004-2005 and 2005-2006 fiscal years; this results in a total of $10 million in General Fund property tax reductions for the coming fiscal year which will be coupled with another $3.4 million diverted from redevelopment tax increment revenues. Over the past 15 years, the State has: . reallocated a cumulative total of approximately $66.7 million of City property tax for ERAF payments; . redirected a total of $14 million of redevelopment funds for ERAF payments; . postponed the reimbursements for state mandated programs which constitutes 1.5 million in deferred revenues for the General Fund; and . retained 100 percent of cigarette tax revenue, which constitutes an annual loss of approximately $580,000; . suspended payment of $2.1 million in Traffic Relief Congestion Program (proposition 42) Funds in 2003-2004 and 2005-2006. The cumulative effect of the budget related legislative actions over the past 15 years has been a decrease of$I13,075,610 from City resources. Budl!et Overview The State's actions to address its fiscal crisis, coupled with the impact of the investment losses in the State-run retirement system, have resulted in a pronounced impact on the City's budget. Given this financial environment, our efforts in preparing the proposed 2005-2006 fiscal year budget have been focused on resolving the dilemma of meeting the demands for services and infrastructure improvements while coping with declining revenues and increased retirement system costs. Specifically, the challenge of balancing the 2005-2006 General Fund budget was to address a projected deficit resulting from expenditures exceeding revenues by approximately $23 million. This budget proposal responds to that challenge through a balanced approach of increasing revenues and decreasing expenditures. The proposed 2005-2006 budget of $404,220,000, includes a General Fund that totals $197,803,660, without including redevelopment pass-throughs. This budget incorporates a cost of services adjustment of five percent in general and safety related fees and 4 percent in the water rate. In terms of expenditures, the General Fund budget supports the functions most commonly associated with city government: police, fire, recreation, library, planning and building, street maintenance, and general city administration. These services are being provided to an increasing population; according to the State Department of Finance, the population of the City in 2004 is 351,697 which constitutes a 55 percent increase over the past twenty years. Although the City's population has substantially increased over that time period, we have reduced our overall supervisory and management positions by over 20 percent. The proposed budget reduces the managerial workforce by one additional position which brings the total workforce allocation to 1,713. This workforce figure equates to a ration of 4.8 employees per 1,000 residents and demonstrates a significant improvement in Resolution No. eRA 2005-003 Page 11 of 22 4