75A - PH 2013-2015_BUDGET_SUMMARY

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California —A Continued Take After grappling with its own budget challenges for over a decade, often on the backs of local government, the State of California has finally achieved a balanced budget for FY 13 -14 that includes a $1.1 billion reserve. However, local governments still have felt the hands of the State as it took the last piece ($1.2 million) of the Vehicle License Fee in 2012. In addition, cities continue to feel the effects of the dissolution of the redevelopment agencies. The State used the dissolution of redevelopment agencies as a means to balance its budget. Originally the State had assumed savings of $2.1 billion for FY 2012 -13 and $1.1 billion for FY 13 -14 but these numbers appear to be one -third of what the State had originally estimated. The City has maintained its battle with the State in terms of defining enforceable obligations and has succeeded on many fronts. With the State defining the total amounts to be disbursed to local taxing agencies as $33,174,377 for Housing Set -Aside assets and $21,760,018 for Non- Housing Assets, the City has only disbursed $10,644,759 and continues to meet its obligations in terms of debt payments and affordable Housing projects. One unfortunate consequence of the elimination of redevelopment is that local cities have lost the funding and ability to provide an appropriate level of economic development for their community. Cities will now need to redefine economic development and look for creative alternatives to fund these activities that were previously funded through redevelopment tax increment. As cities grapple with this new reality, the State has now shifted its focus to eliminating or reforming enterprise zones. In its quest to "save" anther $750 million for the State budget, the elimination or reform of enterprise zones will certainly remove another leg of a development tool used to boost businesses and create jobs. The City Enterprise Zone budget is $393,500. In fiscal year 2011 -12 the enterprise zone issued 3,488 hiring tax credit vouchers to 434 businesses. Rising to the Challenge The City of Santa Ana leadership has taken many important steps in responding to its own budget challenges. Three major decisions by the City Council provided the foundation for ensuring that the City moved to financial stability. These were the outsourcing of the Fire Department to OCFA, collaboration with labor that resulted in $11.4 million in concessions, and the adoption of a fiscal policy that ensures a true balanced budget and commitment to reserves. As the City approached the fiscal year 13 -14 budget, it was essential that the City develop a long- term forecast that would enable policymakers to gage any decisions made in terms of savings as well as costs. As such, City staff worked with a consultant in developing a comprehensive interactive model that would allow for the application of various assumptions to a ten year Budget forecast. As a result of the forecast, the City identified 12 major budgetary assumptions in order to maintain a balanced budget over a two year period. In addition, City Council supported 11 budget - related policies which establish the framework for tasks and direction over the 2 -year 2013 -15 budget. These assumptions are outlined below: