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PAGE 2 <br />MAYOR AND TOWN COUNCIL/CHAIR & MEMBERS OF THE RDA <br />SUBJECT: OPERATING AND CAPITAL BUDGETS FOR FY 2009/10 <br />MAY 13, 2010 <br />An~ changes to the proposed operating and/or capital budgets directed by Council at the May <br />17" budget hearing will be incorporated in the implementing documents to be presented for <br />Council approval on June 7, 2010. <br />DISCUSSION: <br />Overview of Proposed Operating and Capital Budgets <br />The transmittal letter in the FY 2010/11 Proposed Operating Budget provides an executive <br />summary of the budget, including budget development principles and strategies, an overview of <br />revenue and expenditure assumptions, and future challenges affecting the Town's fiscal <br />situation. <br />This staff report provides: <br />a sumrnary of budget balancing actions recommended in the proposed budget; <br />discussion of an updated Five-Year Financial Forecast; <br />presentation of issues for consideration in the proposed budget and to be explored during <br />FY 2010/11; <br />a summary of the proposed Capital hnprovement Program; and, <br />information regarding the budget presentation to be made on May 17, 2010 <br />The slow recovery of the unprecedented economic recession continues to impact the Town's <br />revenues, leading to projections of modest growth in the Town's two largest revenue sowces: <br />property taxes and sales taxes. Projections for other revenue sources, including Transient <br />Occupancy Tax, license and permits, and private development fees, are either flat or show <br />declines. These revenue impacts require adjustments in the Town budget totaling $1.8 million, <br />approximately 5.5% of the General Fund Operating budget. <br />Fortunately, the Town's past conservative financial practices and prompt action in response to <br />the economic crisis positioned the Town relatively well to address the budget shortfall projected <br />for FY 2010/11. Unlike some other local jurisdictions, the Town is not requiring layoffs or <br />sigrrificant public service reductions next year. The outlook for the following year and beyond <br />remains guarded, however, as discussed later in this report. <br />Due to continued reductions in staffing levels, the Town will be limited in its capacity to take on <br />new special projects or initiatives. Longer response times for non-priority calls for service and <br />customer referrals are also expected. Health and safety responses will continue to take priority <br />over aesthetic concerns. Limited workforce furloughs and closures will reduce customers' <br />access to service, as well as employees' salaries. Staff will be available at the budget hearing to <br />address any specific questions regarding impacts of departmental reductions. <br />