Mayor Madeline Rogero held a budget retreat with City Council members and city leadership staff at the John T. O'Connor Center today to discuss the financial state of the City's budget and to introduce new council and staff to the annual budget process.

Finance Director Jim York reported on the forecast for completion of the 2011-2012 Fiscal Year, and presented the budget outlook for Fiscal Year 2012-2013.

At the end of the retreat, which was held from 8:30 a.m. to 1:30 p.m., Mayor Rogero gave this brief summary:

Challenges and Opportunities

As we wrap up today, we have a lot to build on.

We are a great city, in good financial shape, with great employees and exciting policies in place to invest in our city core and to strengthen our neighborhoods.

Challenges

However, we have to be cautious as we look to the future. There are significant constraints on the city's resources. Our own income stream is not robust.

Property tax: The property tax is our largest source of revenue - and there is very little growth to be expected.

The fact that so few building permits have been issued during the down times means that significant new properties will not be coming into the tax base for a good while. Even if the economy picks up substantially, there is a lag before revenues are available for city services

Sales Tax: There is some good news with the sales tax. We are seeing increases, though modest ones. But we have not yet caught up to the levels we enjoyed before the economic downturn.

State level: We also have growing uncertainty at the state level. Bills have been introduced to eliminate the Hall tax that provides us with substantial revenue and to limit the legislative body's ability to raise revenues if we deem it necessary.

Federal level: The situation at the Federal level is also very uncertain. In fact, in the short run, the only certainty is that there will be less money coming to the city through grants, for housing and for valuable programs in community development.

In many cases, we will have to face tough decisions. Do we eliminate programs that make a difference in people's lives or do we use precious local resources to help blunt the impact of lost federal dollars?

While we face limits on resources, we also face increasing demands on those resources.

Fuel: First, we are under great exposure to increases in the cost of fuel. Our fleet is large, and we are a major consumer of gasoline and diesel.

KAT costs are very much fuel dependent. And we face the irony that increases in fuel costs make public transit very appealing on one hand, while forcing reduced service on the other to keep KAT within budget.

Storm water: New regulations limiting storm water runoff will make it much more expensive for the city to build public infrastructure. While we embrace the challenge of environmental stewardship, we have to face the reality of the increased costs.

Employees: Our employees are our greatest resource. And I am committed to making sure that we do not ever fall behind our peers in compensating them. We know that salaries, benefits, and especially pension costs will present us with real challenges.

Opportunities

I don't want to end with doom and gloom. Our challenges are our opportunities.

A great city is a city of choice. We are in competition with other cities and with the areas outside our boundaries.

The work we are doing together - providing quality services, supporting quality businesses and development, continuing downtown's momentum, and keeping neighborhoods strong - all within a framework of environmental sustainability - will keep us healthy and vibrant.

We will be cautious, but we will not be paralyzed into inaction.

We will work with neighborhoods, with business, and we will use our tools wisely in leveraging investment.

We are constrained by economic realities but we must keep investing wisely in both programs and people.

Conclusion

I hope this background has been useful. I thank Jim York and his team for their work in preparing and presenting this information to you.

In late April, I will present you with my budget for your approval. I know you will give it your full consideration.

In the meantime, if you have questions or suggestions, do not hesitate to contact me."