Section 1303 of the City Charter states that "At the time so advertised, or at any time to which Public Hearing shall from time to time be adjourned, the City Council shall hold a Public Hearing on the proposed budget, at which interested persons desiring to be heard shall be given such opportunity."

Article XIIIB of the California Constitution established appropriation limitations on government agencies within California. Section 7909 of the Government Code requires that the City annually adopt an appropriation limitation for the coming year. Any challenges to the declared limit must be brought within 45 days of its adoption. The supporting documentation for the establishment of the limitation must be available for public review at least 15 days prior to the adoption of the appropriation limitation resolution. The required material, Attachment A, that provides detailed information on the appropriation limitation, has been available since May 7, 2002 as part of the recommended FY 2002/2003 Budget and Resource Allocation Plan.

The purpose of the hearing is to furnish an opportunity for citizens to be heard on the City's budget, the appropriation limitation, and the proposed increase in fees and charges. No action is required on the part of the City Council, except for what the Council itself initiates. The FY 2002/2003 budget is scheduled for adoption on June 18, 2002.

On May 21, 2002, the City Council held a Budget Workshop to review in detail the City Manager's recommended FY 2002/2003 Budget and the Resource Allocation Plan. Although City Council is only required to adopt an annual budget, staff presented a ten-year resource allocation plan and a twenty-year financial plan for approval in concept as well.

In summary, the total recommended revenue for FY 2002/2003 is approximately $195 million, and total expenditures are approximately $215 million. The total recommended budget for operating expenditures is approximately $178 million. The total project and equipment budget is approximately $30 million. Debt Service totals approximately $7 million. Details of the revenues and expenditures are contained in the recommended FY 2002/2003 Budget and Resource Allocation Plan, distributed on May 7, 2002.

As discussed at the Budget Workshop, the recommended budget does not reflect the potentially significant negative effects of the State Budget. If the proposed reductions in the Governor’s May Revision are adopted, staff suggests that the General Fund’s Fiscal Uncertainties be used to cover the loss for FY 2002/2003. Further analysis would be required if the reductions are for more than one year.

At the Budget Workshop, Council requested verification of the budget for the Animal Sheltering Services contract to ensure the most recent contract agreement was incorporated. Staff has verified that the funds budgeted are very close to the final agreement, with a difference of less than $500. The adopted budget will be revised to reflect the precise number. Additional expenditures in the Animal Shelter program activity are the allocation of administrative expenditures which are distributed across all program activities.

Subsequent to the submittal of the recommended FY 2002/2003 Budget, revenues and expenditures related to the Fremont High School Pool operations changed due to the final contract negotiations. The updated financial plan for the Community Recreation Fund, which contains this project, is shown under Attachment B. This revised financial plan and corresponding adjustments to the operating program will be incorporated into the adopted budget document.

Additionally, at the May 21, 2002 meeting, Council directed staff to research potential funding sources for the additional costs associated with the Lawrence Expressway/Wildwood Avenue Intersection Project. The project requires additional funding in the amount of $1.6 million. Staff recommends the appropriation of:

• $900,000 from unappropriated Capital Project funds originally proposed for the Fair Oaks Utility Undergrounding;
• $502,740 from the AB 2928 Traffic Congestion Relief Funding – FY 2003/2004 Allocation;
• $197,260 from the FY 2001/2002 General Fund Fiscal Uncertainties.

At Council’s direction, staff will incorporate these changes into the adopted budget.

To recover the cost of services, most user fees in the recommended fee schedule are approximately 3% over the current fees. Staff requests additional language under Section 8.08 – Right of Way Encroachment to better clarify the fee structure. The revised section is shown in Attachment D.