Communicating Budget Reductions

1. Communicating BudgetReductions GFOA AZ February 2009

2. Financial Forecast Fiscal Update 2nd Quarter FY 2009

3. 2008 - December National CPI – 0.7% December job change = (1,529,000) Unemployment rate 7.2% Arizona Unemployment rate 6.9% December job change = (12,400) Active foreclosures = 7,797 (Maricopa County) 328 Avondale foreclosures 2007 - December National CPI 0.4% December job change = (320,000) Unemployment rate 4.9% Arizona Unemployment rate 4.2% December job change = 5,100 Active foreclosures = 3,859 (Maricopa County) 193 Avondale foreclosures Economic Indicators

4. State Revenues • Shared Sales Tax • December sales tax collections were down (16.4)% compared to December 2007 and were $(79.7) million short of the monthly forecast. • 14.8% projected annual loss = $920,000 to Avondale • Income Tax • December individual income tax collections were down (6.2)% compared to December 2007 and were $(43.1) million below forecast.

5. State Revenues • Auto In-Lieu Tax • FY 2009 YTD Disbursement to Avondale $100,00 below 2007 (7.5% below City forecast) • HURF • FY 2009 YTD Disbursement $348,000 below 2007 (14% below City forecast)

6. State Shared Revenue *Projected

7. Local Revenues • Sales Tax • Six month collections $2.2 million or 11.3% below forecast • Six month collections below same six months prior year $2.4 million or -12%. • Development Revenue • Single family permits total 39 year to date – 38% below forecast

8. City Sales TaxCalendar Year Monthly

9. Restaurant & Bar TaxQuarterly Collections

10. Tax on Items over 5,000Quarterly Collections

11. Contracting TaxQuarterly Collections

12. Retail TaxQuarterly Collections

13. Tax Percent by CategoryFY 2007

14. Tax Percent by CategoryFY 2009 YTD

15. Taxable TransactionsQuarterly

16. Assumptions FY 2009-10 • Baseline sales tax assumes -5% growth • 100% of contracting sales tax considered one-time • 75% of building/development revenue considered one-time • 75% of Interest Income considered one-time

17. FY 2009-10 RevenueProjections

18. Avondale Budget Reductions • Step One Reductions – Spring 2008 - $3.2 million • Elimination of 29.5 positions • Transfer or redeployment of staff • Layoff of two employees • Voluntary separation offered • Reduce training and travel • Eliminate consulting projects and services • Eliminate operating capital purchases and improvements • Reduce memberships • Reduce meeting expenses and supply budgets • Reduce special events and activities • Reduce printing, publication and marketing costs • Replacement costs, temps and other contracts

19. Avondale Budget Reductions Step Two Reductions – December 2008 - $3.6 million Contracting out for services – $153,000 Reduction in force - $1,198,960 Eliminating special events for one year $110,000 + O/T (not including RIF) State of the City $2,500 Northwest Public Safety Facility $1,100,000 (net) Eliminating the Neighborhood Traffic Management Program (NTMP) $200,000 Cashion Community Center Conversion $58,500 Contributions Assistance Program $40,000 Youth Non-Profit Sports Voucher Program $32,500 New Life Center $25,000 Line items/Other - $670,000 Elimination of 46 positions Layoff of 20 employees

20. The Final $3 Million • Suspend equipment and vehicles replacements • Suspend replacement fund contributions • Additional voluntary retirements • No salary adjustments • No additional employees • Special interest classes/sports cost recovery • Increase in engineering and planning fees

21. Transition Assistance • 2 weeks base pay + 1 week for each year capped at 12 weeks • $3,000 for 90 days of medical premiums • Outplacement services including skills training, professional resume service, interviewing assistance

22. Questions? March 2009