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Introduction

Dear Mayor and Council Members,

I am pleased to present City Council with the Manager’s Proposed Budget for Fiscal Year 2017 and

the Proposed Five-year Capital Improvement Plan. Staff begin the budget process in the Fall,

spending several months identifying, analyzing, and prioritizing what to include in the budget. The

$858.6 million Proposed Budget is the culmination of this analysis and discussion that has included

every City department and City Council Members.

We are fortunate to have a strong economy and tax base. Despite our financial position, this year’s

process was still challenging. First, we plan to open many new or renovated facilities. Second, we

continue to face additional service demands due to our population growth. And third, this is the first

budget process to reflect our City-wide Strategic Plan. Our goal is to implement the Strategic Plan

over the next three to five years, and I am very pleased to share that the Proposed Operating

Budget and Capital Improvement Program (CIP) reflect a solid start to this effort. This budget

message highlights the connection between the budget and the Strategic Plan’s six Key Focus

Areas.

Revenue Outlook

Property taxes are the largest revenue source for the City’s General Fund, which supports public

safety, parks, transportation, and many other service areas. The City is fortunate to have a robust

property tax base. The Proposed Budget assumes a regular growth rate of 2% or $4.6 million, over

the FY2016 budgeted amount of $226.7 million for a total of $231.3 million in FY2017.

The City’s other major revenue sources remain strong. Our budgeted sales tax revenue is estimated

to increase by 5% from $86.7 million in FY2016 to $91.1 million in FY2017. The utility franchise tax

provides $31.2 million. User fee revenues for water and sewer services, stormwater management,

and solid waste services also remain steady. City staff continue to study user fee policies for our

development services area and will bring City Council recommended structural changes during

FY2017.

Staff will continue monitoring legislative changes that might affect our revenue streams. Though the

City absorbed the loss of $7.2 million in Business Privilege License revenues in FY2016, any

additional changes to sales tax distribution or the taxable base could present serious problems.

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