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California LAFCoAnnual Conference

October 28-30, 2009

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Sales and Use Tax Revenue: FY Total and Percent Change - State

Source: California Department of Finance, Financial Research Unit, December 11, 2008.

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The Fiscal Squeeze

Growing Service Demands

Increasing Costs

Falling Revenues

$9

$10

$10

$10

$10

$10

$11

2005-2006

2007-2008

2009-2010

Costs (Millions)

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Growing Service Demands

California Population: 1990-2030

0.0

10.0

20.0

30.0

40.0

50.0

60.0

1990 2000 2010 2020 2030

Year

Mill

ion

s

Source: State of CA, Dept. of Finance

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Increasing Costs

Agencies must make larger retirement contributions to offset CALPERS portfolio losses

CALPERS Investment Portfolio

-30.0%-25.0%-20.0%-15.0%-10.0%-5.0%0.0%5.0%

10.0%15.0%20.0%25.0%

99-0000-01

01-0202-03

03-0404-05

05-0606-07

07-0808-09

Fiscal Year

An

nu

al R

etu

rn

New Accounting Rules

Must address post employment benefits costs in current budgets

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Required CALPERS member contributions increase as stock market falls

Annual CALPERS Employer Contributions(Inflation-Adjusted to 07-08$)

$0.00$1.00$2.00$3.00$4.00$5.00$6.00$7.00$8.00

00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08

Fiscal Year

Bill

ion

s

Source: CALPERS

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Falling Revenues

Loss of sales taxes due to slowdown in consumer spending

Local Sales Tax Distributions(Inflation Adjusted to 07-08$)

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

00-01

01-02

02-03

03-04

04-05

05-06

06-07

07-08

Fiscal Year

(Mill

ion

s)

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Source: CA State Controller

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

98-9

9

99-0

0

00-0

1

01-0

2

02-0

3

03-0

4

04-0

5

05-0

6

06-0

7

07-0

8

08-0

9

09-1

0

Fiscal Year

An

nu

al C

han

ge

0.00.51.01.52.02.53.03.54.04.55.0

Sta

tew

ide

Ass

esse

d

Val

ue

($T

rill

ion

s)

Percent change Assessed Value

Loss of property tax revenues due to collapse of real estate bubble

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Loss of development-related revenues due to housing crash

California New Housing Starts

0

50000

100000

150000

200000

250000

2000 2001 2002 2003 2004 2005 2006 2007 2008

Un

its

Source: Calif. Building Industry Assn.

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Local agencies forced to loan up to 8% of 2009-1020 property taxes to State

State promises to pay by 2013

State decides to pay 2% interest

Loan securitization - but local agencies will likely pay higher interest rate

More Local Government Sacrifices to Help Balance 2009-2010 State Budget

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State suspends Williamson Act payments to local governments

Worth $33.1 million in 2008/2009

Top 5 Williamson Act Counties2008-2009 Allocations

Fresno, $4.8

Kern, $4.2

Tulare, $3.1

Kings, $2.3

San Joaquin, $1.7

Remainder of CA, $17.0

Source: CA State Controller