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ATTACHMENT 5 DRAFT Economic and Fiscal Element of the General Plan Review and provide comment on a Draft Economic and Fiscal Element of the General Plan. Ms. Stem summarized the staff report, and noted that Pamela Ott, Economic Development Director, and Sue Rossi, Assistant Finance Director, were also in attendance. She detailed the background ofthis Draft Plan and described its relationship to the General Plan. She noted that the Economic and Fiscal Element was an optional element and not required by State law; it provided guidance regarding economic development and fiscal policy for the City. She described the process by which this document was drafted. She noted that when the 1996 General Plan was written, it was thought that sales tax revenues would outpace property tax revenues. That outcome had not occurred, and property taxes were still the major source of funding for the City. She noted that other City budget challenges were discussed, particularly with respect to labor costs and long-term debt limit. Ms. Stem noted that Attachments 3 and 4 contained a number of changes to goals, policies, and programs, although most were carry-tbroughs of the 1996 General Plan. She noted that the Balanced Budget section has been renamed Sustainable City Finances. She noted that changes were made to Programs 13.2 and 13.3, using the wording "discourage" rather than "prohibit" with respect to debt limit and financing current expenditures with debt, which allows some flexibility when fiscally prudent. Program 14.4 regarding the funding ofPERS addressed the issues with PERS during the low-performing periods ofthe stock market. Some cities did not perform that funding, which was not required, and the City of Pleasant on did fund it. She added that this program requires the City to fund PERS under normal contribution; therefore, reserves will be built up by the City for future needs. Ms. Stem noted that Program 17.3, regarding the City debt limit, was lowered to five percent from ten percent to more accurately reflect the current debt limit; some flexibility was included by allowing exceptions to be made by the City Council. She noted that this element related to the potential fiscal impacts of the new General Plan and that the options for Land Use would be addressed in the near future. Those options would be tested by creating a fiscal model of the City, and potential impacts would be assessed. She requested feedback from the Commission prior to review by the City Council. Chairperson Arkin inquired how the City would be run financially at buildout, when growth would no longer be possible. He further inquired about staffing requirements at buildout. Ms. Rossi replied that in a situation where inflation did not outpace revenues even in buildout, the City would be probably be fine. She noted that property taxes could not be controlled and that they were the largest part of the tax base. She added that a normal real estate market would probably yield normal growth. She noted that the real key to the City's future would be the City's economic vitality and the ability to find other sources of revenue; business development and redevelopment of businesses would be important parts of that scenario. She noted that property tax was close to 50 percent of the total General Fund revenue, and approximately 25 percent was from sales tax. DRAFT EXCERPT: PLANNING COMMISSION MEETING MINUTES, March 29, 2006 Page 1 of 6