Charter Section 3.105 directs the Controller to issue periodic or special financial reports during the fiscal year. This report is the Nine-Month Budget Status Report that is based on sources of funds received and uses of funds expended from July 1, 2006 through March 31, 2007. The purpose of the report is to apprise the City\u2019s policy makers of the current and projected budgetary status of the General Fund and other key operating funds.

surplus is primarily attributed to the additional fund balance available from the prior year, which was larger than previously assumed due to both better revenue growth and expenditure savings in FY 2005-06 as well as projected revenue growth and expenditure savings in the current fiscal year. That being said, however, the $98.41 million projected fund balance is $28.21 million less than previously projected during our Six-Month Report, primarily due to recent ly approved and assumed approved supplemental appropriations of over $35 million. Key changes since the Six- Month Report are summarized below.

The Joint Report assumed all available projected fund balance from FY 2006-07 would be used to fund next year\u2019s budget. With the updated projections included in the Controller\u2019s Nine-Month Report, the Joint Report\u2019s $25.40 million projected shortfall for FY 2007-08, as previously

The projected current year-end balance is based on current revenue and spending patterns. Actual year-end balances may differ due to changes in revenues, spending rates, the amount of further supplemental appropriations, and releases of reserves ultimately approved by the Mayor and/or the Board. The narrative on the following pages provides a summary of key budgetary issues, helping to frame the key uncertainties present.

At the time the budget for FY 2006-07 was prepared, we anticipated starting the current fiscal year with a General Fund beginning balance of $99.48 million and prior-year reserves of $25.65 million. When the Comprehensive Annual Financial Report (CAFR) for the year ended June 30,

2006 was completed in December 2006, we confirmed that the ending balance from the previous fiscal year was $145.58 million, along with prior- year reserve balances of $35.29 million. As a result, there is an additional $46.11 million of prior-year fund balance and $9.64 million in prior- year reserves available from FY 2005-06 that was not anticipated for FY 2006-07 budget.

We project revenues and transfers-in to be $91.41 million better than the revised FY 2006-07 budget. The revenue surplus is primarily due to higher Property Tax, Real Property Transfer Tax, Hotel Room Tax, Business Payroll Tax, Parking Tax and Interest Income revenue. Some shortfalls in Social Service Subventions are projected with more than offsetting expenditure savings in the Human Services Agency. Similarly, shortfalls in Health Department charges are more than offset by net savings at the Department of Public Health. In addition to realized revenues through the first nine months of FY 2006-07, posted activity through April 30, 2007 has been incorporated into our revenue projectio ns. Our projections are also based on discussions with department staffs and industry experts, as well as analyses of key economic indicators and forecasts. Chart B below provides a high- level summary of key revenue changes from budget. Chart F (page 10) provides a more detailed revenue summary followed by descriptive narrative.