CITY OF PACIFIC GROVE
300 FOREST AVENUEPACIFIC GROVE, CALIFORNIA 93950TELEPHONE (831) 648-3170FAX (831) 375-9863
February 10, 2005Honorable Mayor CostelloMembers of the City CouncilCitizens of the City of Pacific GroveThe General Purpose Financial Report of the City of Pacific Grove, California, for the fiscal year endedJune 30, 2004, is hereby submitted. This report has been developed and organized to conform togenerally accepted accounting principles and to meet for the first time the governmental reportingstandards in GASB34. Responsibility for both the accuracy of the presented data and the completenessand fairness of the presentation rests with the City. We believe the data, as presented, is accurate in allmaterial aspects; that it is presented in a manner designed to fairly set forth the financial position andresults of operation of the City as measured by the financial activity of its various funds and accountgroups; and that all disclosures necessary to enable the reader to gain an understanding of the City’sfinancial affairs have been included.
Summary of Financial Results
The fiscal year ended June 30, 2004 is a reflection of the economical problems of the State of California.The City’s situation of increased expenses and reduced revenues is in direct response to the inability of the State to provide solutions to Californian’s budgetary woes. The City of Pacific Grove, like other citiesin California, is the final rung in the response to dealing with the public services costs. The CaliforniaLegislative has not increased taxes or revenues, so they take dollars from the Counties and Cities; this inshort, is the main problem to any city in California.The economy in California has not rebounded and low production growth and diminished tourism isaffecting our region leaving sales and transient occupancy taxes reduced or flat. Compounding thestagnate climate in the state with the record increases in cost to our employees retirement and workerscompensation insurance made of this year the hardest year in the last decade. The City, both citizens andemployees, had to make sacrifices and accommodations in order to provide the required services to ourcitizens. Our most important correcting measure to cope with our problems came in the form of wagereductions. All city employee Associations were in agreement to reduce their wages for one year by a3.5% of their gross. Eight positions were eliminated during the year in 6 departments. The General Fundservices were the first ones to be affected by these changes. Reduction in hours of services was the lastresource. Litigation cost and a consent decree imposed on the City, made our fund balance to take asignificant declined. The General fund suffered a loss of $247,800.00 for the year leaving only$1,588,640 on June 30, 2004.Total revenues in the General Fund amounted to $12.7 million. The difference in total receipts from theprior fiscal year is an increase of $473 thousand, which represents a 3.7% change. The largest source of