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Indian River County,Florida Management's Discussion and Analysis For the Year Ended September 30,2009 The County's General Obligation and Revenue Bonds underlying rating from Standard & Poor's continues to be "AA". Standard & Poor's rating is required on all issues. A second rating from Fitch or Moody's is also required. Additional information on the County's long-term debt can be found in Note 12 on pages 70-85 of this report. ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES In response to declining property values, sales tax and various other County revenues, the Board's departments, Constitutional Officers, and outside agencies were asked to trim their budgets substantially from the previous year. Many cost savings initiatives have been proposed in order to account for the revenue reductions. Some of these included staffing reductions, travel decreases, energy conservation measures, minimal reductions in services and programs, and reduced non-profit funding. The County's staff and elected officials considered many factors in developing the fiscal year 2009-2010 budget. The tax roll in the General Fund declined by 8.8%due to falling real estate values. The total proposed budget (with capital project expenditure adjustments) is a decrease of 10.1%. Indian River County, like the nation overall, has been experiencing an economic slowdown this year. New construction activity has fallen sharply as a result of the downturn in real estate and the associated credit crunch. The national slowdown has impacted our tourism and retail industries as well. These areas have spilled over into other sectors of the economy. As a result, revenue projections for next year are quite weak. For example, Half-Cent Sales Tax shows a 10.2% decrease and State Shared Revenues are projected to decrease 11.5%. Development permitting fees are expected to drop 33.3% while i building permit revenues are expected to fall 29.2%. Interest earnings are also projected to decline 42.3%. With an increase in recycling and the department's cost cutting measures, Solid Waste Disposal District (SWDD) residential rates have decreased 1.4% and the commercial assessment rates have decreased 0.7% for the fiscal year 2009-2010. Street lighting district assessment rates remained the same. All other rates and user's fees remain unchanged from fiscal year 2008-2009. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the County's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in } this report or requests for additional financial information should be addressed to: Clerk of the Circuit Court Attention: Finance Department 180127'Street Vero Beach, FL 32960 13