1 STAFF REPORT
DATE: May 6, 2025
TO: Justin Hess, City Manager
FROM: Jennifer Becker, Financial Services Director
BY: Leana Mkrtchyan, Deputy Financial Services Director Susan Langford, Revenue Manager
Joy Escalante, Budget Manager
Nathan Lightell, Senior Administrative Analyst
SUBJECT: Review the Proposed Fiscal Year 2025-26 Budget
RECOMMENDATION
Review the proposed recommendations for the Fiscal Year (FY) 20 25-26 Budget and Citywide Fee Schedule.
BACKGROUND
The City of Burbank experience d several years of consistent growth in the three years following the COVID-19 pandemic; however, Burbank’s economy has experienced more mixed results in 2025. There are positive signs, such as the recovery of the local entertainment industry from recent labor disputes , a healthy growth in tourism, and the continued investment in new businesses and development throughout the City. However, there are also several factors of concern, including sluggish sales tax returns, an uptick in unemployment, the security of Burbank’s federal funding sources and the impacts of shifting federal policies on the stock market and the overall U.S. economy. This level of uncertainty warrants caution as the City moves forward with its proposed financial plan for FY 202 5-26. Fortunately, prior City Council decisions to increase reserves and set aside funds for future liabilities have placed Burbank in a favorable position to weather any future economic instability in the coming years.
The FY 2025-26 Proposed Budget was developed using a conservative and responsible approach for both revenues and appropriations while meeting the community’s needs and
2 addressing the goals established by the City Council for the upcoming year. The FY 2025- 26 Proposed Budget is balanced ; however, the five -year financial forecast reflects a recurring budget deficit starting in FY 2026-27 through FY 2029-30. While expenses are outpacing revenues in succeeding years, s taff is committed to mitigating the future recurring deficit by implementing prior cost-saving initiatives and identifying future efficiencies, revenue -generating opportunities, and financial policies that will provide long-term recurring savings to the City. The Proposed FY 2025-26 Budget also includes additional one -time funding towards paying down pension liabilities and the ongoing investment in maintaining and improving the City’s infrastructure, in support of continuous improvement and financial sustainability.
DISCUSSION
FY 2025-26 General Fund Budget Overview
Based on the projected FY 20 25-26 revenues and proposed recurring appropriations, staff i s projecting a recurring balance of approximately $1 million in FY 20 25-26 (see details included within the FY 20 25-26 Budget Matrix in Attachment 1). This does not include several proposed discussion papers addressed later in this report. Factoring in the anticipated ending balance from FY 2024-25, contributions to reserves, and proposed one-time appropriations, staff is expecting an available one-time balance of $21.1 million in the General Fund at the end of FY 2025-26.
FY 2025-26 Recurring General Fund Revenue
Despite elevated interest rates and continued inflation, households and businesses largely maintained spending levels in recent quarters. However, the types of spending has shifted since the end of the pandemic, with consumers preferring travel and experiences over the purchase of tangible items like automobiles and home furnishings.
As a result, economic growth in FY 2024-25 has not been as robust as the years following the Pandemic. The impact of tariffs, recent Federal polic y changes , and local wildfire recovery remains uncertain. Burbank’s diverse revenue sources will help to sustain the City’s economy, with moderate revenue growth expected in FY 2025 -26. The impact of tariffs, recent Federal policy changes, and local wildfire recovery remains uncertain as to how it may impact forecasted revenues in the coming year. As a result, staff took a conservative approach to forecasting revenues, particularly those categories that are most susceptible to fluctuations in the economy.
Burbank’s General Fund recurring revenue estimates of $263.5 million for FY 202 5-26 represent a 3.5% increase over the revised FY 202 3-24 projections. Sales tax and property tax continue to be the General Fund's largest revenue sources, representing 56% of recurring revenue.
3 Table 1 shows the actual FY 2023-24 revenue, the adopted and revised estimates for FY 2024-25, and the projection for FY 202 5-26. For further detail on the City’s revenues, please refer to the “Revenues” section of the FY 2025-26 Proposed Budget.
Table 1 - General Fund Recurring Revenues FY 2025-26
REVENUE
CATEGORY
ACTUAL
TOTAL
FY 2023-24
ADOPTED
RECURRING
FY 2024-25
REVISED
RECURRING
FY 2024-25
PROPOSED
RECURRING
FY 2025-26
%
CHANGE
Sales Tax $ 63,522,092 $ 64,412,066 $ 64,412,066 $ 63,381,000 -1.6% Property Tax 76,196,111 74,955,921 78,625,921 82,557,013 5.0% Utility Users Tax 18,687,489 19,639,000 19,639,000 20,802,308 5.9% Services Charges - Intra City 15,439,505 15,657,042 15,657,042 17,590,495 12.3% Services Charges 27,747,054 25,558,890 27,858,890 28,529,794 2.4% In Lieu of Tax 9,564,335 9,893,000 9,893,000 10,694,333 8.1% Interest/Use of Money 9,494,890 4,318,156 4,818,156 4,612,156 -4.3% Parking/Traffic/Other Fines 2,167,922 2,601,000 2,601,000 2,864,000 10.1% Transient Occupancy Tax 13,184,332 13,853,000 13,853,000 14,407,120 4.0% Building Permits/License Fees 9,006,020 6,152,195 6,902,195 7,072,531 2.5% Transient Parking Tax 4,564,487 4,401,000 4,701,000 4,889,040 4.0% Business Taxes 2,294,821 2,464,190 2,464,190 2,538,000 3.0% Franchises 1,741,869 1,519,650 1,519,650 1,535,400 1.0% Intergovernmental Revenues 7,652,019 2,011,018 1,511,018 1,985,961 31.4% TOTAL REVENUE $261,352,449 $247,436,128 $254,456,128 $263,459,151 3.5% NOTE: FY 2023-24 includes $11.7M of non-recurring revenue. • Sales Tax: Sales tax results for the second quarter of FY 202 4-25 (fourth quarter calendar year 2024) were recently released. Burbank’s receipts from October through December were 0.5% above the fourth quarter of the prior year, on an adjusted basis.
Burbank experienced a positive growth rate for the quarter compared to the County and State with declines of 2.8% and 1.2%, respectively. The Business and Industry category experienced a 28% increase this quarter due to the purchase of office equipment for media storage. Entertainment equipment also contributed to the increase in this category which may be indicative of a recovery from the writer s’ and actor’s strikes that took place in 2023 . Restaurants and Hotels increased by 3.2%, attributable to increases in casual dining and catering.
Measure P, which is the City’s Transaction and Use Tax (TUT), experienced a 4% increase for the fourth quarter of 2024 versus the same period in 2023. Measure P is a district tax that the City receives only if goods are delivered or first used in Burbank. 4 Overall, Burbank’s sales tax revenues are anticipated to decline 1.6% for FY 2025-26 based on the forecast from, the City’s sales tax consultant, HdL. Consumer confidence has waned in response to recent Federal policy shifts and the resulting economic instability. Industries like automobiles and electronics will be impacted by tariffs as well as continued elevated interest rates. Household consumption has shifted away from goods to non-taxable items like services, travel, and entertainment. This trend is expected to continue into FY 202 5-26 with a forecasted softening in revenue from taxable sales.
• Property Tax: A total tax of 1% is levied on the Assessed Value (AV) of property as determined by the Los Angeles (LA) County Assessor. The City of Burbank receives approximately 18.5% of the 1% levy on the AV. Under Prop osition 13, AV on parcels with continuing ownership may change by inflation as defined by the California Consumer Price Index (CPI), up to a maximum increase of 2%. The State has released CPI growth, and for FY 202 5-26, the AV of properties will increase by 2%.
Other sources of AV growth are change of ownership, new construction, recapture of prior Prop 8 impairments of value, change to values for unsecured items such as aircraft, and post Redevelopment residual distribution.
Compared to FY 202 3-24, the AV for the entire city increased by 4.9% for FY 2024-
25. General Fund related AV increased by 5%. The citywide AV increase between FY 2023-24 and FY 202 4-25 was $1.6 billion. The largest AV increase s were due to assessments in unsecured property with several e ntertainment companies. This added $92.5 million to the tax roll. Staff is projecting property tax revenue to increase by 5% for FY 2025 -26, reflecting the continued growth with larger developments throughout the City.
Despite market fluctuations, t he price for a single -family home in Burbank remained flat for the first quarter of 202 5, with the median sale price at $1,270,000 and the average sale price at $1,358,308. However, sales volume remain ed low due to the elevated interest rate environment.
While the housing market and local development efforts are expected to remain strong in 2025, there are some hurdles that could present risks to Burbank’s revenues in the upcoming year, namely inflation, policy changes from the Federal government, and the impact of property tax deferrals and supplemental refunds to homeowners affected by the Eaton and Palisades Fires. Because the fires occurred halfway through the fiscal year, it is likely that the losses may translate into secured negative supplemental assessments for those properties. The impact of these reassessments will be spread across all agencies in Los Angeles County in FY 2024-25 and/or 2025-26, depending on the timing of work to be done by the Los Angeles County Assessor, Auditor Controller, and Tax Collector. The potential exposure to Burbank is estimated at up to 5 $840,000 in lost or deferred property tax revenue, but foretunately those impacts will be one time in nature.
• Utility User’s Tax (UUT): The UUT rate of 7% is applied to telephone, gas, and electric usage. Unlike other cities, Burbank does not apply this tax to water, cable television, sewer, and refuse collection usage/sales. The FY 2025 -26 rates for electricity will be adopted at the publ ic hearing on May 20, 2025. UUT revenue is anticipated to increase by 5.9% for FY 2025 -26. The growth is attributable to the electric rate increase and higher natural gas prices which are offset by the continual decline in wireless revenue with the reclassification of data to non-taxable information services and the reduced electric usage due to efficiencies.
• Service Charges: Service charges are fees charged to users of city-provided services and are designed to at least partially cover the costs incurred for providing these services. The construction of large developments throughout the City, and the elevated participation in recreation activities contributed to the increased service charge revenues for FY 2024 -25. For FY 2025-26, Parks and Recreation will see an increase in revenues from the expansion of the afterschool program and a growing demand for aquatics classes. Fire inspections and new processing fees for real estate services are expected to boost revenues. While it is also anticipated that plan check fees will increase from the sizable developments planned within the City, the tariffs introduced by the Federal government could slow down activity to residential renovation projects over pricing concerns on construction materials. Considering the above factors, sta ff is forecasting a modest increase in service charge revenues of
2.4% for FY 2025-26.
• Parking/Traffic/Other Fines: Parking fines are issued by the Burbank Police Department and represent a small portion of the General Fund revenue. Fines are dependent on the amount of the fine, the number of citations issued, and the amount retained by the County and State agencies. For FY 2025-26, revenue in this category is anticipated to increase by 10.1% from the revised FY 2024 -25 budget with expanded citywide parking enforcement, collections, and administration now managed by a third-party.
• Transient Occupancy Tax (TOT): The City receives 10% TOT on short-term lodging rentals within the city limits. The continued economic recovery, economic development efforts, and aggressive marketing of by the Tourism Based Improvement District (TBID) have all led to increasing TOT reven ues. Hotel occupancy rates for February 2025 were at 79.1% compared to the prior year’s occupancy rate of 66.5%.
According to the Visit California website for the February 2024 update, California domestic visitation is expect ed to increase by 2.4% while international visitation is expected to grow by 11%. For FY 2025-26, TOT is anticipated to increase by 4% from 6 the revised FY 2024-25 projection.
• Transient Parking Tax (TPT): The current rate for TPT is 12% and is charged by parking lot operators (e.g., airports, businesses, hotels, and restaurants) for short - term parking. With approximately 85% of the parking tax revenue derived from lots at or directly serving the Hollywood B urbank Airport, the City’s TPT is dependent on travel demand. Passenger counts at the airport increased by 8.5% in 2024 compared to 2023. Staff anticipates that trend to continue in FY 2025 -26, with TPT revenues expected to increase by 4%, compared to the revised budget of FY 2024-25.
FY 2025-26 Recurring General Fund Expenditures:
The Mid-Year Financial Report was presented to the City Council on February 25, 2025, and projected a recurring General Fund balance of $1.8 million heading into FY 2025-26.
While current inflation has slowed down, the price of consumer goods and services along with labor costs continue to escalate. In addition, the hardened insurance market in California has significantly impacted indemnification, driving general liability and property insurance rates higher. Proposed recurring General Fund appropriations for FY 2025-26 are $262.4 million, an increase of approximately 6.8% over last year’s adopted recurring budget of $245.7 million.
As part of the budget process, the City Manager reviewed proposed budget requests from all City departments . New budget requests were prioritized in accordance with their adherence to the City Council’s stated goals for the year. Staff has made significant efforts to maintain spending at existing budget levels citywide. However, several departments identified immediate needs that required funding as well as a number of opportunities for service enhancements that align with the City Council’s identified goals.
Roughly $2.2 million in new General Fund recurring budget requests ($1.7 million net of revenue) and $4 million in one -time requests were incorporated into the FY 202 5-26 Proposed Budget. The following chart summarizes the total new proposed General Fund budget requests (net of revenue) by department. A comprehensive listing of all budget requests by department is included in the Proposed FY 2025-26 Budget Document under the “New Budget Requests” tab.
7 Table 2 - General Fund Budget Requests by Department FY 2025-26
DEPARTMENT NEW BUDGET
ITEMS (Recurring)
NEW BUDGET
ITEMS
(One-Time)
TOTAL
REVENUE
OFFSET
NET TOTAL
City Attorney $62,383 50,000 $112,383
Community Development $321,689 $1,001,736 $508,485 $814,940 Financial Services $18,374 $18,374
Fire $346,064 $2,605,000 $66,064 $2,885,000
Library Services $213,942 $4,000 $20,974 $217,942
Management Services $60,217 $180,620 $240,837
Non-Departmental $12,400 $12,400
Park & Recreation $553,877 $20,500 $124,477 $449,900
Police $476,528 $175,000 $218,000 $433,528
Public Works $115,000 $115,000
TOTALS: $2,228,464 $4,036,856 $917,026 $5,348,294
The following are some of the notable new items included in the Proposed FY 2025 -26 Budget:
➢ The Burbank Fire Department is requesting one-time funding to expand the EMS division by increasing the peak-hour ambulance pilot program from 40 hours to a 24/7 schedule. Other one-time appropriation requests for supplies and staffing will support a Fire Recruitment Academy in FY 2025-26.
➢ The Community Development Department is proposing to add a new Parking Services Manager to support parking management strategies for Downtown Burbank, parking leases, and parking permits. In addition, a one-time request to increase the number of service contractors for homeless outreach services from three to five.
➢ The Burbank Police Department is requesting funding to expand the parking control program to Downtown Burbank. Additional funding is requested for citation processing costs due to the higher volume of citations issued by the City’s third - party parking enforcement vendor. One-time funds are requested for the digital scanning of records to enhance accessibility, reduce physical storage needs, and ensure long-term preservation of critical documents.
➢ The Parks and Recreation Department is adding funding to solidify the pilot Park Patrol Program launched in November 2024. This will enhance safety measures and improve the overall experience for park users citywide. Funding is also requested for additional tree trimming services, as well as the expansion of day camps and aquatics programming.
8 Discussion Papers:
At this time, eight items have been identified as discussion papers for FY 202 5-26. In total, these items have a General Fund recurring impact of $507,091 plus a one-time cost of $1,176,000. Should the City Council approve all discussion papers as proposed, the General Fund recurring balance would be reduced to $519,000 in FY 2025-26, and the year-end projected cash balance would drop to $19.4 million.
A summary of these items , along with the individual discussion papers , can be found in the “Discussion Papers” tab of the Proposed Budget Document. Throughout the Budget presentation process, City Council members will have the opportunity to identify additional items that they would like to consider for discussion papers. These will be compiled and reviewed at the Budget presentation on May 20th.
Citywide Fee Schedule
The FY 2025-26 Proposed Fee Schedule remains in compliance with the City Council’s adopted policy, which provides a set of principles to determine when, and if, cost recovery is appropriate for different types of fees for services based on the benefits a user receives above a general taxpayer. Some of the more notable changes to the Fee Schedule for FY 2025-26 include new fees for the temporary encroachment in the paid parking meter zone, processing fees for real estate services, additional recycling and organics carts, vegetation clearance, and parking violations for large non-commercial vehicles.
For FY 202 5-26, staff is proposing to increase all fees Citywide in accordance with the City Council’s cost recovery policy. The goal of this policy is to establish a consistent and objectively based fee structure to align with industry-accepted best practices and reaffirm the City’s compliance with Proposition 26 , which limits certain fees collected to the reasonable cost of providing the service. The most recent citywide User Fee Study was done in FY 2022 -23 to review the City’s fee structure and determine an accurate accounting for the true cost of providing various programs and services. In accordance with the recommendations from that study, staff is recommending the majority of the City’s fees be adjusted by CPI in order to maintain the current level of recovery.
It is important to note that the Burbank Program, Activity, and Service Subsidy (PASS) Program provides financial assistance for Burbank residents to afford them the opportunity to participate in Citywide services. 857 participants are currently enrolled in the program, with subsidy amounts ranging from 40%-80% depending on the activity or service. The Parks and Recreation Department oversees the administration of the PASS program, and detailed information can be found on the department’s website.
FY 2025-26 State Budget Proposal
In early January, Governor Newsom released his proposed budget for FY 2025 -26. This proposal serves as the beginning of deliberations in the State Legislature, leading to final 9 budget adoption in June 2025. The proposal calls for a $322.2 billion budget, with a General Fund total of $228.9 billion. The proposed budget estimates $23 billion in various budget solutions in FY 2025 -26. Last year, the administration was proactive by t aking a multi-year approach and addressing shortfalls ahead of time to propose a balanced budget for the upcoming year. Revenue receipts continued to improve since June 2024 and have contributed to strong growth for fiscal years 2024-25 and 2025-26.
The budget includes three categories of discretionary proposals:
• Short-term proposals providing budget savings of $2.2 billion, of which $1.6 billion is related to schools and community colleges.
• New discretionary General Fund spending of $570 million for various programs and $150 million for expansions of existing/new tax expenditures. • New discretionary reserve balance of $4.5 billion for the Special Fund for Economic Uncertainties (SFEU), to provide the State support to deal with unanticipated cost increases, such as for wildfires and modest revenue declines.
The governor is revising the revenue forecast from the 2024 Budget Act due to the stronger than anticipated performance of the economy, stock market, and cash receipts.
The three main drivers of the revision are as follows:
• Personal income tax ($12.6 billion)
• Corporation tax ($2.5 billion)
• Pooled money interest ($2.0 billion)
The 2024 Budget Act assumed withdrawals from the Budget Stabilization Account (BSA), also known as the Rainy -Day Fund, of $5.1 billion in FY 2024 -25 and $7.1 billion in FY 2025-26. The BSA receives 1.5% of the General Fund tax revenue as well as a portion from capital gains. The FY 2025 -26 proposed budget maintains the planned $7.1 billion withdrawal from BSA. The State has only used half of the budget reserves to date.
The administration is continuing to implement the Road Repair and Accountability Act of 2017, Senate Bill 1 (SB-1), which provides funding for both state and local transportation infrastructure. SB-1 increased the gas fuel tax by 12 cents, providing a stable and ongoing increase in state transportation funding. SB-1 funding is protected under Article 19 of the California state constitution for transportation purposes only. The City of Burbank is estimated to receive SB -1 funding of $2. 8 million in FY 202 5-26, which assumes the inflationary adjustment. Staff will continue to monitor developments in the state budget process and provide updates to Council as necessary.
General Fund Financial Forecast
The intended purpose of the financial forecast is to foster an understanding of long -term financial trends and their impact on the City’s overall financial picture. This long -term 10 perspective allows the City Council and City management to make informed financial decisions today while fully understanding the future financial impacts of decisions.
Projected Revenues and Expenditures:
Forecasted revenues are driven by the parameters included in Attachment 2 . These assumptions are inherently conservative; however, there is a risk that certain revenues may not perform as projected due to economic cycles, changing legislation, and other external factors. Staff will update projected revenues periodically throughout the year as new information becomes available.
It is staff’s expectation that recurring revenue growth over the next five years (FY 20 25- 26 through FY 202 9-30) will average 3.9% while recurring expenditures will average
4.6%. Revenue expectations have been revised based on the most recent economic data available, as well as recent and planned business openings and developments . The average revenue growth in the current forecast includes projections of 1.4% for Sales Tax and 5% for Property Tax, the City’s largest general fund revenue sources.
The two main drivers of expenditures for the General Fund are salaries and benefits, including the CalPERS rates that are applied to the base salaries. The forecasted expenditure growth assumes the following costs:
Memorandum of Understanding (MOU) Projected Costs:
Salaries and benefits currently comprise approximately 74% of the General Fund recurring budget. As such, the City’s MOU negotiation process for the various bargaining groups plays a significant role in determining the City’s financial position . All bargaining groups have current MOUs for FY 2024 -25 except for the Burbank City Employees Association (BCEA) and the International Brotherhood of Electrical Workers (IBEW).
Aligning with Council’s Financial Policies related to employee compensation, the General Fund forecast includes assumptions for salary and benefit growth over the next five years based on projected market rates for all employee groups. Market rates are determined through salary and benefits surveys, which compare the City’s job classifications to those of similar organizations throughout the region. The City of Burbank calculates the average salary paid for comparable positions to determine whether they are at market value.
Public Employees Retirement System (CalPERS) Costs:
Managing costs associated with pensions continues to be a challenge for CalPERS cities throughout California, including Burbank. Based on the City’s most recent CalPERS actuarial reports, Burbank has an Unfunded Actuarial Liability (UAL) of just over $439 million across the City’s three pension plans. The funded status for the City’s three plans is currently 77.1% for Miscellaneous, 70.9% for Police, and 74.6% for Fire, for an average of 74.2%, up just slightly from 73.9% in the prior year. Table 3 shows the actual CalPERS employer rates and UAL contributions for the three employee classifications for the 11 current fiscal year (FY 2024-25), the upcoming fiscal year (FY 2025-26), and the projected amounts for the following two fiscal years (FY 2026-27 and FY 2027-28).
Table 3 – City of Burbank Pension Costs FY 2024-25 – FY 2027-28
Classification
Actual
FY 2024-25
Actual
FY 2025-26*
Projected
FY 2026-27
Projected
FY 2027-28
Police 3% @ 50 Rate 23.20% 22.80% 22.30% 21.80%
Police Liability Payment $7,997,927 $8,314,615 $9,314,000 $9,906,000 Fire 3% @ 55 Rate 18.42% 18.32% 17.90% 17.50%
Fire Liability Payment $5,066,096 $5,818,144 $6,579,000 $7,014,000 Misc 2.5% @ 55 Rate 10.96% 10.76% 10.60% 10.40%
Misc Liability Payment $20,417,782 $21,711,502 $24,828,000 $26,482,000 * Amounts shown are the are the total employer contribution amounts required for FY 2025-26 if the City were to pay CalPERS on a monthly basis . For FY 2025-26 staff is proposing to prepay the UAL payment to CalPERS, which will result in a net savings of $1,159,879 citywide.
It is important to note that Burbank’s projected liability payments are based on an annual actuarial study that assumes CalPERS will meet their expected rate of return of 6.8% annually. Recent volatility in the market has resulted in investment losses throughout the country, and CalPERS was no exception. At their April 15 board meeting, CalPERS CEO Marcie Frost announced that the agency lost $26 billion in market value in the two weeks following President Trump’s tariff announcements. Additionally , the agen cy embarked upon a new experience study that will analyze current assumptions such as life expectancy, disability rates, and inflation, which is slated for release in September 2025.
Any investment losses experienced in the current fiscal year or changes to actuarial assumptions will impact Burbank’s funded status as well as the City’s required UAL payments beginning in fiscal year 2027-28.
The City continues to take measures toward mitigating future pension cost increases , including sending Additional Discretionary Payments (ADPs) to CalPERS over the City’s required contributions to decrease Burbank’s unfunded liability . As part of the FY 2024 - 25 budget process, Council adopted an expanded pension funding plan , which includes a citywide contribution of $9 million in FY 2024 -25 and another $4.5 million ADP in FY 2025-26 to help reduce future pension liability. Included in the Proposed FY 2025 -26 Budget is an additional $3 million General Fund contribution, which will bring the total ADP to $7.5 million for the coming fiscal year. This investment will generate an estimated additional $500,000 in recurring budget savings, and aligns with the City Council’s Pension Funding Commitment Policy, which requires the City to contribute half of any 12 year-end General Fund balance in excess of 6% of the General Fund’s budgeted recurring appropriations
Burbank also maintains a Section 115 trust for pension obligations, which was established in June of 2020. The Section 115 Trust allows the City to set aside funds that could be used to help support future pension -related economic volatility. As of March 2025, the current balance in the trust is $32.1 million.
Financial Reserves
The City of Burbank continues to fulfill the City Council’s Financial Policies by fully funding our financial reserves. The City’s policy is to designate 15% of the General Fund’s operating budget to its working capital reserve , 5% to a designated emergency reserve, and up to 5% to a Budget Stabilization reserve, as adopted by the City Council in previous years. Based on the current figures for the proposed budget as presented, the City will contribute the following amounts to the reserves for FY 2025-26:
➢ $2,517,175 to the Working Capital Reserve
➢ $839,059 to the Emergency Reserve
➢ $839,059 to the Budget Stabilization Reserve
The City also maintains a Compensated Absences reserve, which was established to offset the City’s unfunded accrued leave payout liability and fund estimated annual payoffs that are not included in the operating budget. As of June 30, 2024, the City’s total General Fund accrued leave payout liability is estimated at $16.1 million. Currently, the City has $3.9 million set aside in the Compensated Absences reserve. To fulfill the policy approved by the City Council that this reserve is maintained at or above 25% of the General Fund’s total outstanding liability, staff is recommending a contribution of $77,783 in FY 2025-26.
Infrastructure Funding
Adhering to the City Council’s adopted Infrastructure Maintenance, Repair, and Improvement Policy, the FY 2025-26 Proposed Budget continues to contribute half of the Measure P sales tax revenue to the Municipal Infrastructure Fund 534, in addition to the annual $4.7 million General Fund maintenance of effort.
The FY 202 5-26 Proposed Capital Improvement Program (CIP) continues the City’s efforts towards addressing the infrastructure needs, with just over $31.5 million in proposed general city capital spending from 15 different funds and funding sources , alongside $4.7 million in annual Fund 534 maintenance dollars. Included in the proposed infrastructure program is an investment in the City’s streets and sidewalks of $4.9 million, along with a variety of capital projects which include building improvements, park playground and facility upgrades, street and pedestrian improvements, and funding 13 towards the future development of a new Central Library and Civic Center. Proposed Municipal Infrastructure funded projects include the restoration and modernization of the Police Department’s Forensic Services area, facility improvements at 2244 N. Buena Vista, planning and development for the replacement of the Olive Recreation Center, Palm Avenue paseo upgrades, and shade structure installations at Johnny Carson, Gross, and Valley Parks, in addition to the annual facilities small capital improvements.
The proposed CIP projects were presented to the Infrastructure Oversight Board (IOB) for review at two public meetings on February 2 7 and March 2 7, 2025, the second of which the IOB formally approved the capital plan for inclusion in the Proposed Budget.
Information on individual CIP project appropriations proposed for FY 202 5-26 can be found in the “Capital Improvement Program” tab of the FY 202 5-26 Proposed Budget Document.
ENVIRONMENTAL REVIEW
This activity includes the FY 2025-26 Proposed Budget and has no potential for resulting in either a direct or a reasonably foreseeable indirect physical change in the environment.
As such, it is not a “project” subject to the requirements of the California Environmental Quality Act (CEQA) 14 Cal. Code Regs § 15378.
CONCLUSION
As illustrated in Chart 1, staff is projecting a recurring General Fund balance of $1 million in FY 20 25-26, with that balance giving way to a budget deficit of approximately $ 2.4 million in FY 2026-27, prior to the consideration of discussion papers . The City’s cash position remains strong, with a projected year -end non-recurring General Fund balance of $21 million at the end of FY 202 5-26, if the budget is adopted as proposed . It should be noted that there are several risks associated with our projections, including potential CalPERS losses and changes to assumptions, impacts of federal actions, and general fluctuations in the economy.
14 Chart 1 - General Fund Financial Forecast FY 2025-26 through FY 2029-30 (in millions)
Burbank is heading into FY 202 5-26 with a proposed budget that reflects the City Council’s goals and priorities but still adheres to the City’s values of fiscal responsibility.
The City Council has consistently pursued sound fiscal policies and strategies like strengthening revenues, paying down pension liabilities, building up reserves, and utilizing one -time funds to make strategic investments to reduce future recurring expenses. In addition to the projected FY 202 5-26 year-end General Fund Balance of $21 million, Burbank’s formal reserves total approximately $61.4 million and will increase with the adoption of this budget. These funds will allow the City to mitigate the impact of a potential economic downturn on the Burbank community over the next several years.
Staff will continue to monitor any economic conditions or legislative actions that may impact the City’s financial position and provide updates to the Council.
A dedicated City Council meeting to review the proposed FY 202 5-26 Budget is scheduled for May 6, 2025, with continued discussion planned for May 20, 2025. The public hearing and adoption of the citywide budget and fee schedule are scheduled for June 3, 2025. Per the City’s Charter, the FY 2025-26 Budget must be adopted by June 30, 2025.
$263.5
$273.3
$284.2
$296.2
$307.4
$262.4
$275.7
$286.2
$298.5
$307.6
$200
$220
$240
$260
$280
$300
$320
$340
2025-26 2026-27 2027-28 2028-29 2029-30
Revenue Expenses
Balance/
(Deficit): $1.0 ($2.4) ($2.0) ($2.4) ($0.2) 15 ATTACHMENTS
Attachment 1 – General Fund Projected Spendable Fund Balance FY 2025-26 Attachment 2 – General Fund Financial Forecast FY 2025-26 through FY 2029-30