Proposed Budget
Fiscal Year
2025/26 & 2026/27
PRESENTED BY:
DAMIEN O’BID, CITY MANAGER
ANGELA COURTER, DIRECTOR OF ADMIN
SERVICES
1 City of Cotati
City Council Session June 10, 2025
2 Budget Study Session Overview
3 Strategic Planning Session
•Developed City Objectives/Goals
20 Feb. 2025
Budget Study Session
•General Fund
•City Goals Finalization
1 Apr. 2025
Budget Study Session
•Enterprise Funds
•Special Revenues
•Capital Projects
•Transfers In and Outs
15 April 2025
Budget Adoption
Salary Schedule Adoption
Financial Policy Update Adoption
Appropriations Limit Adoption
10 June 2025
Quick Economic Recap
UNEMPLOYMENT RATE*
The U.S. economic outlook is slower growth1
◦ GDP for 2025 est. 2.8% and 3.0% in 2026
◦ Down from 3.3% growth in 2024
◦ Uncertainty due to Tariff shocks
California economy same slowing2
◦ Unemployment consistent with prior year at
5.3%
◦ Continued housing construction and budget
deficit issues
SUMMARY
Unemployment
Rate April 2025 April 2024 Change
US 3.9% 3.5% 0.4%
California 5.0% 4.8% 0.2%
Sonoma* 4.0% 3.7% 0.3%
1. HTTPS://WWW.BLS.GOV/CPS/
2. HTTPS://LABORMARKETINFO.EDD.CA.GOV/FILE/LFMONTH/SATR$PDS.PDF. 4 Economic Uncertainty
Federal Funds Rate Increases
Impacts on Investments in Development
Legislative Impacts from Federal, State & Regional Government Budgetary Assumptions
Revenues:
Additional Slowing in Sales Tax
Slow growth in Cannabis Business Tax
Excludes Uncertain Development Revenues
Decreased Water Consumption Continuing
Expenditures
Project Cost based on Engineering Estimates
Increased Insurance, Unknown Final Increase
Full Employment
Continued Full Lump Sum CalPERS payment No ADP
5 GENERAL
FUND A GENERAL FUND IS THE
PRIMARY FUND USED BY A GOVERNMENT
E N T IT Y.
USED TO RECORD ALL RESOURCE INFLOWS
AND OUTFLOWS THAT ARE NOT ASSOCIATED
WITH SPECIAL - PURPOSE FUNDS.
ACTIVITIES BEING PAID CONSTITUTE THE
CORE ADMINISTRATIVE AND OPERATIONAL
TA S KS OF T H E G OVE R N ME N T E N T IT Y.
6 General Fund Highlights
7 Fiscal Year 2025/26 Fiscal Year 2026/27
Total Operating Revenue $10.8M $11.1M
Total Operating Expense $10.5M $10.7M
Net Operating Surplus $283K $391K
Total Capital Project $ $2.6M $308K
Transfers for Debt Payments $810K $810K
Ending Fund Balance $3.9M $3.4M
Fund Balance as % of Operating Expense 37.1% 31.4%
General Fund Risks
Annual net operating surplus must be $1.5M or more to support basic maintenance/grant matching capital programs in future fiscal years. Surplus currently estimated at $1.2M for fiscal year 2024/25 and then shrinking in future years.
Planned mid-year discussion on CalPERS losses and associated UAL strategies.
Energy Costs are continuing to increase and increases in consumption could dramatically increase costs as well.
Unknown impacts due to Federal Cuts and State Budget Deficit reducing direct and passthrough County or regional grant availability.
Increasing mandated programs or reporting required by the City that are unfunded. These mandates either (1) require staff time which reduces availability of said staff for normal operations or (2) require outside contractor's assistance which cost more and removes the funds available for other projects or programs.
Undiversified General Fund Revenues. Over 54% of the proposed budget operating revenues are derived from Sales Tax. Over 73% is Sales Tax and Property Tax combined. 8 Revenue Forecast/Assumptions
Cotati Budget Revenues:
§ Based on best available information today
§ Estimates are always conservative
§ Sales tax and Measure S
§ Approximately 54% of General Fund Operating Revenues
§ Tax base is relatively secure – Subject to Consumer Spending Variability § Projecting Status Quo due to Weakening Spending offset by increased prices. § Primary Industry categories are Building/Construction, Fuel and Service Stations, Food and Drug, and the County Pool.
§ Property Tax
§ Approximately 20% of General Fund Operating Revenues
§ Flat Growth
§ Increase due to Assessor Applied CPI
§ Offset by Decreasing Unsecured Property Tax
§ Cannabis Tax slow increasing due to increased business activity 9 Operating Revenues
NOTE: SPECIAL REVENUES INCLUDE INTEREST EARNINGS
10 REVENUES 2024-2025 EST 2025-2026 PROP 2026-2026 PROP 601- PROPERTY TAX $2,138,512 $2,146,280 $2,207,731
603- SALES TAX $5,767,500 $5,867,000 $6,054,950
604- OTHER TAX $850,435 $873,750 $911,000
606- LICENSE & FRANCHISE $747,755 $782,800 $809,800
607- RENTS $122,000 $128,745 $133,845
608- REVENUE - OTHER
AGENCIES
$241,343 $231,541 $238,864
609- OTHER REVENUE $359,630 $250,310 $256,040
620- CHARGES FOR SVS $409,912 $385,060 $381,939
660- CONTRIBUTIONS $10,800 $9,000 $9,600
680- SPECIAL REVENUES $231,552 $157,000 $133,200
Total Operating Revenues $10,879,439 $10,831,486 $11,136,969 Operating Expenditure
- All Departments -
• 2025-26 & 2026-27 - FULL LUMP SUM PAYMENT OF THE PERS CALPERS UNFUNDED LIABILITY • ALLOCATED CONTRACT SERVICES
• SHARED INDIRECT COSTS SUCH AS AUDIT FEES, JANITORIAL COSTS, UTILITIES, ETC.
• BASED ON FULL FTE
CONTRACT SERVICES
EVALUATION
• USING ESTIMATES RECEIVED
• INSURANCE ESTIMATE ADJUSTED FROM STUDY SLIGHT DECREASE • MARKET UNCERTAINTY – LA FIRES
INSURANCE
INCREASES
• ESTIMATES ARE BASED ON EXISTING STAFFING
• INCLUDES ALL NEGOTIATED MOU CHANGES
ALL DEPARTMENTS
ARE BUDGETED AT
FULL STAFFING
11 Operating Expenditures
12 EXPENSES 2024-2025 2025-26 2026-27
EST PROP PROP
CITY COUNCIL $ 181,112 $ 172,515 $ 210,991
CITY MANAGER $ 979,344 $ 995,952 $ 969,916
ADMINISTRATIVE SERVICES $ 549,037 $ 549,770 $ 579,398
COMMUNITY DEVELOPMENT $ 988,245 $ 969,243 $ 961,848
PUB WORKS-COMBINED $ 1,875,236 $ 1,898,547 $ 1,884,980
POLICE $ 4,782,287 $ 5,381,939 $ 5,595,760
RECREATION $ 520,236 $ 580,729 $ 542,943
Total Operating Expenses $ 9,875,497 $ 10,548,695 $ 10,745,836 Department Change Highlights
Decrease expected cost for Sunflower Park $805K
Debt Service was excluded and is now properly included within Transfers Out $810K
Increased transfers in for Veterans Building Rental Revenue Sharing $15K Insurance Revised Estimated Charges Slight Decrease $30K Increased Project Cost for 2025 Streets Project $40K
13 General Fund
14 $-
$2
$4
$6
$8
$10
$12
$14
$16
FY 2023 Actual FY 2024 Actual FY 2025 Estimate FY 2026 Budgeted FY 2027 Budgeted Millions
General Fund Revenues, Expenditures, and Fund Balance
Total Revenues Total Expenditures Fund Balance
General Fund Transfers
Transfer In for:
$170K from Public Safety Fund
$15K from Veterans Building
$40K from Comm. Facilities Dist.
Transfer Out for:
$1.4M To Grants Funds
$810 K to Debt Service Fund
$569K to Capital Projects Fund
$21 K to Special Revenues
15 16
Parks Capital Projects
2025-26 Park Improvements - $3,245,000
Sunflower Park Improvements
The project includes walkways, new play structure,
picnic area near restrooms, reroofing and painting the
existing restroom, new lighting and landscaping.
Budget Revised to $2,055,000
(Study Session Est. $2,995,000 * Grant
Matching
Cator Basketball Ct. Resurfacing – Budget $50,000
Veronda-Faletti Ranch Barns
Continued design and environmental work towards
rebuild barn and brooder house to expand the
potential community programs and events centered
on agricultural themes.
Budget $200,000
Parks Capital
Projects
2026-27 Park Improvements
– All on B List Pending Funding
Veronda Faletti Ranch Construction -
$2,000,000
Putnam Park Improvements – Phase 2
- $3,400,000
Streets Capital
Projects
2025-26 Streets Construction & Improvements - $3,108,000 Street Paving Improvements and Maintenance
• Hwy 116/W. Coati Ave. Intersection Safety – Budget $1,468,000 • 2026 Street Preservation Project – Budget $1,065,000
• 2027 Street Preservation Project - Design – Budget $100,000 • Class 1 Pathway Maintenance - $150,000
• Continued Traffic Safety and Landscaping Improvements • Various projects as needed - Budgeted $85,000
• Trash Implementation Plan – Phase 1 of Project – Budget $240,000 • B Projects – Not Included in Budget Due to Funding Constraints • ADA Transition Plan & Redwood Drive – Desired Funding $287,500 Streets Capital
Projects
2026-27 Streets Construction & Improvements - $2,626,760 • Continuing: Hwy 116/W. Cotati Ave Intersection Safety – Budget $1,376,760 • Annual Landscaping and Bicycle & Pedestrian Safety Projects – Budget $85,000
• 2027 Street Preservation Project
• Preservation treatments (slurry seal, crack seal,
dugouts) of the Bird Streets, Aquirre Way, Keppel
Way, Hahn Way, Keyt Way, and Veronda from Aquirre
Way east to the end, the outer hub streets except for
Arthur Street, E. Cotati Ave, Old Redwood Hwy
between W Sierra and Myrtle, and between Lasker
Lane and Eucalyptus Ave., and Eucalyptus Ave. Project
also includes preservation of Lipton Ct, Lancaster
Drive, and Dyquisto Way.
• Budgeted $1,165,000
B Projects – Not Included in Budget Due to Funding Constraints Traffic Signal at William George– Desired Funding $1,370,000 Other Capital Projects
City Buildings
◦ Reroof of Police Building - Budget $693,000
◦ B Projects – Not Included in Budget Due to
Funding Constraints
◦ Microgrid City Hall Complex– Desired Funding $110,000 Storm Water
◦ Trash Implementation Plan - $240,000
Special Revenue & Other Funds
22 Special Revenue Funds are a group of accounts established by a government for restricted use to ensure that certain revenue sources are used or earmarked only for their specific purpose.
This Special Revenue Fund type may be used to account for the proceeds of specific revenue sources that are legally restricted or restricted by City Council policy for a specified purpose.
Revenue Summary By Fund
23 Revenue Summary
BY TYPE
24 Expenditure
Summary By Type
25 Internal Service Funds
Vehicle Maintenance & Replacement
Provides an ongoing funding source for scheduled replacement of City vehicles from billings to other funds who are utilizing the fleet.
◦ 2025/26 Replacement of :
◦ One Patrol Vehicle
◦ Upfit and conversion of Two other Police Vehicles
◦ One Public Works Field Truck Replacement
◦ One Public Works F800 rolled forward from the prior year ◦ New Equipment- Various as needed including:
◦ Two Trailers one for Water one Flatbed
Compensated Absences Fund
◦ Funds compensated absences with contributions made based on a proportionate and rational allocation of the total government wide liability.
◦ Balances are increased to address estimated changes in Salaries and Benefits Schedules 26 ENTERPRISE FUNDS
27 Enterprise Funds are used to account for operations that are financed and operated in a similar manner as a private business enterprises, where the intent is that the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges.
Enterprise Budget Highlights
28 Water Maintains a
reserve of 33%
Sewer Deficit at
23%
Rate change per
the adopted rate
study for water &
sewer
Conservative
Revenue and
Expenditures
Estimates
Cost management
to preserve critical
infrastructure
Water Funds Combined Summary
Operating Revenues
◦ Rate Increase
◦ No significant Connection Fees
Proposed Capital Project Improvements ($700K):
◦ Well 2 Renewal/Remediation - $215K
◦ Water Renewal and Replacement Master Plan - $150K
◦ Distribution System Monitoring - $130K
◦ Well 1A/Well 3 Treatment Renewal and Replacement – $125K ◦ P-3, 4: Cypress Tank New Water Main (Design)– $80K
Changes in Operating Expenditures:
◦ Personnel budgeting full staffing
◦ Allocated Contract Services
◦ Estimated Increasing Insurance
◦ Continued water conservation programs
◦ Cost of Water Procurement -
◦ Water Agency Increased Rate of 11.0%
◦ Consistent Decreased Water Consumption
◦ Debt Service Back to General Fund for UAL Contribution $80K 29 -
1 1
2 2
3 3
4 FY 2023 Actual FY 2024 Actual FY 2025
Estimate
FY 2026
Budgeted
FY 2027
Budgeted
Millions
Combined Water Funds Revenue and
Expenses
Total Revenues Total Expenditures
Sewer Funds Combined Summary
Operating Revenues
◦ Rate Increase
◦ No significant Connection Fees
Proposed Capital Project Improvements:
◦ FY 25/26 – Sewer Master Plan - $70K
◦ FY 26/27 - Sewer Lift Station Renewal - $110K
Changes in Operating Expenditures:
◦ Allocated Expenses Increased
Increased wastewater treatment costs
approx.
◦ 1 % in FY 25/26
◦ 3% in FY 26/27
Debt Service
◦ General Fund for UAL - $68K/Year
◦ Inclusionary Housing fund Loan- $76K
30 $0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
FY 2023 Actual FY 2024 Actual FY 2025
Estimate
FY 2026
Budgeted
FY 2027
Budgeted
Millions
Combined Sewer Funds Revenue and Expenses
Total Revenues Total Expenditures
Fund Balance FY 25/26
City Debt
31 •Direct Debt
• Streets Improvements Tax Exempt Lease Obligation Bonds 2022A • Initial Debt $7M, Principal Remaining $6.1M - matures in FY 40/41. • Pension Taxable Lease Obligation Bonds 2022B
• Initial Debt $4M, Principal Remaining $3.4M - matures in FY 36/37. •Pass-through Debt
• Assessment District Debt with No City Commitment totaling $5.7M and maturing in 2034 • Successor Agency Debt Service for Recognized Obligation Payment Schedules • Cotati-RP Unified School District payments total debt of $663K maturing in 2033. • Tax allocation refunding bond, Series 2020 with total Debt Service of $6.3M maturing in 2036 •Inter-Government Loans
• In-Lieu Housing Loan to Sewer total debt service $693K maturing in 2039 • General Fund Loans to Water and Sewer for their portion of the Unfunded Pension Liability Additional Discretionary Payment.
• The total outstanding debt as of June 30, 2025, for the Water and Sewer operations funds is approximately $820K and $786K respectively.
• Annual combined payments are approximately $156K back to the General Fund. • Matures in FY 2036/37
•Pension Obligations
City Debt
32 Conclusion
The Proposed FY 2025/26 Budget:
Prioritizes Community Engagement, Long Term Vitality, Best in Class Community Service
Balanced Operating Budget - Operating Expenditures Do Not Exceed Conservatively Estimated Operating Revenues
Continued Progress on Investments in Deferred Capital Projects Need to continue improvements towards reducing operating costs/expenses to fund future FY on-gong capital program Fiscally Prudent Reserves as a percent of Operating Expenses General Fund 37%
Water Fund at 68%
Sewer still fiscally constrained but per budget and rate study projections.
Fiscal year 2025/26 should be the trough with FY 2026/27 showing improvements towards future growth.
Primary Cost is Wastewater Treatment.
City staff are committed to exercise prudence and integrity in the management of public funds and provide transparency and accountability in its use.
33 34