Biennial Budget Discussion
John Furtado
Director of Finance
1 Overview
2 What is a Structural Deficit
Trends/Forecast
What austerity looks like
Direction
Revenues Expenses
3 Structural Deficit
A structural deficit occurs when government spending exceeds government revenue, and it persists throughout the business cycle. Unlike cyclical deficits, which are related to economic fluctuations, structural deficits reflect a chronic problem that requires changes in tax and spending policies.
Revenues Expenses
Revenue Trends
4 Category 2021 2022 2023 2024 2025* 2026* 2027*
Property Taxes (28%) 4.7% -1.4% 5.5% 6.3% 7.8% 5.1% 3.9% Sales Tax (21%) 13.0% 15.5% 2.5% -2.9% -0.5% 2.0% 3.0%
Measure P Tax (18%) 18.4% 11.0% -0.6% -1.4% -2.4% 0.3% 2.9% UUT & Franchise Tax (9%) 1.4% 6.9% 14.5% 8.7% 1.9% 2.4% 2.4% *Preliminary forecast
Expense Trends
5 Category 2021 2022 2023 2024 2025*
Salaries 1.6% 7.6% 8.9% 1.7% 9.9%
Benefits 5.3% 6.1% 6.0% 8.9% 12.1%
Overtime 40.1% -2.9% 6.3% 3.3% -25.1%
ISF 18.2% 23.5% 31.7% 5.6% 6.3%
*Preliminary forecast
Unfunded Needs
In Millions
Unfunded Needs As of
06/30/2024
Net Pension Liability (06/30/2023)* $248.9
General Liability $6.5
Compensated Absences $15.3
Worker’s Compensation $1.9
Total Recognized Unfunded Liabilities $272.6
Vehicle Replacement $17.2
Pavement Maintenance – Current PCI $145.0
Unfunded CIP TBD
Electrification $84.0
Additional Needs Identified $246.2+
CalPERS Unfunded Actuarial Liability Payments
In Millions
7 8
10 12 13 14
16 17
20 23
25 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
General Liability
In Millions
0.52 0.64
1.28 1.59 1.93 2.30
3.17 0.97 0.54
3.59 0.97
2.94 1.00
1.00 1.49
1.18 4.87
2.56 4.87
3.30 4.17
2020 2021 2022 2023 2024 2025* 2026*
Insurance Claims
Insurance Premiums
*Preliminary forecast 8
Worker’s Compensation
In Millions
*Preliminary forecast
0.4 0.5 0.4 0.7 0.8 1.0 0.3 0.3 0.4
0.5 0.7
0.8 1.0
1.3 0.3
1.6 2.5 2.0
1.7 2.1
1.1 2.8
4.0 3.8
2020 2021 2022 2023 2024 2025*
Claims
Premium
Staff/Operational Costs
9 Preliminary Forecast
In Millions
10 (75)
(25)
25 75
125
175
FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34
Revenue One-Time Expenses Projected Fund Balance
Measure P Impact on Long Term Forecast
In Millions
11 135
145
155
165
175
185
FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34
Revenue Expenses
Prior Budget Development Strategy
12 • Use one-time balancing strategies
Focus on future revenue increases
Focus on future expense reductions
Hybrid
• Balanced Budget
• Significant cuts to services
Austerity
Only
Increase other fees
• Focus on sales tax measure
• Explore User Utility Tax Increase
Revenue
Only
FY 2023-24 Adjustments
In Millions
13 Cut or hold the line
Department Reduction Offset Net
Police (0.79) 0.72 (0.06)
Public Works (0.79) 0.47 (0.31)
Fire (0.70) 1.48 0.78
HR (0.11) - (0.11)
CMO (0.77) 0.33 (0.44)
CDD (0.05) - (0.05)
Parks & Rec (0.27) 0.19 (0.08)
Finance (0.02) - (0.02)
Total (3.48) 3.20 (0.29)
FY 2024-25 Adjustments
In Millions
14 Cut 5%
Department Target Council Accepted
Police (3.22) (2.49)
Public Works (1.02) (1.02)
Fire (1.70) (0.73)
HR (0.09) (0.10)
CMO (.29) (0.29)
CDD (0.32) (0.32)
Parks & Rec (0.46) (0.46)
Finance (0.09) (0.01)
Total (7.20) (5.42)
(1.78)
1.23% Short
3.77%
Frozen Positions
15 Department Position
2024
Adopted
2025
Proposed Total
City Manager's Office Administrative Assistant - 0.5 0.5 City Manager's Office Homeless Outreach Specialist 4.0 - 4.0 Community Development Building Inspector I - 1.0 1.0
Fire Administrative Technician II - 1.0 1.0
Fire Fire Inspector III/Plans Examiner - 1.0 1.0
Parks & Rec Parks & Rec Supervisor 1.0 - 1.0
Police Code Enforcement Officer I 1.0 - 1.0
Police Crime Prevention Specialist 1.0 - 1.0
Police CSO II - 1.0 1.0
Police Dispatch Supervisor 1.0 - 1.0
Police Dispatcher I - 1.0 1.0
Police Police Department Assistant 1.0 - 1.0
Police Police Officer - 4.0 4.0
Police Program Specialist 1.0 - 1.0
Police Public Information Officer 1.0 - 1.0
Police Homeless Intervention Case Manager - 1.0 1.0
Public Works Homeless Engagement Worker I 1.0 1.0 2.0
Public Works Traffic Control/Signal Tech II 1.0 - 1.0
Grand Total 13.0 11.5 24.5
Austerity Options for Consideration
16 • Use one-time balancing strategies
Focus on future revenue increases
Focus on future expense reductions
Hybrid
• Balanced Budget
• Significant cuts to services
Austerity
Only
Increase other fees
• Focus on sales tax measure
• Explore User Utility Tax Increase
Revenue
Only
17 Austerity
Projected Structural Deficit ~ $10M
•Austerity Identified - $7.6M
•Balance Deficit - $2.4M
•Includes 18.5 additional FTE’s reductions
•Layoffs of 5 current employees
Human Resources - $88,000
18 • Circle Up Education
• Employee engagement activities and training for City
Staff
Employee Engagement/Training - $88,000
Finance - $104,627
19 •Delays to vendor payments
•Less support for payroll division
•Accounting Assistant - $104,627
Vendor/Payroll
City Manager's Office - $297,200
20 • Minimal to no winter care services
Winter Shelter - $150,000
• Elimination of Annual Report
• Reduce .5 FTE
MOD - $89,000
City Manager's Office - $297,200
21 • Gonsalves & Sons
Legislative Advocacy - $46,000
• Council Event Attendance - $8,200
• Council Meeting Food - $4,000
Council - $12,200
Community Development - $442,732
22 • Economic development support
• Administrative & operational support
• Management Analyst - $205,519
Economic Development/Admin
• Delayed review/responsiveness
Commercial – Industrial – Larger Residential
• Planner Senior - $237,213
Planning
Parks and Recreation - $590,000
23 • Blues, Brews & BBQ – Independence Day Parade – Tomato & Vine – Veteran’s Day Parade, Christmas Tree & Menorah Lighting • Program Coordinator - $125,000
• Operational Costs - $75,000
Signature Events - $200,000
• Management Contract
• Current contract expires August 2025
Downtown Theatre - $200,000
Parks and Recreation - $590,000
24 • Eliminate contract with Frazier Trager Presents
Concerts in the Park - $40,000
• Eliminate 1 FTE
Pool Capacity - $100,000
• Eliminate printing/mailing of activty guide
Activity Guide - $50,00
Description for Reduction FY26 FY27
Extending Hardware Replacement Cycle 226,960 226,960
Licensing 163,648 134,258
Professional Services 133,123 62,487
Operational Expenses 249,052 25,071
Grand Total – Reductions Proposed 772,783 448,776
IT Department – $772,783
Public Works - $1,250,000
26 • Eliminate tree service to front yard trees and landscape strip trees - Low branches over streets, signs and sidewalks
• Reduce tree service and wood fence service
• Eliminate I-80 corridor maintenance
Landscape Services - $500,000
• Reduction of fleet vehicles from General Fund
• Impact on core services of other departments
Fleet Size - $250,000
Public Works - $1,250,000
27 • 16 Neighborhood Parks
• 3 Community Parks
• Substantial reduction in maintenance performed
• Increased liability
• Impacts cleanliness, upkeep and resident use
Cut Contracts to Parks - $500,000
Fire Department - $1,684,772
28 Taking one engine company out of service daily
• In 2024 average vacancy per day was 5 positions
• Constant staffing model; OT required to fill every vacant position
• 7 – 8 months of “brown out” results in $1.62 - $1.85M in OT savings
• For equitable community impact, rotate “browned out”
engine daily
“Brown Outs”
Police Department - $3,036,697
29 • PAL Supervisor - $164,530
• PAL Program Specialist -$120,583
• PAL Discretionary - $325,000
PAL Program - $609,933
• Police Lieutenant - $345,117
• Police Sergeant - $300,676
• Police Officer (4) - $823,560 - (4 X $205,890)
− Homeless Intervention Team - Special Operations Team - Traffic Sworn Staff Cuts - $1,469,353
• Discretionary - $70,000
Homeless Intervention Team - $70,000
Police Department - $3,036,697
30 Domestic Violence Program Manager - $191,943
• Code Enforcement Sr - $131,035
• Crime Prevention Specialist - $124,564
• Communications Manager - $219,869
• Additional TBD based on vacancies - $130,000
Freezing Additional Professional Staff - $605,468
Rent on Property and Evidence Building - $90,000
Austerity
Parks and Rec
Signature
Events
Downtown
Theatre
Concerts in
the Park
Pool Capacity
Activity Guide
Police
PAL
Sworn Officer
Positions
Domestic
Violence
Community
Engagement
Fire
Brown Outs
CMO
Winter Shelter
Homeless
Services
Council
Digital Annual
Report
Community
Development
Economic
Development
Planning
HR/Finance/IT
Employee
Engagement
Vendor/Payroll
Equipment
Extension
Licensing
Public Works
Landscaping
Services
Parks
Fleet
Reduction
31 32
Questions