Live, Work & Play
in Foster City
City of Foster City
Financial Services Dept.
Based on the updated growth trends, staff is increasing estimated FY 24/25 General Fund revenues by net $950,000 which will help alleviate a budgeted General Fund Deficit of $5.58 million
The adopted FY 24/25 General Fund budget (Funds
001 to 003) included a projected deficit of $5.58
million, inclusive of a $5.75 million transfer out to
the City’s Capital Improvement Projects Fund.
Due to the updated revenue growth trends for
sales tax and business license tax (BLT), City staff is increasing the total projected General Fund reve-
nues by $950,000. This includes the downward ad-
justment of $449,600 for sales tax revenues and
increase of $1.4 million in BLT revenues due to the
passage of Measure V in November 2024.
Total General Fund Revenues (Funds 001 to 003)
in the 1st quarter were $5.10 million compared to
$4.33 million in FY 23/24. This is due primarily to
the higher interest income and the larger amount
of Property Tax in -lieu of VLF backfill in current
year vs. last fiscal year ($1.40 million vs $667,000
respectively).
It is important to note that the City’s revenues are
non-linear and are not received evenly by the City
over the course of the fiscal year. As an example,
most property tax revenues are paid by the Coun-
ty to the City in December and April. Since prop-
erty taxes account for over 60% of total General
Fund revenues, total first quarter revenues are
normally low, as is the case for the current fiscal
year. Notwithstanding, transient occupancy tax
(TOT), sales tax, and recreation program/class rev-
enues were $644,000, $296,000, and $714,000
respectively compared to the prior year’s results
of $663,000, $295,000, and $819,000 . Recrea-
tion Center program revenue for the 1st quarter
was $714,000, a $106,000 drop from last year.
With the Federal Funds rate remaining at around
5.00% level and expectations more rate cuts in
coming months, the City’s FY 24/25 interest earn-
ings will likely drop compared to the last year’s re-
sults.
General Fund expenditures (Funds 001 to 003) to-
taled $16.36 million or $2.84 million higher than
the prior year’s mark of $13.52 million. In the pri-
or year, considering the availability of investment
returns of approximately 5.5%, City staff opted not
to prepay its unfunded accrued liability (UAL) to
CalPERS in July of the previous fiscal year and instead made its 12 monthly payments. However, after look-
ing at the actual results, there were no savings, staff opted to prepay UAL in the current fiscal year, which
amounted to a cash outflow difference of $5.53 mil-
lion ($7.37 million vs. $1.84 million). In addition, the City made recorded quarterly funding payments of
$2.40 million each to SMC Fire Department for the
current fiscal year, but made only the 1st quarterly
funding payment totaling $2.29 million in the 1 st quar- ter of the prior fiscal year. Wage COLA for FY
2024-25 increased by 3.8% for the POA bargaining
unit as well as the Management unit. COLA payment
for the AFSCME unit was made in the 1 st quarter as
that labor agreement was finalized in September
2024. In terms of the first quarter’s performance
from a budget perspective, General Fund expendi-
tures were at 24.6% of the annual total.
Water Enterprise operating revenues were $176,000
higher than last year as water consumption and fixed
charges increased by 3.8% and 4.5% respectively. Op-
erating expenditures were $4.04 million or $442,000
higher than the same period last year. Wastewater
Enterprise Fund operating revenues totaled $3.86
million or 428,000 higher than the same period in the
prior year as base rates were increased by 2.0% ef-
fective July 1, 2024 primarily to fund debt service
costs associated with the District’s financing of its
$156 million share of the Wastewater Treatment
Plant (WWTP) Master Improvements project with
the City of San Mateo. Operating expenditures were
$1.46 million or $90,000 higher than the same period
last year.
The organization still has multiple staff vacancies with recruitment being a high priority. The projected mul-
ti-year deficits, impacts from increasing CalPERS’ and
higher labor costs, and higher Recreation Center re-
build costs are some of the challenges as City staff
begins the preparation of the FY 25/26 budget and 5 -
year financial plan in the upcoming weeks.
Foster City Financial
Update FY 24/25 Q1