Live, Work & Play
in Foster City
City of Foster City
Financial Services Dept.
General Fund Unrestricted Reserves Ends Year at $71.3 million, or 110% of Expenses.
FY 2024-25 ended another strong financial year
for Foster City, with a net General Fund surplus of
$7.4m compared to a budgeted deficit of
$6.7m, resulting in an ending fund balance of
$71.3m (110% of FY 2025-26 budgeted expenses).
These results were driven primarily by higher reve-
nues from the new Business License Tax structure,
robust interest earnings, permit revenues
exceeding budget expectations, and reduced salary
expenditures from position vacancies.
Major sources of revenues and expenses are dis-
cussed below:
Property Taxes: Direct real property tax payments
performed largely as predicted.
Property Taxes in Lieu of Vehicle License Fees
(VLF): In the 2004 State budget compromise, the State
committed to pay local governments property taxes in
lieu of diverted VLF revenue under a formula which is
tied to minimum school funding. For the past seven
years, the State’s available property tax under the formu- la has been insufficient to pay the amount owed, but the State consistently backfilled this shortfall through addi- tional appropriations until FY2024-25 when the Gover-
nor excluded it from the State’s proposed budget.
Therefore, shortfall revenue was not assumed in the
City’s budget. A last-minute shortfall appropriation was finally included in the State budget and drove the positive variance in the City’s FY 2024-25 results.
Transient Occupancy Tax: The City’s TOT has yet
to recover to pre-pandemic levels, suggesting current
hotel occupancy and revenue pe r available room should
be considered the new and stable normal.
Business License Tax: In November of 2024 the vot-
ers of Foster City approved Measure V which amended
the City’s flat tax rate to a progressive tiered system which generated additional revenue. FY 2024-25 budget
did not assume this new tax structure.
Permits: Permit revenues are highly unpredictable and therefore budgeted at very conservative levels. In FY
2024-25, the budget did not assume revenues from Gile-
ad’s project at 331 Lakeside Drive.
Interest Income: Interest earnings in FY 2024-25 were unusually strong, typically exceeding 4%.
Other: This category includes fees for franchise taxes, ser- vices, facility rentals, and ot her various revenues. The vari- ance in this category was largely driven by conservatism in the budgeting assumptions.
Personnel Costs: Staff costs are budgeted assuming full staffing for the entire FY. Underspending in this category is driven by actual vacancy, which was normal in FY2024-25 compared to most years.
Supplies & Other Costs: Under-spending in this catego- ry reflects a combination of conservatism in expenditure budgeting and cost savings opportunities which were not assumed in the budget.
Despite these notable financia l results, financial head- winds remain including transient occupancy tax levels
which remain below pre-pandemic levels, high office
vacancy rates, and economic uncertainty driven by
rapid shifts in federal policy.
Water and Wastewater enterprise funds performed
as expected, with sufficient rate-based revenues to
cover expenses.
Foster City Financial
Update FY 24/25 Q4