Fremont City Council Meeting: 06/10/25 07:00 PM
3300 Capitol Avenue Div/Dept: Finance Department
Fremont, CA 94538 Category: Budget
SCHEDULED
Sponsors:
COUNCIL STAFF REPORT (ID # 5456) DOC ID: 5456
Updated: 6/6/2025 8:54 AM by Dina Lewis Page 1
SECOND PUBLIC HEARING AND ADOPTION OF FY 2025/26 OPERATING BUDGET AND APPROPRIATIONS LIMIT - Conduct a Second Public Hearing (Published Notice) and Adopt Resolutions Adopting FY 2025/26 Operating Budget and Establishing Appropriations Limits
Contact Persons:
Name: Lauren Chu David Persselin
Title: Management Analyst Finance Director
Div/Dept: Finance Department Finance Department
Phone: (510) 494-4635 510-494-4631
E-Mail: [email protected] [email protected]
Executive Summary: Staff recommends that the City Council hold the second public hearing on the FY 2025/26 Proposed Operating Budget and adopt resolutions approving the budget and the constitutional appropriations limit.
BACKGROUND: Staff presented the FY 2025/26 Proposed Operating Budget to the City Council during a televised City Council meeting on May 13, 2025, and the City Council held the first public hearing on the proposed budget on June 3, 2025. The budget identifies total appropriations, including all funds, for FY 2025/26 in the amount of $422.6 million. The General Fund portion of the total is $277.8 million. Following tonight’s second public hearing, the Council may adopt the budget.
Article XIIIB of the California State Constitution imposes a limit on annual appropriations funded from taxes and certain regulatory fees, user fees, and investment earnings. The appropriations limit is often referred to as the “Gann limit.” The appropriations limit is adjusted from year to year using adjustment factors that must be adopted annually by the City Council.
DISCUSSION/ANALYSIS:
FY 2025/26 Budget Resolution
In addition to documenting the City Council’s approval and adoption of the budget, the Budget Resolution also authorizes the City Manager to appropriate and transfer funds under certain limited conditions specified in the resolution.
The City Council has recently established an accrued leave liability reserve in the Employee Benefits internal service fund. This reserve is used to pay accrued leave balances when employees retire or terminate employment, or as part of an annual leave cash-out. The reserve is replenished each year based on the change in accrued leave liabilities in each of the operating funds where staff are budgeted.
To give the City Manager authority to make the appropriate accrued leave transfers after the final pay period of the fiscal year, staff recommends the City Council approve the following language which is included in the Draft FY 2025/26 Budget Resolution:
Council Staff Report (ID # 5456) Meeting of June 10, 2025 Updated: 6/6/2025 8:54 AM by Dina Lewis Page 2
SECTION 11. The City Manager is authorized to appropriate and transfer funds from the General Fund, or other funds from which personnel costs are budgeted, to the Employee Benefits Fund in the amounts necessary to maintain adequate funding of the accrued leave liability reserve based on actual leave balances as of June 30, 2025, to the extent that the necessary amounts are available as unencumbered ending fund balance.
FY 2025/26 Appropriations Limit
Staff has calculated the FY 2025/26 appropriations limit in accordance with Article XIIIB of the California State Constitution. The appropriations limit is adjusted annually to reflect both the percentage change in population and the percentage change in cost of living.
The percentage change in population for each city is provided by the State Department of Finance, which also provides the percentage change in California per capita personal income. As an alternative to the percentage change in personal income as a cost of living factor, local agencies may choose to use the percentage change in the local assessment roll from the preceding year due to the addition of local nonresidential new construction. The Alameda County Assessor’s Office annually provides information on the value of nonresidential new construction by the city.
As the California per capita change in personal income is 6.44%, while the percentage change in the City’s assessment roll due to the value of nonresidential new construction is
0.06%, staff recommends that the City Council adopt the percentage change in per capita personal income as the cost of living factor to be used in calculating the FY 2025/26 appropriations limit.
Using the percentage change in City population of 0.16% and the percentage change in California per capital personal income of 6.44%, the appropriations limit for FY 2025/26 is calculated to be $1.0 billion. Based on the proposed General Fund operating budget of $277.8 million, the City is not at risk of exceeding the appropriations limit. The Appropriations Limit Resolution attachment describes in more detail the methodology for calculating the appropriations limit.
FISCAL IMPACT: Supplemented by funding from the Budget Uncertainty Reserve, total General Fund budgeted revenues and transfers in in the coming fiscal year of $278.3 million will be more than adequate to support total budgeted expenditures and transfers out of $277.8 million, and the $1.0 billion appropriations limit far exceeds the proposed appropriations.
ENVIRONMENTAL REVIEW: Action on this item represents a fiscal, organizational, and/or administrative governmental activity that will not result in physical changes in the environment. Therefore, it is not a project subject to review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15378.
LINK: The FY 2025/26 Proposed Operating Budget is posted on the City’s website at:
https://www.fremont.gov/home/showdocument?id=18096
Council Staff Report (ID # 5456) Meeting of June 10, 2025 Updated: 6/6/2025 8:54 AM by Dina Lewis Page 3
ATTACHMENTS:
• Draft Resolution - FY 2025/26 Budget Resolution
• Draft Resolution - FY 2025/26 Appropriations Limit
RECOMMENDATIONS:
1. Hold a public hearing on the proposed operating budget for FY 2025/26.
2. Adopt a resolution approving the City of Fremont FY 2025/26 Operating Budget.
3. Adopt a resolution creating an appropriations limit of $1,007,585,306 for FY 2025/26 .