March 21, 2024
5-YEAR GENERAL FUND PROJECTIONS
2 • Early Stages of FY25 Proposed Budget Preparation
• Typical Process:
o Proposed: Present Balanced Budget for Next FY (May)
o Adoption: (June)
o Mid‐Year: Present Council with Current Budget Presentation • FY25 Process:
o Workshop: Present Council with 5‐Year Projections (March 2024) o Proposed: Present Council with Balanced Budget (May 2024) o Adoption: (June 2024)
o Mid‐Year: Present Council with FY25 Mid‐Year Budget
KEY FEDERAL & STATE RESOURCES
3 • Coronavirus Aid, Relief, and Economic Security (CARES Act) • Emergency Rental Assistance Program (ERAP)
• American Rescue Plan Act (ARPA)
Obligation Deadline 12/31/2024
Expenditure Deadline 12/31/2026
IN THE NEWS
4 • State of CA $ 73,000,000,000
• Los Angeles $ 400,000,000
• San Francisco $ 200,000,000
• Oakland $ 180,000,000
• San Diego $ 167,000,000
• Sacramento $ 58,600,000
5-YEAR FORECAST EXPENDITURES (GF)
• FY25: Currently Estimated to be $37,168,400 in the Red at the End of the Fiscal Year
• ATTRITION: Deficit Already Includes $21m in Salary Savings from Vacant Positions
• 5‐YEAR FORECAST: Compounds to Over $180m by End of FY29 5 6
KEY DRIVING FACTORS FOR DEFICIT
PG&E: Projected $4.8 million increase
FY24, reported the previous 3 years of rate increases
represented a $16.3 million increase
FY24 PG&E budget $42 million (11% increase over FY23)
FY25 (calculations pending), projecting minimum of 11% increase over FY24, or $46.8 million
7 KEY DRIVING FACTORS FOR DEFICIT (continued)
Contractual Increases/Annual Escalation
• Labor Contracts/Salary Increases (impact to workers comp and health/welfare) • Service Contracts (Janitorial, Software/Technology, Security, Leases) Overall Inflationary Costs (Parts, Equipment, Tires, Vehicles, etc.) Retirement Contribution ($6m)
Workers Compensation ($5.2m) & Health and Welfare ($2.9m) SAFER 42 Grant Funded Firefighters rolling on to GF ($4.9m) Risk/Liability Fund ($1.8m)
Public Safety Communications Upgrades ($1.7m)
8 FY 2025 Base
Budget
FY 2024
Estimate
(as of 02/25/2024)
FY 2024
Amended
Budget
GENERAL FUND – 10101
152,247,000148,530,000153,604,000Sales Tax
3,717,000(5,074,000)$ Change
2.5%-3.3%% Change
187,006,000179,804,000174,107,000Property Tax
7,202,0005,697,000$ Change
4.0%3.3%% Change
23,844,00023,200,00024,121,000Business License
644,000(921,000)$ Change
2.8%-3.8%% Change
15,896,00015,510,00016,193,000Room Tax
386,000(683,000)$ Change
2.5%-4.2%% Change
7,121,0002,262,0005,381,400Cannabis
4,859,000(3,119,800)$ Change
214.8%-58.0%% Change
9 FY 2025 FORECAST – Revenues
Five revenue categories account for ~80% of
the General Fund’s operating revenue:
• FY24 Sales Tax reflects growth above FY23
actuals; however projected slower growth
compared to Amended Budget.
• FY24 Property Tax growth projected above
FY23 and projected above FY24 Budget.
• Business License/Room Tax is estimated to
grow above FY23 actuals; however,
growth projected at levels below FY24.
• FY24 Cannabis revenue projected to be
below budget based on the number of
businesses currently permitted and
operating, as well as the number of
permits projected to be issued by the end
of the fiscal year.
NEXT STEPS
• March‐April
• Meet with Retirement
• Meet with Labor Groups
• Meet with Department Directors
• Meet with Councilmembers Regarding District Budget Priorities • Strategies to Reduce FY25 Baseline Budget Requests
• 3% Expense Reduction Department Exercise
• Reevaluate ARPA projects not on track to meet obligation/expenditure deadlines
10