Long-Term
Financial
Forecast
January 21, 2025
ATTACHMENT 1
Roadmap
• Introduction
• Big Picture
• Historical
Comparison
• Preliminary Long-
Term Findings
– Key Assumptions
– Results
• Measure G
ATTACHMENT 1
The Big Picture
• Revenue growth rates beginning to
plateau
• Expenditures have continued to increase
and are projected to be higher than
revenues in future years
– Inflation (Services & Supplies)
– Labor & Pension Costs
– Self-Funded Insurances
ATTACHMENT 1
General Fund Financial Status
Operating Revenue only shown; does not include one-time revenues used to balance the General Fund in FY20 through FY25
FY25 Projected Revenue: $126.5 M
50 60
70 80
90 100
110
120
130
140
FY20 Actual FY21 Actual FY22 Actual FY23 Actual FY24 *Actual FY25 Budget Millions
Operating Revenue Expenditures
ATTACHMENT 1
Financial Status Update
FY 2023/24
• Property and Sales Tax continues to grow
at a more moderate rate
• Transient Occupancy Tax slight decline
• Inflation still a factor & labor costs
continue to rise
• One-Time dollars have been used since
FY20 to balance the General Fund
budget
• General Fund Reserves are still fully
funded
ATTACHMENT 1
Long-Term Financial Forecast
• Components
– Financial Trend Analysis – 5 Year (4 history +
current)
• Rapid growth out of last recession can skew
analysis of current trends
– Financial Forecast – 5 Years Forward
• Economic Assumptions
• Collaborative efforts with staff, professionals &
consultants
• Anticipated Development
ATTACHMENT 1
Historical Revenue
• Property Tax: average annual increase of 6.5% from FY15 – FY24 • Sales Tax: average annual increase of 3.8% from FY15 – FY24 • TOT: average annual increase of 7.1% from FY15 – FY24 • Timeframe includes 4 new hotels and 1 hotel expansion
45.9 22.7
29.5 0
5 10
15 20
25 30
35 40
45 50
FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24
Millions
Primary Revenue Sources
Property Tax Sales Tax Transient Occupancy Tax
ATTACHMENT 1
The Forecast….
ATTACHMENT 1
The Forecast….
• Is a model that shows us what MIGHT
happen in the future
• Revenue estimates based on our current
best guess of economic outlook
• Expenditure estimates based on historical
growth rates → what happens if we keep
doing what we’ve been doing
– Actuarial data – UAL
ATTACHMENT 1
The Forecast….
• A set of reasonable, most likely assumptions
about future revenues and expenditures based
on current budget/trends
• Changes to assumptions → Changes in the
forecast
• GFOA best practice for fiscal management
• Planning Tool
– Allows us to model future impacts of current budget
decisions
– Allows us to see surplus/deficit trends over time
– Assists us with making changes needed to avoid future deficits
ATTACHMENT 1
The Forecast….
• Is not a budget – Council has final authority to
establish the budget and amend it as needed
• Is not a labor relations plan – Collective
bargaining is a separate process from
forecasting; assumptions in the forecast are for
modeling purposes only
• Is not a set of promises – COLA increase
assumptions, operating budget growth
assumptions, etc. are for modeling purposes only
• Is not set in stone – Assumptions are changed
over time in response to a variety of factors and
trends
ATTACHMENT 1
Forecast….
• What’s Included
– Economic Assumptions
– Major Development Currently Underway plus
Anticipated Growth
– Transfers Based on Current Fiscal Policy
• What’s Not Included
– ARPA Funding
– New Positions
– Funding for Current Unfunded Needs
– New or Enhanced Programs/Services
ATTACHMENT 1
Forecast Assumptions
Annual Revenue Growth Rates
• Property Tax: 4.0% throughout forecast
• Sales Tax: 3.5% average annual growth
• Transient Occupancy Tax
– From 2.5% average annual growth for existing
inventory to 1% in FY26 & 2% beyond
– FY24 Actual less than FY23
– Estimated projected new development
ATTACHMENT 1
Property, Sales & TOT Revenue
56.4 27.3
32.2 0
10 20
30 40
50 60
FY21
Actual
FY22
Actual
FY23
Actual
FY24
*Actual
FY25
Proj
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
Millions
Property Tax Sales Tax Transient Occupancy Tax
ATTACHMENT 1
Revenue Forecast
87.0 101.9
117.6
125.4 126.5 130.1 134.0 138.1 142.6 147.3
0 20
40 60
80 100
120
140
160
FY21
Actual
FY22
Actual
FY23
Actual
FY24
*Actual
FY25
Proj
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
Millions
Property Tax Transient Occupancy Tax (TOT) Sales Tax Other Revenues Transfers In ATTACHMENT 1
Forecast Assumptions
Annual Expenditure Growth Rates
• Based on historical trends, core City services
• Staffing: No new positions beyond FY25 budget
• Salaries & Wages: 3.7% combined rate for
COLA and step increases beyond MOUs
• 4.5% annual increase in healthcare/dental costs
• -2.1% average annual increase in CalPERS
normal costs (payroll)
• CalPERS UAL schedule increasing 6.7%
– Reflects rising annual costs, peaking in FY31 at $21M (GF)
ATTACHMENT 1
Projected CalPERS Costs
General Fund Only
14.1 17.2 16.3
19.1 20.7
22.8 24.0 24.9
26.6 27.1
0 5
10 15
20 25
30 FY21
Actual
FY22
Actual
FY23
Actual
FY24
*Actual
FY25
Proj
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
Millions
Normal Cost UAL
ATTACHMENT 1
Projected CalPERS UAL
Prepayments - GF
5.4 6.2 7.0 7.4 7.8 8.4 8.6 8.8
8.0 8.5
9.5 10.2 10.7
11.7 11.9 12.2
0 5
10 15
20 25
FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31
Millions
GF Misc Prepayment Safety Prepayment
ATTACHMENT 1
Projected CalPERS UAL
All Funds
-
5 10
15 20
25 30
2023-24
2024-25
2025-26
2026-27
2027-28
2028-29
2029-30
2030-31
2031-32
2032-33
2033-34
2034-35
2035-36
2036-37
2037-38
2038-39
2039-40
2040-41
2041-42
2042-43
2043-44
2044-45
2045-46
2046-47
264 - Miscellaneous Plan 265 - Safety Plan
ATTACHMENT 1
Forecast Assumptions
Annual Expenditure Growth Rates
• Semi-Discretionary
– Services & Supplies: 9.7% - Capping at 5%
• Utilities, Property Tax Administration Fees, Software Licenses, Payments to Other Agencies, etc.
– Internal Services: Fleet 3.21%, Risk 15.3%
• Discretionary
– Services & Supplies: 4.3% - Capping at 3%
• Professional Services, General Supplies,
Travel/Training, etc.
– Transfer to Sidewalks Program: $0.9
million/year
ATTACHMENT 1
Forecast Assumptions
Annual Expenditure Growth Rates
• Transfers Out per Fiscal Policy
– CIP Facilities Reserve: 2% of Operating
Budget
– CIP General Fund Reserve: 1% of Operating
Budget, plus $0.10 million for the General Plan
– Equipment Replacement Reserve: $0.15
million/year
– General Fund Reserves: bring balances up to
equal 14% (Emergency), 5% (Operating), or
1% (Contingency) of Operating Budget
ATTACHMENT 1
Expenditure Forecast
57.4 61.5 66.5 72.8 77.5 81.1 84.3 87.4 90.7 94.1
-
20 40
60 80
100
120
140
160
180
FY21
Actual
FY22
Actual
FY23
Actual
FY24
*Actual
FY25
Proj
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
Millions
Salaries & Benefits
ATTACHMENT 1
Expenditure Forecast
10.2 11.7 11.9
13.4 14.7 16.5 17.6 18.4 20.1 20.6
-
20 40
60 80
100
120
140
160
180
FY21
Actual
FY22
Actual
FY23
Actual
FY24
*Actual
FY25
Proj
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
Millions
Salaries & Benefits PERS UAL
ATTACHMENT 1
Expenditure Forecast
6.9 8.2 7.9
8.8 8.9 9.4 9.8 10.3 10.8 11.4
-
20 40
60 80
100
120
140
160
180
FY21
Actual
FY22
Actual
FY23
Actual
FY24
*Actual
FY25
Proj
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
Millions
Salaries & Benefits PERS UAL Semi-Discretionary Exp
ATTACHMENT 1
Expenditure Forecast
5.8 6.9 9.7
10.1 12.8 13.2 13.5 13.9 14.3 14.7
-
20 40
60 80
100
120
140
160
180
FY21
Actual
FY22
Actual
FY23
Actual
FY24
*Actual
FY25
Proj
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
Millions
Salaries & Benefits PERS UAL Semi-Discretionary Exp Discretionary Exp ATTACHMENT 1
Expenditure Forecast
6.8 7.5
8.6 10.2
11.2 12.3 13.7 15.2 16.9 18.9
-
20 40
60 80
100
120
140
160
180
FY21
Actual
FY22
Actual
FY23
Actual
FY24
*Actual
FY25
Proj
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
Millions
Salaries & Benefits PERS UAL Semi-Discretionary Exp
Discretionary Exp Internal Services
ATTACHMENT 1
Expenditure Forecast
5.6 4.8
4.6 11.1
6.0 6.5 6.4 6.6
7.1 7.2
-
20 40
60 80
100
120
140
160
180
FY21
Actual
FY22
Actual
FY23
Actual
FY24
*Actual
FY25
Proj
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
Millions
Salaries & Benefits PERS UAL Semi-Discretionary Exp
Discretionary Exp Internal Services Transfers Out
ATTACHMENT 1
Expenditure Forecast
95.4 92.6
100.6
109.2
126.5
131.1
139.0
145.3 151.9
160.0 166.9
-
20 40
60 80
100
120
140
160
180
FY20
Actual
FY21
Actual
FY22
Actual
FY23
Actual
FY24
*Actual
FY25
Proj
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
Millions
Salaries & Benefits PERS UAL Semi-Discretionary Exp
Discretionary Exp Internal Services Transfers Out
ATTACHMENT 1
Revenues & Expenditures
92.5 105.4
119.9
127.6 131.5 133.1 137.0 141.1 145.6 150.3
-
20 40
60 80
100
120
140
160
180
FY21
Actual
FY22
Actual
FY23
Actual
FY24
*Actuals
FY25
Proj
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
Millions
ATTACHMENT 1
Revenues & Expenditures
Includes continued use of one-time revenues through FY30 93 105
120
128 132 133 137 141 146
150
93 101
109
126
131
139
145
152
160
167
0 20
40 60
80 100
120
140
160
FY21
Actual
FY22
Actual
FY23
Actual
FY24
*Actual
FY25
Proj
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
Millions
ATTACHMENT 1
Usage of General Fund Reserves
(10)
(5)
-
5 10
15 20
25 30
FY25
Proj
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
Millions
Projected General Fund Reserve Balances
ATTACHMENT 1
New Revenue –
Measure G
ATTACHMENT 1
Measure G -
Projected Revenue
$5.4
$22.5 $23.2 $23.9 $24.7 $25.5
-
5 10
15 20
25 30
FY25
Proj
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
Millions
ATTACHMENT 1
Revenues, Measure G &
Expenditures
Includes continued use of one-time revenues through FY30 0 20
40 60
80 100
120
140
160
180
-
20 40
60 80
100
120
140
160
180
FY20
Actual
FY21
Actual
FY22
Actual
FY23
Actual
FY24
*Actual
FY25
Proj
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
Millions
Millions
Revenues Measure G Expenditures
ATTACHMENT 1
• Revenues growth is stabilizing
• Economic Uncertainty – VLF, ERAF & UAL
• As Measure G decision are made, continue to
analyze impacts
• Ensure long-term fiscal stability
Summary
ATTACHMENT 1
What’s Next?
• January 30: Council Workshop
• February/March:
– End of Year Report/ACFR (FY 23/24)
– Mid-Year Report – revenue adjustments as needed
• May/June: Budget Workshop & Adoption
• Going forward will continue to use the Forecast
and Mid-Year Report to evaluate revenue and
adjust budgets as needed if growth differs from
expectations.
ATTACHMENT 1
Comments / Questions?
ATTACHMENT 1
End of Presentation
ATTACHMENT 1