Long-Term
Financial
Forecast
January 20, 2026
ATTACHMENT 1
Roadmap
• Introduction
• Big Picture
• Historical
Comparison
• Preliminary Long-
Term Findings
– Key Assumptions
– Results
• Measure G
ATTACHMENT 1
The Big Picture
• Introduction of Measure G
• Revenue growth in line with planned
spending
• Expenditures continuing to increase but
lower than projected revenue in all future
years
• External Pressures & Uncertainty
– Inflation (Services & Supplies)
– Labor & Pension Costs
– Self-Funded Insurances
– Potential loss of significant revenue sources
ATTACHMENT 1
General Fund Financial Status
Operating Revenue only shown; does not include one-time revenues used to balance the General Fund in FY21 through FY26
FY26 Projected Revenue: $160.2 M
60 80
100
120
140
160
FY21 Actual FY22 Actual FY23 Actual FY24 Actual FY25 Actual FY26 Budget Millions
Operating Revenue Expenditures
ATTACHMENT 1
Financial Status Update
FY 2024/25
• Property and Sales Tax continues to grow at a
more moderate rate
• Measure G collection began April 1, 2025
– $22 million annual programed for new projects & core
services enhancements
• Transient Occupancy Tax had a strong FY25 Q4
yielding higher than projected actuals
• Inflation still a factor and labor and insurance
costs continue to rise
• One-Time dollars have been used since FY20 to
balance the General Fund budget
• General Fund Reserves fully funded
ATTACHMENT 1
Long-Term Financial Forecast
• Components
– Financial Trend Analysis – 5 Year (4 year
history + current budget)
• 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 6.1% from FY16 – FY25 • Sales Tax: average annual increase of 6.5% from FY16 – FY25 • TOT: average annual increase of 6.0% from FY16 – FY25 • Timeframe includes 5 new hotels and 1 hotel expansion
47.24 28.48
30.91 0
5 10
15 20
25 30
35 40
45 50
FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25
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 – Unfunded Accrued
Liability (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
– Nonrecurring General Fund Revenue or
ARPA Funding
– New Positions
– New programs or services
ATTACHMENT 1
Forecast Assumptions
Annual Revenue Growth Rates
• Property Tax: 4.0% throughout forecast
• Sales Tax: 3.0% average annual growth
• Transient Occupancy Tax
– FY26 – 1% on FY25 actual
– FY27 – FY31 – 2%
– Estimated projected new development
ATTACHMENT 1
Property, Sales & TOT Revenue
59.03 51.59
34.47 0
10 20
30 40
50 60
70 FY22
Actual
FY23
Actual
FY24
Actual
FY25
Actual
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
FY31
Proj
Millions
Primary Revenue Sources
Property Tax Sales Tax Transient Occupancy Tax
ATTACHMENT 1
Revenue Forecast
101.9
117.6
125.4
138.9
160.2 164.0 169.1
174.5 180.1 185.9
0 20
40 60
80 100
120
140
160
180
200
FY22
Actual
FY23
Actual
FY24
Actual
FY25
Actual
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
FY31
Proj
Millions
Property Tax Transient Occupancy Tax (TOT) Sales Tax Sales Tax - Measure G Other Revenues Transfers In ATTACHMENT 1
Forecast Assumptions
Annual Expenditure Growth Rates
• Based on historical trends, core City services
• Staffing: No new positions beyond FY27 budget
• Salaries & Wages: 3.7% combined rate for
COLA and step increases beyond MOUs
• 4.3% annual increase in healthcare/dental costs
• -0.3% average annual increase in CalPERS
normal costs (payroll)
• CalPERS UAL schedule increasing 4.0%
– Reflects rising annual costs, peaking in FY31 at
$20.1M (GF)
ATTACHMENT 1
Projected CalPERS Costs
General Fund Only
17.2 16.3
19.1 20.4
23.1 24.2 24.5 26.0 26.3 26.6
0 5
10 15
20 25
30 FY22
Actual
FY23
Actual
FY24
Actual
FY25
Actual
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
FY31
Proj
Millions
Normal Cost UAL
ATTACHMENT 1
Projected CalPERS UAL
Prepayments - GF
6.2 7.0 7.4 7.6 8.2 8.3 8.4 8.0
8.5 9.5 10.2 10.5
11.4 11.5 11.6 11.3
0 5
10 15
20 25
FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32
Millions
GF Misc Prepayment Safety Prepayment
ATTACHMENT 1
Projected CalPERS UAL
All Funds
-
5 10
15 20
25 30
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 3.2%, Risk 12.7%
• Discretionary
– Services & Supplies: 4.3% - Capping at 3%
• Professional Services, General Supplies, Travel/Training, etc. – Transfer to Sidewalks Program:
• $0.9 million/year
– Transfer to Paving Program
• $1.5 million/year
ATTACHMENT 1
Forecast Assumptions
Annual Expenditure Growth Rates
• Transfers Out per Fiscal Policy
– CIP Facilities Reserve: 0.5% of Operating
Budget
– CIP General Fund Reserve: 0.5% 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
61.5 66.5 72.8 77.3 81.4 84.0 86.5 89.5 92.7 96.0
-
20 40
60 80
100
120
140
160
180
200
FY22
Actual
FY23
Actual
FY24
Actual
FY25
Actual
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
FY31
Proj
Millions
Salaries & Benefits
ATTACHMENT 1
Expenditure Forecast
11.7 11.9 13.4 14.7 16.5 17.5 18.2 19.6 19.9 20.1
-
20 40
60 80
100
120
140
160
180
200
FY22
Actual
FY23
Actual
FY24
Actual
FY25
Actual
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
FY31
Proj
Millions
Salaries & Benefits PERS UAL
ATTACHMENT 1
Expenditure Forecast
8.2 7.9
8.8 10.5 12.6 12.9 13.5 14.2 14.9 15.6
-
20 40
60 80
100
120
140
160
180
200
FY22
Actual
FY23
Actual
FY24
Actual
FY25
Actual
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
FY31
Proj
Millions
Salaries & Benefits PERS UAL Semi-Discretionary Exp
ATTACHMENT 1
Expenditure Forecast
6.9 9.7
10.1 12.5
16.6 13.4 13.8 14.2 14.6 15.0
-
20 40
60 80
100
120
140
160
180
200
FY22
Actual
FY23
Actual
FY24
Actual
FY25
Actual
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
FY31
Proj
Millions
Salaries & Benefits PERS UAL Semi-Discretionary Exp Discretionary Exp ATTACHMENT 1
Expenditure Forecast
7.5 8.6
10.2 11.2
12.9 14.5 15.9 17.4 19.2 21.1
-
20 40
60 80
100
120
140
160
180
200
FY22
Actual
FY23
Actual
FY24
Actual
FY25
Actual
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
FY31
Proj
Millions
Salaries & Benefits PERS UAL Semi-Discretionary Exp
Discretionary Exp Internal Services
ATTACHMENT 1
Expenditure Forecast
4.8 4.6
11.1 14.6
27.6 25.4 25.4 23.4 22.9 22.1
-
20 40
60 80
100
120
140
160
180
200
FY22
Actual
FY23
Actual
FY24
Actual
FY25
Actual
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
FY31
Proj
Millions
Salaries & Benefits PERS UAL Semi-Discretionary Exp
Discretionary Exp Internal Services Transfers Out
ATTACHMENT 1
Expenditure Forecast
100.6
109.2
126.5
140.8
167.7 167.7 173.2 178.3 184.1 190.0
-
20 40
60 80
100
120
140
160
180
200
FY22
Actual
FY23
Actual
FY24
Actual
FY25
Actual
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
FY31
Proj
Millions
Salaries & Benefits PERS UAL Semi-Discretionary Exp
Discretionary Exp Internal Services Transfers Out
ATTACHMENT 1
Revenues & Expenditures
105.4
119.9
127.6
141.9
168.2 168.2 173.3 178.7 184.3 190.1
-
20 40
60 80
100
120
140
160
180
200
FY22
Actual
FY23
Actual
FY24
Actuals
FY25
*Actuals
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
FY31
Proj
Millions
ATTACHMENT 1
Revenues & Expenditures
Includes continued use of one-time revenues through FY31 101
109
126
141
168 168
173
178
184
190
105
120
128
142
168 168
173
179
184
190
-
20 40
60 80
100
120
140
160
180
200
FY22
Actual
FY23
Actual
FY24
Actual
FY25
Actual
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
FY31
Proj
Millions
ATTACHMENT 1
Usage of General Fund Reserves
25.9 27.6 28.0 29.1 30.5 31.8 33.1
-
5 10
15 20
25 30
35 FY25
Actual
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
FY31
Proj
Millions
Projected General Fund Reserve Balances
ATTACHMENT 1
Measure G
ATTACHMENT 1
Measure G -
Projected Revenue
5.7 21.5 22.0 22.6 23.3 24.1 24.9
-
5 10
15 20
25 30
FY25
Actual
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
FY31
Proj
Millions
ATTACHMENT 1
Revenues & Measure G
Expenditures
Includes continued use of one-time revenues through FY31
5.0 22.3 22.0 22.6 23.3 24.1 24.9
-
20 40
60 80
100
120
140
160
180
200
FY25
Actual
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
FY31
Proj
Millions
Expenditures Measure G - Expenditures Revenues
ATTACHMENT 1
Revenues & Measure G
One-time Expenditures
Includes continued use of one-time revenues through FY30
5.0 11.4 11.3
10.0 7.5
7.0 6.0
-
20 40
60 80
100
120
140
160
180
200
FY25
Actual
FY26
Proj
FY27
Proj
FY28
Proj
FY29
Proj
FY30
Proj
FY31
Proj
Millions
Expenditures Measure G - Discretionary Revenues
ATTACHMENT 1
• LTFF
– Positive reflection of efforts to identify and manage a former structural deficit
• Measure G
– Allowing the continuation and enhancement of our core services plus significant investments in our community
• Revenue growth
– Stabilizing with expenditures rising
• Economic Pressures/Uncertainty
– UAL, VLF and Federal/State funding
• Ensure long-term fiscal stability
– Fiscal discipline and prudent planning
Summary
ATTACHMENT 1
What’s Next?
• January 20: FY 2024/25 End of Year/ACFR
January 28: Council Workshop
• February/March: Mid-Year Report
– Revenue and expenditures adjustments as needed
• May/June: Mid-Cycle Budget and 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