REVENUE
2022-2023
Mid-Year
Revised
Budget
2023-2024
Preliminary
Base Budget
2024-2025
Projected
2025-2026
Projected
2026-2027
Projected
2027-2028
Projected
2028-2029
Projected
2029-2030
Projected
2030-2031
Projected
2031-2032
Projected
2032-2033
Projected
Property Tax $ 15,554,100 $ 16,204,900 $ 16,853,100 $ 17,527,200 $ 18,228,300 $ 18,957,400 $ 19,715,700 $ 20,504,300 $ 21,324,500 $ 22,177,500 $ 23,064,600 Vehicle License Fees 6,986,807 5,508,600 5,728,900 5,958,100 6,196,400 6,444,300 6,702,100 6,970,200 7,249,000 7,539,000 7,840,600 Sales Tax 3,356,000 3,401,000 3,503,000 3,608,100 3,716,300 3,827,800 3,942,600 4,060,900 4,182,700 4,308,200 4,437,400 Measure Y 650,000 2,800,000 2,884,000 2,970,500 3,059,600 3,151,400 3,245,900 3,343,300 3,443,600 3,546,900 3,653,300 Transient Occupancy Tax 2,643,000 2,669,500 2,736,200 2,804,600 2,874,700 2,946,600 3,020,300 3,095,800 3,173,200 3,252,500 3,333,800 Utility Users Tax 2,400,000 2,700,000 2,767,500 2,836,700 2,907,600 2,980,300 3,054,800 3,131,200 3,209,500 3,289,700 3,371,900 Other Taxes 2,965,800 3,033,500 3,109,300 3,187,000 3,266,700 3,348,400 3,432,100 3,517,900 3,605,800 3,695,900 3,788,300 Department/Program Revenues 10,292,251 10,962,900 11,182,200 11,405,800 11,633,900 11,866,600 12,103,900 12,346,000 12,592,900 12,844,800 13,101,700 Transfers In 1,130,900 1,130,900 1,130,900 1,130,900 1,130,900 1,130,900 1,130,900 1,130,900 1,130,900 1,130,900 1,130,900 Excess ERAF 88,000 88,000 88,000 88,000 88,000 88,000 88,000 88,000 88,000 88,000 88,000 ARPA 4,610,512 - - - - - - - - - -
Total Annual Revenue $ 50,677,370 $ 48,499,300 $ 49,983,100 $ 51,516,900 $ 53,102,400 $ 54,741,700 $ 56,436,300 $ 58,188,500 $ 60,000,100 $ 61,873,400 $ 63,810,500
EXPENDITURES
2022-2023
Mid-Year
Revised
Budget
2023-2024
Preliminary
Base Budget
2024-2025
Projected
2025-2026
Projected
2026-2027
Projected
2027-2028
Projected
2028-2029
Projected
2029-2030
Projected
2030-2031
Projected
2031-2032
Projected
2032-2033
Projected
Salaries And Benefits $ 30,677,431 $ 30,984,200 $ 32,095,801 $ 33,265,570 $ 34,497,467 $ 35,795,756 $ 37,165,024 $ 38,610,209 $ 40,136,629 $ 41,750,009 $ 43,456,514 Contract Services 11,041,884 9,554,300 9,790,158 10,034,911 10,285,784 10,542,929 10,806,502 11,076,665 11,353,581 11,637,421 11,928,356 Material/Supplies/Maintenance 3,611,531 3,563,200 3,601,990 3,647,015 3,692,603 3,738,760 3,785,495 3,832,813 3,880,723 3,929,232 3,978,348 Debt Service 2,072,081 1,936,514 1,975,909 2,043,595 2,257,820 2,318,189 2,346,202 2,180,680 1,079,640 1,070,527 1,071,015 Transfers Out 373,300 1,177,086 1,212,399 1,248,771 1,286,234 1,324,821 1,364,565 1,405,502 1,447,667 1,491,097 1,535,830 Total Annual Operating Expenditures $ 47,776,227 $ 47,215,300 $ 48,676,256 $ 50,239,861 $ 52,019,907 $ 53,720,454 $ 55,467,788 $ 57,105,869 $ 57,898,241 $ 59,878,287 $ 61,970,064 Capital Transfers $ 655,000 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Total General Fund Expenditures $ 48,431,227 $ 47,215,300 $ 48,676,256 $ 50,239,861 $ 52,019,907 $ 53,720,454 $ 55,467,788 $ 57,105,869 $ 57,898,241 $ 59,878,287 $ 61,970,064 GF Structural Surplus/Deficit 2,246,143 1,284,000 1,306,844 1,277,039 1,082,493 1,021,246 968,512 1,082,631 2,101,859 1,995,113 1,840,436 % of GF Revenues 4.43% 2.65% 2.61% 2.48% 2.04% 1.87% 1.72% 1.86% 3.50% 3.22% 2.88% Projected Ending Fund Balance $ 18,309,534 $ 19,593,534 $ 20,900,378 $ 22,177,417 $ 23,259,909 $ 24,281,155 $ 25,249,668 $ 26,332,298 $ 28,434,157 $ 30,429,271 $ 32,269,707 Non-Spendable, Restricted & Assigned $ 10,819,741 $ 10,865,130 $ 10,661,226 $ 10,817,586 $ 10,995,591 $ 11,165,645 $ 11,340,379 $ 11,504,187 $ 11,583,424 $ 11,781,429 $ 11,990,606 $ 7,489,793 $ 8,728,404 $ 10,239,152 $ 11,359,831 $ 12,264,319 $ 13,115,510 $ 13,909,289 $ 14,828,111 $ 16,850,733 $ 18,647,842 $ 20,279,101
15.7% 18.5% 21.0% 22.6% 23.6% 24.4% 25.1% 26.0% 29.1% 31.1% 32.7% 12,267,416 13,449,934 15,106,778 16,383,817 17,466,309 18,487,555 19,456,068 20,538,698 22,640,557 24,635,671 26,476,107 Unassigned Fund Balance Unassigned
balance as % of Op. Exp.
25.7% 28.5% 31.0% 32.6% 33.6% 34.4% 35.1% 36.0% 39.1% 41.1% 42.7% City of Pacifica
Long Term Financial Forecast Table and Assumptions
General Fund
Attachment 1
Total Available Reserves (Unassigned
+ 10% Policy Designation)
Available balance as % of Op. Exp
LONG-TERM FINANCIAL FORECAST ASSUMPTIONS
The long-term financial model features a set of assumptions for revenues and expenditures based on conservative projections. The scenario presented represents conservative levels of revenue based on information available now. These projections are preliminary, and staff will further refine the figures included in this report as part of the FY 2023-24 Base Budget development process and presentation on May 8, 2023.
Revenue Assumptions
1. Property Tax assumes a 5.65% increase for FY2023-24 and a 4% increase annually thereafter, per assumptions used by HdL, the City’s 3rd party tax consultant. This aligns with the past years’ collections and is consistent with the anticipated increases in the assessed market value from properties being sold.
2. Vehicle License Fees (VLF) are tied to property tax growth and assume a conservative 4% annual increase. The FY2023-24 Base Budget does not include a backfill amount of $691,185, which is due from the State, based on the most recent information that the State did not budget these payouts to the cities. There is a possibility that the State will revise its budget in the May review. Staff will continue monitoring this issue. The City will eventually receive this backfill amount in future years.
3. Sales Tax assumes a modest increase of 1.5% over the FY2022-23 Revised Budget, followed by a nearly 8% increase over the last year’s adopted budget at mid-year. The preliminary FY2023-24 assumptions are based on recent projections by HdL projections (City’s Sales Tax advisor). The future years are projecting a 3% increase considering local economic recovery from the pandemic and continuing growth in online sales.
4. Measure Y is the new ½ % voter-approved Transaction and Use Tax that went into effect on April 1, 2023, with projected FY2022-23 Q4 revenues of $650,000 recorded at the mid-year budget review. The FY2023-24 amount of $2.8 million is based on recent projections by HdL, and like the regular 1% of Bradley Burns Local Sales and Use Tax mentioned above, a 3% assumption is used in the following years.
5. Transient Occupancy Tax received a substantial adjustment increase at mid-year because of the post-COVID recovery of the hotel industry and recent compliance efforts related to short-term rentals (STR). As a result, the preliminary FY2023-24 revenues assume a small 1% or $45,000 increase over the FY 2022-23 Revised Budget for the next fiscal year and a normal inflation change of 2.5% after that.
6. Utility Users Taxes (UUT) also assumes a 10% increase for the next fiscal year, given the anticipated increase in PG&E rates, and a modest 2.5% increase after that, assuming more normalized growth in utility rates and demand.
7. Other Taxes include business license tax, cannabis operations tax, and franchise tax. The preliminary forecast includes a small 2.3% or $68k change over the midyear estimates and a
2.5% increase after that, assuming a normal inflation change.
8. Departmental or Program revenues include building, planning, and other permits, recreation revenues, and rentals. This category assumes a $0.7 million or 6% increase over the Revised FY 2022-23 Budget. This includes a 2% increase based on the current service activity level that is anticipated to continue, plus inflationary adjustments to the Wastewater Fund administrative service fee, and an anticipated increase in investment income due to the recently completed renegotiations of the City agreements for banking services.
9. No changes were assumed for the General Fund portion of ERAF, which will continue funding the Disaster Fund as per previously approved Council policy, leaving only $88K in the General Fund to provide local non-profit grants. Also, no new ongoing Grants were anticipated as part of the Base.
10. The Operating Transfer, In/Out category, also remains the same. However, this figure will likely change once the FY 2023-24 Base Budget is developed.
Expenditures Assumptions
1. Salaries and Benefits (S&B) projections include the same base level full-time equivalent count citywide but assume NO ongoing annual increase in the employee compensation for FY 2023-24 as the City is currently in negotiations with all labor groups. The future years include a 2% increase to allow for inflationary changes in employee benefits and potential changes in position control. Once the new Memoranda of Understanding (MOU) terms and provisions are in place, this category will have to be revised. Other S&B assumptions include the following:
a. FY 2023-24 includes a marginal increase of $307,000 to account for normal merit increases and new costs associated with increased PERS and medical rates. b. The anticipated increases in the City’s contribution towards the unfunded liabilities of $0.4M for FY2023-24 and $0.5M in FY2024-25 as per CALPERS Actuarial Reports are built in the projections.
c. The projections also include the previously approved $200,000 contribution to the the section 115 trust fund with PARS to prefund the unfunded OPEB liability and the minimum $167,500 pre-funding contribution to the pension trust per the new policy approved by City Council during the budget adoption last year. The policy calls for a contribution of 1.5% of the accrued pension liability, which would be $3.8 million and is not feasible for the upcoming budget. Therefore, a minimum of $167,500 figure is being used again (consistent with the current budget) for the upcoming FY 2023-24 projections d. The FY2023-24 Projections eliminate the one-time 1% Bonus pay funded by ARPA that was included in the FY 2023-24 labor agreements.
2. Materials, Supplies, and Maintenance Category assumes a modest 1.00% increase in FY2023-24 and a 1.25% increase thereafter, partially accounting for inflation.
3. Contractual Services Category assumes a 2.0% increase in FY2023-24 over the FY 2022-23 Revised Budget. An annual increase of 2.25% is applied thereafter to most City contracts to account for inflation and regular CPI increases.
4. Debt Service Expense Category is projected in accordance with the City’s updated debt service schedule and includes the new Civic Center debt financing.
5. Operating Transfers Category staff is changing the allocation for the internal service funds as part of the FY 2023-24 Base Budget development to accurately account for total risk management program fundings, including insurance premiums in the General Liability and Worker Compensation funds. This accounting change increased the General Fund transfers out to these funds in addition to the anticipated increase in insurance premium cost of $357,000 or 13% in FY2023-24.
6. Capital Transfers Category. The Financial Outlook does NOT include any funding towards the Capital Improvement Program (CIP), as this will be the Council’s policy decision during the budget development. The current FY 2022-23 Adopted Budget included a modest $655,000 General Fund contribution to the Capital program, which is not a sustainable funding level to address the City’s increased capital needs. Given that the City does not have dedicated capital revenue sources, a more considerable General Fund contribution for CIP will likely be required every year, competing with the Council’s other strategic priorities.