Attachment 6
REVENUE
2024-2025 Base
Budget
2025-2026
Projected
2026-2027
Projected
2027-2028
Projected
2028-2029
Projected
2029-2030
Projected
2030-2031
Projected
2031-2032
Projected
2032-2033
Projected
2033-2034
Projected
Property Tax 16,751,000 $ 17,253,500 $ 17,771,100 $ 18,481,900 $ 19,221,200 $ 19,990,000 $ 20,789,600 $ 21,621,200 $ 22,486,000 $ 23,385,400 $ Vehicle License Fees 4,590,000 4,624,700 4,763,400 4,953,900 5,152,100 5,358,200 5,572,500 5,795,400 6,027,200 6,268,300 Sales Tax 3,279,200 3,344,800 3,411,700 3,497,000 3,584,400 3,674,000 3,765,900 3,860,000 3,956,500 4,055,400 Measure Y 2,512,000 2,562,200 2,613,400 2,678,700 2,745,700 2,814,300 2,884,700 2,956,800 3,030,700 3,106,500 Transient Occupancy Tax 2,978,000 3,052,500 3,128,800 3,222,700 3,319,400 3,419,000 3,521,600 3,627,200 3,736,000 3,848,100 Utility Users Tax 2,800,000 2,870,000 2,941,800 3,015,300 3,090,700 3,168,000 3,247,200 3,328,400 3,411,600 3,496,900 Other Taxes 1,331,000 1,364,300 1,398,400 1,433,400 1,469,200 1,505,900 1,543,500 1,582,100 1,621,700 1,662,200 Department/Program Revenues 12,164,800 12,408,100 12,656,300 13,099,300 13,557,800 14,032,300 14,523,400 15,031,700 15,557,800 16,102,300 Transfers In 1,450,400 1,479,400 1,509,000 1,422,000 1,539,200 1,570,000 1,601,400 1,633,400 1,666,100 1,699,400 Excess ERAF 145,000 145,000 145,000 145,000 145,000 145,000 145,000 145,000 145,000 145,000Total Annual Revenue 47,973,000 $ 49,075,500 $ 50,309,300 $ 52,036,200 $ 53,824,700 $ 55,676,700 $ 57,594,800 $ 59,581,200 $ 61,638,600 $ 63,769,500 $
EXPENDITURES
2024-2025 Base
Budget
2025-2026
Projected
2026-2027
Projected
2027-2028
Projected
2028-2029
Projected
2029-2030
Projected
2030-2031
Projected
2031-2032
Projected
2032-2033
Projected
2033-2034
Projected
Salaries & Benefits 31,493,473 $ 32,989,413 $ 34,556,410 $ 35,938,666 $ 37,376,213 $ 38,871,262 $ 40,426,112 $ 42,043,157 $ 43,724,883 $ 45,473,878 $ Contract Services 8,396,742 8,564,677 8,735,970 8,910,690 9,088,904 9,270,682 9,456,095 9,645,217 9,838,122 8,232,100Material/Supplies/Maintenance 3,879,127 3,937,314 3,996,374 4,056,319 4,117,164 4,178,921 4,241,605 4,305,229 4,369,808 3,821,800Transfers Out - Debt Service 2,316,727 2,105,624 2,379,021 2,406,156 2,237,555 1,136,787 1,126,902 1,127,498 1,096,054 Transfers/Allocations Out 1,627,290 1,587,600 1,667,972 1,709,672 1,752,413 1,796,224 1,841,129 1,887,158 1,934,336 1,982,695 Total Annual Operating Expenditures 45,134,973 $ 48,998,196 $ 51,043,100 $ 52,759,703 $ 54,501,792 $ 56,111,108 $ 56,853,632 $ 58,754,917 $ 60,737,164 $ 62,760,556 $ Transfers Out - Capital 75,000 $ - $ - $ - $ - $ - $ - $ - $ - $ Total General Fund Expenditures 45,209,973 $ 48,998,196 $ 51,043,100 $ 52,759,703 $ 54,501,792 $ 56,111,108 $ 56,853,632 $ 58,754,917 $ 60,737,164 $ 62,760,556 GF Structural Surplus/Deficit* 2,763,027 77,304 (733,800) (723,503) (677,092) (434,408) 741,168 826,283 901,436 1,008,944Surplus/Def as % of GF Revenues 5.76% 0.16% -1.46% -1.39% -1.26% -0.78% 1.29% 1.39% 1.46% 1.58%Projected Ending Fund Balance 21,379,338 $ 21,456,642 $ 20,722,841 $ 19,999,339 $ 19,322,247 $ 18,887,839 $ 19,629,007 $ 20,455,291 $ 21,356,727 $ 22,473,179 Non-Spendable, Restricted & Assigned 10,646,088 $ 10,493,420 $ 10,697,910 $ 10,869,570 $ 11,043,779 $ 11,204,711 $ 11,278,963 $ 11,469,092 $ 11,667,316 $ 10,785,956 Unassigned Fund Balance 10,733,250 $ 10,963,222 $ 10,024,931 $ 9,129,768 $ 8,278,468 $ 7,683,128 $ 8,350,044 $ 8,986,199 $ 9,689,411 $ 11,687,223 $ Unassigned balance as % of Op. Exp. 23.8% 22.4% 19.6% 17.3% 15.2% 13.7% 14.7% 15.3% 16.0% 18.6%GFOA Recommended Reserves 7,522,496 8,166,366 8,507,183 8,793,284 9,083,632 9,351,851 9,475,605 9,792,486 10,122,861 10,460,093Above/(Below) GFOA Guidelines 3,210,754 2,796,856 1,517,748 336,485 (805,164) (1,668,723) (1,125,561) (806,287) (433,450) 1,227,130 City of PacificaLong Term Financial Forecast Table and AssumptionsGeneral Fund *The FY2024-25 structural surplus of $2.7 million is due to a one-time General Fund relief of $2 million for the debt service payment that should be backed out due to the reoccurring nature of these obligations leaving only $0.7 in adjusted structural surplus
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 revenue estimates 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 2024-25 Recommended Budget.
Revenue Assumptions
1. Property Tax is the City's biggest revenue category. Based on the current collection trends, consistent with the anticipated increases in the assessed market value and information provided by the county and HdL, the City’s property tax consultant, these revenues assume a 3% increase for the upcoming two fiscal years FY2025-26 and FY2026-27 and a 4% increase annually thereafter.
2. Vehicle License Fees (VLF) are tied to property-assessed value growth and a corresponding growth in tax revenue. The total amount due to the City from FY2024 is $2.3 million, but due to a two-year lag in receiving these revenues from the state, the City does not anticipate receiving it until FY 2025-26. The FY2024-25 Base Budget includes the full backfill that is due from the FY2022-23 shortfall (1,452,355) that is due from the State. The normal annual VLF has been reduced by the shortfall expected during FY 2024-25, as we expect a shortfall again each year going forward. This revenue is in constant jeopardy, depending on the state’s budget situation.
There is a possibility that the State will revise its budget in the May 2025 review. Staff will continue monitoring this issue. Similarly to property tax, the VLF revenue assumes a 3% increase for two fiscal years, FY2025-26 and FY2026-27, then a 4% increase annually thereafter.
3. Sales Tax assumes a modest increase of 2% for two years over the FY2024-25 Base Budget based on the most recent projections by HdL (the City’s Sales Tax consultant), followed by a
2.5% increase for the next seven years to consider the cyclical nature of these revenues driven by the local economy.
4. Measure Y is the new ½ % voter-approved Transaction and Use Tax that went into effect on April 1, 2023. The same projection method is applied to Measure Y as the other regular 1% of Bradley Burns Local Sales and Use Tax mentioned above, assuming 2% increase for FY2026 and FY2027 and 2.5% for the future years.
5. The Transient Occupancy Tax assumes a 2.5% increase for FY2026 and FY2027 and a normal inflation change of 3% thereafter for the next seven years. These revenues could be substantially affected by the Council’s future policy changes related to STR regulations.
6. Utility Users' Taxes (UUT) also assume a uniform 2.5% increase for all nine years, consistent with current collections trends. While reviewing our FY2023-24 UUT revenue, the anticipated increase in PG&E rates didn’t seem to have a huge impact on the UUT income. Staff will continue monitoring these revenues.
7. Other Taxes include business license tax, cannabis operations tax, and franchise tax. A modest
2.5% increase is projected for these tax categories in future years.
8. Departmental or Program revenues include building, planning, and other permits, recreation revenues, grants, and rentals. In FY2026 and FY2027, this category includes a 2% increase and a 3.5% increase thereafter based on the anticipated continuation of the current service activity level, 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. The Operating Transfer in assumes a 2% increase throughout the years to account for the normal inflationary increase. This category mainly includes the cost recovery reimbursements from Fund 16 (NPDES), Fund 10 (Gas Tax) and Fund 09 (Measure A).
10. The General Fund’s portion of ERAF revenues assumes no changes. Based on the current Council-approved policy, $145K of ERAF revenues are retained in the General Fund and allocated to local non-profits. The rest of the ERAF funding is split 50% each between the Disaster Accounting Fund (Fund 38) and the Housing In lieu Fund (Fund 24).
Expenditures Assumptions
1. Salaries and Benefits (S&B) projections include the same base level full-time equivalent count of 193.25 citywide as listed in the FY2024-25 Base Budget. The future years include a 4.75% increase in FY2026 and FY2027 and a 4.0% increase thereafter to account for increases related to increased cost of medical, dental, and vision benefits, PERS rates, and unfunded pension liability payments, merit, and other labor-related increases.
2. The Contractual Services Category assumes an annual increase of 2.0% for most City contracts to account for inflation and regular CPI increases in existing contracts.
3. Materials, Supplies, and Maintenance Category assumes a modest 1.5% increase each year to account for inflation.
4. Debt Service Expense Category is projected to be in accordance with the City’s updated debt service schedule for each projected year. These are the major debt service obligations included in financing: 2016 COP, 2019 POB, and 2021 Civic Center. The General Fund receives a onetime relief of debt payment transfer to the Debt Service Fund due to the available cash balance in the Debt Service Fund to accommodate the payment without additional transfer from the General Fund that year. Also, a reduction of the debt payment in FY 2029-30 is related to the projected payoff for the Pension Obligation Bond.
5. The Operating Transfer Out Category accounts for transfers to Internal Service Funds, including Risk Management funds for General Liability and Worker's Compensation insurance premiums and Motor Pool funds to cover motor pool operating expenditures. The projection assumed a marginal 2.5% increase each year, which may not be sufficient in the future years, given the highly volatile nature of the insurance market and future vehicle replacement needs.
6. Capital Transfers Category. The Financial Outlook does not include any ongoing funding for the Capital Improvement Program (CIP). The FY2024-25 Budget only includes the General Fund’s contribution to one CIP project at $75K. Given that the City does not have dedicated capital revenue sources, a consistent annual contribution from the General Fund to the CIP program will likely be required every year, competing with the Council’s other strategic priorities.