Attachment 1
REVENUE
2024-2025
Amended Budget
2025-2026
Base Budget
2026-2027
Projected
2027-2028
Projected
2028-2029
Projected
2029-2030
Projected
2030-2031
Projected
2031-2032
Projected
2032-2033
Projected
2033-2034
Projected
2034-2035
Projected
Property Tax $ 16,958,000 $ 17,466,700 $ 17,990,700 $ 18,530,400 $ 19,086,300 $ 19,658,900 $ 20,248,700 $ 20,856,200 $ 21,481,900 $ 22,126,400 $ 22,790,200 Vehicle License Fees 4,621,030 5,410,902 4,974,173 4,623,976 5,953,841 6,856,277 7,876,674 7,781,402 8,610,545 10,128,731 9,739,482 Sales Tax 3,134,490 3,197,200 3,261,100 3,326,300 3,409,500 3,494,700 3,582,100 3,671,700 3,763,500 3,857,600 3,954,000 Measure Y 2,456,000 2,505,100 2,555,200 2,606,300 2,671,500 2,738,300 2,806,800 2,877,000 2,948,900 3,022,600 3,098,200 Transient Occupancy Tax 2,978,000 2,458,000 2,319,600 1,685,700 1,736,300 1,788,400 1,842,100 1,897,400 1,954,300 2,012,900 2,073,300 Utility Users Tax 2,800,000 2,856,000 2,913,100 2,971,400 3,030,800 3,091,400 3,153,200 3,216,300 3,280,600 3,346,200 3,413,100 Other Taxes 2,670,000 2,734,550 2,802,400 2,869,900 2,941,600 3,015,100 3,090,500 3,167,800 3,247,000 3,328,200 3,411,400 Department/Program Revenues 11,055,177 11,232,800 11,442,600 11,608,200 12,014,500 12,435,000 12,870,200 13,320,700 13,786,900 14,269,400 14,768,800 Transfers In 1,422,000 1,422,000 1,422,000 1,422,000 1,422,000 1,422,000 1,422,000 1,422,000 1,422,000 1,422,000 1,422,000 Excess ERAF 145,000 145,000 145,000 145,000 145,000 145,000 145,000 145,000 145,000 145,000 145,000 Total Annual Revenue $ 48,239,697 $ 49,428,252 $ 49,825,873 $ 49,789,176 $ 52,411,341 $ 54,645,077 $ 57,037,274 $ 58,355,502 $ 60,640,645 $ 63,659,031 $ 64,815,482
EXPENDITURES
2024-2025
Amended Budget
2025-2026
Base Budget
2026-2027
Projected
2027-2028
Projected
2028-2029
Projected
2029-2030
Projected
2030-2031
Projected
2031-2032
Projected
2032-2033
Projected
2033-2034
Projected
2034-2035
Projected
Salaries & Benefits $ 32,104,298 $ 35,617,948 $ 37,042,666 $ 38,524,373 $ 40,065,348 $ 41,667,962 $ 43,334,680 $ 45,068,067 $ 46,870,790 $ 48,745,622 $ 50,695,447 Contract Services 9,097,300 9,300,082 9,486,084 9,675,805 9,869,321 10,066,708 10,268,042 10,473,403 10,682,871 10,896,528 11,114,459 Material/Supplies/Maintenance 4,454,873 4,477,891 4,545,059 4,613,235 4,682,434 4,752,670 4,823,960 4,896,320 4,969,765 5,044,311 5,119,976 Transfers Out - Debt Service 1,454,600 2,168,621 2,469,951 2,530,320 2,558,335 2,392,809 1,291,744 1,282,631 1,071,016 1,041,956 1,041,990 Transfers/Allocations Out 485,000 - - - - - - - - - -
Total Annual Operating Expenditures $ 47,596,071 $ 51,564,542 $ 53,543,760 $ 55,343,734 $ 57,175,438 $ 58,880,149 $ 59,718,427 $ 61,720,421 $ 63,594,442 $ 65,728,417 $ 67,971,871 Transfers Out - Capital $ 75,000 $ - $ - $ - $ - $ - $ - $ - $ - Total General Fund Expenditures $ 47,671,071 $ 51,564,542 $ 53,543,760 $ 55,343,734 $ 57,175,438 $ 58,880,149 $ 59,718,427 $ 61,720,421 $ 63,594,442 $ 65,728,417 67,971,871 GF Structural Surplus/Deficit* 568,626 (2,136,290) (3,717,887) (5,554,558) (4,764,097) (4,235,072) (2,681,153) (3,364,919) (2,953,797) (2,069,386) (3,156,389) Surplus/Def as % of GF Revenues 1.18% -4.32% -7.46% -11.16% -9.09% -7.75% -4.70% -5.77% -4.87% -3.25% -4.87% Projected Ending Fund Balance $ 18,353,386 $ 16,217,096 $ 12,499,208 $ 6,944,651 $ 2,180,554 $ (2,054,518) $ (4,735,671) $ (8,100,590) $ (11,054,387) $ (13,123,773) (17,367,165) Non-Spendable $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Restricted $ 375,291 542,791 710,291 877,791 1,045,291 1,212,791 1,380,291 1,547,791 1,715,291 1,882,791 2,050,291 Assigned Reserves
Policy Level of 10% of Expenditures $ 4,759,607 $ 5,156,454 $ 5,354,376 $ 5,534,373 $ 5,717,544 $ 5,888,015 $ 5,971,843 $ 6,172,042 $ 6,359,444 $ 6,572,842 $ 6,797,187 VLF Backfill Reserve $ - $ 2,326,576 $ 2,536,607 $ 2,869,875 $ 3,909,634 $ 5,011,999 $ 5,168,493 $ 5,844,422 $ 5,488,019 $ 6,800,120 $ 6,191,174 Facility Maintenance & Replacement $ 205,000 $ 205,000 $ 205,000 $ 205,000 $ 205,000 $ 205,000 $ 205,000 $ 205,000 $ 205,000 $ 205,000 205,000 Compensated Absences $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 $ 200,000 200,000 Child Care Reserve $ 488,591 $ 488,591 $ 488,600 $ 488,600 $ 488,600 $ 488,600 $ 488,600 $ 488,600 $ 488,600 $ 488,600 488,600 Legal Reserves $ - $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 100,000 Assigned Reserves $ 5,653,198 $ 8,476,621 $ 8,884,583 $ 9,397,848 $ 10,620,778 $ 11,893,614 $ 12,133,936 $ 13,010,064 $ 12,841,063 $ 14,366,562 $ 13,981,961 Non-Spendable, Restricted & Assigned $ 6,028,489 $ 9,019,412 $ 8,884,583 $ 9,397,848 $ 10,620,778 $ 11,893,614 $ 12,133,936 $ 13,010,064 $ 12,841,063 $ 14,366,562 13,981,961 Unassigned Fund Balance $ 12,324,897 $ 7,197,683 $ 3,614,625 $ (2,453,198) $ (8,440,224) $ (13,948,132) $ (16,869,607) $ (21,110,654) $ (23,895,450) $ (27,490,335) $ (31,349,126) Unassigned balance as % of Op. Exp. 25.9% 14.0% 6.8% -4.4% -14.8% -23.7% -28.2% -34.2% -37.6% -41.8% -46.1% GFOA Recommended Reserves 7,932,679 8,594,090 8,923,960 9,223,956 9,529,240 9,813,358 9,953,071 10,286,737 10,599,074 10,954,736 11,328,645 Above/(Below) GFOA Guidelines 4,392,218 (1,396,407) (5,309,335) (11,677,153) (17,969,464) (23,761,490) (26,822,678) (31,397,391) (34,494,524) (38,445,071) (42,677,771) City of Pacifica
Long Term Financial Forecast Table and Assumptions
General Fund - Preliminary Base Budget FY 2025-26
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 2025-26 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 year and annually thereafter.
2. Vehicle License Fees (VLF) are tied to property-assessed value growth and a corresponding growth in tax revenue. Utilizing the estimates from San Mateo County, VLF assumes a 6.6% increase year over year, however the State has been unable to fulfill its payments in the year due, causing a shortfall each year. The shortfall becomes an estimate to be received two-years later, which is referenced as a backfill. The FY2025-26 Base Budget includes the projected shortfall in the current year of $2.8 million, which will be due in FY2028, as well as the expected backfill to be received in the current year from FY2024 of $2.3 million. The normal annual VLF has been reduced by the shortfall each year going forward, as well increased by the projected two-year backfill. 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.
3. Sales Tax assumes a modest increase of 2% for three 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 through FY2028 and 2.5% for the future years.
5. The Transient Occupancy Tax assumes a 2.5% increase for FY2026 through FY2028 and a normal inflation change of 3% thereafter for the next seven years. Unfortunately, due to the Council’s recent ordinance changes related to STR regulations, the preliminary base budget incorporates a reduction of almost $1.5 million over the next three years.
6. Utility Users' Taxes (UUT) also assume a uniform 2.0% increase for all ten years, consistent with current collections trends. 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. However, this category was also affected by the Council’s recent ordinance changes related to STR regulations and a slight decrease in business license activity was incorporated.
Departmental or Program revenues include building, planning, and other permits, recreation revenues, grants, and rentals. In FY2026 through FY2028, 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. However, this category was also affected by the Council’s recent ordinance changes related to STR regulations and a slight decrease in STR permits was incorporated.
8. The Operating Transfer in remains flat. This category mainly includes the cost recovery reimbursements from Fund 216 (NPDES), Fund 210 (Gas Tax) and Fund 209 (Measure A).
9. 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 238) and the Housing In lieu Fund (Fund 224).
Expenditures Assumptions
1. Salaries and Benefits (S&B) The FY2025-26 base budget projections include the same base level full-time equivalent count of 200.75 citywide as FY2025. The future years include a 4.0% increase in annually thereafter to account for increases related to cost of medical, dental, and vision benefits, PERS rates, and unfunded pension liability payments, merit, and other laborrelated 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, 2021 Civic Center, and the new 2023 Fire Equipment Lease.
Also, a reduction of the debt payment in FY 2031 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 excludes future transfers at this time and will be reviewed during ongoing budget development.
6. Capital Transfers Category. The Financial Outlook does not include any ongoing funding for the Capital Improvement Program (CIP). 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.