City of Pacifica
Long Term Financial Forecast Table and Assumptions
General Fund
revised March 2026 for Strategic Planning
LTFF will be revisisted during the FY 2026/27 Budget Process
REVENUE
2025-2026
Adopted Budget
2025-2026
Revised 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 17,466,700 17,728,670 $ 18,349,200 $ 18,991,400 $ 19,656,100 $ 20,344,100 $ 21,056,100 $ 21,793,100 $ 22,555,900 $ 23,345,400 $ 24,162,500 Vehicle License Fees 5,410,902 4,639,057 3,498,579 4,623,976 5,953,841 6,856,277 7,876,674 7,781,402 8,772,534 10,301,412 9,761,571 Curr Yr VLF 5,954,201 5,954,201 6,347,200 6,766,100 7,212,700 7,688,700 8,196,200 8,737,100 9,313,700 9,928,400 10,583,700 Curr Yr Shortfall (2,869,875) (2,869,875) (3,909,634) (5,011,999) (5,168,493) (5,844,422) (5,488,019) (6,800,120) (6,029,185) (6,427,108) (6,851,314) Prev Yrs Backfill* 2,326,576 1,554,731 1,061,013 2,869,875 3,909,634 5,011,999 5,168,493 5,844,422 5,488,019 6,800,120 6,029,185 Sales Tax 3,241,230 3,125,230 3,187,700 3,251,500 3,332,800 3,416,100 3,501,500 3,589,000 3,678,700 3,770,700 3,865,000 Measure Y 2,505,100 2,560,000 2,611,200 2,663,400 2,730,000 2,798,300 2,151,225 - - - - Transient Occupancy Tax 2,358,000 2,984,221 1,999,000 1,741,500 1,793,700 1,847,500 1,902,900 1,960,000 2,018,800 2,079,400 2,141,800 Utility Users Tax 2,870,000 3,646,762 3,719,700 3,794,100 3,870,000 3,947,400 4,026,300 4,106,800 4,188,900 4,272,700 4,358,200 Other Tax - Franchise Tax 1,352,550 1,171,440 1,200,700 1,230,700 1,261,500 1,293,000 1,325,300 1,358,400 1,392,400 1,427,200 1,462,900 Other Tax - Business License Tax 582,000 582,000 596,100 608,400 623,600 639,200 655,200 671,600 688,400 705,600 723,200 Other Tax - Cannabis Tax 800,000 700,000 714,000 728,300 742,900 757,800 773,000 788,500 804,300 820,400 836,800 Excess ERAF 3,860,000 3,860,000 3,917,900 3,976,700 4,036,400 4,096,900 4,158,400 4,220,800 4,284,100 4,348,400 4,413,600 Department/Program Revenues 11,260,824 11,103,824 11,461,100 11,727,100 12,137,500 12,562,300 13,001,900 13,457,000 13,928,000 14,415,500 14,920,100 Intergovernmental 2,762,824 2,656,524 2,709,700 2,763,900 2,860,600 2,960,700 3,064,300 3,171,600 3,282,600 3,397,500 3,516,400 Investment Earnings 972,100 998,100 1,018,100 1,038,500 1,074,800 1,112,400 1,151,300 1,191,600 1,233,300 1,276,500 1,321,200 Charges for Services 7,525,900 7,449,200 7,733,300 7,924,700 8,202,100 8,489,200 8,786,300 9,093,800 9,412,100 9,741,500 10,082,500 Transfers In 1,478,800 1,478,800 1,593,800 1,625,700 1,658,200 1,691,400 1,725,200 1,759,700 1,794,900 1,830,800 1,867,400 Total Annual Revenue $ 53,186,106 $ 53,580,004 $ 52,848,979 $ 54,962,776 $ 57,796,541 $ 60,250,277 $ 62,153,699 $ 61,486,302 $ 64,106,934 $ 67,317,512 $ 68,513,071 Revenue Year-to-Year 8.65% 7.04% -1.36% 4.00% 5.16% 4.25% 3.16% -1.07% 4.26% 5.01% 1.78%
EXPENDITURES
2025-2026
Adopted Budget
2025-2026
Revised 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
S&B 36,454,015 36,553,464 $ 38,230,302 $ 39,759,514 $ 41,349,895 $ 43,003,891 $ 44,724,046 $ 46,513,008 $ 48,373,528 $ 50,308,470 $ 52,320,808 Salary Savings (5%) - (1,461,842) (1,911,515) (1,987,976) (2,067,495) (2,150,195) (2,236,202) (2,325,650) (2,418,676) (2,515,423) (2,616,040) Salaries & Benefits 36,454,015 35,091,621 36,318,787 37,771,539 39,282,400 40,853,696 42,487,844 44,187,358 45,954,852 47,793,046 49,704,768 Contract Services 8,719,867 9,995,643 9,810,600 10,006,800 10,206,900 10,411,000 10,619,200 10,831,600 11,048,200 11,269,200 11,494,600 Material/Supplies/Maintenance 4,501,536 5,031,381 5,106,900 5,183,500 5,261,300 5,340,200 5,420,300 5,501,600 5,584,100 5,667,900 5,752,900 Transfers Out - Debt Service 2,048,781 1,419,798 2,990,583 3,067,962 3,088,206 2,895,486 1,797,046 1,781,108 1,570,438 1,520,294 1,520,412 Transfers Out - Allocations 1,419,798 2,041,561 2,072,200 2,103,300 2,134,800 2,166,800 2,199,300 2,232,300 2,265,800 2,299,800 2,334,300 Total annual operating Expenditures $ 53,143,997 $ 53,580,004 $ 56,299,070 $ 58,133,101 $ 59,973,606 $ 61,667,182 $ 62,523,690 $ 64,533,966 $ 66,423,390 $ 68,550,240 $ 70,806,980 Transfers Out - Capital 50,000 50,000 - - - - - - - - - Total General Fund Expenditures $ 53,193,997 $ 53,630,004 $ 56,299,070 $ 58,133,101 $ 59,973,606 $ 61,667,182 $ 62,523,690 $ 64,533,966 $ 66,423,390 $ 68,550,240 $ 70,806,980 Exp Year-to-Year 10.06% 12.50% 4.98% 3.26% 3.17% 2.82% 1.39% 3.22% 2.93% 3.20% 3.29% GF Structural Surplus/Deficit $ 42,109 $ (0) $ (3,450,091) $ (3,170,325) $ (2,177,065) $ (1,416,905) $ (369,991) $ (3,047,664) $ (2,316,455) $ (1,232,728) $ (2,293,909) Surplus/Def as % of GF Revenues 0.08% 0.00% -6.53% -5.77% -3.77% -2.35% -0.60% -4.96% -3.61% -1.83% -3.35% Beginning Fund Balance 19,309,076 22,635,647 22,585,647 19,135,556 15,965,231 13,788,166 12,371,261 12,001,270 8,953,606 6,637,151 5,404,423 Total Revenues 53,186,106 53,580,004 52,848,979 54,962,776 57,796,541 60,250,277 62,153,699 61,486,302 64,106,934 67,317,512 68,513,071 Total Expenditures 53,193,997 53,630,004 56,299,070 58,133,101 59,973,606 61,667,182 62,523,690 64,533,966 66,423,390 68,550,240 70,806,980 Projected Ending Fund Balance $ 19,301,185 $ 22,585,647 $ 19,135,556 $ 15,965,231 $ 13,788,166 $ 12,371,261 $ 12,001,270 $ 8,953,606 $ 6,637,151 $ 5,404,423 $ 3,110,514 Non-Spendable 8,287 23,188 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 Restricted 542,791 750,133 917,633 1,085,133 1,252,633 1,420,133 1,587,633 1,755,133 1,922,633 2,090,133 2,257,633 Assigned Reserves
Policy Level of 10% of Expenditures 5,314,400 5,358,000 5,629,907 5,813,310 5,997,361 6,166,718 6,252,369 6,453,397 6,642,339 6,855,024 7,080,698 VLF Restriction Budget Strategy #2 2,300,000 - - - - - - - - - - Facility Maintenance & Replacement 205,000 117,992 205,000 205,000 205,000 205,000 205,000 205,000 205,000 205,000 205,000 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 488,591 488,591 488,591 488,591 488,591 488,591 488,591 488,591 488,591 488,591 488,591 Legal Reserves 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 Assigned Reserves 8,607,991 6,264,583 6,623,498 6,806,901 6,990,952 7,160,309 7,245,960 7,446,988 7,635,930 7,848,615 8,074,289 Non-Spendable, Restricted & Assigned 9,159,069 7,037,904 7,566,131 7,917,034 8,268,585 8,605,442 8,858,593 9,227,121 9,583,563 9,963,748 10,356,922 Unassigned Fund Balance $ 10,142,116 $ 15,547,742 $ 11,569,425 $ 8,048,197 $ 5,519,581 $ 3,765,819 $ 3,142,677 $ (273,514) $ (2,946,412) $ (4,559,325) $ (7,246,408) Unassigned balance as % of Op. Exp. 19.07% 28.99% 20.55% 13.84% 9.20% 6.11% 5.03% -0.42% -4.44% -6.65% -10.23% GFOA Recommended Reserves 8,857,333 8,930,001 9,383,178 9,688,850 9,995,601 10,277,864 10,420,615 10,755,661 11,070,565 11,425,040 11,801,163 Above/(Below) GFOA Guidelines 1,284,783 6,617,741 2,186,247 (1,640,653) (4,476,020) (6,512,045) (7,277,938) (11,029,175) (14,016,977) (15,984,365) (19,047,571) * If VLF lobbying efforts fail, the entirety of the backfill revenue will be at jeopardy, and thus be adding to the deficit.
LONG-TERM FINANCIAL FORECAST ASSUMPTIONS
Updated March 2026 for Strategic Plan, LTFF will be revisited during the FY 2026/27 Budget Process The long-term financial model features a set of assumptions for revenues and expenditures based on conservative projections and information available at the time of publication. The forecast starts with the FY 2025-26 adopted budget, and includes preliminary FY 2025-26 mid-year revisions, plus nine (9) forecasted years, for a ten (10) year financial forecast. This forecast is intended to be used to guide strategic budgeting and financial stability efforts, in accordance with Strategic Goal #1 – Enhance organizational and fiscal stability.
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 are forecasted to trend higher than adopted budget, therefore have been adjusted with the mid-year revision. These revenues assume a 3.5% 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 FY 2025-26 Adopted Budget included the projected shortfall in the current year of $2.8 million, which will be due in FY 2028. The preliminary assumptions included the backfill to be received in the current year owed from FY 2024, in the amount of $2.3 million. After the Budget Study Session 1, Council approved Budget Strategy #2, that placed $2.3 million as assigned reserves in case the State doesn’t fulfill its obligation. However, since the State’s Budget only included paying cities 2/3 of the backfill amount, the 2025-26 revised budget shows this reduction in VLF revenues of $771,845. The VLF Backfill revenue is in constant jeopardy of not being received in future years. If the current lobbying efforts fail the entire backfill revenues due to the City next year will be in jeopardy, which would increase the FY 2026-27 projected deficit from $3.45m to $4.5m. The City has joined the lawsuit against the State along with San Mateo County and other affected cities in pursuit of the withheld VLF revenues.
3. Sales Tax is projecting a slight decline with the mid-year revision, however going forward a modest increase of 2% for the next two years 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 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, after reflecting a modest increase in the midyear revision, assuming a 2% increase through FY 2028 and 2.5% for the future years. Measure Y transactions and use tax measure is scheduled to sunset in 2031 and the forecast reflects that revenue reduction.
5. Transient Occupancy Tax reflects an increase for projected actuals with the mid-year revision and assumes a 2.5% increase through FY 2028 and a normal inflation change of 3% thereafter for the subsequent seven years. Unfortunately, due to the Council’s recent ordinance changes related to short-term rental (STR) regulations, the forecast incorporates a reduction of almost $1.5 million over the next three years due to a projected reduction in both coastal and non-coastal renewals.
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Packet Pg. 439 Attachment: Attachment 1 - Long Term Financial Forecast (6184 : FY 2026-27 Budget Planning Process, Timeline and Preliminary Budget
6. Utility Users' Taxes (UUT) incorporates a mid-year revision to reflect increases in projected actuals due to increased UUT collected on rate changes across the various gas and electric tiers and variety of customers. Revenues in this category also assume a uniform 2.0% increase for all remaining years conservatively forecasted.
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. Cannabis tax revenue has a decline in the mid-year revision due to a reduction in cannabis operators.
8. For FY 2025-26 the General Fund received 100% of the Excess Educational Revenue Augmentation Fund (ERAF) revenues projected. This is a change from the Council Policy of allocating only $145K of ERAF to the General Fund and splitting the rest of the ERAF funding 50% each between the Disaster Accounting Fund (Fund 238) and the Housing In lieu Fund (Fund 224).
Given the structural deficit the financial forecast keeps the current allocation to the General Fund in place through 2035. Council direction could change from year to year on this allocation methodology.
9. Departmental or Program Revenues include building, planning, and other permits, recreation revenues, grants, and rentals. The mid-year revision shows a slight decline due to trending forecasts on the STR permits, and loss of Senior Programs funding. This category includes a 2% increase through 2028, 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.
10. Operating Transfers in reflect a modest increase of 2% in the out years to account for the cost increases that drive this transfer relationship. This category mainly includes the cost recovery reimbursements from Fund 216 (NPDES), Fund 210 (Gas Tax) and Fund 209 (Measure A).
Expenditures Assumptions
1. Salaries and Benefits (S&B) The FY 2025-26 adopted budget includes a full-time equivalent count of 201.75 Citywide. During the budget process Council made a one-time policy decision to not allocate $214k to the pension trust for FY 2025-26. For the mid-year revision, mou increases were incorporated with a 4.0% salary savings applied to account for these increases. The remaining years include a 4.0% increase 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 labor-related increases, with a 5% salary savings factor, and include contributions to both the pension and OPEB trusts.
2. 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. Operating Transfers Out Debt Service 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. A reduction of the debt payment starting with FY 2031 is related to the projected payoff for the Pension Obligation Bond.
5. Operating Transfers Out Allocations category accounts for transfers to Internal Service Funds, including the Risk Management funds for General Liability and Worker's Compensation insurance
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Packet Pg. 440 Attachment: Attachment 1 - Long Term Financial Forecast (6184 : FY 2026-27 Budget Planning Process, Timeline and Preliminary Budget premiums and Motor Pool funds to cover motor pool operating expenditures. Also included in this category is an ongoing allocation to the motor pool vehicle replacement fund in order build up fund balance for future fleet replacement. The forecast shows a modest 1.5% increase each year to account for rising insurance premiums.
6. Capital Transfers Out category contains the approved allocation of $50k for the FY 2025-26 budget year. With no automatic ongoing contribution to capital in the future years.
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Packet Pg. 441 Attachment: Attachment 1 - Long Term Financial Forecast (6184 : FY 2026-27 Budget Planning Process, Timeline and Preliminary Budget