June 17, 2024 www.cityofpaloalto.org/budget1
ADOPTION OF FY 2025
OPERATING AND
CAPITAL BUDGETS, MUNICIPAL FEE
SCHEDULE, &
APPROPRIATION LIMITS &
RETIREE HEALTH CARE
ACTUARIAL & CONTRIBUTION
Item #28
CITY COUNCIL FY 2025 BUDGET ADOPTION OVERVIEW
Tonight’s meeting concludes the FY 2025 budget process
• Staff report provides summary of Finance Committee
deliberations to date
• Review final balancing actions
• Summarize staff workplan items
• Other Actions: approve municipal fees, appropriation
limits and retiree health actuarial report &
contribution.
GOAL: Adopt the FY 2025 Operating & Capital Budgets and Municipal Fee Schedule and other actions above.
2 BUDGET CONVERSATIONS & CALENDAR
3 MAY 6 MAY 7 & 8 MAY 13 MAY 15
MAY 21 &
JUNE 4
TODAY
Finance Committee Budget
Workshops:
Review the proposed
budgets and recommend
amendments
Study Session City Council:
Finance Committee check-in
with the City Council
Community
Budget Listening
Session
Finance Committee Budget Wrap-up:
Based on the input from the May
budget meetings, recommend final
adjustments to proposed budgets for
Council adoption
City Council: FY 2025 Proposed
Budget Overview:
Discuss guidance for Finance
Committee colleagues
City Council Budget
Adoption:
Adopt Operating & Capital
budgets (as amended by
the Finance Committee)
FY 2025 BUDGET SUMMARY
4 • Operating budget totals $1.1 billion ($306.9 million in General Fund) • Capital budget totals $441.8 million in FY 2025 and $1.7 billion over the five-year CIP General Fund Reserves
• Budget Stabilization Reserve (BSR) - $54.4 million projected FY 2025 balance (18.5% of expenses) • Uncertainty Reserve - $6.2 million remaining for FY26 projected gross deficit of $11.0 million Staffing Levels: +29 Full-time FTE or 2.7% increase over the FY 2024 Budget (Citywide) • Includes +16.5 FTE in the General Fund
FY 2020
Actuals
FY 2021
Actuals
FY 2022
Actuals
FY 2023
Actuals
FY 2024
ADOPTED
FY 2025
ADOPTED
GF Revenue $209.7 $201.0 $239.1 $254.8 $261.1 $287.5
GF Expense $226.3 $185.6 $201.9 $243.8 $279.6 $306.9
Full-time Staffing
(Citywide) 1,035 1,035 956 1,018 1,063 1,092
5 FY 2025 Finance Committee Recommendations (General Fund Uses) Dept
FY 2025 General Fund
Recommended Adjustments
Description
FY 2025
Revenue or
Savings/
(Cost)
Ongoing
Revenue or
Savings/
(Cost)
NON Other Post Employment Benefit
(OPEB) 2-Year Phase-In
(1,650,000) (3,300,000)
NON Increase Uncertainty Reserve to
$6.2M for Future Needs
(1,470,000) -
CSD JMZ additional staffing, new
ticketing system and promotion
(509,000) (702,000)
CIP California Avenue Interim
Improvements
(450,000) -
CIP Additional funding for Roth Building
Rehabilitation (PF-23001)
(revise terms and conditions of the tenant
work letter)
$1M total including $0.2M interest
earnings previously appropriated
(300,000) (500,000)
NON Establish Citywide Special Events &
Programming ($265k total program)
[Requested UNAFF $45k, 3rd Thursdays
$40k, Neighbors Abroad $30k (already in
FY25 Proposed Budget), Magical Bridge
$150k, Environmental Volunteers Foothills
Nature Preserve $11k one-time]
(246,000) (235,000)
NON Palo Alto Transportation Management
Association (PATMA) (increase to $400,000
Citywide)
(175,000) (175,000)
PWD Public Services Streets 311 Requests (100,000) (107,000) FIR Upstaff Fire Engine 62 with 3 Sworn
Staff instead of Overtime
(74,000 (120,000)
NON Car-free Streetscape Design for
Ramona Street
(50,000) -
CSD Administrative Support for new
Citywide Special Events &
Programming (1 FTE)
- (125,000)
CIP Study of artificial turf replacement with
grass at up to 4 fields (recommend use
of current CIP to fund a study)
- -
OOT Review an alternative service approach
for PA Link with reduced net costs
(proposed FY2025 budget funds $0.9M)
177,000 340,000
NON Reduce Real Property Investment
Reserve to $1.0M Annually
1,500,000 1,500,000
Subtotal Uses (Expense) ($3,347,000) ($3,424,000)
Dept
FY 2025 General Fund
Recommended Adjustments
Description
FY 2025
Revenue or
Savings/ (Cost)
Ongoing
Revenue or
Savings/
(Cost)
6 FY 2025 Finance Committee Recommendations (GF Sources) Dept
FY 2025 General Fund
Recommended Adjustments
Description
FY 2025
Revenue or
Savings/ (Cost)
Ongoing
Revenue or
Savings/ (Cost)
NON Beginning Balance – City Council Priorities Reserve $- $- NON Increase Gas Transfer to General Fund in FY25 to 14.5% (from
11.9%) & in FY26 to 18% (previously scheduled in FY27)
1,958,000 916,000
NON Increase JMZ ticket prices from $10 to $14, during peak periods 350,000 350,000 NON Use BSR to balance FY 2025 – Reduce BSR to 18.5% 605,000 - OOT Review an alternative service approach for PA Link with reduced net costs (proposed FY2025 budget funds $0.9M)
223,000 60,000
CSD Account for Los Altos & Los Altos Hills contribution for animal control services Report #2403-2827
198,000 198,000
FIR Upstaff Fire Engine 62 with 3 Sworn Staff instead of Overtime (Funding from Stanford for Fire Services Agreement)
14,000 23,000
Subtotal Sources (Revenue) $3,347,000 $1,547,000
Potential Fund Remaining (Deficit)/Surplus $- ($1,877,000) 7 FY 2025 Finance Committee Recommendations (Other Funds) • Add 1.0 FTE Associate Sustainability Program Administrator in the Electric Fund • Adjust Gas Equity Transfer to GF from 11.9% to 14.5% of Gross Revenues (+$2.0M) • Gas Rate increase from 9.0% to 12.5% in FY25
• Increase Equity Transfer to full 18% of Gross Revenues in FY26 • Decrease Gas Main Replacements #25 (GS-15000) -$0.7M
• Capital Budget Adjustments
• Reappropriations to continue projects in FY25
• Baylands Boardwalk Piling Repair (PE-24000) +$0.2M for higher bids • California Avenue Streetscape Update (PL-23000) +$0.5M for overall improvements • Roth Building Rehabilitation (PF-23001) +$1.0M in total for cost escalation ($0.2M interest earnings in project FY24 Mid-Year, $0.3M in FY25, $0.5M in FY26) 8 STAFF WORKPLAN ITEMS FOR FY 2025
• Ability Path request to be considered at FY 2025 Mid-Year Review • Fire Emergency Medical Response Fee Adjustments (Ongoing Revenue TBD) • Fire Emergency Medical Response; Supplemental Resources ($1.0-$4.0M Ongoing) • Review Parks Restroom Prioritization Specifically Pardee Park (Ongoing costs TBD) • Active Recruitment Digital Marketing Services (Ongoing costs TBD) • Organizational Development & Safety Division ($0.1M Ongoing; 50% GF/50% ISF) • Historical Grants Information
9 DRAFT MOTION FOR CITY COUNCIL CONSIDERATION
1) Adopt the Fiscal Year 2025 Budget Ordinance which includes the Operating and Capital Budgets, Table of Organization, and Municipal Fee Schedule, as amended by the actions outlined in this report:
a. […INSERT ANY CHANGES HERE…]
2) Accept the FY 2025-2029 Capital Improvement Plan as amended by the actions outlined in this report;
3) Adopt a Resolution determining the Appropriations Limit for Fiscal Year 2025; and 4) Accept the June 30, 2023 biennial actuarial valuation of Palo Alto’s Retiree Healthcare Plan and approve funding of the Actuarial Determined Calculation (ADC) for Fiscal Year 2025 and Fiscal Year 2026 with a two-year phase-in