Recommended Fiscal Year 2025 Operating BudgetMay 6, 2024City Council MeetingItem 19 Department of Finance
FY 2025 Budget Appropriations
2 Department of FinanceTotal Budgeted Appropriations(including Affiliated Agencies and CIP)(in millions)FY 2025RecommendedFY 2024AdoptedFY 2023Actuals$340.7$323.7$304.7General Fund$1,147.5$1,240.5$1,000.9All FundsFull-Time Equivalent Positions(including Affiliated Agencies)FY 2025RecommendedFY 2024AdoptedFY 2023Adopted1,080.271,062.151,028.10General Fund2,403.382,356.232,321.36All Funds 3 Total RevenuesFY25 REVENUE BY CATEGORY – ALL FUNDS ($987.0 Million)
4 General Fund RevenueFY25 REVENUE BY CATEGORY – GENERAL FUND ($340. Million)
5 Total AppropriationsFY25 APPROPRIATIONS BY CATEGORY – ALL FUNDS ($972.1 Million)
6 General Fund RevenuesFY25 OPERATING REVENUES BY CATEGORY – GENERAL FUND ($340.7 Million)
Economic Conditions•Fee and Charge based funds.>Ongoing and higher than normal inflation and the reluctance to increase fees during the COVID-19 period has put increased pressure to increase fees now.>Increased regulations (Federal, State, and Local) has resulted in:Delayed revenues (Development fees)Inability to recover full cost of serviceIncreased costs in near term to achieve compliance>Departments will provide future fund outlooks for key funds.7 Economic Conditions•Grant or Special Revenue Funds>State is delaying programs and grants due to budget challenges.>Federal government is not increasing funds for operational programs.>Federal Congressional Directed Spending is shrinking.>Some special revenue sources are flat or declining.>Overhead to support programs is increasing faster than funding source.>Departments will provide future fund outlooks for key funds.8 General Fund Revenues•Significant slow down in Property and Sales Tax revenues for FY 2025>Property Tax – 3.0%, Sales Tax – 2.4%•Transient Occupancy Tax>Occupancy and rates have been flat after a period of strong recovery>Business-related travel/weekday travel still lagging•Utility Users Tax>Increase in revenue related to inflation and higher rates9 General Fund Expenditures•General Fund>Pension costs are increasing as CalPERS investments fell short of target the last two-years.>Inflation is impacting certain commodities in a significant way.>City is not immune to rising costs of utilities, especially electricity and water.>Cost of insurance and General Liability continues to experience large increases annually.>Increased pressure or need to fund services that were previously funded 100% with outside sources.10 Light & Power Fund Transfer to G.F.•Adopted FY 2024 Budget anticipated utilizing $5m in General Fund Operating Reserves to offset reduced GFT in FY 2024.>Light and Power Fund finished FY 2023 better than expected.>The GFT for FY 2024 can be the full $18.0 million.>The transfer in FY 2025 is planned to be $18.0 million.>This clean-up will be included as part of the resolution adopted with the FY 2025 Operating Budget.11 General Fund Outlook•The future forecast for both property and sales tax growth is lower than normal.>Property Tax – 4.5%, down from 7%>Sales Tax – less than 3%, down from 8-9%•Economic development will continue to play a vital role in growing out major tax bases.•City has significant capital needs where no or insufficient grant funds are available.>The City does not have funding to do the library repairs on its own.12 General Fund Five-Year
13 FY 2023 FY 2024 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029Final Rev. Budget Forecast Budget Forecast Forecast Forecast ForecastBeginning Amount Available for Appropriations 0 18,086,075 18,086,075 6,803,101 1,587,157(382,051) (3,661,049) (5,831,290)RevenuesTax Revenues 256,099,426 250,860,100 254,930,304 265,657,100 275,442,388 284,542,670 293,888,284 303,568,090Other Revenues 46,153,066 58,823,605 58,823,605 54,732,734 56,053,217 57,407,231 58,795,643 60,219,345Contributions/Svs. From Other Funds 54,527,524 15,190,438 20,190,438 20,140,438 20,140,438 20,140,438 20,140,438 20,140,438Total Revenues 356,780,016 324,874,143 333,944,347 340,530,272 351,636,043 362,090,339 372,824,365 383,927,873ExpensesPersonnel 186,024,588 204,966,273 204,966,273 214,778,587 225,493,081 234,312,948 241,929,694 253,055,984Debt Service 11,426,366 11,692,948 11,692,948 12,318,397 12,323,966 12,317,139 11,290,184 11,288,643Contributions To Other Funds 18,195,625 25,609,821 25,609,821 14,180,877 14,464,495 14,753,784 15,048,860 15,349,837Other Expenses 87,921,858 114,997,675 114,997,675 99,468,355 101,323,710 103,985,465 106,725,867 109,547,505Total Expenses 303,568,437 357,266,717 357,266,717 340,746,216 353,605,251 365,369,337 374,994,605 389,241,969Operating Income/(Loss) 53,211,579(32,392,574) (23,322,370) (215,944) (1,969,208) (3,278,998) (2,170,240) (5,314,096)Ending Amount Available for Appropriations 53,211,579(14,306,499) (5,236,295)6,587,157(382,050) (3,661,048) (5,831,289) (11,145,385)Contributions to Capital Projects(7,137,700) (7,137,700)Reserve for Capital & Other Funds(33,860,146) 23,247,300 23,247,300 (5,000,000) - - - - Reduction/(Contribution) to Policy Reserve(1,265,358)5,000,000 - Net Income/(Loss) with Reserve Contribution 18,086,075 6,803,101 10,873,305 1,587,157(382,050) (3,661,048) (5,831,289) (11,145,385) General Fund Five-Year Forecast
General Fund ReservesFY 2024$ 43,952,96915% Emergency Reserve14,650,9895% Operating Reserve13,099,495Section 115 Trust – Pension2,481,744Section 115 Trust – OPEB$ 74,185,197Total14 Proposed Enhancements•Parking Enforcement>Add 4.0 FTE – Parking Enforcement staff>Offset cost by reducing contracted staff>One-time purchase of vehicles – Electric Vehicles•Fire Engineer – 40-hour>Dedicated 40-hour Engineer focused on training, safety, and staff development>Recruit Training Academy Cadre15 Proposed Enhancements•Enterprise Risk Management & Employee Wellness>2.0 FTEs - One Senior Office Assistant, One Management Analyst IV>Funding for leased office space>1.0 FTE – Sr. HR Analyst to support Employee Wellness and Benefits Division•PRCS Boxing Program>Increase by 0.53 FTE to create a full-time Recreation Services Specialist for the Boxing program16 Proposed Enhancements•Tree Infrastructure Maintenance>Additional funding to ensure regular tree maintenance.>City tree inventory exceeds 60,000 trees.•Public Health – General Fund Support>Grant funds do not increase as fast our internal costs/overhead to support programs.>Complaint investigations & enforcement duties.>Additional office space needed.17 Proposed Enhancements•Housing Staffing>2.0 FTEs – Junior Housing Assistant and Office Assistant >Housing assistance and Rental assistance programs•City Service Center>1.0 FTE – Office assistant to support increased needs of the CSC•Transportation CIP>1.0 FTE – Planner funded through capital grants18 Proposed Enhancements•Water and Power>13.0 FTEs Support achieving 2030 Carbon Free policy goal.Upgrade of Computerized Maintenance Management System (System is part of the CIP). Will facilitate monthly billing and time of use rates.Electric Vehicle Charger maintenance.Water treatmentAdministrative Internships 19 RecommendationFind that the proposed action is not a project subject to the California Environmental Quality Act (CEQA).Open the public hearing on City Manager’s FY 2025 Recommended Operating Budget.Continue the public hearing to the regular meeting of the City Council on June 3, 2024, until a formal recommendation to adopt the FY 2025 Recommended Operating Budget is presented to the City Council.20 Department of Finance