Fiscal and Org.
Sustainability
Update
PETALUMA CITY COUNCIL
MAY 5, 2025
Agenda
Petaluma Budget Basics
FOS Recap
Measure U History, Priorities and
Accomplishments
Current Forecast
Revenue Options
Petaluma
Budget Basics
Budget Context
•Petaluma has over 100 individual funds
•Most are restricted based on type of revenue and what it can be spent on • Special Revenue Funds (Impact Fees, LADS, Measure M Parks, Streets, etc.) • Enterprise Funds (Water, Wastewater, Airport, etc.)
• Internal Service Funds (IT, Risk Management, Workers Comp, etc.) • Capital Projects Fund
• Debt Service Fund
•Few discretionary funds – General Fund, TOT Fund, Measure U • Most general city services funded here: Police, Fire, Parks and Rec, Public Works, Administration, etc.
All FundsFY 24-25
Current Expenditure Budget: $306M
General Fund,
26%Measure U Sales Tax, 5%
Measure H Sales Tax, 1%
Special Revenue Funds, 10%
Debt Funds, 0%
Enterprise Funds, 6%
Utility Funds, 37%
Internal Service Funds, 5%
Capital Project Funds, 8%
Successor Agency Funds, 2%
All FundsFY 24-25
Current Revenue Budget: $280M
Fees, Permits & Fines, 4%
Other Taxes, 4%
Other Revenue, 5%
Property Taxes, 7%
Charges for
Services, 10%
Sales Taxes, 12%Intergovernmental,
15%
Utility Revenue,
20%
Transfers In from
Other Funds, 23%
General FundFY 24-25
Current Revenue Budget: $77.9M
Other Revenue, 2%
Fees, Permits & Fines, 3%
Transfers In, 4%
Other Taxes, 8%
Intergovernmental,
12%
Transfer In from
Measure U, 17%
Sales Taxes, 18%
Charges for
Services, 18%
Property Taxes,
18%
General Fund FY 24-25
Expendituresby Function $78.88M
Internal Services & Economic
Development, 7,589,321 ,
10%
Finance, 3,214,715 , 4%
Transfers, 1,407,507 , 2%
Community Development,
1,796,605 , 2%
Parks & Recreation, 7,087,314 , 9%
Fire, 25,707,701 ,
33%
Police,
29,465,949 , 37%
Public Works, 2,608,323 , 3%
General Fund FY 24-25
Expendituresby Category $78.88M
Salaries & Wages,
37,922,387 , 48%
Employee Benefits
& Pension,
24,191,147 , 31%
Services & Supplies, 9,482,913 , 12%
Utilities, 1,515,242 , 2%
Capital Assets, 154,004 , 0%
Intragovernmental,
4,204,235 , 5%
Transfers Out,
1,407,507 , 2%
Fiscal and
Organizational
Sustainability
Recap
A LOOK BACK –
2019 - 2021
Elements of FOS
•GF Forecast, Assumptions, Structural Deficit
•GF Departments, Operations, Service Levels
•Core Staffing Recommendations
•Employee Compensation and Benefits
•Pension and “Other Post Employment Benefits”
•Infrastructure and Deferred Maintenance
Forecast circa 2020
$50
$52
$54
$56
$58
$60
$62
$64
$66
FY 21 FY 22 FY 23 FY 24 FY 25 FY 26
General Fund Revenue Gap
$ in Millions
Revenues with COVID Impact Revenues prior to COVID Impact Expenditures $8.5m Estimated COVID-19 Revenue Loss FY 21-
FY 26
$6.4m avg. annual
revenue gap
From FOS –
2019 - 2021
GF Staffing in 2020
48 Positions Below Pre-Recession Levels
-
50.00 100.00
150.00
200.00
250.00
300.00
350.00
54,000
55,000
56,000
57,000
58,000
59,000
60,000
61,000
62,000
63,000
64,000
FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 Funded Positions
Population
General Fund Funded Positions and Population
City of Petaluma Population General Fund/Non Utility Funded Positions 26% Reduction
in General
Fund FTE
Still down
16% FTE
since
recession
From FOS –
2019 - 2021
Core Staffing Initial Scenarios
“Full” Core Staffing
• 29 FTE additional staff positions
• 4 position upgrades / contract resources
• Spread across most General Fund departments
• Some positions have offsetting revenue / cost reductions / charge-outs • Net General Fund annual cost = $3.8 million
“Limited” Core Staffing
• 19 FTE additional staff positions; 1 position upgrade • Spread across most General Fund departments
• Some positions have offsetting revenue / cost reductions / charge-outs • Net General Fund annual cost = $2.2 million
From FOS –
2019 - 2021
Cost of Living Adjustments
From FOS –
2019 - 2021
In 2018 – 2019, most
employees began
paying 2% or 3% of
salary as a PERS cost-
share
Survey Results – Total Compensation
Compensation Report - SAMPLE 3/3/2020
Strongest trend of the survey jobs
should be in shaded region
5 8
24 14
18 13
8 2
0 0
0 5
10 15
20 25
30 More than
-20%
-20% to -
15%
-15% to -
10%
-10% to -
5%
-5% to 0% 0% to 5% 5% to 10% 10% to
15%
15% to
20%
20% or
more
Number of Survey Classifications
Total Comp Relationship to Market Median
55% Below Market 11% Above Market
34% Within +/- 5%
Survey Results – 92 Jobs
From FOS –
2019 - 2021
Compensation Assumptions
1.Assume that employee salaries keep pace with inflation in the long run – 2.5% annual COLA - $550,000 per year compounding; $1.65M by year 3; $2.75 by year 5; and growing
2.Assume that surveyed employee salary levels are brought up to within 5% ofmarket median on a total compensation basis - $400,000 annually
3.No changes to pension / retiree health funding – continue to make mandated CalPERS payments and fund OPEB on a pay-as-you-go basis
From FOS –
2019 - 2021
Streets Financial Overview
Revenue, Expenditures, CIP and Shortfall to maintain
18 Shortfall in Funding to Maintain Condition
From FOS –
2019 - 2021
Street Pavement Options
•Option 1 – Maintain current investment levels
• CIP budget $14M over 5 years
• Pavement Condition Index (PCI) drops from 46 to 43
• Deferred maintenance backlog grows to $126M
•Option 2 - Increase investment levels to maintain current PCI • CIP budget $25M over 5 years
• PCI maintains at 46
• Deferred maintenance backlog grows to $122M
• Additional funding needed of $1.25M per year for 20
years
•Option 3 – Increase Investment Levels to get roads to ‘Fair’ • CIP budget $70M over 5 years
• PCI Improves to 60
• Deferred maintenance backlog decreases to $79M
• Additional funding needed of $3.6M per year for 20
years
•Option 4 – Increase Investment Levels to get roads to ‘Good’ • CIP budget $100M over 5 years
• PCI Improves to 70
• Deferred maintenance backlog decreases to $48M
• Additional funding needed of $5M per year for 20 years 19 From FOS –
2019 - 2021
Option 1
No change in funding
Budget $14M over 5 years
Option 2
Maintain Current Condition
Budget $25M over 5 years
Option 3
Raise Condition to 'Fair'
Budget $70M over 5 years
Option 4
Raise Condition to ‘Good’
Budget $100M over 5 yrs
From FOS –
2019 - 2021
Total Needs for General Fund Facilities
Total Expenditure by Building over next 20 years - ~$52M Total + ($3.5M in Seismic Upgrades) 22 $0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
Millions
Seismic Upgrade
Parks
Housing
Recreation
Police Department
Other Community Services
Fire
City Services, not PD or PFD
Seismic
Needs
From FOS –
2019 - 2021
Facility Investment Options
23 $0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
$10.0
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Millions
Spending Forecast To Address Annual Needs Over 20 Years Annual Need to Address Backlog
Annual Need Going forward
Average Cost over 20 years for all maintenance ($2.8M)
Average Cost over 20 years to Address Backlog & Critical Issues ($1.9M) Current Facility Maintenance funding level ($750k)
Option 1 – Fund at level to address backlog and maintenance needs going forward.
Option 2 – Fund at level to Address Backlog & most Critical Issues.
Option 3 – Continue as is, reactive maintenance for only critical needs.
Funding level for Option 1
Funding Level for Option 2
Current funding level Option 3
From FOS –
2019 - 2021
Other Deferred Maintenance Needs
•Stormwater System - ~$37 million
•Parks and Open Space - ~$12 million
•Sidewalks fronting City-owned properties - ~$1.7 million •Multi-use paths - ~$500,000
•Vehicle Fleet (15+ years old) - ~$6 million
•Sound Walls - ~$1 million
•Retaining Walls - ~$1 million
•Medians and Frontages - ~$3 million
•Traffic signals, Streetlights - ~$6 million
24 From FOS –
2019 - 2021
Example Infrastructure Scenario
Infrastructure Category Level of Investment
Streets, Signals, Curb Ramps $2.3 M
Storm Water $0.3 M
Facilities and Sidewalks $1.0 M
Parks, Pathways, Waterways $0.4 M
Vehicle Fleet $0.6 M
Total Infrastructure Annually $4.6 M
25 From FOS –
2019 - 2021
26 Infrastructure Options – Streets, signals, curb
ramps, facilities, sidewalks, parks, paths,
waterways, and vehicle fleet
$6.4 M
$4.6 M
$2.0 M
Employee Compensation Options – COLA +
Market
$2.2 M Core Staffing – Limited Scenario
$15.2 M
Current Projected 5-Year
Existing services Deficit - $6.4
million
From FOS –
2019 - 2021
FOS Scenario
FOS Scenario – With Revenues
27 $15.2 M
Needs
Scenario
½ Cent
Sales Tax
$6.7 M
$13.4 M
$2.0 M
$0.7 M
$3.6 M
$0.4 M
1 Cent
Sales Tax
Cannabis
TaxParcel Tax 2% TOT
Tax
Infrastructure
Bond
From FOS –
2019 - 2021
Even with a 1% sales tax add-on,
this was not the full panacea for
the City’s funding issues.
Measure U
IMPLEMENTATION,
RESULTS AND
IMPACTS
Measure U Ballot Language
City of Petaluma Local Recovery, Emergency Preparedness, and Essential Services Measure. To maintain emergency
health/wildfire/natural disaster preparedness; rapid 911 emergency response; fire protection services/firefighting equipment; well-trained community police officers;
streets/pothole repair; clean/safe public areas; support for local businesses/jobs; and other city services; shall the City of Petaluma adopt a measure establishing a 1¢ sales tax, providing approximately $13,500,000 annually until ended by voters, requiring audits, citizen oversight, and all funds spent locally?
29 Measure U Implementation Plan
•Eliminate the GF Deficit (representing LOS at the time) •Core Staffing Recommendations
•Bring Compensation up to Market Median
•Ensure Annual Staff COLAs
•Infrastructure Investments
•Initial Priority Initiatives
Measure U Plan & Forecast
31 Workforce Stabilization
From March
2021
Measure U Community Priorities (1 of 2)
Community-Identified City Service Priorities
Community Safety, Health & Emergency Preparedness
Fire Prevention & Protection
Maintain and prevent cuts to firefighting equipment/fire engines and adequate 24 -hour staffing.
Emergency Preparedness & 911 Response
Ensure public health, wildfire, natural disaster emergency preparedness and maintain 911 emergency response times to ensure first responders can respond quickly to calls for services.
Addressing Homelessness
Continue homeless prevention programs and community partnerships while ensuring our local businesses, public areas, and neighborhoods are safe, stable, and secure for everyone.
Public Safety
Maintain properly trained community based public safety officers, community outreach programs, and ensure adequate 24 - hour staffing.
Safe Public Spaces & Recovery
Keep public areas safe and clean; support local business and job retention through recovery Measure U Community Priorities (2 of 2)
Roads Maintenance & Repair Investment
Repairing Roads & Fixing Potholes
Enhance street maintenance, repaving, and pothole repair on Petaluma’s 396 miles of streets Road Safety
Address existing road hazards and improve road safety for drivers, bicyclists, and pedestrians, including maintaining safe ro utes to schools.
Deferred Maintenance
Improve conditions of local roads by better addressing $141 million in repairs backlog and prevent road ratings from further decreasing per the standard Pavement Condition Index
Fire Prevention, Protection, Emergency
Preparedness, and 911 Response
• No reductions to staffing or fleet
• Comprehensive analysis to assess operational needs
• Emergency Medical Services (EMS) Coordinator,Emergency Services Manager, and a Training Officer
• 3rd paramedic ambulance, staffed 24/7/365
• Chipper/ vegetation mgt. program to reduce wildfire risk • Public Safety Facility Master Plan
• Fire HQ (D St.) seismic retrofit and safety improvements underway • Design of new Public Safety building at the Fairgrounds underway Public Safety
•No reductions to staffing & added specialty pay for select assignments •Comprehensive analysis to assess operational needs
•SAFE Team Mobile Crisis Intervention
• DUI enforcement officer,add'l Sergeant, training coordinator, f/t Evidence Technician, p/t Property Technician
•Created the Community Impact Response Team
•Created the Professional Standards Division
•Implemented the hybrid Police oversight model, including the Independent Police Auditor •Essential equipment upgrades
Addressing Homelessness
•People’s Village – 25 units of non-congregate shelter
•HomeKey/Studios at Montero – 60 permanent supportive housing units •SAFE Team – Mobile crisis intervention team
•Mobile shower program
•First City in CA to get encampment injunction lifted
•Secured more than $10 million for encampment resolution •Renovations to Mary Isaak Center and Family Shelter
•Outreach & support services, shelter options, rental assistance, workforce development program, landlord recruitment, Keep People Housed program, Universal Basic Income program, upgraded mental health counseling, etc.
Safe Public Spaces & Recovery
•COVID Assistance to businesses, including small business loan program and connected local businesses to county state and federal pandemic assistance grants and loans
•Free Range outdoor dining program, including tent purchases •Helped connect local businesses to county state and federal pandemic assistance grants and loans
•Funded the downtown association to support operations during the pandemic
•ShopPetaluma program
Safe Public Spaces & Recovery, Pt. 2
•Park maintenance staffing additions
•Playground replacements and redesigns
•SMART – owned trestle design ($683,000 spent to date)
•ADA accessibility of our parks
•New Skate Park at Lucchesi
•Lucchesi Turf Replacement
•New turning basin docks
•River dredging in cooperation with Army Corps of Engineers Road & Mobility Investments
•Increased annual pavement maintenance funding from $2.1 Million (FY19-21) to $7.6 Million (FY22-27); approx. $55 million over 5 years; Improved the citywide Pavement Condition Index (PCI) three-year average from 45 to 52, a 7-point increase •Purchased new vehicles and equipment, including bike lane sweeper, asphalt roller, skid steer, and asphalt patch truck, bucket truck to expand street maintenance and pothole repair capacity
•Added 3 positions to the Safe Streets and Mobility Division – Transportation Planner, Traffic Technician, Equipment Mechanic
•Added 6 positions to the Capital Improvement Program Division – Engineering Manager, (2) Senior Civil Engineers, (2) Assistant Engineers, Engineering Inspector Road & Mobility Investments Pt. 2
•Completed safe routes to school audits for all schools and currently 40% complete with the recommended improvements
•Implemented the Safe Streets Nomination Program and quick-build program to double our Safe Streets and Mobility work order program from 40 to 80 work orders per year to improve safety for all Petalumans
•Fare-free Transit for all
•LumaGo—on-call microtransit
Current Status Summary
•Measure U Implementation Plan has been implemented and leveraged:
• Eliminated the structural GF deficit
• Added key core staff positions in all departments to improve service delivery • Brought all job classifications up to market median compensation • Implemented annual COLAs
• Invested $20 million in road maintenance
• Public Safety (police + fire) building currently in design • Invest in initial Priority Initiatives: homelessness, infrastructure • Transformed the City: from facing imminent bankruptcy to a nimble, flexibleand innovative organization responsive to community needs and is leading • Saved the Fairgrounds!
A Sampling of Unmet Needs
•Deferred maintenance of all types of infrastructure ($200 million+) •Ongoing maintenance and upgrades of facilities (corp yard, city hall) •Vehicle replacements
•Stormwater permit funding
•Fairgrounds renovation / Implementation of master plan •Downtown improvements
•Marina loan
Take Aways
•Balanced budget proposed for 2025/26
•Not much more flexibility with Measure U funds
•Status quo = declining condition of City infrastructure and reductions in services
•Significant investments and unmet needs still unfunded •Tipping point – future conversation about fiscal and organizational sustainability
Questions?