CITY COUNCIL STAFF REPORT
Meeting Date: June 16, 2025
TO: THE HONORABLE MAYOR AND CITY COUNCILMEMBERS
TITLE: ADOPT RESOLUTION NO. ___-25 AMENDING THE FISCAL
YEAR 2025/2026 ADOPTED BUDGET
SYNOPSIS
At its June 4, 2025 meeting, the Budget Committee considered revisions to the Fiscal Year (FY) 2025/2026 General Fund budget proposed by staff. The proposed changes were forwarded by the Committee with a recommendation for City Council adoption.
DISCUSSION
Background
The City of Pleasant Hill operates on a biennial budget. Prior to the beginning of the second year of the budget cycle, staff reviews the adopted budget and determines whether any changes to revenues and/or appropriations are needed. The biennial budget for fiscal years 2024/2025 (FY 24/25) and 2025/2026 (FY 25/26) was adopted by the City Council on June 17, 2024. Staff is requesting adjustments to revenues and expenditures based on the current information and to amend the FY 25/26 Adopted Budget. The cost of the additional appropriations requested is projected to be covered by a higher-than-anticipated beginning General Fund balance.
Analysis
Staff is projecting that FY 24/25 will have a General Fund ending balance (excluding Measure K) approximately $1.6 million higher than currently budgeted. The budget deficit for FY 22/23 is currently $1.9 million with General Fund balance dropping slightly under $10.0 million. Based on revised estimates, the current deficit is $0.4 million with the General Fund balance ending at $11.6 million. Revenues are currently estimated to be $29.8 million, higher than the original budget attributable to improved licenses and permits revenues and use of money and property.
Expenditures are currently estimated to be $30.2 million and under budget mainly due to staff vacancies. The originally adopted FY 23/24 General Fund ending fund balance was $8.9 million and including the proposed revisions is currently $10.0 million.
Table 1
GENERAL FUND REVENUES (excluding Measure K)
General Fund revenues for FY 24/25 were budgeted at $31.4 million. Revenues are currently projected to slightly decrease to $31.2 million. Summary of changes provided below.
Table 2
Property Tax (Proposed Adjustment: $35,000 decrease)
Property tax revenue was originally budgeted to be $9.37 million. Based on current information provided by the City’s property tax consultant, HdL, it is projected to decrease by $35 thousand to $9.34 million for FY 25/26. This projected decrease is due to reassessments of commercial property.
Sales Tax (Proposed Adjustment: $338,000 decrease)
Sales tax revenue was originally budgeted to be $11.1 million. Based on current analysis by HdL, sales tax revenues are projected to decline by $0.3 million to $10.8 million. The decrease is due to the decline in retail with the closure of stores around the downtown and drop in fuel prices affecting service stations.
GENERAL FUND EXPENDITURES (excluding Measure K)
General Fund expenditures for FY 25/26 were budgeted at $35.1 million. Based on updated analysis from all City Departments, expenditure is projected to decrease by $0.2 million, to $34.9 million. The main reason for the increase is related to the City’s insurance premiums decreasing by $0.2 million.
Table 3
Salaries and Benefits (Proposed Adjustment: $83,000 decrease) Salaries and benefits adopted budget is $26.8 million and proposed to decrease $83 thousand to $26.7 million. The decrease reflects changes to benefits due to an increase in the unfunded pension liability payment by $113 thousand attributable to CalPERS not receiving the assumed discount rate in FY 22/23; and Municipal Pooling Authority decreasing workers compensation premiums of $196 thousand given the City’s improved claim experience.
Insurance Costs (Proposed Adjustment: $130,000 decrease) The City is a member of the Municipal Pooling Authority (MPA), a joint powers authority that provides self-insurance and insurance coverage against the risk of losses. MPA provides coverage from general liability, employment liability, cyber risk, vehicle, and property loss. The total insurance premiums are decreasing from $1.7 million to $1.6 million for FY 25/26. The premium decreases are due to the City’s improved claim experience.
FISCAL IMPACT
On net, the proposed adjustments to FY 25/26 revenues and expenditures outlined above will result in increased expenditures of $159 thousand. Staff is expecting that this amount can be offset by higher-than-anticipated beginning General Fund balance.
PUBLIC CONTACT
Public Contact was made through posting of the City Council agenda on the City’s official notice bulletin board, at the Pleasant Hill Senior Center, and at the Pleasant Hill Police Department. The agenda and staff report are posted on the City’s web page.
RECOMMENDED CITY COUNCIL ACTION
Adopt the proposed resolution authorizing the Fiscal Year 2025/2026 Budget Amendments, as recommended by the Budget Committee at its meeting of June 4, 2025.
ATTACHMENT(S)
Proposed Resolution
Exhibit 1- Adjustments to FY 2025/2026 General Fund Revenues and Expenditures Prepared by: Erick Cheung, Chief Financial Officer
Approved by: Ethan Bindernagel, City Manager