City Council Meeting – February 11, 2025; Item 3.3
2024-2025
Mid-Year Budget Review
2 Operating and capital funds are generally performing as expected, with a few exceptions
Marginal economic growth experienced through the first half of 2024-2025 Budget adjustments are recommended in various operating and capital funds The City enters the 2025-2026 budget development process with headwinds 2024-2025 Mid-Year Budget Review
Overview
3 Economic Conditions: Employment
4 Economic Conditions: Real Estate
5 General Fund Assessment
In most categories, revenues are trending in accordance with budgeted expectations; however, Sales Tax revenues have underperformed and are preliminarily anticipated to end the year $25 - $30 million below budgeted levels
Expenditures currently tracking to end the year with savings of approximately $10 million Cost controls, implemented in December 2024, will be maintained throughout the remainder of 2024-2025 to achieve higher levels of savings 6 Sales Tax
Economic Sector 2023-2024
% of Total
Revenue
2024-2025
% of Total
Revenue
% Change of
Revenue
Received by
Category
Business-to-Business 21.3% 20.4% (9.9%)
Construction 9.8% 10.2% (2.4%)
Food Products 14.2% 15.2% 0.4%
General Retail 17.6% 17.4% (7.0%)
Miscellaneous 0.6% 0.7% (1.2%)
Transportation 18.6% 17.3% (12.6%)
County Pool* 17.9% 18.8% (1.7%)
Total 100% 100%
General Sales Tax Revenue Economic Performance
First Quarter Payment
*Captures the majority of online transactions. Revenue is distributed to all cities within Santa Clara County based each jurisdiction’s total General Sales Tax receipts divided by the Total General Sales Tax receipts for the entire County. The City typically receives between 45%-50% of the total County Pool.
Sales Tax revenues are
continuing a downward
trend
Last two quarters of
General Sales Tax
collections were
significantly lower than
prior years:
• Apr – Jun: -9%
• Jul – Sep: -10%
7 General Fund Recommended Budget Adjustments
Recommended 2024-2025 General Fund Adjustments ($ in Millions) Source Use
Required Technical/Rebalancing Actions $1.57 $2.03
Grants/Reimbursements/Fee Activities $11.54 $11.54
Clean-Up Actions $0 ($0.46)
Total Recommended Budget Adjustments
$13.11 $13.11
8 General Fund Recommended Budget Adjustments Highlights Required Technical/Rebalancing Actions ($ in Millions)
Source Use
Other Revenue (History Park Insurance Payment) $1.57
Elections and Ballot Measures $5.3
Workers’ Compensation Claims $4.53
Electricity (Transportation Department) $0.97
Unanticipated/Emergency Maintenance (Police Power Supply) $0.61 Tow Program Contractual Services $0.57
Budget Stabilization Reserve ($8.0)
Cultural Facilities Capital Maintenance Reserve ($1.25) 9 Status of Selected Special Funds
Airport Operating Funds
• 6.2 million passengers
enplaned/deplaned through
December, down 1.4% from
last year
• Takeoffs and landings are up
less than 1% from last year
10 Status of Selected Capital Funds
0 10
20 30
40 50
60 70
($ in Millions)
Actual Annual Collections
and 2024-2025 Estimate
Building & Structure Construction Excise Construction & Conveyance Construction and
Conveyance Tax Funds:
• Increased real estate activity
is leading to higher revenue
Building and Structure /
Construction Excise Tax
Funds:
Construction Valuation
• Commercial
• Industrial
• Residential
Building & Structure
Construction Excise
11 Looking Forward: 2025-2026 Budget Process
February 2025
2025-2026 City Manager’s Budget Request and 2026-2030 Five-Year Forecast Released March 2025
City Council Review and Approval of Mayor’s March Budget Message April/May 2025
2025-2027 Proposed Biennial Capital Budget/2025-2026 Proposed Operating Budget/2026-2030 Proposed CIP/2025-2026 Fees and Charges Released City Council Budget Study Sessions, Initial Budget Public Hearing and Community Budget Meetings
June 2025
Final Budget Public Hearing
Mayor’s June Budget Message & Final Review of Budgets
2025-2026 Capital/Operating Budgets and Fees & Charges Approval 2024-2025
Mid-Year Budget Review
Jim Shannon Selena Ubando
Budget Director Financial Status Coordinator
Bonny Duong Bryce Ball
Assistant Budget Director Operating Budget Coordinator Claudia Chang William Yu
Deputy Budget Director Operating Budget Coordinator
Jennifer Tell
Capital Budget Coordinator