Attachment 1
FY 2025-26 General Fund Budget Assumptions
Revenue Assumptions
Revenue Description FY 2025-26
Budget Assumption
Explanatory Comments
Secured Property Tax
4% growth
Based on January 1 valuation (Tax Lien
Date) established by the County Assessor
and adjusted to reflect the outcome of any
assessment appeals.
Property Tax
Property Tax in-lieu of
Vehicle License Fee (VLF)
4% growth; includes
$7.1 million shortfall and
receipt of $3.3 million
(50% of 2023-24
shortfall).
VLF revenues face long-term uncertainty.
VLF shortfall is projected to worsen over
the next 5-7 years as more school districts
switch from non-basic-aid to basis-aid
status. Without State backfill, the City will
face significant revenue loss.
Sales Tax Flat Based on recent economic development,
the latest sales tax data, and long-term
forecast from the City’s sales tax
consultant (HdL).
Measure S revenue assumed to follow the
same trend.
Real Property Transfer Tax
(RPTT)
$8 million baseline and
$0.6 million from
Measure CC revenue
RPTT is highly volatile and difficult to
forecast. The base tax rate is 0.5% of
property sales value. Measure CC imposes
a 1.5% rate on sales or transfer of any
property valued at $10 million or more.
Transient Occupancy Tax
(TOT)
$4 million baseline Baseline adjusted from $7 million to $4 million due to the closure of San Mateo
Marriott hotel.
Other Taxes 0 – 2% growth Other taxes include franchise tax and business tax. Franchise tax is projected to
stay flat. Business tax is expected to
remain stable at $8 million.
Charges for Services,
and Fees Revenues
2%-3% growth Based on CPI.
Attachment 1
Expenditure Assumptions
Expenditure Description Explanatory Comments
Personnel Costs Salaries & Wages:
Reflect current labor contracts, including cost of living (COLA), merit step increases, and equity adjustments.
Benefits:
Health care costs are projected to increase 6.5% for 2026*; Pension cost reflects normal cost and unfunded pension (UAL) payments based on the latest report from CalPERS;
Other benefits are projected to grow by 3% annually.
Note*: Kaiser is the benchmark for healthcare costs. Kaiser’s monthly premium effective January 1, 2025 went up 9% compared to 2024. The proposed 2025-26 budget assumes a 6.5% rate increase as of January 1, 2026, based on healthcare premium assumptions from the City's other post-employment benefits (OPEB) actuarial valuation.
Non-Personnel Operating Exp. A 3% growth rate is assumed based on CPI and utility rate projections.
General liability insurance premiums have gone up 20%-30% each year over the last five years. The 2025-26 projection is based the latest estimates from the insurance pool plan.
Indirect Costs 3-4% growth based on inflation and adjustments to internal service charges.
Transfers In (Out) •$4.25 million from General Fund to CIP; •$2 ~ $3 million from Measure S to CIP;
•$3 million to Debt Service Funds; and
•$410,000 to the Equipment Replacement Fund for building maintenance set-aside.