Proposed
2025-26 Budget
&
2025-30 Capital
Improvement Plan
June 2, 2025
1 Agenda
2 • Budget Timeline
• Proposed 2025-26 Citywide Budget
• Proposed 2025-26 General Fund Budget
• Proposed 2025-26 Capital Budget and Five-Year CIP Plan • Challenges and Financial Sustainability
Budget Timeline
Budget
Kickoff
February 18
2024-25 Mid-Year
Updates
April 7
General Fund Reserve
Policy Study Session
April 21
Budget Preview
June 2
Proposed Budget
1st Public Hearing
June 16
Budget Adoption
2nd Public Hearing
3 January 2025 February 2025 April 2025 June 2025
FY 2025-26 Citywide Budget (in millions)
4 Proposed FY 2025-26
Citywide Budget
$333.5 million
General Fund
FY 2025-26 Proposed Budget - Expenditures
5 FY 2025-26
Proposed Budget
General Fund Expenditures
$187.7 million
35%
21%
13%
5%
5%
1%
10%
3% 7%
Police
Fire
Recreation and Parks
Library
Public Works
Community Dev
General Admin
Non-Departmental
Transfers Out
General Fund
FY 2025-26 Proposed Budget - Revenues
6 FY 2025-26
Proposed Budget
General Fund Revenues
$172.5 million
Property Tax
50%
Sales Tax
16%
Property Transfer Tax
5%
Business Tax
5%
Other Taxes
4%
Fees and Permits
9%
2%
4% 3% 2%
Property Tax
Sales Tax
Property Transfer Tax
Business Tax
Other Taxes
Fees and Permits
Intergovernmental
Interest and other
In-Lieu Charges
Transfers
General Fund
FY 2025-26 Proposed Budget - Revenues
7 Property Tax: 4% assessed value growth
Sales Tax: remain flat
Real Property Transfer Tax (RPTT): baseline $8.6 million Transient Occupancy Tax (TOT): baseline $4.0 million Other Revenues: remain flat or grow moderately.
General Fund Property Tax In-Lieu of
Vehicle License Fee (VLF) Revenue Impact
8 General Fund
FY 2025-26 Proposed Budget
9 General Fund (in millions)
2024-25
Adopted
Budget
2025-26
Proposed
Budget
Change
in $
Change
in %
Total Revenues A 169.9$ 172.5$ 2.6$ 1.5% Expenditures:
Personnel Costs 79.7 80.7 1.0 1.3% Pension Unfunded Liability (UAL) 13.0 13.6 0.6 4.6% Other Operating Expenditures 40.1 42.3 2.2 5.5% SMC Fire and Legacy Costs 36.1 38.8 2.7 7.5% Total Operating Expenditures B 168.9 175.4 6.5 3.8% Transfer for Debt Service C 3.0 3.0 - 0.0% Transfer to Other Funds D 0.4 0.4 - 0.0% Surplus / (Deficit) before Contribution to CIP E = A - (B+C+D) (2.4) (6.3) (3.9) Less: Transfer to Capital Projects Fund F 8.1 8.9 0.8 9.9% Surplus / (Deficit) G = E - F (10.5)$ (15.2)$ (4.7)$ 10 FY 2025-26 Proposed Capital Budget
and
Five-Year Capital Improvement Plan (CIP)
FY 2025-26 Proposed Capital Budget
and Five-Year CIP
The following is a breakdown of CIP expenses by program areas:
11 CAPITAL PROJECTS
2025-26
PROPOSED
BUDGET
2026-27
PLAN
2027-28
PLAN
2028-29
PLAN
2029-30
PLAN
5-Year
TOTAL
Bikeway/Pedestrian $ 4,098,820 $ 5,563,636 $ 1,575,000 $ 865,000 $ 865,000 $ 12,967,456 Bridges 75,000 75,000 75,000 - - 225,000 Facilities 5,878,742 4,310,000 3,360,000 4,010,000 6,575,000 24,133,742 Parks 6,391,822 2,695,000 6,345,000 1,845,000 2,625,000 19,901,822 Sanitary Sewer and
Wastewater
Management
29,089,000 28,996,805 37,544,930 25,384,035 31,311,652 152,326,422 Stormwater 250,000 1,050,000 700,000 700,000 700,000 3,400,000 Street Lights 700,000 1,000,000 - - - 1,700,000 Streets 9,240,473 8,818,000 9,003,000 8,203,000 8,203,000 43,467,473 Traffic 1,325,000 550,000 350,000 1,050,000 350,000 3,625,000 Other City Capital
Projects 4,492,000 1,002,000 927,000 927,000 927,000 8,275,000 Total $ 61,540,856 $ 54,060,441 $ 59,879,930 $ 42,984,035 $ 51,556,652 $270,021,914
Five-Year CIP Highlights
• Wastewater Treatment Plant Expansion – complete in FY 2025/26 • Smooth Streets Program – continue to commit $8 million annually • Storm and Flood Controls – Citywide Stormwater Master Plan will be complete by the end of 2025.
• City Buildings and Facilities Improvements, including Marina Library Project (start construction in summer 2025)
• Parks and Recreation Facilities Renovation and Rehabilitation Projects – nearly $20 million in the Five-Year CIP
• Bikeway and Pedestrian Safety – Five-Year CIP allocates $13 million. 12 Unfunded Projects
13 Unfunded Project Totals:
• Approximately $352 million
Priority Unfunded Projects:
• Central Park (Phases 2-4): $50 million
• MLK Recreation Center: $20 million
• Fire Station # 27: $11 million
• Corporation Yard: $26 million
• 2nd and El Camino Parking Garage: $20 million
• Bike Master Plan projects: $13 million
14 Challenges to the General Fund
and
Financial Sustainability Plan
Challenges to the General Fund
15 • Revenues remain flat.
• VLF shortfall remains an uncertainty.
• Rising costs of providing essential city services.
• Aged City facilities & infrastructure – Over $352 million unfunded CIP General Fund - Revenues vs. Expenditures
16 General Fund - Structure Deficit
17 10-YEAR FORECAST
GENERAL FUND 2024-25
Estimates 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31 2031-32 2032-33 2033-34 2034-35
REVENUES
Total Revenues 173.9 172.5 180.5 182.8 190.0 195.0 195.1 203.1 211.7 216.6 224.0
EXPENDITURES
Operating Expenses 166.2 171.3 178.1 182.9 189.9 195.5 200.3 204.6 209.7 213.8 218.8 Transfers to CIP 8.1 8.9 6.4 6.4 6.4 6.5 6.5 6.5 6.5 6.8 6.8 Transfers Out - Debt Service & Other 6.0 3.5 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 Total Expenditures 180.3 183.7 187.8 192.7 199.7 205.3 210.1 214.5 219.6 223.9 229.0 Surplus / (Deficit) (6.4) (11.2) (7.3) (9.9) (9.7) (10.4) (15.0) (11.4) (7.8) (7.3) (4.9) General Fund - Beginning Fund Balance 117.9 111.5 75.3 68.0 58.1 48.4 38.1 23.0 11.6 3.8 (3.6) Transfer to Capital Invesment Reserve (25.0)
General Fund - Ending Fund Balance $111.5 $75.3 $68.0 $58.1 $48.4 $38.1 $23.0 $11.6 $3.8 ($3.6) ($8.5) (shown in millions)
Financial Sustainability Plan
Strengthen Financial Policies
• Update the General Fund Reserve Policy to align with long-term fiscal sustainability goals.
Expenditure Controls
• Reduce discretionary spending where feasible.
• Review and evaluate the 2% and 4% budget reduction proposals (belt-tightening) • Carefully assess whether to fill vacant, non-essential positions.
Revenue Enhancement
• Increase cost recovery for the General Fund.
• Prioritize the use of special and restricted funds before using General Fund dollars. • Pursue competitive grant funding opportunities.
• Support economic development initiatives that strengthen the local tax base. • Consider a potential revenue measure for the November 2026 ballot. 18 Thank you
Karen Huang
Finance Director
[email protected]
650-522-7110
19