Agenda packet, regular meeting — San Mateo City Council, April 20, 2026 (part 3 of 3)

FY 2026-27 General Fund Budget Assumptions
Revenue Assumptions
Revenue Description FY 2026-27
Budget Assumption
Explanatory Comments
Secured Property Tax

3.17% 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)

3.17% growth; includes
$7.1 million shortfall and
no receipt of FY 24-25
$6.9 million shortfall.

VLF revenues face short and 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.

Given the current state of VLF, receipt of
$0 in shortfall is budgeted in FY 26-27.

Sales Tax 2% growth 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)
$8.4 million baseline and
$.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)
3% growth Anticipated some growth from new
baseline of $4 million.

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
increase with minor growth to $8.3
million.

Charges for Services,
and Fees Revenues
2%-3% growth Based on CPI.
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Attachment 1

Page 2 of 2 ends

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 6.0% for 2027; Pension costs reflects normal cost and unfunded actuarial pension (UAL) payments based on the latest report from CalPERS; Other benefits are projected to grow by 3% annually.

Non-Personnel Operating Exp. A 3% growth rate is assumed based on CPI for most expenses except for utilities which have increases between 15%-18%.

General liability insurance premiums were increased by over 20% based on the latest estimates from the insurance pool plan.

Indirect Costs 3% growth based on inflation and adjustments to internal service charges.

Transfers In (Out) • $2.25 million from General Fund to CIP; • $.7 million from Measure S to CIP;
• 1.25 million from Measure CC to CIP;
• $3 million to Debt Service Funds; and
• $410,000 to the Equipment Replacement Fund for building maintenance set-aside.
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City of San Mateo
Attachment 2
General Fund Ten-Year Forecast Scenario A
Note: Directional estimates are provided solely to facilitate budget planning discussions GENERAL FUND 2025-26
Est. 2026-27 2027-28 2028-29 2029-30 2030-31 2031-32 2032-33 2033-34 2034-35 2035-36

REVENUES
Property Tax* (no VLF) $73.0 $74.9 $77.9 $81.0 $84.1 $87.4 $91.6 $96.1 $100.8 $105.7 $110.9 VLF Property Tax $14.3 $10.1 $14.9 $15.5 $18.8 $17.0 $20.7 $22.1 $17.5 $23.4 $24.8 Sales Tax (including Measure S) 27.4 28.0 28.5 29.1 29.6 30.2 30.8 31.4 32.1 32.7 33.4 Property Transfer Tax 10.9 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 TOT 4.3 4.1 4.2 4.3 4.4 4.5 4.5 4.6 4.7 4.8 4.9
Other Taxes 12 12 12 12 12 13 13 13 13 14 14
Charges for Services, Fees and Other 35.4 36.1 36.3 36.4 36.8 37.1 37.4 38.1 38.4 39.3 40.1 Total Revenues 176.8 174.0 182.8 187.5 195.2 197.8 207.0 214.5 215.9 228.5 236.9

REVENUES
Property Tax* (no VLF) $73.0 $74.9 $77.9 $81.0 $84.1 $87.4 $91.6 $96.1 $100.8 $105.7 $110.9 VLF Property Tax $14.3 $10.1 $12.6 $13.0 $15.4 $13.4 $17.0 $17.4 $13.6 $18.7 $19.2 Sales Tax (including Measure S) 27.4 28.0 28.5 29.1 29.6 30.2 30.8 31.4 32.1 32.7 33.4 Property Transfer Tax 10.9 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 TOT 4.3 4.1 4.2 4.3 4.4 4.5 4.5 4.6 4.7 4.8 4.9
Other Taxes 12 12 12 12 12 13 13 13 13 14 14
Charges for Services, Fees and Other 35.4 36.1 36.3 36.4 36.8 37.1 37.4 38.1 38.4 39.3 40.1 Total Revenues 176.8 174.0 180.5 185.0 191.8 194.3 203.3 209.9 212.0 223.8 231.2

REVENUES
Property Tax* (no VLF) $73.0 $74.9 $77.9 $81.0 $84.1 $87.4 $91.6 $96.1 $100.8 $105.7 $110.9 VLF Property Tax $14.3 $10.1 $7.8 $8.1 $8.4 $6.2 $9.5 $7.9 $5.8 $9.2 $7.6 Sales Tax (including Measure S) 27.4 28.0 28.5 29.1 29.6 30.2 30.8 31.4 32.1 32.7 33.4 Property Transfer Tax 10.9 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 TOT 4.3 4.1 4.2 4.3 4.4 4.5 4.5 4.6 4.7 4.8 4.9
Other Taxes 12 12 12 12 12 13 13 13 13 14 14
Charges for Services, Fees and Other 35.4 36.1 36.3 36.4 36.8 37.1 37.4 38.1 38.4 39.3 40.1 Total Revenues 176.8 174.0 175.7 180.1 184.8 187.1 195.8 200.3 204.2 214.3 219.7

REVENUES
Property Tax* (no VLF) $73.0 $74.9 $77.9 $81.0 $84.1 $87.4 $91.6 $96.1 $100.8 $105.7 $110.9 VLF Property Tax $14.3 $10.1 $7.8 $8.1 $8.4 $6.2 $9.5 $7.9 $5.8 $9.2 $7.6 Sales Tax (including Measure S) 27.4 28.0 28.5 29.1 29.6 30.2 30.8 31.4 32.1 32.7 33.4 Property Transfer Tax 10.9 9.0 9.0 4.5 - - - - - - -
TOT 4.3 4.1 4.2 4.3 4.4 4.5 4.5 4.6 4.7 4.8 4.9
Other Taxes 12 12 12 12 12 13 13 13 13 14 14
Charges for Services, Fees and Other 35.4 36.1 36.3 36.4 36.8 37.1 37.4 38.1 38.4 39.3 40.1 Total Revenues 176.8 174.0 175.7 175.6 175.8 178.1 186.8 191.3 195.2 205.3 210.7

EXPENDITURES
Personnel Costs 78.7 82.3 84.4 86.9 89.5 92.2 95.0 97.8 100.7 103.8 106.9 Pension Unfunded Liability 13.4 14.7 14.9 16.2 16.4 16.6 16.2 16.0 15.2 14.8 14.8 Non-Personnel Operating Expenses 42.6 44.7 41.5 42.6 43.7 44.4 45.5 46.8 48.0 49.3 50.6 SMC Fire and Legacy Costs 38.8 40.7 42.5 42.3 44.2 44.0 45.8 46.8 47.5 48.5 49.7 Debt Service and Other Transfer Out 3.5 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 Operating Expenses 173.4 182.4 183.2 188.1 193.8 197.2 202.4 207.4 211.4 216.4 222.0 Transfers to CIP 8.9 4.2 6.4 6.4 6.5 6.5 6.5 6.5 6.8 6.8 6.8 Transfers Out - Debt Service & Other 1.3 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 Total Expenditures 183.7 190.0 193.0 197.8 203.7 207.1 212.3 217.3 221.6 226.5 232.2 Surplus / (Deficit) (6.9) (16.0) (17.3) (22.2) (27.8) (29.0) (25.5) (25.9) (26.4) (21.2) (21.5) General Fund - Beginning Fund Balance 119.5 87.7 71.7 54.4 32.2 4.4 (24.6) (50.2) (76.1) (102.5) (123.7) Transfer to Capital Invesment Reserve (25.0)
General Fund - Ending Fund Balance $87.7 $71.7 $54.4 $32.2 $4.4 ($24.6) ($50.2) ($76.1) ($102.5) ($123.7) ($145.2) Assumptions:
(1) Property assessed values grow 4% annually in first 5 years and 5% in second five years. (2) Property tax in-lieu of VLF (VLF): City will receive 0% of VLF shortfall revenue. (3) Real Property Transfer Tax: City receives 0% of RPTT starting two years after potential ballot measure approved. 572 of 605
FY 2026-27
General Fund
Operating Budget
Preview
April 20, 2026
1 573 of 605
Budget Timeline
December 2025 February 2026 April 2025 June 2025
Budget
Kickoff
February 23
FY 2025-26 Mid-Year
Budget Updates
April 20
2026-27
Budget Preview
GF and CIP
June 1
Proposed Budget
Public Hearing
June 15
Budget Adoption
Public Hearing
Budget Process
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FY 2026-27 Budget Goals
• Maintain baseline operating budget
• Integrate Financial Sustainability Plan activities
• Align with City Council strategic plan and priority
initiatives
• Support day-to-day operational needs
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Economic Outlook
• Economic uncertainty continues
• Inflation remains a concern
• Federal Reserve back in “wait-and-see” mode
• Overall economic growth has slowed
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Legislative Environment
• Potential Limits on Federal Funding
• State threat to Property Tax in-Lieu of Vehicle License Fee (VLF)
• Real Property Transfer Tax (RPTT) Statewide Proposed Ballot Measure
577 of 605
Budget Strategies
Maintain core budget techniques for FY 26-27:
• Use conservative approach
• Reduce VLF Funding
• Return to the fundamentals
• Focus on long-term stability, not short-term reactions 578 of 605
General Fund Revenue Base
Tax Revenues
79%
Other Revenues
21%
$174.0 million
Top-3 tax revenues account for 90%
of total tax revenues:
• Property tax
• Sales tax
• Real property transfer tax (RPTT)
$137.9 million
Property Tax
Sales Tax
RPTT
Business Tax
Other Taxes
579 of 605
General Fund Revenue Base
Not all economic data affect us the same way:
• Housing Market Trends: Directly affect two of our largest revenue sources, Property Tax and Real Property Transfer Tax (RPTT). • Interest Rates: High borrowing costs may affect housing market. • Inflation: Persistent inflation drives up costs across the board—from construction materials and vehicles to staffing and service contracts. • Economic Growth: Reduction in growth expectations could impact sales tax revenue.
580 of 605
General Fund Revenue Base
Housing Market
Local housing market is
relatively stable:
• Market activity slowed in
2022/2023 and has been
increasing in 2024/2025
• Home prices remain stable, no
sign of sharp declines.
• Demand is still strong -
averaged days on market @
15~20 days
Data Source: San Mateo County Association of Realtors
$-
$0.4
$0.8
$1.2
$1.6
$2.0
$2.4
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
0 200
400
600
800
1000
Millions
City of San Mateo
Single Family Residential
# Sold Averaged Days on Market Averaged Median Sales Price 581 of 605
General Fund Revenue Base
Sales Tax Trend
Diversified sales tax base:
• Not heavily reliant on auto
dealers or retail hubs
• Diverse set of business
types.
• Recover more quickly from
economic downturns

18.4 18.6 18.8 19.9 17.9 18.8

22.2 22.5 21.0 20.4 20.6 21.0

5.4 5.1 5.1

6.1 5.4 5.7

6.9 7.1

6.8 6.8 6.8 6.9
$-
$5
$10
$15
$20
$25
$30

SALES TAX (IN MILLIONS)
Local 1% Sales Tax (including Prop 172) Measure S
582 of 605
FY 2026-27
General Fund Operating Budget - Preview
583 of 605
General Fund Challenges
12 • Costs of providing essential city services
• Fund long-term, legally-obligated
liabilities
• Maintain and repair city facilities
• Provide for infrastructure needs
Costs to
Provide City
Services
Long-Term
Pension
Obligations
City Facilities
&
Infrastructure
Revenues
584 of 605
General Fund Challenges
VLF
Shortfall
Potential of no
backfill from
State
Threat to
RPTT
Potential to
eliminate 3rd
largest tax
revenue
Two Major Uncertainties
13 585 of 605
FY 2026-27 Budget Preview
General Fund Revenue Assumptions
• Property Tax: 3.17% growth
• VLF shortfall: assume receipt of 0% of FY 24-25 VLF shortfall • Sales Tax: flat @ $28.0 million
• Real Property Transfer Tax (RPTT): $9.0 million total • $8.4 million baseline
• $0.6 million from Measure CC
• Business Tax: $8.3 million baseline
• Transient Occupancy Tax (TOT) – $4.1 million baseline 586 of 605
FY 2026-27 Budget Preview
General Fund Revenues
587 of 605
FY 2026-27 Budget Preview
General Fund Expenditure Assumptions
• Personnel Costs:
• Salaries and Wages: per labor contracts
• Benefits: rising health care and pension costs
• Non-Personnel Operating Costs:
• Supplies, services, maintenance costs: up 3%
• Insurance Premium: up about $1 million (20%)
• Utilities (PG&E and water): up 15-18%
• Transfer Outs: total $7.6 million, including $4.2 million to CIP Projects; $3.0 million to Debt Service Funds; and $410K to the Equipment Replacement Fund for building maintenance set-aside.
588 of 605
FY 2026-27 Budget Preview
General Fund Expense Assumptions
General Fund Expenditures
(in millions)
2023-24
Actuals
2024-25
Actuals
2025-26
Adopted
Budget
2026-27
Budget
Preview
Change in
$
Change
in %
Personnel Costs:

Salaries and Wages $ 52.8 $ 56.1 $ 56.8 $ 59.7 $ 2.9 5.1% Benefits $ 21.0 $ 23.5 $ 23.8 $ 22.6 (1.2) -5.0%
Pension Unfunded Liability (UAL) $ 11.4 $ 13.0 $ 13.6 $ 14.7 1.1 8.1% Non-Personnel Operating Expenses $ 37.0 $ 40.1 $ 42.3 $ 44.7 2.4 5.7% SMC Fire and Legacy Costs $ 34.2 $ 36.1 $ 38.8 $ 40.7 1.9 4.9% Transfers Out $ 15.7 $ 11.6 $ 12.4 $ 7.6 (4.8) -38.7%
Total General Fund Expenditures $ 172.2 $ 180.4 $ 187.7 $ 190.0 $ 2.3 1.2% 589 of 605
18 0.0

1.0 2.0

3.0 4.0

5.0 6.0

7.0 8.0
2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 Est
2026-27
Forecast
2027-28
Forecast
2028-29
Forecast
2029-30
Forecast
2030-31
Forecast
Pandemic / Post-Pandemic Forecast: Stable with 1-2% moderate growth Measure S Revenue Trend
590 of 605
How we use the Measure S fund?
Police (Total FTE 4.0)

1.0 Traffic Sergeant

0.5/0.5 Traffic Officers

2.0 Police Officers (DTU)
Total: $1.55 million
Parks & Rec (Total FTE 1.16)

0.16 Community Service Supervisor

1.0 Community Service Coordinator
Operating Expenses to support
• Get Around! Senior Ride Program
• Mobile Recreation program
Total: $407,000 Library (Total FTE .75)

0.75 Library Assistant –to support
circulation
Operating Expense to support restoring
service hours at Main Library and the two
branches.

Total: $202,000
Debt Service Cost
2020A Rev. Bonds (Street & Flood Control)
Total: $2.63 million / year
19 591 of 605
Measure S Five-Year Forecast (in millions)
20 FY 2025-26
Adopted Budget
FY 2026-27
Proposed
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Revenues 7.1 7.0 7.2 7.3 7.5 7.6
Expenditures 2.2 2.2 2.3 2.4 2.5 2.5
Transfers Out:

Transfers Out to General Fund 0.3 0.3 0.3 0.3 0.3 0.3
Transfers Out to Debt Service Fund 2.7 2.7 2.7 2.7 2.7 2.7 Transfers Out to Capital Projects Fund 3.0 - - - - -
Total Transfers Out 6.0 3.0 3.0 3.0 3.0 3.0
Available Capacity 0.7 2.4 1.7 1.7 1.7
Net Change in Fund Balance (1.1) 1.1 (0.5) 0.3 0.3 0.4
Unrestricted Fund Balance, beginning 0.8 (0.3) 0.8 0.3 0.5 0.9 Unrestricted Fund Balance, end of year (0.3) 0.8 0.3 0.5 0.9 1.3 592 of 605
FY 2026-27 General Fund Budget Preview
General Fund
(in millions)
2025-26
Adopted
Budget
2025-26 MidYear
Projection
2026-27
Budget
Preview
Change in
$
Change in
%
Total Revenues $ 175.8 $ 176.8 $ 174.0 $ (2.8) -1.6%
Total Expenditures 187.7 183.7 190.0 $ 2.3 1.3%
TOTAL $ (12.0) $ (6.9) $ (16.0) $ (0.5)
593 of 605
General Fund Balance

GENERAL FUND
2023-24
Actuals
2024-25
Actuals
2025-26 MidYear
Projection
2026-27
Budget
Preview
Beginning Fund Balance $ 117.9 $ 117.9 $ 119.5 $ 87.6
Total Revenues 172.2 179.3 176.8 174.0
Total Expenditures 172.2 177.7 183.7 190.0
Net - 1.6 (6.9) (16.0)
Transfer to Capital Investment Reserve (25.0)
Ending Fund Balance $ 117.9 $ 119.5 $ 87.6 $ 71.6
594 of 605
General Fund Balance

GENERAL FUND
2025-26 MidYear
Projection
2026-27
Budget
Preview
Contingency Reserve (15% of GF Expenses) $ 26.3 $ 28.5
Housing Set-Aside Reserve 6.5 6.5
CIP Carryover 9.2 8.2
Budget Stabilization Reserve (15% of GF Revenues) 26.4 18.4 Pension Stabilization Reserve 10.0 10.0
Unassigned Fund Balance 9.2 -
Capital Investment Reserve 25.0 25.0
Ending Fund Balance $ 112.6 $ 96.6
595 of 605
General Fund 10-Year Forecast
Four Ten-Year Forecast Scenarios
• Optimistic
• Practical
• Grave
• Dire
24 596 of 605
General Fund 10-Year Forecast
Expenditure Assumptions:
• Personnel Costs
• Salaries and Wages – increase with general alignment of historical CPI • Medical Costs – an annual growth rate of 6%
• Pension Costs – based on CalPERS valuation data
• Non-Personnel Costs – 4% compounded annual growth rate was used for FY 2026-27 and 2027-28, then 3% for the out years in the forecast • Transfer Out – $7.5 million of baseline annual contribution to CIP except in FY 26-27, and required debt service
25 597 of 605
General Fund 10-Year Forecast
26 Revenue Assumptions:
• Property Tax: Secured property tax growth of 3.17% in FY 26-27 and 4% going forward
• Sales Tax: Relatively flat with moderate 1-2% increase • TOT: Maintain new baseline at $4.1 million with slight 2% growth • Property Transfer Tax: New baseline of $9 million (includes Measure CC) • Fees and Other Revenues: Moderate growth
598 of 605
General Fund 10-Year Forecast
27 Revenue Assumptions: Uncertainty in some property taxes drives four scenarios Property
Tax:

Optimistic Scenario Practical Scenario Grave Scenario Dire Scenario VLF
Shortfalls
No State backfill in
FY 26-27
100% backfill in
future
(2-year gap)
No State backfill in
FY 26-27
67% backfill in
future
(2-year gap)
No State
backfill in
future
No State
backfill in
future
RPTT No change No change No change No RPTT
599 of 605
General Fund 10-Year Forecast
Optimistic Scenario
28 • No VLF Shortfall
in FY 26-27
• 100% VLF
Shortfall into FY
2035-36
• Three more
schools move to
basic aid status
600 of 605
General Fund 10-Year Forecast
Practical Scenario
29 • No VLF Shortfall
in FY 26-27
• 67% VLF
Shortfall into FY
2035-36
• Three more
schools move to
basic aid status
601 of 605
General Fund 10-Year Forecast
Grave Scenario
30 • No VLF Shortfall
in FY 26-27
• 0% VLF Shortfall
into FY 2035-36
• Three more
schools move to
basic aid status
602 of 605
General Fund 10-Year Forecast
Dire Scenario
31 • No VLF Shortfall
in FY 26-27
• 0% VLF Shortfall
into FY 2035-36
• Three more
schools move to
basic aid status
• No RPTT two
years following
potential ballot
measure
603 of 605
FY 2026-27 General Fund Budget Preview
Financial Sustainability Activities
Expenditure
Control
• Frozen
positions
• Non-General
Fund Charges
• Benefit Savings
• Operating
Budget Savings
Revenue
Enhancements
• Sales Tax
Measure
• Revenue
Agreements
Cost Recovery &
Cost Allocation
• Cost Recovery
• Citywide
Updated Cost
Allocation
Grant
Opportunities
• Grants
Coordination &
Acquisition
Economic
Development
• Adopted Work
Plan Activities
$3.2 Million
Est. Savings
604 of 605
Thank you
Abby Veeser
Finance Director
[email protected]
650-522-7102
33 605 of 605

San Mateo City CouncilApril 20, 2026

San Mateo City Council
April 20, 2026