Proposed 2026-27
Budget & 2026-31
Capital
Improvement
Plan
June 1, 2026
1 Agenda
2 • Budget Timeline
• Proposed 2026-27 Citywide Budget
• Proposed 2026-27 General Fund Budget
• Proposed 2026-27 Capital Budget and Five-Year CIP Plan • Challenges and Financial Sustainability
Budget Timeline
December 2025 February 2026 April 2026 June 2026
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
FY 2026-27 Citywide Budget (in millions)
4 Proposed FY 2026-27
Citywide Budget
$356.5 million
General Fund
$183.8
51%
Enterprise Funds
(Sewer/Storm)
$74.9
21%
Capital Projects
Fund
$66.3
19%
Other Funds
$31.6
9%
General Fund
FY 2026-27 Proposed Budget - Revenues
5 FY 2026-27
Proposed Budget
General Fund Revenues
$173.9 million
Property Tax
49%
Sales Tax
16%
RPTT 5%
Business License 5%
Other Taxes 4%
Permits, Fines,
Fees 9%
2%
4%
3% 3%
Property Tax
Sales Tax
Property Transfer Tax (RPTT)
Business License Tax
Other Taxes
Permits, Fees, and Fines
Intergovernmental
Interest and Other
In-Lieu Charges
Transfers
General Fund
FY 2026-27 Proposed Budget - Revenues
6 Property Tax: 3.2% assessed value growth
Sales Tax: minimal growth
Real Property Transfer Tax (RPTT): baseline $9.0 million Transient Occupancy Tax (TOT): baseline $4.1 million Other Revenues: remain flat or grow modestly.
General Fund Property Tax In-Lieu of
Vehicle License Fee (VLF) Revenue Impact
7 $12
$16
$11
$14 $14
$10
$13 $13
$15
$13
$17 $17
$14
$19 $19
$-
$5
$10
$15
$20
$25Millions
Practical Scenario
VLF available VLF shortall VLF -Practical Scenario VLF entitlement General Fund
FY 2026-27 Proposed Budget - Expenditures
8 FY 2026-27
Proposed Budget
General Fund Expenditures
$190.9 million
35%
21%
13%
6%
5%
1% 11% 4% 4%Police
Fire
Parks and Recreation
Public Works
Library
Community Development
General Admin
Non-Departmental
Transfers
General Fund
FY 2026-27 Proposed Budget
9 GENERAL FUND 2025-26 Adopted
Budget
2026-27 Proposed
Budget Change in $ Change in %
REVENUES
Total Revenues 175.8 173.9 (1.9) -1.1%
EXPENDITURES
Personnel Costs $ 80.7 $ 83.7 $ 2.9 3.6% Pension Unfunded Liability $ 13.6 $ 14.3 $ 0.7 5.0% Non-Personnel Operating Expenses $ 42.3 $ 45.1 $ 2.8 6.6% SMC Fire and Legacy Costs $ 38.8 $ 40.7 $ 2.0 5.1% Operating Expenses $ 175.4 $ 183.8 $ 8.5 4.8% Transfers to CIP $ 8.9 $ 4.0 $ (5.0) -55.7% Transfers Out - Debt Service & Other $ 3.5 $ 3.1 $ (0.3) -9.9% Total Expenditures 187.7 190.9 3.2 1.7%
Surplus / (Deficit) (11.9) (17.0)
General Fund - Beginning Fund Balance 119.5 87.4
Transfer to Capital Invesment Reserve (25.0)
General Fund - Ending Fund Balance $87.6 $70.3
Sewer Enterprise Fund
FY 2026-27 Proposed Budget
10 Sewer Fund (CASH BASIS) 2024-25
Actuals
2025-26
Estimated
Actuals
2026-27
Proposed
Budget
2027-28
Projected Budget
Beginning Fund Balance $ 184,575 $ 301,950 $ 332,426 $ 339,562 Revenues
Interest Earnings $ 13,100 $ 5,003 $ 5,000 $ 5,000 Operating Revenues 86,110 89,042 92,168 94,852
Capital Contributions from Other 25,606 3,915 9,377 9,667 Total Revenues $ 124,817 $ 97,959 $ 106,545 $ 109,519 Expenses
Operating and Maintenance $ 28,369 $ 28,761 $ 40,537 $ 40,119 Debt Service 19,030 24,593 28,333 29,727
Capital Projects 39,448 29,639 39,925 44,325
Total Expenses $ 86,847 $ 82,994 $ 108,795 $ 114,170 Loan Proceeds $ 79,405 $ 15,511 $ 9,386 $ - Ending Fund Balance $ 301,950 $ 332,426 $ 339,562 $ 334,910 Values are shown in thousands.
Storm Enterprise Fund
FY 2026-27 Proposed Budget
11 Storm Enterprise 2024-25
Actuals
2025-26
Estimated
Actuals
2026-27
Proposed
Budget
2027-28
Projected Budget
Beginning Fund Balance $ - $ 3,333 $ 5,768 $ 5,558 Revenues
Charges for Services $ 3,860 $ 4,050 $ 4,071 $ 4,193 Interest Earnings 152 120 120 120
Total Revenues $ 4,012 $ 4,170 $ 4,191 $ 4,313 Expenditures
Personnel $ 587 $ 240 $ 384 $ 395 Operating 92 345 497 185
Capital - 650 145 120
Total Expenditures $ 679 $ 1,235 $ 1,026 $ 700 Transfer Out $ - $ 500 $ 3,375 $ 3,550 Ending Fund Balance $ 3,333 $ 5,768 $ 5,558 $ 5,621 Values are shown in thousands.
12 FY 2026-27 Proposed Capital Budget
and
Five-Year Capital Improvement Plan (CIP)
FY 2026-27 Proposed Capital Budget
and Five-Year CIP
The following is a breakdown of CIP expenses by program areas:
13 CAPITAL PROJECTS 2026-27 Proposed
Budget 2027-28 Plan 2028-29 Plan 2029-30 Plan 2030-31 Plan 2026-31 5-Year Total
Bikeway/Pedestrian $ 1,578,636 $ 1,560,000 $ 1,360,000 $ 1,350,000 $ 1,250,000 $ 7,098,636 Bridges 75,000 75,000 75,000 75,000 75,000 375,000
Buildings 9,520,000 6,570,000 4,170,000 4,650,000 5,150,000 30,060,000 Misc/Other 655,000 1,550,000 1,000,000 - - 3,205,000 Parks 2,100,677 2,350,000 3,175,000 3,625,000 2,225,000 13,475,677 Sanitary Sewer 39,775,000 44,275,000 47,175,000 48,055,000 48,775,000 228,055,000 Stormwater 3,200,000 3,550,000 3,550,000 3,550,000 3,550,000 17,400,000 Streets 8,967,600 8,738,000 9,208,000 9,168,000 8,988,000 45,069,600 Traffic 400,000 950,000 650,000 2,050,000 450,000 4,500,000 Grand Total $ 66,271,913 $ 69,618,000 $ 70,363,000 $ 72,523,000 $ 70,463,000 $ 349,238,913 Five Year CIP Highlights
• Wastewater Treatment Plant – New funding for solids processing facilities of the WWTP • Smooth Streets/Street Rehabilitation Programs – Commit at least $8 million annually • Storm and Flood Controls – Funding for “Very High” priority projects as identified in the Citywide Storm Drain Master Plan
• City Buildings and Facilities Improvements – Dedicated funding for King Recreation & Swim Center and New Fire Station #27
• Parks and Recreation Facilities – Lakeshore Center Feasibility Study and Recreation & Aquatics Facility Study
• Bikeway and Pedestrian Safety – Five-Year CIP allocates additional $7.1 million including Local Roadway Safety Plan Implementation funding
14 Unfunded Projects
15 Unfunded Project Totals:
• Approximately $348 million
Priority Unfunded Projects:
• Central Park (Phases 2-4): $60 million
• New Central Park Parking Garage $32 million
• MLK Recreation Center (Phase 2): $16 million
• Fire Station # 27 (Phase 2): $8.8 million • Corporation Yard: $26 million
• Bike Master Plan projects: ~$13 million
16 Challenges to the General Fund
and
Financial Sustainability Plan
Challenges to the General Fund
17 • Slow growth in revenues
• VLF shortfall remains an uncertainty.
• Rising costs of providing essential city services.
• Aged City facilities & infrastructure – Over $348 million unfunded CIP General Fund - Revenues vs. Expenditures
18 -
50 100
150
200
250
2018-19
ACTUALS
2019-20
ACTUALS
2020-21
ACTUALS
2021-22
ACTUALS
2022-23
ACTUALS
2023-24
Actuals
2024-25
Actuals
2025-26
Estimates
2026-27
Proposed
Millions
General Fund Historical Trend
Operating Expenditures Contribution to CIP Revenues
General Fund - Structural Deficit
19 (shown in millions)
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
Total Revenues 177.2 173.9 180.8 184.6 191.4 193.8 202.8 209.4 211.5 223.3 230.7
EXPENDITURES
Operating Expenses 174.0 183.8 186.2 190.6 195.4 198.9 204.2 209.2 213.3 218.3 223.5 Transfers to CIP 8.9 4.0 6.6 5.9 5.9 5.9 6.5 6.5 6.8 6.8 6.8 Transfers Out - Debt Service & Other 1.3 3.1 3.2 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3 Total Expenditures 184.3 190.9 195.9 199.7 204.5 208.1 214.0 219.0 223.4 228.4 233.5 Surplus / (Deficit) (7.1) (17.0) (15.1) (15.1) (13.2) (14.3) (11.2) (9.6) (11.9) (5.1) (2.8) General Fund - Beginning Fund
Balance 119.5 87.4 71.9 56.8 41.7 28.5 14.2 3.0 (6.6) (18.5) (23.5) Transfer to Capital Invesment
Reserve (25.0)
General Fund - Ending Fund Balance $87.4 $70.3 $56.8 $41.7 $28.5 $14.2 $3.0 ($6.6) ($18.5) ($23.5) ($26.3) Financial Sustainability Plan
Expenditure
Controls
• Freeze
positions
• Non-General
Fund Charges
• 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
Thank you
Abby Veeser
Finance Director
[email protected]
650-522-7102
21