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City Council MeetingItem #1: Review of the Proposed FY 2026/27 & FY 2027/28 Biennial Capital Improvement Program Budget and FY 2026/27 Operating Budget ChangesMay 5, 2026 •Budget Calendar•Proposed Budget Overview•Economic Conditions/Ten-Year Financial Forecast Update•Capital Budget for FY 2026/27 and FY 2027/28 and Five-Year CIP–Measure I Bond Funding–General Fund Capital Projects Reserve –Summary by Capital Theme•Operating Budget Amendments to FY 2026/27•Questions and AnswersAgenda2 1 2
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Budget Calendar3
4Budget Calendar •Oct – Nov 2025 – Departments submit CIP Project requests; turn over Operating Budget and begin work on proposed Municipal Fee Schedule•November – March – Review of CIP and Operating Budget requests; prepare Ten-Year General Fund Forecast, complete review of Proposed Municipal Fee Schedule•April 14 – City Council Study Session on the Proposed Municipal Fee Schedule•April 21 – Public Hearing and Adoption of the Proposed Municipal Fee Schedule•April 28 – Proposed Capital Budget Released•May 5 – City Council Study Session on Capital Budget and Operating Budget Changes•May 19 – Second City Council Study Session on Capital Budget and Operating Budget Changes •June 9– City Council Adoption of Capital Budget, Gann limit, Operating Budget Changes and CIP Carryovers 3 4
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Proposed Budget Overview5
6Overview (Biennial Budget Cycle)June 2026Dec 2026June 2027Dec 2027June 2028Capital Budget•Adopt Biennial Budget•Amend Budget (2ndYear)Operating BudgetBudget Monitoring/Year-End Report• Adopt Biennial Budget• Amend Budget (2ndYear)• Adopt Biennial Budget• Amend Budget (2ndYear)•Close and reconcile FY 2025/26•Close and reconcile FY 2026/27 5 6
4 Proposed Budget Overview7Measure IGO Bond ImplementationCapital Project DeliveryCity Services and Organizational EffectivenessFiscal Sustainability and Planning for the Future•Measure I: $400 M GO Bonds; Tranche 1 projects total $96.6M of which $63.2M is reflected in CIP•Dedicated staff focused on project delivery•Tranche 2 and 3 to be reflected in future CIPs•Council Priorities•Position changes to address organizational reviews/other needs•More effective service delivery•Additional adjustments expected in next Operating Budget•Significant funding for utility infrastructure•Dedicated funds for transportation projects•Capital Projects Reserve to support high priority projects •Improved General Fund Forecast addresses structural deficit•New Infrastructure Replacement Capital Fund •Reserve to restore previously frozen positions •$593 M Biennial Budget; $1.11 B Five-Year CIP•Significant improvement since the last CIP–Measure I projects total $63.2 M in this CIP–Well-funded for the utilities (84% of the CIP)–Projects with dedicated funding (e.g., transportation),–New Infrastructure Replacement Capital Fund totaling $56.1 M over CIP (set at 3% of General Fund expenditures annually)•Measure I provides $400 M to address over $1 B of unmet needs; this budget includes funding for the first tranche of projects•General Fund Capital Projects Reserve: recommended use of $12.9 M in this CIP and $3.0 M set aside in last CIPCapital Budget Overview8 7 8
5 •Updates to the FY 2026/27 Adopted Operating Budget–Updates to all Source and Use Statements–Revisions to revenue estimates –Revisions to labor, non-personnel, resource/production costs–Revisions to budgeted positions•Improved General Fund fiscal outlook–Forecast shows significant improvement due to stronger revenue growth–Addresses the structural deficit–Funds $2 million for City Council priorities –Funding for ongoing capital replacement/maintenance –Reserve to restore frozen positions–Proposed positions to address org. reviews/other needsOperating Budget Overview9 Total City Budget10* Does not include the Stadium Authority Budget** Adjusts for transfers, contributions and reserves to avoid double counting of the same funds*** FY 2026/27 Proposed Budget does not yet include carry forward of capital projects from FY 2025/26 City of Santa Clara Budget*FY 2026/27Proposed BudgetFY 2025/26Adopted BudgetFund Type$365,418,808$335,374,572 General Fund 43,199,21352,037,355Special Revenue Funds 1,228,839,4451,012,631,859Enterprise Funds49,000,12451,672,525Internal Service Funds64,479,696273,236,049Debt/Other*(436,802,534)(529,425,156)Less (Transfers, Contributions, and Reserves)**$1,314,134,752$1,195,527,204 Subtotal Operating Budget362,495,965777,527,724Capital Funds***(2,154,000)(1,454,000)Less (Transfers, Contributions, and Reserves)**$360,341,965$776,073,724 Subtotal Capital Budget$1,674,476,717$1,971,600,928Total Budget• Funds appropriated annually• Year 1 of the Biennial Capital Budget• Revisions to Year 2 of the FY 2025/26 and FY 2026/27 Operating Budget adopted in June 20259 10 6
Proposed Revisions to Budget Policies and Principles•Budget and Fiscal Policies–Definebiennial budget process–ReviseCapital Projects Reserve to clarify its use in conjunction with the new Infrastructure Replacement Capital Fund•Budget Principles–Addthe focus on fiscal sustainability efforts to better position the City long-term–Modifythe language regarding focus of future revenue sources for specific targeted needs–Modifythe language regarding employee participation to incorporate the annual review of the budget with employeesProposed Budget Overview11 1212
Economic Conditions/Ten-Year Financial Forecast Update12 11 12
7 1313Economic ConditionsUCLA March 2026 Forecast - Quarterly Real GDP Growth, Seasonally Adjusted Annual Rates •Spring UCLA Anderson Forecast: pointed to strength in the economy with projected growth approaching 3% in 2026•Changing Conditions: Middle East conflicts have resulted in greater economic uncertainty (gas prices, inflation, consumer spending, GDP growth, employment, financial market volatility)•City of Santa Clara: record breaking sales tax growth, strong property tax receipts, improved TOT collections and SVP growth; 2025 median price of a single-family home was $2.01 M, up from $1.95 M in 2024 General Fund Ten-Year Forecast14FY 2027-2036 General Fund Ten-Year Financial Forecast$ in millions2035/362034/352033/342032/332031/322030/312029/302028/292027/282026/27$523.9 $503.2 $484.2 $466.1 $449.1 $433.4 $415.7 $401.5 $385.4 $377.2 Funding Sources$515.0 $497.6 $479.2 $464.6 $448.8 $432.7 $416.8 $403.4 $384.8 $377.2 Projected Expenditures$8.9 $5.6 $5.0 $1.5 $0.3 $0.7 ($1.1)($1.9)$0.6 $0.0 (Shortfall)/ Surplus• Improved financial position due to stronger revenue growth; factors in fund balance assumption• Includes funding for newInfrastructure Replacement Fund, Frozen Position Restoration Reserve, contributions to the Budget Stabilization Reserve (25% level), Pension Stabilization Reserve, GO Bond implementation, staffing changes in Proposed Budget 13 14
8 1510-Year General Fund Forecast Forecast Assumptions•Compares ongoing revenues and expenditures–Updates to each revenue categories based on latest information–Incorporates latest MOUs, retirement rates–Updates to non-personnel costs–Updates to interfund services•Does not Include:–Funds to fully address infrastructure needs–Costs to address growth in the City –Costs to add new/enhanced services–Costs to provide permanent funding for pilot programsRisk Factors•Uncertainty regarding results of tariffs and other federal actions•Economic downturn•CalPERS actuarial changes or reform actions•Unanticipated capital/ infrastructure costs 10-Year General Fund ForecastMajor Changes from Last Forecast16Additional Sources ($34.7 M)• Beginning Fund Balance ($13.9 M)• Sales Tax ($8.0 M)• SVP Transfer ($3.8 M)• Interest Income ($3.0 M)• Transient Occupancy Tax ($2.1 M)• Property Tax ($1.8 M)• Other Changes ($2.1 M)FY 2026/27 (April 2025)$0.1 M ShortfallAdditional Uses ($34.6 M)• Salaries and Benefits ($3.8 M)• Non-Personnel ($2.0 M)• Interfund Svcs. ($2.2 M)• Capital Replacement Fund ($10.4 M)• Transfer to Other Funds ($4.3 M)• Reserves ($11.9 M)FY 2026/27 (April 2026)Balanced Budget15 16 9
17$226.5 M or 60% of General Fund RevenueGeneral Fund Ten-Year Forecast2026/27 General Fund Sources = $377.2 M Property Tax, $107.8 M, 28.6%Sales Tax, $75.8 M, 20.1%SVP Transfer, $42.9 M, 11.4%Transient Occupancy Tax, $30.7 M, 8.1%Other Services Fees, $49.5 M, 13.1%Beginning Fund Balance, $13.9M, 3.7%All Other Sources, $56.6 M, 15.0% 18General Fund Ten-Year ForecastTen-Year Summary of Key Revenues% Change from FY 2017/18FY 2026/27 ProposedFY 2025/26 Budget FY 2024/25 ActualFY 2023/24 ActualFY 2022/23 ActualFY 2021/22 ActualFY 2020/21 ActualFY 2019/20 Actual FY 2018/19 ActualFY 2017/18 Actual96%$107.8 M$101.2 M$95.9 M$90.7 M$84.6 M$74.6 M$68.8 M$65.5 M$58.4 M$55.0 MProperty Tax36%$75.9 M$65.9 M$79.4 M$61.8 M$64.5 M$56.9 M$56.2 M$55.3 M$58.5 M$55.9 MSales Tax 43%$30.7 M$27.5 M$27.0 M$22.3 M$19.0 M$10.8 M$2.9 M$16.0 M$22.5 M$21.4 MTransient Occupancy Tax N/A$6.2 M$6.2 M$5.8 M$4.8 M1$0.8 M$0.8 M$0.8 M$0.8 M$0.9 M$0.9 MBusiness Tax95%$42.9 M$37.3 M$38.9 M$33.1 M$29.6 M$27.3 M$24.5 M$22.7 M$21.3 M$22.0 MSVPTransfer1Reflects a new business tax structure 17 18
10 19General Fund Ten-Year Forecast 2026/27 General Fund Expenditures = $365.4 M*$257.2 M or 70% of General Fund Expenditures Salaries, $158.3 M, 43.3%Benefits, $98.9 M, 27.1%Non-Personnel/Transfers, $108.2 M, 29.6%* Excludes net contributions to reserves 20FY 2026/27 Proposed Budget2026/27 General Fund Expenditures = $365.4 M*$186.3 M, or 51% of General Fund Expenditures are Public Safety costsCity Attorney's Office, $4.7 MCity Auditor's Office, $1.1 MCity Clerk's Office, $2.4 MCity Council, $1.3 MCity Manager's Office, $7.0 MCommunity Development Department, $6.3 MFinance Department, $20.8 MHuman Resources, $6.2 MLibrary Department, $12.6 MNon-Departmental, $58.9 MParks & Recreation, $25.9 MPolice Department, $105.8 MFire Department, $80.5 MPublic Works, $31.9 M* Excludes net contributions to reserves 19 20
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Capital Budget for FY 2026/27 and 2027/28 and Five-Year CIP21 Measure I General Obligation Bond22• Tranche 1 capital projects totaled $96.6 M; Proposed CIP includes Tranche 1 projects carried over from FY 2025/26 totaling $63.2 M• Planning to issue bonds in three phasesFire Stations and Emergency Response ($142,235,450)Parks, Libraries, Senior Center, and Aquatics Facilities ($115,258,750)Storm drain System Improvements ($46,000,000)Police Facilities ($43,987,500)Streets and Transportation ($41,170,000)Historic Buildings and Beautification ($9,200,000)21 22 12
Measure I General Obligation Bond23
Project Delivery Timeline
Measure I General Obligation Bond24Transparency and Accountability• Bond proceeds can only be spent on projects and programs that serve Santa Clara and must align to the adopted Expenditure Plan• With the exception of the project management and delivery costs, Bond proceeds cannot be used for employee salaries. Administrative costs capped at 5% • Annual independent performance audits and financial audits submitted to the California State Auditor for review and posted on the City’s website.• Bond Compliance Oversight Committee to ensure that Bond proceeds are expended only for the purposes described in the measure • Separate fund to account for the Bond proceeds and expenditures• Finance Director to report to the City Council at least annually on the actual bond proceeds and expenditures and the status of improvements• No improvements to Levi’s Stadium or improvements that benefit any professional sports teamAmending the Expenditure Plan1. City staff review, analyze and make a recommendation on any proposed substantive amendment to the Expenditure Plan (“Amendment”). 2. Prior to City Council consideration, any such proposed Amendment will first be submitted to the Bond Compliance Oversight Committee for their review and recommendation. 3. Any proposed Amendment requires the unanimous approval of the City Council. 23 24
13 General Fund Capital Projects Reserve (CPR)25Administrative Facilities, $ 4.8 M, 30.3%Other Community Projects, $ 0.1 M, 0.1%Community Facilities, $ 2.1 M, 13.2%Parks and Trails, $ 1.0 M, 6.4%Storm Drain, $ 4.6 M, 29.0%Technology & Equipment, $ 0.3 M, 2.0%Transportation, $ 3.0 M, 19.0%CPR Funding in Five-Year CIP = $15.9 M•General Fund CPR funded from excess revenues and expenditure savings at the end of a fiscal year•Used to fund capital projects with no other funding source•Use of $15.9 M, including new projects identified in this CIP ($12.9 M) and projects with funding set aside in prior CIP ($3.0 M); remaining balance of $12.5 M •Address high priority needs across program areas Proposed Use of General Fund CPR265-Year TotalFY 2030/31FY 2029/30FY 2028/29FY 2027/28FY 2026/27Administrative Facilities$1,725,000$750,000$750,000$225,000ADA Transition Plan Implementation$656,000$287,000$328,000$41,000Electric Vehicle Charging (Fleet)$119,700$119,700Fleet Shop Retrofit$100,000$50,000$50,000Morse Mansion Maintenance & Repair$1,495,000$1,322,500$172,500Public Building Parking Lot Improvements (Triton)$250,000$125,000$125,000Repair to Historic Buildings$350,000$175,000$175,000Repairs-Modifications to City Buildings$110,000$35,000$75,000Triton Museum Repair & Modifications$4,805,700$0$0$1,037,000$2,785,500$983,200Administrative Facilities Total 25 26
14 Proposed Use of General Fund CPR275-Year TotalFY 2030/31FY 2029/30FY 2028/29FY 2027/28FY 2026/27Other Community Projects$50,000$50,000ADA Self Evaluation and Transition Plan Update$50,000$0$0$0$0$50,000Other Community Projects TotalCommunity Facilities$1,044,000$522,000$522,000Central Park Library Repaint Interior$1,098,000$1,098,000Central Park Library Carpet Replacement$2,142,000$0$522,000$1,620,000$0$0Community Facilities TotalParks and Trails$993,000$504,000$489,000Park Improvements and Repairs$993,000$0$0$0$504,000$489,000Parks and Trails Total Proposed Use of General Fund CPR285-Year TotalFY 2030/31FY 2029/30FY 2028/29FY 2027/28FY 2026/27Storm Drain $750,000$150,000$150,000$150,000$150,000$150,000Storm Drain Repairs and Maintenance$200,000$200,000Kiely Blvd.-Saratoga Creek Storm Drain Outfall Relocation$700,000$700,000Storm Drain Master Plan Update$350,000$350,000Lick Mill Storm Drain Pump Station Rehabilitation$150,000$150,000Tri-Level Underpass Storm Drain Pump Station Rehabilitation$350,000$350,000Fairway Glen Storm Drain Pump Station Rehabilitation$1,800,000$1,800,000Storm Drain Pump Station Remote Terminal Unit (RTU) Upgrade$250,000$250,000Storm Drain Pump Station Outfall Reconstruction Program$4,550,000$150,000$150,000$150,000$400,000$3,700,000Storm Drain Total 27 28
15 Proposed Use of General Fund CPR295-Year TotalFY 2030/31FY 2029/30FY 2028/29FY 2027/28FY 2026/27Technology and Equipment $31,000 $31,000 Fire Station 3 Sprinklers$50,000 $50,000Permit Information System$200,000 $50,000 $150,000 Replacement VOIP Phone System for Aging Mitel Connect$281,000$0 $0 $0 $50,000 $231,000Technology and Equipment Total Proposed Use of General Fund CPR305-Year TotalFY 2030/31FY 2029/30FY 2028/29FY 2027/28FY 2026/27Transportation$1,025,000$525,000$500,000ADA Transition Plan Implementation (Public Right of Way)$150,000$150,000Bikeway Study Policy$710,000$710,000Bridge Maintenance Program$278,000$278,000Median Islands Water Conservation and Drought Tolerant Landscape Imp.$465,438 $465,438Street Tree Services$127,000$127,000Water Conservation and Drought Tolerant Landscaping300,000300,000Public Right-of-Way Standards Update$3,055,438 $0 $525,000$500,000$0 $2,030,438 Transportation Total$15,877,138$150,000$1,197,000$3,307,000$3,739,500$7,483,938Total General Fund Projects 29 30
16 CIP Projects by Theme31Five-YearCIPBiennial Budget2027/28Budget2026/27BudgetTheme$17,640,450$16,190,450$3,482,500$12,707,950Administrative Facilities$8,835,750$6,693,750$0$6,693,750Community Facilities$0$0$0$0Convention Center*$739,393,000$396,841,000$171,415,000$225,426,000Electric Utility$18,968,087$7,604,133$3,779,339$3,824,794Other Community Projects$19,874,595$8,038,145$742,145$7,296,000Parks and Trails$156,945,767$59,883,809$29,553,430$30,330,379Sewer Utility$7,026,516$4,294,160$3,060,000$1,234,160Solid Waste$20,382,300$19,932,300$416,000$19,516,300Storm Drain$2,020,000$943,000$386,000$557,000Technology and Equipment$97,286,186$61,487,173$14,306,541$47,180,632Transportation$24,425,000$11,150,000$5,575,000$5,575,000Water and Recycled Water Utilities$1,112,797,651$593,057,920$232,715,955$360,341,965TOTAL* Convention Center funding to be brought forward separately.
Proposed CIP –Electric Utility Theme32Five-Year CIP: $739.4 million• CAISO 3rd 230kV Transmission Line Into NRS ($109.4 M)• Transmission Loop 1 ($106.9 M)• Spare Equipment Strategy & Procurement ($44.0 M)• New Business Estimate Work ($43.3 M)• Homestead Substation Rebuild ($40.0 M)• Agnew Rebuild and Expansion ($38.4 M)• Transmission & Distribution Capital Maintenance & Betterments ($35.7 M)Major Funding Sources: Transfer from Electric Utility Fund (customer service charges), debt financing, developer contributions, load development feesAccomplishments• Continued progress on NRS, KRS, and SRS Rebuild and Replacements• Completed Storm Water Compliance project• Completed Memorex Junction Substation• Completed the replacement of the Balance of the Plant Control System for DVR31 32 17
Proposed CIP –Electric Utility Theme33Infrastructure investment for existing and increasing load and peak demand225325425525625725825 2,000 3,000 4,000 5,000 6,000 7,0001998199920002001200220032004200520062007200820092010201120122013201420152016201720182019202020212022202320242025Annual Peak Demand (MW)Annual Load (GWh)SVP Historic Growth Annual Peak Demand (MW) Total Annual Load (GWh) Proposed CIP –Electric Utility Theme34CIP Planning/Development• Annual CAISO Transmission Planning Process (TPP)• Coordination with CAISO Projects• Identify System Maintenance/Security ProjectsShort-Term and Long-Term Priorities• Enhancing system to increase capacity and reliability• Maintenance and replacement of equipment• Provide service to customers 33 34
18 Proposed CIP –Electric Utility Theme35Major Projects Address Priorities• CAISO 3rd230kV Transmission Line Into NRS– Meet CAISO system demands• Transmission Loop 1– Construct new loop to rebalance system and increase reliability and capacity• Spare Equipment Strategy and Replacement–Proactive asset management for transformers• New Business Estimate Work–Provide distribution for new and existing customers Proposed CIP –Electric Utility Theme36CIP Projects Face Risks•Supply Chain–Long lead times and material shortages•Staffing–Recruiting and retaining skilled workers for projects•Project Delays–Timeline risks for transmission and local grid expansion•Tariffs–Increasing equipment costs and limiting sourcing options due to international trade restrictions 35 36
19 Proposed CIP –Administrative Facilities Theme37Five-Year CIP: $17.6 million• Measure I Projects (fire station 5 and 7 replacements, fire training tower, fire station security upgrades, feasibility funds for real time intelligence center, Police training facility and Police drone first responder infrastructure, Triton Museum roof replacement) • Public Parking Improvements• Repairs – Modifications to City Buildings and Historic Buildings• ADA transition Plan Implementation (Public Buildings)• Electric Vehicle Charging (Fleet)• Fleet Shop RetrofitMajor Funding Sources: Measure I Bond Funds, General Fund CPRAccomplishments• Construction for Phase II Stationary Standby Generators; design for Phase III• Complete Upgrade Lighting to LED project at 32 City buildings (energy savings and reduction in greenhouse gas emissions) Proposed CIP –Community Facilities Theme38Five-Year CIP: $8.8 million• Measure I Projects (Central Library Restrooms & Access Control Redesign, Central Library Lighting Control System Replacement, Central Library Entry Auto Door System Replacement, Central, Mission, and Northside Libraries Renovation Design, Community ISC Aquatic Facility Renovation/Replacement)• Central Park Library – Carpet Replacement• Central Park Library – Repaint InteriorMajor Funding Sources: Measure I Bond Funds, General Fund CPR, Mitigation Fee Act & Quimby Act fees, developer contributionsAccomplishments• The ISC project is in the pre-construction phase with a Notice to Proceed issued on March 16, 2026• The concrete sidewalk replacement at Central Park Library was completed 37 38
20 Proposed CIP –Convention Center Theme39Five-Year CIP: Unfunded• The proposed budget does not include funding in the five-year CIP for the Convention Center• Existing appropriations will be used to complete the kitchen refresh, including updating the corridor and preparation areas. Other projects underway include replacement of the HVAC and cooling tower and installation of drop ceilings.• Potentially allocate excess revenue to the Convention Center project as part of the FY 2025/26 budget year-end reportMajor Funding Sources: Convention Center Enterprise Fund, OVG360 and Levy ContributionsAccomplishments• Front buildings were updated with a new fresh paint palette and stucco improvement Proposed CIP –Other Community Projects Theme40Five-Year CIP: $19.0 million• Projects to support the Measure I GO Bond projects, include the Bond Implementation Project and Furniture, Fixtures, and Equipment Project• Related Santa Clara Administration and Development Project ServicesMajor Funding Sources: General Fund, developer contributionsAccomplishments• El Camino Specific Plan revisions have been completed and will be brought forward for City Council approval in May 2026 • A third “clean-up” ordinance for the Zoning Code Update will be brought forward for City Council approval in May 2026 39 40
21 Proposed CIP –Parks and Trails Theme41Five-Year CIP: $19.9 million• Measure I Projects (Warburton Park Playground Renovations, Henry Schmidt Park Playground Renovations – funding in FY 2025/26)• Maywood Park Playground Rehabilitation• Earl Carmichael Park Playground Rehabilitation• Community Park North – Phase 1 (developer funded)• Mary Gomez Park Playground Rehabilitation• Park Improvements and RepairsMajor Funding Sources: Measure I Bond Funds, Mitigation Fee Act & Quimby Act fees, developer contributions, General Fund CPRAccomplishments• Developer Funded parks completed in FY 2025/26: Calle Del Mundo Park, Calle De Lune Park, and Gateway Grossing Park Proposed CIP –Sewer Utility Theme42Five-Year CIP: $156.9 million• Updated annual allocation of capital infrastructure for the Regional Wastewater Facility, co-owned with the City of San José• Sanitary Sewer Condition Assessments• Sanitary Sewer Capacity and System Improvements Major Funding Sources: Transfer from Sewer Utility Fund (customer service charges), debt financingAccomplishments• Completed approximately 170,000 linear feet of CCTV inspection of sewer infrastructure and 500,000 linear feet of flushing/jetting• Completed the Sanitary Sewer Master Plan in 2025 41 42
22 Proposed CIP –Solid Waste Theme43Five-Year CIP: $7.0 million• Sanitary Landfill Development – Post Closure• Emergency Backup and Collection System Enhancements for Closed Landfill (new) to increase the reliability of the City’s existing landfill gas flare and collection systemMajor Funding Sources: Transfer from Solid Waste Operating Fund (customer service charges), developer contributionsAccomplishments• Multiple sections of landfill gas pipeline were repaired to maintain vacuum on the collection system and prevent methane emissions• Landfill surface was regraded to facilitate proper drainage and prevent ponding at several locations• All mandated reports were submitted to regulatory agencies on time Proposed CIP –Storm Drain Theme44Five-Year CIP: $20.4 million• Measure I Projects (Storm Drain System Improvements, Green Storm Drain Infrastructure Design and Construction, Bowers Ave Underpass SDPS Rehabilitation, Storm Drain Renovations)• Storm Drain Pump Station Remote Terminal Unit (RTU) Upgrade• Storm Drain Master Plan Update• Lick Mill Storm Drain Pump Station Rehabilitation• Tri-Level Underpass Storm Drain Pump Station Rehabilitation• Fairway Glen Storm Drain Pump Station RehabilitationMajor Funding Sources: Measure I Bond Funds, General Fund CPR, grantsAccomplishments• Completed construction of the Storm Drain Slide Gate Rehabilitation Project• Successfully maintained all 21 storm drain pump and lift stations to manage stormwater runoff 43 44
23 Proposed CIP –Technology and Equipment Theme45Five-Year CIP: $2.0 million• Fire Station 2 Sprinklers• Permit Information System (funding by Technology Reserve)• GIS Enterprise System • Replacement of VOIP Phone System for Aging Mitel Connect Major Funding Sources: General Fund CPR, Utility FundsAccomplishments• Launched a customer service-based platform, Qmatic (development svcs)• Fire Dept. implemented new Accela modules• AR and Billing implemented for Stadium Authority• Expanded Enterprise Asset Management• GIS Improvements• Updated asset datasets for over 1,300 City trees and over 300 traffic signs Proposed CIP –Transportation Theme46Five-Year CIP: $97.3 million• Measure I Projects (Street Resurfacing and Rehabilitation, ADA Improvements, Creek Trail Rehabilitation, Bicycle Wayfinding)• Annual Street Maintenance and Rehabilitation Program (current Pavement Condition Index is approx. 73 and is projected to increase to 74 during 5-year CIP w/transportation and GO bond funds) • Agnew Road At-Grade Crossing• Uncontrolled Crosswalks Improvement Project• Neighborhood Traffic Calming, Vision Zero• ADA Transition Plan Implementation• El Camino Real Bike Lane ProjectMajor Funding Sources: Measure I Bond Funds, gas tax, vehicle registration fees, SB1 funds, County Measure B, traffic mitigation fees, grants, General Fund CPRAccomplishments• Completed maint. and rehab for approx. 34 lane miles of street pavement in 2024 and 2025• Installed Rainbow Crosswalk• Constructed Class IV bicycle facilities on Mission College Boulevard from Great America Parkway to Montague Expwy.• Implemented 15 mph school zone speed limit program• Completed quick-build pedestrian safety improvements at the Winchester Blvd. and Dolores Ave. crosswalk• Implemented Central Transit Signal Priority at 23 signalized intersections 45 46
24 Proposed CIP –Water & Recycled Water Utilities Theme47Five-Year CIP: $24.4 million• Distribution System Replacement/Restoration• Buildings and Grounds • Pressure Regulating Zone Valve Replacement• Recycled Water System Mains and ServicesMajor Funding Sources: Transfer from Water Utility and Recycled Water Utility Operating Funds (customer service charges)Accomplishments• Completed a Sustainable Water Master Plan• Ongoing replacement of water infrastructure Unfunded Capital Needs48•Identified unfunded projects represent only a portion of the needs. Other needs total $1B+–Parks and Recreation Master Plan Phase 1 (Years 1-5 in 2025 dollars) - $185 M to $260 M–Library Facilities Master Plan – over $55 M for existing and new facilities (2025 dollars)–Vision Zero Action Plan - $350 M (2025 dollars) reduces high-injury traffic accidents–Storm Drain Master Plan - $290 M (2018 dollars)–Santa Clara Bicycle Plan Update 2018 - $39.3 M (in 2018 dollars)–Santa Clara Pedestrian Master Plan - $194.0 M (in 2019 dollars)–ADA Self-Evaluation and Transition Plan (Draft) -$758.5 M (in 2024 dollars)–Public buildings (e.g., City Hall, historic buildings)Administrative Facilities,$28.3 M, 11.2%Community Facilities, $50.0 M, 19.8%Convention Center, $10.4 M, 4.1%Other Community Projects, $0.1 M, 0.1%Parks and Trails, $88 M, 34.8%Storm Drain, $21.6 M, 8.5%Technology and Equipment, $0.2 M, 0.1%Transportation, $54.3 M, 21.4%Five Year CIP Unfunded Need = $252.9 M47 48 25
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FY 2026/27 Operating Budget Amendments49
FY 2026/27 Operating Budget Amendments50•FY 2025/26 and FY 2026/27 Adopted Operating Budget approved June 2025•FY 2026/27 Operating Budget amendments necessary to:– Update revenue estimates for the General Fund and other funds– Make adjustments to account for updated labor and non-personnel costs in the General Fund and other funds– Update resources and production costs in Enterprise Funds– Incorporate service enhancements in the General Fund (e.g., Council priorities, restore frozen positions, infrastructure replacement)– Update/Add positions (24.25 proposed positions)•Described in the Appendices section of the Proposed Budget 49 50
26 5151Proposed Position Changes•Position Changes/Organization Reviews −Parks and Recreation Organizational Review (6.0 FTE): oNet addition of 6.0 positions (1.0 Management Analyst, 3.0 FTE Office Assistant PT (partially offset by reduction in As-Needed), and 2.0 Recreation Coordinators)oNet-Zero Reclassifications to better align staff to meet service needs (Deputy Director to Assistant Director, Recreation Manager to Division Manager, Park Maint. Crafts Worker to Parks Construction, Maintenance and Repair Manager, Recreation Supervisor to Recreation Coordinator, Office Specialist III to Staff Aide I, Health and Wellness Coordinator to Recreation Coordinator)oRemove 3.0 Grounds Maintenance Worker I/II positions and Office Specialist from frozen position list•s 5252Proposed Position Changes•Position Changes/Organization Reviews −Public Works Organizational Review (7.0 FTE): oNet addition of 7.0 positions (1.0 Senior Engineer (Vision Zero); 2.0 Auto Technicians (limited dated for two years); 1.0 Senior Civil Engineer and 1.0 Associate Engineer (Measure I Bond Implementation); unfreeze 1.0 Assistant Engineer; and 1.0 Division Manager)oManagement Reclassification to better align staff to meet service needs (Deputy Director to Assistant Director)oRemove 4.0 Street Maintenance Worker I/III positions and 1.0 Automotive Technician III from the frozen position list51 52 27
5353Proposed Position Changes•Position Changes/Organization Reviews −Electric Utility/Finance (Net 1.0 FTE): SVP Business Services restructure to move unit to the Finance Department (22 FTE in new division: 10 in SVP Purchasing and 12 in SVP Business Services)oShift 16.0 positions from SVP to Finance; Shift 5.0 existing Finance purchasing positions to Finance – SVP PurchasingoAdd 1.0 Management Analyst to Finance – SVP Business ServicesoElectric Utility (4.0 FTE)oAdd 1.0 Management Analyst (Engineering Support); 1.0 Key Customer Service Representative (Support large, complex customers); and 1.0 Staff Aide II and 1.0 Program Manager (Public Benefits Program)o$830K set aside in budget for additional position adds from the Organizational Review 5454Proposed Position Changes•Outstanding Reviews in Progress and Future Organizational Reviews−CDD, Water and Sewer, SVP−Expected to result in additional organizational restructuring and position changes •Other Position Changes−City Manager’s Office (2.0 FTE) : Add 1.0 Sr. Management Analyst to support economic development - small business support (50% funding from Building Development Services) and unfreeze 1.0 Sr. Management Analyst to provide administrative/analytical support−Human Resources (4.0 FTE): Add 2.0 Management Analyst positions to support employee health and safety, 1.0 Management Analyst to support SVP and 1.0 Human Resources Technician to speed up hiring−Library (0.25 FTE): Increase 0.75 Office Specialist II to 1.0 Office Specialist II to support library administration 53 54
28 5555Hiring/Recruiting UpdateHiring Efforts Continue•As of April 25, 2026, 159.50 vacancies (vacancy rate of 13.2%), down from July 2025 rate of 15.9% •Active recruitments for 108.50 positions (60 classifications) and 14 As Neededclassifications (multiple hires) in progress•Classification/compensation projects for 4 classifications•July – late April Hiring: 115 new hires/rehires and 63 promotions versus 79 separations •Budget Stabilization Reserve (BSR) – Used for weathering economic downturns, emergency financial crisis or disaster situations–Per Council policy, the BSR target is 25% of the expenditure budget–The Proposed Budget and Ten-Year Forecast maintain the 25% funding level•Land Sale Reserve – Allocates the proceeds from the sale of City-owned land–$18.6 million in FY 2026/27 Proposed Budget•Capital Projects Reserve – Used to support the City’s CIP–The target funding level is a minimum of $5 million–Use $12.9 million of the reserve in this CIP; use $3.0 million previously reserved for projects funded in the out years of the last CIP–New Infrastructure Replacement Capital Fund to set aside ongoing funding to address capital needsGeneral Fund Reserves56 55 56
29 FY 2026/27 Proposed Balance FY 2025/26 Current BalanceReserve Type$84.0 M$81.5 MGeneral Fund Budget Stabilization (BSR)$12.5 M$21.4 MGeneral Fund Capital Projects$18.6 M$18.6 MLand Sale Reserve $49.2 M$42.1 MPension Stabilization Reserve (General Fund)$10.4 M N/ACapital Infrastructure Replacement (GF Transfer to new fund)57General Fund Reserves 5858
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City Council MeetingItem #1: Review of the Proposed FY 2026/27 & FY 2027/28 Biennial Capital Improvement Program Budget and FY 2026/27 Operating Budget ChangesMay 5, 202659