General Fund Financial Update
CITY COUNCIL MEETING
OCTOBER 21, 2025 SCOTT WAGNER,
INTERIM CHIEF FINANCIAL OFFICER
Financial
Update
FY 2024-25
2 CFO Comments
Operating Revenues & Expenditures
Reserves
Prior Reductions
Operational Allocations
Questions & Feedback
CFO Comments
Results for Fiscal Year (FY) 2024-25 are preliminary & unaudited but we do not anticipate material changes FY 2024-25 began with a $13.3 million budget deficit
Actions after adoption totaled $18.1 million during FY 2024-25:
$10.4 million in one time funding allocated from projects to shore up reserves $4.0 million mid year budget reduction
$3.7 million in ongoing voter approved enhanced tax measures for business and transient occupancy tax FY 2024-25 results of operating expenditures, revenues and changes in appropriations and encumbrances versus budget $4.3 million positive
$4.4 million in one time interest revenue (investment returns) $13.3 million deficit + $18.1 million mid-year actions + $4.3 million 24/25 results = +9.5 million change in reserves General Fund has gained immediate stability but remains in a structural deficit $8.4 million deficit in FY 2025-26 expected to grow to $17.3 million in FY 2026-27 Primary factors include stagnant sales tax revenue & CalPERS unfunded liability payment growth 3 CFO Comments
The City will need strategies going forward which address Equity amongst departments (What does this look like?) Tiers by department
Cut amount target / Minimum reduction amounts required (Sustainable Reserves VS Deficit) Room for positive changes (Economic Development/ Department Efficiencies / Revenue Improvement)
Not too much too soon (Defendable position)
Timing (lengthening the budget process)
4 General Fund Revenues FY 2024-25
5 Revenue Source FY 2024/25 Budget FY 2024/25 Actual Over (Under) Budget % Difference Interes t 600,000$ 5,022,393$ 4,422,393$ 737.1% * Interest is flat budgeted to $600K each year to insulate operations from gains and losses of the market Revenue Source FY 2024/25 Budget FY 2024/25 Actual Over (Under) Budget % Difference TOT 7,000,000$ 7,399,552$ 399,552$ 5.7% Business Taxes 4,750,000$ 8,018,506$ 3,268,506$ 68.8% Total 11,750,000$ 15,418,058$ 3,668,058$ 31.2% ** Voter approved changes occured after adoption and were not included in budget Revenue Source FY 2024/25 Budget FY 2024/25 Actual Over (Under) Budget % Difference Sales Taxes 75,866,735$ 69,098,976$ (6,767,759)$ -8.9% Property Taxes 39,068,300$ 40,764,412$ 1,696,112$ 4.3% Other Taxes (net of BT and TOT) 36,625,700$ 37,290,883$ 665,183$ 1.8% Charges for Services 26,727,653$ 27,709,234$ 981,581$ 3.7% UUT 14,200,000$ 15,059,524$ 859,524$ 6.1% Contributions from Private Parties 3,611,535$ 3,408,160$ (203,375)$ -5.6% Licenses and Permits 3,181,000$ 2,899,067$ (281,933)$ -8.9% Miscellaneous 2,116,360$ 4,075,098$ 1,958,738$ 92.6% Intergovernmental Revenue 1,991,493$ 1,807,234$ (184,259)$ -9.3% Fines and Forfeitures 1,610,900$ 1,613,965$ 3,065$ 0.2% Total 204,999,676$ 203,726,554$ (1,273,122)$ 0.6% Total 6,817,330$ 3.1%
General Fund Revenues FY 2024-25
Revenues exceeded budget by $6.8 million or 3.1%
Budgets did not factor voter approved enhanced business and transient occupancy tax measure Revenues outperforming budget
Voter approved enhancements after adopted budget
Business taxes $3.3 million
Transient occupancy tax $400 thousand
Interest (investment portfolio returns) $4.4 million
Large outlier from prior years, City flat budgets $600K to insulate volatile returns from operations Property taxes $1.7 million
Charges for service $1.0 million
Revenues underperforming budget
Sales taxes $6.6 million
Licenses and permits $300 thousand
Without voter approved revenue enhancements and an anomaly investment return remaining categories $1.2 million under budget 6 Interest
Revenue
- Category is naturally volatile
- City has traditionally budgeted
$600K
- Conservative approach provides
protection to operations following
gains and losses in the portfolio
- In years like FY 2024-25 reserves
benefit from overperformance
- FY2024-25 is a significant positive
outlier
7 Revenue Source FY 2024/25 Budget FY 2024/25 Actual Over (Under) Budget % Difference Interest 600,000$ 5,022,393$ 4,422,393$ 737% 8 Major General Fund Revenues
5-year Lookback
9 Major General Fund Revenue
5-year Lookback
160
170
180
190
200
210
220
FY 2020-21
FY 2021-22
FY 2022-23
FY 2023-24
FY 2024-25
Millions
General Fund Expenditures FY 2024-25
Total operating expenditures exceeded final budget by $1.7 million or 0.8% Includes mid-year reduction approved by Council for $4.0 million Most departments finished the year under budget
City Manager hiring freeze created savings across departments The Fire Department $1.7 million over driven primarily by overtime and Public Works over by $400 thousand
FY 2024-25 created no savings or “turnback”
We do not anticipate turnback going forward with tighter budgets from reductions and being fully staffed
10 FY 2024-25
Operating
Expenditure
Results
- Budget amount includes $4 million
mid-year reduction
- Does not include transfers and
changes in project appropriations
or encumbrances
11 Department
Budget +
Carryover +
Changes
FY2024/25
Actua ls +
Encumbrance*
FY2024/25
(Over) Under
Budget
%
Difference
Police 80,571,388 80,416,649 154,740 -0.2% Fire 57,748,949 61,016,049 (1,667,596) 2.9% Public Works 26,219,989 26,662,201 (442,212) 1.7% Planning, Economic Development 19,746,875 17,963,009 1,783,866 -9.0% Recreation & Parks 18,558,194 18,601,762 (43,568) 0.2% Finance 7,889,387 7,562,333 327,054 -4.1% City Attorney 5,057,586 4,685,509 372,077 -7.4% Human Resources 4,778,764 3,855,903 922,861 -19.3% City Manager 3,318,991 2,846,157 472,834 -14.2% CIRO 1,781,767 1,385,710 396,057 -22.2% City Council 1,371,463 1,455,929 (84,466) 6.2% Water 780,984 703,836 77,149 -9.9% HCS 125,207 125,206 1 0.0% Non Departmental (Vacancy Offset) (9,587,042) (7,228,313) (2,358,730) -24.6% Total 218,362,504 220,051,941 (1,689,437) 0.8% 12 Major General Fund Expenditure
5-year Lookback
160
170
180
190
200
210
220
FY 2020-21
FY 2021-22
FY 2022-23
FY 2023-24
FY 2024-25
Millions
General Fund Reserves FY 2024-25
General Fund began FY 2024-25 with $13.3 million deficit Reserves had a net increase of $9.5 million
Significant mid-year actions taken by Council and voters $10.4 million in one-time funding released to shore up reserves including PG&E settlement projects $4.0 million in ongoing mid-year budget reductions
$3.7 million in enhanced revenue from business and transient occupancy tax measures $13.3 million deficit + $18.1 million mid-year actions + $4.3 million 24/25 results = +9.5 million change in reserves
Without enhanced tax measures and one time project monies being released reserves would have decreased $5.0 million
Reserves are projected to fall $3 million below Council mandated reserves of 17% of operating expenditures by FY 2026-27 and down to $7.8 million by FY2027-28 without additional actions Per Governmental Accounting Standards Board we must lower our reserve by the adopted deficit (reserves are one year in advance)
13 14
FY2025 FY2026 FY2027 FY2028 FY2029
6/30/2024 Reserves 68,826,590$
Adopted deficit (13,300,000)$
Mid-year budget reduction 4,000,000$
FY 25/26 results variance from budget 4,300,000$
Results of Operating 63,826,590$
Enhanced taxes 3,700,000$
One-time projects released 10,400,000$
6/30/2025 Preliminary Reserves 77,926,590$
FY 26/27 Budget Deficit (17,300,000)$
6/30/2026 Projected Reserves 60,626,590$
FY 27/28 Budget Deficit (23,100,000)$
6/30/2027 Projected Reserves 37,526,590$
FY 28/29 Budget Deficit (30,100,000)$
6/30/2028 Projected Reserves 7,426,590$
FY 29/30 Budget Deficit (33,700,000)$
6/30/2029 Projected Reserves (26,273,410)$
* Council Mandated Reserve was $34.9M in FY2024, expected to be $40.6M in 2027 Upcoming Budget Adoptions
Current Total Reserves Usage Projection
Long Range
Financial
Forecast
- First update will be at the end of
January when payroll budgeting
model runs
- Will create basis for targeted
reduction amount
15 Budget Reductions
All departments were directed to develop 8% reductions:
Results varied by department after review and then Council direction Staff is developing a tiered approach to proposing budget reductions for FY 2026-27 All departments are preparing financial presentations for the Long-Range Financial Planning and Audit Subcommittee that are designed to get feedback and guidance for department-specific tiering of programs and services
16 Cumulative
Budget
Reductions
- Council has adopted $15.2 million
of ongoing budget reductions since
mi-year FY 2024-25
- FY 25-26 original deficit amount of
$19.3 million reduced to $8.4
million
17 General Fund Allocation of Budget Data
As requested, we have developed graphs detailing how budget in the General Fund has been allocated over time
This data does not include grant funding or special taxes (SAFER, Measure H – Fire Prevention, PSAP)
Data is separated as:
Public Safety (Police and Fire)
Police
Fire
Operational (PED, HCS, Public Works)
Administration (CMO, CAO, Finance, HR, CIRO)
18 19
47%
43%
36%
53%
57%
64%
0%
10%
20%
30%
40%
50%
60%
70%
2006-07 2016-17 2025-26
% of GF Budget
Fiscal Year
Percentage of GF Budget - Public Safety & Non-Public Safety Non-Public Safety GF Total Public Safety
20 21
22 23
14%
13%
10%
0%
2%
4%
6%
8%
10%
12%
14%
16%
2006-07 2016-17 2025-26
% of GF Budget
Fiscal Year
Percentage of GF Budget
Adminstrative-Central Services
Questions
24