Sebastopol City Council
March 4, 2025

City of Sebastopol
Long-Range Forecast Update
March 4, 2025
City Council Presentation
Bob Leland, Special Advisor
Baker Tilly Advisory Group, LP
Model version 2.11 revised 2/11/25
Original Baseline Forecast Assumptions Still Valid
• FY24 based on estimate and FY25 based on budget
• 3% COLAs plus 0.25% net merit increase offset by turnover savings • 4% vacancy rate ongoing
• Maintain current FY25 staffing levels (does affect ability to respond to future workload increases) • Pension scenarios per CalPERS Pension Outlook, assumes 6.8% discount rate but lower average return of 6.2% (more conservative than CalPERS actuarial assumptions) • Assumes Pension Trust reimburses 20% of pension costs starting FY27 until balance is depleted • O&M expense grows at 2.5%
• Interest is 1.5% return on fund balance, with 4.5% on Pension Trust portion • Moderate recessions starting FY27 on 7-year cycle thereafter • Property tax growth averages 3.9%, FY25 per County assessed values • Sales tax growth averages 2.2%, FY25 per Avenu forecast • Transfers In/Out from other funds grows from FY25 base • Debt service per debt maturity schedules
• Capital outlay $150K per year
• Asset preservation increases for building/park/street maintenance and vehicle replacement (first $300K in FY25 budget, add $300K ongoing in FY26 and another $300K starting FY27) • $1.1M loan to Wastewater Fund in FY24 repaid over FY28-32 2 Revised Baseline Assumptions
3 • FY24 based on actuals; FY25 based on staff estimate • Measure U Local Sales Tax
 Voters approved a ½ cent rate for 12 years, but conflicts with Measure I, which together puts the total sales tax rate at 10.50%, which is over the 10.25% limit per state law  CA Dept of Tax and Fee Administration is seeking CA Attorney General’s opinion, and as a backup, legislative remedies are being explored to allow the City to keep the full ½ cent rate approved by the voters
 Temporary agreement between the City and County is expected to result in 6 months of revenue at a ½ cent rate level, followed by a ¼ cent tax for 11.5 years, assuming no legal or legislative remedy is obtained  Presentation will show the impact of both a ¼ cent rate and a ½ cent rate • Fire Service
 Consolidation of fire service with Gold Ridge Fire Protection District results in no City Fire expense starting FY26
 $1.11M direct payment to Gold Ridge starting FY26 (with 2.5% growth)  $40K fire inspection fees paid to GRFPD starting FY26 (with 2.0% growth) • Hotels
 Hotel Barlow is moving faster toward development than Hotel Sebastopol, but neither hotel is included in the revised baseline assumptions
Result is Steady Decline in Unassigned Balance
4 • Pension Trust use starts in FY27 and is
depleted in FY34, but unassigned balance
goes into deficit earlier in FY29
• Additional revenue or expense
reductions required in 3 years
• Structural shortfall averages $2M
per year
• Requires additional revenues or
reduced spending to close gap
Summary
Revised
Baseline
Forecast
Measure U at ½
cent for 6 months
and ¼ cent for 11.5
years
No Cuts, No Hotels
are Built
5 ($ in 000) FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 Property Tax 3,293 $3,444 $3,620 $3,664 $3,813 $3,891 $4,009 $4,211 $4,422 $4,644 $4,830 $5,023 Sales Tax 2,365 2,305 2,251 2,331 2,271 2,259 2,467 2,591 2,720 2,791 2,864 2,801 Local Sales Taxes 2,353 2,322 2,634 3,316 3,224 3,056 3,374 3,486 3,640 3,712 3,808 3,716 Utility Users Tax 851 863 877 924 949 975 1,002 1,030 1,058 1,087 1,117 1,148 Transient Occup Tax 544 519 519 549 537 565 610 627 644 646 664 649 Other Taxes 688 692 717 732 744 749 762 783 804 825 842 856 Intergovernmental 1,726 115 51 51 51 51 51 51 51 51 51 51 Building Permits 558 349 1,040 980 400 408 416 424 433 442 450 459 Fees & Charges 190 171 142 145 140 140 146 153 160 163 166 161 Interest (31) (3) 100 38 19 1 - - - - - -
Other Revenues 1,228 673 179 266 269 272 275 278 281 285 288 291 Transfers In 103 102 188 125 126 127 128 130 131 132 133 135 Cost Allocation* 2,190 2,303 1,762 1,802 1,842 1,884 1,926 1,969 2,014 2,059 2,105 2,153 Total Revenue 16,058 13,855 14,080 14,922 14,384 14,379 15,167 15,732 16,359 16,837 17,319 17,443 Salaries 3,987 4,433 4,278 4,452 4,830 4,987 5,149 5,316 5,489 5,667 5,851 6,041 Part-time 415 67 102 104 106 108 110 113 115 117 120 122 Overtime 431 257 251 243 250 258 266 274 282 290 299 308 Pension 1,574 1,512 1,746 1,910 2,121 2,192 2,363 2,400 2,432 2,521 2,540 2,562 Health/OPEB 870 966 972 1,140 1,208 1,244 1,281 1,319 1,358 1,399 1,440 1,483 Other Personnel 888 1,051 977 983 1,009 1,036 1,063 1,091 1,120 1,149 1,180 1,211 Vacancy Savings - - - (353) (381) (393) (409) (420) (432) (446) (457) (469) Subtotal Personnel 8,164 8,286 8,326 8,478 9,143 9,431 9,823 10,092 10,363 10,698 10,972 11,258 Services & Supplies 3,384 3,345 4,412 3,226 3,307 3,390 3,474 3,561 3,650 3,742 3,835 3,931 Liability Insurance 571 651 641 554 567 582 596 611 626 642 658 675 Utilities 341 354 553 550 564 578 592 607 622 638 654 670 Contributions 580 257 80 82 84 86 88 91 93 95 97 100
Fire District/Contract - - - 1,150 1,220 1,292 1,366 1,444 1,524 1,607 1,693 1,783 Debt Service 254 300 208 446 389 111 86 86 86 86 86 86
Capital/Other Tfrs Out 1,176 1,074 433 432 442 453 465 476 488 500 513 526 Asset Preservation Adds - - - 300 600 615 630 646 662 679 696 713 Total Expense 14,470 14,267 14,653 15,218 16,316 16,538 17,122 17,614 18,116 18,688 19,205 19,741 Net Annual 1,587 (412) (573) (296) (1,932) (2,159) (1,955) (1,882) (1,757) (1,851) (1,886) (2,298) Pension Trust Contribs - - - - 424 438 473 480 486 504 508 512 Balance Sheet Adjusts - (1,039) - - - - - - - - - -
Wastewater Loan - (1,100) - - - 220 220 220 220 220 - - Beginning Fund Balance 5,644 7,231 4,680 4,107 3,811 2,303 802 (460) (1,642) (2,693) (3,819) (5,197) Ending Fund Balance 7,231 4,680 4,107 3,811 2,303 802 (460) (1,642) (2,693) (3,819) (5,197) (6,983) less: Commit/Assign 1,423 200 200 200 200 200 200 200 200 200 200 200 Unassigned Balance 5,809 4,480 3,907 3,611 2,103 602 (660) (1,842) (2,893) (4,019) (5,397) (7,183) Pension Trust (105) 2,781 2,906 3,037 3,173 2,892 2,584 2,227 1,848 1,444 1,005 542 54 Total Avail Balance 8,589 7,386 6,944 6,784 4,995 3,186 1,568 6 (1,448) (3,014) (4,855) (7,129) Unassign as % of Exp 40.1% 31.4% 26.7% 23.7% 12.9% 3.6% -3.9% -10.5% -16.0% -21.5% -28.1% -36.4% *net of G&A expense for FY18-24
Alternate Forecast Scenarios
6 A - ¼ cent Measure U + $1.2M in Expense Cuts
7 • Assumes Measure U continues at ¼ cent rate and is not renewed by the voters • Assumes $1.2M of ongoing expense reductions (5.6% cut) are phased in over three years starting FY26; if cuts are delayed, the level of future cuts will need to be higher to compensate
• Balance continues to decline, making additional reductions likely in 10 years Expense Reduction Annual Impact (000)
Summary
Forecast
for
Alternate
Scenario A
Measure U at ½
cent for 6 months
and ¼ cent for 11.5
years
$1.2M in
Expense Cuts, No
Hotels are Built
8 ($ in 000) FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 Property Tax 3,293 $3,444 $3,620 $3,664 $3,813 $3,891 $4,009 $4,211 $4,422 $4,644 $4,830 $5,023 Sales Tax 2,365 2,305 2,251 2,331 2,271 2,259 2,467 2,591 2,720 2,791 2,864 2,801 Local Sales Taxes 2,353 2,322 2,634 3,316 3,224 3,056 3,374 3,486 3,640 3,712 3,808 3,716 Utility Users Tax 851 863 877 924 949 975 1,002 1,030 1,058 1,087 1,117 1,148 Transient Occup Tax 544 519 519 549 537 565 610 627 644 646 664 649 Other Taxes 688 692 717 732 744 749 762 783 804 825 842 856 Intergovernmental 1,726 115 51 51 51 51 51 51 51 51 51 51 Building Permits 558 349 1,040 980 400 408 416 424 433 442 450 459 Fees & Charges 190 171 142 145 140 140 146 153 160 163 166 161 Interest (31) (3) 100 42 30 25 25 26 29 32 35 32
Other Revenues 1,228 673 179 266 269 272 275 278 281 285 288 291 Transfers In 103 102 188 125 126 127 128 130 131 132 133 135 Cost Allocation* 2,190 2,303 1,762 1,802 1,842 1,884 1,926 1,969 2,014 2,059 2,105 2,153 Total Revenue 16,058 13,855 14,080 14,926 14,396 14,402 15,192 15,758 16,388 16,869 17,354 17,475 Salaries 3,987 4,433 4,278 4,452 4,830 4,987 5,149 5,316 5,489 5,667 5,851 6,041 Part-time 415 67 102 104 106 108 110 113 115 117 120 122 Overtime 431 257 251 243 250 258 266 274 282 290 299 308 Pension 1,574 1,512 1,746 1,924 2,132 2,205 2,356 2,387 2,391 2,445 2,439 2,423 Health/OPEB 870 966 972 1,140 1,208 1,244 1,281 1,319 1,358 1,399 1,440 1,483 Other Personnel 888 1,051 977 983 1,009 1,036 1,063 1,091 1,120 1,149 1,180 1,211 Vacancy Savings - - - (354) (381) (393) (409) (420) (430) (443) (453) (464) Subtotal Personnel 8,164 8,286 8,326 8,492 9,153 9,444 9,816 10,080 10,324 10,625 10,876 11,125 Services & Supplies 3,384 3,345 4,412 3,226 3,307 3,390 3,474 3,561 3,650 3,742 3,835 3,931 Liability Insurance 571 651 641 554 567 582 596 611 626 642 658 675 Utilities 341 354 553 550 564 578 592 607 622 638 654 670 Contributions 580 257 80 82 84 86 88 91 93 95 97 100
Fire District/Contract - - - 1,150 1,220 1,292 1,366 1,444 1,524 1,607 1,693 1,783 Debt Service 254 300 208 446 389 111 86 86 86 86 86 86
Capital/Other Tfrs Out 1,176 1,074 433 432 442 453 465 476 488 500 513 526 Asset Preservation Adds - - - 300 600 615 630 646 662 679 696 713 Total Expense 14,470 14,267 14,653 14,831 15,526 15,351 15,885 16,341 16,785 17,290 17,751 18,217 Net Annual 1,587 (412) (573) 94 (1,130) (948) (693) (584) (397) (421) (398) (741) Pension Trust Contribs - - - - 426 441 471 477 478 489 488 485 Balance Sheet Adjusts - (1,039) - - - - - - - - - -
Wastewater Loan - (1,100) - - - 220 220 220 220 220 - - Beginning Fund Balance 5,644 7,231 4,680 4,107 4,201 3,497 3,210 3,208 3,322 3,624 3,912 4,002 Ending Fund Balance 7,231 4,680 4,107 4,201 3,497 3,210 3,208 3,322 3,624 3,912 4,002 3,745 less: Commit/Assign 1,423 200 200 200 200 200 200 200 200 200 200 200 Unassigned Balance 5,809 4,480 3,907 4,001 3,297 3,010 3,008 3,122 3,424 3,712 3,802 3,545 Pension Trust (105) 2,781 2,906 3,037 3,173 2,890 2,579 2,223 1,846 1,451 1,027 586 127 Total Avail Balance 8,589 7,386 6,944 7,175 6,187 5,589 5,232 4,968 4,875 4,739 4,388 3,673 Unassign as % of Exp 40.1% 31.4% 26.7% 27.0% 21.2% 19.6% 18.9% 19.1% 20.4% 21.5% 21.4% 19.5% *net of G&A expense for FY18-24
B - ½ cent Measure U for 12 years + No Cuts
9 As Approved by Voters Limited by State Local Rate Cap • Assumes tax not renewed by the voters
• Amounts include partial first and last year receipts
• Includes impact of economic cycles
B - ½ cent Measure U for 12 years + No Cuts
10 • Assumes Measure U continues at ½ cent for 12 years (legal issues with cap resolved in City’s favor, but no voter renewal)
• Balance still declines over time (but more slowly), going negative in FY35 • Additional reductions likely required in 6 years
Summary
Forecast
for
Alternate
Scenario B
Measure U at ½
cent 12 years
No Cuts, No Hotels
are Built
11 ($ in 000) FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 Property Tax 3,293 $3,444 $3,620 $3,664 $3,813 $3,891 $4,009 $4,211 $4,422 $4,644 $4,830 $5,023 Sales Tax 2,365 2,305 2,251 2,331 2,271 2,259 2,467 2,591 2,720 2,791 2,864 2,801 Local Sales Taxes 2,353 2,322 2,634 3,905 3,796 3,849 4,268 4,363 4,537 4,607 4,722 4,605 Utility Users Tax 851 863 877 924 949 975 1,002 1,030 1,058 1,087 1,117 1,148 Transient Occup Tax 544 519 519 549 537 565 610 627 644 646 664 649 Other Taxes 688 692 717 732 744 749 762 783 804 825 842 856 Intergovernmental 1,726 115 51 51 51 51 51 51 51 51 51 51 Building Permits 558 349 1,040 980 400 408 416 424 433 442 450 459 Fees & Charges 190 171 142 145 140 140 146 153 160 163 166 161 Interest (31) (3) 100 43 30 21 17 14 13 11 10 2
Other Revenues 1,228 673 179 266 269 272 275 278 281 285 288 291 Transfers In 103 102 188 125 126 127 128 130 131 132 133 135 Cost Allocation* 2,190 2,303 1,762 1,802 1,842 1,884 1,926 1,969 2,014 2,059 2,105 2,153 Total Revenue 16,058 13,855 14,080 15,516 14,968 15,191 16,078 16,623 17,268 17,743 18,243 18,334 Salaries 3,987 4,433 4,278 4,452 4,830 4,987 5,149 5,316 5,489 5,667 5,851 6,041 Part-time 415 67 102 104 106 108 110 113 115 117 120 122 Overtime 431 257 251 243 250 258 266 274 282 290 299 308 Pension 1,574 1,512 1,746 1,924 2,132 2,205 2,356 2,387 2,391 2,445 2,439 2,423 Health/OPEB 870 966 972 1,140 1,208 1,244 1,281 1,319 1,358 1,399 1,440 1,483 Other Personnel 888 1,051 977 983 1,009 1,036 1,063 1,091 1,120 1,149 1,180 1,211 Vacancy Savings - - - (354) (381) (393) (409) (420) (430) (443) (453) (464) Subtotal Personnel 8,164 8,286 8,326 8,492 9,153 9,444 9,816 10,080 10,324 10,625 10,876 11,125 Services & Supplies 3,384 3,345 4,412 3,226 3,307 3,390 3,474 3,561 3,650 3,742 3,835 3,931 Liability Insurance 571 651 641 554 567 582 596 611 626 642 658 675 Utilities 341 354 553 550 564 578 592 607 622 638 654 670 Contributions 580 257 80 82 84 86 88 91 93 95 97 100
Fire District/Contract - - - 1,150 1,220 1,292 1,366 1,444 1,524 1,607 1,693 1,783 Debt Service 254 300 208 446 389 111 86 86 86 86 86 86
Capital/Other Tfrs Out 1,176 1,074 433 432 442 453 465 476 488 500 513 526 Asset Preservation Adds - - - 300 600 615 630 646 662 679 696 713 Total Expense 14,470 14,267 14,653 15,231 16,326 16,551 17,115 17,602 18,077 18,614 19,109 19,608 Net Annual 1,587 (412) (573) 285 (1,359) (1,360) (1,037) (979) (808) (872) (866) (1,274) Pension Trust Contribs - - - - 426 441 471 477 478 489 488 485 Balance Sheet Adjusts - (1,039) - - - - - - - - - -
Wastewater Loan - (1,100) - - - 220 220 220 220 220 - - Beginning Fund Balance 5,644 7,231 4,680 4,107 4,392 3,460 2,761 2,415 2,134 2,024 1,861 1,483 Ending Fund Balance 7,231 4,680 4,107 4,392 3,460 2,761 2,415 2,134 2,024 1,861 1,483 693 less: Commit/Assign 1,423 200 200 200 200 200 200 200 200 200 200 200 Unassigned Balance 5,809 4,480 3,907 4,192 3,260 2,561 2,215 1,934 1,824 1,661 1,283 493 Pension Trust (105) 2,781 2,906 3,037 3,173 2,890 2,579 2,223 1,846 1,451 1,027 586 127 Total Avail Balance 8,589 7,386 6,944 7,365 6,149 5,139 4,439 3,780 3,275 2,688 1,868 620 Unassign as % of Exp 40.1% 31.4% 26.7% 27.5% 20.0% 15.5% 12.9% 11.0% 10.1% 8.9% 6.7% 2.5% *net of G&A expense for FY18-24
C – Potential Impact of New Hotels
12 • Assumes both hotels currently in the
planning stages are ultimately
constructed
• Will they get built? Will market support
ultimately two high-end hotels?
• Assumes Hotel Barlow at 80 rooms,
$550 average room rate, 70%
occupancy rate, opens Jan 2028
• Assumes Hotel Sebastopol at 66 rooms,
$350 average room rate, 75%
occupancy rate, opens Jan 2030
• To be conservative, assumes both
hotels start at 60% of full revenue- generating level and phase into that full TOT=Transient Occupancy Tax at 12% of room revenue level over 5 years receipts for stays of under 30 days
C - ¼ cent Measure U + Two New Hotels + No Cuts
13 • Assumes Measure U at ¼ cent rate expires after 12 years (no voter renewal) • Assumes both hotels are built and phase into full expected revenue generating levels • Balance (including Pension Trust ) remains above 15% reserve goal • Hotel revenues subject to wide variance depending on health of the economy; risk is associated with including revenues from two projects that are not yet completed Summary
Forecast
for
Alternate
Scenario C
Measure U at ½
cent for 6 months
and ¼ cent for 11.5
years
No Cuts, Both
Hotels are Built
14 ($ in 000) FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 Property Tax 3,293 $3,444 $3,620 $3,664 $3,813 $3,891 $4,009 $4,211 $4,422 $4,644 $4,830 $5,023 Sales Tax 2,365 2,305 2,251 2,331 2,271 2,259 2,467 2,591 2,720 2,791 2,864 2,801 Local Sales Taxes 2,353 2,322 2,634 3,316 3,224 3,056 3,374 3,486 3,640 3,712 3,808 3,716 Utility Users Tax 851 863 877 924 949 975 1,002 1,030 1,058 1,087 1,117 1,148 Transient Occup Tax 544 519 519 549 537 971 1,604 2,002 2,481 2,656 2,890 2,881 Other Taxes 688 692 717 732 744 749 762 783 804 825 842 856 Intergovernmental 1,726 115 51 51 51 51 51 51 51 51 51 51 Building Permits 558 349 1,040 980 400 408 416 424 433 442 450 459 Fees & Charges 190 171 142 145 140 140 146 153 160 163 166 161 Interest (31) (3) 100 38 18 5 2 4 12 22 34 39
Other Revenues 1,228 673 179 266 269 272 275 278 281 285 288 291 Transfers In 103 102 188 125 126 127 128 130 131 132 133 135 Cost Allocation* 2,190 2,303 1,762 1,802 1,842 1,884 1,926 1,969 2,014 2,059 2,105 2,153 Total Revenue 16,058 13,855 14,080 14,922 14,384 14,788 16,163 17,111 18,208 18,869 19,579 19,715 Salaries 3,987 4,433 4,278 4,452 4,830 4,987 5,149 5,316 5,489 5,667 5,851 6,041 Part-time 415 67 102 104 106 108 110 113 115 117 120 122 Overtime 431 257 251 243 250 258 266 274 282 290 299 308 Pension 1,574 1,512 1,746 1,924 2,132 2,205 2,356 2,387 2,391 2,445 2,439 2,423 Health/OPEB 870 966 972 1,140 1,208 1,244 1,281 1,319 1,358 1,399 1,440 1,483 Other Personnel 888 1,051 977 983 1,009 1,036 1,063 1,091 1,120 1,149 1,180 1,211 Vacancy Savings - - - (354) (381) (393) (409) (420) (430) (443) (453) (464) Subtotal Personnel 8,164 8,286 8,326 8,492 9,153 9,444 9,816 10,080 10,324 10,625 10,876 11,125 Services & Supplies 3,384 3,345 4,412 3,226 3,307 3,390 3,474 3,561 3,650 3,742 3,835 3,931 Liability Insurance 571 651 641 554 567 582 596 611 626 642 658 675 Utilities 341 354 553 550 564 578 592 607 622 638 654 670 Contributions 580 257 80 82 84 86 88 91 93 95 97 100
Fire District/Contract - - - 1,150 1,220 1,292 1,366 1,444 1,524 1,607 1,693 1,783 Debt Service 254 300 208 446 389 111 86 86 86 86 86 86
Capital/Other Tfrs Out 1,176 1,074 433 432 442 453 465 476 488 500 513 526 Asset Preservation Adds - - - 300 600 615 630 646 662 679 696 713 Total Expense 14,470 14,267 14,653 15,231 16,326 16,551 17,115 17,602 18,077 18,614 19,109 19,608 Net Annual 1,587 (412) (573) (310) (1,942) (1,763) (952) (491) 132 255 470 106 Pension Trust Contribs - - - - 426 441 471 477 478 489 488 485 Balance Sheet Adjusts - (1,039) - - - - - - - - - -
Wastewater Loan - (1,100) - - - 220 220 220 220 220 - - Beginning Fund Balance 5,644 7,231 4,680 4,107 3,797 2,281 1,180 919 1,126 1,956 2,919 3,877 Ending Fund Balance 7,231 4,680 4,107 3,797 2,281 1,180 919 1,126 1,956 2,919 3,877 4,468 less: Commit/Assign 1,423 200 200 200 200 200 200 200 200 200 200 200 Unassigned Balance 5,809 4,480 3,907 3,597 2,081 980 719 926 1,756 2,719 3,677 4,268 Pension Trust (105) 2,781 2,906 3,037 3,173 2,890 2,579 2,223 1,846 1,451 1,027 586 127 Total Avail Balance 8,589 7,386 6,944 6,771 4,971 3,558 2,943 2,772 3,207 3,747 4,263 4,395 Unassign as % of Exp 40.1% 31.4% 26.7% 23.6% 12.7% 5.9% 4.2% 5.3% 9.7% 14.6% 19.2% 21.8% *net of G&A expense for FY18-24
D - ½ cent Measure U + One New Hotel + No Cuts
15 • Assumes Measure U at ½ cent rate expires after 12 years • Assumes one hotel opens in Jan 2028 at lower revenue level, and the other is not built • Balance (including Pension Trust ) levels off above 15% reserve goal • Requires resolution of local sales tax rate cap; there is still some risk of assuming new hotel TOT revenue, but includes only one, not two
Summary
Forecast
for
Alternate
Scenario D
Measure U is ½
cent for 12 Years
No Cuts, One Hotel
is Built
16 ($ in 000) FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 Property Tax 3,293 $3,444 $3,620 $3,664 $3,813 $3,891 $4,009 $4,211 $4,422 $4,644 $4,830 $5,023 Sales Tax 2,365 2,305 2,251 2,331 2,271 2,259 2,467 2,591 2,720 2,791 2,864 2,801 Local Sales Taxes 2,353 2,322 2,634 3,905 3,796 3,849 4,268 4,363 4,537 4,607 4,722 4,605 Utility Users Tax 851 863 877 924 949 975 1,002 1,030 1,058 1,087 1,117 1,148 Transient Occup Tax 544 519 519 549 537 794 1,169 1,266 1,363 1,426 1,521 1,487 Other Taxes 688 692 717 732 744 749 762 783 804 825 842 856 Intergovernmental 1,726 115 51 51 51 51 51 51 51 51 51 51 Building Permits 558 349 1,040 980 400 408 416 424 433 442 450 459 Fees & Charges 190 171 142 145 140 140 146 153 160 163 166 161 Interest (31) (3) 100 43 30 23 25 29 35 41 48 49
Other Revenues 1,228 673 179 266 269 272 275 278 281 285 288 291 Transfers In 103 102 188 125 126 127 128 130 131 132 133 135 Cost Allocation* 2,190 2,303 1,762 1,802 1,842 1,884 1,926 1,969 2,014 2,059 2,105 2,153 Total Revenue 16,058 13,855 14,080 15,516 14,968 15,421 16,645 17,276 18,009 18,552 19,139 19,219 Salaries 3,987 4,433 4,278 4,452 4,830 4,987 5,149 5,316 5,489 5,667 5,851 6,041 Part-time 415 67 102 104 106 108 110 113 115 117 120 122 Overtime 431 257 251 243 250 258 266 274 282 290 299 308 Pension 1,574 1,512 1,746 1,924 2,132 2,205 2,356 2,387 2,391 2,445 2,439 2,423 Health/OPEB 870 966 972 1,140 1,208 1,244 1,281 1,319 1,358 1,399 1,440 1,483 Other Personnel 888 1,051 977 983 1,009 1,036 1,063 1,091 1,120 1,149 1,180 1,211 Vacancy Savings - - - (354) (381) (393) (409) (420) (430) (443) (453) (464) Subtotal Personnel 8,164 8,286 8,326 8,492 9,153 9,444 9,816 10,080 10,324 10,625 10,876 11,125 Services & Supplies 3,384 3,345 4,412 3,226 3,307 3,390 3,474 3,561 3,650 3,742 3,835 3,931 Liability Insurance 571 651 641 554 567 582 596 611 626 642 658 675 Utilities 341 354 553 550 564 578 592 607 622 638 654 670 Contributions 580 257 80 82 84 86 88 91 93 95 97 100
Fire District/Contract - - - 1,150 1,220 1,292 1,366 1,444 1,524 1,607 1,693 1,783 Debt Service 254 300 208 446 389 111 86 86 86 86 86 86
Capital/Other Tfrs Out 1,176 1,074 433 432 442 453 465 476 488 500 513 526 Asset Preservation Adds - - - 300 600 615 630 646 662 679 696 713 Total Expense 14,470 14,267 14,653 15,231 16,326 16,551 17,115 17,602 18,077 18,614 19,109 19,608 Net Annual 1,587 (412) (573) 285 (1,359) (1,129) (470) (326) (68) (62) 30 (389) Pension Trust Contribs - - - - 426 441 471 477 478 489 488 485 Balance Sheet Adjusts - (1,039) - - - - - - - - - -
Wastewater Loan - (1,100) - - - 220 220 220 220 220 - - Beginning Fund Balance 5,644 7,231 4,680 4,107 4,392 3,460 2,991 3,213 3,585 4,215 4,862 5,380 Ending Fund Balance 7,231 4,680 4,107 4,392 3,460 2,991 3,213 3,585 4,215 4,862 5,380 5,475 less: Commit/Assign 1,423 200 200 200 200 200 200 200 200 200 200 200 Unassigned Balance 5,809 4,480 3,907 4,192 3,260 2,791 3,013 3,385 4,015 4,662 5,180 5,275 Pension Trust (105) 2,781 2,906 3,037 3,173 2,890 2,579 2,223 1,846 1,451 1,027 586 127 Total Avail Balance 8,589 7,386 6,944 7,365 6,149 5,370 5,236 5,231 5,466 5,689 5,765 5,403 Unassign as % of Exp 40.1% 31.4% 26.7% 27.5% 20.0% 16.9% 17.6% 19.2% 22.2% 25.0% 27.1% 26.9% *net of G&A expense for FY18-24
Pension Cost Forecast
17 Basis for Lower CalPERS Investment Return Assumption 18 • CalPERS investments are volatile, and have been on slow overall downward trend over past 30 years
• CalPERS plans to leverage its investments in private
equity (carries greater risk and volatility of return) to achieve its 6.8% return target
• Forecast assumes 6.2% average returns to be
conservative, given risks inherent in CalPERS’
investment strategy
• Discount rate is investment rate of return assumed
by CalPERS
• Discount rate has been lowered several times over
past 45 years, from high of 8.75% to current 6.8%
• Following the 45-year linear trend of discount rates, in 20 years discount rate would theoretically be 6.0%
• However, forecast assumes the current 6.8%
discount rate is maintained; if discount rate is
lowered, City costs will be higher in near-term, and
lower in long-term Source: CalPERS
Summary of Pension Costs-Citywide
19 • Assumes 6.8% discount rate and 6.2% average return • UAL shrinks significantly, but begins to grow again assuming returns average less than the discount rate; if discount rate drops, costs to City increase in near-term but UAL eventually is paid off
• If returns are higher, then UAL is paid down faster; at 6.8% returns and 6.8% discount rate UAL is (in theory) paid off completely in 2045 Source: CalPERS Pension Outlook Model