Presented by Ana Kwong, June 2025
Presentation to City Council
City of Sebastopol Budget
July 1, 2025 - June 30, 2026
Meeting 1
Budget Changes from June 3 to June 17
• Revised Measure U revenues increased $152,000
• Measure U associated expenses increased $75,000 (reflecting 40% policy) • City’s Bottom line improved by $77,000
• New Total Budget Surplus is $148,249
City of Sebastopol Budget July 1, 2025 - June 30, 2026
What we'll cover today:
•Where the city gets money (revenue)
•Where the city spends money (expenses)
•Keeping the budget balanced, How we plan for the future •Financial Forecast Overview
•Cost Allocation Plan
•All fund overviews
•General Fund: Revenues Sources | Measure U | Expenses by Department •Staffing
•Enterprise Funds
•Special Revenue Funds
•Insurance Fund
Budget Committee: Councilmembers Maurer & Carter, Acting City Manager Mary Gourley, Administrative Services Director Ana Kwong
Where money comes from: $32 Million
• Property taxes from homes and businesses
• Sales taxes from stores and restaurants
• Water and sewer bills
• Building permits and fees
• State and federal grants
Where money goes: $29.1 Million
•Police and fire protection
•Roads and infrastructure
•Parks and recreation
•City personnel costs
•Water and sewer services
City Budget Monetary Flow
What This Budget Accomplishes
• A balanced budget ( income ≥ expense )
• Maintains current city staffing levels
• Improves services, accommodates annual goals
• Invests min $300K annually (starting FY27) in fixing roads, buildings, and equipment • Prepares for economic uncertainty ( forecasted in 2027 recession) & responsible revenue projections
• New $1.1M annual payment to Gold Ridge Fire District
Key Highlights
• Financial Health & Reserves: General Fund at 27.6%
• Property tax growth: 5% on average, includes new construction and Prop 13 (max 2%) • Sales tax growth: 3% on average
• Measure U revenue @ .25% until legislation passage (0.50% for first 6 months | 0.25% for last 6 months) • Pension costs based on CalPERS investment assumptions • Employee compensation reflects a 5% adjustment in the budget (approved by Council on January 7, 2025) plus any standard annual merit increases where applicable. • $1.1M wastewater loan gets repaid to city (FY28-32)
• Hotel Barlow to include permit fee impact in ’25-26 budget • The term Cost Allocation Plan -> a mechanism to allocate shared costs by distributing general fund staff and/or resource to enterprise funds based on time spent or usage. 1 – COMMUNITY VITALITY
2 – PUBLIC SAFETY
3 – INFRASTRUCTURE
4 – HIGH PERFORMANCE ORGANIZATION
5 – LONG TERM FINANCIAL SUSTAINABILITY
6 – ECONOMIC DEVELOPMENT
Sebastopol City Goals
Baseline Forecast:
Steady Decline in Fund Balance
• Measure U: (7/25-12/25) = 0.5%, (1/26-
6/26) = 0.25%
• FY27 recession with subsequent recovery;
recessions every 7 years thereafter
• Structural shortfall averages near $1.0M
per year from FY24-FY34
• Pension Trust diverts to general fund in
FY27 and is depleted in FY34;
• Unassigned balance continues to fall;
below minimum 15% reserve level starting
FY30
• Requires $500K additional revenues or
reduced spending starting FY27 to achieve
unassigned balance of 20% by FY34
Alternative 1:
Measure U Continues @ 0.5% Rate, NO HOTEL
• Assumes approval is secured for
0.5% ( 1/26 - sunset )
• Measure U tax rate remains in
effect over its entire 12-year term
• Structural shortfall eliminated,
creating fiscal capacity to improve
services and/or capital funding
• Includes impact of FY27 recession
and subsequent recovery;
recessions every 7 years
thereafter
Alternative 2:
Measure U = 0.25% Rate, + Barlow Hotel
• Measure U: (7/25-12/25) = 0.5%, (1/26-
6/34) = 0.25%
• Barlow Hotel opens July 2027 (83
rooms, $350 average room rate, 70%
occupancy; with a high-end hotel in a
new market, experience will be
required to determine revenue
generation capability of this property
• Significant growth in TOT results; shows
impact of following recession in FY34
• Structural shortfall eliminated, just
above reserve goal through FY34
Alternative 3:
Measure U @ 0.50% Rate + Barlow Hotel
• Measure U continues at 0.50% rate
through its entire 12-year term
• Assumes Barlow Hotel opens July
2027 (83 rooms, $350 average room
rate, 70% occupancy ramped up
over 5 years)
• Structural shortfall eliminated;
balance shows significant growth
starting FY29
Cost Allocation Plan
Shared service cost recovery between departments for utility-related support The current cost allocation structure, based on standard industry methods for indirect costs, was approved by the City Council in February 2024. City staff will review the Indirect Cost Allocation Plan in FY 2025-26 to determine if updates are needed. Any proposed changes will be presented to the City Council mid-year for consideration.
FY 2025-26 Revenue | Expenditures Overview by Fund
0.00 M 4.00 M 8.00 M 12.00 M 16.00 M
General Fund
Special Revenue Fund
Wastewater Fund
Water Fund
General Fund "Assigned" Reserves
Assessment District
Non-Governmental Funds
$15,314,718
$6,020,117
$5,657,903
$4,006,748
$665,000
$140,658
$119,900
$15,166,469
$5,559,904
$4,469,823
$2,980,007
$575,500
$139,278
$227,600
Revenue Expenses
FY 2025-26 General Fund Revenue Sources %
Property Tax
24%
Sales Taxes
38%
Transient
Occupancy Tax
3%
Licenses &
Permits
8%
All Others *
27%
*user taxes (UUT), franchise fees, charges for services, cost allocation plan, transfers FY24-25 Measure U
• April–June 2025 (Last Quarter of FY24-
25) – full 0.5%
• Projected Revenue: $375,000
$.005 guaranteed by the State
$.0025 temporarily supported by the County
• 40% policy put in to Building, Facilities
and Infrastructure: ($150,000)
• Remaining funds to be used for
operations: $225,000
FY25-26 Measure U
• FY25-26 (July 2025-June 2026)
• Projected Revenue: $1,125,000
$.0025 guaranteed by the State (06/25-6/26)
$.0025 temporarily supported by the County (06/25-
12/25)
• 40% policy put in to Building, Facilities
and Infrastructure: ($450,000)
• Remaining funds allocates to operations:
$675,000
FY 2025-26 Expenditures By Department
'- 1,500,000 3,000,000 4,500,000 6,000,000
Police
Public Works | Engineering
Administrative Services
Fire
Community Development
City Attorney
City Manager
Assistant Cty Mgr | City Clerk
Transfers
Building
Ives Pool
City Council
Community Center
Debt Service
Non Departmental
Senior Center
$5,762,328
$2,496,015
$1,466,539
$1,237,640
$701,666
$643,750
$581,282
$470,818
$450,000
$437,909
$225,761
$183,214
$164,202
$150,755
$146,940
$47,650
($1.1M contract + pension cost and fire inspection fee passthrough) City Personnel
• 53 Full-Time Equivalent
positions
• FY 25 26 Budget Includes
COLA or step increases
• Maintains current staffing
levels (other than Fire
personnel who have merged
with Gold Ridge Fire
Department)
• 2 Positions Remains Frozen
(Laborer & Police Officer)
• No layoffs or furloughs
proposed for FY 25 26
0 8 15 23
City Manager
Assistant City Manager | City Clerk
Building
Community Development
Administrative Services
City Council
Public Works | Engineering
Police
11 2
3 4
5 15
22 FY 2025-26 Water Fund Revenue Proposed Budget
Single Family
51%
Commerical
43%
Water Tower
2%
Others *
4%
*Others: interest income, new
account set up fee, penalties
FY 2025-26 Water Fund Expenses Proposed Budget
Salaries &
Benefits
21%
Professional
Services & Others
16%
Utilities
11%
Cost Allocation
Plan
30%
All Others
22%
FY 2025-26 Wastewater Fund Revenue Proposed Budget
Single Family
49% Commerical
50%
Others *
1%
*Others: interest income, penalties
FY 2025-26 Wastewater Fund Expenses Proposed Budget
Salaries &
Benefits
13%
Professional
Services &
Others
7%
Subregional
46%
Cost Allocation
Plan
22%
All Others
12%
FY 2025-26 Special Revenue Funds
Proposed Budget
• Money that comes with rules about how it can be spent, like having separate piggy banks for different purposes. For instance:
Gas Tax income can only fix roads
Park Fees can only improve parks
• Supports ongoing capital projects
• We keep 25+ different funds to follow these rules
• Each of these fund can be found on pages 139-173
FY 2025-26 Insurance Fund Proposed Budget
• The City is part of a joint powers authority (JPA) risk pool. • Insurance Budget - pages 174-175
• Each year, the California Intergovernmental Risk Authority (CIRA) determines the premiums for various types of insurance, and the City budgets and distributes those costs accordingly. • Workers’ compensation premium and deductible costs are paid from the insurance fund, then proportionally allocated to all departments based on their total salary • General liability premium and deductible costs are paid from the insurance fund, then distributed proportionally across all departments based on prior year expenditures Open to Receive Comments from the Public
• Additional City Council Questions of Staff
• Council Discussion/Deliberations
• Budget Discussion continues with the following options:
Schedule a special meeting before June 30th
Or budget continues at next scheduled meeting on July 1 and/or July 15, 2025 • Council discussion/deliberations/action will be conducted at a future city council meeting