FY 2026-27 Proposed Budget
May 13, 2026 – Budget Subcommittee Meeting
City of South San Francisco
Presented by: Christie Donnelly, Finance Director
Agenda
2 Key Themes / Overview
FY 2025-26 (Current Year) General Fund Projection
FY 2026-27 General Fund Proposed Budget
Summary
Anticipated Revenues & significant drivers
Anticipated Expenditures & significant drivers
Fund & Reserve Balances
FY 2026-27 Recommended Departmental Adjustments
Positions
Appropriations Adjustments – General Fund
Appropriations Adjustments – Non-General Fund
Takeaways
Requests & Questions
Key Themes &
Budget Overview
Key Themes
4 •Balanced Budget Preserves Current Service Levels
•Limited Reserve Use Addresses Near-Term VLF Impacts
•Prior-Year Budget Slack Reduced
•Revenue Uncertainty Remains, Especially Related to VLF •One-Time Funds Are Not Used for Ongoing Operations
Overview
5 What this Budget Is & What it Does:
• Balanced operating budget – with small (VLF-related) transfer from general fund available unassigned fund balance (i.e.; reserves)
• Addresses anticipated VLF shortfall for the Current FY • Utilizes all available funding sources to maximize availability • Proposes modest departmental increases
• Reduces slack identified in PY budgets
• Preserves current staffing and service levels
• Preserves all prior commitments and Council encumbrances for services and projects What this Budget Is Not & What it Does Not Address:
• Does not address FUTURE or Not-Yet-Known Impacts due to VLF shortfall • Current Year base – unknown number of basic-aid schools • Future Year backfill – unknown action by state: budget, legal action, legislative fix • Inflationary impacts of VLF
• Does not address future CalPERS UAL increases due to not-yet-determined metrics • Does not utilize one-time money/project funds to fund ONGOING operational needs 2025-26 Projected FYE
FY 2025-26 General Fund Projection (Excluding Meas W) (in millions) 7 2025-26
Adopted
Budget
Mid-Year 2025-26
Projected FYE
Updated 2025-26
Projected
FYE
Revenues/Transfers In $ 140.5 $ 154.7 $ 158.4
Expenditures/Transfers Out (152.7) (160.5) (159.0)
2026-27 Proposed Budget
Revenue Updates
Property Tax
Property Tax - VLF
• Projected 3.5% secured property tax revenue increase
• Reset to increased base for unsecured property tax revenue • Continued and rising uncertainty.
• Expected Current Year payment: reduced from $7.0M to $5.7M. • Expected Prior Year Backfill: Zero ($0) budgeted.
• Volatile landscape - Depending upon multitude of factors (basic-aid school count, state budget decisions, legislative fix, etc.) – these numbers are likely to change, possibly even soon.
Transient Occupancy
Tax (TOT)
• Strong recovery since the pandemic.
• 6% increase over the current year’s revised projection • Equals a13% increase over the current adjusted budget. • Will continue to monitor closely.
Transfer from Measure W • Measure W transfer in order to offset the increased cost needed to operate the new Aquatic Center.
• Operating the pool is an essential community service
• The expanded facility (Measure W -funded )increases ongoing operational costs.
General Fund Revenue Updates
9 General Fund Expenditure Updates
10 Expenditure Updates
Base Payroll Update • Salary and benefits are projected to increase 3.4% over adjusted budget due to:
• 4.1% COLA, 3.7% CalPERS UAL payment, and Health Premium (3.2% for Kaiser, 9.2% for Blue Shield) increases.
• A vacancy factor of $8.0M salary savings is assumed (approx. 6.4%) Services and Supplies
Adjustment
• Removed approx. $2.4M from the base budget to align the base budget with demonstrated spending patterns.
• This is in addition to $6.0M in savings realized in the current FY.
Interdepartmental
Charges Adjustment
• Increase of $2.5M across all funds ($2.0M GF) to align budget charges with the City’s actual risk-management obligations.
FY 2026-27 General Fund – Proposed Budget Summary (in millions) 11 Beginning Available* Fund Balance $ 42.5
Revenues 156.9
Less: Expenditure 162.4
Surplus/ (Deficit) (5.5)
Use of Available Unassigned Balance 5.5
Net Surplus/(Deficit)
Balanced
Budget
Ending Available Fund Balance** $ 40.5
*Available fund Balance is unassigned general fund balance after policy-level reserves subtracted **20% reserve requirement decreased $3.5M due to lower proposed revenue FY 2026-27 – Projected General Fund Balance
12 FY 2026-27 Projected General Fund Balances (in millions)
FYE Restricted & Committed Total $ 29.6
FYE Reserves Total $45.8
FYE Available Unassigned Fund Balance $ 40.5
13 (in millions)
FY 2026-27 General Fund Unassigned Fund Balance
(progression over time)(in millions)
14 2024-25
Actuals
FYE
Mid-Year
2025-26
Projected
FYE
Updated
2025-26
Projected
FYE
2026-27
Proposed
Budget
Available Unassigned - Begin $25.3 $ 43.1 $ 43.1 $42.5
Revenues 167.9 $ 154.7 158.4 156.9
Expenditures (150.1) (160.5) (159.0) (162.4)
Surplus (Deficit) $ 17.8 $ (5.8) $ (0.6) $ (5.5)
Available Unassigned - End $ 43.1 $ 37.3 $ 42.5 $ 40.5
Total Unassigned Balance - End $92.4 $86.6 $ 91.8 $ 86.3 Less: Reserves (49.3) (49.3) (49.3) (45.8)
Available Unassigned - End $ 43.1 $ 37.3 $ 42.5 $ 40.5
Recommended Departmental
Adjustments
Non-Personnel
Operating Positions
Position Adjustments
Parks and Recreation
• Convert 1.0 FTE Building Maintenance Stationary Engineer to Lead Crafts Person • Convert 1.0 FTE Arborist Technician to Parks Maintenance Supervisor Public Works
• Convert 1.0 FTE Utility Locator to Senior Public Works Maintenance Worker Position Adjustments – Budget Neutral
17 Parks and Recreation – Measure W & increased pool revenue • Add 15.77 FTE Aquatics Positions
• Add 0.5 FTE Park Maintenance Worker - Hourly
• Add 0.5 FTE Building Maintenance Custodian
Economic and Community Development -
• Convert - 1.0 FTE Management Analyst I to Management Analyst II Information Technology – ISF Fund: Allocated in part to GF • Add 1.0 FTE Information Technology Manager
Position Adjustments – Offset through non-GF Funds
18 City Manager’s Office
• Remove – (1.0) FTE Diversity, Equity, and Inclusion Officer Library:
• Add 1.0 FTE Librarian II (GF)
• Add 0.5 FTE Office Specialist – Hourly (GF)
Oyster Point CFD – Special Tax B (Fund 236):
• 3 Positions previously subsidized by General Fund now able to be funded by increased revenue to Fund 236
• Parks Maintenance Worker
• Lead Parks Maintenance Worker
• Senior Parks Maintenance Worker
Position Adjustments – General Fund
19 Non-Personnel Operating
Adjustments
General Fund Appropriation
Adjustments - $1.7M total
1. City Attorney
• Expense: $55k Contract Increase
2. City Clerk
• Expense: $200k Elections
3. Economic & Community Development
• Expense: $493k
• $218k EAC Operation Costs and Rent
• $200k Legal Fees (adjustment)
• $75k Consulting Fees
• Revenue: $41k Rent
General Fund Appropriations Adjustments - $1.7M total
22 4. Fire
• Expense: $262k
• $105k EMS-band Radio Replacement
• $157k Supplies and Services – detailed on Attachment 2
5. Human Resources
• Expense: $340k Contract Negotiations and Staffing Study
6. Library
• Expense: $40k PLS Network Increase
• Revenue: $89k Project Read, ASES Grant, and Fines and Fees General Fund Appropriations Adjustments - $1.7M total
23 7. Parks and Recreation
• Expense: $310k
• $249k Orange Memorial Park Aquatics Center pool-related expenses • $61k Utility increase for new parks
• Revenue: $245k Aquatics Expansion
8. Police
• Revenue: $24k Dispatch Services
9. Public Works
• Expense: $11k Additional Services and Supplies, Meeting and Training expenses General Fund Appropriations Adjustments - $1.7M total
24 Non-General Fund Appropriation
Adjustments - $2.2M total
1. Economic & Community Development
• $30k General Plan Website Maintenance
• $30k Developer Deposits
• $300k Housing Service Contracts
• $100k Affordable Housing
• $200k Commercial Linkage Impact Fee
2. Fire
• $525k Portable Radio Replacement and Fire Alerting Hardware:
• $410k Measure W
• $115k Fire Impact Fee
3. Police
• $525k Handgun and Body-Worn/In-Car Cameras and Taser Replacement:
• $359k Measure W
• $166k Police Impact Fee
Non-GF Appropriations Adjustments - $2.2M total
26 4. Public Works
• Expense: $518k
• $510 Stormwater Capture Maintenance and Permit Fee Increase – Stormwater Fund • $8k Safety Attire and Equipment – Sewer Fund
• Revenue: $686k Sewer Rate Increase – Sewer Fund
5. Information Technology
• Expense: $309k Software and Equipment
• $309k Internal Service Fund
6. Stormwater Fund
• Due to statutory limitations, this is currently heavily subsidized with transfers from the General Fund and Gas Tax revenues. This year, an increase of $500k from Measure W to the Stormwater fund is proposed to cover the expenses of operating the City’s new storm capture improvement.
Non-GF Appropriations Adjustments - $2.2M total
27 Key Takeaways
• City is in relatively good financial health overall
• Unassigned Fund balance position establishes resiliency to withstand economic cycles
• Prudence requires us to discuss and plan for long-term solutions to ongoing & increasing budget deficit
• Budget and forecast will continue to be monitored, updated and refined throughout the year – update(s) will be presented as soon as needed
29 Key Takeaways
• Input on Use $5.5M of General Fund Unassigned Fund
Balance to balance current year General Fund budget.
• Input on Use of $1.1M of Measure W operating revenue
to fund increased costs of Measure-W funded Aquatic
Center
• Any additional guidance to staff in preparation for the City Council study on May 27, 2026.
30 Requested Actions of the Committee
Questions?
FY 2026-27 Proposed Budget
City of South San Francisco
THANK YOU
FOR JOINING US TODAY