Woodland Tourism Business Improvement District | 20 25/2026 Annual Report Page 9 At the time this Report was prepared, the hotel properties numbered 1 through 12 and 14 above comprise the entire District for Fiscal Year 2025/2026 and are proposed to be assessed in accordance with the System of Assessmen t established by ordinance and described in the “Assessment Methodology” section o f this Report. Furthermore, Courtyard by Marriott is currently under constructi on and anticipated to open sometime during the upcoming fiscal year.
The general location of each District hotel being assessed for Fiscal Year 2025/2026, as well as those under construction, as referenced in the preceding table, are identified within the District Boundary Diagrams provided on the pages that follow.
Woodland Tourism Business Improvement District | 2025/2026 Annual Report Page 10 District Boundary Diagrams
Woodland Tourism Business Improvement District | 2025/2026 Annual Report Page 11
Woodland Tourism Business Improvement District | 2025/2026 Annual Report Page 12
Woodland Tourism Business Improvement District | 2025/2026 Annual Report Page 13
TO: THE HONORABLE MAYOR AND CITY COUNCIL
AGENDA: City Council Regular Meeting
DATE: June 3, 2025
ITEM #: J.13
SUBJECT: Presentation of the FY2025/26 Proposed Budget
Recommendation for Action: Staff recommends that the City Council receive a presentation on the proposed budget for Fiscal Year 2025/26.
Discussion:
The staff report was not completed at the time of publication. A supplemental report will be completed once the staff report has been approved.
Attachments:
None
MEMORANDUM
DATE:
T
O:
F
ROM:
SUBJECT:
June 2, 2025
City Council
Ken Hiatt, City Manager / Sarah Lansburgh, City Clerk
Item J.13. Supplemental Staff Report No. 1 – Presentation of the FY2025/26 Proposed Budget
The City Council Agenda and Agenda Packet for the June 3, 2025 regular meeting was published on Friday, May 30, 2025. A t the time of publication, the staff report for Item J.13. was not completed. The staff report has since been completed as ‘Supplemental Staff Report No. 1,’ and is attac hed to this memorandum for the City Council’s review.
cc: City Manager
C
ity Attorney
City Clerk
En
c
TO:
AGENDA:
DATE:
ITEM #:
SUBJECT:
THE HONORABLE MAYOR AND CITY COUNCIL
City Council Regular Meeting
June 3, 2025
J.13
Presentation of the FY2025/26 Proposed Budget
Recommendation for Action: Staff recommends that the City Council receive a presentation on the proposed budget for fiscal year 2025/26.
Staff Contact:
Karie Farnham, Financial Services Manager, (530) 661-5846, [email protected] Background:
The City's annual budget process is a lengthy process, including all City departments and spanning several months. The budget process begins around December each year, and typically includes several discussions with the Council, including quarterly updates, budget workshops, spending plan discussions, incorporates City Council's goals and priorities, and ultimately includes presentation of staff's recommended budget. The City's Proposed Budget for fiscal year(FY) 2025/26 includes assumptions consistent with the information provided to Council at the April 1, 2025 budget workshop and includes limited new items recommended for funding approval.
Discussion:
The proposed budget totals $222.7 million, supporting city operating funds of $211.99 million, capital projects of $10.7 million and debt service obligations of $24.36 million; this represents an decrease of less than 1% from last year’s adopted budget.
The budget includes a set of specific funding recommendations totaling $5.13 million, including $3.66 million in one-time funding allocations and $1.47 million in ongoing budget augmentations. Although there are recommended adjustments to some authorized positions, the proposed FY2024/25 full-time equivalent staffing level of 327 positions, which includes one more position than FY2024/25, remains
26.5 positions (7.5%) fewer than the pre-recession staffing levels of FY2008/09.
The General Fund budget, totaling $74.78 million, as proposed, represents an increase of $2.52 million (3.5%) from the prior year, including $121,243 in recurring funding recommendations and another $179,500 in one-time funding allocations from available excess General Fund reserves. The overall budget proposal, which includes specific funding recommendations to meet selected priority needs would, if approved, result in an anticipated year-end unreserved fund balance in the General Fund of $15.67 million (26%), or $3.68 million above the Council's adopted reserve policy level of 20%.
The proposed FY2025/26 Capital Improvement Program (CIP) budget includes new funding recommendations totaling $10.7 million, of which $5.3 million is allocated for investment in transportation infrastructure, $4.5 million to advance capital projects in water, sewer, and storm drain utilities, $100,000 for Park Facilities projects, $450,000 for Spring Lake related projects, and $85,000 supports the library.
The overall budget proposal remains consistent with the City’s framework for advancing the Council’s goal of fiscal stability. The proposed FY2025/26 budget uses minimal amount of budget flexibility to address priority needs. As the City continues to make progress in addressing its long-term structural
budget deficit, focus remains on efforts to manage personnel costs, address unfunded liabilities, and explore opportunities for revenue enhancement. Specifically, the budget proposal presented herein shows a deficit of $3.22 million in FY2025/26 and reflects a growing deficit of $7.2 million by the end of the five-year forecast’s planning horizon. This ongoing budget gap is attributable to expenditures outpacing revenues, especially related to inflationary costs for essentially all City purchases, ongoing increases in utility rates charged by PG&E, rising premiums in an increasingly volatile insurance market, and continued increases in retirement contribution rates resulting from under-performing investments and the shifting of assumptions at CalPERS.
Proposed Budget Recommendations
Overall, the Proposed Budget is consistent with the budget framework developed over the past several fiscal years as well as feedback provided by the City Council through its regular quarterly budget updates and the Spring Budget Workshops held in April.
As has been the case in recent years, the budget incorporates fairly conservative revenue estimates, which contribute to limited discretionary budget flexibility. The ability of the City to maintain and increase reserve levels over the last several years has provided an opportunity to exercise diligence in implementing long-term, sustainable structural budget changes, while also providing the ability to utilize a prudent amount of one-time funding to address priority needs, above what can be supported by the baseline budget.
Several baseline General Fund budget adjustments are recommended in order to provide for a balanced budget and contribution to additional budget flexibility to support priority unmet needs.
The following summarizes the specific General Fund one-time funding recommendations included as part of the FY2025/26 Proposed Budget:
In addition, staff is proposing some limited ongoing funding recommendations in the General Fund.
The following table summarizes the recommendations for limited supplemental funding for recurring annual appropriations in the General Fund:
Staff is recommending both one-time and ongoing allocations for requests from other funds throughout the City that have sufficient ongoing revenues or reserve balances.
The following table summarizes the recommendations for limited supplemental funding for recurring annual appropriations in Other Funds:
The following also summarizes the specific Other Funds one-time funding recommendations included as part of the FY2025/26 Proposed Budget:
These funding recommendations will be discussed in more detail during the Council presentation.
Capital Budget Overview
A major component of the City's annual budget process is the update to the five-year Capital Improvement Program (CIP). For FY2025/26, the CIP budget proposes funding totaling $10.7 million, allocated as follows:
Many of the projects in the CIP have also been included in previous Council discussions regarding the various spending plans for the City's sales tax measures, or were included in the water and sewer rate studies approved by Council. These projects were described and discussed in the Council report
received on May 13, 2025. In summary, a few of the highlighted projects included in the discussion were as follows:
Project 17-05 ASR Wells #31: Construction of Aquifer Storage and Recover (ASR) capable wells was evaluated as a component of the surface water project with three ASR wells anticipated initially.
Ultimately, four ASR wells are needed in the City. The new ASR well would replace the existing Well 6, which was constructed in 1976. The site is adjacent to the transmission main on West Street and will effectively distribute water on the west side of the City. The site is also expected to be a good producing aquifer. The project involves drilling a new well and construction of the ASR-capable well and pump house. Construction of this well was planned for in the currently approved water rates.
Project 14-02 Water Pollution Asset Replacement Project: The City's Water Pollution Control Facility (WPCF) has numerous assets that allow the plant to work as designed. The Asset Replacement Project works to fund planned equipment replacement and balance the capital costs of equipment replacement over several years to minimize rate impacts. Projects typically include replacement of pumps, mechanical bar screens, aeration equipment, and the generator at the end of their useful life. The currently approved sewer rates include an annual allocation to asset replacement projects.
Project 24-06 I-5/SR113 Freeway to Freeway Connector Project: This project, which will ultimately include the construction of the freeway to freeway connectors from northbound I-5 to southbound SR113 and northbound SR113 to southbound I-5, is needed to serve regional traffic growth and to maintain adequate level of service on Main Street and other routes in the City. The project is identified in the Streets Master Plan and the Sacramento Area Council of Governments Regional Plan. The City recently received a Federal Earmark of $1.05M. The City will use this funding, along with approximately $700K of City funding, to complete a Supplemental Project Report.
Project 06-14 Annual In-House Road Program Support: This ongoing project includes two components. Approximately $250,000 of this total is used to fund materials and labor for work done by in-house road crews for road program support, including preparatory work for the annual road maintenance and rehabilitation projects as well as maintenance work done throughout the City. The remaining $750,000 is used to supplement the ongoing operations of the City's road crews. This additional funding is needed to offset the declining revenues received from the combination of gas taxes and the Transportation Development Act funds allocated and shared between the City and Yolo Transit District.
As has been the case for the last ten years, CIP funding relies heavily on grants, sales tax measures and utility funds. While development impact fee funds have improved over recent years due to healthy development activity, many categories continue to face challenges with accumulated deficits, ongoing debt service and limited availability of money for project expenditures.
Looking Ahead
In preparation for the transition to a new fiscal year, there are a number of issues on the horizon that will have a direct impact on the City’s ability to sustain the current and proposed service levels and/or provide additional budget flexibility to advance specific priority needs not provided for in this budget proposal.
Revenue Updates
This City's fiscal outlook has historically reflected increases in expenditures that outpace forecasted revenue growth. Fortunately, for the last several years, actual revenue growth, particularly in the areas of sales tax and development related fees, has been better than expected. This helped to cushion the continued growth of total City expenditures over the same time, and to help increase the
City's reserve balance. However, beginning in FY2022/23, the City's sales tax revenue, which is the single largest revenue source for the General Fund, began to decline. This decline continued into FY2023/24, and is expected to continue through FY2025/26, when moderate growth is projected to return. The five-year forecast was significantly impacted by the changed sales tax assumptions and contributed to the growing deficit. Other revenue sources are expected to grow, but at moderate rates, particularly in the short term. To correct the forecasted deficits, new revenue sources and/or enhancements to existing revenues will be required. There are opportunities for revenue growth in the near term, but to remain conservative and await better information, staff have not yet included new revenue for these items. For example, although there is progress toward active commercial cannabis dispensaries operating in Woodland, no revenues have been assumed within the forecast.
Similarly, several new hotels are under construction in the City and will likely open for business in the coming year, but the forecast does not assume collection of any new transient occupancy taxes (TOT) related to these hotels.
Ongoing Labor Negotiations
The City has seven employee bargaining groups with contracts that expire at various times. Management has met with two bargaining groups whose labor agreements expire on June 30, 2025 and staff expects to bring the updated Memorandum of Understanding (MOU) for each group to Council on June 17, 2025. The assumptions used in the development of the FY2025/26 budget are sufficient to cover the costs associated with contract provisions. The five-year forecast incorporates assumptions relative to personnel costs for employees represented in all bargaining groups, but the terms of successor agreements may have direct short-term and long-term budget implications.
CalPERS Pension Costs
The Proposed Budget for FY2025/26 reflects the city’s costs associated with employer contributions for CalPERS pension obligations, as set by CalPERS for the coming fiscal year, and the five-year forecast, in turn, includes assumptions consistent with projected pension costs provided by CalPERS. In FY2025/26 staff is estimating the cost of retirement to be $10.43 attributed to the General Fund and $16.17 million across all City funds.
In late July or early August, updated CalPERS valuation reports are provided that will establish the pension contribution levels for FY2026/27 as well as updated five-year projections. The upcoming valuation reports (and those to follow) are expected to continue to have a significant impact on the city budget, particularly in light of recent actual and projected investment losses and continued volatility in the investment market.
Inflationary Pressures and Other
The City's cost of operations, unrelated to personnel cost changes, continues to increase, but at rates much higher than previously expected. Items that are particularly impactful to the budget and forecast are the costs paid to PG&E for utilities, which have increased significantly over the last few years. Additionally, the cost to purchase replacement vehicles in the City's fleet continues to increase due to both inflation and lack of inventory. The volatile insurance market has resulted in significant changes to the City's worker's compensation and liability insurance premiums, with rates increasing by more than 30% each year over the last three years. Items such as these are expected to continue to present challenges for funding in the short term, and have been reflected in the forecast as such.
Conclusion
As we look forward to implementing the budget for FY2025/26, staff continues to look for ways to leverage local funding to enhance programs and services consistent with City Council and community priorities. Through ongoing partnerships and collaborations with public and private sector partners, we are seeing progress of key initiatives undertaken over the past few years. Despite downgraded revenue projections, Measure F and Measure R provide the City with resources and
certainty to be able to provide essential programs and services as well as implement Council priorities. It is the overall goal of the Proposed Budget and long-term financial plan of the City to ensure that the City of Woodland can continue to deliver quality services, invest in the future of the community, while sustaining a fiscally prudent budgetary framework.
Lastly, staff will provide City Council with a presentation of the information described herein at the June 3, 2025 meeting. Although the budget numbers presented herein are considered substantially final, staff continue to refine and adjust where necessary. Council feedback received will inform the final FY2025/26 Budget scheduled for adoption at the June 17th meeting.
Conclusion:
Staff recommends that the City Council receive a presentation on the proposed budget for fiscal year 2025/26.
Prepared by: Karie Farnham, Financial Services Manager
Reviewed by: Kim McKinney, Administrative Services Director
Attachments:
None