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City of Pleasanton Operating Budget • FY 2021/22 - FY 2022/23D - 6 • Development fees are projected to increase by approximately 5.6 percent in FY 2023/24, decrease by 11.6 percent in FY 2024/25 and grow by 2.0 percent each year thereafter. The decrease in the second year is due to known one-time revenues going away in FY 2024/25. • Salaries and benefits are based on existing labor contracts and assumed to increase by 3.0 percent annually thereafter. • PERS contributions are projected to increase by 9.8 percent in FY 2023/24 and by 7.2 percent in FY 2024/25 and staying between 4.7 and 8.8 percent through FY 2028/29 before moderating to 2.5 percent and slowly decreasing in the last four years. These increases are based on actuarial method changes and decreased discount rates adopted by CalPERS. • Employee fringe benefits are projected to increase by approximately 12.4 percent in FY 2023/24 and increase by 6.8 percent in FY 2024/25, and 3.0 percent each year thereafter. • Non-personnel expenditures and transfers to other funds collectively are projected to decrease by approximately 2.8 percent in FY 2023/24. This is largely due to decreasing transfers from the General Fund to other funds. A reduction in transfer to the Miscellaneous CIP Fund is the largest adjustment, going from $7.7 million in the FY 2022/23 Modified Budget to $2.0 million in FY 2023/24. Costs going up include the City’s general liability insurance premiums, which went up more than 70.0 percent from FY 2021/22 to FY 2022/23. This cost is expected to continue increasing at a faster rate than other cost categories. In FY 2024/25, non-personnel expenditures are projected to decrease by 1.8 percent from FY 2023/24 mainly due to one-time budget items going away and increase by approximately 2.0 percent each year thereafter. • Transfers to the Capital Improvement Program (CIP) are $2.0 million annually for FY 2023/24 and FY 2024/25; $1.0 million annually for FY 2025/26 and FY 2026/27 and increasing by $0.5 million every two years thereafter. • Allocations to Repair and Replacement Funds are $5.0 million annually. Second Scenario – Recession in 2024 • This scenario assumes a recession sometime during 2024. Historically, the average duration of recession has been approximately 10 months. • Property tax is projected to increase at a slower rate of 3.0 percent in FY 2025/26 and 2.0 percent in FY 2026/27 before increasing slowly through FY 2028/29 and staying at approximately 3.5 percent each year thereafter. • Sales tax is projected to grow at a rate of 3.8 percent in FY 2024/25 even with a new Costco beginning its operation, decrease by 5.0 percent in FY 2025/26 and decrease by 2.0 percent in FY 2026/27 due to less consumer spending before recovering to increase at a 2.0 percent rate each year thereafter. • Transient Occupancy Tax is usually one of the first revenue sources to be impacted from any recession and projected to decrease by approximately 8.0 percent in FY 2024/25 and additional 8.0 percent in FY 2025/26 before rebounding in FY 2026/27 and increasing at a 2.0 percent annual rate thereafter. • Recreation revenues are expected to slightly decrease by 2.2% in FY 2024/25, remaining flat through FY 2026/27 before recovering to increase 3.0 percent annually thereafter.