11 ATTACHMENT 1, EXHIBIT A - Laserfiche WebLink

D - 5 City of Pleasanton Operating Budget • FY 2023/24 - FY 2024/25 APPENDIX D General Fund Ten-Year General Fund Forecast: FY 2023/24 to FY 2032/33 Summary of Forecast Assumptions The purpose of this forecast is to assess the General Fund’s ability over the next ten years to do the following: 1. Maintain current service levels. 2. Maintain the City’s existing infrastructure and facilities. 3. Preserve the City’s long-term fiscal heath by aligning operating revenues and costs and maintaining fund balance at policy levels. Since the Great Recession, which lasted approximately 18 months from the tail end of 2007 to the middle of 2009, the San Francisco Bay Area’s economy has experienced a steady growth, coinciding with the trend observed at the national and state levels. However, the regional economy began showing some signs of slowing in 2019, and a recession was being forecasted by a growing number of economists at the time. With the arrival of the COVID-19 pandemic in early 2020, the country went into a short but deep recession, creating a lot of economic uncertainties in the near-term. In an effort to keep the economy from tail spinning for a prolonged period of time, the federal government took quick actions, approving a series of fiscal stimulus packages to provide assistance to state and local governments, businesses, and individuals. Combined with the Federal Reserve’s fiscal policies which included the quantitative easing program, the country’s economy turned around rapidly, and the pandemic-induced recession was very short-lived, lasting just two months. Fueled by the unprecedented level of stimulus funding and business-friendly fiscal policies, the economy grew 5.7% in terms of annual gross domestic product (GDP) in 2021, the fastest since 1984. The local economy also thrived as a result, and the City collected record-high revenues in FY 2021/22 and is on track to set at a slightly higher level in FY 2022/23. The City’s revenue totals were also aided by the one-time American Rescue Plan Act (ARPA) stimulus funding of just over $8.6 million. While the City’s overall revenue is projected to continue increasing going forward, the level of revenue growth observed in recent years is not likely. Staff is forecasting a more modest level of growth, in line with historical averages in the normal ten-year General Fund forecast scenario. Given the current economic environment, there is an increasing chatter amongst economists forecasting a recession in the next 12 to 18 months. As such, staff prepared a second scenario, which assumes the regional economy entering a recession sometime during 2024. Below is a set of assumptions used to develop the ten-year General Fund forecast, from FY 2023/24 to FY 2032/33. First Scenario – Normal • General Fund revenue including transfers from other funds and program reserves is projected to increase only by approximately 1.4 percent in FY 2023/24 and 3.4 percent in FY 2024/25. A smaller increase in the first year is due to the one-time federal ARPA funding no longer available in FY 2023/24. • Property tax is projected to increase by approximately 5.5 percent in FY 2023/24 and moderate at approximately 3.5 percent each year thereafter. • Sales tax is projected to increase by approximately 1.3 percent in FY 2023/24 and increase by approximately 9.2 percent in FY 2024/25 based on a new Costco beginning its operation, and then 2.0 percent each year thereafter.