CITY COUNCIL REGULAR MEETING AGENDA PACKET

Page 2 of 6 tax measure. BACKGROUND The reasons the City is facing a structural deficit include factors that other cities across the state and country are also facing, such as: • Slowing real estate development activity • Declining retail sales activity, including at the Stoneridge Shopping Center • Increasing insurance costs • Increasing operating supplies and materials costs • Increasing contract service costs • Growing number of unfunded mandates from the State • Rising personnel costs, including pensions • Reduced hotel tax revenue (particularly during and post-pandemic). In addition, much of the City’s infrastructure and facilities are aging. Pleasanton realized significant and rapid growth in the 1980s and 1990s, when buildings, parks, streets, and many other City assets were constructed. The City has contributed significant resources to maintain these assets over time, but many are reaching the end of their useful life and funds have not been fully set aside to replace or significantly rebuild infrastructure and facilities. As the City continues to transition from a growing city to a mature community, the rate of necessary revenue increases is no longer occurring. Over the years, the City has implemented cost-saving measures to improve operational efficiency and reduce costs, including merging departments and operations, providing lower pension and retiree medical benefits to employees, implementing energy and water efficiency projects, and establishing a pension trust to pay down the City's unfunded liability. The City is a full-service organization, primarily relying on employees for providing a breadth of municipal services. For many years, the City Council has acted to ensure that the size of the workforce and the level of total employee compensation is controlled, at a reasonable level but within budget constraints. In recent years, sound fiscal actions have included the following: 1. Controlling Employee Compensation • Requiring the maximum contribution to retirement benefits from all employees. • Reducing retiree health benefits. • Trimming retirement benefits and extending the retirement age (including for Public Safety employees). Currently, over 40% of the City’s workforce will receive lower benefits in retirement. 2. Limiting Full-Time City Staffing • The number of budgeted General Fund positions has remained flat over the past 5 years. Currently, some positions are frozen resulting in fewer employees at a time of Page 232 of 248