CITY COUNCIL REGULAR MEETING AGENDA PACKET

Page 1 of 5 Item #12 CITY COUNCIL AGENDA REPORT December 17, 2024 City Manager TITLE: APPROVE THE FY 2025/26 AND FY 2026/27 BUDGET ENGAGEMENT PLAN SUMMARY The City operates on a two-year budget cycle. Prior to July 1 of every odd numbered year, the City Manager submits to the City Council a proposed two-year budget for the subsequent two fiscal years. The City’s biennial budget includes revenue and expenditure projections and consists of two primary components: the Operating Budget and the Capital Budget. This report provides the City Council and the community with an overview of the budget development timeline and recommends approval of the proposed public engagement plan for the upcoming fiscal years (FY) 2025/26 and FY 2026/27 budget development process. RECOMMENDATION Approve the FY 2025/26 and FY 2026/27 budget engagement plan. BACKGROUND The City is confronting significant fiscal challenges, with a projected structural deficit averaging $13 million annually over the next eight years, starting in fiscal year 2025/26. Contributing factors include rising personnel and pension costs, inflation, and declining revenues from retail activity and hotel taxes, which have not rebounded to pre-pandemic levels. Additionally, the City faces a substantial capital and infrastructure funding gap, with an estimated $900 million needed over the next decade for maintaining and upgrading community assets such as streets, parks, and public facilities. The City’s budget serves as a strategic financial plan for operating and capital resource allocations. City funds are used to provide a wide variety of services and programs to residents and businesses. These services include Public Safety (Police, Fire, and Emergency Services), Operations Services, Water, Sewer, City Planning, Building and Safety, Code Enforcement, Housing, Economic Development, Parks and Recreation, Library, and Transit. Funds are also used to develop and maintain city infrastructure. In designing the budget process, the City follows the four principles established by the Government Finance Officers Association (GFOA), as presented below. These guiding principles ensure a well-integrated process is in place, all stakeholders have the opportunity to provide input on the City’s budget priorities, and a budget is developed reflecting the needs and values of the community. Four Principles of the Budget Process 1. Establish Broad Goals to Guide Government Decision-Making A government should have broad goals that provide overall direction for the government and serve as a basis for decision-making. Page 281 of 893