CITY COUNCIL WORKSHOP AGENDA PACKET

Page 15 of 16 generally agreed-upon principles to inform methodology is particularly critical in the current budget cycle, which is likely to include trade-offs and program/service cuts with tangible impacts to the community and the City organization. It is important to note the development of the two-year budget is a discrete process that is time-sensitive and requires significant staff time. Because the financial issues facing the City have developed over many years, choices will have to be made about how the City will spend/invest limited funds on programs, services, and capital needs. To guide the budget development work, staff is seeking early City Council direction on the principles that will be used to develop the FY 2025/27 budget. While somewhat nuanced, the examples provided below are principles, not a methodology. The principles will be used by staff to develop the budget, with additional input from the community and City Council expected in the months to come. The sample principles are intended to spark discussion regarding the priorities and tradeoffs in developing a balanced budget. The list below is not an exhaustive list of all principles that can be or might be applied, nor does selection of one or more priority principles mean that others cannot be applied. At this time, staff is seeking input on the top three to five principles that should be top of mind for City staff as the budget is developed. • Long-Term Fiscal Stability – Prioritize placing Pleasanton on a solid foundation for long-term fiscal sustainability over short-term outcomes. Mitigate future risks by taking precautionary actions, such as maintaining fund balances in all key operating funds and identifying and funding unfunded liabilities with surplus funds when available. • Use One-Time Revenues and Reserves for One-Time Uses – One-time revenues should be used for one-time expenditures. Annual budgets should not become overly reliant upon cyclical, unreliable, or one-time revenues. During economic downturns and budgetary contractions, the use of reserves (e.g., rainy day funds or other reserves) may be used to ease the transition to downsized or reorganized operations. • Organizational Health – Promote and maintain an inclusive work environment that supports professional growth and development to retain and attract highly qualified employees. • Protect Core and Essential Services – Prioritize the preservation of essential over non-essential programs and services. [Staff is not suggesting a definition for “essential” at this time, but will engage more deeply with the community and City Council during the budget development process.] • Community Engagement and Equity – Actively engage and seek input from the community to ensure a collaborative and transparent decision-making process. Ensure that communities most impacted by service reductions are considered when making decisions. • Strategic Plan Alignment – The City’s mission, vision, and values and the City Council’s priorities and direction should be used to strategically guide the budget development process. [The City Council will be asked to provide updated input/direction on this Strategic Plan priorities at the planned January 29, 2025, City Council Retreat.] • Prioritize Infrastructure – Maintain and enhance Pleasanton’s infrastructure. Capital improvement projects, including related maintenance costs, should be identified at the planning stage so these amounts can be recognized and budgeted where appropriate. Funding of capital projects will require current, planned resources and one-time funds. • Support and Partnerships – Maintain and support a strong positive relationship Page 17 of 109