ITEM 15 ATTACHMENT 1 - Laserfiche WebLink

First Scenario - Normal General Fund revenue, including transfers from other funds and program reserves, is projected to increase by approximately 3.9 percent in FY 2025/26 and 3.7 percent in FY 2026/27. The overall increase also reflects the use of reserves for approximately $3.3 million in year one and approximately $4.0 million in year two, which includes $2.0 million pension trust funds for each fiscal year. These one-time funds are not included in the projection in the out years. • Property tax is projected to increase by approximately 4.1 percent in FY 2025/26, by 3.8% in FY 2026/27, and at approximately 3.7 to 3.8 percent each year thereafter. • Sales tax is projected to increase by approximately 4.1 percent in FY 2025/26, by approximately 2.8 percent in FY 2026/27, and then by 2.0 to 3.2 percent each year thereafter. The higher increase in year 1 is due to the recognition of a full year of revenue from the Costco store opened in November 2024. • Development fees are projected to increase by approximately 5.4 percent in FY 2025/26, by less than 1.0 percent in FY 2026/27, and by 2.0 percent each year thereafter. Development activities in year 1 are expected to be higher than those in year 2. • Salaries, including cost -of -living adjustments and step increases, are projected to decrease by approximately 1.1 percent in FY 2025/26, increase by 3.2 percent in FY 2026/27, and increase by 3.5 percent to 3.8 percent each year thereafter. The decrease in FY 2025/26 is due to significant staffing reductions proposed in the budget. • PERS contributions are projected to increase by approximately 8.2 percent in FY 2025/26 and by 5.5 percent in FY 2026/27. They will stay between 1.2 and 9.1 percent through FY 2029/30 before moderating to 0.9 percent and decreasing in the last four years. These increases/decreases are based on actuarial method changes and discount rates adopted by CaIPERS. • Employee fringe benefits are projected to decrease by approximately 3.7 percent in FY 2025/26, increase by 1.9 percent in FY 2026/27, and increase by 3.0 percent each year thereafter, except for FY 2027/28 at 8.9 percent. The decrease in FY 2025/26 and the slight increase in FY 2026/27 are due to staffing reductions in the proposed budget and the use of retiree medical trust funds for both fiscal years, reducing benefit costs. The use of retiree medical trust funds is not included in the projection in the out years. • Non -personnel expenditures are projected to decrease by approximately 2.9 percent in FY 2025/26, increase by 4.7 percent in FY 2026/27, and increase by 4.0 percent to 4.5 percent each year thereafter. Contributions to the Repair and Replacement Program (e.g., vehicle replacement) total about $3.5 million for FY 2025/26 and $3.6 million for FY 2026/27. Due to wildfires in California, general liability insurance premiums are expected to continue to increase at a faster rate than other expenditure categories. Utility, operating supplies and materials, and contract service costs are also expected to increase. The decrease in FY 2025/26 is mainly due to cost reductions. • Operating transfers to support various City programs total about $3.3 million for FY 2025/26, $1.2 million for FY 2026/27, and about $1.2 million to $1.5 million each year thereafter. The higher transfer in year 1 is due to funding needs for repairs for several critical projects. Transfers to the Capital Improvement Program (CIP) are $1.0 million for FY 2025/26 and $3.3 million for FY 2026/27, increasing by $0.3 million annually thereafter. To address the City's deferred maintenance needs and the anticipated completion of the Asset Management Plan, $6.2 million is set aside for FY 2025/26 and $6.1 million for FY 2026/27. $5.6 to $6.3 million is set aside for each year thereafter. Second Scenario- Recession in FY 2027/28 • This scenario assumes a mild recession sometime during FY 2027/28. Historically, the average duration of recession has been approximately 10 months. 269