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• Sales tax is projected to decrease by 5.0 percent in FY 2027/28 and by 2.0 percent in FY
<br />2028/29 due to the decline in consumer spending before recovering to increase at a 2.0
<br />percent rate each year thereafter.
<br />• Other taxes, primarily hotel and business license taxes, are projected to decrease by 2.0
<br />percent in FY 2027/28 and FY 2028/29 due to fewer visitors and slower business activities
<br />before recovering to increase at a 2.0 percent rate each year thereafter.
<br />The chart below shows a ten-year surplus/deficit projection for each scenario. The City's
<br />expenditures are expected to continue outpacing revenues for the next several years,
<br />largely due to increasing operating costs and aging infrastructure, including general liability
<br />insurance, pension obligations, and deferred maintenance. Pension costs are projected to
<br />increase until FY 2030/31 based on the latest projection from the California Public
<br />Employees' Retirement System (CalPERS). As more employees in the CaIPERS' Classic Plan
<br />retire over time, the City's staffing pool will gradually consist of a higher percentage of
<br />employees in the CalPERS Pension Reform Act (PEPRA) Plan, which has reduced pension
<br />benefits. Liability insurance premiums and related costs are expected to continue to
<br />increase due to current market conditions. Required funding for aging community assets,
<br />such as facilities and other infrastructure, is significant. However, due to financial
<br />constraints, funds have not been set aside for repair and replacement.
<br />During these deficit years, the City will need to consider a number of options, including 1)
<br />exploring opportunities for revenue enhancements and/or new revenue streams; 2)
<br />continuing to reduce operating expenses; and/or 3) drawing on the Section 115 Pension
<br />Trust Fund to help cover pension expenses.
<br />270
<br />Estimated Annual General Fund Surplus/(Deficit)
<br />$4,OOO,000
<br />$2,545,893
<br />$2,000,000
<br />$42,098
<br />$6,832
<br />FY 2023/24
<br />Fr 2024/25
<br />FY2025/26
<br />�202
<br />FY 2027/28 FY 2028/29
<br />FY 2029/30
<br />FY 2030/31
<br />FY 2031/32
<br />FY 2032/33
<br />FY 2033/34
<br />FY 2034/35
<br />$(z,aoo,oao)
<br />$(4,000,0001
<br />1248809s
<br />$113,366,642(
<br />$113,J52,610)
<br />$112,904,943)
<br />$112,908
<br />$15,884,190)
<br />$(6,000,000(
<br />$(],622,840)
<br />$(7,010,374)
<br />$(6,989,095)
<br />$(8,293,SJfi)
<br />$(8,386,0421
<br />$(8,6]2,410(
<br />$K",Ow)
<br />$(10,000,0001
<br />$la,sfi4,
<br />$112,803,9J6)
<br />$(12p01,5]4)
<br />$(12,000,0001
<br />$(14,000,000(
<br />$(16,000,000(
<br />�Narm91—Reaucn
<br />M 2028
<br />270
<br />1248809s
<br />$113,366,642(
<br />$113,J52,610)
<br />$112,904,943)
<br />$112,908
<br />
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