CITY COUNCIL AGENDA PACKET - Laserfiche WebLink

General Fund 10-Year Financial ForecastGeneral Fund 10-Year Financial Forecast The General Fund 10-year {nancial forecast is the mechanism for monitoring the long-term {nancial health of the City’s most important fund. By tracking and trending current and anticipated revenues and expenses, the forecast provides a tool for City management and policymakers for understanding the impact of decisions on the City’s {scal health. The forecast includes projections of current revenues and expenses, including pension contributions as estimated by staff and the CalPERS. In addition, the forecast includes projected tax revenues associated with anticipated development over the next ten years. The General Fund 10-year {nancial forecast is included under Appendix D. Given the current economic climate, two separate forecast scenarios have been prepared. The {rst scenario assumes the City’s revenues will continue to grow at a measured pace, with the local economy not experiencing any major downturn during the 10-year period. The second scenario assumes a mild recession sometime during FY 2027/28, impacting the City’s major revenue categories. In the recession scenario, sales tax revenue is projected to decrease by 5.0 percent in FY 2027/28 and an additional 2.0 percent in FY 2028/29, and other tax revenues are assumed to decrease by 2.0 percent in both {scal years. The chart below shows a 10-year surplus/de{cit projection for each scenario. The City’s expenditures are expected to continue outpacing revenues for the next several years, largely due to increasing operating costs and aging infrastructure, including general liability insurance, pension obligations, and deferred maintenance. Pension costs are projected to increase until FY 2030/31 based on the latest projection from CalPERS. As more employees in the CalPERS’ Classic Plan retire over time, the City’s staf{ng pool will gradually consist of a higher percentage of employees in the CalPERS Pension Reform Act (PEPRA) Plan, which has reduced pension bene{ts. Liability insurance premiums and related costs are expected to continue to increase due to current market conditions. Required funding for aging community assets, such as facilities and other infrastructure, is signi{cant. However, due to {nancial constraints, funds have not been set aside for repair and replacement. 11Page 292 of 682