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General Fund 10-Year Financial Forecast
<br />The General Fund 10-year financial forecast is the mechanism for monitoring the long-term
<br />financial health of the City's most important fund. By tracking and trending current and
<br />anticipated revenues and expenses, the forecast provides a tool for City management and
<br />policymakers for understanding the impact of decisions on the City's fiscal health. The
<br />forecast includes projections of current revenues and expenses, including pension
<br />contributions as estimated by staff and the CaIPERS. In addition, the forecast includes
<br />projected tax revenues associated with anticipated development over the next ten years.
<br />The General Fund 10-year financial forecast is included under Appendix D.
<br />Given the current economic climate, two separate forecast scenarios have been prepared.
<br />The first scenario assumes the City's revenues will continue to grow at a measured pace,
<br />with the local economy not experiencing any major downturn during the 10-year period.
<br />The second scenario assumes a mild recession sometime during FY 2027/28, impacting the
<br />City's major revenue categories. In the recession scenario, sales tax revenue is projected to
<br />decrease by 5.0 percent in FY 2027/28 and an additional 2.0 percent in FY 2028/29, and
<br />other tax revenues are assumed to decrease by 2.0 percent in both fiscal years.
<br />The chart below shows a 10-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 CaIPERS. As more employees
<br />in the CaIPERS' Classic Plan retire over time, the City's staffing pool will gradually consist of
<br />a higher percentage of employees in the CalPERS Pension Reform Act (PEPRA) Plan, which
<br />has reduced pension benefits. Liability insurance premiums and related costs are expected
<br />to continue to increase due to current market conditions. Required funding for aging
<br />community assets, such as facilities and other infrastructure, is significant. However, due to
<br />financial constraints, funds have not been set aside for repair and replacement.
<br />$4,000,000
<br />$2,000,000
<br />$(2,000,000)
<br />$(4,000,000)
<br />$(6,000,000)
<br />$(8,000,000)
<br />$(30,000,000)
<br />$(12,000,000)
<br />$(14,000,000)
<br />$(16,000,000)
<br />Estimated Annual General Fund Surplus/(Deficit)
<br />$2,545,03
<br />$471,871
<br />$6,832
<br />FY 2023/24 FY 2024/25 FV 2025/26 FY 202 FY 2027/28 FY 2028/29
<br />FY 2029/30
<br />FY 2030/31
<br />FY 2031/32
<br />FY 2032/33
<br />FY 2033/34
<br />FY 2034/35
<br />$(6,063,824)
<br />$(8,430,174)
<br />$(8,579,298)
<br />$(8,872,918)
<br />$(7,930,999)
<br />$(],838,538)
<br />WI)
<br />$(%740,324)
<br />$(12,990,274)
<br />$(12,625,308)
<br />$(12,720,061)
<br />$(13,559,898)
<br />%U,953,118)
<br />$(13,112,899)
<br />$(13,]24p38)
<br />—N.—I —Recession in 2028
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