HomeMy WebLinkAboutCC 2025-01-28_11a Five Year Financial Forecast_PP
Five-Year Financial Forecast (General Fund)
Fiscal Years
2025-26 through 2029-30
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The Five-year Financial Forecast:
Is not a budget, but rather a planning tool to facilitate a discussion for the creation of the upcoming FY 2025-27 Biennial Budget
Focuses on the General Fund and Measures E & O
Assumes no enhancements to current service levels or increases in staffing (Status Quo)
Contains estimates based on the best information available at the time it is prepared
1/28/2025
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General Fund Overview - Key Points:
Projected beginning fund balance of $7.7 million for 2025-26
$1.6 million higher beginning fund balance than the 2024-25 mid-cycle budget update primarily due to:
FY 2023-24
Revenues higher than estimate by $0.6 million
Expenditures lower than estimate by $0.5 million
FY 2024-25
Revenues expected to be $0.5 million higher
1/28/2025
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General Fund Overview - Key Points:
General Fund shortfall projected to average $1.4 million annually throughout Forecast
Note: does not include any impact from Measure E since in this Forecast this new funding is allocated to only road improvement projects
Fund balance drops below 15% minimum target by FY 2027-28 and to only 2% by 2029-30
1/28/2025
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General Fund Overview
1/28/2025
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General Fund Overview
Two funding adjustments for discussion/information:
Change percentage split of FCFA contract from 75% General Fund/25% Measure O to 65%/35%
Add funding for one additional police officer position to Measure O, for a total of two positions.
General Fund shortfall projected to average $740,000 annually throughout Forecast
Fund balance drops below 15% minimum target by FY 2029-30
1/28/2025
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General Fund Overview
1/28/2025
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General Fund Overview - Key Points:
Revenues:
After an expected modest increase of 0.4% projected for 2024-25, revenues are projected to increase 3.2% annually thereafter.
Expenditures
An 8.7% decrease is projected in FY 2025-26 due primarily to:
Moving some public safety costs to the Measure O Fund, and
One-time expenditures in 2024-25 budget for pavement maintenance
For the remainder of the Forecast period expenditures are projected to increase 3.7% on average annually thereafter.
1/28/2025
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General Fund Overview
1/28/2025
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Property Tax Revenue
40% of General Fund revenue.
Key drivers: annual increase assessed by the County of up to 2%, home sales, and home prices.
County Auditor-Controller’s office provided property tax estimates for 2024-25 and 2025-26.
Forecast includes growth of 4.25% annually.
1/28/2025
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Property Tax Revenue Projection
1/28/2025
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Sales Tax Revenue
24% of General Fund revenue.
Key drivers: consumer confidence, unemployment, consumer spending, business retention and development.
City’s sales tax consultant provided estimates of 1.5% in 2024-25 and 2.8% in 2025-26.
Sales tax is projected to grow approximately 3% per year for remaining years of the Forecast.
1/28/2025
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Sales Tax Revenue Projection
(General Fund only)
1/28/2025
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Transient Occupancy Tax (TOT) Revenue
7% of General Fund revenue.
Key drivers: lodging capacity, room rates, and occupancy rates.
TOT is forecasted to grow 3% annually throughout the five-year Forecast.
Forecast does not factor in any increase in room capacity.
1/28/2025
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Transient Occupancy Tax Revenue Projection
1/28/2025
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Overview
1/28/2025
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Major Expenditures
Salary and payroll taxes are forecasted to increase 4.3% in 2024-25 and 1.1% in 2025-26 due to moving cost of one additional police officer to Local Sales Tax funding.
For the remainder of the Forecast salaries and taxes are projected to increase 3.5% per year.
City’s unfunded accrued liability (UAL) is expected to increase 9% annually on average according to projections from CalPERS.
1/28/2025
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Major Expenditures
Employee benefits projected to increase on average 4.6% over the Forecast period. Health insurance costs alone account for 85% of all employee benefit costs.
Workers’ compensation costs are forecasted to increase 8% per year over the Forecast period.
After an expected 7.2% decrease in contractual and professional service costs in 2025-26 due to the completion of the General Plan update, these costs are expected to increase 2% per
year for the remainder of the Forecast.
1/28/2025
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Major Expenditures
During the period of the Forecast, the cost of services provided by Five Cities Fire Authority is projected to average $4.5 million annually.
The Forecast assumes that the General Fund will fund 65% of this cost and the Measure O Fund the remaining 35%. This is a proposed change from the 75%/25% split currently in place. This
adjustment will help balance the General Fund budget over time.
1/28/2025
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General Fund, Measures O & E Combined
1/28/2025
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General Fund, Measures O & E Combined
1/28/2025
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General Fund, Measures O & E Combined
1/28/2025
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1/28/2025
Next Steps
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Questions?
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