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BACKGROUND The City of Pleasanton prepares a biennial operating budget and updated capital improvement program. On June 15, 2021, the City Council adopted the biennial operating budget for FY 2021/22 and FY 2022/23 as well as the updated Capital Improvement Program for FY 2021/22 — FY 2024/25. Mid-Term Budget review updates the FY 2022/23 Operating Budget and Capital Improvement Program. DISCUSSION One of the City Council and City Manager's goals is to continue to maintain fiscal sustainability. The approach to the Mid-Term update was to ensure that ongoing operating revenues would be sufficient to cover operating expenses, as well as provide adequate allocations to the Repair and Replacement Program (R&R) and Capital Improvement Program (CIP), while maintaining operating reserves. Staff has evaluated and analyzed current economic trends and programmatic needs necessary to provide services to our residents. Based on this analysis, the Mid-Term Budget update includes adjustments to some revenue and expenditure categories. The update is comprised of two sections: 1) Operating Budget and 2) Capital Improvement Program. Section I of this update provides a general overview and explanation, notating where and why those adjustments have been made. In addition to the overview, included are operating budget tables providing a more detailed view of such changes. The data is being presented to show how these revenue and expenditure adjustments impact various funds, categories, and citywide activities. Also included is a historical overview of full-time staffing and FY 2022/23 Mid-Term adjustments. Notable Adjustments in Operating Budget The FY 2022/23 Mid-Term Budget includes changes in several City funds. The details of these changes are provided in Section I of the Mid-Term budget document. The most notable changes in the General Fund include an increase of$5.4 million in revenues and a $3.7 million increase in expenses, resulting in a surplus of$1.7 million. Staff's recommendation is it to transfer the surplus to CIP to support City Council priority projects as discussed in this report and Section II of the Mid-Term budget document. Tables 1 and 2 below provide a brief overview and the rationale behind the changes in the revenue estimates and adjusted expenses. Page 2 of 4