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DISCUSSION General Fund Overview As described below, staff recommends increasing revenue estimates and transfers in by $960,000 and $500,000 and decreasing expenditures by $1.1 million. As a result of these changes, staff expects the General Fund will have a $2.5 million surplus. Staff recommends keeping the projected surplus in the General Fund until further analysis at year end. Please note the Rainy Day Fund is not included in the table below. Table 1. General Fund Overview FY 2022/23 FY 2021/22 Adjusted Recommended Mid-Year Actual Budget Adjustments Budget Rewnues $139,006,882 $142,484,027 $959,597 $143,443,624 Net Transfers (12,781,954) (5,638,485) 500,000 (5,138,485) Expenditures (120,540,274) (137,239,542) 1,075,486 (136,164,056) Difference $5,684,655 ($394,000)1 $2,535,083 $2,141,083 General Fund Revenues and Transfers In As presented in Table 2 below, General Fund revenues are projected to increase by $960,000 based on current revenue trends. The net increase is primarily due to increases in Sales Tax, Business License Tax, and Grant Revenues offset by decreases in Supplemental Property Tax, Documentary Transfer Tax, and Recreation Revenues. The revised budget also includes $500,000 in transfers in from the Golf Operating Fund for loan repayment. The Golf Operating Fund achieved a surplus in FY 2021/22, and excess funds are available for debt service payment. Other revenue adjustments are highlighted below: • A decrease of$300,000 in Supplemental Property Tax due to the slowdown in the housing market. Supplemental Property Tax represents additional secured taxes that are due when property undergoes a change in ownership or new construction. Property Tax is the City's largest revenue source. • An increase of$1.0 million in Sales Tax based on the latest projection provided by the City's consultant. Improvement from the leisure and hospitality sector is expected to continue into the current fiscal year. The growth in the building and construction and business and industry sectors are expected to be positive. The overall increase from FY 2021/22 is projected to be less than 3.0 percent. Sales Tax is the City's second largest revenue source. • A decrease of$165,000 in Documentary Transfer Tax due to the decline in home sales. Pleasanton's year-over-year decline in home sale activities from December 2021 to December 2022 was more than 50.0 percent. • An increase of$100,000 in Business License Tax due to projected increase in gross receipts as the original budget estimate is conservative. Page 2 of 9