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ATTACHMENT 1 THE CITY OF 1 M-a PLEASANTON, MEMORANDUM Date: March 10, 2023 To: Mayor and City Council From: Gerry Beaud in, City Manager Subject: Upcoming Two-Year Capital Budget and Four-Year Capital Improvement Program Staff is preparing the two-year Operating Budget and the four-year Capital Improvement Program (CIP) budget that will be presented to City Council for consideration beginning with a workshop on April 18, 2023. Additional workshops will be scheduled as necessary to incorporate City Council direction to have balanced budgets ready for approval before the beginning of the new fiscal year on July 1, 2023. The purpose of this memorandum is to present components of the CIP development and to request Council input to inform the budget preparation to be presented on April 18. The focus of the memorandum is on existing and proposed projects within the CIP that are funded with non-restricted funds; these are the projects budgeted from the General Fund. The upcoming CIP presentation will also include recommendations about projects proposed to be funded with restricted funds, such as enterprise funds, Gas Tax, Measure BB, etc.; as the City has little discretion regarding how restricted funds are allocated, staff will prepare those budget recommendations separately for Council's approval. City Council input on projects funded by the General Fund is necessary because preliminary revenue projections indicate there will be fewer dollars available for allocation to facility and infrastructure projects over the next two- year budget cycle as compared to past years, yet the number of priority projects remains high. Finally, this memorandum will address how existing facility and infrastructure repair and replacement projects also compete for the same limited General Fund dollars through the Capital Budget and CIP development process, and why recent staff work on the ten-year infrastructure plan has increased concern about the City's ability to fund the needed major maintenance of existing facilities and infrastructure. Since many of these needs are not well documented at this time, staff is recommending the creation of an Asset Management Plan to fully understand maintenance and replacement need. With respect to the upcoming four-year CIP development, this memorandum will discuss the following four items: