11 ATTACHMENT 1, EXHIBIT A - Laserfiche WebLink

City of Pleasanton Operating Budget • FY 2023/24 - FY 2024/251 Honorable Mayor and City Councilmembers, In accordance with the City’s ordinance, it is my pleasure to present the FY 2023/24 and FY 2024/25 Operating Budget (Budget) for the City of Pleasanton. This balanced Budget represents the City’s two- year financial plan for delivering City programs and services in a fiscally responsible manner consistent with the priorities, goals, and objectives adopted by the City Council. Collectively, the Budget, Capital Budget, and four-year Capital Improvement Program (CIP) provide funding for projects, programs, and services consistent with the City Council’s previously adopted Two-year Work Plan. The City is currently transitioning from a two-year work plan to a five-year strategic planning process that will identify more comprehensive, longer-term goals, needs, and priorities. Through continuous collaboration with the City Council, future budgets will address the goals and implement the priorities identified in the Strategic Plan. Overall, the General Fund Budget anticipates modest revenue growth over the next two years. That growth will enable the City to continue providing valuable programs and services to the community. It also allows the City to allocate $2.0 million annually to the capital program and approximately $4.0 million to the Repair and Replacement funds, while maintaining reserves at levels consistent with the City’s policy. While the financial stability of the City is sound for the next two fiscal years, there are several trends that could adversely affect the City’s fiscal health in subsequent years and will require prudent decision-making to maintain the current service levels. In terms of revenues, the level of revenue growth experienced in recent years is not likely to continue, as increases were largely fueled by the unprecedented level of federal stimulus funding and business-friendly fiscal policies during the COVID-19 pandemic. The City is expected to spend the remaining one-time American Rescue Plan Act (ARPA) stimulus funding in the current fiscal year. Transient Occupancy Tax (TOT) is one of the City’s top revenue sources, and this revenue category decreased significantly during the pandemic. Although revenue has shown improvements over the last two years, annual revenue at the $4.0 million level is still well below the pre-pandemic level of $6.5 million. The City’s expenditures are projected to increase at a slightly faster rate than the revenue growth in coming years. In particular, increasing pension expenses through FY 2030/31 is putting pressure on the City’s budget. The lack of available resources coupled with increasing operating costs will present challenges in the City’s ability to balance future budgets. To ensure long-term fiscal sustainability, staff has begun developing strategies to identify cost savings and potential new revenue options. The following is an overview of the Budget, the City’s financial challenges, regional economy, and City Council priorities reflected in the budget. City Manager’s Budget Message Gerry Beaudin City Manager