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BACKGROUND The Operating and Capital Budget includes a comprehensive detailed account, forecast and plan of all City revenues and expenditures across all funds, including the General Fund, Enterprise Funds, Internal Service Funds, Special Revenue Funds, and Capital Projects Funds. Both the Two-Year Operating Budget and the CIP documents include narratives and details that provide information regarding budgetary adjustments, issues, and goals. Please refer to the budget messages in the Operating Budget and the CIP for highlights. As with all City budgets, this document focuses attention on those areas deemed by the City Council to be a high priority. As a result, the Budget maintains existing service levels and meets capital needs in a way that addresses not only new programs and capital improvement projects but also a wide range of maintenance projects related to facilities, roadways, parks, water, and sewer systems. In this way it meets the goals of the City Council and the community. DISCUSSION The attached Operating Budget and CIP books include updated numbers based on a set of recommended adjustments to the Proposed Budget that staff presented at the May 16, 2023 budget workshop. With these changes, the Budget now includes additional funding to cover the City's general liability insurance premium costs for FY 2023/24, as well as legal costs related to upcoming litigations and claims. With reductions to various one-time funding to offset these increases, the General Fund remains balanced for both years. At the May 16, 2023 budget workshop, there were discussions about identifying additional funding for trail improvements if resources are available. The City is currently pursuing grant funds from the Alameda County Transportation Commission (ACTC) for the West Las Positas Boulevard Multimodal Reconstruction project. Staff is optimistic about the ACTC grant. If this grant, which will be up to $9.0 million, comes through, the City will be able to consider shifting funds between other bike and pedestrian improvement projects and trail projects. These adjustments will likely to be included as part of the mid-term budget update. Staff originally presented recommended updates to the existing reserve policy at the April 18th budget workshop. Based on the Council's feedback, the draft reserve policy was revised and presented to the City Council on May 16, 2023. A final version of the reserve policy is attached to this report for Council's adoption. As indicated previously, staff met with the City Council several times throughout this budget development process to provide an update and seek guidance and feedback, starting with the March 21St meeting to discuss staff's proposed capital budget adjustments. Subsequently at the April 18th budget workshop, staff presented the preliminary General Fund operating budget and CIP summary to preview the numbers and most recently at the May 16th budget workshop presented the Proposed Budget and CIP. The attached Budget and CIP books represent a final version and are Page 2 of 3