CITY COUNCIL WORKSHOP MEETING AGENDA PACKET

Page 2 of 5 In addition, much of the City’s infrastructure and facilities are aging. Pleasanton realized significant and rapid growth in the 1980s and 1990s, when buildings, parks, streets, and many other City assets were constructed. The City has contributed significant resources to maintain these assets over time, but many are reaching the end of their useful life and funds have not been set aside to replace or significantly rebuild infrastructure and facilities, including Fire Station #2 (on Stoneridge Mall Road), park irrigation systems, the Pleasanton Police station, the Delores Bengston Aquatic Center and many others. The City has been historically prudent in managing its finances. In fact, Pleasanton was incorporated nearly 130 years ago. Unlike most other cities in Alameda County, Pleasanton has never asked local voters to consider a bond or tax to help support programs, services and/or capital needs. As the City continues to transition from a growing city to a mature community, necessary revenue increases are no longer occurring. Over the years, the City has implemented cost- saving measures to improve operational efficiency and reduce costs, including merging departments and operations, offering less generous pension and retiree medical benefits to employees, implementing energy and water efficiency projects, and establishing a pension trust to pay down the City's unfunded liability. However, the City has also deferred critical infrastructure repair and replacement to balance the General Fund operating budget and to continue to support the delivery of services. Currently, there is not sufficient capital funding, nor is there sufficient operational funding, to continue to delivering services and programs at the level the Pleasanton community has come to expect. To prepare for the future, the City must identify new and/or expanded revenue sources to keep pace with the growth of expenses, or significantly curtail expenses and reduce service levels to maintain the required balanced budget. Community input is critical to this process, and the community has been actively engaging in a revenue measure exploration process over the past year. As of early May, the City has received more than 3,100 responses to a community survey about budget priorities: it is clear that all City services included in the survey matter to our community, and that public safety and 911 response are highly valued. While working with the community to assess revenue measure feasibility, the City has also been actively taking steps to reduce costs and developing a budget stabilization plan for further cost containment and limited revenue enhancement strategies primarily impacting the adopted FY 2024-25 budget. Staff will present this plan in more detail during upcoming mid- term budget discussions. Municipalities have limited options for raising revenues, and many cities face similar challenges related to rising operating costs and deferred maintenance. Pleasanton is not alone in identifying options to address the financial challenges that are on the horizon. Staff is aware that several cities in Alameda County are also exploring revenues options including infrastructure bonds, sales tax, utility users’ tax, and hotel tax. DISCUSSION Budget Forecast As part of the biennial budget development process, staff evaluates the City’s overall financial health in part by forecasting revenues and expenditures for several years beyond the current Page 4 of 10