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Page 3 of 23
<br />DISCUSSION
<br />General Fund Overview
<br />As shown in Table 1 below, recommended adjustments consist of decreasing revenues
<br />by $0.20 million and increasing expenditures by $1.97 million. It should be noted that an
<br />increase to the expenditure budget was initially greater than $1.97 million, but various
<br />reduction measures, including freezing positions, have been implemented. These
<br />reductions are described in detail in the General Fund Expenditures section below. To
<br />close the resulting deficit based on adjustments to revenues and expenditures, staff
<br />recommends utilizing approximately $2.17 million from the Rainy Day Fund and
<br />removing the previously budgeted transfer of $0.20 million to the Miscellaneous CIP
<br />Fund, as well as using $0.31 million in program reserves to balance the General Fund
<br />budget. The Rainy Day Fund is not included in the table below; the fund balance for the
<br />Rainy Day Fund is projected to reduce to $0.45 million at the end of FY 2024/25 with
<br />the recommended use of $2.17 million in addition to $2.00 million that is already
<br />included in the adopted budget. It should be noted that $0.47 million of $2.17 million will
<br />be transferred to the Miscellaneous CIP Fund to pay the City’s share of the Foothill High
<br />School Southbound Left Turn capital project managed by the Pleasanton Unified School
<br />District.
<br />
<br />Table 1. General Fund Overview
<br />
<br />
<br />General Fund Revenues
<br />As presented in Table 2 below, General Fund revenues are estimated to decrease by
<br />approximately $0.20 million based on revised projections from evaluating more current
<br />revenue trends and economic data, as well as year-to-date actual revenues. A decrease
<br />in Sales Tax is the primary reason for the overall net decrease.
<br />
<br />Highlighted major revenue adjustments include:
<br />x An increase of $1.47 million in Property Tax based on continued resilience in the
<br />local housing market. While reduced sales activities due to low inventory remain
<br />a concern, given the overall housing shortage in the Tri-Valley along with high
<br />demand, it is anticipated the local housing market will continue to remain positive
<br />in the near term devoid of any major economic downturn or recession. Updated
<br />projections include an increase of approximately $1.29 million in Secured
<br />Property Tax, $0.32 million in Unsecured Property Tax, and $0.08 million in the
<br />Property Tax portion of the Vehicle License Fees. These increases are offset by
<br />a decrease of approximately $0.22 million to Homeowners Tax Exemptions and
<br />Delinquent Taxes. Property Tax is the City’s largest revenue source.
<br />x A decrease of more than $2.64 million in Sales Tax largely due to a delay in
<br />opening of a new Costco along with slowing consumer spending seen in select
<br />spending categories based on the most recent projection from the City’s
<br />FY 2023 FY 2024 Adopted Recommended Mid-Term
<br />Actual Modified Budget Budget Adjustments Budget
<br />Revenues $151,149,404 $146,441,627 $151,442,025 ($203,250) $151,238,775
<br />Net Transfers (8,975,623) 465,052 496,152 1,891,050 2,387,202
<br />Use of Program Reserves - 1,180,572 30,000 280,000 310,000
<br />Expenditures (133,540,446) (148,079,541) (151,963,438) (1,966,067) (153,929,505)
<br />Difference $8,633,335 $7,710 $4,739 $1,733 $6,472
<br />FY 2025
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