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<br />
<br />RECOMMENDATION
<br />Receive an update on state of the City’s finances to prepare for the development of the next
<br />two-year (FY 2025/26 and 2026/27) budget.
<br />
<br />BACKGROUND
<br />Pleasanton is a full-service city, meaning the City organization provides most essential public
<br />services (police, fire, park maintenance, library and recreation programs, etc.) and owns and
<br />maintains vehicles, equipment, and infrastructure (facilities, parks, streets, lighting, traffic
<br />signals, pipes, etc.) that enhance and protect the community’s high quality of life. Most of these
<br />services are provided using the General Fund, which covers both City operations (staffing,
<br />maintenance, and service delivery) and capital costs (infrastructure/projects). The City budget
<br />also includes major enterprise funds, like water and sewer, that are financed primarily through
<br />user charges rather than the General Fund and managed separately.
<br />
<br />The fiscal year 2024/25 Citywide operating budget totals $239 million, comprising $154 million
<br />in the General Fund, $63 million in Enterprise Funds, $4 million in Special Revenue Funds,
<br />and $18 million in Internal Service Funds. Enterprise Funds and Special Revenue Funds are
<br />restricted funds (e.g., water, sewer, and grant funds), and these resources cannot be used to
<br />fund General Fund operations such as public safety and library services. Resources in the
<br />Internal Service Funds are designated for repairing and replacing buildings, vehicles, and
<br />equipment in future years, and so are not used for general operations.
<br />
<br />The fiscal year 2024/25 capital budget totals $57 million with project categories including
<br />facilities, parks, sewer, storm drain, transportation and streets, water, and miscellaneous
<br />projects. Funding for the City’s Capital Improvement Program is from a number of sources,
<br />including the General Fund, Gas Tax and Highway Funds, Measure B and BB Funds,
<br />development impact fees, grants, and transfers from other funds.
<br />
<br />DISCUSSION
<br />The following discussion addresses each of the budgetary categories and shares the current
<br />status, and forecasted outlook over the next two-year budget, including areas of forecast
<br />deficiency and factors to consider as decisions are made to address those deficits.
<br />
<br />General Fund
<br />The General Fund is the City’s primary operating fund or account used to pay for most day-to-
<br />day City operations. The three primary sources of the General Fund are property tax, sales
<br />tax, and hotel tax (also called Transient Occupancy Tax or TOT). While the General Fund is
<br />the City’s largest fund and can be used for any City expense, there is a relatively small
<br />amount of discretionary spending. As a service organization, personnel costs account for
<br />approximately 72% of the General Fund budget, which is typical for a full-service city
<br />government. The remaining 28% is used to fund supplies and materials and contract services
<br />(23%), repair and maintenance of City vehicles, buildings, and equipment (4%), and
<br />transportation, training, and other miscellaneous expenses (1%).
<br />
<br />Forecasted General Fund Structural Deficit
<br />The City, with assistance from municipal finance experts who have helped dozens of cities
<br />around the state with similar work, developed its first long-term, detailed financial forecasting
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