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THE CITY OF CITY COUNCIL AGENDA REPORT PLEASANTON April 18, 2023 Finance TITLE: PRESENTATION ON FISCAL YEARS 2023/24 AND 2024/25 PRELIMINARY GENERAL FUND BUDGET AND FOUR-YEAR PRELIMINARY CAPITAL IMPROVEMENT PROGRAM, AN UPDATED RESERVE POLICY, AND WORK PLAN PRIORITIES FOR FISCAL YEAR 2023/24 SUMMARY Every two years the City Council adopts a Two-Year Operating and Capital Budget (collectively, the "Budget") and approves a Four-Year Capital Improvement Program. During the budget development process, staff seeks input from the City Council and the community. This report presents the preliminary budget for discussion with the City Council, which will help staff finalize a recommendation for the Budget for FY 2023/24 and FY 2024/25. The preliminary budget reflects projected revenues and expenditures to support and maintain essential City services and programs. The preliminary budget also assumes current service levels will be maintained with limited enhancements to bridge service gaps to meet the community's needs. The focus of the preliminary budget is the General Fund since the General Fund is the City's primary operating fund. General Fund revenues include discretionary revenues, and the City has the flexibility to cover any expense that supports the City's program objectives and priorities. Revenues from other funds such as Water, Sewer, and Traffic Impact Fee Funds are non- discretionary resources, and funds can only be spent for specific purposes. As part of budget development, staff is also recommending updates to the City's reserve policy to reflect best practices and current operational needs. Staff seeks feedback from the City Council, and the input will be incorporated into the final policy and presented as part of the May 16, 2023 proposed budget presentation. The preliminary budget also includes seven categories of proposed capital projects for City Council consideration. Projected financial resources and expenditures for these projects are included for FY 2023/24 through FY 2026/27. Appropriations for FY 2023/24 and FY 2024/25 will be incorporated into the two-year budget. Like the operating budget, staff seeks initial feedback from the City Council on the Four-Year Preliminary Capital Improvement Program (CIP). Staff is still in the process of refining certain revenue and expenditure estimates. The projected revenues and expenditures may be updated based on more current information.