CITY COUNCIL WORKSHOP AGENDA PACKET

Page 10 of 16 The annual General Fund pension contribution is currently more than $20.0 million, which only represents the minimum contribution required by CalPERS. Pension liability is like a mortgage – the longer the liability is outstanding, the higher the interest expense. As shown in the table below, the City’s pension costs have increased by more than 80% over an eight- year period. Long-Range Financial Planning Long-range financial planning helps the City to diagnose potential risks, focus on long-term objectives, and stimulate big-picture thinking. Beyond the biennial budget and multi-year capital planning, the City needs to identify long-term financial trends. The long-term financial forecast projects revenues, expenses, and key factors, such as challenges that may have significant budgetary impacts on City operations, beyond the actual or projected results for one or two fiscal years. As the City completed the development of its first comprehensive financial forecast model, the projection was updated to reflect the City’s significant needs in both the operation and capital areas. The goal was to provide the City’s full financial picture and challenges to the community as the City embarked on the exploration of a potential revenue measure. It would not be prudent to understate the City’s funding needs, as Pleasanton residents’ quality of life will be impacted when services are provided at a lower level either due to insufficient revenues and/or deteriorated facilities and infrastructure. The City uses reasonable assumptions for revenue and expenditure projections when developing financial assumptions. Revenues are projected conservatively, and costs are projected less aggressively. The long-term projection shows revenue projections including property tax–which is the City’s largest revenue source–growing at 3.5% annually, sales tax–which is the second Page 12 of 109