ITEM 15 ATTACHMENT 1 - Laserfiche WebLink

Honorable Mayor and City Councilmembers, I am pleased to submit the proposed FY 2025/26 and 2026/27 Operating Budget (Budget) for the City of Pleasanton in accordance with the City's Municipal Code. This Budget represents the City's two-year financial plan for delivering City programs and services in a fiscally responsible manner consistent with the priorities, goals, and objectives adopted by the City Council, along with Council direction and consistent with the five-year ONE Pleasanton Strategic Plan adopted in October 2023. Gerry Beaudin City Manager Collectively, the Budget, Capital Budget, and five-year Capital Improvement Program (CIP) provide funding plans for projects, programs, and services consistent with the City Council's strategic goals and recognizing ongoing fiscal constraints. The FY 2025/26 and FY 2026/27 Proposed Operating Budget is balanced with significant cost reductions and limited use of savings and investment funds. The City faces a severe and increasing structural deficit, meaning that expenses have and are expected to continue to grow faster than revenues. The City Council and the administration collectively have taken various actions to contain costs as early as the FY 2023/24 budget by freezing some vacant positions and delaying certain vehicle and equipment purchases, as well as other operational cost saving measures to realize some savings at year-end. With the need to continue reducing expenditures, as part of the FY 2024/25 Mid -Term Budget Review process, staff performed a comprehensive analysis of all the City programs and services and identified approximately $2.5 million in reductions in the General Fund budget without significantly impacting the programs and services provided to the community. This is in contrast to a typical Mid -Term Budget Review process where minor changes to year two of the biennial budget are proposed. However, given the City's fiscal challenges, staff undertook a more in-depth approach to progressively work toward reducing spending. Even with the aforementioned efforts to reduce expenditures, closing the structural deficit completely would mean reductions and elimination of additional City services and programs that the community values and expects. As such, staff also performed exhaustive research and presented various supplemental revenue options for the City Council to consider, and in July 2024, the City Council approved placing a half -cent sales tax measure on the November 2024 ballot. With Measure PP, which would have generated approximately $10.0 million in additional sales tax revenues, failing to gain the necessary support from voters, the City immediately began working on developing the next two-year budget with extraordinary cost-containment requirements—guided by an exceptional level of community engagement.