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General Fund 10 -Year Financial Forecast
<br />The General Fund 10 -year financial forecast is the mechanism for monitoring the long-term
<br />financial health of the City's most important fund. By tracking and trending current and
<br />anticipated revenues and expenses, the forecast provides a tool for City management and
<br />policymakers for understanding the impact of decisions on the City's fiscal health. The
<br />forecast includes projections of current revenues and expenses, including pension
<br />contributions as estimated by staff and the CaIPERS. In addition, the forecast includes
<br />projected tax revenues associated with anticipated development over the next ten years.
<br />The General Fund 10 -year financial forecast is included under Appendix D.
<br />Given the current economic climate, two separate forecast scenarios have been prepared.
<br />The first scenario assumes the City's revenues will continue to grow at a measured pace,
<br />with the local economy not experiencing any major downturn during the 10 -year period.
<br />The second scenario assumes a mild recession sometime during FY 2027/28, impacting the
<br />City's major revenue categories. In the recession scenario, sales tax revenue is projected to
<br />decrease by 5.0 percent in FY 2027/28 and an additional 2.0 percent in FY 2028/29, and
<br />other tax revenues are assumed to decrease by 2.0 percent in both fiscal years.
<br />The chart below shows a 10 -year surplus/deficit projection for each scenario. The City's
<br />expenditures are expected to continue outpacing revenues for the next several years,
<br />largely due to increasing operating costs and aging infrastructure, including general liability
<br />insurance, pension obligations, and deferred maintenance. Pension costs are projected to
<br />increase until FY 2030/31 based on the latest projection from CaIPERS. As more employees
<br />in the CaIPERS' Classic Plan retire over time, the City's staffing pool will gradually consist of
<br />a higher percentage of employees in the CaIPERS Pension Reform Act (PEPRA) Plan, which
<br />has reduced pension benefits. Liability insurance premiums and related costs are expected
<br />to continue to increase due to current market conditions. Required funding for aging
<br />community assets, such as facilities and other infrastructure, is significant. However, due to
<br />financial constraints, funds have not been set aside for repair and replacement.
<br />W
<br />Estimated Annual General Fund Surplus/(Deficit)
<br />$4,000,000
<br />$2,545,893
<br />13—
<br />$2,000,000
<br />$6,62 $ae,619
<br />$-
<br />FY2023/24
<br />FY 2024/25 FY202S/26 FY20 7 FY 2027/28 FY 2026/29 FY 2029/30 FY 2030/31 FY 2031/32 FY 2032/33
<br />FY2033/34 FY 2034/35
<br />$(2,000,000)
<br />$(4,000,000)
<br />Ns,e6 3901
<br />$(6,000,000)
<br />$nn3p61 $V,6z,9ao1
<br />$I],6BA3e1 N6.9H,195)
<br />51B,x6,nb1 $16nx,41o1
<br />$(&3agwz)
<br />$(81000,000)
<br />$(0.56.4981
<br />$(10,000,000)
<br />$(12,000,000)
<br />513x,63,9]6)
<br />5139,366.60.1 $(39752,60) $(32,64961 $((M—M0
<br />$114,000,000)
<br />$116,000,000)
<br />Normal-eKessiOn in 20x8
<br />W
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