CITY COUNCIL WORKSHOP AGENDA PACKET

Page 3 of 4 current economic climate. The first scenario assumes the City’s revenues will continue to grow at a measured pace, with the local economy experiencing no major downturn during the 10- year period; the second scenario assumes a recession in FY 2027/28, impacting the City’s major revenue categories. For the recession scenario, sales tax revenue is projected to decrease by 5% in FY 2027/28 and 2% in FY 2028/29. Other taxes will decrease by 2% in both fiscal years. The City’s expenditures are expected to continue outpacing revenues for the next several years due to rising operating costs and revenue limitations. Based on the underlying assumptions, the baseline scenario forecast projects annual deficits of $10.4 million to $16.9 million. For more details, the Long-Term Financial Forecast Chart is provided as Attachment 2. Next Steps A budget workshop is planned for March 4, 2025, to discuss pension and retiree medical liabilities and the potential use of trust funds. Once staff has collected and evaluated the input from the community and the Budget Advisory Committee regarding cost reductions, the information will be presented to the City Council for consideration. Staff will present the proposed budget to the City Council in May 2025. EQUITY AND SUSTAINABILITY Financial forecasting is an important tool to facilitate the City’s financial planning, health, and resiliency. Ensuring long-term fiscal sustainability allows the City to continue to provide programs and services to benefit the entire community, including vulnerable and underserved populations. OUTREACH This report is part of the City's overall comprehensive community engagement related to the current budget development process. The Budget Advisory Committee and the community have been informed of opportunities to provide input and further participate in shaping the City's upcoming two-year budget. City staff will similarly continue to be informed throughout the budget development process. STRATEGIC PLAN ALIGNMENT This item aligns with the ONE Pleasanton strategic plan goal of Funding Our Future that supports financial health and sound fiscal policies. FISCAL IMPACT This item is informational; direction and feedback received from the City Council at this meeting will be incorporated into the development process leading to the presentation of the City Manager’s proposed budget. Prepared by: Submitted by: Approved by: Susan Hsieh, Director of Finance Susan Hsieh, Director of Finance Gerry Beaudin, City Manager Page 30 of 33