Emeryville projects $9.7 million general fund shortfall in first year of 2025–27 budget
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Summary
City financial consultant presented a proposed biennial 2025–27 budget that shows a large first‑year general fund deficit driven by lower development fee revenue and steady expenditures; council was briefed and will return to adopt the budget on June 3.
Brian Mora, financial consultant to the City from Regional Government Services, told the Emeryville City Council on Tuesday that the proposed 2025–27 biennial budget projects a $9.7 million general fund deficit in the first year and a $9.9 million deficit in the second year.
Mora said citywide revenues for the two‑year budget total about $116.5 million in year one against $143.5 million in expenditures, noting the figures reflect capital improvement spending. “In the first year, the revenues are projected at $116,500,000 and expenditures at $143.5 million,” Mora said. He also reported the proposed budget funds 174.61 full‑time equivalent positions across all funds and eliminates two positions from the prior budget.
The shortfall comes largely from a sustained drop in development fee revenues, Mora told council. Development and fees and charges declined from $12.7 million in 2022–23 to an estimated $4.8 million in the current projections and are forecast to fall further toward $3.3 million. The consultant said the general fund’s leading revenue source has shifted toward property taxes, with business license and cardroom fees, sales tax and hotel tax following.
Mora outlined capital and multi‑year risks and assumptions: flat sales‑tax and fees projections, the city’s experience of a modest fourth‑quarter sales‑tax increase, unanticipated social‑security costs, and higher salary and benefit increases. He flagged CalPERS investment volatility as an uncertain factor and said the city expects to use its unassigned general fund balance and $4 million from the economic uncertainty reserve to offset deficits in the first two years if revenues do not improve.
Council members pressed staff on timing for integrating a more detailed capital improvement program and on when to study revenue options. Mora and staff said the capital improvement budget will be returned in greater detail in September after public works completes its work; council will consider final adoption of the 2025–27 budget on June 3. The budget advisory committee recommended studying a payment‑in‑lieu‑of‑tax (PILOT) agreement with Sutter Health, prioritizing a business license tax and either a parcel tax or community facilities district, and evaluating a possible hotel‑tax increase; a quarter‑cent local sales tax and utility‑tax increases were lower priorities in the committee’s recommendations.
Latonya, the city manager, said the presentation was informational and that the council was not being asked to take formal action at the meeting. “We’re not looking for any direction this time,” she said.
Next steps in the schedule presented to council include a budget‑and‑governance committee review, a final budget presentation at the following meeting, and a council study session on revenue options in the fall that staff said would include detailed analyses of parcel tax, community facilities district and business license tax scenarios.
