Council reviews proposed FY25‑26/FY26‑27 biennial budget and five‑year CIP; staff proposes transfers to CIP and risk reserves

Assistant City Manager and Administrative Services Director Doug Alessio presented the proposed biennial operating budget for fiscal years 2025‑26 and 2026‑27 and reviewed the first two years of a five‑year capital improvement plan (CIP).

Why it matters: The budget sets staffing, service levels and the city’s fiscal policy for the next two years. Staff asked the council to provide direction on any changes before final adoption on June 3.

Major points from staff presentation

• Balanced two‑year proposal: The draft operating budget is balanced for both years, with a modest projected operational surplus of about $265,000 in year 1 and about $60,000 in year 2 under current assumptions. Alessio said the city expects to end FY24‑25 slightly stronger than budgeted and to add roughly $1 million to the general fund balance at year‑end.

• Reserves and transfers: Staff proposed increasing the city’s contingency reserve to meet the council’s 50 percent‑of‑operating‑budget policy. The draft budget includes a recommended transfer of approximately $685,000 to the city’s risk management internal service fund to replenish reserves drawn down by recent settlements and rising insurance costs. Staff also recommended transferring $2,000,000 from unassigned general fund balance to the capital improvement fund (Fund 700) to support CIP projects.

• Staffing and service levels: The proposed budget keeps regular staffing steady at about 40.5 full‑time equivalents (FTE). Two limited‑duration positions are included for the budget cycle and temporary staffing levels were increased in the draft to cover facility attendance and GIS support (a proposed half‑time GIS technician).

• Revenue assumptions: Staff said revenue estimates are conservative given national economic uncertainty. Taxes account for the largest share of general fund revenue; staff used conservative growth rates for property tax, sales tax and interest earnings and highlighted the city’s relatively stable property‑tax base.

• CIP overview: Director Scott Christie presented the CIP: roughly $21 million in proposed capital spending across about 53 projects during the next two fiscal years. Major projects include the City’s annual paving program; a category A storm‑drain project underway; and the Moraga‑Way Winding and Path Study (a proposed $400,000 measure‑R contribution), which staff said will be pursued jointly with Moraga. Several large projects remain contingent on grant funding, including a multi‑use Wilder Pathway projected at a large cost that staff listed as contingent and unfunded.

Next steps: The council received the draft and asked clarifying questions. Staff will incorporate council direction and return to the council for adoption of the final biennial budget and CIP at a future meeting (June 3).