Walnut Creek council accepts 10-year financial forecast, flags pension and Measure O timing

Walnut Creek City Council on Jan. 21 accepted a 10-year financial forecast presenting two recession scenarios and updated assumptions about revenues, pension costs and Measure O funding.

The forecast, prepared by Administrative Services Director Kirsten Lacasse, projects general-fund trends under a “mild” recession (12-month downturn, two-year recovery) and a “moderate” recession (18-month downturn, three-year recovery). It assumes no use of reserves or the pension trust in baseline modeling and does not include potential new Measure O revenue beyond existing ongoing commitments.

The forecast’s nut graf: council members heard that under both scenarios the city generally remains near breakeven over 10 years but could face mid-range deficits if a recession occurs. The presentation emphasized that timing and severity of any recession are uncertain and that pension discount-rate changes and Measure O expirations could materially affect long-term costs.

Lacasse told the council the forecast assumes a 2% annual assessed-value growth baseline (Prop 13 inflator), modest softening in sales tax, and a 2.9% CPI inflator for personnel and operations. The model includes a 6.8% assumed CalPERS discount rate through the forecast period; staff said a lower assumed discount rate would have raised projected annual costs by about $2.5 million when phased in. The pension trust balance was reported at about $28.7 million as of Sept. 30.

City Manager Dan Buckshay and members of the council questioned how recession timing maps to fiscal years; staff clarified that the forecast scenarios assume a recession beginning at the start of fiscal year 2027 (July 1, 2026 in calendar terms). Council members emphasized conservative treatment of Measure O: the forecast assumes only existing ongoing Measure O expenditures (roughly $2.67 million today, built to $3.8 million under forecast growth assumptions) will eventually be returned to the general fund when Measure O expires in fiscal year 2034.

Council discussion also covered pension policy: staff said CalPERS kept the discount rate at 6.8% after recent returns and that its Asset Liability Management (ALM) process, starting in fiscal 2025, could change the discount rate with effects to the city beginning in fiscal 2028. Council members noted that total pension cost comprises employee contributions, employer contributions and investment returns, and that the council will see a pension-trust strategy report from staff in February–March.

After questions and public comment (none on the item), council moved to accept the forecast. A roll-call vote recorded ayes from Council member Silva, Council member De Vinny, Council member Francois, Mayor Pro Tem Wilk and Mayor Cindy Darling; the motion passed unanimously.

The council and staff said the forecast will guide the upcoming two-year budget process for fiscal years 2026–27 and that staff will return with pension-trust strategy recommendations ahead of the budget adoption timeline.