Council reviews FY 2025–26 proposed budget and CIP ahead of June adoption; staff details forecasts, requests and priorities

City staff presented the proposed fiscal year 2025–26 budget and capital improvement program (CIP) at a May 15 special session study session; the council used the presentation to identify follow-up items the mayor and staff will provide before the June 3 budget hearing and adoption.

Presentation highlights: Director of Administrative Services Christina Alfaro and acting budget manager Anthony Anderson walked the council through a $136 million all‑funds budget proposal with estimated revenues around $135 million and an estimated use of fund balance of roughly $843,000 across funds. Major assumptions include moderate growth in sales tax and property tax using HDL forecasts, a recessionary adjustment in the out years (assumed flat revenue in the model year labeled 2027–28), CalPERS increases based on actuarial projections, CPI-based increases for materials and contracts, and a 4% vacancy assumption used in the 10‑year forecast (the vacancy assumption is used in the forecast but not budgeted at the department line‑item level).

Requests and priorities: Staff summarized $8.3 million in budget requests across funds (about $4.4M one‑time and $1.6M ongoing) plus a recommended $2.3M city work program allocation. Notable proposed items included restoration of the internal-audit contract, restoration of some training funds (50% of prior reductions), a management analyst in Administrative Services for grant reporting and purchasing, a maintenance worker in Public Works for trees and right-of-way, funding for a strategic plan, PV and EV-related capital projects, and continued funding for the community shuttle contract (listed under Public Works). Staff said selected CIP projects and grant-funded items remain in the proposed CIP and that changes requested by council at the May 6 continuation were reflected where possible.

Council questions and follow-ups: Councilmembers asked staff for clarifications (to be provided by the final budget hearing): - A reconciled transfers-in/transfers-out table (staff flagged an identified discrepancy and will return with corrected numbers). - A clearer accounting of special-project carryovers in the city work program and a mechanism to require council re-authorization for carryovers the council decides should end. Staff said projects not actively continued will need council direction to remain in the work program. - More transparent reporting on nonprofit and community-support spending (festival fee waivers, sponsorships, sister‑city agreements, Shakespeare in the Park, and other contracts). Staff will provide an itemized memo showing the budget impact of recurring non‑profit support and fee-waiver programs. - Clarification of certain line items and the timing of one‑time versus recurring costs (for example, some items carry multi‑year operating impacts even if the capital purchase occurs in a single year).

Traffic, CIP and other cross‑cutting items: Several councilmembers asked for more complete, directional traffic counts and average speed data for major corridors (Stevens Creek Boulevard, Bollinger Road, Lawrence Expressway, Homestead and other segments) before the council makes further CIP decisions; Public Works said it can scope such a citywide traffic-count/analysis program but the cost will vary with level-of-service and modeling requirements. Council also requested an information memo on hybrid meeting support for commissions and the policy for festival fee waivers and other community-support agreements.

Next steps: Staff will update the proposed budget materials with the corrected transfers reconciliation and will provide supplemental memos (special-project carryovers, nonprofit supports and a scope/cost estimate for citywide traffic counts) before the June 3 final hearing and adoption. The council held extensive preparatory briefings earlier in May and used tonight’s session to narrow follow‑up work ahead of final adoption.