Council reviews FY26 draft budget and five-year CIP; capital projects fund projected at $11.75M, civic center needs additional financing

The Ross Town Council spent the better part of its April 24 meeting on the draft fiscal year 2025–26 budget, a five-year financial forecast and the five-year capital improvement program (CIP).

Town Manager Krista presented the draft budget and forecast, and emphasized that the town remains in generally healthy financial shape largely because of the public safety parcel tax renewed in March 2024 and conservative management. Staff projects an operating fund surplus for the current fiscal year of roughly $617,000 and plans a transfer that would bring the capital projects fund to an estimated $11,750,000 by the end of fiscal year 2026, assuming the draft budget's transfers and no additional large-scale borrowing.

Key financial items discussed

- CalPERS and pension liabilities: Krista summarized the town's pension exposure and mitigation steps. The most recent CalPERS valuation showed an unfunded accrued liability of about $6.1 million for the town. The forecast includes optional annual paydowns of $200,000; the town's mandatory CalPERS payment for FY26 is projected at just under $500,000, and staff noted required pension costs could reach approximately $1.1 million annually by FY2030 if actuarial assumptions and markets shift.

- Fire services and JPA savings: The council heard that the planned closure of one Ross Valley Fire Department station will generate substantial savings sooner than expected. Staff reported that Ross's share of savings applied under the JPA third amendment is estimated at about $323,000 beginning July 1, 2025, with another portion to follow a year later pending the final JPA board actions. The council discussed whether to revisit cost-allocation formulas with the Ross Valley Fire Department board; staff explained that any change to allocations in the JPA would require a separate process and, likely, JPA approval.

- Revenue and reserves: Property tax remains the town's largest revenue source and HDL provides property tax projections used by staff (4% annual growth in the forecast). The draft budget proposes continuing transfers to the capital projects fund, including a recommended $1,000,000 transfer from operating reserves; after that transfer, the operating fund is still projected to exceed the town's 30% reserve policy.

- Capital projects and five-year CIP: Public Works Director Rich Siminich reviewed the CIP list and phasing. Major projects included the Winship Bridge replacement (multi-year; construction projected in 2027), Balena storm-drain Phase 2, and a Civic Center modernization project that has been costed in prior planning at about $21 million (2023 estimate). The Civic Center program includes new civic facilities and housing (nine units required by the certified housing element) and involves demolition, temporary relocation of functions (police, paramedics, Public Works) and undergrounding of utilities at the Civic Center intersection.

Undergrounding and Rule 20A

Rich reported productive coordination with PG&E on a Rule 20A undergrounding district for the Civic Center area. The rule 20A credits available to the town are modest (PG&E credits in the meeting were discussed around $300,000) compared with an estimated undergrounding cost staff cited of roughly $2.2 million to $2.6 million. Staff said that partial undergrounding (a single pole) generally would not qualify for Rule 20A credits and that a project of sufficient scope is required to maximize available credits.

Funding gap and next steps

Staff noted the capital projects fund balance projected for FY26 (about $11.75 million) would still leave a multi-million-dollar gap against the prior civic center 2023 cost estimate. Options discussed to close the gap included additional operating transfers, grant-seeking, partner donations, or voter-approved debt (bond or parcel tax). Staff said a part-time project manager is budgeted to start initial environmental and pre-construction work; council will need to decide the timing and approach to voter measures if the council opts for debt financing. Staff cautioned that cost escalation since 2023 means updated cost estimates are necessary before a final financing plan.

Other budget highlights

- Public safety parcel tax: Renewed in March 2024, the next parcel-tax cycle begins July 1, 2025; the draft budgets reflect the continuation of current assessments and show that the parcel tax materially supports the town's public-safety budget.

- Police and public safety staffing: The police department budget maintains nine funded positions (an increase from eight in prior years for succession planning and recruitment) and staff noted ongoing labor negotiations with police and fire unions that could affect FY26 staffing costs.

- Infrastructure: The CIP includes planned paving and pathway work (Sir Francis Drake repaving segments, Laurel Grove Safe Routes phases, Allen Avenue pedestrian improvements) and the Winship Bridge right-of-way and final design phases leading to 2027 construction.

Council direction and next steps

Council members asked staff to return with additional materials, refined cost estimates and graphics showing capital fund trajectories over time (requested by council to track the capital projects fund balance and to help plan potential voter measures). Staff indicated it would return with a final draft budget for adoption in June. No formal budget adoption occurred at the April 24 workshop; the meeting served as council review and direction-setting for staff.