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City manager presents FY 2025''6 budget and five-year CIP; council schedules hearings
Summary
City Manager Mike Wojcicki and Finance Director Stephanie Meyer presented the proposed fiscal year 2025''6 operating budget and five-year capital improvement plan; council received and filed the proposal and set hearings in June to review the details.
City Manager Mike Wojcicki and Finance Director Stephanie Meyer presented the proposed fiscal year 2025''6 operating budget and five-year capital improvement plan (CIP). Council received and filed the proposal and scheduled public hearings in June to review operations, capital projects and adopt the budget.
The budget presentation emphasized personnel costs, investments in technology and training, continued public-works capital needs, and fiscal caution in light of an annual CalPERS unfunded accrued liability (UAL) payment that staff estimates at about $4.3 million. Wojcicki described the UAL as a multi-year structural pressure that staff proposes to manage partly with a $3.5 million transfer from the city's pension reserve and with continued monitoring of actuarial assumptions; he noted refinancing as a future option.
Why this matters: The proposed budget funds core city services, advances grant-funded capital projects, and sets aside contingency and one-time funds for Measure FP planning and other capital needs; the UAL and slower-than-expected hotel/transient-occupancy-tax (TOT) revenue were central budget drivers.
Highlights from the presentation: - General fund: staff projects roughly 3'.7% revenue growth overall; property tax and TOT are key drivers but TOT remains below a full-recovery estimate. Wojcicki said local TOT could be several million dollars higher under a stronger business-travel recovery. - Pension/UAL: staff projects an annual UAL payment near $4.3 million; the budget relies on a $3.5 million transfer from the pension reserve to cover most of the payment in FY26, leaving a remaining general fund balance and modest one-time capacity for decision packages. - Capital program: the proposed five-year CIP totals about $94 million across funds, with roughly $29.7 million of new appropriations for FY26; staff highlighted almost $24 million in newly awarded competitive grants as a significant driver of capital activity. - Decision packages: the budget includes 52 decision packages across funds; staff reported the general-fund ongoing packages net to a modest positive structural impact and that one-time packages will use limited reserves.
Treasurer Eugene Solomon joined the hearing by Zoom and provided investment context: "The return on our investment portfolio is approximately $1,500,000," he said, and explained that the city's portfolio is conservative to preserve liquidity and safety; he noted several long-duration investments with low yields that will roll to higher rates over time.
Council members asked for additional detail and analysis, including updated CalPERS actuarial materials, a clearer comparison of amortization options for the pension exposure, and revenue assumptions for TOT and investment returns. Several council members requested staff return with Budget Response Reports (BRRs) on specific questions and noted that staff should minimize late BRRs once hearings begin in June to allow sufficient review time.
Next steps: Council scheduled hearings on June 3 (operations), June 10 (CIP), a Budget and Finance Commission review on June 12, and a budget adoption hearing on June 17; staff will provide BRRs and requested detail before the hearings.
