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City Council accepts 10-year financial forecast, staff to use it as FY2026 budget baseline
Summary
Palo Alto staff told council the long-range financial forecast projects a $12 million general fund shortfall for fiscal 2026 and ongoing gaps that staff recommend cover with uncertainty reserves and budget discipline; council accepted the forecast and budget development guidelines unanimously.
PALO ALTO, Calif. — City staff and the Finance Committee presented a 10‑year long-range financial forecast Monday that projects a $12 million structural shortfall for fiscal year 2026 and additional gaps in subsequent years, and the City Council unanimously accepted the forecast as the baseline for budget development.
Lauren Lai, the city’s chief financial officer, and budget manager Paul Harper said the Long Range Financial Forecast (LRFF) — covering fiscal 2026 through 2035 — assumes a stagnant near-term economy and includes a base-case scenario and two sensitivity scenarios: a 1% decline in economically sensitive revenues and a 1% increase in compensation costs…
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