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Gilroy finance director reports FY26 Q1: sales-tax dip and improved CalPERS returns
Summary
Finance Director Harjo Tsangen told council that updated sales-tax projections reduce FY26 revenues by about $400,000, CalPERS returns lowered the city's UAL from $115M to $101M, and council approved budget adjustments including $60,000 for an economic development assessment and $12,500 for election outreach.
Finance Director Harjo Tsangen presented the city’s first-quarter FY26 budget report and recommended several budget adjustments that the council adopted by a unanimous vote.
Tsangen said updated quarterly sales-tax data reduced the FY26 forecast by roughly $400,000 and that preliminary CalPERS FY25 investment returns improved the discount-rate assumption, lowering the city’s unfunded accrued liability (UAL) from about $115 million to $101 million. Staff incorporated these changes into the multi-year forecast and noted the UAL adjustments phase in over several years.
The staff-recommended budget amendments approved by the council included reappropriating funds for the previously approved Jessup property escrow cleanup, $60,000 from the general fund for an economic development assessment study to inform the incoming economic development director, and $12,500 for election outreach beginning January 2026 related to district-based elections.
Tsangen said the UAL improvements and planned use of the city's section 115 pension trust could allow earlier use of trust resources, potentially beginning in fiscal year 2028, which may alleviate future operating-margin pressure. Council adopted the budget amendment resolution by roll call vote (6–0).
Staff said the next forecast update will come with future quarterly reports in early 2026.
