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City staff warns long-range forecast shows expenditures outpacing revenue, reserves projected to decline
Summary
OMB Director Sharon McGuire presented the city's 27th Long Range Financial Plan, showing expenditures rising faster than projected revenues, a forecasted drawdown of the general fund, growing pension costs and a recommendation to explore fees and cost-containment measures to preserve reserves.
Sharon McGuire, the city's director of the Office of Management and Budget, told the city council that the Long Range Financial Plan forecast shows expenditures increasingly outpacing revenues and projects a multi-year drawdown of the general-fund balance if no policy changes are made.
"The forecast allows for improved decision making in maintaining fiscal discipline and delivering essential community services," McGuire said during the presentation of the 27th update to the plan.
The plan focuses on the general fund (with related treatment of transportation, water/sewer, cemetery, sanitation and stormwater funds), uses a baseline built from historical trends and staff's assumptions, and highlights several drivers of future cost pressure. Staff used a working assumption of about 5% average property-tax growth over the forecast period and 2% growth on other revenue lines; personnel and public-safety costs were modeled higher (general personnel at 5% and public-safety personnel at 7.7% average growth).
McGuire and her team showed that the city's fund balance stood at about $88.7 million at the start of the fiscal year, with allocations including about $21 million set aside for disaster and emergency. The plan includes a projected need for a roughly $6 million transfer from the general fund to support the beautification fund this fiscal year and notes that historical Community Redevelopment Agency (CRA) repayments contributed significant one-time revenue in prior years.
Staff flagged pension contributions as a major near-term cost increase. "These are not forecasted; these are actual contributions the city will need to make," McGuire said, citing actuarial-driven increases that add roughly $5 million for police and fire pension contributions.
Councilmembers pressed staff on timing and magnitude of the projected shortfall. Councilmember Richter summarized the concern: under current assumptions the city remains above the 10% fund-balance threshold through 2027 but faces the risk of falling below that metric in 2028 if no changes are made. Jim Zervis, the city's financial services director, characterized the plan's revenue assumptions as conservative and noted long-term valuation growth has historically averaged higher, but said county assessor estimates could adjust those figures.
In response to the projected gap, staff recommended exploring additional fee opportunities, emphasizing comprehensive cost-recovery analysis, selective service additions, cost-containment measures and continued evaluation of long-term impacts before making commitments. Council members and staff also discussed structural revenue concerns such as declining gas-tax receipts and the need to consider alternative revenue approaches, including registration or mobility-based fees at the state or local level.
The presentation concluded with staff offering to provide follow-up detail on specific lines (for example, a deeper breakdown of franchise-fee trends) and with a reminder that the long-range plan is a planning document to inform decisions, not a binding budget for next year.
The council did not take formal action on the plan during the workshop; staff said follow-up work and additional analysis will be provided to inform budget and policy discussions in coming months.
