City forecast: Measure G lifts revenues but CalPERS UAL poses long-term pressure

Budget Officer Seth Anderson presented the city’s five-year long-term financial forecast and said this is the first forecast to include Measure G sales tax in the general fund. "Measure G adds another $22,000,000 annually to general fund operating revenue," he said, and staff’s projections show revenue growth roughly in line with planned expenditures in the forecast years.

Anderson walked the council through assumptions used in the forecast: property tax growth at about 4% annually, sales tax growth driven by Measure G and consultant projections, and modest yearly increases for wages and benefits. He also noted the forecast excludes ARPA dollars, new positions and one-time revenues unless specifically documented.

On pension liabilities, Anderson and staff emphasized long-term pressure from CalPERS. The presentation showed the city’s CalPERS unfunded accrued liability (UAL) payments growing and peaking around fiscal year 2031; the UAL payment in the forecast was projected to be approximately $20.1 million in that peak year. "The UAL payment amounts are determined by CalPERS," Anderson said, and staff indicated they will return with a more aggressive plan to address the liability.

Council members praised the thoroughness of the presentation and asked for further detail on reserves, EIFD reporting and the assumptions behind the 2.5% expenditure growth rate; staff said they would provide additional breakdowns and return with proposed strategies for tackling the UAL.