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Larkspur staff present five‑year budget outlook showing modest FY 2026–27 shortfall; reserves earmarked for CalPERS relief
Summary
Administrative Services Director Emilia Gabrielle presented a five‑year general fund forecast showing an estimated FY 2026–27 operating gap of about $486,000. Staff cited rising public-safety and pension costs as pressure points and noted a $2.5 million contingency set aside for CalPERS unfunded liability.
At the March 30 special meeting, Administrative Services Director Emilia Gabrielle presented the city’s five‑year financial outlook for fiscal year 2026–27 through 2030–31.
Gabrielle said the city projects roughly $27.52 million in revenue and transfers and $28.01 million in expenditures and transfers for FY 2026–27, producing an estimated operating shortfall of about $486,000. Property tax is the largest revenue source at roughly 65 percent of general fund revenue (about $17.4 million); sales tax is projected near $3.2 million and transient‑occupancy tax (TOT) showed recent softness.
“The preliminary forecast shows an annual operating gap on the order of half a million dollars,” Gabrielle said. “We have a $2.5 million contingency set aside for CalPERS unfunded liability that can help us manage near‑term pressure while we refine revenue and expenditure assumptions.”
Staff attributed most of the cost pressure to negotiated increases and market wage pressures for public‑safety partners, together with rising pension and benefit costs. Gabrielle said staff used conservative assumptions for revenue growth (4% property tax; 3% sales tax) and flagged one‑time increases in permit‑related revenue for FY 2026–27 that staff currently estimates at roughly $835,000 combined (plan check, building permit and planning fees) due to higher construction activity.
Council members questioned specifics, including the contribution breakdown for joint powers authorities that provide police and fire services, the status of a large multifamily property reassessment (Skylock/Serenity referenced in discussion), and whether forecast assumptions include anticipated new development or should wait until permits are firm. Staff recommended accounting conservatively and modelling new developments only once permits are real.
City Manager Dan Morgensson and staff stressed ongoing work with partner agencies and the assessor to refine growth and reappraisal assumptions and to negotiate public‑safety contracts in the coming year. The city plans further budget sessions in mid‑April (or early May) and a preliminary budget presentation in mid‑May ahead of formal adoption targeted for June 3, 2026.
The council took no immediate budgetary actions at the meeting; staff will return with refined assumptions, reserve projections and recommended options to close recurring shortfalls.
