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The Pleasanton City Council will be receiving a report on Tuesday during a special meeting workshop before the normal council meeting that outlines a list of city services which could be reduced or eliminated in order to address the city’s ongoing budget deficit.
None of the services will necessarily be on the chopping block on Tuesday as the council will discuss a plan on how to address the financial challenges if a half-cent sales tax revenue measure isn’t placed on the November election ballot or if voters don’t approve that tax increase.
“The city is facing a severe and increasing structural deficit, meaning that expenses have and will continue to grow faster than revenues,” according to the staff report. “Current forecasts indicate an average budget shortfall of approximately $13 million annually over the next eight years, which city staff have been working to address proactively with a combination of reduced costs and new revenue.”
According to staff, the city identified the structural budget shortfall in early 2023. The staff report states that the structural deficit goes back many years and is caused by several factors including slow real estate development; declining retail sales activity; increasing insurance costs; increasing operating supplies and material costs; increasing contract service costs; growing number of unfunded mandates from the state; rising personnel costs such as pensions; and reduced hotel tax revenue, which took a hit because of the pandemic.
“The most likely baseline scenario projects an annual deficit of as much as $11 million beginning in (fiscal year) 2025-26, with peak years approaching a $16 million deficit,” according to the staff report. “Beyond the current budget cycle, the cumulative deficit is projected to exceed $110 million over the next eight years. If there is an economic downturn, the average annual deficit is projected to exceed $22 million and the cumulative deficit is projected to exceed $180 million over the same period.”
Since last year, staff have been working on containing costs while also working on a revenue measure feasibility project, which led staff to focus on assessing whether or not the council should place a half-cent sales tax on the Nov. 5 ballot.
“If successful, the proposed sales tax increase would generate approximately $10 million per year, which would largely address the forecasted structural budget gap and allow the city to maintain most vital City services,” according to the staff report.
But because the approval of such a tax increase is not ensured, staff have also developed a contingency plan if the ballot measure is not successful. That plan, which will be brought forth to the council on Tuesday, includes a list of programs and services that could be eliminated or reduced as part of the next two-year budget or even sooner if new revenue is not secured.
Staff will be presenting immediate departmental budget reductions with cuts totaling about $2.5 million, which include non-personnel costs and personnel costs associated with vacant positions, according to the staff report.
With the help of input and analysis from these different departments, staff is proposing to reduce parks, trees and landscape maintenance; library services; community programming, youth and senior programs and special events; plan checking and traffic management programs; sustainability programming and services; funding to community programs and to economic development services.
Staff will also be looking at potentially reducing police and fire services as well as critical internal service functions. The report also states that the city-funded school crossing guard program could be eliminated.
During the presentation, staff will also be looking at potential longer term service reductions from every city department, which could total in expenditure savings up to $8.9 million
The City Council special meeting workshop is scheduled to begin at 5 p.m. Tuesday (May 21). The full agenda can be accessed here.
Following the special workshop, the City Council will be holding its regular council meeting where it will be looking to adopt a resolution to accept the 2024-25 mid-term update for the city’s operating and capital budget.Â
According to the staff report, the update includes recommendations to the operating and capital budget, which the council adopted on June 6, 2023, including adjustments that will affect the city’s General Fund, Enterprise Funds, Internal Service Funds, Special Revenue Funds and Capital Projects Funds.
“Recommended mid-term budget adjustments are based on current information and projections related to various tax revenues, accompanied by updated funding need analysis for various expenditure budget items since the adoption of the (fiscal year) 2024-25 budget,” according to the staff report.
The largest proposed adjustments which the council will have to consider will be related to utility, legal, and personnel costs. According to the staff report, electricity, water and recycled water costs are all projected to increase more than previously estimated by staff. Legal costs associated with the city’s legal claims and related obligations have also been going up.
As for personnel cost increases, those have been attributed to salary adjustments as well as “necessary adjustments based on the most recent pension actuarial reports from the California Public Employees’ Retirement System.”
The proposed budget adjustments include about $2.5 million in non-personnel and personnel cost reductions which will be identified in the special budget workshop before the regular meeting.
“These cost savings help to reduce the increased operating costs mentioned above,” according to the staff report. “Reduced non-personnel costs include contract services, equipment, operating supplies, and materials; personnel reductions include freezing a number of vacant positions.”
“While these cost reductions will likely have minimal impacts on the service the city provides to the community, they will nevertheless have some impact on staff’s ability to provide the same level of quality service and to more fully implement the City Council’s policy direction in some areas,” the report further states.
The proposed amendments also reflect the use of the city’s Rainy Day Fund, which was capital improvement funding set aside during the early stages of the pandemic, to help balance the 2024-25 budget.
* The council will be reviewing an appeal made by The True Life Companies — a real estate development company based in Denver, Colorado — of the Planning Commission’s decision to deny the applicant’s housing development project.
The proposal was to demolish two commercial buildings at 5976 and 5994 West Las Positas Boulevard and build 146 multi-family residential units with 38 accessory dwelling units; however, the commission denied the project at its April 10 meeting based on a zoning designation which did not allow for that type of development in that area.
* Staff will be presenting a report on the use of Section 115 Pension Trust Funds and seek feedback from the council on how to continue using those pension trust funds to help reduce the projected General Fund budget deficit in future years.
The regular City Council meeting is scheduled to begin at 7 p.m. Tuesday (May 21). The full agenda can be accessed here.
A budget shortfall ? Just like the state for their irresponsible spending !!
When you have Valerie Arkin saying 6 million is a drop in the bucket at a council meeting last year in June (it was a budget adoption meeting), when asked not to spend that money on a skate park improvement, it clearly shows lack of fiscal irresponsibility. And you have our mayor declaring she was worth it and a lot more when voting in a raise for themselves – yep another lack of fiscal responsibility statement. Then you have Julie Testa fighting every development, thereby causing lack of tax revenues for the City with new developments. What happened to the East Side plan anyway?