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The city of Pleasanton ended the 2024-25 fiscal year with a $7 million surplus, which the City Council acknowledged as part of an unaudited report from city staff during its Nov. 18 regular meeting.
While city officials noted the overall actual general fund revenues and expenditures were in line with the city’s 2025-26 balanced budget adopted by the council in June, one-time funds such as last-minute development fees presented a notable distinction between the budgeted numbers and the actual results for the end of the prior fiscal year, which the council reviewed and ultimately approved before Thanksgiving.
“There’s going to be people who are in the community wondering why we have a surplus and it’s really important to recognize that we budget conservatively and we do it on purpose so that we don’t have to draw in reserves at the end of the fiscal year,” City Manager Gerry Beaudin said during the meeting. “We also want to proactively ensure that we have cashflow throughout the year.”
Beaudin’s remarks reference the contentious period earlier this year when council and city staff spent months trying to balance its 2025-26 budget. That process ultimately ended in many departmental reductions and cuts to services — decisions that faced pushback from residents who did not think so many cuts were necessary.
In addition to accepting the operating budget report and approving budget amendments in multiple funds Nov. 18, the council also adopted a resolution to accept the 2024-25 fiscal year-end financial and program delivery report for the capital improvement program. The resolution included the approval of $63.8 million in CIP carryforward funds, which will earmark that unspent money for future capital projects.
During staff’s presentation on the city’s unaudited financial results for the general fund revenues and expenditures in 2024-25, finance director Susan Hsieh said property tax revenue came in lower than originally budgeted for but that was offset by increases in both sales tax and business license tax, which came as a result of new licenses and greater gross receipts. Hsieh said the new Costco opening on Johnson Drive and the relocation of Kaiser Permanente workers from Oakland to Pleasanton significantly helped with these funds.
The surplus in revenue also partly came from development services fee revenues which were about $3.4 million higher than what the city originally estimated. Hsieh and Beaudin explained that those fees were not included in the original budget projections the city used to balance its current two-year budget because those funds actually came in during the last month of the 2024-25 fiscal year.
Beaudin said one-time funds such as those development fees tend to fluctuate and are less predictable to budget for, which is why the city tends to be more conservative when projecting those revenues. One of the large developments that paid those fees to the city include the Avalon Bay multifamily residential project, which looks to expand the Avalon Pleasanton by adding 280 new homes, according to the developer’s website.
But even without those development fees, the city’s actual revenue was still 2.4% higher than what was originally budgeted for, according to staff’s presentation.
“The revenues came in higher by about 4.6%, including the one-time money,” Beaudin said. “And the expenses came in about half a percent lower than what was projected.”
The city also spent $800,000 below what was originally budgeted for, according to Hsieh. She said vacant staff positions helped contribute to the overall staffing savings in expenditures.
Hsieh also went over actual budget details for certain enterprise funds such as the water, sewer, storm drain and cemetery funds. According to her presentation, the water fund reserve level improved thanks to recent rate increases while the sewer fund met its reserve target. The city’s storm drain and cemetery funds, on the other hand, continue to receive subsidies from the general fund, Hsieh said.
Thanks to the one-time revenue contributing to the surplus, the council approved the transfer of $2.4 million to the streets CIP fund, $500,000 to replace the canceled transfer from the golf fund and $62,000 to the library and recreation facilities and equipment fund.
Staff also recommended to use $3.08 million of the one-time money toward the capital reserve fund, previously known as the rainy day fund.
However, Mayor Jack Balch later explained in his friendly amendment to the approved motion that he thought staff should take the time to reevaluate the use of that money and see if there was a way to use it so the city didn’t have to draw from its Section 115 Trust Fund.
The council previously approved a plan to draw $2 million over the next two years from that supplementary trust fund, which was established in 2018 to address the city’s unfunded retiree medical and pension liabilities.
Balch said — and the rest of the council agreed — that staff should come back during the mid-year and mid-term budget reviews next year with options so that the 115 trust money can stay in that fund and continue to garner interest.
“If we could reduce the draw, we’re showing our employees our real dedication to solving the pension obligation problem,” Balch said. “It’s always going to be, at least in my view, a challenge between operations, capital needs and pension — and we’re balancing that out as transparently and forthright with our community.”
Structural deficit looming to $7m surplus in one fell swoop. Hmmm.