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The Pleasanton City Council reviewed and approved two separate resolutions last week to accept the latest update reports for the city’s four-year capital improvement program and the city’s two-year general fund operating budget.
The two budget-related items, which were high-level overviews of the unaudited results for the 2022-23 fiscal year, included several key highlights including funds to be carried over to the next budget period in the CIP, adjustments to the city’s various operating funds and the two newly established reserve funds — the strategic plan implementation reserve and the emergency reserve.
“The city of Pleasanton used to be a sleepy little town … And things were done very casually about finance and reserves,” Pleasanton Mayor Karla Brown said during the Dec. 19 meeting. “We’re a real city, we’re almost 80,000 people … and that means better planning. It means being more conservative.”
The audited information will be reflected in the city’s annual comprehensive financial report, which will be presented to the council sometime in January or February after the city’s independent auditor and the audit committee review it.
“Where are we going to put the focus of our dollars that we do have and where are we going to, if we have to, find additional funding?” Brown added. “This is the roadmap for the success.”
City finance director Susan Hsieh started off the presentation with the city’s CIP budget as of June 30 and how there is $84 million in carryover funds for the 2023 fiscal year.
“Since capital projects are multi-year in nature, funds not spended in one fiscal year are carried over to the next fiscal year,” Hsieh explained. “The project budget that’s presented here and in the staff report only reflects the unspent budget in fiscal year 2023. It does not represent the cumulative budget approved by the City Council.”
She also pointed out that other adjustments that the council recently made to the CIP budget earlier this year were not reflected in the report and that a significant portion of the carryover balance it’s non-discretionary money, which is money from the state, county and other funding agencies and developers.
Hsieh also said that the carryover balance covers various capital project categories such as sewer, water, parks, miscellaneous projects, transportation and streets, storm and facilities. She said that the largest carryover category was in transportation and streets, which totaled $46 million.
Some of the major projects that the city had completed this past year that Hsieh pointed out were the new pickleball courts at Muirwood Community Park, the rebuilt Fire Station No. 3 and the Pleasanton Public Library roof replacement..
“The capital improvement program is something that we’re looking to balance all of the needs of repairing and replacing what you have now and reaching forward in small steps for adding additional items,” Brown said.
Councilmember Jack Balch also confirmed with staff some specifics regarding some of the bigger projects to come in the city like how the city has already spent $130,000 as of June on designing the new skatepark at Ken Mercer Sports Park.
He also got confirmation that the city has started spending on redesigning Lions Wayside and Delucchi parks and a community farm.
Other projects that came up during this portion of the meeting were the renovation of the Century House — which no money has been spent because the city just hired an architect who has yet to begin work on that design — and the renovation of the council chambers, which staff reiterated was not included in the report because the city is using public educational funds for that project, not general fund money.
One other major question that came up was from Vice Mayor Julie Testa, who asked about unrealized traffic impact fees, which were unrealized because new developments were slowed down due to the city having to launch its new Housing Element.
“We do anticipate seeing additional revenue through the housing projects,” City Manager Gerry Beaudin said. “Whether they’re ministerial or not, the impact fees apply … the ministerial approval process that does not exempt folks from, or applicants from, impact fees.”
The other half of the budget discussion was on the year-end operating budget, which not only helped designate the city’s overall general fund balance, but also had the council unanimously approve two new reserve funds — a strategic plan implementation reserve of $800,000 and an emergency reserve of $500,000.
Hsieh said that the strategic plan reserve will help the city meet its goals set in the ONE Pleasanton five-year plan by having money set aside once that plan’s regular budget has been exhausted.
“We also have an implementation action plan that we’re working on currently and so we don’t exactly know what will come from that and what the financial needs will be,” Beaudin said. “So there’ll be a little bit of money that isn’t programmed at this time that will be set aside in this reserve that will likely have projects or efforts that will take us through this fiscal year.”
Hsieh said the emergency reserve will be useful after seeing the need for such funds after the damage the city saw during the heavy storms at the beginning of 2023.
“The idea behind this is to increase the amount of funding that we have should an emergency arise,” Beaudin said. “To have it in a separate account allows us to call it an emergency reserve and to go after it quicker without impacting our current reserve target of 20%.”
The council also approved several other transfers of money including: $1 million to the storm drain operating fund; $1 to the information technology fund; $800,000 to the general liability fund; $500,000 to the workers compensation fund; $250,000 to the fire repair and replacement Fund; $250,000 to the facilities repair and replacement fund; and $200,000 to the traffic signal repair and replacement fund.
Hsieh said that with these allocations, the city will be able to meet its 20% reserve goal and in general, strengthen the general fund reserves.
The total general fund reserves will be projected at around $51 million, according to Hsieh.
Hsieh also pointed out that due to limited financial resources, not all of the city’s funding needs were incorporated into the regular budget. Two of the biggest funding needs that the city will need to address in the near- and long-term future are the $185 million in unfunded pension and post-employment benefits; and the $900 million in deferred maintenance.
“While the development of a comprehensive assessment management plan is underway, near-term and long-term funding is needed for infrastructure repair and replacement,” Hsieh said.
She said that the city’s 10-year infrastructure plan will be one of the tools the city uses to plan for the city’s future funding needs.
Beaudin also said that the recent increase in the city’s water rates is another good example of the tools the city has used to begin addressing funding needs and that the city will plan on doing something similar with the sewer and cemetery funds.
“The cost containment for the cemetery is something that we’ve been working on for quite some time … and we’re at the point where we need to figure out how to bring new revenue into the cemetery to be able to offset that general fund subsidy that has been going there to maintain the cemetery,” Beaudin said.
Balch added at the end of the discussion that as the city gets ready for its next budget update in June, he is still worried about short staffing levels, specifically within the police department, and about the nearly $1 billion in deferred maintenance.
“This vacancy savings not only does it provide us with the cost savings that we will have now used to present estimates as we go forward, but I want to point out that it does have an impact on our workforce ability to address issues and to handle things,” Balch said. “As we start to reduce reserves to lower targets, as we start to still be within the range, but we still are at the lower end of the range, these are all warning signs that we should be making prudent fiscal decisions as soon as possible so that we can weather this storm ahead.”
