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File Number: 22-408 The City is fortunate to have strong growth in sales tax revenue during the pandemic, following a decline in fiscal year 2019-2020. The increase in sales tax has provided funding to support needed services and programs. Additional resources also make available funding for other community priority projects. Sales tax is the City’s top revenue source, and it is susceptible to economic cycles. Staff will continue to monitor the revenues closely to evaluate the impact from inflation, supply chain shortages, consumer confidence, and other key market conditions. While revenue growth is expected to be steady in the short term, staff is mindful of the City’s obligations related to unfunded pension and retiree healthcare liabilities, deferred maintenance and facility and equipment replacement costs. The amounts below represent estimates for the City’s key obligations. ·$204,000,000 in Net Pension Liability ·$2,800,000 in Net Retiree Healthcare Liability ·$200,000,000 for Road Pavement ·$14,000,000 for Citywide Median Rehabilitation ·$2,000,000 for Tree Replacement ·$25,000,000 for Fire Station Renovation ·$3,500,000 for Facility Maintenance ·$9,000,000 for Park Maintenance ·$13,000,000 for Traffic Equipment Replacement The City Council has taken steps to fund the City’s unfunded pension and other post-employment benefits (OPEB) liabilities, including the establishment of trust accounts and additional contributions to CalPERS. The adoption of the Prioritizing Unfunded Liability Liquidation Plan (PULL) in 2015 put the City in a great position in terms of building assets. The City Council Finance Committee directed staff to develop an OPEB funding policy to fully fund the liability in roughly 12 years. A draft OPEB policy is planned for Committee review in September 2022. The Finance Committee also requested a pension study and planned for a policy discussion in the Fall of 2022. The goal is to fully fund the City’s obligations over time. In terms of capital related projects, the City Council continues to direct available resources to fund the various programs. The City also pursues grant opportunities on an ongoing basis. The 2022-2023 General Fund budget reflects significant one-time investments to the streets and roads program. Funding for a building condition assessment is authorized and expected to take place in 2022-2023. Staff is in the process of developing a comprehensive Capital Improvement Plan to address the City’s overall funding needs. Funding strategies will be formulated for short- and long-term needs and will be presented to the Council and the community for consideration. DISCUSSION The General Fund finances the operations of the City having no special or dedicated revenue sources and pays for basic municipal services. All General Fund 2022-2023 Adjusted Budget expenditures total $150,694,000 as shown in Attachment 1. Adjusted Budget estimated revenues in the amount of $133,527,000 finance the anticipated expenditures. The 2022-2023 General Fund budget includes one-time expenditures, and reserves will be used to fund these projects. The 2021-2022 Adjusted Budget includes critical supplemental City Council-approved Page 2 City of San Leandro Printed on 6/15/2022