HomeMy WebLinkAbout7.1 Preliminary Fiscal Year 2025-26 General Fund Budget Update
STAFF REPORT
CITY COUNCIL
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Agenda Item 7.1
DATE: June 3, 2025
TO: Honorable Mayor and City Councilmembers
FROM: Colleen Tribby, City Manager
SUBJECT:
Preliminary Fiscal Year 2025-26 General Fund Budget Update
Prepared by: Jay Baksa, Finance Director
EXECUTIVE SUMMARY:
The City Council will receive an update on the Preliminary Fiscal Year 2025-26 Budget, a brief
economic overview, review of current sales tax receipts, and - based on feedback from the
April 15 City Council meeting - a potential framework for budget reductions in the event of a
recession or significant revenue loss.
STAFF RECOMMENDATION:
Receive the report and provide direction to Staff related to the budget adoption scheduled for
June 17, 2025.
FINANCIAL IMPACT:
The updates to the Preliminary Budget figures presented on April 15, 2025, reflect a $219,000
decrease in projected revenues and a $283,645 increase in General Fund operating
expenditures. After accounting for transfers out, total General Fund reserves are now projected
at $258,744,874 - a net decrease of $502,645 from the April 15 estimate.
DESCRIPTION:
Background
On April 15, 2025, the City Council received a presentation on the Preliminary Fiscal Year
2025-26 Budget (Attachment 2) which reflected a projected decline in sales tax revenue, the
City’s second largest revenue source, of $3.8 million in Fiscal Year 2056-26. This was driven
by a sharp drop in the auto sector in the current year that is projected into next year,
accompanied by a general flattening in other sectors. As Staff informed the City Council,
incorporating this information in the 10-year forecast results in the projected operating deficit
moving one year closer, to Fiscal Year 2030-31. It was further noted that this broader softening
may signal future impacts on other key revenue sources, such as property tax and interest
income. Staff also mentioned concerns over recent federal tariff increases, and whether the
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country might be facing a new recession.
As a result, and in advance of the adoption of the budget, the City Council directed Staff to
look for cost-cutting and/or revenue enhancing measures, along with other creative budget
balancing solutions that the City could implement, while maintaining a high level of service to
the community. This report presents a discussion of Staff’s work to that end, preceded by
updated economic and sales tax information, and refinements to the budget that include
updated proposals from police and fire and a request from Dublin Unified School District
(DUSD), among other items.
Update on the Economy and Sales Tax
As discussed at the April meeting, in addition to the slowdown in sales tax revenues both
locally and statewide, the U.S. economy is experiencing heightened uncertainty, largely driven
by the federal government’s expansive and rapidly evolving tariff policies. These ongoing shifts
have caused significant volatility in global markets and disrupted business planning, making
economic forecasting increasingly difficult. As of late May 2025, economists offer a mixed
outlook, with most agreeing that while uncertainty remains high, a recession is not imminent.
Staff anticipates that greater clarity on the national economic outlook should emerge by the
fourth quarter of 2025.
Additionally, there have been recent reports that have suggested that gas prices could double
by 2026, potentially reaching as high as $8.44 per gallon. Staff, in coordination with the City’s
sales and property tax consultant, HdL, have been monitoring this issue closely. HdL projects
gas prices may reach $6.00 per gallon in 2026. However, from an operational perspective, fuel
costs have a limited impact on the City’s overall budget. Any increa se in fuel expenses is
expected to be offset by higher fuel-related sales tax revenue.
The greater concern is the potential for broader inflationary effects, as rising energy costs
could drive prices up across California. The extent of this impact remains uncertain and will
likely not be realized until gas prices begin to rise significantly.
On a positive note, the City received its final first quarter 2025 sales tax payment (quarter
ending March 31), which exceeded HdL’s projections by approximately $128,000.While this is
encouraging, it is not significant enough to warrant changing the Fiscal Year 2025 -26 sales tax
outlook at this time.
Refining the FY 2025-26 Budget
At the time of the Preliminary Budget report, Staff noted that the budgeted amounts for Police
and Fire Services were preliminary. These proposals have since been received and
incorporated into the Fiscal Year 2025-26 Budget Update, with changes noted below. In
addition, Staff has revised revenue projections for the Transient Occupancy Tax and License
and Permit categories and has adjusted the professional services budget for Code
Enforcement to account for potential costs associated with ongoing legal matters . Table 1
summarizes these updates, followed by a review of the recommended adjustments.
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Table 1. FY 2025-26 Operating Budget Updates
FY 25-26
Preliminary
FY 25-26
Update
$
Variance
%
Variance
Fire Contract $18,146,721 $17,969,989 ($176,732) (0.97%)
Police Contract 27,633,647 27,894,024 260,377 0.94%
Code Enforcement 200,000 400,000 200,000 100%
Expenditures Difference $45,980,368 $46,264,013 $283,645 0.62%
Transient Occupancy Tax 1,500,000 1,400,000 (100,000) (6.67%)
Licenses and Permits 319,900 200,000 (119,900) (35.7%)
Revenue Difference $1,819,900 $1,600,000 ($219,900) 12.08%
Fire Contract – Decrease of $176,732 (-0.97%). The net decrease is primarily due to
lower-than-anticipated personnel and county overhead costs, partially offset by higher
costs for dispatch services, program expenses, and supplies.
o Not included in that above number is a request from Alameda County Fire that
the City allocate $1,752,868 from the Vehicle Replacement Fund to replace two
fire engines. Although the current engines are not due for replacement for up to
five years, the County recommends placing the order in FY 2025 -26 due to a
nationwide backlog and a four-year lead time for new fire vehicles. This is not a
General Fund expenditure.
Police Contract – Increase of $260,377 (+0.94%). The overall increase is primarily
due to higher personnel costs, partially offset by a reduction in dispatch service costs.
o The proposed budget includes four Behavioral Health Unit positions; three are
funded by the American Rescue Plan Act, and one is funded through a federal
grant.
o The proposed budget also includes two new DARE program positions filled by
retirees, funded through Opioid Settlement Funds.
Code Enforcement – Increase of $200,000 (+100.00%). Increase in cost due to
ongoing legal matters.
Transient Occupancy Tax – Decrease of $100,000 (-6.67%). The decrease in
revenue is based on current collections. Although actual receipts are slightly above
projections, Staff recommends a downward adjustment of $100,000 to the FY 20 25-26
Transient Occupancy Tax revenue estimate.
Licenses and Permits – Decrease of $119,900 (-35.7%). The decrease is based on
current year projections, which are expected to continue into FY 2025-26.
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Table 2. FY 2025-26 Operating Budget Impact and Reserves
FY 2025-26
Preliminary
FY 2025-26
Update
$
Change
%
Change
Revenues $133,398,929 $133,179,029 ($219,900) (0.16%)
Expenditures (116,021,991) (116,305,636) ($283,645) 0.24%
Net Operating Budget Impact $17,376,839 $16,873,393 ($503,545) (2.90%)
Transfers In $136,015 $136,015 $0 0.00%
Transfers Out / Contributions 20,701,900 20,701,900 $0 0.00%
Total Reserves, End of Year $259,247,519 $258,743,974 ($503,545) (0.19%)
Additionally, a City/DUSD Liaison Committee meeting was held on Thursday, May 22, 2025
during which DUSD requested a revision to the Memorandum of Understanding between the
agencies regarding crossing guard funding. Citing the City’s growth and the opening of new
schools, DUSD requested that the City fund three additional crossing guard positions,
estimated at $23,000 each. This would bring the total number of City-funded positions from 11
to 14; and any positions beyond that would be funded by DUSD (in the current year, there are
17 crossing guards that serve the schools). Staff believes the request is reasonable given the
growth in the community, but awaits City Council direction on adding these into the ongoing
annual budget. This cost is not reflected in the above tables.
Budget Balancing Considerations
Per City Council direction at the April 15 meeting, Staff has identified potential cost reduction
measures and revenue enhancements that may be implemented depending on the duration
and severity of any downturn.
Potential Expenditure Reductions
If the City were to face a deficit, immediate corrective actions would need to focus primarily on
the expenditure side. The City’s ability to raise additional revenue is significantly constrained,
as most tax increases require voter approval. Consequently, any substantial revenue-
generating measures would require approval through an election process —an outcome that is
not guaranteed and cannot be implemented quickly.
Table 3 summarizes potential cost reductions totaling $3.5 million, with more detail provided in
Attachment 1. It should be noted that Staff is not recommending any of these at this time, as
the City is still in a strong surplus budget situation. Staff will continue to closely monitor the
City’s financial position and broader economic conditions and expects to have more clarity in
the current calendar year with respect to sales tax performance . Staff recommends moving
forward with the Fiscal Year 2025-26 Budget as proposed, with the understanding that the City
has a plan to implement immediate cost-reducing actions should they be warranted.
Table 3. Potential Budget Balancing Cost Reductions
Category Impact Amount
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Parks and Community
Services - Scale back
special events.
Negative impacts on community quality of life:
decreased community engagement, limited
recreational and cultural opportunities for
residents.
$258,000
Non-Departmental -
Reduce Library hours. Negative impacts on community quality of life. $367,000
Public Works - Reduce
maintenance and contract
services.
Declining field conditions impact user group
experience: clumping and debris accumulation
on turf areas; uncontrolled vegetation. Potential
higher future costs due to deferred maintenance.
Lower quality of City events.
$1,750,000
Finance – Reduce
contributions to
preventative maintenance
(up to $2M).
One time reduction is reasonable. More than this
impacts City’s ability over time to make
replacements of aging infrastructure when
needed.
$750,000
Citywide - Implement
hiring freeze.
Increases workload on existing staff; may lead to
reprioritizing/decreasing project work. TBD
Citywide - Reduce training
/ travel.
Decreases professional development, leading to
lower quality of work over time. $400,000
Total $3,525,000
Potential Revenue Increases
The City of Dublin has two primary sources of revenue: taxes and fees. Under Proposition 218
and related laws, fees may only be set at levels that recover the cost of providing services.
Fees cannot be increased arbitrarily unless justified by increased costs or the fee was
previously subsidized. According to the current fee study, the City subsidizes approximately
$256,000 in fees, excluding those set by state statute. Additionally, Staff has analyzed
potential revenue increases – Transient Occupancy Tax and Sales Tax – that could be brought
forward to the voters. Potential revenue enhancements to consider in the future are as follows:
Reduce Fee Subsidy – Increase in Revenue of up to $256,000. Business License
Fees account for $173,000 of the total fee subsidy. The remaining fees attributable to
community development and permits are not charged at full cost due to health and
safety concerns, as excessively high fees may discourage permitted work, increasing
the risk of unpermitted and potentially unsafe activity.
Transient Occupancy Tax. The City of Dublin’s Transient Occupancy Tax (TOT) rate
has remained at 8.00% since incorporation in 1982. While Pleasanton and Livermore
also maintain an 8.00% rate, San Ramon and Hayward have increased theirs to 10.00%
and 8.50%, respectively. As TOT primarily impacts visitors rather than residents, it is
generally more acceptable to voters—reflected in the 86% approval rate of TOT
measures statewide in the November 2024 election.
Based on the Fiscal Year 2025-26 TOT budget of $1.4 million, a voter-approved
increase in the TOT rate could generate the following additional revenue:
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Table 4: Projected Revenue from an increase to TOT
Rate Revenue Increase ($) Increase (%)
8% $1,400,000 — —
10% $1,750,000 $350,000 25%
12% $2,100,000 $700,000 50%
Sales Tax. The current sales tax rate in the City of Dublin is 10.25%, with the City’s
share at 1.00%. Total sales tax revenue in Fiscal Year 2025-26 is projected at $27.6
million. Under State law, there is room for a 0.25% sales tax increase within the existing
cap of 10.5%, without requiring special legislative approval. However, this increment is
shared among all eligible agencies, including the City, school district, BART, and
Alameda County.
Estimating the exact revenue impact of a sales tax increase is challenging due to how
sales tax is allocated—particularly on vehicle purchases, where the tax is based on the
buyer’s place of residence rather than the point of sale. Nonetheless, preliminary
analysis suggests that a 0.25% increase could generate between $4.5 million and $6.0
million in new annual revenue for the City.
Next Steps
Staff is seeking direction from the City Council on the Preliminary Fiscal Year 2025-26 Budget.
Specifically, Staff is looking for the City Council to confirm:
1) The funding of three additional crossing guards.
2) That cost reductions are not warranted at this time.
The final Proposed Budget will be brought back to the City Council on June 17, 2025 for
adoption.
STRATEGIC PLAN INITIATIVE:
The Preliminary Fiscal Year 2025-26 Budget reflects priorities established in the City’s Two-
Year Strategic Plan.
NOTICING REQUIREMENTS/PUBLIC OUTREACH:
The City Council Agenda was posted.
ATTACHMENTS:
1) Potential Budget Balancing Cost Reductions
2) Staff Report dated April 15, 2025 (without attachments)
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Attachment 1
Splatter Eliminate droneshow and tasting pavilion and reduce the overall size and
scale of the event.$104,000
Scale back Tree Lighting and Breakfast with Santa.
Reduce summer concerts from eight to four.
Reduce outdoor movie nights from six to three.
Reduce waterpark hours during weekdays by one hour.
Reduce advertising/marketing budget.
Heritage Cener Eliminate the museum conservator and replace with in-house staff.$30,000
PCS Administration Reduce the number of activity guides from four to three. Each activity
guide costs approximately $14,000
$258,000
Library Reduce additional City-paid hours from 23 to 11.$367,000
$367,000
Reduce extra cleaning following rentals and events.
Reduce window and carpet cleaning by 50%.
Decrease frequency of mat service and septic tank maintenance.
MCE - Sports Fields Reno Reduce annual spending on field maintenance activities such as
reseeding and topdressing.$462,000
MCE - Turf Mowing Reduce mowing frequency by 50% (from bi-weekly to weekly).$157,000
MCE - Weed Control Reduce weed abatement services for general maintenance and special
events, excluding St. Patrick’s Day, Dublin Pride, and Splatter.$259,000
MCE - Support City Events Eliminate MCE support for City events, excluding St. Patrick’s Day, Dublin
Pride, and Splatter.$97,000
Tree Maintenance Limit tree maintenance to minor work and emergencies only.$533,000
Decrease sidewalk inspection and shaving program by 10%.
Reduce sweeping frequency in industrial areas from twice per month to
once per month.
$1,750,000
Preventative Maintenance Reduce or eliminate General Fund contributions to Preventative
Maintenance – Reduction of up to $2,000,000.$750,000
$750,000
Staffing Implement hiring freeze.TBD
Employee Development Limit citywide training and travel.$400,000
$400,000
$3,525,000
$110,000
Subtotal Public Works
POTENTIAL BUDGET BALANCING COST REDUCTIONS
Subtotal Finance
Subtotal Citywide
$132,000
$55,000
$55,000
TOTAL POTENTIAL REDUCTIONS
Parks and Community Services
Non-Departmental
Public Works
Finance
Citywide
Janitorial Services
Contract Services - Streets
Subtotal PCS
Subtotal Non-Departmental
Other Community Events
The Wave
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STAFF REPORT
CITY COUNCIL
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Agenda Item 8.1
DATE:April 15,2025
TO:Honorable Mayor and City Councilmembers
FROM:Colleen Tribby, City Manager
SUBJECT:Preliminary Fiscal Year 2025-26 General Fund BudgetPrepared by:Jay Baksa, Finance Director
EXECUTIVE SUMMARY:The City Council will review the Preliminary Fiscal Year 2025-26 Budget, focusing on the General Fund. The review will include a refined projection of the current year and an update to the 10-Year Forecast. This is the second year of the City's two-year budget;therefore, this information will supplement the budget document adopted by the City Council in June 2024. The updated Capital Improvement Program is presented under a separate item.
STAFF RECOMMENDATION:Receive the report and provide direction to Staff related to the budget adoption scheduled for the first City Council meeting in June.
FINANCIAL IMPACT:The update to the second year of the City’s two-year budget results in a decrease to revenues of $319,051 and an increase to operating expenditures of $3,315,216 in the General Fund as compared to the Fiscal Year 2025-26 Forecast Budget that was presented in June 2024. After transfers out, total General Fund reserves are projected at $259,247,519, a decrease of $6,648,252 from the Forecast Budget.
DESCRIPTION:BackgroundThe City of Dublin utilizes a biennial budget process, in which a comprehensive budget document is prepared that establishes high-level priorities and specific departmental goals for a two-year period. The second year of the cycle is the "update year," in which projections are revised to account for new and updated costs, while the original document continues to serve as the guiding financial plan.
Attachment 2
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As in prior years, this report focuses on the General Fund, as there are no major budgetary changes in other funds. This report will discuss the updates to the City's major revenue categories and recommended updates to the City’s expenditure projections, reflecting the most recent information available. Updated Projections, Fiscal Year 2024-25On February 18, 2025, Staff presented a mid-year financial review to the City Council that showed$132.5 million in total General Fund revenue in the current year, reflecting an increase of $4 million over the budget due to higher interest income. Staff utilized the most up-to-date information in preparing the mid-year report, including sales tax figures from the third quarter of 2024 (July – September 2024). Furthermore, and as a matter of conservative practice, Staff included changes to major revenues only in the mid-year report and assumed that all expenditure budgets would be spent. In early April 2025, Staff received the sales summary for the fourth quarter of 2024 showing a dramatic drop in the auto market, which makes up almost 40% of the City’s sales tax base. In that quarter alone, revenue from auto sales dropped over $600,000 from the same quarter last year. Applying such reductions to the first and second quarters of 2025 (January – June) results in a decrease of $1.8 million in the current fiscal year, from $30.5 million to $28.7 million.Moreover, the City’s consultant expects the decline in the auto sector to continue into Fiscal Year 2025-26, and for an uncertain national economic climate (i.e., weakened consumer confidence) to cause a softening across all sales sectors. The impact is a decrease of $3.8 million in anticipated revenue next year. Chart 1 below illustrates these points. Chart1: Sales Tax Projections($ in millions)
Because of the significance of this information, Staff has worked to refine the Fiscal Year 2024-25 year-end numbers. In reality, City expenditures almost always end the year under budget,
28.9 29.3
28.7
27.6
30.5
31.4
25
26
27
28
29
30
31
32
Actual
FY 22-23
Actual
FY 23-24
Projected
FY 24-25
Projected
FY 25-26
Updated Projection Prior Projection
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reflecting things like position vacancies and underspending on supplies or utilities. Accordingly, despite the decline in sales tax projected over the next year and a half, Dublin remains in a surplus position (ongoing revenues less ongoing expenditures). Staff is acutely mindful, however, that these new sales tax figures could be a signal of potential negative economic impacts in other areas such as property tax and interest income. This is discussed in the Recession Analysis section ofthis report.Table 1 summarizes the updated current year-end projections and is followed by a review of the findings. Large changes to specific categories (+/-$500,000) are discussed below. Table 1: FY2024-25 Year-End ProjectionsFY 24-25 Adopted FY 24-25 Amended FY 24-25 Projected $ Variance % VarianceRevenues$128,267,303 $133,569,704 $133,493,473 ($76,231)0.06%Expenditures (109,321,048) (111,858,059)(106,806,646)$5,051,413 (4.52%)Difference $18,946,255 $21,711,645 $ 26,686,827 $4,975,182 22.91%Revenues:
Sales Tax– decreaseof $1,840,536 (-6.03%)This is due almost entirely to a decline in the auto sector, beginning in the quarter ending December 31, 2024.
Rentalsand Leases/ Charges forServices – decreaseof $554,269(-5.74%)Both revenue categories coming in lower than the Amended Budget, mainly due to the Dublin Arts Center not yet being operational. All other recreation programming revenuesare generally coming in as budgeted.
Development Revenue– increase of $879,887 (+10.05%)The increase is due to the acceleration of the Dublin Centre and Francis Ranch development projects.
OtherRevenue– increase of $1,081,007 (+38.03%)The category is a catch-all for various items such as the sale of property and donations but mainly comprises reimbursements from the Camp Parks Intergovernmental Services Agreement and one-time items like community benefit payments. In the current year, the City received a community benefit payment of $1 million from Landsea as part of thedevelopment agreement for the Dublin Centre project.Expenditures:
Salaries and Wages – decreaseof $1,650,145 (-10.53%)The decrease is due to multiple staffing vacancies throughout the year, including at the Director and Assistant Director levels.
Benefits– decreaseof $855,597 (-13.72%)
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The decrease is due to the multiple vacancies, as well as the conservative practice of budgeting the highest level of benefits for vacant positions (such as the higher retirement tier and the family medical plan).
Services & Supplies– decreaseof $1,344,744 (-16.52%)The net decrease is due partially to the lower-than-anticipated cost of insurance premiums through PLANJPA, the City’s insurance pool. These savings will also be reflected in the Fiscal Year 2025-26 Budget. While rates have continued to increase, the overall amount of the increase was lower than originally anticipated. The City is also experiencing lower costs for general repairs and maintenance, as well as for operating supplies.
Utilities– decrease of $539,611(-14.01%)Utilities can be difficult to budget; for example, a rainy fall and winter can lead to significant savings in recycled water costs, which the City is seeing in the current year. Additionally, Staff is projecting budget savings in both electricity and gas on an annualized basis. It should be noted that the completion of various energy efficiency projects is currentlysaving the City approximately $600,000 annually.
Contract Services– decreaseof $683,065(-0.98%)After factoring in encumbered funds and annualizing expenditures, Staff is projecting a savings in contract services of $683,065. This is primarily due to the Dublin Arts Center not opening this fiscal year.Preliminary Fiscal Year 2025-26 BudgetThe Preliminary Budget (Table 2 and included as Attachments 1 and 2) projects an operating surplus in the General Fund (ongoing revenues less ongoing expenditures) of $17,376,839. After transfers, total reserves are projected at $259,247,519, a decrease of $6,648,252 from the Forecast Budget. As shown in Table 2, revenues in Fiscal Year 2025-26 are projected to decrease a net $319,051 (-0.24%) from the Forecast Budget, due primarily to the net impact of lower projected sales tax revenue, higher interest income, and revenue derived from development. Expenditures are increasing $3,315,216 (+2.94%) over the Forecast Budget. Changes to specific categories (+/-$100,000) are explained in the section below.
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Table 2: FY 2025-26 Operating Budget Impact & ReserveFY 2025-26Forecast FY 2025-26Update $ Change %ChangeRevenues$133,717,880 $133,398,929 ($319,015) (0.24%)Expenditures (112,706,775) (116,021,991) (3,315,216)2.94%Net Operating Budget Impact $21,011,106 $17,376,839 ($3,634,267)(17.39%)Transfers In $136,015 $136,015 100.0%Transfers Out / Contributions 17,551,900 20,701,900 3,150,000 17.95%Total Reserves, End of Year $265,895,771 $259,247,519 ($6,648,252)(2.50%)
Revenues:
Sales Tax– decreaseof $3,829,460 (-12.19%)The auto sector losses experienced in the current year have been carried into Fiscal Year 2025-26, along with a general softening of other sectors.
Development Revenue– increase of $1,633,000 (+18.73%)Development revenue includes permitting fees and payments for planning and engineering services provided by the City. The increase from the Forecast is due to the acceleration of projects. It should be noted that the receipt of revenues and corresponding services (i.e., City cost) do not happen simultaneously. Plan check costs are typically incurred approximately 12 months after revenue has been received, meaning that as development decreases, the associated decrease in costs will lag. In anticipation of this, the City has maintained the Service Continuity Reserve (currently at $3.2 million) to cover costs during that lag.
Charges for Services– net increase of $115,304(+1.52%)The increase is due to anticipated administrative fee revenue from the management of the City’s solid waste contract.
Interest – increaseof $2,000,000 (+35.74%)The projected increase in interest earnings is due to the continued benefit of high interest rates, as well as a high cash balance in the General Fund. Staff and its consultants are closely monitoring the actions of the Federal Reserve and will make any adjustments as needed throughout the year.
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Expenditures:
PersonnelCosts (Salaries and Benefits)– Increase of $723,235(+3.17%)The Preliminary Budget includes two new positions funded by the General Fund:
o One Administrative Technician in the Communications Division, to assist with the increased level of public transparency activities undertaken (the weekly Dublin Digest, social media posts, and public outreach). This Division currently has three staff: one Public Information Officer, one Analyst, and one Coordinator.
o One Office Assistant in Dublin Police Services, to assist with an increased workload of records management, reporting needs, and customer service. This Division currently has four staff: two Office Assistant II’s, one Administrative Technician, and one Administrative Aide.In addition, the full year cost for the Park Monitor position approved with the mid-year financial review has been included, as well as additional hours for seasonal staff at the Shannon Center. Health and retirement costs have been updated to reflect current and requested staffing.
Services & Supplies– decreaseof $220,939 (-2.67%)The net decrease is due to lower insurance premiums through PLANJPA, the City’s insurance pool. The City’s insurance rates have continued to increase, but the amount originally budgeted for both budget years was based on guidance from the plan JPA’s conservative projections. The decrease is partially offset by minor increases indepartmental costs ($25,000 for the purchase of water bottle filling stations and City flag replacements, combined), as well as an increase in the Youth Advisory Committee grant program from $2,500 to $10,000, per City Council direction at the November 19 meeting.
InternalServices Fund (ISF)– Increaseof $130,000 (2.26%)The change is attributed to an increase in software costs for the City’s new Financial and Permitting system being fully implemented and online, and additional unforeseen costs with the system such as additional user licenses. All technology-related costs are paid for by the Information Technology ISF and allocated out to City departments based on service requests and equipment allocation.
Contract ServicesExpenditures– increase of $2,682,920 (+3.83%)The increase in contract services is due to the following:
o $1,556,622 for development-related contracts, specifically for the Dublin Centre and Francis Ranch projects, which have advanced quicker than anticipated. These costs have offset revenues, although the receipt of the revenue and the corresponding expense can occur in different fiscal years.
o $602,000 for maintenance costs, including:
$70,000 for Green Stormwater Infrastructure maintenance, which is a requirement of the Municipal Regional Permit.
$462,000 for increased maintenance (field management, trash removal, and restroom cleaning), and additional support for events and rentals at Fallon Sports Park, Dublin Sports Grounds, and Don Biddle Community Park resulting from high park usage by the various user groups. Staff will factor
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these increases in costs for field maintenance when analyzing future rental fees. Staff has also included $12,000 for MCE to install water bottle filling stations in City facilities.
$70,000 for one-time Civic Center maintenance including painting, drywall repairs, fire sprinkler maintenance, roll-up door replacement, HVAC duct inspections, and potential carpet repairs or replacement. This cost will be covered by the General Fund Reserve for the Parks Department Relocation to the Dublin Arts Center.
o $303,420 for street sweeping expenses, due to the need to comply with prevailing wage regulations beginning July 1, 2025.
o $79,379 for other maintenance contracts which include additional janitorial services at The Wave during peak activity days, contract services to maintain the new Battery Energy Storage Systems at Corp Yard, Senior Center, and The Wave, and a new contract with a specialty vendor for preventative maintenance and repairs of The Wave Natatorium dehumidifier.
o $70,000 for ongoing SB1383 implementation costs and as-needed solid waste franchise support.Other Pending ProposalsThe Preliminary Fiscal Year 2025-26 Budget for both the Police Services and Fire Services contracts are currently based on the proposals given to the City last year. Staff expects to receive updated proposals in May but does not anticipate major cost increases at this time. Any changes will be highlighted at the time of the final budget presentation in June.Transfers OutThe Preliminary Budget includes transfers out of $2.0 million to the Internal Services Fund –Facilities for preventive maintenance, and $18,701,900 to capital improvement projects. Of the amount for capital projects, $10,900,000 comes from Committed/Assigned Reserves and $7,801,900 from Unassigned Reserves. Capital projects funded by the General Fund in Fiscal Year 2025-26 are shown in Table 3, with new items noted in bold italics. These are included in the Preliminary CIP Budget item on this City Council agenda. All other transfers remain the same as in the Forecast Budget.
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Table 3: Transfers Out to the Capital Improvement Program, FY 2025-26Reserves / Projects Amount Committed/Assigned $10,900,000Dublin Arts Center 250,000Village Parkway Reconstruction 10,650,000Unassigned$7,801,900Annual Street Resurfacing 2,086,900Citywide Energy Improvements 400,000Citywide Storm Drain Improvements 30,000Facilities Parking Lot Resurfacing 500,000FallonField G Renovations (NEW)500,000Kolb Park Renovation 2,450,000Resiliency and Disaster Preparedness 1,375,000ShadeStructureStudy(NEW)200,000Sunday School Barn Improvements 260,000Total$18,701,90010-Year ForecastThe 10-Year General Fund Forecast serves as the foundation of the annual budget process in terms of guiding the City’s use of resources now to prepare for the future. Staff continues to monitor ongoing revenue sources that fund ongoing costs and how those impact the General Fund over time. After incorporating the most current information available into the 10-Year Forecast and making certain assumptions about future revenues and expenditures, the projected operating deficit begins in Fiscal Year 2030-31, as illustrated in Chart 2. This is one year closer compared to the last forecast model. Revenue and expenditure assumptions are discussed below.
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Chart 2: 10-Year General Fund Forecast($ in thousands)
10-Year RevenueAssumptions:
PropertyTax
o Years 2-5: Between 4.38% - 5.06% annual growth based on estimates provided by the City’s Property Tax consultant, which includes the following assumptions:
o CPI adjustment: 2% increase throughout the forecast.
o Transfer of ownerships: growth based on historical averages.
o Years 5-10: 2.5% annual growth as development slows down.
Sales Tax
o Year 2: 3.5% growth based on the current projects from the City’s sales tax consultant. This follows projected decreases in both FY 2024-25 and FY 2025-26.
o Years 3-5: 3.2% annual growth; Years 6-10: 2.5% annual growth.
Development Revenue
o Based on development projections.
o Year 2: 3% increase based on timing of ongoing projects; Year 3: 3% decrease.
o Years 4-10: Flat in Year 4 and steady declines beginning in Year 5 through Year 10 as the community nears build-out. This is continually adjusted as development projects are brought to the City.
0
50,000
100,000
150,000
200,000
250,000
24-25 25-26 26-27 27-28 28-29 29-30 30-31 31-32 32-33 33-34 34-35
Property Taxes Sales Tax Development Licenses & Permits
Other Taxes Fines Interest Rents & Leases
Intergovernmental Charges for Svcs Other Total Expenditures
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Charges for Services
o 2% annual growth (inflationary).
Interest
o Decreases beginning in Year 2, as the City spends General Fund Reserves and as interest rates decrease.
AllOther Revenue
o 0% - 2% annual growth.10-Year ExpenditureAssumptions:
Personnel
o No new positions.
o COLA: up to 3.5% annually and merit increases.
o Benefit increases: 5% annual increase to retirement and health care.
Services and Supplies
o 2% annual increase (inflationary).
InternalServices Funds
o 10% annual increase to build up balances for future maintenance needs.
ContractedServices
o 6% annual increase across the board for all contract services.
o This allows for one new Police Officer added annually to the City’s contract with Alameda County Sheriff’s Office. Actual needs are determined each year through collaboration with Dublin Police Services.
Utilities
o 4% annual increase.
Transfers Out/Contributions/Other
o Preventative Maintenance - $1.0 million per year (decreased from the current contribution of $2 million per year).
o Lease Revenue Bond Early Payoff - $1 million per year to FY 2028-29.
o General Fund contributions to capital projects based on the approved CIP.Recession Analysis It should be noted that, while conservative assumptions are used in the City’s major revenue categories, a full recession is not included in the 10-year period. With the recent actions by the federal government, there has been speculation that a recession may occur in the near future. While the length and severity of any downturn is impossible to predict, Staff generally looks to the Great Recession, which significantly impacted City revenues over a three-year period, beginning in 2009.
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Using the Fiscal 2024-25 projected year-end numbers as a baseline, potential total recessionary revenue loss could net $12.5 million over three years as shown in Table 4 below.Table 4: Potential Recession, Impact on RevenueFY 2024-25 Recession Year 1 Recession Year 2 Recession Year 3Total Revenue $133,493,473 $125,807,548 $121,066,112 $121,091,817 Property Tax $63,499,389 (2,857,473)(612,483)Sales Tax $28,695,829 (4,447,853)368,569 1,587,767 Interest Revenue $9,622,800 (3,238,072)(2,252,532)(949,579)Net Revenue(Loss)/Gain (7,685,926)(4,741,435)25,705 Expenditures $106,806,646 $118,021,991 $123,833,778 $131,109,144 Operating Surplus/(Deficit)$26,686,827 $7,785,557 ($2,767,666)($10,017,357)Revenue loss amounts would serve as the starting point for discussion regarding expenditure reductions and/or use of reserve funds. As of the time of this report, the City has a total of $11.2 in contingency reserves, as well as an Unassigned (Cash Flow) Reserve of $76.6 million that equates to about 8 months of the Fiscal Year 2025-26 budgeted expenditures. This positions the City to be able to weather short-term revenue losses, even if severe. However, structural revenue losses (such as losing a major stream altogether) in combination with uncontrolled expenditure growth would require the City to consider programmatic cuts, new revenue streams, and other long-term budget balancing solutions.Next StepsStaff is seeking direction from the City Council on the Preliminary 2025-26 Budget. The final Proposed Budget will be brought back to the City Council on June 3 for adoption.
STRATEGIC PLAN INITIATIVE:The Preliminary Fiscal Year 2025-26 Budget reflects priorities established in the City’s Two-Year Strategic Plan.
NOTICING REQUIREMENTS/PUBLIC OUTREACH:The City Council Agenda was posted.
ATTACHMENTS:1) Preliminary Fiscal Year 2025-26 General Fund Summary2) Preliminary Fiscal Year 2025-26 General Fund Reserves
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Preliminary General Fund
FY 2025-26 Update
June 3, 2025
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Presentation Overview
•Preliminary Budget Recap
•Economic and Sales Tax Update
•FY 2025-26 Budget Update
•Budget Balancing Considerations
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Preliminary Budget Recap
28.9
29.3
28.7
27.6
30.5
31.4
25
26
27
28
29
30
31
32
Actual
FY 22-23
Actual
FY 23-24
Projected
FY 24-25
Projected
FY 25-26
Updated Projection Prior Projection
o Preliminary budget presented April
15, 2025.
o Decrease of $1.8M and $3.8M in
Sales Tax revenue in FY 24-25 and
25-26, respectively.
o Based on decline in Auto Sales =
41% of all sales tax in FY 23-24.
o “Softening” in other sectors.
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Preliminary Budget Recap, 2
•Not a recession, but reflection of uncertainty, that may
affect other revenue sources.
o Concerns about effect of federal tariffs.
•Council directed Staff to look at cost-cutting and/or
revenue enhancements.
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Economic and Sales Tax Update
•Continuing high level of uncertainty leading to significant
volatility in global markets.
o Disrupting business planning.
•(Positive Update) - Recession is not imminent.
•Greater clarity by fourth quarter 2025.
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Economic and Sales Tax Update, 2
•Potential – Gas Prices reach $8.44/gallon in 2026.
o City Consultant (HdL) – projected $6.00/gallon.
o Operationally limited impact.
o Increase of fuel costs offset by fuel related sales tax.
o Greater concern is broader inflationary effect.
•(Positive Note) – Q1 Sales Tax payment (Qtr. ending March
31) - $128,000 higher than HdL projections.
o Staff not recommending any updates to Sales Tax projections at this time.
o Meet with HdL in late July to discuss Q1 results.
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FY 2025-26 Budget Update
•Fire Contract – decrease $176,732 (-0.97%)
o Lower personnel and county overhead costs.
o Partially offset by higher dispatch and program expenses.
o City allocating $1.75 million for purchase of two replacement fire engines.
Funded by ISF for vehicle replacement.
Four-year lead time.
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FY 2025-26 Budget Update, 2
•Police Contract – increase $260,377 (+0.94%)
o Higher personnel costs; offset by reduction in dispatch service costs.
o 4 Behavioral Health Positions.
3 funded by ARPA
1 funded by federal grant
o 2 Dare program positions; funded by Opioid Settlement Funds.
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FY 2025-26 Budget Update, 3
•Code Enforcement – Increase $200,000 (+100%)
o Ongoing legal matters.
•Licenses and Permits – Decrease $119,900 (-35.7%)
o Current year projections carried into FY 2025-26.
•Transient Occupancy Tax (TOT) – decrease of $100,000
(-6.67%)
o Based on current collections.
o Actual receipts are moving in right direction and slightly above projections.
o Staff continues to recommend the downward adjustment.
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FY 2025-26 Budget Update, 4
•Operating Surplus of $16,873,393
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FY 2025-26 Budget Update, 5
•May 22, 2025 – City/Dublin Unified School District
(DUSD) liaison meeting was held.
o DUSD requested City fund three additional crossing guard positions.
$23,000 per position
o Staff believes reasonable request, given growth in community.
o Has not been incorporated in Budget, awaiting City Council direction.
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Budget Balancing Considerations
•Staff has identified potential cost reductions and revenue
enhancements.
•Staff is not recommending any of the following actions.
o Strong surplus position
•Budget Balancing Plan to be implemented should the need
arise.
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Budget Balancing Considerations, 2
•If, immediate corrective actions are needed, focus would
be on expenditures.
–Cities are strictly constrained on how additional revenue can be raised.
•Revenue enhancements typically need voter approval.
–Not guaranteed and cannot be implemented timely.
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Budget Balancing Considerations, 3
Category Impact Amount
Parks and Community Services - Scale back
special events.
Negative impacts on community quality of life: decreased community engagement, limited
recreational and cultural opportunities for residents.$258,000
Non-Departmental - Reduce Library hours.Negative impacts on community quality of life.$367,000
Public Works - Reduce maintenance and contract
services.
Declining field conditions impact user group experience: clumping and debris accumulation
on turf areas; uncontrolled vegetation. Potential higher future costs due to deferred
maintenance. Lower quality of City events.
$1,750,000
Finance – Reduce contributions to preventative
maintenance (up to $2M).
One time reduction is reasonable. More than this impacts City’s ability over time to make
replacements of aging infrastructure when needed.$750,000
Citywide - Implement hiring freeze.Increases workload on existing staff; may lead to reprioritizing/decreasing project work.TBD
Citywide - Reduce training / travel.Decreases professional development, leading to lower quality of work over time.$400,000
Total $3,525,000
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Budget Balancing Considerations, 4
•City’s primary sources of revenue are fees and taxes.
•Prop 218 – Fees can only be set at levels to recover costs.
o Cannot be arbitrarily increased, must have increase in costs or fee
previously subsidized.
o Reduce all fee subsidies – increase of revenue of $256,000
Business License Fees
Community Development/Permit Fee – Health and Safety
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Budget Balancing Considerations, 5
o Current rate 8% since City’s
incorporation.
o Impacts visitors rather than residents.
o High approval rate.
o FY 2025-26 Budget $1.4 million.
o Projected increase between $350k -
$700k.
•Transient Occupancy Tax (TOT) Increase
Rate Revenue Increase ($)Increase (%)
8%$1,400,000 ——
10%$1,750,000 $350,000 25%
12%$2,100,000 $700,000 50%
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Budget Balancing Considerations, 6
•Sales Tax Increase
o Current rate 10.25%; FY 2025-26 projected revenue = $27.6 million.
o State Cap of 10.50%; 0.25% remaining for all eligible agencies.
o Projecting increase difficult due to how sales tax is allocated; particularly
vehicle purchases.
o Estimated increase of $4.5 million to $6.0 million.
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Next Steps
•Provide Staff direction on Preliminary FY 2025-26 Budget;
specifically confirm:
o Funding of three additional crossing guards.
o Cost reductions are not warranted at this time.
•Final Proposed Budget will be brough back on June 17th
for adoption.
•Questions?
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