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Home My WebLink AboutBUDGET WORKSHOPFiscal Year 2025-2027 Proposed Budget CITY COUNCIL WORKSHOP May 20, 2025 Agenda Fiscal Sustainability Strategy — 10-year Plan (FY 25/26 — FY 36/37) 2. Projected New Revenue —Not Included in Budget 3. Pension Paydown Plans: Unfunded Accrued Liabilities (UAL) Year 1 and Year 2 General Fund and Land Sale Proceeds Budget Options 5. 15-Year Revenue and Expense Forecast 6. Revenue and Expense Overview Capital Improvement Program Summary 8. Workshop Discussion Fiscal SustainabiLity Strategy 10-year Plan (FY 25/26 — FY 36/37 GOAL: To achieve sustainable alignment of on -going revenues with on -going expenses within 10-years OBJECTIVES: Increase on -going General Fund Revenues Advance development of City owned property to generate additional recurring sales tax and property tax revenues Decrease on -going General Fund expenses Achievement of UAL paydown policy goal and reduce expenses Utilize projected one-time revenues to fund: a) General Fund Reserves minimum 15% fund balance level b) Paydown of unfunded pension liabilities c) Operations and programs, if needed to maintain existing service leve is Projected New Revenue Not included in proposed budget Confluent Senior Care (6 acres) 150 E. 1st Street (0.4 acres) Pacific Center East (11 acres) N-G Residential (61 acres) Cornerstone II (52 acres) FY 25-26 FY 26-27 FY 28-29 FY 27-28 FY 28-29 Proceeds may be a potential replenishment to the General Fund's reserves. New developments generate additional recurring revenues for the General Fund to support on -going City programs. WOMIM Pension Paydown Plans Total Unfunded Accrued Liability DUAL is 578M, - Two kinds of pension cost: 1. Normal cost —for current Employees. 2. Unfunded Accrued Liability (UAL) — how much we have now vs. how much we need to have to pay retirees. UAL amortized over 20 years at 6.8% discount rate. City pays a portion of UAL (principal & interest) every year Different Payment Types and Funding Sources: Annual required UAL: 25-26 $7.2M and 26-27 $7.7M Past years paid from General Fund Projected to top out at $10M by 30-31 City's 5-year funding plan (2022-2026): Annual $2M to a PARS pension trust from Land Sale Proceeds Fund Annual $1.8M discretionary UAL payment from Land Sale Proceeds Fund Projected to pay off UAL by 2036 Pension Paydown Plans 10-Year Pension Payment Actua12015 to 2024 and 13-Year Estimates 2025 to 2037 $4 $2 $0 14115 15116 16117 17118 18119 19120 20121 21122 22123 23124 24125 25126 Est 26127 Est 27128 Est 28129 Est 29130 Est 30131 Est 31132 Est 32133 Est 33134 Est 34135 Est 35136 Est 36137 Est Budget ■ NarmalCastGF ■ Required UAL GF ■ Addl UAL Land Sale ■ PARSTrust Land Sale Funding for a new updated analysis of potential Pension paydown options is included within Year 1 of the Paydown proposed budget. Plans Findings from the analysis and alternative options are planned for City Council consideration during the annual mid -year budget update process next February. YEAR 10 : FY 25-26 Budget Options Recommended Budget Options Beginning Fund Balance Operating Revenue Operating Expenditures Net Operating Change Non -Recurring Items: ARPA Funding Land Sale Proceeds Capital Improvement Projects (CIP) Furniture and Fixtures Optional Pension and OPEB Required Pension UAL Temporary Emergency Shelter PD Mobile Digital Computers (MDC) PD Body-Worn/In-Car Cameras PD Locker Room Remodel G F Reserve % to itures GENERALFUND OPTION 1 OPTION 2 $ 29,292 $ 29,292 95,345 95,345 98,780 98,780 (3,435) (3,435) LAND SALE PROCEEDS OPTION 1 OPTION 2 $ 85,954 $ 85,954 2,000 2,000 7, 524 (7,524) (5,524) (5,524) 708 708 42,100 42,100 (22,277) (22,277) (132) (132) (4,320) (4,320) (7,205) (7,205) (1,485) (1,485) (234) (234) (900) (900) (1,000) (1,000) 15% 27% YEAR 2.0 FY 26-27 Budget Options Recommended Budget Options Beginning Fund Balance Operating Revenue Less: Operating Expenditures Net Operating Change Non -Recurring Items: Capital Improvement Projects (CIP) Water Loan Repayment Furniture and Fixtures Vehicles and Equipment Transfer -in From Land Sale Proceeds Fund to Maintain 15% Reserve Level Required Pension UAL Temporary Emergency Shelter PD CAD/RMS Dispatch System PD Body-Worn/In-Car Cameras PD Locker Room Remodel GF Reserve % to ODerati itures GENERALFUND OPTION 1 OPTION 2 $ 15,843 $ 26,433 98,161 98,161 104,858 104,858 (6,698) (6,698) LAND SALE PROCEEDS OPTION 1 OPTION 2 $ 95,699 $ 85,109 2,000 2,000 6,942 6,942 (4,942) (4,942) (8,125) (8,125) 714 714 (77) (77) (1,000) (1,000) 6,000 (6,000) (7,709) (7,709) (1,557) (1,557) (1,300) (1,300) (600) (600) (1,000) (1,000) 15% 18% GF Reserve Forecast - Budget Option 1 • Includes estimated f— C .... , ..,... / : AA An. 17-Year 2023 to 2039 General Fund Reserve % with MOU % Increases and Option 2 in 2025-2027 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 FY 2036 FY 2037 FY 2038 FY 2039 oi—m GF Reserve Forecast - Budget Option 1 • FY 25/26 — 35/36 Fiscal Sustainability Strategy Use of Land Sale Proceeds Fund Items from Land Sale Proceeds under Option 1: 25-26 26-27 27-28 28-29 29-30 30-31 34-35 35-36 Total PD MDC $ 234,000 $ 234,000 Required PERS UAL $ 7,708,540 $ 8,028,850 $ 9,125, 995 $ 9,333,759 $ 7,000,000 $ 7,000,000 $ 6,000,000 $ 54,197,144 GF recurring expenses $ 6,000,000 $ 4,000,000 $10,000,000 Temporary Emergency Shelter Operation $ 1,556,808 $ 1,556,808 PD CAD/RMS Dispatch System $ 1,300,000 $ 1,300,000 PD Body-Worn/In-Car Cameras $ 600,000 $ 600,000 PD Locker Room Remodel $ 1,000,000 $ 1,000,000 Total $ 234,000 $ 18,165,348 $ 12,028,850 $ 9,125,995 $ 9,333,759 $ 7,000,000 $ 7,000,000 $ 6,000,000 $ 68,887,952 GF Reserve Forecast - Budget Option 2 • Includes estimated r F rAvA n i i A f i A AR A- 17-Year 2023 to 2039 General Fund Reserve % with MOU % Increases and Option 3 in 2025-2027 FY 2024 FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 FY 2032 FY 2033 FY 2034 FY 2035 FY 2036 FY 2037 FY 2039 FY 2039 6i A GF Reserve Forecast - Budget Option 2 • FY 25/26 — 35/36 Fiscal Sustainability Strategy Use of Land Sale Proceeds Fund Items from Land Sale Proceeds under Option 2: 25-26 26-27 27-28 28-29 29-30 30-31 35-36 Total PD MDC $ 234,000 $ 234,000 Required PERS UAL $ 7,205,000 $ 7,708,540 $ 8,028,850 $ 9,126,000 $ 8,000,000 $ 7,000,0000 $7,000,000 $61,068,390 GF recurring expenses $ - $ - $ - 14:-35 $ - Temporary Emergency Shelter Operation $ 1,484,579 $ 1,556,808 $ 3,041,387 PD CAD/RMS Dispatch System $ - $ 1,300,000 $ 1,300,000 PD Body-Worn/In-Car Cameras $ 900,000 $ 600,000 $ 1,500,000 PD Locker Room Remodel $ 1,000,000 $ 1,000,000 $ 2,000,000 Total $ 10,823,579 $ 12,165,348 $ 8,028,850 $ 9,126,000 $ 8,000,000 $ 7,000,000 $ 7,000,000 $ 7,000,000 $ 69,143.777 YEARS 1 AND 2m. General Fund Revenues Operating Revenues: Property Tax Sales Tax Franchise Fees Transient Occupancy Tax Other Tax Revenue Departmental Revenue Use of Money & Property Fines & Forfeitures Transfers and Reimbursements Other Revenue Subtotal Non -Recurring Revenues: Water Loan Repayment Reimbursement from Land Sale Proceeds for Legacy Annex TI Reimbursement from GF CIP Fund for Mainstreet Improvements One -Time ARPA Funding Subtotal �_excludes Navy North Hangar Fire incident reimbursements (A) Amended FY 24-25 $ 27,287 $ 35,500 1,848 2,200 1,509 4,904 4,023 800 12,423 1,650 92,143 (B) (B) - (A) Proposed Increase/ FY 25-26 (Decrease) 28,266 $ 980 $ 35,846 346 1,856 8 2,300 100 1,710 201 5,706 802 4,274 252 900 100 12,907 484 1,580 (70) 95,345 3,202 600 - (600) 3,170 - (3,170) 3,216 708 (2,508) 6,986 708 (6,278) (C) Proposed FY 26-27 29,305 $ 37,228 1,856 2,300 1,783 6,279 3,804 900 13,126 1,580 98,161 714 714 (C) - (B) Increase/ 1,039 1,382 74 573 (470) 219 714 7 General Fund Revenue Major Changes Property Tax increase 4% increase 4% Sales Tax increase 1% increase 4% both years include projected sales tax new Kia Dept Revenue - Building Permit related increase $750k increase $550k Irvine Company, Tustin Financial Plaza, Enderle Ctr. Use of Money/Property - Interest increase $344k decrease $344k Increases: Special Tax B; Increase: Special Transfers Real Property and CM Tax B legacy activity Transfers Decreases: Cl P transfer Decrease: ARPA $ and ARPA $ Total Revenue decrease $3M Increase $2M 25-26 no one-time transfer for CIP, less ARPA $ YEAR 1m. General Fund Expenditures FY 2025-2026 Proposed Budget General Fund (in thousands) Recommended Budget Options OPTION 1 OPTION 2 Annual Operating Expenditures: City Council $ 127 $ 127 City Clerk 1,088 1,088 City Attorney 900 900 City Manager 3,252 3,252 Finance 2,113 2,113 Human Resources 1,590 1,590 Community Development 5,982 5,982 Public Works 18,477 18,477 Police Services 41,379 41,379 Fire Services 11,496 11,496 Parks and Recreation 6,027 6,027 Non -Departmental 3,251 3,251 Transfers 3,098 3,098 98,780 98,780 Subtotal Annual Operating Expenditures Non -Recurring Expenditures: Furniture and Fixtures 132 132 Temporary Emergency Shelter 1,485 Police Body-Worn/In-Car Cameras 900 Police Locker Room Remodel 1,000 Required Pension UAL 7,205 10,722 132 Subtotal Non -Recurring Expenditures Total General Fund Expenditure 109,502• * excludes Navy North Hangar Fire incident reimbursements YEAR 2m. General Fund Expenditures FY 2026-2027 Proposed Budget General Fund (in thousands) Recommended Budget Options OPTION 1 OPTION 2 Annual Operating Expenditures: City Council $ 127 $ 127 City Clerk 1,339 1,339 City Attorney 900 900 City Manager 3,411 3,411 Finance 2,194 2,194 Human Resources 1,795 1,795 Community Development 6,109 6,109 Public Works 19,170 19,170 Police Services 43,896 43,896 Fire Services 12,013 12,013 Parks and Recreation 6,304 6,304 Non -Departmental 3,351 3,351 Transfers 4,248 4,248 104,858 104,858 Subtotal Annual Operating Expenditures Non -Recurring Expenditures: Vehicles and Equipment 1,000 1,000 Furniture and Fixtures 77 77 Temporary Emergency Shelter Required Pension UAL $7.7M Transfer -in From Land Sale Proceeds Fund to Maintain 15% Reserve Level 6,000 (4,923) Subtotal Non -Recurring Expenditures General Fund Expense Major Changes 4M MOLL/Salary/Benefits FY 25-26 FY 26-27 Increase $5.5M Increase $3.31VI New Positions * $553k Transfers Non -Recurring: PD/PW/Parks vehicle/equipment $1 M TTES operation $1.41VI $1.61VI Transfers Operating - Liability Increase $900k Increase $1.21VI Fire Contract Increase $450k Increase $500k Total Expenditures Increase $7.4M Increase $7.5M * FY 25-26 detention officer (1) funded from Supplemental Law Enforcement Fund (not General Fund); FY 26-27 new positions from General Fund: police officers (2), detention officer (1), HR Management Analyst (1) PoLice u et Headcount 14-YEAR 2014-2027 TUSTI N POLICE DEPARTMENT BUDGET HEADCOUNT (SWORN AND NON -SWORN) ISO 160 140 120 100 W H LL 80 60 40 20 0 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2C26 FY2027 Proposed Proposed ■ PD-Sworn ■ PD-NonSwam YEAR 1: CIP Funding Sources F 2025-2026 IP $5SM by fund! ng source (Millions) Gas Tax1RMRA/M2fCDBGJAQMD, Water, $1.5,39 Legacy Backbone, $8.7 , 15 S7.0 ,126 �lo YEAR lo. CIP Projects FY 25/26 CIP program total $58M*, 35 projects Public Facility Projects(6) Total $6.3M: Building Maintenance $0.7M and Emergency Generator $0.8M ➢ PD Facility Improvements $2M ➢ CT Gym HVAC Replacement $2M ➢ Youth Center Playground and Senior Center Expansion $1M Budget appropriations only. Not for project approval. In accordance with the City's new purchase policy, all contracts (including design services) greater than $200,000 will be brought back to the City Council for approval. Park Projects(6) Total $8.11MI: Heideman School Park $5.15M (grant funded) ➢ Legacy Park Improvements $0.75M (grant funded) ➢ Tustin Sports Park Turf $0.66M Annual Park Maintenance $0.6M Camino Real Park Playground $0.5M Tustin Sports Park Diamonds 1&3 $0.5M YEAR lo. Projects (Continued) Street Maintenance Projects(7) Total $8.2M: Annual Roadway Maintenance $3M ➢ Old Town $4.2M ➢ Jamboree Rehab Barranca/OCTA SCRRA $0.6M Traffic Projects(8) Total $7.9M: ➢ Main Street $7M (grant funding $3.17M) ➢ Various Traffic Synchronization Projects $0.2M ➢ Various Traffic Signal Projects $0.4M Traffic Signal Equipment $0.2M Active Transportation Master Plan $0.075M Water Projects(3) Total $1.5M: 17t" Street Facility Electrical $0.3M ➢ El Camino Water Line Relocation $0.4M ➢ Well Rehab $0.75M See separate slide for Legacy CIPs YEAR 2m. CIP Funding Sources FY 2026-2027 CIP $32M by fund! ng source (Millions) Unfunded, S10.8 , 34% NTJ Legacy Backbone, S1,1, 3% Land Sale Proceeds, $8.1, 26% GIP GF, S1.7 , 5% Prog. Fees, S1.6, Salo- Tax/ R M RAI M 2/C D BGIAQ M D , $3.6,12% YEAR 2m. CIP Projects FY 26/27 CIP program total $32M*, 18 projects Public Facility Projects(1) Total $1.7M: Annual Building Maintenance includes: o Senior Center Auditorium Wood Floor Replacement $0.2M o CT Gym Operable Wall Replacement $0.55M Civic Center Parking Garage Deck Coating $1M *Budget appropriations only. Not for project approval. In accordance with the City's new purchase policy, all contracts (including design services) greater than $200,000 will be brought back to the City Council for approval. Park Projects(4) Total $1.8M: Annual Park Maintenance $0.4M Laurel Glen and Magnolia Tree Parks Playground $0.7M Tustin Sports Park Fitness Court $0.2M (unfunded) Tustin Sports Park Diamonds 1&3 $0.5M YEAR 2m. CIP Projects (Continued) Street Maintenance Projects(4) Total $13.6M: Annual Roadway Maintenance $1M ➢ Jamboree Rehab Barranca/OCTA SCRRA $2M ➢ Jamboree Rehab 1-5/Portola $10.6M (unfunded) Traffic Projects(2) Total $0.5M: ➢ Irvine Blvd. Traffic Synchronization $0.3M ➢ Traffic Signal Equipment $0.2M Water Projects(4) Total $4.7M: 17t" Street Facility Electrical $3M ➢ Water Main Replacements $0.5M ➢ Well Rehab $1.15M See separate slide for Legacy CIPs Land Sale Proceeds Funded CIP Projects FY 25/26 FY 26/27 N-D South Phase 2 Package 2 $2M N-D South Phase 2 Package 2 $1M (construction) (construction) N-G Phase 1 $3.3 M N-G Legacy Park $� M (design) (design) Armstrong Ave Pedestrian Bridge $3.9 M ±8M ** (construction) Tustin Legacy Linear Park ND South $7.6M (construction) Cornerstone II Infrastructure $250K (design) Old Town/Main Street Improvements $ 5.2 M (construction) TOTAL ±22M** **Project $ by land sale proceeds only. Discussion Items Fiscal Sustainability Strategy — 10-year Plan (FY 25/26 — FY 36/37) Year 1 and Year 2 General Fund and Land Sale Proceeds Budget Options /OOOOO—=MWO= N UJII Remembering what connects us. Thank You! 4 w ie