Newly hired Pleasanton Finance Director Tina Olson just presented her first full-year municipal budget to the City Council, and it's a winner.
General Fund revenues are estimated to increase by $6.1 million or 6% from the current fiscal year that ends June 30 to FY 2015/16, and by another $3.5 million or 3% by the end of the following fiscal year that will end June 30, 2017.
Olson projected total General Fund revenues to reach a near-record high of $106.4 million in the new fiscal year that starts July 1, and $110 million in FY 2016/17. These revenues are primarily derived from property, sales and hotel taxes and business license fees, accounting for 83% of total municipal revenues.
While revenue is soaring, operating expenditures remain in check, stemming from fiscal restraints imposed during the recent recession.
Police and firefighters recently received their first raises in two years, although new union-agreed contracts also have them contributing more to their health and pension programs, somewhat offsetting those raises. Municipal employees, who are covered by a separate union contract, also haven't received raises for two years. Their new contract is in the early stages of negotiations.
General Fund revenue has shown remarkable growth. It stood at $92.3 million at the end of FY 2012/13, inched up by $4 million the following year, and hit the $100 million mark in the current fiscal year. As the recession ebbed, expenditures still lagged as the city curbed capital projects, employee raises and even held back on purchases such as replacing police cars, computers and supplies. In FY 2012/13, expenditures totaled $88.2 million, and they won't reach the $100 million mark until the coming fiscal year.
City Manager Nelson Fialho said the improved fiscal condition for Pleasanton city finances is fueled by significant increases in both property and sales taxes. Property tax revenue for the 2015/16 fiscal year are projected to increases by 6.7%, and by 3.5% in 2016/17. Sales taxes are expected to increase by 8.3% in the coming fiscal year, and by another 6.2% in FY 2016/17.
By having a better fiscal condition, Fialho and the City Council plan to restore some of the critical positions that were eliminated during the recession. Additionally, funding for repair and replacement of vehicles and equipment has been increased to $4.5 million annually.
The General Fund contribution to the city's capital improvement program (CIP) also is being raised to $3.2 million annually, which is close to per-recessionary funding levels. Even so, consistent with the city's conservative financial policies, the General Fund reserve for economic uncertainty remains budgeted to 10% of operating revenues, or $10.6 million next year and $11 million in FY 2016/17.
The added revenue also will allow the city to pay down a greater portion of its unfunded liabilities for pension and health benefits, which now total $157.8 million. Fialho and Olson are recommending that this year's estimated year-end surpluses along with the stronger FY2015/16 and 2016/17 budgets be used to make an additional $16.7 million payment, which will reduce the current liability by 11%.
With more companies moving to Pleasanton and anticipated continued sales tax growth from new retail centers and auto dealerships, Olson may find that she is in an even more enviable position next year when she presents another two-year budget update.