Meeting Summary
Present: Gilman, Mang, Creasy, Roth
This summary was AI-generated to save you time. It may miss or misstate details — verify against the official recording and the transcript.
At a glance
Gann Appropriation Limit Presentation
- Staff presented the calculated 2026-27 appropriation limit of $17.98 million against projected revenues of $20 million.
- The analysis identified an $896,000 buffer after excluding $3 million in qualified capital outlay from Measure C.
- Discussion clarified that only specific capital improvements qualify for exemption, while operating costs remain subject to the limit.
- Members expressed concern regarding revenue projection accuracy and the potential for the buffer to shrink with mid-year adjustments.
Fiscal Year 2026-27 Budget Review
- The committee reviewed an updated budget draft featuring percentage change comparisons and a placeholder for a 3.7% personnel COLA.
- Questions were raised regarding the classification of Measure C payroll costs and the lack of a dedicated Human Resources function.
- Members discussed the need for a formal reserve policy to address cash flow, emergencies, and future fire mitigation projects.
- Staff acknowledged data discrepancies in the document, including mismatched figures for Plaza Maintenance and property tax projections.
Full summary
Agenda Item 1: Gann Appropriation Limit Presentation
- A presentation was delivered regarding the Gann limit (Proposition 13) appropriation limit for the fiscal year 2026-27. The presenter explained that the limit restricts the ability to appropriate tax proceeds and is calculated based on the previous year's limit adjusted for inflation and population growth. The presentation detailed what constitutes "proceeds of taxes," including user fees that exceed the cost of service, and outlined exclusions such as qualified capital outlay (fixed assets with a useful life of 10+ years and a value of $100,000 or more), debt service, and costs related to court orders or federal mandates.
- The city's calculated appropriation limit for fiscal year 2026-27 was stated as $17,984,338. Estimated tax revenues were projected at approximately $20 million, with $3 million in qualified capital outlay (primarily from Measure C) excluded, leaving revenue subject to the limit at approximately $17 million. This resulted in a "headroom" or buffer of approximately $896,000 below the limit.
- Discussion focused on the treatment of reserve funds. It was clarified that tax proceeds appropriated into reserve funds are counted against the limit in the year of appropriation, but withdrawals from those reserves in subsequent years do not count against the limit. Committee members questioned whether Measure C funds used for operating expenses (such as salaries and code enforcement) were correctly classified as capital outlay for exemption purposes. Staff and the presenter indicated that only specific capital improvements qualify for the exemption, while operating costs within Measure C remain subject to the limit. Concerns were raised regarding the accuracy of revenue projections and the potential for the headroom to shrink if actual revenues exceed budgeted estimates or if mid-year adjustments are made. No formal motion was made on this item; it was a discussion and information session.
Agenda Item 2: Approval of Finance and Budget Committee Minutes
- The minutes from the Finance and Budget Committee meeting held on May 19 were presented for approval. A motion was made to approve the minutes, and a second was provided. No objections were noted. The motion passed.
Agenda Item 3: Discussion of Fiscal Year 2026-27 Budget Review
- The committee reviewed the proposed fiscal year 2026-27 budget, which had been updated following a preliminary review on May 19. Key changes incorporated into the document included adding percentage change comparisons between fiscal years 2025-26 and 2026-27, adding notes regarding large fluctuations, removing a fee study as a non-recurring cost, and moving a $2 million ERF grant budget item to a future year.
- The budget includes a placeholder for a 3.7% Cost of Living Adjustment (COLA) for personnel, with a fiscal impact of approximately $200,000. Revenue projections were discussed, including sales tax (projected at $2.5 million), property tax (projected at $2.6 million), and Transient Occupancy Tax (TOT), with Measure C funds totaling approximately $12.16 million. The general fund budget was described as structurally balanced, with recurring revenues exceeding recurring expenditures. The estimated general fund balance at the end of the current fiscal year is approximately $21.7 million, with $5.6 million unallocated beyond the 100% reserve requirement.
- Committee members raised several questions and concerns:
- Personnel and Positions: Questions were asked regarding the breakdown of full-time versus part-time positions, the conversion of part-time roles to full-time, and the lack of a dedicated Human Resources function. Staff explained that the city is competitive in recruitment due to recent salary adjustments and that a part-time administrative support position is proposed for elevation to full-time.
- Measure C Expenditures: Clarification was sought on whether payroll and personnel costs funded by Measure C (specifically for road maintenance and code enforcement) qualify as capital outlay. Staff indicated that while Measure C funds infrastructure maintenance, the classification of specific payroll items as capital outlay for Gann limit purposes requires careful interpretation and policy development.
- Reserve Policy and Unallocated Funds: Discussion occurred regarding the unallocated fund balance and the potential need for a formal reserve policy that includes layers for cash flow, emergencies, and other specific purposes. Suggestions were made to set aside funds for future fire mitigation or hardening projects.
- Trolley Program: Questions were raised regarding the staffing of the trolley program, specifically the reduction in full-time positions and increase in part-time wages. Staff explained that most drivers preferred part-time flexibility, though a full-time supervisor is being hired.
- Data Discrepancies: Committee members noted discrepancies in the budget document, including mismatched numbers for Plaza Maintenance (Fund 52) and differences between property tax figures presented in slides versus charts. Staff acknowledged these items for review.
- No formal motion to approve the budget was taken, as the committee's role is advisory. The committee discussed the need for future studies on reserve policy and Measure C allocation proportions to recommend to the City Council. The meeting concluded with the adjournment of the committee.