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Early Direction for the Fiscal Year 2024-25 Budget <br />April 2, 2024 <br />Page 3 <br />4 <br />1 <br />5 <br />8 <br />•Contribution to OC Street Car operations beginning November 2025, increasing <br />by Inflation Factor; <br />•Debt retirements (Police Building, City Hall Annex, 800Mhz communication <br />system, Streetlights); <br />•Employee pension unfunded liability contributions as estimated by CalPERS, <br />increasing due to the CalPERS investment losses in FY 2021-22; <br />•Contributions to, and uses of, the Pension Stabilization Account have been <br />included to smooth the pension debt fluctuations; and <br />•Inflation Factor for all other spending. <br />The graphical results of the Outlook indicate that expenditures are increasing faster <br />than revenue, creating a deficit beginning in FY 2025-26. When the Measure X rate <br />decreases in 2029, that deficit will increase significantly. <br />There are three basic options to rebalance the budget in the future: <br />1. Request voter approval for a revenue measure; <br />2. Reduce service levels to fit within available resources; and/or <br />3. Encourage new development to increase the tax base in the City, which may also <br />necessitate increased spending to serve additional residents and businesses.