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The General Fund Ten-Year Outlook is created by taking the current budget structure, applying an <br />inflationary adjustment for the following nine years, and including the following assumptions: <br />Factors in recurring spending only <br />Changes in scheduled debt service such as pay-offs <br />Local Sales Tax (Measure X) sales tax rate decrease (1.5% to 1.0% on April 1, 2029) <br />Inflationary increases in FY25-26 and later, based on the California Department of Finance CPI <br />forecast <br />Negotiated wage increases, CPI thereafter <br />Orange County Fire Authority contract increase of 4.5% annually <br />Contributions to, and uses of, the Pension Stabilization Account have been included to smooth the <br />pension debt fluctuations <br />The model indicates that the General Fund budget structure must be adjusted in the future to remain <br />balanced. The future imbalance is caused by multiple factors. Costs are expected to continue increasing <br />faster than the City’s revenues. In one example, the OCFA contract may increase up to 4.5% per year, yet <br />property tax revenue is not expected to exceed 3% per year. To further complicate matters, the Local <br />Sales Tax (Measure X) rate decrease in 2029 will cause significant a decrease in revenue. Options to <br />rebalance the budget include decreasing service levels, finding efficiencies, and raising ballot revenue <br />through development and/or future tax measures. <br />