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Early Direction for the Fiscal Year 2026-27 Budget <br />April 7, 2026 <br />Page 3 <br />5 <br />6 <br />9 <br />0 <br />Property Tax estimates from consultant for FY 2026-27 through FY 2030-31, 3.1% <br />increase thereafter; <br />Sales Tax estimates from consultant for FY 2026–27 through FY 2027–28, with <br />3.1% growth thereafter; prior forecast of 2.9% revised to 1.9% for FY 2026-27 in <br />the updated outlook based on recent taxable sales figures; <br />Inflation factor for all other revenues: increase of the Consumer Price Index (CPI), <br />as forecasted by the California Department of Finance, at 3.1% beginning in FY <br />2026-27 and thereafter; <br />Labor cost assumptions have been updated to reflect recently approved <br />Memoranda of Understanding (MOUs). The prior outlook assumed increases of <br />2.5% for FY 2025-26 and 2.6% for FY 2026-27, which were based on projected <br />CPI growth at the time. The approved MOUs provide for increases of 5% in FY <br />2025-26 and 4% in FY 2026-27; <br />Employees at the top of their salary range: negotiated increases per approved <br />MOU; 3.1% CPI assumed in years beyond current agreements; <br />Employees below the top of their salary range: Negotiated increases per approved <br />MOU plus 5% merit-step increases; 3.1% CPI assumed in years beyond the <br />current agreement; <br />Orange County Fire Authority contract increase of 3.0% in FY26-27 based on an <br />early estimate from the Authority, and 4.5% annually thereafter; <br />Contribution to OC Streetcar operations updated to as much as $2.0 million <br />annually based on revised estimates from OCTA (prior outlook assumed $1.0 <br />million); <br />Debt retirements (800Mhz, Appellate Court Garage, and Animal Shelter) totaling <br />$1.4 million in FY26-27, and a total of $1.5 million thereafter; <br />Employee pension unfunded liability contributions updated based on CalPERS <br />actuarial information received in August 2025, resulting in an additional $2.2 million <br />in required contributions in FY 2026-27 compared to the prior outlook; <br />Contributions to, and uses of, the Pension Stabilization Account have been <br />included to smooth the pension debt fluctuations in future years; and <br />Inflation Factor for all other spending. <br />The Outlook does not include additional tax revenue from the Related Bristol development <br />or the Village Santa Ana development. The following estimates were provided when the <br />projects were approved.