Title
Budget Workshop for Fiscal Years 2025-26 and 2026-27 to Provide Direction that Will Be Incorporated into Budget Adoption Hearing Materials for City Council Consideration in June 2025. (Finance 10024056)
Body
To: Honorable Mayor and Members of the City Council
From: Jennifer Ott, City Manager
EXECUTIVE SUMMARY
The City Manager is proposing a General Fund Budget of $152,310,465 in Fiscal Year (FY) 2025-26, and $152,966,825 in FY 2026-27. The Proposed General Fund Biennial Budget recommends the use of Residual Fund Balance of $6.5 million in FY 2025-26, and $2.9 million in FY 2026-27 for both one-time and ongoing expenses. For ongoing expenses, less than 3% of the General Fund is drawn from the Residual Fund Balance due to current economic conditions. The expectation is to utilize the next two years to monitor the economy and consider potential strategies to increase revenues and to develop a contingency plan in case additional cost-saving measures are required. The total proposed budget for all funds is $335,141,690 in FY 2025-26 and $337,288,291 in FY 2026-27.
Overall, the Proposed General Fund Biennial Budget is using 2.88% of total General Fund expenditures from fund balance for FY 2025-26 and 2.78% for FY 2026-27 to cover ongoing operating costs due to the current economic climate. Operating expenses in the Proposed Budget exceed revenues by $4.2 million in FY 2025-26 and by $4.1 million for FY 2026-27. General Fund one-time costs, covering primarily the Capital Improvement Program (CIP) budget, are $7,861,335 in FY 2025-26 and are $4,188,335 in FY 2026-27. The proposed budget also incorporates key values to retain existing employees by bringing them to a market rate salary as well as offering a cost-of-living adjustment and other benefits. Staff is proposing an operating budget to maintain current service levels while working within the constraints of a tight economic reality.
The City Manager and staff anticipate evaluating the two-year biennial budget further at Mid-Cycle budget update in 2026.
BACKGROUND
The May 5, 2025 budget workshop provides the City Council and community with an opportunity to discuss the factors that make up the overall City of Alameda (City) budget and consider proposals for changes in service levels and capital improvements. The City Council will hold an additional budget workshop on May 13, 2025, to continue any discussion of department requests and to discuss the CIP budget. The FY 2025-27 Biennial Budget will be scheduled for adoption at the June 3, 2025 City Council meeting.
These workshops include overall budget context, efforts to balance the budget and highlights of the City Manager Proposed Budget. Additionally, department heads will provide an overview of their departmental responsibilities, accomplishments from the previous biennial budget period, and considerations specific to their budget proposals above baseline. Staff is seeking direction from City Council on the allocation of funding for the upcoming two fiscal years.
The City Manager Proposed FY 2025-27 Biennial Budget covering the General Fund and all other City and Successor Agency funds is summarized in Exhibit 1. Related to the proposed budget, the proposed CIP budget is being heard at the May 13, 2025 Budget Workshop.
DISCUSSION
Overall, the City is in a financially stable position, given the current economic conditions and in comparison to other jurisdictions. Receipt of property taxes, the City’s largest General Fund revenue base, has slowed but is not anticipated to decrease. Thanks to growth and major development transactions in recent years, the City maintains a substantial Residual Fund Balance, above its 25% operating reserves.
For context, there are various factors that impact the General Fund expenditures. Over the last several years, important service programs were added, some with one-time funds that now require full funding from the General Fund. These include the CARE Team (approximately $3 million annually), Homelessness initiatives (approximately $2.8 million annually for all related programs) and the Prosecution Unit (approximately $1.3 million annually). Other costs that the City cannot control also continue to increase, including insurance premiums (30% increase each year), medical costs and PERS retirement contributions as well as overall inflation. Lastly, the City’s General Fund annual debt service increased from $1.3 million to nearly $3 million, primarily due to the Aquatic Center financing.
Staff also considered the federal funding uncertainties and the proposed budget provides enough remaining Residual Fund Balance to cover the $6.3 million of federally funded grants that are considered at high risk.
Numerous measures were taken to balance the General Fund, prior to new requests, and all options were reviewed. These are described in greater detail in the presentation.
Priorities for new requests were based on several considerations and values. First, is taking care of existing employees through equity salary adjustments, a modest COLA increase, police department staff retention and increasing wages for part-time staff to avoid disruptive turnover. Second, no new staff positions were recommended for the General Fund unless they were substantially offset by non-General Fund revenues or other expense reductions. Lastly, ongoing operations and maintenance contract increases were not assumed unless contractually obligated.
Staff plans to utilize the next two years to monitor and plan for fiscal sustainability through potential revenue options and monitoring economic and development conditions while planning for additional cost reductions, if necessary.
I. General Fund Revenues
The General Fund is the City’s main operating fund and typically accounts for approximately 47% of total City revenues.
As a high-level overview, the recommended General Fund budget uses Residual Fund Balance of $6.5 million in FY 2025-26 and $2.9 million in FY 2026-27, including both one-time and ongoing expenditures, resulting in an anticipated remainder of over $9.5 million at the end of the biennial budget. This is in addition to maintaining 25% General Fund reserves ($37.5 million by the end of the biennial budget) per the City Council Reserve Policy.
General Fund revenues in the Proposed Budget, including transfers in, are estimated to increase by $4.9 million, from $140.8 million in FY 2024-25 to $145.7 million in FY 2025-26, and increase by $4.3 million in FY 2026-27, to $150.0 million. The City’s largest source of General Fund revenue, property taxes, is projected to remain stable despite an anticipated continued slowdown in real estate activity. Receipt of sales tax already dropped due to the loss of a major revenue generator and receipts are anticipated to be slow due to economic conditions.
General Fund Revenues Expectations
• Property tax is the largest single source of revenue for the City’s General Fund and represents approximately 44.12% of General Fund revenues. The property tax is ad valorem, meaning the tax paid on a property is proportional to the property’s assessed value (AV). Under the terms of Proposition 13 passed in 1978: 1) the annual tax owed is a maximum of 1% of a property’s AV and 2) the AV may only increase to a maximum 2% each year unless ownership changes or new construction, in which case the prevailing market value assessment is used as the basis for taxation. Over the last five years, property tax revenues have grown by 36%. The growth for that period was accelerated by a rapid increase in the sales prices for housing and commercial properties, as well as new construction. Property tax is expected to increase an estimated 5% from the FY 2024-25 projection of $63.4 million to $66.7 million in FY 2025-26, and by 4% to $69.2 million in FY 2026-27.
• Real Property Transfer Tax (RPTT) rate on residential and commercial sales is 1.31% of the value of each real estate transaction. Alameda’s share is 1.2% with Alameda County receiving 0.11%. The tax is triggered by the transfer of property ownership, and both the buyer and seller are responsible for ensuring the tax is paid. RPTT is conservatively estimated at $11.3 million for FY 2025-26 and $11.5 million for FY 2026-27. Actual Real Property Transfer Tax receipts fluctuate greatly, from as much as $21.9 million in FY 2021-22 to a low of $10.8 million two years later. During these last few years with the increase in mortgage interest rates, sales of real property has slowed considerably. The proposed budget assumes that the real property markets will continue to remain slow but constant during both budget years.
• Sales Tax/Transaction and Use Tax revenue is dependent on consumer spending and on the economy overall, as these taxes apply to retail sales or the use of tangible personal property. The two main revenue streams in this aggregated category are the 1% Bradley Burns sales tax and the 0.5% Measure F (2018) Transaction and Use Tax. The City’s sales, transactions and use taxes are approximately 14% of the City’s General Fund revenues. After briefly being impacted by the pandemic in FY 2020-21, this aggregate revenue stream has seen steady year-over-year growth through FY 2023-24. However, the possibility of a suppressed economy and the relocation of one of the City’s larger taxpayers during FY 2024-25 is impacting the aggregate category with receipts in FY 2025-26 forecasted to dip from $21.4 million in FY 2024-25 to $20.4 million in FY 2025-26 before recovering slightly to $20.9 million in FY 2026-27.
• Transient Occupancy Tax (TOT) is imposed on occupants for the privilege of occupying room(s) in a hotel, motel, short-term residential rental, etc. TOT decreased briefly during the pandemic. In November 2022, the Alameda electorate approved an increase to the TOT rate increasing from 10% to 14%, and City staff is projecting stable TOT revenues of $3.4 million each of the next two years.
• The City imposes a Utility Users Tax (UUT) of 7.5% on all residential and commercial utility bills for properties within the City. The UUT is generated on the use of cable television, telephone services, natural gas and electricity. City staff projects slight increases to UUT of 2% per year as natural gas prices stabilized and energy consumption has steadily risen. This amounts to $9.9 million in FY 2025-26 and $10.1 million in FY 2026-27.
• The Business License tax (BLT) is charged annually to all businesses operating within the City. Some businesses pay a flat rate tax, and some are assessed based upon gross receipts earned, paying a minimum tax based upon graduated rate bands. The City’s residential rental businesses pay $20 per unit, and commercial rental businesses pay $20 per 1,000 square feet. In accordance with Ordinance No. 2500 adopted by the City Council in 1990, the minimum tax is adjusted each fiscal year by the percentage change in the Consumer Price Index. There is no CPI increase to business taxes assessed on residential or commercial rental properties. Due to the structure of the City’s BLT, these revenues typically grow slowly, and account for approximately 2% of General Fund revenues. Business License Tax is projected to stay flat from $3.0 million in FY 2024-25 to FY 2025-26 and then increase by 2% to $3.1 million in FY 2026-27.
• Departmental Fees and Charges for Services are $10.2 million in FY 2025-26 and in FY 2026-27 due to increased collection of ambulance fees and increased recreation program activity.
In addition to these ongoing revenues, the Proposed Budget is utilizing several one-time General Fund revenues to balance one-time General Fund expenditures, unless otherwise specified. These one-time revenues are as follows:
• Staff recommends using the PARS Pension 115 Trust Fund to directly pay a portion of the required CalPERS Unfunded Accrued Liability (UAL). The City has consistently put funds into this Trust since its inception in 2017 for uncertain economic times. As of February 28, 2025, the City has $21.5 million in its PARS Pension 115 Trust. Staff recommends using $3.2 million in FY 2025-26 and $3.4 million in FY 2026-27 to directly help cover the increases in the CalPERS UAL payments. These amounts are within the confines of the City’s Pension Rate Stabilization Policy.
• During its most recent quarterly review, Finance and the Police Department staff calculated an estimated Police vacancy savings for FY 2024-25 of approximately $4.0 million. Staff recommends using these savings to offset additional public safety costs anticipated for the biennial budget and offset a greater portion of the Police CalPERS UAL contribution. As such, staff recommends the City utilize this $4.0 million from FY 2024-25 for the following:
o $2.0 million for Police CalPERS UAL payments: $1.0 million during the first fiscal year of the biennial budget and $1.0 during the second.
o $2.0 million to fund an internal service account for General Fund expenses for additional staff costs in the Biennial Budget, including one-time labor costs.
• Transfer in from CIP Fund 310 of $300,000 for CIP projects that were completed during FY 2024-25 and need City Council authority to be re-appropriated to new safety-related Parks projects.
II. Citywide Expenditures
The City’s operating budget is comprised of a number of different funding sources. The General Fund is the largest single fund and represents the resources over which City Council has the most discretion. Prior to consideration of any program or service budget requests, the Proposed Biennial Budget absorbed ongoing and required expenditure increases of approximately $7.4 million in FY 2025-26, and $9.4 million in FY 2026-27, primarily in the General Fund. Specifically:
● Total General Liability Insurance premiums are projected to increase between 25% and 30% each year for this biennial budget. The General Fund is absorbing an estimated $3.9 million of this premium increase over the two years of the biennial budget.
● CalPERS UAL Payments - The City’s UAL payments increase approximately 6.8% and 5.1% over the next two years, respectively. This combined payment is approximately $6.7 million higher than the previous two-year budget cycle and brings the payments up to $23.5 million and $25.1 million, respectively.
● Medical costs - The City contributes to staff medical insurance premiums with the goal to keep staff healthy and active. In most cases, the City covers all of an employee’s health care premiums. However, staff estimates these health care premiums are going to increase between 10-15% per year over this biennial budget timeframe.
In addition, the Proposed Biennial Budget is absorbing expenses for new, significant and critical programs that were created with one-time funds such as American Rescue Plan Act (ARPA), state earmarks and grants but now require ongoing General Fund monies to continue. A few of the larger programs include:
● 12 Firefighters hired through the SAFER grants in FY 2022-23 and FY 2023-24 that now require $3.5 million of General Fund monies per year.
● The CARE Team, which was partially offset by $1.8 million one-time grant funding and now costs $3 million in General Fund monies per year.
● Ongoing funding of the Safe Parking, Day Center, and Overnight Shelter programs at $1.06 million per year, which was initially funded by a State Homeless Housing Assistance and Prevention (HHAP) grant in FY2022-2023. Transitioned to being fully General Fund in January 2024.
● ARPA funding was used starting in FY 2021-22 to create the Emergency Supportive Housing Program and that funding will be expended by December 2025. Ongoing programming costs are $1.1 million per year.
● The Prosecution & Public Rights Unit was added in FY 2019-20 and requires $1.3 million in General Fund monies,
● The Free Bus Pass for Seniors program was added through Measure BB funding at $275,000. However, AC Transit raised fares and the program has a waitlist that will take $70,000 in General Fund monies to be fully funded, including the fare increase.
● Free Water Shuttle service opened in 2024, funded by a grant from the Alameda County Transportation Commission and private sector funding and $150,000 in General Fund monies. The total program cost is $3 million and is funded through July 2026. After that, it would need grant, private sector and public agency funding, in addition to General Fund monies, which are not expenses included in the proposed budget.
Staff does not propose any inflationary adjustments for services or material and supplies unless specifically provided for in existing contracts with vendors as part of the Proposed Biennial Budget. However, staff did need to include operational costs for the new facilities and infrastructure improvements that are nearing completion such as the Emma Hood Swim Center. Complete streets, such as Central Avenue that is currently under construction, also require a higher level of maintenance and additional cost. The proposed budget does not include new Public Works maintenance staff that would provide additional street sweeping for complete street bike lanes. Additional staffing and operational costs are required when the City invests in a new facility or program. For example, the new Aquatic Center and Estuary Park Phase II were not included in this biennial budget but those projects are anticipated to come to City Council for approval in the Mid-Cycle Budget or the next Biennial Budget. Other programs that are currently funded by grants and may require General Fund support in future budgets include the free Water Shuttle and Dignity Village, which provides interim supportive housing.
Separate from rising costs in insurance, pension and medical benefits, increases in personnel costs are modest and fall into one of two categories. First, equity adjustments are being proposed to bring employees up to market rate salaries. This also includes a cost of living adjustment for part-time staff budgets to support retention for operational effectiveness and to reduce turnover. Departments most impacted by part-time wages are Recreation & Parks Department, Police Department, Library and City Attorney’s Office. Second, the Proposed Biennial Budget includes salary and benefit assumptions based on ongoing MOU deliberations. Retention of existing staff is of great importance and the Proposed Budget reflects that value.
As a part of balancing this FY 2025-27 Biennial Budget, two departments are maintaining services with existing staff vacancies. The Police Department had been operating with a 48% vacancy rate among police officers for the past several years but is now fully staffed in patrol. In recent months, the Department has seen reduced crime levels given the additional patrol officers and by utilizing various data-driven operational tactics. As a result, the City is realizing significant crime reductions due to these strategies rooted in data, technology, and best practices. Planning, Building, and Transportation has also had a 15% vacancy rate, but continues to process the current volume of permit applications without significant delays, in part due to lower overall permit numbers, which is anticipated to continue throughout the Biennial Budget. These two departments will delay hiring new personnel. The Police Department will have 47 police officer positions hired by the end of FY 2024-25. The Proposed Budget assumes no additional hiring of police officers over the two-year period for the Police Department other than to replace existing positions, vacated due to retirement or other reasons. This would mean overall Sworn staffing would be maintained at 70 out of 88 budgeted positions. This will result in non-patrol assignments, such as investigations, traffic, and training not being fully staffed. For Planning, Building, and Transportation, three positions will not be filled over the two-year period, unless revenue significantly increases for Planning and Building - Fund 209. Due to current economic uncertainties and the rapidly changing federal funding environment, these hiring delays are made out of fiscal prudence and may be revisited during the Mid-Year and Mid-Cycle Budget processes if the City’s revenues are higher than expected. Currently, neither Department anticipates any reduction in its ongoing services due to these hiring delays.
Additional funding requests from various City Departments are summarized below and detailed in Exhibit 2.
General Fund Major Proposed Budget Requests
C11. Police - Services & supplies budget adjustment for expenses related to State/Federal Law: $53,200
Services around training, concealed carry weapons permitting processes, and background investigations bear costs to be compliant with state and federal laws. As APD continues to hire new employees, extensive background investigations are required to ensure the onboarding of highly qualified candidates. This budget request rightsized APD’s budget to its current operational needs.
C7. Fire - Fire Inspector Part-Time funding: $22,000
This funding will be used to hire one part-time Fire Inspector, who will work one day a week to conduct life safety inspections throughout the City. This position will help support the Fire Prevention Bureau in completing additional inspections annually, ultimately making the city safer. This request is anticipated to be cost-neutral, and it is anticipated to generate revenue in excess of the cost, which will serve as a recurring source of revenue each year.
C23. Fire - New records management system: $24,828
Image Trend will replace the Fire Department's current Records Management System (RMS), Zoll, which will be unsupported and unusable after December 2025. Image Trend is a leading electronic RMS provider for fire departments nationwide, including several other fire agencies in Alameda County. The implementation of Image Trend will ensure that AFD maintains compliance with the US Fire Administration's National Emergency Response Information System (NERIS). Image Trend will support reporting while also providing the Fire Department with enhanced capabilities to monitor performance standards and generate customizable reports as needed.
C12. Public Works - Services & supplies budget adjustment for On-Call Program: $25,000
This funding will be used to hire one part-time Fire Inspector, who will work one day a week to conduct life safety inspections throughout the City. This position will help support the Fire Prevention Bureau in completing additional inspections annually, ultimately making the city safer. This request is anticipated to be cost-neutral, and it is anticipated to generate revenue in excess of the cost, which will serve as a recurring source of revenue each year.
C8. PBT - City Attorney expenses for Transportation & Climate programs $50,000
The Planning, Building and Transportation Department has requested $50,000 from the General Fund to offset City Attorney costs supporting Transportation Planning and Climate Action work, which are currently incorrectly subsidized by permit fees in Fund 209.
C9. PBT - Funding Code Enforcement program from General Fund for non-permit related activities: $60,750
The role of Code Enforcement has expanded in recent years to include addressing initiatives not covered by permit fees, such as the leaf blower ordinance and graffiti enforcement. These efforts are not recovered through fees and the General Fund has historically funded a portion Code Enforcement in recognition of the importance of continuing this work. This budget request aligns the General Fund contribution to Code Enforcement work that is focused on these initiatives not covered by permit fees.
C10. PBT - Airport-related project staffing $10,000
Staff is requesting an additional $10,000 in ongoing General Fund money to cover Planning staff time dedicated to Airport-related work, which cannot be justifiably charged to permit fee payers.
C3 & C15. Recreation & Park - Park Technician & Park Maintenance: $251,331
These requests will strengthen park maintenance through the hire of a dedicated park technician and the implementation of a work order management system to improve response times. The Park technician position is offset through the department reducing its professional services budget. The proposed requests include investing in sustainability with ongoing tree care and new plantings to maintain the beauty of the City’s green spaces.
C4. City Attorney’s Office -Legal Services and Part-Time Budget Increases: $25,110 (FY26-27 only)
The Legal Services increase is in response to fee increases from outside law firms. The General Fund legal services line item is planned to remain unchanged for FY 2025-26 and then increase by $25,000 (or 10%) for FY 2026-27. The modest part-time budget increase is to ensure the department meets the existing needs of current staff.
C5. City Attorney’s Office - Prosecution & Public Rights Unit O&M Increases: $32,016
This request seeks to cover the following key areas: maintaining a CJIS-compliant case management system especially in response to AB 2778’s new race-blind charging requirement, continuing to pay for office space near the county courthouse where prosecutors operate daily, providing comprehensive training for attorneys and support staff, and funding community education programs and workshops especially in support of the victim services function. Prosecutor by Karpel, the Prosecution unit's CJIS-compliant case management system, is critical for securely managing sensitive case information, enhancing efficiency, and ensuring compliance with criminal justice data regulations. Ongoing training ensures that legal and support staff remain in good standing and are well-equipped to handle complex cases effectively by staying up to date on best practices and evolving legal standards. Additionally, investing in community education initiatives, especially as part of the victim services function, will allow the office to offer workshops and outreach programs on important legal topics, empowering residents with the knowledge and resources needed to prevent victimization and engage with the justice system.
C22. BRED - Consultant for real estate/lease agreement negotiations: $30,000
This allocation of $30,000 per year will support Base Reuse and Economic Development's efforts to negotiate various real estate agreements for leases on City-owned property throughout the City, outside of Alameda Point and the State Tidelands Trust areas. This includes renegotiating expired cell tower leases, which are currently below fair market value. Staff estimate that the renegotiation of cell tower leases alone could generate an additional $200,000 annually in General Fund revenues. In addition, these funds will support efforts to reposition other City assets such as the Grandview Pavilion for long-term restoration and use.
C1. City Manager - Housing and Human Services Outreach and Case Management Services: $56,621
This Proposed Budget request would bring homeless outreach and case management services in-house and the cost is offset by eliminating the contractual homeless outreach services. This maintains current service levels for people who are unhoused by utilizing two existing part-time Case Manager positions, adding one part-time Case Manager and one full-time Program Specialist II. Moving this program in-house is more cost effective and provides the ability to directly manage the service levels. It also creates needed capacity for the City to retain and grow the newly developed homeless prevention program which supports households at risk of becoming homeless to connect to services to retain their housing.
As a newly developed division, HHS has a low staffing ratio in relation to the workload overseeing homeless services, inclusionary housing, residential rehabilitation, social services, SSHRB and the Alameda Collaborative for Children, Youth & Families, and multiple complex funding streams. Adding one additional full-time position will also provide crucial ongoing support and balance to the current workload structure. The 1.0 FTE Program Specialist would support homeless outreach services and programming which allows other existing positions to focus on complex tasks such as State and Federal reporting and compliance, grants and fundraising.
C19. City Manager - Housing and Human Services ADA Van: $85,000
The request for an ADA van is a one-time expense intended to support households and individuals in need of transportation support on the island. The primary use of this vehicle will be for case management staff to provide transportation to unhoused residents, particularly those with mobility challenges. This van will allow case managers to streamline transportation needs and to support clients, particularly those with disabilities, in getting to appointments and accompanying them at these appointments. In homeless services, it is common for clients to need warm handoffs and advocacy support in their journey to become housed.
C20. City Manager - Housing and Human Services Emergency Supportive Housing (ESH) Program costs: $540,000 in FY25-26 and $1,100,000 in FY26-27
Emergency Supportive Housing (ESH) is one of three critical year-round shelter programs on the island. Until FY 2024-25 fiscal year, this program has been funded entirely through Federal ARPA funds that will be fully expended by December 2025. Therefore, for FY 2025-26, six months of funding is required to continue running the shelter program for the duration of the upcoming fiscal year. In FY 2026-27, the program will need full funding to continue to operate at its current level. HHS is prioritizing seeking external funding opportunities to supplement the need for General Funds to cover shelter expenses. This program is a critical component to the City’s homelessness response and getting people housed because the local funding source allows the City to directly make housing placements, rather than through the County system. A reduction in ESH funding may result in an increase in individuals being unhoused.
Funding for this program is considered one-time and may need to be reconsidered if the economic outlook further negatively impacts the budget. This program is fully operated through contractual services with city staff oversight so reduction or elimination of this program would not result in staffing impacts.
C6. City Council - Part-time assistance for Mayor: $68,000
The Mayor holds leadership roles with key regional agencies, such as MTC, ACTC and the League of California Cities. These positions raise the profile of the City of Alameda and benefit its residents and businesses. Due to these increased responsibilities, the Mayor requires additional administrative support. These include managing the Mayor’s schedule, constituent communication, event coordination assistance when the Mayor hosts the Alameda County Mayor’s conference, and other related duties. This would fund a part-time position up to 28 hours per week.
Non-General Fund Major Proposed Budget Requests
E3. City Attorney’s Office - Convert a part time Program Assistant to a full time Housing Specialist II in the Rent Program: $149,000 (offset by $75,000 in existing part time expenditure)
The Rent Program is seeking to convert an existing part-time Program Assistant position to a full-time position focused on annual registration requirements and invalid rent increases. The full time staff cost is expected to be $149,000 which will be offset by the current part-time staffing expenditure of approximately $75,000. Demands on staff resources changed significantly in June 2024 with the launch of a requirement for landlords to submit registration on an annual basis. The influx of updated tenancy data last year led to the Rent Registry flagging more than 700 rent increases for follow-up. To resolve these cases, staff must obtain a detailed history of rent increases to distinguish simple registration errors from actual rent payments not in compliance with local law. Conversion to a full-time position will allow for improved service for landlords and tenants, faster response times, quicker resolutions, and positive equity impacts by benefiting tenant households, which have lower median incomes than property owner households. The request also aligns with the City Council’s Strategic Plan, which calls for implementing inspection and investigative services for City Attorney’s Office departments, including the Rent Program. The Rent Program’s operations are entirely funded by the Rent Review/Stabilization Special Revenue Fund, meaning this request requires no General Fund monies.
E10-E16. Library - Various Personnel requests along with new funding for security $337,366
Safety for the staff and community, as well as aligning with industry best practices, are driving factors for the Library staffing requests. Two positions are requested for the first year to ensure two staff are at the branch libraries at all times and two additional positions are requested for the second year to support improved safety and services as well as social services at the main library. These positions are all offset by reducing part-time costs and moves the library toward best practices for staffing by reducing the current reliance on part-time staff. There is an operational burden created by the department’s over-reliance on part-time employees that have high turnover. Adding these positions also creates the opportunity to adjust the staffing to a one shift schedule and the overall library schedule to improve safety, consistent hours for the community, cost effectiveness and expansion of community services. This proposed schedule also enables the Library to expand its events for children and families at all locations and provides more programming out in the community.
Three principles guide the Library’s package of budget requests: operating hours that align with community usage, focusing on services that draw people to the Library, and safety for all. At the Main Library and both branch libraries, the least used hours are weekday evenings from 6-8 pm based on six months of door tracking data. After detailed analysis, it is clearly not cost effective to remain open weekdays beyond 6pm due to low community usage. The proposed revised Library schedule is:
|
|
Monday |
Tuesday |
Wednesday |
Thursday |
Friday |
Saturday |
Sunday |
|
Main Library |
10-6 |
10-6 |
10-6 |
10-6 |
9-5 |
9-5 |
12-5 |
|
Bay Farm Island and West End Libraries |
10-6 |
10-6 |
10-6 |
10-6 |
|
9-5 |
|
As a result of these proposed changes, the Bay Farm and West End Libraries will both continue to be open five days per week for a total of 40 hours and the Main Library will continue to be open seven days per week for 53 hours per week which is one hour less than the current schedule.
The Library is one of the last great public spaces, but its role and the services it provides have evolved with societal changes. The addition of a 1.0 full-time social worker at the Main Library will connect the most vulnerable library patrons with critical resources and services. The full-time social worker will also help de-escalate situations with people who are in crisis and support Library staff who interact with everyone at the library as well as provide general library support as time allows. The Proposed Budget also includes $100,000 to cover an unarmed security guard at the Main Library to provide another layer of safety for all patrons and staff. As a result of all these changes, the Library’s overall increase of 4.0 FTE by the second year are offset through reductions in part-time budget as well as the transfer of the IT staff personnel to the IT department.
E5. BRED - Add 1.0 FTE Administrative Analyst: $178,000
This budget request is for Alameda Point Fund 290 for an Administrative Management Analyst who would help with the demand for getting more leases in the Base, more renewals processed, and supporting the maintenance of services. This added position would help to clear the department’s backlog of expired leases and keep the department’s portfolio in shape. Currently, BRED has leases that need to be reviewed because they have expired, which is one area where the department is losing additional revenue. Adding this position creates capacity for other staff to focus on increasing the pace of lease negotiation activity at Alameda Point, which could result in an extra $200,000-$500,000 in revenue annually.
III. Overview
Overall, with these requests as a part of the Proposed Budget, 2.88% and 2.78% of the total General Fund expenditures are drawn from residual fund balance each year, respectively. This reflects the amount needed to offset the current economic conditions. For FY 2025-26, this equates to $4.2 million of residual fund balance. For FY 2026-27 this equates to $4.1 million of residual fund balance. The General Fund residual fund balance is expected to be $9.51 million at the end of FY 2026-27.
The City’s total proposed expenditure budget for all funds including transfers out is $335.1 million in FY 2025-26 and $337.3 million in FY 2026-27, both exclusive of Alameda Municipal Power (AMP). The General Fund represents approximately $152.3 million, or 45%, of the total in FY 2025-26 budget and $153.0 million, or 45%, of the FY 2026-27 budget, as shown below.
|
|
FY 2023-24 Actual |
FY 2024-25 Revised Budget |
FY 2025-26 Proposed |
Change |
FY 2026-27 Proposed |
Change |
|
General Fund |
$150,252,214 |
$154,542,935 |
$152,310,465 |
(1.4)% |
$152,966,825 |
0.4% |
|
All Other Funds |
$156,137,899 |
$195,773,149 |
$182,831,224 |
(6.6)% |
$184,321,467 |
0.8% |
|
Total |
$306,390,113 |
$350,316,084 |
$335,141,690 |
(4.34)% |
$337,288,291 |
0.6% |
Overall, the City is maintaining a strong and stable position financially that continues existing services and makes strategic investments. The Proposed Budget preserves City Council’s 25% reserve policy. City staff are committed to exploring over the next two years new revenue-generating measures to bring to City Council to consider along with the potential for cost-saving program adjustments.
IV. Workforce Changes
This proposed budget includes minimal personnel additions to be funded from the General Fund. Those that are recommended have a minimal impact on the General Fund due to offsets by either other funds, increased revenue or corresponding expense reductions. Overall, existing staff are prioritized in this recommended budget through equity salary adjustments, a modest cost of living increase, Police retention, and part-time wage increase to mitigate turnover impacts. The City Manager recommends increasing the authorized position count (excluding AMP) from the 507 full-time-equivalent (FTE) positions approved in the FY 2024-25 Mid-Year Budget Update to a total of 513 FTEs in FY 2025-26, and 515 FTEs in FY 2026-27. Funding for the authorized and proposed positions is incorporated in the FYs 2025-27 City Manager Proposed Budget.
|
Department |
FY 2024-25 Authorized |
FY 2025-26 Proposed |
Change |
FY 2026-27 Proposed |
Change |
|
City Attorney |
23.0 |
24.0 |
+1.0 |
24.0 |
- |
|
City Clerk |
4.0 |
4.0 |
- |
4.0 |
- |
|
City Manager |
10.0 |
11.0 |
+1.0 |
11.0 |
- |
|
Base Reuse and Economic Development |
11.0 |
12.0 |
+1.0 |
12.0 |
- |
|
Finance |
17.0 |
17.0 |
- |
17.0 |
- |
|
Fire |
121.0 |
121.0 |
- |
121.0 |
- |
|
Human Resources |
10.0 |
10.0 |
- |
10.0 |
- |
|
Information Technology* |
10.0 |
12.0 |
+2.0 |
12.0 |
- |
|
Library |
22.0 |
23.0 |
+2.0 (1.0) |
25.0 |
+2.0 |
|
Planning, Building & Transportation |
34.0 |
33.0 |
(1.0) |
33.0 |
- |
|
Police |
125.0 |
125.0 |
- |
125.0 |
- |
|
Public Works |
86.0 |
86.0 |
- |
86.0 |
- |
|
Recreation & Parks |
34.0 |
35.0 |
+1.0 |
35.0 |
- |
|
Total |
507.0 |
513.0 |
+6.0 |
515.0 |
+2.0 |
* To better deliver IT services, the City Manager proposes transferring an IT FTE each from PBT and Library to the IT Department.
Departments requested a total of 13 new authorized positions and an upgrade of one existing position, detailed in Exhibit 3.
V. Organizational Changes
As part of the Proposed Biennial Budget, two departments requested organizational changes to their divisions to better manage their operations. The Police Department has requested to consolidate its current 7 divisions into 4 divisions. Planning, Building, and Transportation requested a new division be created solely for its Code Enforcement program and staff. These changes will be budget neutral but will aid these two departments with their internal controls around ongoing expenses.
VI. Conclusion
Overall, the City has preserved a relatively stable financial position despite the turbulent economic times and the City has a much healthier fiscal profile than neighboring jurisdictions. The Proposed Budget is maintaining the 25% reserve to cover several months in case of a natural disaster or precipitous economic downturn. This Proposed Budget reflects the tight-knit collaboration between departments and the City Manager over the past few months to continue existing services while stewarding the City’s resources pragmatically. In terms of major increases, they were mostly done at the Citywide level to create a Citywide benefit. For example, increasing staff wages became prioritized over adding new staff. Similarly, one-time investments were selected based on necessity and strategic investments. Given the rapidly changing landscape of federal policy and macro-economic conditions, the Proposed Budget leaves $9.51 million in residual fund balance to buffer the City in the case that federal grants are rescinded, or the City experiences a major decline in its revenue streams. Staff presents this Proposed Budget to provide continuity of services and intends to spend the next two years researching potential new revenue streams and potential cost saving measures for the City to pursue.
ALTERNATIVES
• Provide direction regarding staff recommendations for the City Manager Proposed FY 2025-27 Biennial Budget. The City Council’s direction will be incorporated into the proposed budget for the City Council’s consideration and adoption planned for June 2025.
• Direct staff to include additional significant expenditure reductions such as to personnel, major services and programs or across the board departmental reductions. Staff is not recommending this approach because it may be premature to take drastic measures given the economic uncertainty and the available residual fund balance that provides stability while staff is assessing the economic conditions and other revenue generating options over the next two years.
• Request additional information from staff.
FINANCIAL IMPACT
There is no impact to the General Fund or other funds because of this informational item.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This action is in conformance with the Alameda Municipal Code and all policy documents.
ENVIRONMENTAL REVIEW
This activity is not a project and is exempt from the California Environmental Quality Act (CEQA) pursuant to section 15378 (b)(4) of the CEQA Guidelines, because it involves governmental fiscal activities, which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.
CLIMATE IMPACT
There are no climate impacts associated with this action. City Council may provide direction to staff on funding priorities for implementation of the Climate Action and Resiliency Plan as part of the budget workshops.
RECOMMENDATION
Provide direction to staff on the FYs 2025-26 and 2026-27 Proposed Biennial Budget.
Respectfully submitted,
Ross McCarthy, Acting Finance Director
By,
Ecaterina Burton, Budget Manager
Exhibits:
1. City of Alameda Proposed Budget Summary, General Fund and All Other Funds
2. FY 2025-27 Biennial Budget Proposals
3. Workforce Change Requests and Recommendations