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Proposed Fiscal Year 2026-27 City Budget, Changes to the City's Classification and <br /> Compensation Plan, Uniform Schedule of Miscellaneous Fees, and the Seven-Year <br /> Capital Improvement Program <br /> June 2, 2026 <br /> Page 4 <br /> The Outlook is a tool that projects the future General Fund budget based on the proposed <br /> budget structure and known future events, such as the scheduled Measure X rate <br /> decrease. <br /> This Outlook includes the following assumptions: <br /> • Recurring amounts only <br /> • Debt pay-offs <br /> • Measure X rate decrease (1.5% to 1.0% in April 2029) <br /> • Inflationary increases FY27-28 and later, based on the California Department of <br /> Finance forecast of CPI <br /> • Labor increases based on MOUs <br /> • Orange County Fire Authority (OCFA) contract increase of 4.5% annually <br /> • Employee pension unfunded liability contributions as estimated by CalPERS <br /> • Contributions to, and uses of, the Pension Stabilization Account have been <br /> included to smooth the pension debt fluctuations <br /> 5630 <br /> 5590 7.6 <br /> .3 <br /> $550 <br /> $532.3 <br /> $525.0 <br /> $604.0 $508.8 <br /> $510 $485.8 <br /> $493.0 <br /> $477.7 <br /> $471.8 <br /> $470 <br /> $477.9 <br /> $427.3 $462.9 <br /> sm 5 <br /> $427.3 $435.0 <br /> $390 <br /> $350 <br /> FY26-27 FY27-28 FY28-29 FY29-30 FY3031 FY31-32 FY32-33 FY33-34 FY34-35 FY35-36 <br /> Revenue Sp—,"q <br /> The Ten-Year General Fund Outlook indicates that future budget adjustments will be <br /> necessary to maintain a balanced budget. For FY26-27, General Fund revenues are <br /> projected to increase by approximately 3%. Combined with expenditure reductions, <br /> revenue adjustments, and other balancing measures, staff closed the estimated budget <br /> deficit and prepared a balanced General Fund budget. <br /> In future years, revenue growth assumptions are based on projections provided by the <br /> California Department of Finance. However, operating costs are expected to continue <br /> increasing faster than revenues due to factors such as negotiated salary and benefit <br /> increases, rising construction and operating costs, increasing pension contribution <br />