FY 2026-27 Proposed Midcycle Budget

Fee increases will likely follow projected inflation and changes in the local population due to increased service costs and changes in demand.   Any known or anticipated changes in revenues as a result of potential changes in state revenue streams and/or legislation are reflected in the analysis.   The revenue forecast considers a variety of economic factors and trends including changes in economic growth, income, sales, and Consumer Price Index (CPI) among other factors. Anticipated changes in State or local policy are also considered. EXPENDITURE FORECAST Forecasting the City's expenditures involves analyzing future costs at the department level and by category. The expenditure forecast begins with the baseline budget which represents the cost of maintaining the current level of services while considering all unavoidable costs necessary to continue at that current level. Examples of unavoidable costs are pre-negotiated MOU salary levels as well as health care and retirement costs that the City pays on behalf of its employees.   The baseline budget is then modified to reflect changes to programs and services that the Mayor and the City Administrator recommend as part of the Proposed Budget. These modifications might include additions or reductions in any of the categories discussed above. Changes to debt service are made based on changes in the City’s debt payment schedules.   The expenditure forecast follows the guidance of the Government Finance Officers Association (GFOA) which recommends that expenditures be grouped into units of analysis that are meaningful to the organization such as departments and standard budget categories of expenditures. As such, staff grouped proposed budget expenditures by department and by expenditure category consistent with the City’s chart of accounts. Future expenditures are forecasted for the FY 2023-25 Proposed Budget. This forecast generally assumes that expenditures will only grow due to inflationary cost escalation. Costs also change due to modifications in service or staffing levels as described in the “Significant Changes” summary for each department and “Service Impacts” section. BASIS OF BUDGETING The City of Oakland’s basis of budgeting for its major fund groups (General Funds, Special Revenue Funds, Enterprise Funds, Internal Service Funds and Capital Project Funds) are the Generally Accepted Accounting Principles (GAAP), and the modified accrual basis of accounting.   Revenues are budgeted according to when they are both measurable and available. Revenues are considered available when they are collected within the fiscal current year, or soon enough thereafter to pay liabilities of the current period. The City considers property tax revenues to be available for the year levied if they are collected within 60 days of the end of the current fiscal year. All other revenues are considered available if they are collected within 60 days of the end of the current fiscal year.   Expenditures are budgeted according to when the liability is incurred, regardless of the timing of related cash flows. The exceptions are debt service, compensated absences, and claims and judgments, which are budgeted as expenditures according to when the payments are due. The City’s basis of budgeting is the same as the basis of accounting used in the City’s audited financial statements, the Annual Comprehensive Financial Report. 29