Foster City Council now projects a $7.6 million operating surplus for fiscal year 2025-26

“In each year of the five-year plan, we’re showing operating surpluses,” Finance Director Nate Cruz said during a City Council meeting. “However, the transfer out to capital in each year is showing, at least in a budget level, a deficit.”

The plan ultimately projects a deficit after the transfers are made, drawing on reserve funds to fill the gap. The general fund is expected to decrease by about $11 million after the transfers.

Despite lagging sales tax and the potential loss of vehicle license fee revenue, the city is expected to receive strong property tax and permit revenue. The latter is partially due to Gilead’s recently approved Chess Hatch Drive campus expansion project.

“We’re bringing down the projection to $3.75 million as opposed to a budgeted amount closer to $4 million,” Cruz said of the sales tax projections. “What we're seeing here is driven by a decrease in activity in the business-to-business sector, and we believe that this is not a blip that we're going to bounce back from next quarter, and so this change is kind of a structural issue that will inform the 26-27 and 27-28 revenue projections as well.”

The city’s five-year budget plan continues to project annual operating surpluses, though they’re also largely offset once transfers to its separate capital improvement budget is taken into account.

Pursuing stronger economic development initiatives and diversifying its income base has been a common point of discussion among the council. The city commissioned a real estate development and economic analysis to identify future revenue opportunities.

“I think we do need to continue exploring new or improved revenue streams given that our economic development and real estate analysis consultants' time with us will be ending later this year,” Councilmember Phoebe Venkat said during the meeting.

The council is set to adopt the budgets June 15.