Understanding PVE's Budget & Finances
Where the city's money comes from, where it goes, the pension picture, and the five-year capital plan for Palos Verdes Estates.
Data sourced from FY 2025–26 Adopted Budget & April 2025 Town Hall Presentation
The Budget Situation (Explained Simply)
Measure E is like a neighborhood dues payment. Every homeowner in PVE currently pays about $342 per year plus $0.20 per square foot[2] of their home. This brings in about $5.1 million per year, and right now it ONLY pays for police. This payment expires in 2027.
If Measure E is not replaced before it expires, the city loses roughly a quarter of its general-fund revenue and the existing operating deficit widens significantly (see the long-range forecast chart below).
A proposed replacement — Measure PF — is on the June 2026 ballot. This page focuses on the city's current and projected finances; for details on the proposed replacement itself, see the Measure PF Explainer.
Where the Money Comes From[1]
Where the Money Goes[1]
CalPERS Pension Obligations[3][4][5]
PVE participates in three CalPERS pension plans covering city employees. The city faces significant unfunded pension obligations that represent a long-term fiscal liability.
Combined Unfunded Actuarial Liability (UAL)
Total Combined UAL: $21,470,473[3][4][5]
Employer Contribution Requirements
The city is required to pay employer contributions to reduce the unfunded liability over time. For FY 2026-27, combined required employer UAL contributions across all three plans total $2,086,108[3]. These contributions are expected to grow annually as the city's payroll increases.
All three plans use a 6.9% discount rate[3] for actuarial calculations. Contributions are projected to grow each year, with Safety Police contributions escalating from approximately $1.5M to $1.76M by FY 2031-32[3].
Audited Financials (CAFR Data)[6][7]
The city's Comprehensive Annual Financial Reports (CAFRs) provide audited financial statements that offer a comprehensive view of the city's financial health.
Net Pension Liability
The city's net pension liability represents the present value of future pension obligations net of current pension plan assets:
| Fiscal Year | Net Pension Liability[6][7] |
|---|---|
| FY 2024 (ended June 30, 2024) | $20.2M |
| FY 2025 (ended June 30, 2025) | $19.7M |
The modest decrease from FY 2024 to FY 2025 reflects investment performance and actuarial adjustments, though the liability remains substantial relative to city revenues.
General Fund Balance
The General Fund Balance is the city's reserve of unspent funds available for emergencies and budget shortfalls:
| Fiscal Year | General Fund Balance[6][7] |
|---|---|
| FY 2024 (ended June 30, 2024) | $26.2M |
| FY 2025 (ended June 30, 2025) | $24.9M |
Declining trend: The General Fund Balance has decreased by $1.3M year-over-year, reflecting the operating deficit. At the current rate of decline, reserves would be depleted within approximately 8–10 years absent new revenue or significant expense reductions.
Government-Wide Financials
The government-wide statements presented on the accrual basis of accounting (required by GASB 34) show the city's overall financial position:
| Measure | FY 2025[6] |
|---|---|
| Total Expenses | $30.1M |
| Total Revenues (including property tax, grants, charges for services) | $24.7M |
| Deficit (Expenses - Revenues) | -$5.4M |
The government-wide deficit of $5.4M in FY 2025[6] is larger than the General Fund operating deficit because it includes non-cash pension expense and depreciation on capital assets.
General Fund Long-Range Forecast[2]
The Big Picture: Why the Deficit Keeps Growing
Key Cost Drivers
Almost 59%[2] of the city's entire budget goes to just two departments: Police ($8.2M[1], 31%) and Fire ($7.2M[1], 28%). These are essential services, but they're the biggest reason expenses keep climbing. The city also has significant pension obligations (CalPERS) that continue to grow.
Why PVE is Different From Other Cities
PVE is almost uniquely residential — over 92% single-family homes with no hotels, malls, bars, or industrial facilities[2]. That means the city has no sales tax, no hotel tax, and very little business tax revenue to draw from. PVE residents bear a disproportionately high share of the tax burden because there simply aren't commercial alternatives.
Historical Spending by Department (FY 2022 – FY 2026)[1]
The Five-Year Capital Improvement Program (CIP)[11]
Beyond the day-to-day operating budget, the city publishes a rolling 5-Year Capital Improvement Program that lays out planned infrastructure work: street and pavement repairs, sewer and storm-drain upgrades, City Hall structural improvements, park and trail projects, and police-facility upgrades. The current plan covers FY 2025–26 through FY 2029–30.[11]
What's on the List
The 5-year plan includes roughly 30 distinct projects grouped into several categories:[11]
- Streets & pavement: annual slurry seal, resurfacing, signing/striping, pavement management, Palos Verdes Drive West repairs and tieback-wall stabilization
- Sewers & storm drains: master-plan updates, sewer-line upgrades, storm-drain upgrades, groundwater intrusion mitigation at Malaga Cove Plaza
- City Hall & parking structure: condition-assessment-driven repairs, ADA upgrades, structural improvements, seismic improvements
- Police facility: parking-lot security gate, radio conversion project
- Parks, trails, and public space: Farnham Martin Park, Lunada Bay blufftop, Torrance Boundary Trail restoration, feasibility studies, encroachment removal in city parklands
- Other: GIS program, LARIAC 7 aerial imagery, City Council chambers upgrade
Funded vs. Unfunded
A notable share of the CIP is classified as "UNFUNDED" — meaning the project is planned on paper but has no identified revenue source yet. Examples include:[11]
| Unfunded Project | Est. 5-Year Cost |
|---|---|
| Groundwater Intrusion & Mitigation (Malaga Cove Plaza & City Hall) | $8.5M |
| Seismic Improvements for City Hall Building & Parking Garage | $3.8M |
| Immediate Repairs for City Hall & Parking Structure | $2.9M |
| Condition-Assessment Improvements for City Hall & Parking Structure | $1.6M |
| Structural Improvements for City Hall Parking Garage | $0.6M |
The full 36-page CIP document includes project summaries, funding sources, and year-by-year budget allocations. Visit pvestates.org to download the current CIP.
Answering Key Resident Questions
Is there enough data for a historical cost analysis (3–5 years)?
Yes, partially. The FY 25-26 budget document[1] includes actual expenditure data going back to FY 21-22 by department, and revenue data going back to FY 2019 (shown in the charts above). For a complete 5-year analysis, you would also want the FY 2020 and FY 2021 adopted budgets for comparison, and ideally the city's CAFRs[6] which contain audited financials.
Is there enough data for a projected budget (3–5 years)?
Yes. The Town Hall presentation[2] included a General Fund Long-Range Forecast through FY 2033 (shown in the deficit projection chart above). The 5-Year Capital Improvement Plan is also included in the budget starting on page 66.
What about the CalPERS pension debt?
The city participates in three CalPERS plans with a combined unfunded actuarial liability of $21.5M[3][4][5]. The city's CAFR[6] reports the net pension liability (accounting for plan assets) of approximately $19.7M as of FY 2025. Required employer contributions for FY 2026-27 total $2,086,108 across all plans and are expected to grow annually.
Sources & Citations
All sources cited using Chicago Manual of Style (Notes and Bibliography) format. Click citation numbers to view source documents.
- City of Palos Verdes Estates. FY 2025–26 Adopted Budget. All departmental expenditure data, revenue line items, and operational budget figures. View Document.
- City of Palos Verdes Estates. "Town Hall Presentation." April 15, 2025. Revenue percentages, expenditure breakdowns, and long-range fiscal forecast. View Document.
- CalPERS. "Actuarial Valuation, Safety Risk Pool, June 30, 2024." Police pension funded status, unfunded actuarial liability for Safety Police (Classic) plan, contribution requirements, and discount rate assumptions. View Document.
- CalPERS. "Actuarial Valuation, Miscellaneous Risk Pool, June 30, 2024." City staff pension data, funded ratios, and unfunded actuarial liability for Miscellaneous plan. View Document.
- CalPERS. "Actuarial Valuation, PEPRA Safety Police Plan, June 30, 2023." Newer police pension plan data, funded status, and unfunded actuarial liability for PEPRA Safety Police. View Document.
- City of Palos Verdes Estates. Annual Comprehensive Financial Report (CAFR), FY 2025 (Year ended June 30, 2025). Audited net pension liability, General Fund balance, government-wide revenues and expenses. View Document.
- City of Palos Verdes Estates. Annual Comprehensive Financial Report (CAFR), FY 2024 (Year ended June 30, 2024). Prior year audited financials for comparison. View Document.
- City of Palos Verdes Estates. Annual Comprehensive Financial Report (CAFR), FY 2023. View Document.
- City of Palos Verdes Estates. Annual Comprehensive Financial Report (CAFR), FY 2022. View Document.
- City of Palos Verdes Estates. Annual Comprehensive Financial Report (CAFR), FY 2021. View Document.
- City of Palos Verdes Estates. 5-Year Capital Improvement Program, Fiscal Year 2025–26 — Fiscal Year 2029–30. Prepared by Public Works / City Engineer, May 2025. Project list, funding sources, and five-year budget schedule. Palos Verdes Estates, CA, 2025.