To: Honorable Mayor and Members of City Council
From: Donna Lee, Finance Director
Prepared By: Seth Anderson, Budget Officer
TITLE:
Title
Fiscal Year 2025/26 Mid-Year Report
LABEL
RECOMMENDED ACTION:
Recommendation
Receive and file the Mid-Year Financial Report and adopt a resolution amending the City Staffing Plan, and approving revenue and expenditure budget updates to the FY 2025/26 Adopted Budget, as documented in Council Budget Amendment 5P9 as part of the FY 2025/26 Mid-Year Report.
Body
DISCUSSION:
The attached document is the City’s Mid-Year Report for Fiscal Year 2025/26, which provides an overview of the first portion of the fiscal year (July 2025 through December 2025). The report includes a financial section which provides preliminary information on General Fund and proprietary fund revenue and expenditures through December 31, 2025. The report compares revenue sources and department expenditures to the budgeted amounts for each category. An analysis of each of the three major revenues categories (property tax, sales tax, and transient occupancy tax) is provided. Information about national, state and local economic indicators and concerns is also provided.
At this time staff is projecting that General Fund revenue will be higher than budgeted, and budget adjustments are recommended to increase both revenue and expenditure budgets. There are also adjustments recommended for other City funds, primarily to align expenditure budgets with existing activity. All fund recommended revenue increases total $16.6 million. All fund recommended expenditure increases total $19.6 million.
Staffing Plan Changes:
• Community Development: Delete 1 Secretary, Add 1 Administrative Secretary (0 FTE)
• Public Works: Delete 1 Senior Engineering Aide, Add 1 Administrative Assistant (0 FTE)
• Utilities: Delete 1 Management Analyst I/II, Add 1 Materials Diversion Analyst (0 FTE)
• Parks & Recreation: Delete1 Park Maintenance Worker I/II, Add 1 Park Maintenance Worker III, Add 1 Maintenance Laborer (Limited-Term) (1 FTE)
The Mid-Year Report is a public document that will be made available on the City’s website, in the City Clerk’s Office and at the Finance Department.
FINANCIAL IMPACTS:
The Council Budget Amendment will increase Citywide revenue budgets by $16.6 million and Citywide expenditure budgets by $19.6 million - including transfers in and out. In the General Fund, revenue budgets will increase by $1.4 million due to increased revenue expectations, and expenditures budgets will increase by $9.8 million, including transfers out to other funds and required contributions to reserves per fiscal policy. $8.6 million of FY 2024/25’s non-Measure G General Fund fund balance will be utilized for expenditures in excess of the FY 2025/26’s recommended revenue budget increases.
The recommended General Fund Revenue increases were developed through a careful analysis of actual data up to December 31, 2025, along with historical and economic trends, and in close collaboration with departments and experts.
The recommended increases in General Fund expenditure budget are primarily to staffing plan changes, budget corrections, usage of Asset Forfeiture revenue for Police equipment, and required reserve contributions in accordance with fiscal policy.
Additionally, usage of FY 2024/25’s ending fund balance ($8.9 million) was presented to City Council in January 2026. The related increases to FY 2025/26’s expenditure budget are recommended for a Section 115 Trust contribution for future pension mitigation, the Harvest Recreational Site Demolition and Planning, and to true up City reserves as the General Fund expenditure budget is adjusted.
CEQA:
The Finance Director has determined that the recommended actions described in this agenda report are not subject to CEQA, pursuant to CEQA Guidelines Section 15060(c).
DOCUMENTS ATTACHED:
ATCH 1 - Resolution
EX A - Council Budget Amendment No 5P9
ATCH 2 - Mid-Year Report, Fiscal Year 2025/26
NOTIFICATION:
None.