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Proposed Fiscal Year 25-26 Mid -Year Budget Update, Appropriation Requests, <br />Workforce Changes, and Capital Improvement Program Amendment <br />March 3, 2026 <br />Page 2 <br />The proposed adjustments in this report result in a net decrease of $102,158 in the <br />estimated Spendable General Fund balance. As discussed in the First Quarter Budget <br />Report dated December 2, 2025, early economic data and preliminary information from <br />the City's sales tax consultant indicated that sales tax revenues were trending below the <br />FY 25-26 adopted estimates. Updated information received since then reflects a similar <br />trend and will be discussed later in the report. To offset this revenue decrease and <br />maintain a balanced budget, staff recommends the adjustments outlined in this report. <br />The recommendations include a targeted revenue adjustment for Planning and Building <br />fee revenue, which is performing better than expected, and the incorporation of various <br />mid -year requests, as shown in Exhibit 1. <br />A General Fund summary as of December 31, 2025 follows. <br />General Fund <br />Proposed Mid- <br />FY2026-26 General Fund Summary <br />Activity through <br />Updated <br />Estimates <br />1213112025 <br />year <br />Adjustments <br />Estimated Beginning Balance at July 1. 2025 <br />S <br />97;650;804 <br />S <br />- <br />S <br />97,650,804 <br />Revenue Estimate <br />S <br />413.790.950 <br />$ <br />268.098 <br />S <br />414.059.048 <br />Appropriated Spending <br />S <br />(424.230.150) <br />$ <br />(369.941) <br />S <br />(424�600.091) <br />FY25-26 Contribution to Pension <br />S <br />(1,000,000) <br />$ <br />S <br />(1,000,000) <br />Stabilization Trust <br />Estimated Ending Balance at June 312026 <br />$ <br />86,211_604 <br />$ <br />(101.843) <br />$ <br />86_109.761 <br />Less: 18% Reserve' <br />$ <br />74.482.371 <br />$ <br />315 <br />$ <br />74.482.686 <br />Estimated Spendable Balance <br />$ <br />11;729;233 <br />$ <br />(102;158) <br />$ <br />11. 27.075 <br />'The City's 18% reserve policy applies only to annual recurring revenue. Pension Trustee fee revenues aren-t <br />considered recurring because the funds are restricted to pension -related activity. PRGSA's revenue recognition <br />is a one-time event. <br />The following table illustrates that the General Fund remains balanced after the <br />recommended Mid -Year Adjustments by breaking out recurring expenditures and <br />revenues, excluding one-time items. <br />Updated Estimates <br />Revenue 414,059,048 <br />Spending (424,600,091) <br />Remove One -Time Recurring <br />(136.348) 413.922;700 <br />10.680.461 (413.919,630) <br />Net Recurring Available 3 3;070 <br />