Item 07 - FY 2025-26 Third Quarter Budget Report and Proposed Appropriation Adjustments

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FY2025-26 Third Quarter Budget Update and Proposed Appropriation Adjustments June 2, 2026 Page 3 Sales Tax (Bradley Burns) Based on the latest update from the City's sales tax consultant, staff is adjusting the Bradley-Burns sales tax estimate downward by $669,220, resulting in a revised budget total of$58,242,170. Ongoing political and economic volatility, compounded by persistent inflation, continues to constrain consumer spending. In Santa Ana, these conditions have reduced demand in the auto and transportation sectors, as well as in the building and construction trades. Although housing demand remains relatively strong, the building and construction sectors continue to face significant challenges related to elevated labor, material, and financing costs, which are placing downward pressure on sales tax growth. Sales Tax (Measure X) Consistent with the Bradley-Burns adjustment, staff is also reducing the Measure X sales tax estimate by $328,870, bringing the revised budget total to $82,813,710. Measure X revenues continue to face similar economic pressures from inflation and softer consumer spending. However, the reduction is less significant than the Bradley-Burns sales tax adjustment, due in part to continued strength in online sales activity. Paramedic Services Charge Revenue from the Paramedic Services Charge continues to perform above budget estimates, partially offsetting current reductions in sales tax revenues. The Public Provider Ground Emergency Medical Transportation (PP-GEMT) program provides supplemental federal reimbursement to eligible public agencies for qualifying emergency medical transportation services provided to Medi-Cal patients. Based on current year-to- date collections, staff is increasing Paramedic Services Charge revenue estimates by $600,000, resulting in a revised budget of$15,800,000. Business License Tax Santa Ana's Business License Tax revenue continues to perform well, supported in part by participation in the California Franchise Tax Board (FTB) City/County Business Tax Program. These efforts have improved the City's ability to identify unregistered businesses, enhance compliance, and strengthen revenue collection. During FY 2025- 26, the City onboarded approximately 1,000 new business licenses through expanded compliance efforts. As a result, staff is increasing Business License Tax revenue estimates by $400,000, bringing the revised budget total to $17,900,000. General Fund Expenditures A summary of General Fund expenditures follows.