HomeMy WebLinkAboutItem 07 - FY 2025-26 Third Quarter Budget Report and Proposed Appropriation Adjustments Finance and Management Services
www.santa-ana.org/finance
Item # 7
City of Santa Ana
20 Civic Center Plaza, Santa Ana, CA 92701
Staff Report
June 2, 2026
TOPIC: FY2025-26 Third Quarter Budget Report and Proposed Appropriation
Adjustments
AGENDA TITLE
Fiscal Year 2025-26 Third Quarter Budget Report and Proposed Appropriation
Adjustments
RECOMMENDED ACTION
1. Receive and file the Fiscal Year 2025-26 Third Quarter Budget Update.
2. Approve the recommended appropriation adjustments. (Requires five affirmative
votes)
GOVERNMENT CODE 484308 APPLIES: No
DISCUSSION
The Third Quarter Budget Update offers a summary of the City's financial status up to
March 31, 2026, which is the 75% point of Fiscal Year 2025-26 (FY25-26). It includes
recommendations for adjusting appropriations based on recent revenue trends, spending,
and operational needs. This report highlights the City's commitment to maintaining a
balanced budget while adapting to changing economic conditions that influence revenue
estimates. It also addresses the continued community demand for the Ayuda Sin
Fronteras program. Although the main focus of the recommended changes is on the
General Fund, adjustments to various restricted funds are also included to ensure those
budgets align with current and expected financial activity.
This report also includes updated revenue estimates, recommended appropriation
adjustments, a General Fund summary of revenues and expenditures, and a full-time
vacancy report as of March 31, 2026.
The proposed General Fund adjustments result in a net increase of $1,566, bringing the
estimated Spendable Fund Balance to $11,628,642. This minor increase is due to
adjustments caused by higher-than-anticipated Paramedic Service Charges and
Business License Tax revenue. These increases were almost entirely offset by decreases
in sales tax estimates for both Bradley Burns and Measure X, discussed in greater detail
FY2025-26 Third Quarter Budget Update and Proposed Appropriation Adjustments
June 2, 2026
Page 2
in the General Fund Revenue section of this report. The City's General Fund Reserve
Policy requires a reserve equal to 18% of recurring revenue, and the revenue increase of
$1,910 raises the reserve requirement by $344.
A General Fund summary as of March 31, 2026, follows.
General Fund Proposed Third
FY2025-26 General Fund Summary Activity through Quarter Updated Estimates
March 31,2026 Adjustments
Estimated Beginning Balance at July 1,2025 $ 97,650,804 $ - $ 97,650,B04
Revenue Estimate $ 414,059,048 $ 1,910 $ 414,060,958
Appropriated Spending $ (424,600,091) $ - $ (424,600,091}
FY25-26 Contribution to Pension Stabilization $ (1,000.000)
Trust $ - $ (1,000,000)
Estimated Ending Balance at June 30,2026 $ 86,109,761 $ 1,910 $ 86,111,671
Less: 18% Reserve' $ 74,482,686 $ 344 $ 74,483,030
Estimated Spendable Balance $ 11,627,075 $ 1,566 $ 11,628,642
'The City's 18%reserve policy applies to annual recurring revenue only.
General Fund Revenue
A summary of General Fund revenue follows.
AnnualBudget
Estimate through Received .;
Revenue Source 0313112026 0313112026 - - .
Property Tani Property Tax In-Lieu 96,523.310 55,573,671 57.6%
Sales Tax (Measure X) 83,142.580 48,561,773 58.4%
Sales Tax (Bradley Burns) 58,911.390 33,697,005 57.2%
Other General Fund Revenue 49.662.408 36,908,392 74.3%
Charges for Service 32,464.400 26,522,286 81.7%
Utility Users Tax 29,250,000 2D,252,436 69.2%
Business License 17,500,000 12,876,553 73.6%
Franchise Fees 13,600,000 6,984,757 51.4%
Cannabis Revenue 12,651,460 7,725,851 61.1%
Jail Revenue 10,853,500 6,162,820 56.8%
Hotel Visitor's Tax 9,500,000 6,178,360 65.0%
' Total General Fund Revenue 414,059,048 61,443,904 63.1%
The City has received approximately $261.4 million in General Fund revenues through
March 31, 2026, representing 63.1% of the annual revenue estimate. Because the City
continues to accrue revenues through the end of August, current collections indicate that
overall FY25-26 revenue targets remain on track.
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.
FY2025-26 Third Quarter Budget Update and Proposed Appropriation Adjustments
June 2, 2026
Page 4
AnnualBudget
Department Thr. . 0313112026
City Attorney 5,784,036 2,772,135 47.9%
City Clerk 1,700,603 1,081,883 63.6%
City Council 1,034,920 608,777 58.8%
City Manager 4,629,460 3,091,969 66.8%
Community Development 6,418,564 3,180,349 49.5%
Finance &Mgmt Services 14,517,485 9,561,812 65.9%
Fire&Emergency Medical Svcs2 63,248,404 50,425,737 79.7%
General Non-Departmental 59,148,350 36,500,175 61.7%
Human Resources 4,769,673 2,949,162 61.8%
Inter-Fund Transfers 16,479,530 11,249,048 68.3%
Library 14,334,094 7,052,706 49.2%
Museum Funding 1,769,950 1,332,561 75.3%
Parks, Recreation &Comm Svcs 27,813,543 12,371,776 44.5%
Planning &Building 20,253,712 12,303,232 60.7%
Police 164,923,005 119,636,195 72.5%
Public Works 84.143.790 44.492.751 52.9°%
Votal General Fund Expenditure 490,969,119 318,610,268 64.94
21re&Emergency A4edlcal Services includes a one-month advance.
3includes all appropriation adjustments through A4arch 31, 2026; including Carry Fonvards.
As of March 31, 2026, the City has spent approximately $318.6 million from the General
Fund, representing 64.9% of the adjusted budget. Overall year-to-date expenditures
remain within an appropriate range for this point in the fiscal year and are generally
aligned with budget expectations. Fire & Emergency Medical Services is tracking slightly
higher due to the one-month advance, while Museum Funding is nearly on target,
reflecting regular recurring payments. Overall, expenditure trends indicate that
departments are generally operating within their planned budgets.
Ayuda Sin Fronteras
On March 3, 2026, as part of the Mid-Year Budget Update for the Program, the City
Council approved an additional $150,000 in funding for the Ayuda Sin Fronteras program.
The program provides short-term emergency rental and utility assistance to households
affected by Immigration and Customs Enforcement (ICE) activity. With this action, the
City Council has now approved a total of$400,000 in FY25-26. Based on current program
demand, staff is requesting an additional $150,000 allocation, which would increase total
program funding to $550,000 for the fiscal year. The additional funding is supported
through vacancy savings identified through March 31, 2026, resulting in no additional
fiscal impact on the General Fund. The table below outlines the departmental funding
contributions.
FY2025-26 Third Quarter Budget Update and Proposed Appropriation Adjustments
June 2, 2026
Page 5
Department Amount
City Attorney $ 25,0C-)
Finance & 1%,lgmt Services 25,O0(--,
Planning & Building $ 25,0C-1C-1
Police $ 25,000
Public 'Norks 25,000
City klanager $ 10,000
Human Resources $ 10,000
City Clerk $ 1,250
Community Development $ 1,250
Library $ 1,250
Parks_ Recreation & Comm Svcs $ 1,250
Total $ 150,000
The departments identified above have sufficient vacancy savings to support this effort.
If approved, the item would authorize the transfer of funding to the Community Assistance
Fund — Contract Services account established to track program expenses.
Adjustments to Other Funds
Lay's Replay Tournament Donation
The Parks, Recreation & Community Services (PRCSA) department requests to
recognize $34,872 in donation revenue and appropriate the same amount in expenditures
to offset the costs associated with a free tournament at Campesino Park's Lay's Replay
mini pitch. The tournament was held in April and May, and the tournament winners
qualified for the chance to attend a 2026 FIFA World Cup match.
Criminal Activities Fund
An appropriation of $5,000 from the Criminal Activities Fund balance is requested to
support Police Department investigation costs. This fund consists of proceeds from state
asset forfeitures and accumulated interest earnings. In accordance with applicable
restrictions, these funds cannot supplant local funding sources and are generally limited
to supporting eligible law enforcement activities.
Emergency Rental Assistance (ERA) Fund
Community Development staff is requesting approval to recognize $6,277 in revenue from
accumulated interest earnings within the Emergency Rental Assistance (ERA) Fund and
to appropriate the same amount in expenditures. The ERA program provided rental
assistance to residents during the height of the COVID-19 pandemic. While original
program funds have been fully expended and the fund is scheduled to close at the end of
the fiscal year, interest earnings have continued to accrue.
FY2025-26 Third Quarter Budget Update and Proposed Appropriation Adjustments
June 2, 2026
Page 6
The City uses Neighborly, a cloud-based platform, to maintain electronic application
records for prior City-administered rental assistance programs, including ERA and the
Eviction Prevention Program. Federal grant requirements mandate that these records be
retained for five years after the end of the period of performance (September 30, 2025),
or until the final report is submitted to the U.S. Treasury, whichever is later. To ensure
continued compliance and access to these records, the City must maintain an annual
Neighborly subscription costing $15,480. A portion of this expense will be covered by the
$6,277 in accrued interest earnings. The remaining balance, as well as future subscription
costs, will be funded through alternative sources.
Rental Registry Fund
Rental Registry staff continues to manage growing demand for core Rent Stabilization
services, including Tenant Petitions, Fair Return Petitions, Public Records Requests
(PRRs), outreach initiatives, and general public inquiries. This increased workload has
created the need for additional staffing to support program administration and legal
services, while also increasing operating costs for materials, office modernization, and
upgraded communication infrastructure.
Staff anticipates Rental Registry Fee revenues to remain consistent with FY 2024-25
levels at approximately $3.1 million. Accordingly, staff is increasing the Rental Registry
Fee revenue estimate by $700,000 and recognizing $40,000 in late fee revenue, bringing
total revised revenues to $3,182,060. To ensure the Rent Stabilization Program can
continue delivering high quality and reliable services, staff recommends appropriating
these funds for corresponding personnel, operational, and service related expenditures.
With these adjustments, the Rental Registry Fund remains balanced.
Citywide Vacancy Report
The Citywide vacancy rate as of March 31, 2026, remains unchanged at 13%, consistent
with the Mid-Year Vacancy Report covering vacancies through December 31, 2025. This
stability indicates that overall staffing levels have remained steady throughout the third-
quarter reporting period. The March 31, 2026, Vacancy Report is presented in Exhibit 2.
ENVIRONMENTAL IMPACT
There is no environmental impact associated with this action.
FISCAL IMPACT
The overall estimated impact to the General Fund is immaterial, resulting in a net increase
of $1,566 to the Spendable Fund Balance through June 30, 2026. Exhibit 1 provides a
detailed listing of the line-item adjustments to revenue estimates and the corresponding
recommended changes to appropriations.
FY2025-26 Third Quarter Budget Update and Proposed Appropriation Adjustments
June 2, 2026
Page 7
EXHIBIT(S)
1. Line Item Adjustments to Various Revenue and Expenditure Accounts
2. Citywide Vacancy Report as of March 31, 2026
Submitted By: Alexander Trinidad, Executive Director, Finance and Management
Services Agency
Approved By: Alvaro Nunez, City Manager
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