ITEM NO. 11
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CITY COUNCIL STAFF REPORT |
| TO: |
Honorable Mayor and Members of the City Council |
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| FROM: |
Arron Brown, City Manager |
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| BY: |
Terry Shea, Finance Director |
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| DATE: |
02/17/2026 |
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| SUBJECT: | Review of the Fiscal Year 2025-26 Mid-Year Budget and Approval of Proposed Budget Adjustments
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Recommendation:
Review the Fiscal Year 2025-26 Mid-Year Budget Report and approve the recommended budget adjustments.
Background/Analysis:
In May 2025, the City Council adopted Resolution 2025-26, approving the Fiscal Year 2025-26 Budget and Appropriations Limit. The adopted General Fund budget included $8,674,450 in revenues and $8,624,349 in expenditures for a budgeted Revenues over Expenditures of $50,101. Through January, the City Council has approved additional appropriations of $1,384,250, for various items including Police Department Start-up and building remodel costs of $1,200,000, establishing a Facilities Maintenance/Capital Improvement Program Contingency account for $135,000, which is offset by funds received from a penalty for a failed bid, and $37,500 for an employee settlement. In addition, the City Council approved additional revenues for $1,512,000 in Proceeds from Long-term Debt for the purchase of property and $11,750 for sponsorships received for various City Events. The results of the changes as described above increased the proposed Revenues over Expenditures to $189,601.
Actual revenues through December 2025 with projections for the remainder of the fiscal year are higher than anticipated by $174,925. The largest projected increase is in Miscellaneous Income $85,000 as the result of a penalty received for a failed bid, Insurance claim payments $24,300 and sponsorships received for City Events $7,000. The proposed adjustment for revenues is as follows:
Actual revenues through December 2025 with projections for the remainder of the fiscal year are higher than anticipated by $174,925. The largest projected increase is in Miscellaneous Income $85,000 as the result of a penalty received for a failed bid, Insurance claim payments $24,300 and sponsorships received for City Events $7,000. The proposed adjustment for revenues is as follows:
| 10-000-4791 | Insurance Reimbursements | $24,300 |
| 10-000-4790 | Miscellaneous Income | $85,000 |
| 10-421-4801 | City Events | $7,000 |
| Total | General Fund | $116,300 |
Actual expenditures through December 2025 with projections for the remainder of the fiscal year are in line with the original budget, with projected savings in most Departments and Divisions. However, certain line items are over, and some items need to be added to the budget. For the increases, decreases and proposed budget adjustments see Attachment 2 hereto.
Fiscal Year 2026-2027 Budget Adoption Timeline
As Staff continue to monitor the City’s financial position, preparations for the Fiscal Year 2026-2027 budget are underway. The schedule below outlines key dates in the budget adoption process:
- March 5, Budget Kickoff Meeting. Internal staff meeting to initiate the budget process.
- March 16, Draft Budget Presented to City Manager. Finance Director to present the draft budget to the City Manager.
- April 8, Preliminary Budget Presentation. Staff presentation of the draft budget to City Council.
- May 13, Budget Adoption. Final approval of the budget incorporating any changes directed by City Council at the April 8, 2025, City Council meeting.
- Fiscal Impact Yes/No:
- Yes
Additional Fiscal Information:
If the proposed Budget Adjustments are approved, the planned budgeted Revenues over Expenditures for the General Fund for Fiscal Year 2025-26 increases from $189,601 to $219,730.