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ITEM NO. 11
Canyon Lake CA logo CITY COUNCIL STAFF REPORT                   
 		  
 
TO:
 		   Honorable Mayor and Members of the City Council
 
FROM:
 		   Arron Brown, City Manager
 
BY:
 		   Terry Shea, Finance Director
 
DATE:
 		   05/13/2026
 
SUBJECT:  
Consideration of Adoption of the Fiscal Year 2026-2027 Budget and Related Actions
     

Recommendation:

(1) Adopt Resolution No. 2026-23, approving the budget, appropriating revenue and establishing the appropriations limit for Fiscal Year 2026-2027; (2) adopt Resolution No. 2026-24 and Resolution No. 2026-25 approving Updated Salary and Wage Schedules for Non-Safety and Safety Employees; (3) approve job descriptions for the Assistant City Manager, Administrative Assistant, Facilities Maintenance and Building Inspector and Records Clerk; (4) authorize the City Manager to execute contracts per the budget and Municipal Code; (5) approve a new fund for the Public, Educational, and Government Access (PEG) funds; and (6) provide any additional direction to Staff related to the proposed Fiscal Year 2026-2027 budget.

Background/Analysis:

On April 14, 2026, City staff presented a draft Fiscal Year 2026-2027 budget to the City Council for review and feedback. No substantive changes to the draft budget were identified by the City Council. Minor corrections were made to the draft budget for consistency and to correct typographical errors. No changes were made to proposed budget amounts.  The attached Proposed Budget for Fiscal Year 2026-2027 is presented to the City Council for review and approval.

Request for Additional Funding – Public Records Act Compliance

Since presentation of the draft budget to the City Council, staff has identified an increased need to ensure timely and compliant responses under the California Public Records Act, resulting in additional resource demands not fully anticipated during budget development.

The City has received 27 Public Records Act requests from a single requestor since October 2024, including 24 within the past 12 months. These requests are typically multi-part and include numerous distinct and independent records demands within a single submission, effectively functioning as multiple requests consolidated into one. The scope and complexity of these requests have increased over time, requiring staff to identify, collect, and review substantial volumes of records across multiple departments. This has resulted in a significant and ongoing impact on staff workload and available resources. Copies of the requests are attached for City Council’s reference.

The total estimated cost of reviewing and responding to these requests is approximately $19,687.50 in City staff time (157.5 hours at a blended rate of $125/hour) and $21,402.00 in City Attorney time (87 hours at $246/hour), for a combined total of $41,089.50.

In response to the sustained increase in volume and complexity of requests submitted by this requestor, staff has determined that additional legal support from the City Attorney’s Office is necessary to ensure timely and compliant responses. This level of support exceeds the scope of services contemplated under the City’s current agreement for routine legal services.

Accordingly, staff is requesting an appropriation of $19,678.00 to a Public Records Compliance Contingency account to address the increased demand for legal services associated with Public Records Act compliance. This expense was not anticipated at the time the draft budget was prepared and is therefore not reflected in the Proposed Budget totals above. The recommended appropriation is equal to the City’s proposed revenues over expenditures, which staff recommends be applied for this purpose.

Proposed Fiscal Year 2026-2027 Budget Overview

The Proposed General Fund revenues are $9,202,730, which is an increase of $419,080 over the previous Fiscal Year budget. Estimated General Fund expenditures are $9,313,052, an increase of $688,703 over the previous Fiscal Year Budget. The Proposed Budget reflects General Fund Expenditures over Revenues of $110,322 for Fiscal Year 2026-27, however, this includes $130,000 in the use of Restricted Reserves for Equipment Replacement for equipment for the new fire engine which was previously approved by the City Council.

The major changes from the City’s Fiscal Year 2025-2026 Budget are as follows:

• An increase in tax revenues of $246,890 with the largest projected increase in Property Tax, Property Tax Fire, and Property Tax VLF due to higher assessed valuations and an increase in actual revenues received in FY 2025-2026.

• An increase in Construction/Building Permit Fee revenues of $178,240 based on the Fiscal Year 2025-2026 actual revenues received, new commercial cannabis projections and new fees.

• An increase in Miscellaneous revenue of $51,700 based on the Fiscal Year 2025-2026 actual revenue received as well as projected reimbursements for Police and Fire services as well as an administrative reimbursement for the management of the City’s owned commercial property.

• The Proposed Budget for staff salaries for non-sworn positions includes a cost-of-living increase of 3.00% and a planned merit increase of 5.00%, where applicable. It also includes a proposed new position for $102,440 which will be partially funded by the City’s Rental Fund. In addition, it includes the elimination of the Code Enforcement Division and the three full-time and one part-time positions.

• The City Council’s Budget decreased by ($1,940). This includes a decrease in promotion and advertising of $11,000 offset by small increases in other line items.

• The City Manager’s Department Budget increased by $37,581. The increase includes an increase in salaries and wages of $26,831 and $12,000 in professional services.

• The Community Development Department decreased by ($39,357). The decrease is due to a change in salary and benefits of ($86,057) offset by an increase in professional and specialized services of $38,250 for software and IT support.

• The City Clerk’s Division Budget increased by $81,615. The increase includes an increase in salaries and benefits of $29,655 for a proposed change in a staff position, and an increase of $45,000 for the upcoming municipal election.

• The Finance Division Budget decreased by ($80,942). This includes a decrease of ($67,417) in salaries and benefits which is the result of moving the administrative Services Senior Analyst position to the newly created Human Resources Division, offset by the new Accounting Specialist position. Additional reductions include other items moved to the Human Resources Division.

• For Fiscal Year 2026-2027 the City established the proposed new Human Resources Division, this is necessary due to the increase in the number of employees added with the City’s Fire and Police Departments, and the complex issues involved. The Administrative Services Senior Analyst position has been moved from Finance Division as well as some of the human resources portions of that budget.

• The Planning Division Budget decreased by ($27,800), which includes a decrease for General Plan services of ($30,000) offset by an increase of $2,200 in the regular planning costs.

• The Building & Safety Division Budget increased by $94,798. The increase is due to the proposed new position with salary and benefits of $102,437, which will be partially funded by the City’s Rental Fund.

• The Law Enforcement Budget decreased by ($1,947,120), the decrease is due to the City’s proposed new Municipal Police Department. The proposed budget reflects only one month of the Contract Law Enforcement services provided by Riverside County Sheriff.

• The FY 2026-2027 Budget includes the new City Municipal Police Department, which includes projected salary and benefits of $1,757,325, Operation and Maintenance costs of $636,930 offset by CalCOPS revenues of $210,000. The City is also saving costs as the Code Enforcement Division was eliminated with a small amount of those costs being transferred to the Police Department. The FY 2025-2026 Code Enforcement costs were $401,896.

• The Fire Department Budget increased by $333,785, of which $133,902 is related to salary and benefit increases and $27,883 in operations. Salary increases are based on the agreed-upon 4% increase and where applicable 5.00% Step Increases.

• The Emergency Division Budget decreased by ($36,000), $30,000 for the contract with Riverside County for EMD services and $5,000 for CERT training with Riverside County.

• The Public Works Admin Division Budget decreased by ($10,000), $5,000 for on call maintenance services and $5,000 for Interwest Consulting Group services.

• The NPDES Division Budget increased by $5,200 due to the increased costs for the LE/CL TMDL agreement.

• The Code Enforcement Division decreased by ($401,896), as the Division was discontinued.

• The Building & Facilities Maintenance Division Budget increased by $342,343. Most of the increase is an increase of $317,970 in insurance costs, due to the rising costs of liability insurance and the new Municipal Police Department. Additional increases are due to the additional space occupied by the Police Department for utilities and maintenance costs

Organizational Changes

As presented at the April 14, 2026, City Council meeting, the following staffing adjustments are recommended and will become effective as of July 1, 2026:

New Positions:
  • Assistant City Manager
  • Administrative Assistant (fire department)
  • Facilities Maintenance and Building Inspector
  • Records Clerk (police department)
Eliminated Positions:
  • Administrative Services Director
  • Office Assistant (fire department)
  • Supervising CSO
Recommended Actions

Staff are requesting that the City Council take the following actions related to the Fiscal Year 2026-2027 budget:
  1. Adopt the fiscal year 2026-2027 budget and appropriations limit.
  2. Adopt salary schedules for non-safety and safety personnel.
  3. Approve the requested job descriptions.
  4. Authorize the City Manager to execute contracts per the budget and Municipal Code.
  5. Establish a new Fund (23) for the Public, Educational, and Government Access (PEG) funds that the City receives annually
Additionally, staff is requesting an appropriation of $19,678.00 to be allocated to a Public Records Compliance Contingency account to address the increased demand for legal services associated with Public Records Act compliance.
Fiscal Impact Yes/No:
Yes

Additional Fiscal Information:

See attached Proposed Budget document.

Attachments