That the City Council review and approve:
A. An appropriation of $770,246 in estimated new General Fund revenue to partially restore funding for certain budget cuts previously approved by the City Council as part of the adopted FY 24-25 General Fund Budget; and,

B.  An appropriation of $250,000 from the City’s special events reserve to provide funding for the City’s Centennial Celebration planning efforts.

The FY 24-25 General Fund budget was approved and adopted by the City Council on June 17, 2024, and included $6.3 million in budget cuts to keep expenditures within then projected revenues. At that same meeting, the City Council directed staff to return with recommendations to identify additional General Fund cost offsets, revenue opportunities, and future budget balancing measures for City Council consideration. The requested report was presented to City Council at its August 5, 2024, meeting and included a number of future potential budget reduction and cost offset measures, as well as fiscal and operational efficiency recommendations made by prior Fiscal Review Ad Hoc Committees.

City Council reviewed staff’s recommendations and approved staff to evaluate potential future operational efficiencies, evaluate the City’s fee structures, and approved the placement of a Transactions and Use Tax (TUT) on the November 2024 ballot for voters to decide on reauthorizing the City’s existing half cent Measure T local TUT at a one cent rate. The new TUT measure, which was labeled as Measure V by the County, is on track for voter approval by approximately a 68 percent passage rate and is pending final certification by the County. Once certified and reported to the State, staff anticipates that the California Department of Tax and Fee Administration (CDTFA) will begin collection of Measure V at the 1 cent rate in April 2025. If so, the City will receive an additional half cent of TUT revenue above what was budgeted for from Measure T in the last quarter of FY 24-25 (April 2025 through June 2025), currently estimated at approximately $1.8 million.

At the November 18, 2024, City Council meeting, Councilmember Gomez requested staff to bring back a report with recommendations to reverse some of the previously approved General Fund budget cuts. Councilmember Medrano seconded this request. Staff has evaluated the budget cuts that were previously approved by City Council, evaluated the operational impacts of those cuts with each Department Director and, based on the additional new revenue expected in the last quarter of the current fiscal year, recommends the following budget amendments to the FY 24-25 General Fund budget to partially reverse some of the previously approved cuts. It should be noted that the costs reflected for these recommended budget amendments are for six months (from January through June 2025). The full annual cost of any restored budget cuts approved by City Council will be reflected in the proposed FY 25-26 budget when it is presented to City Council for review in the Spring of next year.

The total General Fund cost for the recommended appropriations is estimated at $770,246. The additional revenue from Measure V in the last quarter of FY 24-25 is anticipated to be sufficient to fund this appropriation request. Staff will continue to evaluate the City’s budget over the next several months in the event additional appropriation adjustments require Council consideration at the mid-year budget presentation. Any unappropriated new revenue will be available to restore partial funding to internal service funds and operating and capital reserves at fiscal year-end. Furthermore, there is sufficient unencumbered funding in the City’s special events reserve to fund the recommended $250,000 budget appropriation for the City’s Centennial Celebration planning efforts.

The FY 24-25 Municipal Budget is consistent with the following area of the General Plan:
ED 9.1 -- Balanced Fiscal Practice

It is also consistent with the following City Council Goals and Objectives:
Goal 2, Objective A: Closely monitor revenues, expenditures, and fiscal trends to ensure the City's long term fiscal stability.