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Rancho Mirage preliminary budget shows operating surplus but reserves to fund $3M IID substation for housing capacity
Summary
City staff presented a two‑year preliminary budget that projects a modest operating surplus in year one but a combined operating/non‑operating deficit driven largely by a planned IID electrical substation investment to enable affordable housing; the council signaled support for using reserves for the one‑time cost.
Rancho Mirage City staff presented a preliminary two‑year budget May 21 that projects a roughly $1.3 million operating surplus for fiscal 2025–26 but a larger overall deficit after planned capital spending, leaving the city drawing on reserves to cover about $2.6 million in net shortfall in the first year.
Kofi Atobam, the city’s director of administrative services, told the council the budget projects operating revenues of about $37 million and operating expenditures that produce an operating surplus of roughly $1.3 million for the first budget year. He said non‑operating expenditures — mainly capital projects — total about $4.5 million in year one, with about $3.0 million of that earmarked for a planned Imperial Irrigation District (IID) substation. After accounting for non‑operating revenues, Atobam said the net position for year one would be a deficit that would be covered by reserves.
City Manager Isaiah explained why the council is proposing the IID substation investment: without additional electrical capacity, he said, affordable housing projects “will not get built.” He told the council the city’s contribution is intended to create the capacity necessary for housing developments to proceed and that the substation spending is why reserves are being drawn down in the near term.
Atobam told the council the city is not bond‑funded and the two main categories of concern in the budget are operating versus non‑operating funds. He said the IID substation is the principal driver of the non‑operating deficit in both years of the tentative plan.
Council members discussed the tradeoffs of using reserves for one‑time investments to achieve policy goals. Mayor Weil and other council members framed the substation as a targeted, time‑limited use of reserves to unlock housing capacity rather than an ongoing operating commitment.
No formal action or vote was taken at the study session; staff presented the preliminary numbers and the council provided direction that the proposed nonprofit funding adjustments discussed later in the meeting be incorporated into the preliminary budget prior to the June meeting when the council will be asked to adopt year one and tentatively approve year two.
