Villa Park council hears first look at 2025–26 budget; staff projects modest revenue gains, several large capital carryovers

At a special meeting, the Villa Park City Council received its first public presentation on the fiscal year 2025–26 budget and preliminary year‑end projections, with staff saying revenues are slightly above initial estimates and several capital projects will carry funds into the next fiscal year.

Finance Director Leigh (name/last name not specified) told the council that the city’s projection for fiscal 2024–25 revenues rose from an estimated $6.1 million to about $6.3 million, “roughly, and that is about, like, a $200,000, like, above and beyond what we have expected.” Leigh said investment income and property‑tax receipts contributed to the upward revision while sales and other taxes were slightly below earlier assumptions.

The presentation framed the larger picture: budgeted expenditures for 2024–25 were about $7.4 million (including capital), but staff now project actual expenditures near $6.0 million, producing a net underspend of roughly $1.5 million to carry into FY 2025–26. City Manager (name not specified) summarized the outlook as positive, saying “we are once again in that trajectory.”

Why it matters: the carryover and the city’s reserves affect how much discretionary spending will be available next year and which capital projects can move forward. Staff emphasized that some underspent funds are restricted to specific projects (for example, sewer assessments and other special funds) and cannot be repurposed for general operations.

Key fiscal details and restricted accounts

- Year‑end projection (FY 2024–25) — revenues: about $6.3 million; expenditures projected at roughly $6.0 million; net carryforward about $1.5 million (Leigh). - Capital carryovers called out included an underspend of about $657,000 for a sewer improvement project, about $88,000 on the Cerro Villa project, and roughly $26,000 for a slurry seal project; a $400,000 budget line for an industry improvement design will carry forward into next year (Leigh). - Annual sewer assessments yield roughly $400,000 per year and feed a restricted sewer fund; staff reported approximately $2.7 million available in that restricted account for sewer work (Leigh). - The city maintains a general fund reserve equal to 50% of budgeted operating expenditures (roughly six months of operating costs); staff said the projected ending fund balance for the coming fiscal year would be about $8.2 million before next year’s budget and roughly $7.5 million after proposed spending, with about $3.0 million held as reserves.

Pension, OPEB and Section 115 trust

Staff reported the city’s Section 115 trust (used to prefund pensions and OPEB) holds about $976,000, of which approximately $871,000 is earmarked for pension liabilities and $104,000 for other post‑employment benefits (OPEB). The actuarial unfunded pension liability figure discussed in the meeting was about $1.6 million; staff described the city as being in the roughly 80% funded range for pensions and said they favor continuing moderate contributions to the trust rather than “overfunding” it.

Revenue assumptions and fees

Staff proposed conservative revenue assumptions for FY 2025–26: a 3% increase in assessed valuations for property tax (below the county’s 3.5% projection), a modest sales‑tax projection (about $290,000), and a tech fee on building permits (4% of permit fees) estimated at roughly $15,000. Staff said the city contracts with a vendor that monitors sales tax receipts by vendor and provides quarterly updates.

Grants and specialized revenues mentioned included CalRecycle (an expenditure‑driven grant that requires spending before revenue recognition), Air Quality Management District allocations used for electric vehicle purchases and charging stations, Measure M2 funds for roadway projects (county sales tax), and state gas tax and PEG funds.

Planned and pending capital and policy items

The presentation listed council priorities and pending items that will influence the final budget: sewer maintenance and a pump station improvement program, street rehabilitation and pavement maintenance, city hall maintenance and exterior stucco/repair work, DG (decomposed granite) and trail improvements (including Knowles Park and Villa Park Road medians), storm‑drain work (notably an open trench segment near Nichols and Taft that staff estimated could total $3–4 million), and the general plan/housing element update (staff budgeted a large placeholder, with a $100,000 contract for Kimley‑Horn to assist with HCD responses).

Sewer capacity and ADUs

Staff described a recent sewer capacity study that found existing city capacity adequate for typical growth and accessory dwelling units (ADUs), but noted the city may need to invest in upgrades if large, adjacent developments (for example in neighboring Orange) are built. Council members asked whether developers would pay for capacity upgrades; staff said developers inside Villa Park would typically be required to pay through development agreements, while projects outside the city that affect shared infrastructure would be handled through interagency pass‑through arrangements.

Public safety and contracted services

Public safety costs — primarily the contract with the Orange County Sheriff — comprise a large portion of the city’s budget (staff said roughly $2.5 million of a $6 million budget). Staff reported the sheriff’s second estimate included a 5.7% increase and emphasized discussions about overtime and transportation costs in the sheriff’s billing. The council also asked about school resource officer coverage for the four local schools; staff noted Villa Park funds full coverage for its schools while many neighboring jurisdictions fund SROs differently.

Homeless services and regional agreements

Council and staff discussed the North SPA / regional shelter funding formula and the city’s ongoing contributions. Staff said because Villa Park’s housing element is not yet certified, certain SB2 revenues that would normally offset shelter contributions have been withheld, increasing the near‑term cost to the city; staff said they are pursuing housing element certification to restore those reimbursements.

Staffing and succession planning

Staff proposed a potential reclassification of the senior management analyst position to an assistant city manager role to formalize succession planning and give a designated staffer authority to act during an executive search or interim period. Councilmembers discussed funding and whether to keep the city manager’s salary at status quo while reallocating funds toward the reclassification. Staff noted one assistant planner left and a contract employee replaced that role, producing a modest reduction in CalPERS contributions.

Other items noted

- Automated license‑plate reader pilot: staff said preliminary discussions with the sheriff indicate four intersections could be covered for an initial equipment cost in the low tens of thousands and an operational cost estimate in the $20k–$30k range; council action would be required to proceed. - Capital grant strategy: staff described seeking grants and private partners (foundations, women’s league donations) to supplement city funds for projects such as the Villa Park Road median and Knowles Park improvements.

What’s next

Staff said this is one of two required public budget hearings and that a second workshop will occur in early May (staff referenced a May 5 target) with the formal budget adoption scheduled for the council’s regular meeting in June. The presentation was framed as preliminary: staff said they plan to refine revenue and expenditure estimates and return with a prioritized list of discretionary and external pending items for council direction at the May workshop.

Ending

No formal votes were taken at the special meeting; staff requested direction and input and will return with more detailed figures and recommended priorities at the next budget workshop.