Finance committee advances midyear budget adjustments including $2.3M appropriation to preserve state incentive eligibility

City finance staff presented the 2025 midyear budget projection to the Finance Committee on July 28 and the committee recommended adoption of a midyear appropriation resolution that makes multiple technical adjustments and interfund transfers. Christine (finance/budget staff) said general fund revenues were projected about $9.7 million above budget and agency expenditures about $7.9 million below budget for a combined projected surplus near $17.5 million, driven largely by investment gains and timing differences on contracts and compensated absence escrow activity.

The midyear appropriation resolution the committee advanced would appropriate $2.3 million from general fund balance. Finance staff explained that amount brings the city up to the maximum allowable for the state expenditure restraint incentive program (a state payment added in the current state budget); appropriating now preserves eligibility and lifts the base used to compute the 2026 budget maximum. Staff listed five main components of the resolution: a general fund appropriation increase ($2.3M); appropriating carry-forward encumbrances; intra- and inter-department transfers to cover projected deficits; adjustments to non-general fund agencies; and capital budget updates.

Christine walked the committee through agency highlights. Notable items included: Police projecting roughly $700,000 over budget in the midyear projection (which included approximately $900,000 in compensated absence escrow payouts); Library and several planning and development agencies showing underspending; Fleet Services reporting higher vehicle repair costs in purchase services; and Metro Transit projecting an approximate $4,000,000 deficit driven by both lower-than-budgeted partner and charge-for-service revenues and higher overtime and purchase-service costs.

Specific transfers and appropriations included $45,000 to Civil Rights for interpretation services, $311,000 to the City Clerk's Office for salaries/benefits/supplies and software (staff said about $150,000 related to maintenance/annual costs for the BlueCrest absentee ballot machine were not previously accounted), a $168,000 correction to Finance to reflect cost allocation billing adjustments, $60,000 to the Mayor's Office for software and consulting, and a $1.4 million increase in general fund subsidy to Metro Transit to cover purchase services and operations in the near term. Christine said carry-forward encumbrances totaled a little over $700,000; the resolution uses the central $400,000 direct appropriation and $300,000 from fund balance to cover them.

Committee members asked about prioritization for midyear transfers. Christine described the projection process (snapshots of June actuals, agency-level projections and analyst review) and said finance prioritizes transfers for overspending that could trigger budget stops. Alder Rivera and others asked for more detail on the Clerk's Office and Metro Transit deficits; the mayor and staff explained the Clerk's overrun related to personnel separation/transition costs, temporary reclassifications and the BlueCrest maintenance costs, and that Metro's gap reflected a mix of revenue shortfalls and overtime costs. Committee members asked Metro to present more detail to the committee separately.

The committee moved and seconded the midyear appropriation resolution and recorded a unanimous vote in favor. Staff said the resolution makes technical budget housekeeping, reauthorizes lapsed federal grant authority where appropriate, and does not increase the city’s planned GO borrowing. Staff will return any further year‑end adjustments to the committee as needed.