City Manager (unnamed) walked the Laguna Woods City Council through a two-year operating budget and the 11-year capital improvement program on June 18, telling the council staff expects operating revenues to exceed operating expenditures in both 2025–26 and 2026–27.

The council packet shows roughly $9.3 million in projected revenue and $8.4 million in operating expenditures for 2025–26 and about $9.5 million in revenue and $8.95 million in operating expenditures for 2026–27. City Manager cautioned that several one-time projects will increase transfers from the general fund, including an estimated $1.6 million in 2025–26 for the City Hall downstairs reconfiguration and refurbishment.

"Both of the next two years' budgets are balanced," the City Manager said, adding that the city has an unassigned general fund balance sufficient to cover one-time projects without touching assigned reserves. The presentation also noted no city debt service and fully funded pension plans per the latest actuarial valuations.

Staff also told the council it will insource building inspection, building official, permit counter and some code enforcement services. The city reported offers made to existing building staff and expected to have only a single full-time building inspector vacancy on July 1; recruitment for that position was planned to begin shortly. A six-month extension of the existing contract for code-enforcement services was placed on the consent calendar while staff completes recruitment.

Council and public questioned investment decisions mentioned earlier in the meeting when the city treasurer described placing roughly 50% of funds in the Local Agency Investment Fund (LAIF) and the remainder in CDs and cash equivalents. City Treasurer said staff is pursuing entry into a second pooled money fund to diversify holdings and would follow up with additional security details.

Council members and residents asked about recession risk and revenue volatility. The City Manager said the city’s revenue mix is less volatile because property taxes make up the majority of revenue and historically remain stable during recessions. "Property tax only goes up," the City Manager said, noting sales and transient occupancy taxes are more sensitive but represent smaller shares of overall revenue.

No budget adoption occurred at this meeting; staff expects to return with final resolutions and the formal budget adoption vote at the next council meeting. The council did receive public input and directed staff to prepare the final budget documents.