Laguna Woods Council reviews two‑year budget and $1.86 million transfer for city hall project

Laguna Woods, Calif. — At its May 28 meeting, the Laguna Woods City Council received a detailed presentation of the proposed two‑year budget and work plan that begins July 1 and runs through June 30, 2027. City Manager Chris (presenter name in transcript: Chris) told the council the first fiscal year (2025–26) projects about $9.3 million in revenue and the second year about $9.53 million, and that the proposed operating budgets for both years are fully balanced.

The presentation matters because it maps near‑term spending priorities and one‑time capital commitments for the city, including a $1.86 million transfer to the capital projects fund in 2025–26 largely driven by a $1.6 million allocation for the city hall refurbishment and safety project (phase 5). City Manager Chris said, “the budgets that we've proposed are fully balanced.”

City staff summarized revenue and major expenditures first. Property tax remains the city’s largest revenue source (about 40% of total general‑fund revenue), followed by sales tax (just over 13%) and, new for this cycle, a cannabis business tax that the presentation showed as roughly 12–13% of general revenue. Staff projected the three sources together will comprise about two‑thirds of overall revenue. Interest income and some franchise and transient occupancy tax receipts were forecast to soften compared with recent years, in part because one‑time federal American Rescue Plan Act (ARPA) funds have been largely spent and because interest rates and investable balances are lower than in previous years.

On expenditures, the presentation showed public safety (chiefly the city’s law enforcement contract) is the largest operating cost. The sheriff’s contract for the coming year is just under $3.6 million and was described as “just under 43% of the general fund operating budget.” Staff noted recurring law enforcement‑related costs also cover animal services, automated license plate readers, an automated fingerprint identification system and other items. The presentation included a contingency to account for anticipated labor‑negotiation outcomes for the Orange County Sheriff’s Department in 2026–27.

City Manager Chris detailed the city’s nonoperating (one‑time) expenditures and work‑plan items. Highlights include: - $1.86 million transferred to the capital projects fund in 2025–26, of which $1.6 million is for city hall refurbishment and safety project (phase 5), an increase of $300,000 since April’s discussion; - a $406,000 contribution from the general fund to the senior mobility fund in each of the two fiscal years; - $40,000 per year for additional automated license plate reader (ALPR) installations; - $40,000 per year for digitization of building and planning records; - $50,000 for an emergency operations plan update; - $50,000 for objective design and development regulations (architect/consultant work); and - $250,000 per year for a two‑year public safety grant program to help property owners and businesses comply with forthcoming high‑fire‑hazard (Zone 0) regulations and to assist camera registration with the sheriff’s Connect Orange County program (a total of $500,000 over two years).

Staff noted some anticipated but currently unbudgeted items that will return to council after outside reporting is available: the city expects new CalPERS actuarial valuations in August 2025 and 2026 that could change pension prefunding needs; the presentation reiterated the city’s prefunding goals (a $670,000 target for the employer pension prefunding trust and an 80% prefunding goal for retiree medical liabilities). City Manager Chris said the city’s retiree medical prefunding level was 94.6% as of the last actuarial valuation (06/30/2023) and that the next valuation will be completed during the 2025–26 fiscal year.

Council members asked for follow‑up figures and historical comparisons. Council Member Connors asked for a timeline showing the law‑enforcement share of the budget over time; staff agreed to provide historical percentages in a later report. Council Member Lee asked whether transient occupancy tax might rise because of the Olympics; staff said any Olympic effect would likely be recognized in budgets after this two‑year cycle. Multiple council members praised the presentation visuals and asked staff to return with supplemental materials (including the chapter‑4 equivalent of a balance summary that will appear in the June 18 packet).

No final budget adoption took place at the May 28 meeting; staff said a complete draft of the full budget and work plan will be provided in the June 18 agenda packet and the council is scheduled to consider adoption on June 25. The presentation closed with a reminder that the budget book will include a fund‑balance summary (an operational equivalent of a balance sheet) in the upcoming packet.

Council discussion and public comment: Public comment was opened and closed with no members of the public speaking on the budget item at this meeting. Several council members later offered complimentary remarks to staff about the clarity and conservatism of the projections.

What’s next: Staff will deliver the full draft budget and work plan on June 18 and return with the recommended resolutions and implementing documents for a June 25 decision.