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Half Moon Bay staff report third‑quarter finances; city projects smaller deficit, reserves at $8.6 million
Summary
City staff presented the fiscal year third‑quarter financial report showing transient occupancy tax trending above last year, projected reserves of $8.6 million (37% of target), an unassigned balance near $900,000 and a reduced structural deficit compared with the prior year; council accepted the report.
City staff presented the fiscal third‑quarter financial report for the year ending March 31, 2025, on May 20 and the City Council accepted the report.
Staff reported that transient occupancy tax (TOT) — the city’s largest operating revenue source — was trending above last year’s collections for recent months and that the city now estimates FY 2024–25 TOT to finish between $8.3 million and $8.7 million. The city’s fiscal presentation noted TOT historically comprises about 40% of the general fund and remains a key revenue driver.
On total fund balances, staff projected reserves of approximately $8.6 million (about 37% funded) and an unassigned balance of roughly $900,000 as of June 30, 2025. Staff also reported the city is carrying a reduced structural deficit compared with the prior year; the current draft of next year’s budget still shows a deficit and staff said they will bring options to council on how to address it.
Staff noted several one‑time timing differences that affected the quarter, including an earlier sheriff contract payment that pushed public‑safety expenditures higher in the quarter. The report also described continued salary savings from vacancies and staff said they expect to hit most revenue budgets by year end if current trends continue.
Council members asked about the recently approved half‑cent local sales tax (Measure R) that went into effect April 1. Staff said the measure’s proceeds are new revenue but that receipts will not be visible until late June and staff are using conservative projections from a sales‑tax consultant in the FY 2025–26 budget.
Council voted to accept the report; staff will present the draft FY 2025–26 budget and options to close the remaining deficit at the June budget meetings.
The staff presentation and questions emphasized the city’s sensitivity to TOT volatility, the role of one‑time revenues in near‑term balance, and the need to continue structural adjustments to close the long‑term gap between recurring revenues and ongoing expenditures.
