Calimesa staff present structurally balanced FY 2025–26 budget with $6.7M projected reserves

Calimesa City staff presented a draft fiscal year 2025–26 budget Friday that they described as structurally balanced in ongoing operations, with a projected ending general fund balance of about $6.7 million and an ongoing structural surplus of roughly $83,000.

The budget presentation, led by finance staff Will and Celeste, laid out the city’s revenue mix and near‑term pressures: property and sales taxes make up the majority of ongoing revenue, while rising public‑safety and insurance costs are squeezing the operating picture. Councilmembers gave staff direction on several items and asked that requested adjustments be incorporated for adoption at the June 2 meeting.

City finance staff said the city began the formal budget process in December and that the FY 2026 proposal is “structurally balanced” in the general fund subject to any changes the council directs. “As it stands right now, we have about an $83,000 structural surplus for fiscal year 26,” finance staff Celeste said during the workshop. The staff presentation showed a beginning fund balance for the current year of about $8.6 million and a projected fiscal‑year 25 net change of minus $154,000; staff estimated the starting balance for the FY 26 budget at about $7.4 million.

The presentation explained that roughly 76–84% of the city’s revenue is driven by property tax (including property tax in lieu of vehicle license fees) and sales tax, and that the ongoing revenue picture is sensitive to economic shifts. Finance staff Will outlined the long‑term trends shown in the slides and noted that FY 26 is in a considerably better position than more distant years but that forecasting is harder because of volatility in markets and costs.

On one‑time items, staff identified about $350,000 in recommended one‑time general fund expenditures for FY 26, including strategic planning, limited IT purchases to replace leases, legal costs and two community‑development planning projects (including an AB 98 circulation study that could be folded into a general plan update if state law changes). Staff also recommended a $10,000 allocation to mark Calimesa’s 35th anniversary next year. The budget assumes $375,000 in one‑time revenue transferred from the public services CFD and $350,000 in one‑time spending, yielding an operating surplus before transfers of about $246,000 and proposed transfers out of roughly $900,000.

Councilmembers and staff discussed the five‑year capital improvement plan (CIP). Staff said the FY 25–26 CIP includes roughly $4.5 million in projects for the coming fiscal year and a five‑year program totaling about $80.1 million, largely funded by grants and developer contributions; only a small share would come from the general fund in the five‑year horizon. The city manager reminded the council that approvals at this workshop were for the coming fiscal year only and that later years are for planning and projection.

Council direction and next steps: Councilmembers asked staff to include a parks and trails master‑plan consultant using an existing $75,000 allocation and to consider a parks security approach for Summerwinds Park (staff noted an existing CFD and other maintenance funds available). Staff said they will incorporate council feedback and return the final budget for council adoption on June 2.

The council opened the meeting with a motion to approve the agenda; the workshop continued through review of revenues, expenditures, public‑safety costs, insurance and the CIP. Staff emphasized that many cost increases—insurance, contract law enforcement and wildland fire protection—are largely outside the city’s direct control and that the proposed budget included a number of internal savings measures (for example, converting several contract positions to city employees, which staff estimated would save roughly $75,000 and add about 1,600 service hours).