Villa Park council hears FY 2025–26 budget update; staff warns ‘margin for error’ is thin

The Villa Park City Council on May 5 received a second workshop on the city’s proposed fiscal year 2025–26 budget and an update on capital projects, pension funding and several outstanding items that staff said remain under negotiation.

At the meeting, staff said the city is operating from a position of financial strength but warned the “margin for error is getting thinner and thinner,” noting that projected 2025–26 revenues are close to operating expenditures and that one-time funds are being used for several capital items. “Our philosophy has always been to project revenues low and expenditures on the high side. That margin is thin right now,” staff member Lee said during the presentation.

The workshop covered year-end projections for the current fiscal year, the revenue and expenditure assumptions for 2025–26, a summary of restricted grant funding, and a review of capital projects and pending policy items. Staff said audited fund balance carried into the current year was about $7.9 million; the projected ending fund balance for 6/30/2025 is roughly $8.2 million. For 2025–26 staff proposed total revenues of about $6.04 million, operating expenditures near $5.8 million and capital/project expenditures of about $1.2 million, producing an estimated ending fund balance of about $7.2 million on 6/30/2026 after planned capital spending.

Why it matters: Villa Park’s budget is heavily dependent on property taxes, which staff said account for roughly 60% of general fund revenue. Staff are projecting a conservative 3% growth in assessed value for the city, less than the county assessor’s current 3.5% projection; staff said they prefer a conservative estimate to avoid shortfalls. At the same time, contract costs for public safety are rising faster than property tax revenue: staff reported a sheriff contract increase of about 5.7% compared with last year and said public safety spending accounts for roughly $2.4 million of the city’s operating costs.

Key figures and funding sources discussed included a CalRecycle grant of $75,000 (two-year award, year two spending planned next fiscal year), Measure M2 funds from the Orange County Transportation Authority (about $128,000), gas tax receipts (about $325,000), modest AQMD revenue (about $7,000), and restricted PEG/cable funds (about $15,000). Staff also noted the city is carrying forward unspent capital appropriations (for example, a sewer improvement project carryforward of about $657,000) and other savings from completed projects (Sierra Villa and slurry seal savings were cited).

Capital projects and maintenance: Staff outlined several capital and maintenance priorities expected to be carried into 2025–26, including a multi-year sewer master plan (funded from a sewer assessment fund, with earlier study estimates in the “$2 million–$3 million” range), a street rehabilitation project (design funding proposed at $100,000 with $300,000 for initial construction), pavement maintenance, city hall maintenance, trail improvements and storm-drain/stormwater work. Staff said the Villa Park Road median and related streetscape design work is largely complete and will be used to pursue grant funding; the city has invested about $20,000 so far in design.

Housing element and state compliance: Staff told the council the city has responded to state notices about sixth-cycle housing element compliance and plans to adopt required rezoning and related actions with a first reading in May and second reading in June, then submit materials to the state. Staff said Villa Park is “legally in compliance” with required steps but remains uncertified, and that the lack of certification has led the state to withhold SB 2 reimbursements; staff estimated this withheld reimbursement is on the order of about $30,000.

Pensions, reserves and long-term liabilities: Staff reviewed pension funding and other long-term liabilities. The city’s CalPERS funded ratio was presented as roughly 79.9% last year and about 82.65% as of March (staff-provided figures); staff said the city contributes an additional $100,000 annually into an irrevocable Section 115 trust (PARS) and that under current assumptions the trust contributions push projected funding toward about 88% in three years. Staff emphasized these PARS funds are permanently restricted for pension obligations.

Public safety and technology: The sheriff contract increase was a central point; staff highlighted public safety as the city’s largest operating priority and cautioned that public safety costs are rising faster than the city’s primary revenue. The council discussed potential automated license-plate readers (ALPR) with vendor Flock; staff said initial first-year costs presented were about $30,000 with ongoing charges thereafter and that the vendor had not yet finalized terms and technical placement details. “It’s not going to be as fast — they are not rushing to bring us in. We’re a small customer,” staff said regarding vendor responsiveness.

Outstanding items and next steps: Staff reported they had resolved most of the previously-identified open issues (about 12 of 15), and listed remaining matters including the housing element certification, certain grant reimbursements, trail and fence maintenance, network rewiring for City Hall, and stormwater/culvert projects on Taft Avenue and other locations. The council was reminded that the formal budget adoption hearing is scheduled for Tuesday, June 24 at 6:30 p.m.

Council discussion also touched on discretionary items for community events linked to the city’s 250th-anniversary planning (the “USA 250” committee), possible utility-box art and a proposal for a first “State of the City” event in 2026; council members and staff said the city traditionally leverages the Villa Park Foundation and local nonprofit groups to lead celebration logistics and fundraising. No public comments were received on the budget workshop and the meeting adjourned after the staff presentation.

Ending: Staff will return with the formal budget adoption package and continuing updates on capital projects and the outstanding items that remain under negotiation or vendor response.