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Quarterly finance briefing flags flat revenues, possible downward revisions and a spike in jail billing
Summary
City finance staff told the committee that first-quarter variances show flat underlying revenues, sales tax weakness in January–February and a large settle-and-adjust jail bill that could force downward revenue revisions and budget adjustments.
City finance staff presented the first-quarter variance report comparing year-to-date budget to year-to-date actuals and cautioned that early-year revenue trends could require downward revisions to 2025 projections.
Jessica (finance staff) said general fund revenue was favorable to budget at quarter end when transfer-in accounting entries were included, but that excluding an early transfer from a utility-derived fund shows underlying revenue essentially flat. Sales tax — a major general fund source — was underperforming compared with budget and last year, a trend also described by other staff: recent months’ sales-tax receipts were “roughly just shy of 2% down” from 2024 projections for January and February.
Jessica described timing and accounting effects that can make Q1 variance reports differ from year-end accruals, and she called attention to reserves: the revenue stabilization reserve target is 3.5% of revenues but stood near 2.8%, and the contingency reserve target is 10% of expenditures but stood near 8%, a shortfall Jessica estimated at roughly $7 million.
Committee members pressed on a $1.5 million invoice for 2024 jail costs in the settle-and-adjust bill from the county — described in the briefing as an approximately 513% increase compared with the same billing last year — and asked for supporting detail. City staff said the jail billing reflects higher proportional bed usage and increased county costs (collective-bargaining and mental-health contracts among other drivers); staff said they would provide a detailed usage report.
Staff said the combination of revenue softness and rising county charges will likely require difficult budget decisions; they recommended continuing work with council on options and preparing a more detailed forecast and potential structural adjustments. The committee received the report; no formal council vote was recorded.
