Midyear budget: council approves changes after staff report cites Measure B revenue and unappropriated CIP projects

City staff presented the midyear budget report and proposed appropriation adjustments at the March 10 meeting; the council approved the recommended changes.

Administrative Services Director Lisette Maldonado said the general fund showed a net increase in projected revenues driven in part by Measure B (the local transient-occupancy tax increase from 12% to 15%), one-time state reimbursements tied to prior floods, and an accounting correction for pension reimbursements. Staff recommended a series of adjustments, including: purchasing a used street sweeper in lieu of an electric model (reducing capital outlay), correcting salary allocations across funds, and unappropriating several capital projects where anticipated grants were not secured (notably a pavement project estimated at $3.5 million).

Why it matters: The midyear changes align budget expectations with revenue receipts and grant outcomes and maintain required reserve levels. Staff reported the general fund estimated ending balance following adjustments and noted policy-level reserve targets (40% of expenditures/transfers for economic uncertainties).

Council questions and staff responses: Council members asked about timing of sales tax and transient occupancy tax receipts; staff explained sales tax is received with a two-month lag and that Measure B receipts were beginning to appear in quarterly payments. Staff also discussed recreation revenues and the planned removal of the beach store (noted to have been operating at a loss) and a pending parks and recreation fee study to align cost recovery with peer jurisdictions.

Ending: Council accepted the midyear report and approved the attachment-B adjustments; staff will update accounting records, proceed with contract and purchase decisions and carry unappropriated projects into the CIP review process for alternative funding.