Scotts Valley adopts guiding budget principles for FY 2025–26, sets reserve targets and timeline

The Scotts Valley City Council unanimously approved Resolution No. 630.45 adopting guiding budget principles to guide preparation of the fiscal year 2025–26 budget, city staff reported at the meeting.

Stephanie Hill, a staff member who presented the budget principles, summarized key policies: general fund reserves will aim for a 17% minimum with a 25% target of annual operating expenditures; the wastewater fund is to be self-sustaining through user fees; one-time revenues should be used for one-time expenditures; and debt will be used primarily for capital projects rather than ongoing operations. "Our general fund reserves aim to be 17%, minimum with a 25% target of our annual operating expenditures," Hill said.

Hill also outlined shorter-term budget work and dates: staff are preparing draft budgets now; the budget subcommittee will meet three to four times during April and May to review drafts; the planning commission will review the capital budget for consistency with the General Plan; staff plan to bring a preliminary roll-up to council in May and a hopeful adoption at the June 4 meeting, with final adoption by June 30 if needed to meet statutory deadlines.

Council members praised staff’s work on reserves and fiscal sustainability planning during discussion. A council member moved to approve Resolution No. 630.45; the motion received a second and the council voted "aye," with the meeting record showing the motion passed unanimously.

The staff presentation included financial details and clarifications: a FEMA and state reimbursement check of $50,000 was noted as a one-time reimbursement; the city has updated a cost-allocation plan that affects wastewater and overhead allocations; and the city is monitoring potential structural budget gaps and has committed to identifying mitigating options if the forecast shows deficits.

Votes at a glance: - Consent agenda: motion, second and unanimous approval (roll call recorded as all present members answered "here" at roll call). - Resolution No. 630.45: "Adopting guiding budget principles for use in preparing the fiscal year 2025–26 annual budget." Motion made and seconded; vote recorded as unanimous (5–0).

The council directed staff to continue budget preparations consistent with the adopted principles and scheduled follow-up review in the April–May budget subcommittee meetings and subsequent planning commission and council hearings.