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Fortuna finance director reports mid‑year budget improvement; projects modest surplus for FY24‑25
Summary
Finance Director Aaron Felmy told the City Council that the general fund ended FY23‑24 with an $11,391 surplus and that mid‑year projections for FY24‑25 now show an estimated $30,515 surplus. Staff did not recommend amending the adopted budget at mid‑year and outlined next steps for the FY25‑26 budget calendar.
Finance Director Aaron Felmy presented the City of Fortuna’s mid‑year budget review for fiscal year 2024–25 on Feb. 24, reporting that the general fund closed fiscal year 2023–24 with a net surplus of $11,391 and that mid‑year projections for the current year now show an estimated $30,515 surplus rather than the previously adopted $90,533 deficit.
Felmy said the FY23‑24 surplus was driven primarily by a roughly $350,000 increase in investment income compared with the prior year, while one‑time COVID-era American Rescue Plan Act funds that had provided roughly $1 million per year in FY20–22 and FY22–23 were no longer available. He also explained that a large discretionary one‑time CalPERS payment in FY22–23 reduced salary and benefits in that year and therefore depressed FY22–23 expenditures compared with FY23–24.
On revenue assumptions, staff reported that HDL, the city’s sales-tax consultant, revised sales‑tax projections downward relative to the adopted budget, but property tax projections were modestly increased. Transient occupancy tax (TOT) showed slight declines; franchise-fee increases reflect higher PG&E rates. Felmy noted investment yields were at historic highs (about 4.5%) compared with a 15‑year average just over 1% and cautioned that yields are likely to decline later in the year.
On the expenditure side, departments generally are projected to finish close to adopted budgets; two previously adopted supplemental budget requests—the City Hall remodel ($95,000) and on‑call planning services ($65,000)—account for much of the projected increase in department operating expenditures. After accounting for those, staff said the general fund would be within the adopted budget.
Felmy outlined the next steps for budget work: Measure E committee department presentations on March 18, committee finalization April 1, a council special budget workshop in late April, a second workshop in early May to review enterprise funds, and a target budget adoption date of June 2, 2025. He told the council staff was not recommending mid‑year budget adjustments and that any supplemental budget requests would be brought forward as separate agenda items.
Council members asked no substantive questions during the presentation. The council received the report.
