Santa Fe Springs council approves second-quarter budget updates; water utility flags $4 million billing shortfall

The Santa Fe Springs City Council on Feb. 21 approved the fiscal year 2024–25 second-quarter budget review and associated adjustments after receiving a detailed presentation from the finance director. City staff also reported a significant shortfall in the water fund tied to a prolonged billing-system outage.

Lana Dietrich, finance director, told the council the city is reporting a $2,100,000 surplus for fiscal year 2024–25 through the second quarter, driven largely by vacancy savings. “I’m happy to report that for the fiscal year 2024–25, we’re reporting $2,100,000 of surplus,” Dietrich said. The council was told the city’s unassigned fund balance is tracking toward about $43,000,000 in reserves — up from roughly $40,000,000 — and that staff recommends allocating $1,000,000 from an economic contingency to address unexpected events.

Dietrich described personnel and expense posture: the city currently has 199 filled positions with a vacancy rate of about 13 percent, and staff identified roughly $1,800,000 in vacancy savings for the first six months. Capital improvement program (CIP) spending totaled about $6,000,000 in the first half of the fiscal year, with another $6,000,000 anticipated in the next six months for previously approved projects.

On the water side, Dietrich and staff reported that the city’s legacy billing system failed for several months; as a result, the city issued average bills while staff rebuilt billing files. “For the second quarter, you’re looking at at least $4,000,000 of deficits,” Dietrich said, attributing that estimate to delayed billings and cash receipts. Staff told the council a new, tailored billing software has been completed and will begin trial runs next week; if cycles go as expected, staff will activate it and work on billing reconciliation. Staff also noted the city’s meters are largely analog and more than 20 years old, and that meter replacement or digitization will require funding.

The council voted to approve the second-quarter budget review and the recommended adjustments. There was a motion and second; a roll-call style tally was not recorded in the transcript and the mayor stated the motion passed.

Closed session: The council recessed into closed session earlier in the evening to discuss the two posted items. The city attorney reported the council received staff briefings and provided feedback but took no final action in closed session.

Votes at a glance: - Annual weed abatement public hearing: public hearing opened and closed with no speakers; council moved, seconded and approved the weed abatement action. (Motion/second: not specified; vote: passed.) - Item 7 — FY 2024–25 second-quarter budget review and modifications: motion and second; council approved the item. (Mover/second: not specified; vote: passed.) - Consent calendar (items 8–23): motion and second; council approved the entire consent calendar. (Vote: passed.)

Why it matters: Staff’s fiscal presentation shows the general fund currently tracking with a surplus and healthy reserves, but the water fund’s revenue collection problems create a sizable timing- and cash-flow issue that the council will need to address in upcoming budget study sessions. Staff said the new billing software and an audit of meter-account matches are underway and that additional budget discussion will follow.

Next steps: Staff indicated they will return with audit results, continue reconciling water bills, and include the water-fund shortfall as a topic in future budget study sessions. Council approved the requested second-quarter adjustments at the meeting and directed staff to continue the reconciliation and reporting work.