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Scotts Valley City Council adopts midyear budget amendment amid lower sales tax and delayed federal reimbursements
Summary
The City Council approved Resolution No. 630.44.1 to amend the FY 2024–25 budget after staff warned of declining sales tax projections and $1.4 million in Federal Highway Administration expenses that will be reimbursed later.
Scotts Valley City Council on Feb. 18 approved a midyear amendment to the fiscal year 2024–25 budget after staff reported weaker sales-tax projections and temporary general-fund constraints tied to delayed federal reimbursements.
Finance staff presented the midyear review and the recommended amendments, telling the council that the FY 2023–24 audit closed about $800,000 better than budgeted, but the city must recognize roughly $1.4 million in Federal Highway Administration (FHWA) expenses in the general fund before reimbursement. City Manager Lagot and the Finance Director said the city expects about $2 million in reimbursements, possibly received by 2027, and proposed modest revenue and expenditure adjustments that net to about a $100,000 increase in the FY 2024–25 budget.
The midyear review outlined several revenue shifts. Sales-and-use-tax projections were lowered by $400,000, while utility-user-tax (UUT), permit fees and other charges came in stronger. Staff also reported roughly $100,000 in savings from lower contract-service needs as departments regained full staffing. The finance presentation noted that FHWA reimbursements may be about two years out, which creates an interim constraint on the general fund.
Council members thanked staff for the detail and responsiveness. "I am . . . a little bit nervous about our fund balance here," Council Member Clark said, adding that the council would continue to watch reserves while waiting for reimbursements. Several council members praised the finance team and noted that hiring staff had delivered operational savings and improved capacity to process revenue-generating work.
After discussion, the council voted unanimously to accept the financial report through Dec. 31, 2024, and to adopt Resolution No. 630.44.1, amending the FY 2024–25 annual budget for the revenue and expenditure adjustments recommended in the midyear report. The motion was made and seconded on the council floor; the vote was recorded as unanimous.
The meeting also included unrelated public comment on housing policy and concluded with a closed session under Government Code section 54956.8 on real property negotiations for 360 Kings Village Road; the council reported no reportable action after closed session and adjourned.
