West Covina council adopts long‑range financial forecast projecting short deficits then a return to surplus

The West Covina City Council on Sept. 16 approved the city’s long‑range financial forecast for fiscal years 2026 through 2030 and accepted the finance director’s assumptions and revenue projections.

Finance Director Karen (last name not specified in the meeting record) presented the forecast, saying the city’s general fund — which supports core services including public safety, planning and parks — derives roughly 77% of revenue from property and sales taxes. The presentation used a 10‑year average for property tax growth and HDL Associates’ consultant outlook for sales‑tax growth. The director said the city applied a 3.18% consumer price index assumption for other revenues and used CalPERS actuarial reports to estimate pension costs.

The forecast includes several material assumptions: a $1.5 million annual revenue line tied to a refuse franchise agreement in 2026, and a $3.0 million property sale reflected in the 2027 projection. Under those assumptions the forecast shows an estimated surplus of about $900,000 in 2026 and $2.5 million in 2027 (the latter including the one‑time property sale). The plan projects a deficit of roughly $460,000 in fiscal 2028 and a larger deficit in 2029, with the model returning to a projected surplus of about $860,000 in 2030 as pension increases moderate.

During council questions, members asked whether the best fiscal strategy was to reduce recurring costs or to find recurring revenue sources. The finance director replied that both approaches would help; she confirmed recurring general‑fund revenue increases would strengthen reserves and allow the city to consider a Section 115 pension trust if additional surplus becomes available.

Council members also asked whether the city had the internal capacity to pursue grant funding rather than hiring consultants. The finance director said staff includes grant‑capable employees but that external consultants have been useful in the past.

The council approved the forecast and associated actions by a 5‑0 roll call. The roll recorded Cantos — Aye; Diaz — Aye; Gutierrez — Aye; Mayor Pro Tem Lopez Viado — Aye; Mayor Wu — Aye.

Clarifying details provided at the meeting included: the CPI assumption of 3.18% (Los Angeles‑Long Beach‑Anaheim area); sales‑tax growth assumptions of 3.5% in 2026, 3.2% in 2027 and 3.0% thereafter; and that salaries are modeled with 2.8%–3% increases per assumed MOUs. The finance director emphasized that reserves (the unassigned fund balance) are projected to meet or exceed the city’s 18% policy under the forecast.

The council directed staff to continue monitoring revenues, to present any recommended changes to recurring revenue generation, and to return as needed on potential use of a Section 115 pension trust should surpluses materialize.