Valley Center finance director outlines 2025 budget plan, mill‑levy change and fiscal pressures ahead

City finance staff presented a comprehensive budget update on July 18 that covered the proposed mill levy, reserves, enterprise‑fund transfers, planned software upgrades and future bond obligations.

Staff said the budget plan includes a proposed 1.2‑mill change (presented as a 1.2‑mill reduction in the packet) and provided mill‑rate figures in the presentation. The finance presentation explained how property valuation growth interacts with mill rates and showed revenue and expenditure projections across general, bond and enterprise funds. Staff cautioned that some transcripted mill‑rate figures were given imprecisely in the meeting packet and recommended review of the official budget documents for exact mill values.

Key budget points discussed: - ERP/software: The city’s financial software (Tyler, current version) is aging and staff identified 15 ERP options; the budget includes $35,000 for an ERP accounting upgrade and additional funds for server cloud migration and departmental software needs. - Bonds/reserves: Staff said bond‑interest forecasts will increase sharply in 2027 (forecast bond payments rising to about $5.5 million in 2027) and recommended increasing reserves in bond and interest funds to prepare for upcoming general-obligation and temporary bond payments. Staff described a planned one‑time transfer of roughly $1,005,000 from a recreation account into bond interest reserves to strengthen the position in 2027. - Employee benefits: Staff warned of volatility in employee‑benefit costs and the potential for a negative fund balance this year; measures proposed include transfers from water reserves ($250,000 one‑time) and additional budgeted transfers to stabilize the benefits fund. - Enterprise funds: The water and sewer funds include requests tied to vehicle and equipment (a back truck/vactor and upgrades) and transfers to support benefit obligations; staff said the planned water treatment plant project is large (~$20 million) and cautioned that enterprise reserves and transfers will need careful management to fund future capital needs. - Legislative risk: Staff noted a prior legislative push to cap property‑tax increases (discussion of 2–4%) remains a potential risk and could materially limit future property‑tax revenue growth if enacted.

Council asked questions about the mill‑rate numbers and the water treatment plant funding; staff said some specifics will be clarified in formal budget documents and that further hearings (revenue‑neutral rate hearing and budget hearing) are scheduled per the budget calendar.

Next steps: Staff said notifications to the county have been sent and hearings are set for Sept. 2 (revenue‑neutral rate hearing and budget hearing); staff asked council to review the 17‑H budget letter and the presentation for details and follow-up.