Committee reviews Dana Point draft long-term financial plan and two-year budget; staff presents conservative revenue assumptions

Dana Point staff presented a draft long-term financial plan and proposed operating budgets for fiscal years 2026 and 2027 at the Financial Review Committee meeting on April 29, describing a structurally balanced plan, conservative revenue assumptions and multi-year capital investments.

Staff said the proposed general fund revenues are $51,400,000 for FY26 and $52,700,000 for FY27. Expenditures before transfers were presented at roughly $47,200,000 for FY26 with $4,000,000 in transfers to produce a total FY26 budget of about $51,100,000; FY27 total expenditures were presented at $52,600,000. Staff said the proposed two-year plan shows a small surplus (just over $200,000 for FY26 and just over $100,000 for FY27) while leaving reserves funded in accordance with city policy, including an unassigned fund balance that is budgeted slightly above the city’s 4–7% target.

Staff described major revenue drivers: TOT and property tax. The draft assumes TOT of $17,400,000 in FY26 (and $17.7 million in FY27), based on an FY25 estimated TOT of $16.5 million and an assumption that key hotels will resume full operations; staff noted one hotel is expected to remain closed in the first half of the year. Property tax projections for FY26 were presented as $12,400,000 and $12.9 million for FY27, reflecting an assumed 4.4% assessed-value increase effective January 2025. Sales tax was forecast relatively flat for FY26 at about $7,000,000 and to resume normal growth (3.5%) in FY27.

Expenditure drivers include the Orange County Sheriff’s Department contract, which staff presented as the city’s largest ongoing expense. The FY26 sheriff contract was presented as $16,000,000, a 4% increase from FY25; staff noted FY26 is the final year of the current labor agreements and that labor negotiations are expected later in the fiscal year. Personnel costs were projected higher in FY26 largely because staff included a one-time CalPERS payment of $1,850,000; excluding that payment, staff said total personnel costs represent roughly a 6% increase driven by minimum-wage and merit adjustments, pension and health-benefit cost trends, and increased part-time hours.

Staff outlined the two-year capital improvement program (CIP), with approximately $6.4 million programmed in FY26 and $7.4–7.5 million in FY27. Notable projects highlighted in the presentation included continued residential undergrounding and the Stonehill Drive undergrounding design (with construction funding assumed in the long-term plan), Doheny Village connectivity improvements and the Dela Vista Park modification project. The facilities improvement fund was described as having a planned two-year investment of $2,700,000 to address building and park maintenance needs on a scheduled basis rather than reactively.

Committee members asked questions about staffing, the sheriff contract, alternative approaches (including combining deputy services with adjacent cities or altering scope of work), fee studies to recover permit and technology costs and the ClearGov budgeting software used to prepare the packet. Staff said development and permit fees are intended to be full cost-recovery, although a fee study is due and will be considered next fiscal year. Staff also said one-time software implementation costs are expected to revert to recurring subscription and licensing fees after the upgrade.

No formal committee vote was required to advance the draft; staff said the draft will be discussed at a budget workshop on May 6 and that the committee will have time to review materials before subsequent council consideration.