Midyear report: Beaumont shows midyear surplus after $6.2 million state audit correction; staff recommends several budget amendments

Beaumont finance staff presented the city’s midyear budget report, reporting general fund revenues of $28,100,000 and expenditures of $24,400,000 as of Dec. 31, 2024. Staff told the committee that revenues exceeded expenditures by about $3,600,000 at the midpoint and that the general fund’s 16 percent cash‑flow reserve sits at $11,500,000.

Staff said a $6,200,000 one‑time audit correction from a fulfillment center—identified through the California Department of Tax and Fee Administration (CDTFA) audit and noted by HDL—accounted for the large sales tax increase relative to the prior midpoint. Finance staff said HDL will exclude that one‑time correction from future budget projections when preparing forecasts. Overall, staff projected general fund revenues to come in $11,000,000 over budget and expenditures to finish approximately $5,900,000 under budget, producing an estimated $16,900,000 positive variance for the fiscal year; staff cautioned these are estimates and not final results.

The report included department‑level midyear standings, wastewater and transit fund updates, and recommended budget adjustments. Recommended amendments included use of existing grant balances (for example, $94,778 in a public works grant), allocation of SB 1383/LEAP grant funds for permitting system upgrades ($10,275), budgeting the remainder of newly approved positions ($53,881), and a transfer of $15,734 from streets maintenance to public works for DMV costs related to a dump truck. Staff also recommended adjusting self‑insurance fund estimates for interest and settlement costs.

A committee member asked whether the fulfillment‑center correction could be detected earlier; staff replied that the state audit flagged the correction and HDL performs its own reviews and audits but one‑time corrections are not always predictable. Another member asked whether transient occupancy tax for short‑term rentals is being collected; staff said the city is not collecting short‑term rental TOT because the city has no ordinance in place and that council will consider a short‑term rental ordinance and subcommittee review in the coming months.

After discussion, a committee member moved and a colleague seconded to receive and file the midyear budget report; the motion was approved by voice vote and recorded in the meeting transcript as passed.