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Laguna Beach adopts midyear budget changes; council shifts CIP funds to cover revenue shortfalls but keeps housing fund commitment
Summary
Laguna Beach council approved midyear budget adjustments March 11 to cover an estimated general‑fund shortfall caused by lower hotel and sales tax receipts, tapping capital fund balances and salary savings while preserving a previously promised housing‑fund deposit.
Laguna Beach city officials presented a midyear financial update March 11 that showed revenue shortfalls tied to lower hotel occupancy (transient occupancy tax) and reduced sales tax, alongside stronger than expected property‑tax receipts and investment income.
Finance staff recommended a package of technical adjustments and one‑time transfers to close an estimated general-fund shortfall. The package included returning inactive capital project funds to fund balance, recognizing one‑time increases in property and investment income, and appropriations to cover specific capital purchases (including a fire engine and planned beach access work). Staff also recommended a selective hiring freeze and recognition of projected salary savings to help balance the budget for the remainder of the fiscal year.
Council discussion focused on how to balance liquidity for capital projects against the city’s previously adopted commitment to place up to $500,000 of property‑tax overage into the housing fund. After deliberation councilmembers directed staff to preserve the housing fund deposit commitment and increase the recommended transfer from the capital improvement fund to cover the general‑fund gap rather than diverting the housing transfer. Council also directed staff to return with more explicit CIP timelines showing project initiation and expected completion dates and to continue seeking grants and revenue enhancements to decrease pressure on the general fund.
The measures the council approved included the technical midyear budget amendments and closing of identified inactive CIP projects, transfers between funds to cover specific invoices and a plan to fund certain one‑time capital needs. Council members emphasized process improvements — including speeding permitting to support local businesses — and requested further CIP schedule detail and potential pension or other long‑term options be reviewed as part of the FY 2025–26 budget.
Ending: The council's actions closed, for now, a projected midyear gap with a mix of one‑time transfers and internal savings while preserving the council’s prior housing‑fund commitment and asking staff to return with CIP timing, external grant pursuit, and options for longer‑term structural fixes.
