Valley Center presents first draft 2026 budget as assessed valuation jumps about 15%; employee benefits fund flagged

City staff presented the first draft of Valley Center's 2026 budget at the council meeting, reporting an estimated total assessed valuation of $87,769,650 (a roughly 15.172% increase over last year), a proposed mill levy rate of 53.656 and a number of fund-level changes. Staff emphasized uncertainty in the employee benefits fund and confirmed the city's ARPA funds have been spent and the account closed.

The presenter said the valuation increase came from new construction ($4.3 million), property changes ($1.25 million), a $1.3 million increase in the TIF district and higher assessed values for existing properties. Using those numbers, staff calculated a revenue-neutral rate of roughly 47.592 mills and proposed a mill levy of 53.656 mills for the 2026 budget year.

Staff described concerns about employee benefits reserves: a recent close-out of 2024 claims produced a large number of finalized bills and reimbursements settled under the city's stop-loss arrangement. The presenter said, "we are pretty much out of reserves in this account, and we need to dedicate some additional mills to it," and asked council to consider a one-time transfer to rebuild reserves. The budget draft includes a proposed one-time transfer of $250,000 (fund-source designated in the draft) to employee benefits to cover unusually high recent claims.

Other notable budget items and clarifications included: - The TIF district assessment rose substantially (from about $94,000 last year to roughly $1.366 million in the draft), which drove much of the valuation increase. Staff said the county provided valuation numbers used in the draft. - The city is proposing a one-time migration of servers to a cloud-hosted environment (projected one-time cost of $34,615 with annual savings thereafter). - Community development will receive a new advertising fund next year (approximate $20,000) intended to support housing and economic development promotion. - The budget draft projects modest net operating changes and shows the city will manage interest income by directing earnings to funds with specific reserve needs.

During the presentation council members asked if the city levied a cemetery tax; staff clarified the city currently does not have a dedicated cemetery tax and that developing a cemetery master plan had been discussed for the coming year. Staff said a more detailed budget presentation and additional documentation on employee benefits claims will be provided in a subsequent budget meeting. No formal vote on the budget occurred at the meeting; the presentation was informational and part of the ongoing budget process.