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Milpitas adopts FY25–26 midyear budget amendments; general fund remains neutral
Summary
City Council approved FY25–26 midyear adjustments totaling $26.2 million across funds while keeping the general fund impact at $0; major drivers include reimbursements, OPEB payments, enterprise fund increases for water and sewer, and a $14.1 million redevelopment debt service obligation.
Milpitas — On Feb. 3 the Milpitas City Council adopted midyear budget amendments for fiscal year 2025–26 that adjust citywide appropriations by about $26.2 million while maintaining a neutral impact on the general fund.
Finance Director Lou Ferassi told the council the $26.2 million in midyear adjustments are covered primarily by reimbursements and fund‑balance draws in self‑supporting enterprise funds. "The total citywide midyear budget adjustments across all funds amounts to 26,200,000.0," Ferassi said during the presentation.
Major components: Staff described three general‑fund‑related adjustments totaling $3.7 million that are fully reimbursed: roughly $654,000 for fire mutual‑aid overtime reimbursements, $2.5 million for retiree medical (OPEB) payments, and $526,000 for developer‑funded environmental review services. The water fund will reflect an increase of about $2.2 million primarily for water purchase services; the sewer fund will increase by about $2.6 million driven largely by higher wastewater treatment costs under the city’s contract with San Jose.
Capital and other items: The midyear includes the addition of a grant‑funded pedestrian bridge on South Milpitas Boulevard ($3.0 million, Caltrans grant) and other CIP adjustments; staff said these are grant‑funded or drawn from appropriate fund balances with no general‑fund subsidy. Staff also noted a $14.1 million successor redevelopment debt service payment, fully offset by Santa Clara County tax‑increment reimbursements.
Budget controls and fiscal strategy: Ferassi and acting city management described multi‑pronged fiscal work streams — contract due diligence using a new Tyler system, organizational assessments, cost containment and revenue initiatives (including a fee study and business tax analysis). Staff said contract cleanup and closing unused encumbrances produced roughly $2.5 million in one‑time savings returned to reserves.
Council action and direction: Councilmember Chua moved and Councilmember Lam seconded adoption of the midyear budget amendments and related classification pay‑table updates; the motion passed on a recorded vote. Councilmembers asked for more detailed follow‑up reporting on p‑cards, overtime forecasting, vacancy impacts, and vendor contract reviews as work continues toward the FY26–27 budget discussions.
Next steps: Staff will incorporate study results into the operating budget review beginning Feb. 24 and return to council with more detailed project and contract reporting, survey results for rental assistance clients and RFP outcomes where applicable.
