Midyear review: Fortuna still faces a general‑fund deficit despite CalPERS payment savings
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Summary
City staff reported the general fund ended FY24‑25 with a $180,000 deficit and project a FY25‑26 deficit of about $1.75 million; removing a $1.5 million discretionary CalPERS payment leaves an adjusted deficit of roughly $254,000.
Fortuna — City staff presented a midyear review for fiscal year 2025–26 that shows mixed revenue signals and a continuing general‑fund shortfall.
Finance presentation materials reviewed by staff show that tax and fee revenues were essentially flat year over year, with only a $17,000 increase, while sales tax revenue remains below the peak of FY21‑22. The city ended FY24‑25 with a $180,000 net deficit, driven primarily by three items that rolled into that year: vehicle purchases from a prior budget, a delayed chimney‑repair project and a $112,000 city hall remodel expense approved by supplemental budget request.
Staff projected a FY25‑26 deficit of about $1,750,000. Aaron, the presenter, told the council that if the $1.5 million discretionary CalPERS payment approved by council is excluded, the adjusted deficit is approximately $254,000 — an improvement of about $125,000 from the adopted budgeted deficit of $380,000. "That payment will result in an estimated almost 1,250,000.00 in interest payment savings to the city," the presenter said when explaining the rationale for the CalPERS payment.
On revenue, staff said property tax receipts are expected to be slightly higher than budgeted based on preliminary analysis with HDL (an outside tax consultant), while sales tax is projected to be down about 6% versus the FY21‑22 peak, a trend expected to persist into FY26‑27 and exert continued pressure on the general fund.
Spending trends were described as largely on track for most departments, with exceptions where supplemental budget requests (SBRs) have already been approved — including a $70,000 council allocation for general consultants tied to the Fortuna strategic plan, a $1.5 million discretionary CalPERS payment, and a $110,000 addition of a senior planner in community development.
Staff stressed that no supplemental adjustments to the current adopted budget are being recommended at this time; council can expect further discussion at upcoming budget workshops and special meetings in April and May ahead of final adoption in June.
The council thanked staff for the update and had no oral public comments on the budget item.