El Segundo lowers sales‑tax forecast, approves midyear adjustments amid revenue shifts
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Summary
City Treasurer Chung told the council staff recommends a conservative $2 million reduction in sales‑tax revenue tied to a local business closure; council approved midyear adjustments and minor position reclassifications 4‑1.
El Segundo’s City Treasurer and CFO Chung told the City Council on Feb. 17 that staff recommends reducing the city’s sales‑tax revenue estimate by $2 million for planning purposes after the closure of a local office for InsightDirectUSA.
Chung summarized year‑to‑date financials: general fund revenues recognized were about $29.5 million (roughly 28% of the budget) and general fund expenditures were approximately $46.4 million (44% of budget). Chung said InsightDirectUSA closed its El Segundo location in January 2025 and that the city began to see the sales‑tax allocation impacts in mid‑2025. “I am asking council to decrease our sales tax revenue by $2,000,000 during this midyear,” Chung said.
Staff proposed a set of midyear adjustments that together represent a modest net change (revenue reductions and small expenditure increases, including reclassifying two staff positions). The adjustments include an increase in plan‑check revenue projections tied to contract pass‑throughs and a proposed $522,000 increase on the general‑fund expenditure side coupled with an offsetting revenue realignment.
After discussion about business license compliance and other revenue‑diversification ideas, council voted 4‑to‑1 to amend the fiscal year 2025–26 revenue and appropriations (one member opposed on principle to midyear budget changes). Council directed staff to return with further detail at the May budget study session and described steps to pursue business license compliance work and vacancy‑recruitment incentives for underused properties.