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Finance staff: FY26 first-quarter finances broadly on target, but sales tax softness and GMT reimbursements raise concerns
Summary
Finance staff reported that FY26 first‑quarter revenues and expenditures were largely in line with budgeted estimates but highlighted weakening sales‑tax growth, uncertainty around GMT reimbursements, and some timing effects on capital and personnel accounting.
City finance staff presented the FY26 first‑quarter financial report to the Finance & Budget Committee on Dec. 1, saying overall revenues and expenditures are "in line with budgeted estimates" while flagging several items for monitoring.
Finance presenter Mr. Stoyanov told the committee that, through November, sales tax collections were down 0.3% year‑over‑year while use tax rose 5.8%, leaving combined sales and use tax up 0.9%. He identified the Ground Emergency Medical Transportation (GMT) reimbursement program as an area of concern and said staff "may have to reduce our revenue forecast on that side" pending internal discussions about the program's impact.
On expenditures, personnel costs ran above the 25% first‑quarter target at 26.7%, a figure Stoyanov said would normalize once roughly $2.8 million in staff time charged to capital projects is correctly posted. Finance staff also noted higher early‑year capital finance charges and transfers out; staff cited a $256,000 transfer for Green Street operational costs that occurred at the start of the fiscal year.
Committee members asked whether the sales‑tax dip represents ordinary volatility or a longer trend. Stoyanov said use tax has been a faster‑growing category recently but that sales tax long‑term averages had been roughly 2–3% growth; he said current sales‑tax performance is a concern and recommended continued monitoring.
On construction‑cost pressures, staff asked for more time and suggested that public‑works procurement staff provide project‑level assessments. A staff member said tariff language had appeared in procurement contracts and added that procurement manager Lisa Hatt "got that negotiated out of 1 of our recent contracts." Staff committed to return with more granular cost information.
The committee did not take formal budget actions at the meeting; staff were directed to continue monitoring revenue trends, to reassess the GMT forecast as needed, and to report back with procurement and project‑level cost details.
