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San Gabriel midyear budget shows $1.4M projected deficit but reserves stay above policy level
Summary
Finance staff reported a midyear FY25–26 projection that raises expenditures by $2.4M and projects a $1.4M deficit, offset by an ending general fund balance of about $21.5M (roughly a 36% reserve), and proposed midyear adjustments including a $185,000 transfer to the Mission Playhouse.
City finance staff told the San Gabriel City Council on March 17 that midyear projections for fiscal year 2025–26 forecast higher expenditures and a modest midyear shortfall while reserves remain well above the city’s policy target.
Finance Director Wilco Holacula said the city adopted a FY25–26 budget with $57.7 million in revenues and $56.8 million in expenditures (a $933,000 net change). At midyear, revenues are projected effectively flat (about $24,000 higher than adopted) but expenditures are projected $2.4 million higher—largely driven by labor agreements and a police CAD appropriation—resulting in a projected net deficit of about $1.4 million. Holacula said the city’s projected ending general fund balance would be approximately $21.5 million, keeping reserves near 36%, well above the typical 25% best-practice threshold.
On revenue drivers, Holacula reported taxes are roughly $494,000 below adopted budget this midyear—impacts include property tax being lower by about $104,000, a $190,000 shortfall in utility user tax and slower transient occupancy tax receipts (~$196,000). Some other categories, including intergovernmental revenue and parking/permitting receipts, were above budget.
On expenditures, the finance director cited a $2.2 million increase related to adopted labor agreements and other midyear appropriations. Proposed midyear adjustments included a $185,000 transfer from the general fund to the Mission Playhouse to bring the Playhouse fund to a neutral position and other adjustments (totaling approximately $318,000 in additional changes). Holacula said the retirement fund faces ongoing pressure from CalPERS pension costs and was projecting a midyear deficit in that fund as well.
Staff recommended the council receive and file the midyear update and approve Resolution 2606 to effect the midyear adjustments; the council voted to approve the midyear adjustments and the resolution 5–0.
Holacula outlined next steps including a public budget study session on April 22 and a public hearing in June for adoption of the FY26–27 budget, and said staff would continue to monitor revenues and vacancy savings.
