Laguna Beach studies delegating routine budget transfers to city manager; residents urge caution

Laguna Beach City Council held a study session to review proposed changes to municipal code chapter 3.24 and a draft council policy that would let the city manager make routine budget transfers within the same fund while reserving council action for changes that increase total appropriations. Michelle Banigan, the city's director of finance, led the presentation and said the code has "not been updated since the eighties," arguing some dated provisions — including a fixed May 1 deadline for providing the proposed budget and a hard-coded $400,000 reserve figure — should be modernized.

Banigan said staff wants to remove specific calendar dates from the code to allow practical flexibility in meeting the budget schedule and to avoid hard-coded dollar amounts that become obsolete as the budget grows. "So the red line changes were to change that dollar amount. We're not gonna change the percentage. Want to keep that 10% reserve," she said, adding staff may instead keep only the percentage and omit a fixed-dollar figure.

On operational authority, Banigan recommended shifting budgetary control from the department level to the fund level and delegating administrative transfers within a fund to the city manager, with council approval required if total fund appropriations change. She described the change as an efficiency measure to reduce repeated small amendments to the council while preserving fiscal accountability: "If the total general fund appropriations were to go from 96,000,000 to 96,000,001, we would need to come to city council."

Council members pressed staff on safeguards and thresholds. One council member said a cap makes sense to prevent erosion of the council's role; staff suggested setting dollar thresholds in the policy rather than the municipal code. Banigan noted current practice allows department-level transfers up to $20,000 and said staff could propose a cap higher than that for manager-level authority and exclude capital projects and assessment district funds governed by bond documents.

Transparency measures were central to the discussion. Banigan proposed producing a quarterly budget-versus-actual analysis and attaching a list of all administrative budget adjustments made that quarter so both council and the public could track transfers. Council members suggested pairing that with a lighter monthly data export for visibility. "We could do a monthly report that just spits it out from the finance system'a difficult-to-read account-level document'but the analysis would come quarterly," Banigan said.

Public commenters urged caution. Resident Mary Locatelli said she had "no problem" with intra-department transfers delegated to the manager but asked council to reconsider removing the requirement that the council approve the creation of new funds, citing the COVID fund as an example of restricted revenues that should be accepted or closed with council awareness. Robin Hall said removing council oversight "weakens those controls" and warned that moving from monthly to quarterly reporting "reduces the city's ability to respond in a timely manner to emerging issues," given ongoing fiscal strains.

Council members signaled varying comfort with the proposals: several said they supported staff's goals for efficiency and better quarterly analysis but wanted concrete thresholds and a transparent reporting attachment. Staff indicated the next step is to bring a redlined ordinance for first reading and a formal policy (as an attachment) to a future meeting for council consideration. No formal vote was taken during the study session.