Merced council hears midyear budget showing $2.2 million positive carryover, approves multiple adjustments

Finance Officer Venus Rodriguez presented the city’s midyear budget review on March 2, telling the Merced City Council that the general fund closed fiscal 2024‑25 roughly $2.2 million higher than expected and that staff proposed a set of midyear adjustments for FY2025‑26.

"We're actually a little ahead there — ending at about $14,000,000," Rodriguez said, describing a mix of higher revenues and departmental savings that produced the positive variance.

The presentation highlighted revenue gains in sales tax (up about 11% on a cash basis for a recent quarter), secured property tax and vehicle‑in‑lieu receipts. Rodriguez reported that two reconciled sales‑tax quarters gave confidence in the upward trend and that the city had received roughly 54% of its sales‑tax budget through the most recent reporting period.

Councilors used the discussion to probe the underlying drivers and timing of revenues. Council Member Jean asked whether the $2.25 million improvement was driven by cost savings or tax receipts; Rodriguez said it was a mix of both. Council Member Smith praised staff stewardship and urged the council to note the stronger starting balance when considering supplemental requests.

On the expenditure side, Rodriguez summarized departmental midyear asks: $20,000 to finish a city clerk remodel; $60,000 for Fire Department weed‑abatement work and $60,000 in AED replacements compatible with new ambulance equipment (to be funded from Measure Y); roughly $20,300 for police software that had been inadvertently excluded from Measure Y; fleet reauthorizations for equipment packages totaling about $109,645; and a combination of general‑fund and affordable‑housing fund transfers to address housing administration shortfalls caused in part by unfinalized CalHome loans.

Rodriguez explained the CalHome administration gap: the city’s agreement with Self‑Help Enterprises left an unmatched administrative shortfall of roughly $72,007.73 after grant reimbursements and uncompleted loans. "We had 11 applications that were preapproved but families chose not to move forward," a staff member added, explaining why expected admin reimbursements could not be claimed.

Council debated a late proposal from Council Member Harris to add a $30,000 supplemental appropriation for a tortoise exhibit at the zoo to be paid from the general fund. Several council members expressed concern about setting a precedent for dais‑added budget items; Council Member Smith said he would vote no to avoid an unplanned precedent. The tortoise supplement failed to secure majority support.

The council voted to approve the bulk of the midyear package, with the personnel change to delete a payroll supervisor and add a senior accountant passing after a separate vote. The approved actions reallocated and appropriated funds across departments as recommended by staff; the council also asked for additional follow‑up on several items, including a request to normalize the Measure Y sales‑tax graph to avoid misleading swings in historical charts.

Next steps: staff will implement the appropriations approved tonight, return with any outstanding SB707 implementation items in the next two meetings, and bring forward any additional specific requests for the upcoming budget cycle.