Santa Barbara City finance committee accepts clean audit, approves FY2025 annual financial report

The Santa Barbara City Finance Committee on March 10 reviewed the city’s Comprehensive Annual Financial Report for the fiscal year ending 2025 and unanimously approved the staff recommendation to accept the report.

City Finance Director Kate D. Martini introduced the report and turned the presentation over to staff and the city’s independent auditor. M C Cauley summarized government‑wide results, saying, “La posición neta aumentó aproximadamente 24000000 con respecto al año anterior,” while noting that much of that increase is restricted and not available for immediate use.

The auditor described the scope of the audit and delivered an unmodified, clean opinion. “Nuestra opinión este año es inalterada y sin modificaciones,” the auditor said, and added that no significant deficiencies or adjustments were required.

Why it matters: staff and the auditor told the committee that the city’s stronger net position largely reflects the valuation of long‑lived capital assets — buildings, infrastructure and equipment — which are not liquid. Committee members pressed staff on liquidity and reserve levels because available cash is what the city would rely on in an emergency.

Staff reported specific fiscal highlights: tax revenues increased (roughly $7.3 million year‑over‑year), total revenues for FY2025 were presented at about $188.8 million, and the government‑wide net position rose by about $24 million compared with FY2024. At the same time, staff said many balances are committed under the city’s reserve policy (adopted by council resolution) and that unassigned fund balances showed a deficit relative to the city’s target. M C Cauley told the committee that “nuestras reservas están disminuyendo” and that reserves have been trending downward for just over two years.

The presentation also reviewed enterprise fund performance. Most enterprise funds ended the year with positive results, but Clean Energy and Downtown Parking underperformed versus the prior year; Downtown Parking’s fund balance remained negative by slightly more than $2 million, staff said. Staff emphasized that several enterprise funds are capital‑intensive and maintain additional reserve requirements to stabilize future capital projects.

Councilmember Armon, who opened public questions and praised the audit, asked how the city could show a stronger net position while still facing operating deficits and low liquidity. Armon said, “Es 1 de mis informes favoritos,” and pressed staff to explain the practical implications for budgeting and debt capacity. Staff responded that net position is driven by non‑liquid capital values and that cash and unassigned fund balances are the metrics for immediate fiscal flexibility.

The committee moved to approve the staff recommendation to accept the Comprehensive Annual Financial Report for FY2025; the motion was seconded and passed unanimously by members present. Staff said the committee will receive a third‑quarter update in May and that reserve management will be a focus in the FY2027 budget cycle.

The committee adjourned after the vote.