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Midyear review: Palos Verdes Estates projects smaller-than-expected fund shortfall and recommends targeted amendments
Summary
Staff reported that fiscal-year 2025–26 midyear numbers show a modestly improved beginning fund balance and recommended targeted budget amendments, including reclassification of legal settlements and an approximately $150,158 augmentation for weed-abatement timing; council received and filed the report and approved listed amendments.
Palos Verdes Estates — City finance staff told the council Feb. 10 that the midyear review for fiscal 2025–26 shows the city is projecting a manageable deficit but with a higher-than-expected beginning fund balance. Staff reported an improved beginning general-fund balance of $24.9 million (an increase of about $1.1 million from prior estimates) and projected a year-end fund balance near $22.8 million, above the city’s minimum reserve threshold.
Noah, the finance presenter, said property tax remains the largest revenue source (about 44.7% of total revenues) and overall revenues are tracking close to adopted assumptions. Staff noted savings in salaries and benefits (projected savings around $471,000) partially offset by higher contract services, and proposed budget adjustments for recorded but unbudgeted legal settlements (one identified settlement of $63,740) and other technical reallocations.
Council discussed whether current projections adequately reflect pending legal fees and settlements and asked staff to continue refining estimates. Staff proposed a series of workshops in March–April and an initial budget presentation in May to support the FY27 development process.
The council voted by voice to receive and file the midyear report and approve the fiscal-impact listed amendments.
Council also directed staff to work with consultants (LSL) and the finance advisory committee to prepare longer-range modeling and a holistic plan that addresses reserves, pension liabilities, and capital needs before any permanent hiring decisions in finance.
