Ojai finance committee reviews draft FY 2026–27 budget, flags reserve‑calculation concerns

The Ojai City Finance and Budget Committee spent its May 19 meeting reviewing a draft FY 2026–27 budget, with staff reporting that the city has received roughly 74% of its top three general‑fund revenue sources through April 2026 and that revenue pacing is slightly ahead of last year.

Finance staff told the committee that sales tax, transient occupancy tax (TOT) and property tax together account for the top three revenue sources and that the city has incorporated HDL consultants’ projections into the FY26–27 revenue estimates. “We are trending slightly ahead of what we had budgeted,” the presenter said in the packet review.

Why it matters: committee members focused on how the city calculates its beginning and ending fund balance and whether the published “unallocated” reserve figure is based on conservative budget assumptions or on updated projections. Finance staff said the budget book shows fund balances on a budget basis and that the figures will be updated to actuals after year‑end and audit adjustments.

Committee members pressed staff on a recent set of new columns showing April 30 year‑to‑date figures that were not in the original packet and asked for documentation. One member noted that stronger local home prices in Ojai are helping revenue collections, while another described an apparent puzzle: if expenses are projected to be favorable by roughly $1.2 million and revenues are also favorable, why does the fund‑balance forecast not reflect an equivalent increase?

Finance staff responded that the fund‑balance calculation in the budget book remains budget‑based and that a separate projections‑based calculation will show differences; staff also said they will walk committee members through the assumptions offline. The presentation reiterated the city’s balance‑budget policy and that, under current policy, the minimum reserve is set at 100% of the prior year’s general‑fund operating expenditures.

A point of contention was whether nonrecurring expenditures should be excluded from the reserve calculation. Multiple committee members said changing the reserve methodology—such as excluding one‑time items—amounts to an amendment of policy that only the City Council can adopt. One member urged caution about publishing precise unallocated numbers that have not been reviewed and recommended labeling such figures as unvetted forecasts.

Staff said transfers and deferred‑revenue accounting (for example, for a multi‑year grant award) complicate year‑end balances and that deferred revenue will be recognized as expenditures occur; the department noted some large balance‑sheet items will only be reconciled once audit‑produced starting balances are available. The committee asked staff to reconcile any inconsistencies between the summary and the detailed budget and to add percentage‑change columns or hover‑over explanations for large year‑to‑year variances.

Personnel and other fiscal items: staff reported a recent salary survey found total compensation for surveyed positions within about 5% of the market median. The administration proposed a limited set of internal promotions and partial‑year adjustments to help recruit and retain staff; the committee was told a closed‑session council review of the salary study is scheduled for May 26.

Next steps: staff said the committee will reconvene on June 2 for a follow‑up meeting that will include an auditing‑firm expert on the GANN limit and that the revised budget materials will reflect committee feedback and corrected numeric links.

There were no final appropriations or policy changes adopted at this meeting; the committee treated the packet as a working draft and asked staff for additional documentation and corrected tables before forwarding a budget to the City Council.