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El Centro council accepts FY2026 midyear budget; general fund projects about $1.3 million net surplus
Summary
City consultant Andy Heap told the council that updated revenue and one-time transfers have shifted the city’s FY2026 general fund outlook to an estimated $1.3 million net positive. Council accepted the midyear review 5-0 and staff will carry the numbers into the FY2027 budget development.
The El Centro City Council on March 16 accepted a detailed midyear review of the FY2026 budget that projects the city’s general fund will end the year in a stronger position than originally adopted.
Andy Heap, the city’s financial consultant, told the council the updated general fund revenue estimate is about $51.1 million—roughly $1.4 million above the adopted forecast—while expenditures are only modestly higher, leaving an expected net positive change of just under $1.3 million for FY2026. Heap attributed the improvement to several offsetting items: a $450,000 reduction in one‑time sales tax items, an identical $450,000 increase in interest earnings because of stronger cash balances, higher building-permit receipts, new grant receipts and opioid-settlement receipts that are restricted for specific uses.
Heap also described several one‑time funding adjustments that lift the city’s reserves, including nearly $6.2 million moved back to operating funds from three overfunded internal service accounts (workers’ compensation, unemployment and group health). That transfer is classified as one-time money and is already reflected in the midyear update.
“After updating the actuals through January and building conservative assumptions for the remainder of the year, it looks like you’ll have just under a $1.3 million net position to add back to reserves,” Heap said.
Council members asked for clarification about restricted sources and long-term obligations. Heap walked the council through expected CalPERS cost trends, the city’s OPED trust distributions (about $310,000 this year usable only for retiree health costs) and a $1.2 million ongoing labor placeholder carried in the forecast to reflect negotiated increases and compensation changes.
Measure P (the city’s major local sales-tax fund) remains a major capital source, Heap said, with approximately $3.5 million appropriated toward the Valley Point Center demolition and ongoing allocations for public safety and library debt service. Enterprise funds (water and wastewater) and the newly created special fire fund were also described in detail during the presentation.
Public comment that followed was uniformly supportive of the presentation. Peter Rodriguez thanked staff for the clarity of the briefing and urged the council to resolve labor negotiations early in the budget process.
The council voted 5-0 to accept the midyear budget review. Next steps include closing out the remaining months of FY2026, incorporating any actuarial updates (including final CalPERS reports due in late summer), and using the midyear forecasts to prepare the FY2027 proposed budget.
What the vote means: acceptance of the midyear review does not itself change appropriation authority beyond items already noted; the review updates the council’s picture of projected revenues, expenditures and reserves and informs upcoming budget choices.
Questions or follow-up: The finance committee and staff will return with preliminary year‑end results and a proposed FY2027 budget consistent with the midyear forecast.
