Finance director: Madera’s FY2026–27 revenue outlook is cautiously positive but sales‑tax volatility keeps forecasts conservative

Finance Director Mike Lima presented the City’s fiscal year 2026–27 revenue outlook during a budget workshop on May 20.

Lima called out the “big five” revenue streams (sales tax, property tax in lieu of vehicle license fee, property tax, permit revenues and interest) as comprising roughly 65% of general‑fund revenues. He said sales tax is up about 3.6% year‑to‑date and remains the single largest uncertainty because receipts fluctuate month to month and some county pass‑through payments have not yet been posted. The city’s consultant projects a conservative sales‑tax estimate for next year and staff said it prefers to err on the side of caution because of economic and political uncertainty.

Property tax streams were described as steady and growing (property tax in lieu of VLF and assessed valuation increases), while permit revenues and development impact fees remain flat. Interest income has improved versus the prior year, adding several hundred thousand dollars to current receipts. Lima estimated the city’s working general‑fund revenue figure at approximately $43 million for FY2026–27, noting that some one‑time receipts in the current year will not recur.

Council members asked about the cannabis and hotel taxes, inflation effects on revenue and the potential need to use unrestricted fund balance for one‑time expenses pending the expense side review (scheduled for later budget meetings). Lima said staff will continue to refine both revenue and expense projections before the final budget and highlighted the risk that revenue growth may not outpace inflation and cost pressures.

Next steps: staff will present expense assumptions in a later session (expenses presentation scheduled June 17) and aim to return with a final budget for adoption in late June.

Outcome: Informational workshop; no council vote required.