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Capitola adopts FY 2627 budget and five-year CIP; finance staff to return with updated revenue figures in September
Summary
Council unanimously approved the FY 2627 operating budget and five-year capital improvement program. Finance staff highlighted a tight structural position, $1 million in recent insurance proceeds, pending FEMA reimbursements, and a projected structural imbalance beginning in FY 2030.
The Capitola City Council unanimously adopted the FY 2627 operating budget and the five-year capital improvement program on June 11 after a presentation from finance staff and public comment.
Finance Director Jim told council the proposed budget shows an estimated ending general fund balance of $94,957 and that reserves remain approximately $899,000 below policy targets. He warned that rising PERS costs and the city's current revenue trajectory create structural pressure beginning in FY 2030; the staff presentation therefore recommended cautious use of one-time funds while monitoring major revenue streams.
Key fiscal points presented by staff: - The city received $1,000,000 in insurance proceeds this week related to storm damage; staff recommended reserving the payment pending confirmation of FEMA reimbursements. - FEMA reimbursements remain under review and staff will report changes when they become available. - Staff estimate about $300,000 in building permit revenue later this year from a large project and noted recent back TOT payments of roughly $300,000 under a settlement agreement. - The budget uses a planned $250,000 of Measure Y funds for projects this year and shows a projected structural imbalance starting in FY 2030 without sustained new revenue.
Council and public feedback: Residents urged the council to pursue both revenue and expenditure options, run sensitivity analyses, and keep scrutiny high on parking and TOT receipts (two major near-term revenue drivers). Council members asked staff to return with updated sales-tax and parking revenue figures in September (final sales-tax data for the fiscal year will be available in November), as well as an implementation plan for the new regional records-management system that should improve data reporting.
Outcome and next steps: The council approved the resolution adopting the FY 2627 budget and CIP, 5-0. Staff said they will keep the $1 million insurance payment in reserves while FEMA status is clarified and will return to council in September with final sales-tax figures and any recommended budget adjustments ahead of the midyear review.
