HomeMy WebLinkAbout020626 MID YEAR OPERATING BUDGET
MID-YEAR 2025/26
OPERATING BUDGET UPDATE
BACKGROUND
The Annual Planning and Goal Setting Workshop provides an opportunity to review the
status of all Town revenues and operating expenditures through the midpoint of the fiscal
year on December 31, 2025. This update highlights changes to the 2025/26 Operating
Budget (Budget) approved by the Town Council in June 2025 and sets the stage toward
planning for the upcoming 2026/27 fiscal year.
The budget review focuses on key revenues and expenditures, identifies potentially
significant deviations from the budget adopted last June and recommends revenue or
expenditure adjustments that may be required. The formal mid-year financial report will
be presented to the Town Council for consideration at the February 17, 2026 Town
Council meeting.
As of December 31, 2025, revenues are tracking ahead of the approved Budget forecast,
while overall expenditures are on track to finish the fiscal year within budget. The
Town’s overall fiscal condition remains strong, and the Town expects to finish the fiscal
year on a positive note.
SUMMARY
Budgeted revenues and expenditures are carefully and closely monitored throughout the
fiscal year. Town revenues are received during the course of the year, at monthly,
quarterly, biannual or annual intervals. Receipt of monthly revenues, in particular sales
tax, can lag as much as 30-60 days behind. Therefore, the mid-year review focuses on
identifying any negative deviations from the revenue forecasts included in the 2025/26
Budget. A mid-year revenue comparison covering the past five fiscal years further helps
to identify trend deviations from prior years.
Actual expenditures are tracked and compared against expenditures that were approved
with the Budget. As with revenues, expenditures do not occur in uniform increments
over the twelve month fiscal year. The Town’s accounting systems allow all expenditures
to be tracked against the same point in time for prior fiscal years.
Overall mid-year revenues are on track to exceed budget forecasts with expenditures on
track to finish the fiscal year within the total budget appropriation of $41.5 million. In
addition, the 2024/25 Annual Comprehensive Financial Report identified a positive fund
balance of $9.22 million for the prior year.
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Ten-year forecasts cover fiscal year 2025/26 through 2034/35. The increase in Town-
wide Lighting and Landscape Assessment District (LLAD) assessments approved by
property owners last year significantly improves special revenue forecasts for 2025/26
and beyond. Additionally, re-payment of the loan from the former CDA to the Town will
be retired in 2026/27, reducing general fund revenue by $1.1 million. However, revenue
attributable to re-payment of the loan from the former CDA to the Town ceases in
2025/26, reducing general fund revenue by $659,401.
The Town continues to monitor a variety of factors that affect and influence the economy.
Actions taken by the federal and state governments that affect policy, inflation levels and
interest rates are among variables having potential to impact the Town. These, along with
other trends and factors have the potential to impact availability and costs for utilities,
materials and supplies, contracted services and personnel moving forward.
MID-YEAR 2025/26 OPERATING BUDGET STATUS
At mid-year, total revenues are positive in comparison to the budget forecast while total
expenditures are within approved budget appropriations. Overall fiscal condition
remains strong with the fiscal year expected to end positively in comparison to the
budget. Mid-year expenditures are largely tracking within budget.
REVENUES
Total revenues of $45.0 million were forecast for 2025/26, a 6.9% increase from 2024/25.
Table 1 illustrates revenues received through mid-year. Exhibit A to this memorandum
expands this summary to show a mid-year revenue comparison for the last five fiscal
years.
Table 1
Mid-Year Revenue Summary
Budget Mid-Year % of
General Fund Forecast Actual Total
Property Tax $18,900,000 $ 8,487,530 44.9%
Sales Tax $ 6,400,000 $ 2,861,498 44.7%
Property Transfer Tax $ 465,662 $ 194,214 41.7%
Transient Occupancy $ 144,130 $ 29,371 20.4%
Business License $ 350,000 $ 325,765 93.1%
Franchise Cable $ 824,180 $ 172,574 20.9%
Franchise Solid Waste $ 714,000 $ 427,132 59.8%
Franchise Gas & Electric $ 1,035,412 $ 0 0.0%
Fines & Forfeitures $ 151,500 $ 53,443 35.3%
Interest Income $ 550,000 $ 741,931 134.9%
Rental Income $ 181,800 $ 142,697 78.5%
Recreation Fees and Charges $ 2,758,085 $ 1,271,802 46.1%
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Budget Mid-Year
Special Revenue Forecast Actual Total
Building and Planning $ 2,440,744 $ 1,718,426 70.4%
Engineering $ 405,545 $ 276,559 68.2%
Gas Tax $ 1,943,276 $ 996,923 51.3%
Measure J - RTS $ 878,476 $ 132,545 15.1%
Clean Water $ 584,020 $ 35,247 6.0%
LLAD - A $ 1,223,330 $ 682,840 55.8%
LLAD - B $ 547,624 $ 312,883 57.1%
LLAD - C $ 608,133 $ 347,543 57.1%
LLAD - D $ 2,189,644 $ 1,200,533 54.8%
Solid Waste VIF $ 1,256,361 $ 523,484 41.7%
General Fund
General Fund revenues exceed the budget forecast at mid-year.
Property Tax – The budget forecast is $18,900,000. Property tax is projected to account
for 57.8% of General Fund revenues. Actual prior year revenues totaled $20,132,054 for
2023/24 and $20,180,481 for 2024/25. Based upon mid-year receipts, revenues are
expected to exceed the budget forecast . No mid-year changes are recommended.
Sales Tax – The budget forecast is $6,400,000. Sales tax is projected to account for 19.6%
of General Fund revenues. Sales tax revenues have declined steadily since the fourth
quarter of 2022. Actual revenues of $6,672,729 in 2023/24 and $6,815,062 in 2024/25 were
attributable to state reconciliation adjustments and increases in the county pool rather
than a reversal of an underlying trend. Accordingly, sales tax revenues continue to be
forecast conservatively. Based upon mid-year receipts, revenues are expected to exceed
the budget forecast. No mid-year changes are recommended.
Property Transfer Tax – The budget forecast for 2025/26 is $465,662. Although local
property values have held steady, interest rates have dampened sales. As a result,
revenues have declined from a high of $1,013,688 in 2021/22 to $584,804 in 2024/25.
Mid-year revenues are on par with the prior two years and are expected to meet the
budget. No mid-year changes are recommended.
Business License Tax – The budget forecast for 2025/26 is $350,000. Business license
payments are due by August 1. Mid-year receipts represent 93.1% of the annual forecast,
slightly higher in comparison with the prior two years. No mid-year changes are
recommended.
Franchise Fees – The budget forecast for 2025/26 is $2,573,592. Franchise fees for Cable,
Solid Waste, and Gas and Electric are received at various times throughout the year (from
monthly to annually). At mid-year, revenues are tracking closely with prior years on a
total and percentage basis. No mid-year changes are recommended.
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Interest Income – The budget forecast for 2025/26 is $550,000. At mid-year, the Town has
realized $741,931, well in excess of the forecast. This is attributable to higher investment
yields on Town’s funds. Based upon mid-year income, revenues will exceed the budget
forecast. No mid-year changes are recommended.
Recreation Fees and Charges - The budget forecast for 2025/26 is $2,758,085. Recreation
fees and charges have experienced a progressive pandemic recovery. 2025/26 revenues
were forecast to increase by 7.2% from the prior year. Actual prior year revenues totaled
$2,500,772 for 2023/24 and $2,666,938 for 2024/25. Mid-year adjustments are
recommended to increase the Recreation Services budget by $110,082 through additional
class offerings and a new theater production. No further mid-year changes are
recommended.
Donations – No donation revenue was budgeted for 2025/26. No mid-year changes are
recommended.
Special Purpose Revenue
Special Purpose revenues exceed the budget forecast at mid-year.
Building and Planning – The budget forecast for 2025/26 is $2,440,744. Actual prior year
revenues totaled $3,559,487 for 2023/24 and $3,148,037 for 2024/25. At mid-year,
revenues collected represent 70.4% of the budget forecast. No mid-year changes are
recommended.
Gas Tax - The budget forecast for 2025/26 is $1,943,276. Actual prior year revenues
totaled $2,413,988 for 2023/24 and $2,565,570 for 2024/25. At mid-year, actual revenues
are tracking slightly behind most recent prior year receipts. No mid-year changes are
recommended.
Measure J Return to Source (RTS) – The budget forecast for 2025/26 is $878,476. RTS
revenue comes from the countywide half cent sales tax for transportation and is largely
received at the end of the fiscal year. Actual prior year revenues totaled $1,024,094 for
2023/24 and $1,071,472 for 2024/25. No mid-year changes are recommended.
Solid Waste Diversion Incentive Fees – The budget forecast for 2025/26 is $1,256,361.
Solid Waste DIF is collected from the Town’s solid waste and recycling haulers to offset
impacts of collecting vehicles upon Town streets. Solid Waste DIF was increased as part
of the 2025 rate setting process, meaning that actual revenues for the year will exceed the
forecast. Actual prior year revenues totaled $911,401 for 2023/24 and $1,077,562 for
2024/25. No mid-year changes are recommended.
Lighting and Landscape Assessment District – The budget forecast for 2025/26 is
$4,568,731. LLAD revenues come from assessments levied on property to partially fund
the cost to maintain Town parks, roadside landscaping, and street lighting. 100% of
assessment revenue is devoted to these maintenance activities. Assessment rates were
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increased in 2025 for the first time in more than 20 years, reducing the dependence of the
LLAD upon subsidies from the General Fund. No mid-year changes are recommended.
Successor Agency
The Successor Agency to the former Community Development Agency (CDA) receives
Real Property Tax Trust Fund (RPTTF) revenues to meet obligations that were incurred
by the CDA prior to the dissolution of redevelopment in 2011. RPTTF revenues are
budgeted at $1,830,677 inclusive of Town re-payment under the Re-stated Cooperation
Loan Agreement with the former CDA. RPTTF revenues fund debt service payments for
2001 and 2005 Certificates of Participation, 2001 Taxable Revenue Bonds, and
reimbursement of allowed administrative costs. No mid-year changes are recommended.
Revenue Summary
To date, in 2025/26, the Town Council has approved one budget adjustment:
• Resolution No. 54-2025, authorizing receipt of $111,521.14 from the California
Highway Patrol for the Cannabis Tax Fund Grant Program.
Recommended Mid-Year Revenue Adjustments
Mid-year adjustments are recommended to:
• Increase Recreation, Arts and Community Services by $110,082, for the following
programs:
Adult Services: $25,000
Seniors Services: $8,333
Cultural Arts: $76,749
Table 2 summarizes the adopted budget forecast, prior amendments and recommended
mid-year adjustments. Table 2
Mid-Year Revenue Summary
Adopted Prior Mid-Year
Budget Amendments Revised
TOTAL $ 46,857,943 $ 46,969,464 $ 47,079,546
General Fund $ 32,723,274 $ 32,758,095 $ 32,868,177
Special Revenue $ 12,303,992 $ 12,380,692 $ 12,380,692
Successor Agency $ 1,830,677 $ 1,830,677 $ 1,830,677
EXPENDITURES
The 2025/26 Operating Budget includes total operating expenditures of $41.46 million, a
4.3% increase from 2024/25.
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General Government – The budget for 2025/26 is $3,424,706. All programs are on track
to finish the fiscal year within budget. Additional appropriations are recommended in
City Clerk - $10,000 to cover increased Granicus costs; and Economic Development –
$30,000 to conduct a feasibility study for a Downtown Conference Venue initiative. Mid-
year adjustments are recommended to increase the City Clerk budget by $10,000 and
increase the Economic Development budget by $30,000. No further mid-year changes are
recommended.
Police Services – The budget for 2025/26 is $12,257,068. No mid-year changes are
recommended.
Administrative Services – The budget for 2025/26 is $5,704,403. No mid-year changes are
recommended.
Development Services – The budget for 2025/26 is $5,416,686. All programs are on track
to finish the fiscal year within budget. Additional appropriations are recommended in
Transportation - $59,000 for Town-wide Traffic Signal Maintenance due to increased
contract services costs from Contra Costa County; and $60,000 for a parking study
service. Two mid-year adjustments are recommended to increase the Transportation
budget by $119,000. No further mid-year changes are recommended.
Maintenance Services – The budget for 2025/26 is $9,775,455. No mid-year changes are
recommended.
Recreation, Arts and Community Services – The budget for 2025/26 is $4,172,030. Mid-
year adjustments are recommended to increase the Recreation, Arts and Community
Services budget by $106,950 in anticipation of additional contracted services to deliver
additional classes and newly secured theater production. Mid-year adjustments are
recommended to increase General Fund expenditure in the following program budgets:
• Adult Services - $15,000 to fund additional instructor fees.
• Senior Services - $5,000 to fund additional instructor fees.
• Cultural Arts - $86,950 to fund additional instructor fees, contracted services,
ticket split, administration, and materials and supplies.
Successor Agency
For 2025/26, Successor Agency operating expenditures total $1,171,276 for debt service
and administrative costs. The final payment on the outstanding balance owed under the
former CDA/Town loan is $659,401. All other 2025/26 Successor Agency expenditures
remain unchanged. No mid-year changes are recommended.
Expenditure Summary
To date, in 2025/26, the Town Council has approved one budget adjustment totaling
$174,241.
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• Resolution No. 66-2025, appropriating $174,241 from contingency funds to
authorize the purchase of a backhoe for the Maintenance Department.
Recommended Mid-Year Expenditure Adjustments
The following mid-year adjustments are recommended:
• General Government – City Clerk – Increase Contracted Services budget by
$10,000 (PEG Fund) and Economic Development – Increase Contracted Services
budget by $30,000 (General Fund)
• Recreation, Arts and Community Services – Adults Services – Increase Contracted
Services budget by $15,000 (General Fund) – Senior Services – Increase Contracted
Services budget by $5,000 (General Fund) – Cultural Arts – Increase Contracted
Services, Ticket Split, Administration and Material and Supplies budget by $86,950
(General Fund)
• Development Services – Transportation – Increase Contracted Services budget by
$119,000 ($59,000 from Gas Tax Fund, and $60,000 from Measure J Fund)
Staffing and Employee Costs
Employee costs are budgeted at $14,990,823. As of mid-year, approximately 44 percent
of the budget has been expended, and total costs are projected finish the fiscal year within
budget. One classification change is recommended to reclassify the Communications &
Economic Development Manager position to a Director level classification, restoring the
Director classification for the position that existed through May 2023. Sufficient funds
are available in the Employee Expense budget to accommodate this reclassification.
Table 3 illustrates 2025/26 expenditures, including the adopted budget forecast, prior
amendments and recommended mid-year adjustments.
Table 3
Mid-Year Expenditure Summary
Adopted Prior Mid-Year
Budget Amendments Revised
TOTAL $ 42,631,494 $ 42,805,735 $ 43,071,685
General Fund $ 29,796,914 $ 29,971,155 $ 30,108,105
Special Revenue $ 11,663,304 $ 11,663,304 $ 11,792,304
Successor Agency $ 1,171,276 $ 1,171,276 $ 1,171,276
Transfers and Designations
The 2025/26 budget includes General Fund transfers of $3,883,314, for the following
purposes:
• $1,600,000 for LLAD operations
• $500,000 for CIP - Pavement Management
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• $50,000 for Asset Replacement
• $1,733,314 for CIP – General Purpose
On December 16, 2025, the Town Council adopted Resolution No. 80-2025, approving the
2024/25 ACFR and transferring a total of $4,772,589 from the General Fund into the
Capital Improvement General Purpose Fund. This increased the total 2025/26 transfers
and designations to $8,655,903.
STATUS OF TEN-YEAR FORECAST
Ten-year forecasts are key to planning for future years, ensuring long-term fiscal stability
and continuity of service for Town residents. This report describes factors and conditions
that are likely to affect future ten-year forecasts. Additional time is required to determine
how to factor in this new information toward development of the forecast as part of the
upcoming 2026/27 budget process. No mid-year changes are recommended.
2026/27 OPERATING BUDGET
As the Town prepares to move forward with the 2026/27 Operating Budget, several
considerations have the potential to affect Town costs or service delivery. These include:
• The re-payment from the former CDA to the Town is completed in 2025/26. Prior
year revenues were reduced from $1,100,000 in 2024/25 to $659,401 in 2025/26.
Though the Town has treated this as “one-time” rather than ongoing revenue, the
re-payment reduces the amount of general fund revenue available for transfer to
capital or non-operating purposes.
• Contracted Services and Utility costs are expected to continue to increase at rates
that outpace the ten year forecast fueled by higher levels of inflation.
• Risk Management costs have increased significantly, and general liability costs are
expected to continue to increase as a result of new claims that have been filed.
• Personnel expenses are expected to continue to increase as inflation and the high
cost of living continue to create competition for certain classifications of employees
and affect the rate of staff turnover.
RECOMMENDATION
Review and discuss the 2025/26 Mid-Year Financial Overview and provide direction and
feedback to staff regarding any mid-year budget adjustments.
Attachments
A – Mid-Year Revenue Comparison for 2021/22 – 2025/26
Attachment A
MID-YEAR REVENUE COMPARISON
2021/22 - 2025/26
2021/22 2022/23 2023/24 2024/25 2025/26
General Fund Budget Mid-Year %Budget Mid-Year %Budget Mid-Year %Budget Mid-Year %Budget Mid-Year %
Property Tax 15,200,000 6,798,599 44.7%16,200,000 6,846,134 42.3%17,000,000 7,286,187 42.9%17,900,000 8,075,752 45.1%18,900,000 8,487,530 44.9%
Sales Tax 5,250,000 2,630,587 50.1%6,000,000 3,011,151 50.2%6,500,000 2,837,576 43.7%6,565,000 2,726,097 41.5%6,400,000 2,861,498 44.7%
Transfer Tax 650,000 451,321 69.4%650,000 226,465 34.8%452,000 176,648 39.1%458,780 184,065 40.1%465,662 194,214 41.7%
Transient Occupancy 125,000 33,716 27.0%125,000 40,115 32.1%140,000 38,450 27.5%142,000 33,315 23.5%144,130 29,371 20.4%
Business License 325,150 304,771 93.7%350,000 311,334 89.0%350,000 306,088 87.5%350,000 308,329 88.1%350,000 325,765 93.1%
Franchise Cable 800,000 206,042 25.8%800,000 204,343 25.5%800,000 193,054 24.1%812,000 186,025 22.9%824,180 172,574 20.9%
Franchise Solid Waste 846,851 352,855 41.7%863,788 434,402 50.3%863,788 465,330 53.9%875,000 485,997 55.5%714,000 427,132 59.8%
Franchise Gas & Electric 575,403 0 0.0%575,000 0 0.0%575,000 0 0.0%700,000 0 0.0%1,035,412 0 0.0%
Fines & Forfeitures 150,000 30,803 20.5%150,000 32,643 21.8%150,000 38,932 26.0%150,000 44,177 29.5%151,500 53,443 35.3%
Interest Income 328,750 88,330 26.9%500,000 155,076 31.0%500,000 227,301 45.5%500,000 473,724 94.7%550,000 741,931 134.9%
Rental Income 170,035 72,080 42.4%178,521 91,657 51.3%178,521 759,879 425.7%180,000 89,203 49.6%181,800 142,697 78.5%
Recreation Fees and Charges 1,500,001 682,566 45.5%2,034,067 946,882 46.6%2,485,491 1,155,441 46.5%2,572,688 1,179,323 45.8%2,758,085 1,271,802 46.1%
2021/22 2022/23 2023/24 2024/25 2025/26
Special Revenue Budget Mid-Year %Budget Mid-Year %Budget Mid-Year %Budget Mid-Year %Budget Mid-Year %
Building and Planning 2,153,200 1,308,799 60.8%2,153,200 1,752,021 81.4%2,139,950 1,772,782 82.8%2,753,200 1,405,062 51.0%2,440,744 1,718,426 70.4%
Engineering 260,535 152,825 58.7%302,205 267,864 88.6%302,205 326,490 108.0%302,205 322,498 106.7%405,545 276,559 68.2%
Gas Tax 1,664,828 1,006,705 60.5%1,800,000 972,713 54.0%1,850,000 904,720 48.9%1,895,879 1,200,481 63.3%1,943,276 996,923 51.3%
Measure J - RTS 710,139 228,826 32.2%771,781 198,134 25.7%836,146 130,177 15.6%857,050 151,618 17.7%878,476 132,545 15.1%
Clean Water 272,700 22,187 8.1%572,700 5,580 1.0%572,700 8,777 1.5%578,332 32,087 5.5%584,020 35,247 6.0%
LLAD - A 583,858 336,915 57.7%583,858 332,875 57.0%583,858 335,884 57.5%583,858 325,510 55.8%1,223,330 682,840 55.8%
LLAD - B 746,968 411,144 55.0%746,968 335,223 44.9%746,968 417,131 55.8%746,968 415,669 55.6%547,624 312,883 57.1%
LLAD - C 664,183 366,405 55.2%664,183 375,670 56.6%664,183 372,553 56.1%664,183 373,019 56.2%608,133 347,543 57.1%
LLAD - D 1,134,741 603,759 53.2%1,134,741 608,582 53.6%1,134,741 615,899 54.3%1,134,741 611,683 53.9%2,189,644 1,200,533 54.8%
Solid Waste VIF 846,851 352,855 41.7%872,257 434,402 49.8%898,424 437,213 48.7%925,376 494,082 53.4%1,256,361 523,484 41.7%