ADMINISTRATIVE REPORT
MEETING DATE: April 23, 2025 AGENDA CATEGORY: New Business TO: Honorable Mayor and City Council
FROM: Christian Clegg, City Manager CC
DATE: April 14, 2025
SUBJECT: Fiscal Year 2024/25 Mid-Year Adjustments and Fiscal Year 2025/26 Budget Update
1. FY 2024/25 Mid-Year Review
2. FY 2025/26 PSVS Review
3. FY 2025/26 Revenue Update
RECOMMENDATION:
Staff recommend the Council receive and file the budget report.
BACKGROUND:
City staff will present mid-year adjustments to the fiscal year 2024/25 budget, including updates related to reduced revenues and revised capital improvement project allocations. Separately, staff have prepared the preliminary fiscal year 2025/26 budget, which is currently under review. This budget must be balanced and will include additional refinement. Staff are evaluating current -year resources to ensure a vailable fund balances while incorporating mid-year requests and making necessary adjustments to capital projects to support fiscal stability. The presentation will also cover the fiscal year 2025/26 PSVS Recommended Budget and the fiscal year 2025/26 projections for major General Fund revenue streams.
1. City staff have prepared mid -year adjustments to the fiscal year 2024/25 budget to address a shortfall in PSVS revenue, which has impacted both capital improvement projects and operational funding. To mitigate this shortfall, staff are proposing the reallocation of funding from certain capital projects to others that are higher priority or time -sensitive. In addition to these capital adjustments, other operational changes will be pro posed to help close the funding gap and maintain essential services. These mid-year adjustments are necessary to align expenditures with available resources and ensure continued progress on key City priorities.
2. The PSVS (Public Safety and Vital Services) committee was established following the passage of Measure N by Bakersfield voters in 2018, a local sales tax initiative aimed at enhancing public safety and essential City services. This measure reflected a strong community desire to address longstanding challenges related to crime, homelessness, infrastructure, and economic development. In response, the City formed the PSVS committee to provide oversight and ensure transparency, accountability, and community representation in how Measure N funds are allocated. The committee plays a key role in ensuring that the annual recommended budget is consistent with the 13 measure priorities and City Council Goals. These measure priorities include:
1. Increasing police staffing to improve police response times, reduce crime, and increase neighborhood police patrols
2. Improving rapid response to assaults and robberies
3. Maintaining/improving rapid response to gang violence
4. Investigating and proactively preventing property crimes, burglaries, and vehicle thefts
5. Keeping public areas safe and clean
6. Strengthening the capacity of the Special Enforcement Unit
7. Expanding the School Resource Officer Program
8. Maintaining a fully staffed and equipped Class II Rated Fire Department
9. Reducing homelessness through partnerships with service providers to increase outreach, sheltering, and construction of affordable housing
10. Addressing the fiscal stability of the City
11. Creating jobs through economic development, business retention/attraction, and workforce development
12. Enhancing amenities throughout the community to improve the quality of life and attract visitors
13. Enhancing neighborhoods through additional code enforcement and improved park maintenance
Each of these priorities serves as a guiding framework to inform funding decisions and strategi c investments. The FY 2025/26 Recommended Budget is presented in alignment with these priorities, ensuring that funding decisions reflect the community’s most pressing needs and long- term goals. This alignment reinforces the City’s commitment to transparency, accountability, and measurable impact.
The PSVS FY 2025/26 Recommended Budget totals $114,960,000, reflecting a 1% increase from the previous fiscal year. Major revenue sources include Sales and Use Tax, interest earnings, and a fund balance from prio r-year savings. Personnel expenses, accounting for over half of the budget, are driven by rising pension, health insurance, and workers' compensation costs. Fleet expenses are rising due to higher vehicle prices and maintenance costs, while technology services costs have surged due to increased investments in cybersecurity and system upgrades. Liability insurance costs are also increasing due to higher claims expenses. To offset these rising costs, discretionary expenses have been reduced by 14%. Additionally, $7,809,500 is set aside for capital projects, pending Council approval.
3. City staff reviewed projected revenues for the upcoming fiscal year across the City’s major revenue sources. Property Tax is estimated at $122.3 million, reflecting a 4.83% increase over the prior year, primarily due to new housing added to the tax roll and rising net assessed property values. Sales Tax is projected at $97.2 million, showing a modest 0.41% increase, based on economic forecasts that predict relatively flat growth in the coming year. Public Safety and Vital Services Tax revenue is also estimated at $97.2 million, representing a 4.05% decrease from last year. This decline is the result of adjustments made after identifying reporting errors by businesses that misallocated the taxes they paid, requiring a reset to a new baseline. Transient Occupancy Tax is projected at $13 million, a 13.04% increase from the previous fiscal year, indicating continued strength in local tourism activity.
FISCAL IMPACT:
Overall, these budget reports serve as a financial blueprint that guides City operations and policy implementation for the fiscal year. Approving these budget requests and mid -year adjustments has a significant fiscal impact as it authorizes the allocation of public funds to various departments and services, establishes spending limits, and reflects anticipated revenues from sources. It determines how resources are distributed, directly influencing service levels, staffing, infrastructure investments, and long-term
obligations such as pensions.
COUNCIL GOAL:
Choose an item.
ATTACHMENTS:
Public Safety and Vital Services (PSVS) Fiscal Year 2025/26 Recommended Budget Memorandum