4933-6242-4738 v5
WHEREAS, pursuant to Elections Code Section 10403, whenever an election called by a district, city or other political subdivision for the submission of any question, proposition, or office to be filled is to be consolidated with a statewide election, and the question, proposition, or office to be filled is to appear upon the same ballot as that provided for that statewide election, the district, city or other political subdivision shall, at least 88 days prior to the date of the election, file with the board of supervisors, and a copy with the elections official, a resolution of its governing board requesting the consolidation, and setting forth the exact form of any question, proposition, or office to be voted upon at the election, as it is to appear on the ballot. Upon such request, the Board of Supervisors may order consolidation. The resolution requesting the consolidation shall be adopted and filed at the same time as the adoption of the ordinance, resolution, or order calling the election; and
WHEREAS, it is desirable that the General Municipal Election to be held on November 3, 2026, be consolidated with the Statewide General Election to be held on the same date and that within the City the precincts, polling places and election officers of the two elections be the same, and that the County of Monterey Election Department canvass the returns of such General Municipal Election and that the election be held in all respects as if there were only one election; and
WHEREAS, The City Council exercises its independent judgment and finds that this Resolution is not subject to the California Environmental Quality Act ("CEQA"), because the enactment of this Resolution: (1) does not constitute a “project” as defined by CEQA pursuant to California Code of Regulations, Title 14, Sections 15060(c)(3) and 15378; (2) will not result in a direct or reasonably foreseeable indirect physical change in the environment pursuant to California Code of Regulations, Title 14, Section 15060(c)(2); and (3) is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment pursuant to California Code of Regulations, Title 14, Section 15061(b)(3).
NOW THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF CARMELBY-THE-SEA DOES HEREBY:
1. Recitals. The recitals set forth above are incorporated herein by this reference.
2. Submission of Measure. Pursuant to the laws of the State of California, including, but not limited to, Elections Code Section 9222 and 10201, the City Council, pursuant to its right and authority, does hereby order the submission to the voters of the City at the General Municipal Election to be held on November 3, 2026, which was called pursuant to Resolution No._________, a ballot measure that, if approved, establishes a new 2% transient occupancy tax that is in addition to the existing 10% transient occupancy tax and will be effective until ended by voters (“Measure”). As required by Elections Code Section 13247, the abbreviated form of the Measure to appear on the ballot is specified below in Section 3.
3. Question. Accordingly, the City Council hereby orders the following question to be submitted to the voters at the General Municipal Election:
YES
Shall the measure providing funding for City of
Carmel-by-the-Sea’s general government
purposes, such as, for example, infrastructure
improvements, public safety, and other general
municipal purposes, by establishing a new
transient occupancy tax of 2%, paid by lodging
NO
4933-6242-4738 v5
guests to the operators of hotels and hostelries,
in addition to the existing 10% transient
occupancy tax, with the new 2% tax providing
approximately $1.9 million annually until ended
by voters, be adopted?
4. Proposed Measure. The proposed complete text of the Measure with the proposed Ordinance No. 2026-003 to be submitted to the voters is attached to this Resolution as Exhibit A and incorporated herein by this reference. Further, the City Council hereby approves such proposed complete text of the Measure with proposed Ordinance No. 2026-003 in the form as provided in Exhibit A and the submission thereof to the voters of the City.
5. Voter Approval Requirement. The vote requirement for this Measure to pass shall be a majority of those casting ballots on the Measure (50% plus 1).
6. Publication of Measure. The City Clerk is directed to publish a synopsis of the Measure in a newspaper of general circulation in the City of Carmel-by-the-Sea as required by applicable law.
7. Coordination. The City Clerk is authorized, instructed, and directed to coordinate with the Monterey County Elections Department to procure and furnish and all official ballots, notices, printed matter, and all supplies, equipment, and paraphernalia that may be necessary in order to properly and lawfully conduct the election.
8. Request for Consolidation.
a. Pursuant to the requirements of Elections Code Section 10403, the Board of Supervisors of the County of Monterey is hereby requested to consent and agree to the consolidation of the General Municipal Election with the Statewide General Election on Tuesday, November 3, 2026, for the purpose of submitting to the voters the abovementioned Measure. b. The Monterey County Elections Department is authorized to canvass the returns of the General Municipal Election. The election shall be held in all respects as if there were only one election, and only one form of ballot shall be used. The election will be held and conducted in accordance with the provisions of law regulating the statewide elections, including, but not limited to, Elections Code Section 10418.
c. The Board of Supervisors of the County of Monterey is requested to issue instructions to the Monterey County Elections Department to take any and all steps necessary for conducting and holding the consolidated election.
d. Pursuant to Elections Code Section 10002, the Board of Supervisors of the County of Monterey is requested to permit the Monterey County Elections Department to provide any and all services necessary for conducting such General Municipal Election. e. The City of Carmel-by-the-Sea recognizes that additional costs will be incurred by the County of Monterey by reason of this consolidation and agrees to reimburse the County of Monterey for any costs.
4933-6242-4738 v5
9. Filing with County. The City Clerk shall file a certified copy of this Resolution with the Monterey County Board of Supervisors and Monterey County Elections Department.
10. Arguments and Impartial Analysis.
a. Primary Arguments.
i. Pursuant to Elections Code Section 9282, the City Council authorizes _________ to author and submit the primary argument in favor of the Measure not exceeding 300 words, accompanied by the printed name(s) and signature(s) of the author(s) submitting it, in accordance with Article 4, Chapter 3, Division 9 of the Elections Code, and authorizes the ________ to submit a rebuttal argument to the argument against the Measure pursuant to Section 10(c).
ii. A primary argument in favor or against the Measure shall not exceed 300 words in length and shall be accompanied by the printed name(s) and signature(s) of the author(s) submitting it, or, if on behalf of an organization, the name of the organization, and the printed name and signature of at least one of its principal officers who is the author of the argument, in accordance with Article 4, Chapter 3, Division 9 of the Elections Code. Primary arguments shall be accompanied by the Form of Statement to Be Filed By Author(s) of Argument.
Submittals of primary arguments are to be delivered to the City Clerk no later than ______ p.m. on ______, 2026, and may be changed or withdrawn up and until such date and time. iii. In the event that more than one argument in favor or against the foregoing Measure is timely submitted, then consistent with Elections Code Section 9287, the City Clerk shall select the argument to be included with the ballot materials, giving preference and priority first, to arguments submitted by member(s) of the City Council, and second, to individual voters, or bona fide associations of citizens, or a combination thereof, in the order set forth in Elections Code Section 9287.
b. City Attorney Impartial Analysis. The City Council directs the City Clerk to transmit a copy of the Measure to the City Attorney. Pursuant to Elections Code Section 9280, the City Attorney shall prepare an impartial analysis of the Measure not exceeding 500 words showing the effect of the Measure on existing law and the operation of the Measure. The analysis shall include a statement indicating whether the Measure was placed on the ballot by a petition signed by the requisite number of voters or by the City Council. In the event the entire text of the Measure is not printed on the ballot, nor in the voter information portion of the voter information guide, there shall be printed immediately below the impartial analysis, in no less than 10-point type, the following: “The above statement is an impartial analysis of Ordinance or Measure _________. If you desire a copy of the ordinance or measure, please call the election official’s office at (insert phone number) and a copy will be mailed at no cost to you.” The impartial analysis shall be filed by ______ p.m. on ______, 2026.
c. Rebuttal Arguments.
i. Pursuant to Section 9285 of the Elections Code of the State of California, rebuttal arguments shall be permitted for the Measure. ii. When the City Clerk has selected the primary arguments for and against the Measure (not exceeding 300 words each), which will be printed and distributed to the voters, the City Clerk shall send a copy of an argument in favor of the Measure to the authors of
4933-6242-4738 v5
any argument against the Measure and a copy of an argument against the Measure to the authors of any argument in favor of the Measure immediately upon receiving the arguments. iii. The author or a majority of the authors of an argument relating to a city measure may prepare and submit a rebuttal argument not exceeding 250 words or may authorize in writing any other person or persons to prepare, submit, or sign the rebuttal argument.
A rebuttal argument may not be signed by more than five authors. iv. The rebuttal arguments shall be filed with the City Clerk, signed, with the printed name(s) and signature(s) of the author(s) submitting it, or if submitted on behalf of an organization, the name of the organization, and the printed name and signature of at least one of its principal officers, by ______ p.m. on ______, 2026. The rebuttal arguments shall be accompanied by the Form of Statement to Be Filed By Author(s) of Argument. Rebuttal arguments shall be printed in the same manner as the direct arguments. Each rebuttal argument shall immediately follow the direct argument which it seeks to rebut. v. The provisions of Section 10(c) shall apply only to the election to be held on November 3, 2026, and shall then be repealed.
d. Printing. The City Clerk shall cause the City Attorney’s impartial analysis, and duly selected arguments, to be printed and distributed to voters in accordance with State law regarding the same.
11. Notice of Election. Notice of the time and place of holding the election is given and the City Clerk is authorized, instructed and directed to give further or additional notice of the election, in time, form and manner as required by law.
12. Conduct of Election as Provided by Law. In all particulars not recited in this Resolution, the General Municipal Election shall be held and conducted as provided by law for holding municipal elections.
13. Implementation. The City Clerk and City Administrator are authorized to take all actions as necessary to effectuate the purposes of this Resolution and the election. The City Administrator is authorized to execute all documents and to perform all other necessary City acts to enter into a service agreement for the provision of election services with Monterey County Elections Department. The City Administrator is authorized to make any typographical, clerical, and non-substantive corrections to this Resolution and its exhibits/attachments.
14. Printing of Measure. The City Council of the City of Carmel-by-the-Sea hereby requests that the Monterey County Elections Department print the attached full Measure text Exhibit A exactly as filed or indicated on the filed document in the voter information guide for the November 3, 2026 Statewide General Election.
15. Environmental Compliance. The City Council finds the adoption of this Resolution and the Proposed Ordinance are not subject to the California Environmental Quality Act ("CEQA"), because the enactment of this Resolution and the Proposed Ordinance: (1) do not constitute a “project” as defined by CEQA pursuant to California Code of Regulations, Title 14, Sections 15060(c)(3) and 15378; (2) will not result in a direct or reasonably foreseeable indirect physical change in the environment pursuant to California Code of Regulations, Title 14, Section 15060(c)(2); and (3) is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment pursuant to California Code of
4933-6242-4738 v5
Regulations, Title 14, Section 15061(b)(3).
16. Effective Date. This Resolution shall take effect immediately following passage and adoption by the Carmel-by-the-Sea City Council.
PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA this ___ day of ____ 2026, by the following roll call vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
APPROVED: ATTEST:
_____________________________ _____________________________ Dale Byrne, Mayor Nova Romero, MMC, City Clerk
4933-6242-4738 v5
Exhibit A
Text of Measure/Ordinance
Attachment 3 - REDLINE VERSION
CITY OF CARMEL-BY-THE-SEA
ORDINANCE NO. 2026-003
AN ORDINANCE OF THE VOTERS OF THE CITY OF CARMEL-BY-THE-SEA AMENDING CARMEL-BY-THE-SEA MUNICIPAL CODE CHAPTER 3.32 (TRANSIENT
OCCUPANCY TAX) TO ADOPT A NEW TWO PERCENT TRANSIENT OCCUPANCY
TAX, IN ADDITION TO EXISTING TEN PERCENT TRANSIENT OCCUPANCY TAX WHEREAS, prior to the effective date of this ordinance, the City of Carmel-By-The-Sea (“City”) had established an existing transient occupancy tax in the amount of 10 percent of the rent charged by any operator of a hostelry (“Existing TOT”), as codified at Carmel-By-The-Sea Municipal Code (“City Code”) Chapter 3.32 (Transient Occupancy Tax); and
WHEREAS, on February 3, 2026, the City Council directed staff to prepare a resolution calling for the placement of a proposed ordinance, as set forth herein, to amend City Code Chapter 3.32 by which a new transient occupancy tax in the amount of 2 percent of the rent charged by any operator of a hostelry (“New TOT”) would be placed on the ballot for consideration by the voters at the November 3, 2026 General Municipal Election; and
WHEREAS. If this ordinance is approved by the voters at the November 3, 2026 General Municipal Election, the City will have an effective transient occupancy rate of 12 percent of the rent charged by any operator of a hostelry (based on the Existing TOT of 10 percent plus the New TOT of 2 percent); and
WHEREAS, at the November 3, 2026 General Municipal Election, the electorate of the City of Carmel-By-The-Sea did consider this ordinance and approved the actions set forth herein.
NOW THEREFORE, ON THE BASIS OF THE FOREGOING, THE PEOPLE OF THE CITY OF CARMEL-BY-THE-SEA, DO HEREBY ORDAIN AS FOLLOWS::
SECTION 1. Title 3, Section 3.32.020, Tax Imposed, Subsection A shall be amended in its entirety as set forth below. As described in the recitals to this ordinance, this ordinance does not amend, extend, or increase the Existing TOT in the amount of 10 percent of the rent charged by any operator of a hostelry, and that Existing TOT shall remain in effect and be implemented in accordance with City Code Chapter 3.32. This ordinance hereby establishes a New TOT in the amount of 2 percent of the rent charged by any operator of a hostelry; and, since the procedures of City Code Chapter 3.32 apply to both the Existing Tax and the New Tax, those tax amounts shall be codified in the same section of the City Code, as follows:
1
3.32.020: Tax Imposed.
A. For the privilege of occupancy in any hostelry, each transient is subject to and shall pay a tax in the amount of 10 percent of the rent charged by the operator, plus a new tax in the amount of 2 percent of the rent charged by the operator, for a total tax in the amount of 12 percent of the rent charged by the operator. The tax constitutes a debt owed by the transient to the City which is extinguished only by payment to the operator or to the City.
SECTION 2. For Title 3, Section 3.32.130, Disposition of Proceeds, Subsections A and B are not amended by this ordinance. However, as an aid to the reader, the existing text of Subsections A and B are copied below and will remain in effect, as follows:
3.32.130: Disposition of Proceeds.
All moneys collected under and pursuant to the provisions of this chapter shall be deposited in the hostelry tax fund of this City and shall be distributed within the fund as follows:
A. The first six percent to the extent needed:
1. That amount necessary to fund the portion of the municipal budget covering community and cultural and recreation activities including but not limited to Sunset Center and the Forest Theater, parks, public facilities and municipal structures, and parking lots;
2. The remainder to be distributed to fund such acquisition and improvement of parks, recreation land and other municipal purposes as determined from time to time by the City Council; provided, that all such uses shall be in accordance with the General Plan of the City, as it is now or may be hereafter constituted;
B. The remainder of the first six percent, the additional two percent added by Ordinance No. 78-13, and the additional two percent added by Ordinance No. 83-22 shall be added to the General Fund for usual and current expenses.
SECTION 3. Title 3, Section 3.32.130, Disposition of Proceeds, shall be amended to add a new Subsection C, as follows:
3.32.130: Disposition of Proceeds.
C. The additional two percent added by Ordinance No. 26-003 shall be added to the General Fund for usual and current expenses. 2
SECTION 4. Scope of Amendments. Unless specifically amended by this ordinance, all other provisions of the Carmel-By-The-Sea Municipal Code Chapter
3.32 remain unchanged.
SECTION 5. General Tax. The proceeds from the 2% tax established by this ordinance shall be for unrestricted general revenue purposes of the City and shall be placed into the General Fund of the City.
SECTION 6. Future Amendments. Pursuant to California Elections Code Section 9217, the City Council is authorized to amend Carmel-By-The-Sea Municipal Code Chapter 3.32 without a vote of the electorate; provided however, that no such amendment shall increase the tax imposed as set forth in Carmel-By-The-Sea Municipal Code Chapter 3.32.
SECTION 7. Severability. The City declares that, should any provision, section; paragraph, sentence or word of this Ordinance be rendered or declared invalid by any final court action in a court of competent jurisdiction, or by reason of any preemptive legislation, the remaining provisions, sections, paragraphs, sentences and words of this Ordinance shall remain in full force and effect.
SECTION 8. CEQA. The City finds that this Ordinance is not subject to environmental review under the California Environmental Quality Act ("CEQA") because the Ordinance is an activity that is excluded from the definition of a project by Public Resources Code sections 21065 and 21080(b)(8) and California Code of Regulations Sections 15273 and 15378(b) (the “CEQA Guidelines”). The proposed Ordinance includes organizational or administrative activities of government which will not result in direct or indirect physical changes to the environment and are exempt from CEQA under CEQA Guidelines Sections 15060(c)(2) and 15061(b)(3).
SECTION 9. Effective Date. This Ordinance relates to the levying and collecting of City transient occupancy taxes and shall take effect immediately upon approval by the majority of the electorate.
SECTION 10. Termination Date. The authority to levy the tax imposed by this ordinance shall expire upon an action to terminate as authorized by majority vote of the qualified electors of the City of Carmel-By-The-Sea.
SECTION 11. Adoption. Following a declaration by the City Council that this ordinance was approved by a majority of the voters, as set forth in Elections Code Section 9217, the Mayor is hereby authorized to approve that this ordinance was adopted on November 3, 2026, by signing where indicated below.
PASSED AND ADOPTED BY THE VOTERS OF THE CITY OF
CARMEL-BY-THE-SEA this __ day of MONTH, YEAR.
APPROVED,
________________________
3
DALE BRYNE, MAYOR
City of Carmel-by-the-Sea
ATTEST:
_______________________
Nova Romero, City Clerk
4
1 Attachment 4 - CLEAN VERSION
CITY OF CARMEL-BY-THE-SEA
ORDINANCE NO. 2026-003
AN ORDINANCE OF THE VOTERS OF THE CITY OF CARMEL-BY-THE-SEA AMENDING CARMEL-BY-THE-SEA MUNICIPAL CODE CHAPTER 3.32 (TRANSIENT
OCCUPANCY TAX) TO ADOPT A NEW TWO PERCENT TRANSIENT OCCUPANCY
TAX, IN ADDITION TO EXISTING TEN PERCENT TRANSIENT OCCUPANCY TAX WHEREAS, prior to the effective date of this ordinance, the City of Carmel-By-TheSea (“City”) had established an existing transient occupancy tax in the amount of 10 percent of the rent charged by any operator of a hostelry (“Existing TOT”), as codified at Carmel-By-The-Sea Municipal Code (“City Code”) Chapter 3.32 (Transient Occupancy Tax); and
WHEREAS, on February 3, 2026, the City Council directed staff to prepare a resolution calling for the placement of a proposed ordinance, as set forth herein, to amend City Code Chapter 3.32 by which a new transient occupancy tax in the amount of 2 percent of the rent charged by any operator of a hostelry (“New TOT”) would be placed on the ballot for consideration by the voters at the November 3, 2026 General Municipal Election; and
WHEREAS. If this ordinance is approved by the voters at the November 3, 2026 General Municipal Election, the City will have an effective transient occupancy rate of 12 percent of the rent charged by any operator of a hostelry (based on the Existing TOT of 10 percent plus the New TOT of 2 percent); and
WHEREAS, at the November 3, 2026 General Municipal Election, the electorate of the City of Carmel-By-The-Sea did consider this ordinance and approved the actions set forth herein.
NOW THEREFORE, ON THE BASIS OF THE FOREGOING, THE PEOPLE OF THE CITY OF CARMEL-BY-THE-SEA, DO HEREBY ORDAIN AS FOLLOWS:
SECTION 1. Title 3, Section 3.32.020, Tax Imposed, Subsection A shall be amended in its entirety as set forth below. As described in the recitals to this ordinance, this ordinance does not amend, extend, or increase the Existing TOT in the amount of 10 percent of the rent charged by any operator of a hostelry, and that Existing TOT shall remain in effect and be implemented in accordance with City Code Chapter 3.32. This ordinance hereby establishes a New TOT in the amount of 2 percent of the rent charged by any operator of a hostelry; and, since the procedures of City Code Chapter 3.32 apply to both the Existing Tax and the New Tax, those tax amounts shall be codified in the same section of the City Code, as follows:
2 3.32.020: Tax Imposed.
A. For the privilege of occupancy in any hostelry, each transient is subject to and shall pay a tax in the amount of 10 percent of the rent charged by the operator, plus a new tax in the amount of 2 percent of the rent charged by the operator, for a total tax in the amount of 12 percent of the rent charged by the operator. The tax constitutes a debt owed by the transient to the City which is extinguished only by payment to the operator or to the City.
SECTION 2. For Title 3, Section 3.32.130, Disposition of Proceeds, Subsections A and B are not amended by this ordinance. However, as an aid to the reader, the existing text of Subsections A and B are copied below and will remain in effect, as follows:
3.32.130: Disposition of Proceeds.
All moneys collected under and pursuant to the provisions of this chapter shall be deposited in the hostelry tax fund of this City and shall be distributed within the fund as follows:
A. The first six percent to the extent needed:
1. That amount necessary to fund the portion of the municipal budget covering community and cultural and recreation activities including but not limited to Sunset Center and the Forest Theater, parks, public facilities and municipal structures, and parking lots;
2. The remainder to be distributed to fund such acquisition and improvement of parks, recreation land and other municipal purposes as determined from time to time by the City Council; provided, that all such uses shall be in accordance with the General Plan of the City, as it is now or may be hereafter constituted;
B. The remainder of the first six percent, the additional two percent added by Ordinance No. 78-13, and the additional two percent added by Ordinance No. 83- 22 shall be added to the General Fund for usual and current expenses.
SECTION 3. Title 3, Section 3.32.130, Disposition of Proceeds, shall be amended to add a new Subsection C, as follows:
3.32.130: Disposition of Proceeds.
C. The additional two percent added by Ordinance No. 26-003 shall be added to the General Fund for usual and current expenses.
3 SECTION 4. Scope of Amendments. Unless specifically amended by this ordinance, all other provisions of the Carmel-By-The-Sea Municipal Code Chapter
3.32 remain unchanged.
SECTION 5. General Tax. The proceeds from the 2% tax established by this ordinance shall be for unrestricted general revenue purposes of the City and shall be placed into the General Fund of the City.
SECTION 6. Future Amendments. Pursuant to California Elections Code Section 9217, the City Council is authorized to amend Carmel-By-The-Sea Municipal Code Chapter 3.32 without a vote of the electorate; provided however, that no such amendment shall increase the tax imposed as set forth in Carmel-By-The-Sea Municipal Code Chapter 3.32.
SECTION 7. Severability. The City declares that, should any provision, section; paragraph, sentence or word of this Ordinance be rendered or declared invalid by any final court action in a court of competent jurisdiction, or by reason of any preemptive legislation, the remaining provisions, sections, paragraphs, sentences and words of this Ordinance shall remain in full force and effect.
SECTION 8. CEQA. The City finds that this Ordinance is not subject to environmental review under the California Environmental Quality Act ("CEQA") because the Ordinance is an activity that is excluded from the definition of a project by Public Resources Code sections 21065 and 21080(b)(8) and California Code of Regulations Sections 15273 and 15378(b) (the “CEQA Guidelines”). The proposed Ordinance includes organizational or administrative activities of government which will not result in direct or indirect physical changes to the environment and are exempt from CEQA under CEQA Guidelines Sections 15060(c)(2) and 15061(b)(3).
SECTION 9. Effective Date. This Ordinance relates to the levying and collecting of City transient occupancy taxes and shall take effect immediately upon approval by the majority of the electorate.
SECTION 10. Termination Date. The authority to levy the tax imposed by this ordinance shall expire upon an action to terminate as authorized by majority vote of the qualified electors of the City of Carmel-By-The-Sea.
SECTION 11. Adoption. Following a declaration by the City Council that this ordinance was approved by a majority of the voters, as set forth in Elections Code Section 9217, the Mayor is hereby authorized to approve that this ordinance was adopted on November 3, 2026, by signing where indicated below.
PASSED AND ADOPTED BY THE VOTERS OF THE CITY OF CARMEL-BY-THESEA this __ day of MONTH, YEAR.
APPROVED,
________________________
DALE BRYNE, MAYOR
4 City of Carmel-by-the-Sea
ATTEST:
_______________________
Nova Romero, City Clerk
CITY OF CARMEL-BY-THE-SEA
City Council
Staff Report
May 4, 2026
ORDERS OF BUSINESS
TO: Honorable Mayor and City Council Members
SUBMITTED BY: Jayme Fields, Finance Manager
APPROVED BY: Brandon Swanson, Acting City Administrator SUBJECT: Receive the 2nd Fiscal Year 2025-2026 Tri-Annual Budget Report RECOMMENDATION:
Receive the 2nd Fiscal Year 2025-2026 Tri-Annual Budget Report.
BACKGROUND / SUMMARY:
The purpose of this agenda item is to provide an update on the Fiscal Year 2025-2026 budget based upon the revenues received and expenses incurred through the first eight months of the fiscal year (July 1, 2025 – February 28, 2026). The Financial Stewardship Workgroup and the City staff collaborated on a plan to create a more regular review of the City's budget through a tri-annual review (3 times per year) rather than a single mid-year review, which is what has historically been done. This is the second tri-annual review.
This second tri-annual review allows for a deeper analysis, including suggestions of potential adjustments that are needed, and this review facilitated the preparation of the coming 2026- 2027 budget. As this is the first year of this new approach, feedback from the Council and the community is welcomed on the format of this budget report, and the content that is included within.
An analysis of budget vs. actual is detailed below. Overall, the status of the City's budget is healthy and generally on track as anticipated. There are only four recommended budget adjustments needed after the first eight months of operation.
Revenue
The City’s three major sources of revenue are property taxes, sales and use taxes, and transient occupancy taxes. The amounts reported here are based on cash collected in the months of July through February. The City received its first tranche of property taxes in December and will receive its second tranche in April. Sales and use taxes, which include the statewide sales tax and the local “Measure C” sales tax, are remitted by the State on a quarterly basis, with estimated progress payments received monthly. The sales taxes received to date include advances for January through March, as well as a true-up for the prior quarter. The $3.0 million received in state Sales Tax and $5.0 million received in Measure C local sales tax thus far, combined, are slightly ahead as a percentage of the budget compared to where they were at this time last year (79% and 76% in the current year, respectively, compared to 72% and 77% in the prior year). Transient occupancy tax (TOT) revenue of approximately $7.5 million is currently slightly more than was collected at this time last year but represents a decrease as a percentage of budget compared to the same time last year (82% of budget in the current year compared to 88% in the prior year). This decrease in Transient Occupancy Tax compared to the budget is due to a significantly increased budget for TOT as the City was more aggressive in its revenue budgeting than in prior years. The remainder of the variances at this time represent the cumulative effects of report timing, fluctuating tax receipt trends, and tighter underlying budget assumptions, and do not appear to represent a material change to the budget.
Revenue from Charges for Services totals approximately $1.7 million and is 57% of the budget compared to 75% of the budget at this time last year. The decrease is due to the timing of receipts and to a more aggressive revenue budget in the current year, including a budgeted $549 thousand annual increase in Ambulance revenues which has not been realized. Other Revenue (which includes Business License Renewals) totals approximately $4.1 million and is 126% of the budget compared to 113% of the budget at this time last year.
A summary of revenues to date is as follows:
Revenue Category Adopted
Budget
FY 25-26
Jul - Feb
Receipts
FY 25-26
Percent
Received
FY 25-26
Jul - Feb
Receipts
FY 24-25
Percent
Received
FY 24-25
Property Taxes 9,198,405 5,460,059 59% 5,242,995 58%
State Sales & Use Tax 3,828,119 3,035,734 79% 2,695,415 72% Local Sales Tax - Measure C 6,595,056 4,992,546 76% 4,632,010 77% Transient Occupancy Taxes 9,109,116 7,501,368 82% 6,973,139 88% Charge for Services 2,911,901 1,669,255 57% 1,682,715 75% Other 3,272,484 4,109,368 126% 3,388,240 113%
Total 34,915,081 26,768,330 77% 24,614,514 77%
Expenditures
The City’s largest expenditure category is salaries and benefits, which account for 44% of the revenues forecast to be received in the Fiscal Year 2025-2026 Adopted Budget. For the period of July through February, the salaries and benefits expenditures, inclusive of annual Worker’s Compensation insurance premiums, total $9.4 million. These expenditures represent 62% of the total budgeted salaries and benefits expense and generally align with budget projections, which were more conservative than in prior years, resulting in a higher percentage of the budget compared to the prior year. Services and supplies expenditures total $7.1 million, or 60% of the amount budgeted for the year. The City Non-Departmental expenses include insurance premiums of approximately $1 million and the annual unfunded pension liability (UAL) payment of approximately $2.6 million paid in July. Debt service principal payments have all been executed for Fiscal Year 2025-2026.
Capital Outlays currently reflect spending on 17 active projects, including paving and drainage repairs, pathway reconstruction and essential Police/Public works building repairs. Total capital outlays to date represent a significant increase over similar expenditures in the prior year.
A summary of expenditures to date is as follows:
Expense Category Adopted Budget
FY 25-26
Jul - Feb
Disbursements
FY 25-26
Percent
Disbursed
FY 25-26
Jul - Feb
Disbursements
FY 24-25
Percent
Disbursed
FY 24-25
Salaries/Benefits 15,214,176 9,359,678 62% 8,621,046 53% Services/Supplies 11,829,173 7,146,718 60% 5,605,579 53% Non-Departmental * 4,747,943 4,079,618 86% 3,670,787 88% Debt Service 509,100 459,895 90% 467,665 87%
Capital Outlay 8,405,191 2,722,978 32% 1,940,374 16%
Total 40,697,491 23,768,887 58% 20,305,451 46%
* Largely comprised of Insurance and Unfunded Pension Liability Payments Budget Adjustments
Based on analysis of the first eight months of operations, it is forecast that adjustments to the budget will be needed in order to reflect anticipated expenditures in the remaining four months of operations. These adjustments are based on forecasts, as the actual expenses throughout the rest of the fiscal year are not known yet. Of course, staff will continue to manage costs through the rest of the year in an effort to control costs.
Expenses
Fire ($305,000): Additional funds are needed for increased Vehicle Maintenance costs associated with the City’s outdated fleet, which is in the process of being replaced. This
overage also includes reimbursements to the City of Monterey for overtime as Fire Department personnel filled-in on the short-staffed ambulance, as well as to capture incidental services not included in the adopted budget (i.e., laundry, dispatching).
City Attorney ($140,000): Additional funds are needed for attorney costs due to extra hours incurred addressing telecommunication issues as well as ballot measures and labor negotiations, all of which were unique to this Fiscal Year.
Revenue
Interest & Investment Earnings $445,000 : As City management has worked to maximize interest earnings, including the use of new interest-bearing accounts to earn interest on all its deposited funds, interest earnings have exceeded the budget. These unexpected revenues are sufficient to cover the increased costs associated with Fire and the City Attorney.
See details included in Exhibit A.
FISCAL IMPACT:
There is no net increase to the Fiscal Year 2023-2024 budget thanks to interest and investment earnings exceeding budget expectations.
PRIOR CITY COUNCIL ACTION:
Council adopted the Fiscal Year 2025-2026 Budget on June 3, 2025 (Resolution 2025-052).
ATTACHMENTS:
1. Attachment 1) Resolution 2026-027 Approving Amedments to the FY 2025-2026 Adopted Budget
2. Attachment 2) Exhibit A - Proposed Budget Adjustments
CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL
RESOLUTION NO. 2026-027
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA RECEIVING THE FISCAL YEAR 2025-2026 MID-YEAR BUDGET REPORT AND APPROVING BUDGET AMENDMENTS TO THE FISCAL YEAR 2025-2026 ADOPTED BUDGET
WHEREAS, the City Council adopted Resolution #2025-052 approving the Fiscal Year 2025-2026 annual operating and capital budget on June 3, 2025; and
WHEREAS, the Mid-Year Budget report provides an update regarding revenue and expenditure trends and whether fiscal performance to date aligns with budget assumption; and WHEREAS, after review of expenditures and revenues as of February 28, 2026; and WHEREAS, the City requires additional appropriations to increase the budget for the use of contracted services, and unanticipated revenue; and
WHEREAS, the Carmel Municipal Code Section 3.06.030 requires Council to approve all transfers of appropriations between departments.
NOW THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF CARMEL-BYTHE-SEA DOES HEREBY:
Approve budget amendments to Fiscal Year 2025-2026 Budget as shown in the attached Exhibit A.
PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA this 5th day of MARCH, by the following roll call vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
SIGNED: ATTEST:
______________________________ _________________________________ Dale Byrne, Mayor Nova Romero, MMC, City Clerk
Attachment 1
5 Exhibit A
Proposed Budget Adjustments
General Ledger
Account and
Description
Purpose FY 2025/26
Amended Budget
Adjustment
Amount
FY 2025/26
Adjusted Budget
101-117-00-42001
Fire Contract
Services
Increases in
overtime, true-up
and incidental costs.
$ 3,346,924.00 $ 225,000.00 $ 3,571,924.00
101-117-00-42203
Fire Vehicle
Maintenance
Increased vehicle
repair costs. $ 40,000.00 $ 80,000.00 $ 120,000.00
101-112-00-42001
City Attorney
Contract Services
Increase for extra
time invested. $ 442,000.00 $ 98,000.00 $ 540,000.00
101-112-00-42004
City Attorney Legal
Increased for extra
time invested. $ 75,000.00 $ 42,000.00 $ 117,000.00
101-000-00-37001
Interest &
Investment Earnings
Adjustment to
recognize increased
earnings.
$ 358,883.00 $ 445,000.00 $ 803,883.00
Attachment 2