Staff Report
City Council
Item No. 2.A
Meeting Date: April 9, 2025
From: Kevin Biersack, Financial Services Director
Title: Fiscal Year (FY) 2025/2026 and 2026/2027 Biennial Budget General Fund Overview Discussion
RECOMMENDATION:
This item is presented for information and discussion only.
BACKGROUND:
The City of Cathedral City is proud to participate in the Government Finance Officer Association’s (GFOA’s) Distinguished Budget Presentation Award program for the City’s Biennial Budget. Since FY 2008/2009, we have received this prestigious award for all nine (9) budget documents submitted, covering 17 years of annual budgets. The FY 2025/2026 and FY 2026/2027 Biennial Budget will be the City’s 10th submission to GFOA for this award.
Here is a review of our six-month biennial budget process:
MILESTONE COMPLETION
Workbook Preparation December and January
City Council Introduction to Budget Process January
Strategic Planning January
Department Reviews/Inputs February
Management Review/Council Budget Book March
Dept Staffing Review with Council February through April Council & Staff Discussions April
Budget Adoption May
During the month of April, there are two Study Session discussions to review the budget workbooks and associated Council questions. The April 9th session will be dedicated to the General Fund. The General Fund, including Measure W, is for “necessary City operations” and accounts for all financial resources except those accounted for in another fund. The April 23rd session will be devoted to the Special Revenue Funds, Proprietary Funds, the Capital Improvement Program (CIP) Plan and the Parks Improvement Program Plan.
The proposed budget will be presented at the May 14th Council Meeting. This proposed budget will include updates and changes from the two budget reviews and discussions held in April. With the Council’s concurrence at the May 14th meeting, the proposed FY 2025/2026 and FY 2026/2027 Biennial Budget will be submitted to Council for final approval at the May 28th meeting.
DISCUSSION:
For the purposes of this Study Session discussion focusing on the General Fund, City staff performed budget balancing analysis to identify expenditure reductions so that forecasted expenditures are on par with forecasted revenues. These reductions included position reductions, operational reductions, and reductions to improvement budgets, as well as detailed review of Public Works projected expenditures to reflect any savings attributable to the implementation of the Desert Recreation District agreement for park maintenance.
The proposed Biennial Budget currently reflects the projected balance changes in the General Fund for each year, calculated as follows:
Additionally, extraordinary expenditures were identified to include the proposed Other Post Employment Benefit (OPEB) payments, as well as one-time expenditures. If the City Council approves these expenditures to be paid from the General Fund’s balance, the proposed budgeted expenditures and fund balance would be:
General Fund revenues above are comprised of the following sources:
Taxes
oProperty Tax
oUtility User Tax
oSales Tax
oTransactions and Use Tax, including Measure W
oCannabis Tax
oTransient Occupancy Tax
oFranchise Fees
Licenses and Permits
Fees and Services
Fines and Forfeits
Intergovernmental
Use of Money and Property
Miscellaneous
Transfers In (from other funds into the General Fund)
For FY 2025/2026, taxes are 71.1% of revenues. Licenses and permits and fees and services are 20.4% of revenues, while the remaining revenues come from the other categories at 8.5%. For FY 2026/2027, the percentages are nearly identical. Taxes are
71.3% of revenues. Licenses and permits and fees and services are 20.6% of revenues, while the remaining revenues come from the other categories at 8.1%.
Expenditures budgeted for the General Fund are comprised of the following areas:
Salaries and Benefits
Operations, utilizing 3 rd party labor
oOperations and Maintenance
oProfessional/Technical Services
Operations
oMaterials and Supplies
oFleet
oTransfers
oUtilities
oTraining and Travel
oPublic Employee Retirement System (PERS) and Other Post Employment Benefits (OPEB) Annual Allocations
oInfrastructure
Street Improvements $900K for both Fiscal Years
Park Improvements $0 FY 2025/2026 and $400K FY 2026/2027 For FY 2025/2026, salaries and benefits are 57.6% of expenditures. Operations utilizing third-party labor are 28.0% of expenditures, and the remaining 14.4% of expenditures are other operations as listed above. Similar percentages were calculated for FY 2026/2027.
Salaries and benefits are 57.9% of expenditures, operations utilizing third-party labor are
28.1% of expenditures, and other operations are 14.0%.
The following are significant expenditures in the currently proposed budget for the General Fund, related both to staffing and to operations:
The General Fund provides salary and benefits for 231 Full-Time Equivalent (FTE) Staff Members, comprised of:
6 Elected Positions
82 City Hall / Public Works
61.5 Fire, including 48 sworn
81.5 Police, including 53 sworn
Of the 231 FTE staff positions, 215.3 are funded through the General Fund, which includes 6 from Measure W. Other funds provide the funding for 15.7 of the positions.
To assist with understanding other major expenditures, staff are providing one-time, extraordinary expenditure items. These are investments in the City and for the community.
They are to be funded by the reserves in our General Fund (100) savings account (Fund Balance). These expenditures consist of:
One-time Professional Services and Trainings
One-time Major Repairs and Replacements
One-time Furniture and Fixtures.
The following are one-time expenditures for FY 2025/2026:
Repairs and replacements for Facilities for FY 2025/2026 are comprised of the following:
The following are one-time expenditures for FY 2026/2027:
Repairs and replacements for Facilities for FY 2026/2027 are comprised of the following:
With the comparison of anticipated revenues, including anticipated FEMA Revenue, to proposed expenditures for FY 2025/2026 and FY 2026/2027 for the General Fund, the anticipated fund balance summaries are below:
If the Council approves the proposed Other Post Employment Benefit (OPEB) payments, as well as the one-time expenditures, to be paid out of General Fund balance, the resulting fund balance summary is as follows:
In addition, the $5 million budget forecasted for the Measure W Fund and its five primary elements is provided below:
Ambulance Services
Community Center Programs and Operations
Community Center Debt Service
Parks Operations
Road Improvements
FISCAL IMPACT:
There is no fiscal impact at this time. The full proposed budget will be presented to City Council in May for approval.
FIVE-YEAR STRATEGIC PLAN:
GOAL C – FISCAL STABILITY AND SUSTAINABILITY
Objective: Cathedral City has economically prospered by facilitating the investment of private dollars in high quality development which benefits the community. We remain financially solvent by instituting prudent fiscal policies and transparent financial practices.
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