Staff Report
City Council
Item No. 5.A
Meeting Date: January 14, 2026
From: Kevin Biersack, Financial Services Director
Title: FY 2025/2026 Budget Status Update, Quarter One
RECOMMENDATION:
This item is presented for information, discussion and direction only.
BACKGROUND:
The purpose of this presentation is to update City Council on the status of the City’s General and Measure W Fund’s first quarter budget versus actual results as of September 30, 2025.
In May 2025, the City Council adopted a biennial budget for both FY 2025/2026 and FY 2026/2027 annual budgets. Quarterly budget status reports will provide transparency and allow the City Council to monitor financial performance, evaluate trends, and identify potential fiscal issues early in the biennium.
DISCUSSION:
General Fund Revenues
Tax revenues of $12.73 million are modestly below budget, driven primarily by lower-than- anticipated receipts in sales tax, transaction and use tax, property tax, and transient occupancy tax. Offsetting these shortfalls, user utility tax and cannabis tax revenues are exceeding budget projections.
Licenses, permits, and other non-tax revenues total $3.47 million compared to the first quarter budget of $4.36 million. Revenues from services and fees, licenses and permits, and citations are meeting or exceeding expectations, primarily due to increases in the city’s regulatory and user fees. Conversely, miscellaneous revenues, property and interest earnings, and FEMA reimbursements are below budget, primarily due to the timing of reimbursements and interest recognition occurring later in the fiscal year.
In total, General Fund revenues through the first quarter total $16.21 million, representing
91.53 percent of the adopted first quarter budget of $17.71 million.
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General Fund Expenditures
At the departmental level, Police and Fire expenditures are tracking with budgeted expectations. Some departments, including City Management and Elected Officials, are above their proportional first-quarter allocations due to cashouts, legal fees, and annual assistance/license/subscriptions. Other departments, such as Public Works and General Government, are below budget due to project scheduling and expenditures anticipated later in the fiscal year. The actual expenditures by department and the corresponding budgets are provided in the table below:
By expenditure category, salary and benefit costs total approximately $10.69 million and are tracking close to budgeted levels. Operating expenditures total approximately $6.73 million
and are below budget, reflecting the timing of contractual services, supplies, and other operational costs.
General Fund expenditures through the first quarter total $17.42 million, or 88.63 percent of the adopted first quarter budget of $19.65 million. Overall expenditure levels are within an acceptable range for the first quarter and reflect prudent fiscal management.
General Fund Summary
For the first quarter of FY 2025/2026, total General Fund revenues versus expenditures results in a $1,212,625 deficit compared to the projected budget deficit totaling $1,946,243.
Measure W Summary
With the passage of Measure W in November 2024 and its subsequent implementation in April 2025, we now have six (6) months of Measure W activity. The FY 2025/2026 first quarter Measure W (Fund 151) results follow:
The Measure W revenue for last quarter of FY 2024/2025 was $1,080,102 (April – June) is
3.69% more than we received in first quarter FY 2025/2026 (July through September). For the first quarter of each fiscal year, the reduction in Transaction and Use Tax is expected/anticipated for both the General Fund and Measure W.
FISCAL IMPACT:
Currently, Financial Services anticipates the actual deficit for FY 2025/2026 to be significantly less than the budgeted deficit.
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.
ATTACHMENTS:
None.