v . 0 0 5 P a g e | 1
December 2, 2025
ITEM TITLE
Financial Report and Appropriation: Accept the Quarterly Financial Report for the Quarter Ending September 30, 2025 (First Quarter Report) and Appropriate Funds to Implement Required Budget Adjustments
Report Number: 25-0264
Location: No specific geographic location
Department: Finance
G.C. § 84308 Regulations Apply: No
Environmental Notice : The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines. Therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
Recommended Action
Accept the quarterly financial report for the quarter ended September 30, 2025 (the “First Quarter Report”) and adopt a resolution making various amendments to the fiscal year 2025 -26 budget and the fiscal year 2025-26 Capital Improvement Program budget to adjust for variances and appropriating funds for that purpose. (4/5 Vote Required)
SUMMARY
The Finance Department, in collaboration with other City departments, prepares quarterly financial reports for the General Fund that reflect budget to actual comparisons, projected revenues and expenditures, and highlight major variances that may require additional action or budgetary changes to the Amended Budget.
This First Quarter Report is as of September 30, 2025 and is in compliance with Section 505(F) of the City Charter, which requires that quarterly financial reports be filed by the Director of Fin ance through the City Manager.
In preparing the First Quarter Report, staff identified various budgetary changes that are needed to accurately reflect actual revenues and expenditures or address changes in budgetary needs. For government entities, a budget creates a legal framework for spending during the fiscal year. After the budget is approved by the City Council, there are circumstances which arise that could require adjustments to the approved P a g e | 2
budget. Council Policy 220 -02 “Financial Reporting and Tran sfer Authority” was established in January of 1996 and amended October of 2023, and allows for budget transfers across budget categories and other adjustments to be completed. Budget transfers and adjustments processed pursuant to this authority are provided as Attachments 2 and 3 to this report. This First Quarter Report discusses budget adjustments that staff recommend in the General Fund as well as various other funds to address identified fiscal issues.
ENVIRONMENTAL REVIEW
The Director of Development Services has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines because the proposed activity consists of a governmental fiscal/administrative activity which does not result in a physical change in the environment . T herefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA.
BOARD/COMMISSION/COMMITTEE RECOMMENDATION
Measure A
On October 9, 2025, the Measure A Citizen’s Oversight Committee voted to recommend approval of the purchase of two crew carriers and two crew cab utility vehicles and found the purchase complies with the Measure A expenditure plan. Budget adjustments associated with the purchase of these vehicles are recommended in this item.
Measure P
The Measure P Citizen’s Oversight Committee (COC) approves funding for Capital Improvement Projects (CIPs) at the category level. In contrast, t he City Council reviews CIPs at both the category and individual project level.
As projects are completed , any remaining project funds are routinely reallocated to other C IPs within the same category, without returning to the Measure P COC . Likewise, funds may be shifted between general CIPs and more specific CIPs within a category without requiring additional COC review.
For this reason, this report describes the reallocation of Measure P CIP funds between projects within the same category, which have not explicitly been reviewed by the Measure P COC.
DISCUSSION
The Finance Department, in collaboration with other City departments, prepares quarterly financial reports for the General Fund that reflect budget to actual comparisons, projected revenues and exp enditures, and highlight major variances that may require additional action or changes to the Amended Budget. The First Quarter Financial Report is in compliance with Section 505 (f) of the City Charter, which requires that quarterly financial reports be filed by the Director of Finance through the City Manager.
The First Quarter Report is developed using three months of actual activity for fiscal year 2025-26 as of September 30, 2025. The data in this report is the most current data available; however, due to the limited data available, in-depth year-end projections for departmental revenues and expenditures are not included in this report but will be provided in future quarterly fin ancial reports. The focus instead is on the General Fund’s major revenues, as well as any known significant expenditure budget adjustments. As a result of the P a g e | 3
limited information, the projections are likely to change as the year progresses.
The First Quarter Financial Report provides summary information for the following areas:
Current economic environment
Overview of the General Fund
Details on General Fund revenues and expenditures
Discussion on significant General Fund revenue and expenditure variances Recommended budget adjustments to General Fund, Other Funds and Capital Improvement Project expenditures budgets
The following information provides an overview of the General Fund and recommended budget adjustments, included in the attached First Quarter Report.
General Fund Overview
General Fund revenues are projected to be lower than the Amended Budget by $0.6 million, and expenditures are projected to exceed the Amended Budget by $1.1 million. Staff anticipate major revenues to come in lower than budget by $1.6 million and other revenues to exceed the Amended Budget by $1.0 million, detailed in the General Fund Revenues section. As stated earlier, the First Quarter report is limited to projections of the General Fund’s Major Revenues, as well as any known significant expenditure bud get adjustments. In- depth projections for departmental revenues and expenditures will be included in future quarterly financial reports as additional financial data becomes available. The First Quarter Report (Attachment 1) provides a comprehensive financial overview for the quarter.
Fiscal Year 2025-26 General Fund Overview
Table 1 in millions
Adopted Budget Amended
Budget
Year-end
Projection Variance¹
Revenue Source
Major Revenues
Property Tax $ 58.4 $ 58.4 $ 58.0 $ (0.5) Property Tax in lieu of VLF 33.5 33.5 33.6 0.1 Sales Tax 51.2 51.2 51.2 - Measure P Sales Tax 30.8 30.8 30.8 - Measure A Sales Tax 30.8 30.8 30.8 - Franchise Fees 15.4 15.4 15.7 0.3 Transient Occupancy Tax 21.7 21.7 20.1 (1.6) Utility Users Tax 3.7 3.7 3.7 0.1 Major Revenues Subtotal 245.6 245.6 244.0 (1.6) Other General Fund Revenues
Other Revenues 60.0 60.0 61.0 1.0 Other General Fund Revenues Subtotal 60.0 60.0 61.0 1.0
Total Revenues/Sources $ 305.6 $ 305.6 $ 305.0 $ (0.6) P a g e | 4
Fiscal Year 2025-26 General Fund Overview
Table 1 in millions
Adopted Budget Amended
Budget
Year-end
Projection Variance¹
Expenditures
Personnel Services $ 161.8 $ 162.0 $ 161.9 $ 0.1
Non-Personnel
Supplies and Services 28.6 32.3 33.4 (1.1) Other Expenses 2.7 6.3 3.3 3.0 Transfers Out 100.0 100.0 103.0 (3.0) Internal Services 4.6 4.6 4.6 - Utilities 7.7 7.7 7.7 - Other Expenditures Category² 0.2 0.4 0.4 - Total Non-Personnel 143.8 151.3 152.5 (1.1)
Total Expenditures $ 305.6 $ 313.3 $ 314.4 $ (1.1)
Use of Prior Year Fund Balance $ - $ (7.7) $ (7.7) $ -
Total General Fund Surplus/(Deficit) $ - $ - $ (1.6) $ 1.6 1 Variance compares the Amended Budget and the Year-End Projection. 2 Other Expenditures Category includes: Other Capital, Non-CIP Projects Expenditures and CIP Project Expenditures. *Tables may not tie due to rounding
General Fund Revenues
The City’s General Fund revenues are projected to be approximately $0.6 million lower than the Amended Budget. This variance is primarily due to a shortfall in Transient Occupancy Tax (TOT) of $1.6 million , reflecting a delay in the anticipated opening of two new hotels, now expected to begin operations next fiscal year instead of fiscal year 2026, along with updated revenue assumptions informed by actual receipts in fiscal year 2024–25. Franchise Fees, Property Tax in Lieu of VLF, Utility Users’ Tax and Other Rev enues are projected to exceed the Amended Budget by approximately $1.5 million combined.
General Fund Expenditures
The City’s General Fund expenditures are projected to exceed the Amended Budget by $1.1 million. As stated earlier, the First Quarter Report projections only reflect known significant expenditure budget adjustments.
More comprehensive year-end projections for departmental revenues and expenditures will be presented in subsequent quarterly reports as additional financial data becomes available.
Fiscal Year 2025-26 Budget Adjustments
Staff are recommending various budget adjustments, appropriations, and transfers to City Departmental and Fund budgets that require City Council authorization. Amendments with a net financial impact of $75,000 or greater are detailed in this report. For a comprehensive list of all other amendments, please refer to the First Quarter Report (Attachment 1).
General Fund Adjustments
In the General Fund, some of the transfers are between expense categories within the same Department and some transfers are between Departments. There are also proposed budget adjustments reflecting increased P a g e | 5
revenues and increased expenditures where needed to address unanticipated expenditure category overages and ensure accurate year -end reporting. The recommended budget adjustments are shown in Table 2 below. Additional details by budget category can be found in Exhibit 1 to the Resolution.
Table 2
Department Personnel Non-Personnel Total Total
Services Expenses Expense Revenue Net Impact
City Council $ 14,640 $ - $ 14,640 $ - $ 14,640 Information Technology (94,380) 121,094 26,714 - 26,714 Non-Departmental - (41,354) (41,354) - (41,354) Economic Development - 1,070,160 1,070,160 (1,070,160) 1,070,160 Total General Fund $ (79,740) $ 1,149,900 $ 1,070,160 $ (1,070,160) $ -
Below are additional details of recommended expenditure budget adjustments exceeding $75,000:
Economic Development: Increase to Non -Personnel Expenditures of $1,070,160 fully offset with revenues from Metropolitan Transit System (MTS) for Bayfront Shuttle Program that were not included in the Adopted Budget due to timing of the contract.
Other Fund Adjustments
The recommended adjustments in Table 3 below are for funds other than the General Fund that result in a fiscal impact at the revenue and expenditure level. Additional details by budget category can be found in Exhibit 1 to the Resolution.
The recommended adjustments are offset by additional current year revenues or the available fund balance of the respective funds.
Table 3
Personnel
Non-
Personnel Total Total
Other Funds Services Expenses Expense Revenue Net Impact Capital Improvement Projects $ - $ 780,266 $ 780,266 $ - $ 780,266 2018 Measure A Sales Tax - 400,000 400,000 - 400,000 Equipment Vehicle Replacement - 335,000 335,000 - 335,000 Parking Meter - 100,000 100,000 - 100,000
CFD 97-1 Otay Ranch - 60,262 60,262 - 60,262 CFD 98-3 Sunbow 2 - 34,350 34,350 - 34,350
Other Grants 25,000 125,000 150,000 (125,000) 25,000 CFD 13-M Otay Ranch Village 2 - 17,745 17,745 - 17,745 CFD 08M Vlg 6 McMillin & OR - 15,678 15,678 - 15,678 Sewer Facility Replacement - 14,585 14,585 - 14,585 CFD 99-2 Otay Ranch Vlg 1 West - 13,002 13,002 - 13,002 CFD 09M ORV II Brookfield-Shea - 11,195 11,195 - 11,195 CFD 18M Village 3 Otay Ranch - 9,062 9,062 - 9,062 CFD 07M Eastlake Woods & Vista - 8,686 8,686 - 8,686 CFD 12-M Otay Ranch Village 7 - 6,724 6,724 - 6,724 CFD 12M Village 7 Otay Ranch - 5,369 5,369 - 5,369 Open Space District #14 - 4,482 4,482 - 4,482 Open Space District #31 - 4,261 4,261 - 4,261 Eastlake Maintenance Dist I - 3,654 3,654 - 3,654
Chula Vista Muni Golf Course - 3,246 3,246 - 3,246 P a g e | 6
Table 3
Personnel
Non-
Personnel Total Total
Other Funds Services Expenses Expense Revenue Net Impact Open Space District #18 - 3,053 3,053 - 3,053
Open Space District #10 - 2,397 2,397 - 2,397
CFD 11-M Rolling Hills McM - 1,847 1,847 - 1,847 Open Space District #05 - 1,437 1,437 - 1,437 CFD 14M-A-EUC Millenia - 838 838 - 838 CFD 14M-2-EUC Millenia - 805 805 - 805
Open Space District #06 - 756 756 - 756 Permanent Endowments - 500 500 - 500 CFD 19M Freeway Commercial 2 - 427 427 - 427 2017 CREBs LRBs - - - (780,266) (780,266)
Federal Grants 69,726 165,655 235,381 (549,411) (314,030) Public Liability Trust - 2,827,387 2,827,387 (2,827,387) - State Grants 245,262 667,429 912,691 (912,691) -
Donations - 27,000 27,000 (27,000) -
Local Grants (18,100) - (18,100) 18,100 -
Total Other Funds $ 321,888 $ 5,652,098 $ 5,973,986 $ (5,203,655) $ 770,331 Below are additional details of recommended expenditure budget adjustments exceeding $75,000:
Capital Improvement Projects: Increase to Non-Personnel Expenditures in the Transfers Out category from excess bond proceeds that need to be returned to the 2017 CREBs LRBs Fund of $780,266.
2018 Measure A Sales Tax: Increase to Non-Personnel Expenditures of $400,000 in the Capital category from fund balance for the purchase of vehicles. This item was presented to the Measure A Citizen’s Oversight committee on October 9, 2025, and was found to be in compliance with the Measure A Expenditure Plan.
Equipment Vehicle Replacement: Increase to Non-Personnel Expenditures of $335,000 in the Capital category from fund balance for the purchase of replacement vehicles.
Parking Meter Fund : Increase to Non -Personnel Expenditures of $100,000 from fund balance for CIP STL0480 for additional Americans with Disabilities Act (ADA) compliant parking on Third Avenue.
2017 CREBs LRBs: Increase to estimated revenues of $780,266 in the Transfers In category for a transfer from the Capital Improvement Projects Fund returning bond proceeds to the bond fund.
Federal Grants: Increase to Personnel and Non -Personnel Expenditures for a total of $235,381, offset with estimated revenues of $549,411 for various grants in the Police Department. Increased revenues include the USDA grant match in Public Works.
Public Liability Trust : Increase to Non -Personnel Expenditures fully offset with an increase of revenues of $2,827,387 for anticipated legal expenses.
State Grants: Increase to Personnel and Non-Personnel Expenditures fully offset with an increase of revenues of $912,691 for various grants in the Police and Library departments.
P a g e | 7
Capital Improvement Project Budget Amendments:
Staff are recommending several adjustments to the Capital Improvement Project Budget, which include transfer of expenditures and increases to various projects. Details of these amendments are provided in Table 4 below.
Table 4
Fund Project
CIP Project
Expenditures
Total
Expenditures
2016 Measure P Sales Tax GGV0231 – Civic Center & South Libraries $ (500,000) $ (500,000) 2016 Measure P Sales Tax GGV0271 – Civic Ctr Library Infra Renovation 250,000 250,000 2016 Measure P Sales Tax GGV0272 – South Library Infra Renovation 250,000 250,000 2016 Measure P Sales Tax GGV0242 – Fire St 2 Fueling Tank Replace (321,343) (321,343) 2016 Measure P Sales Tax GGV0339 - Fire Facility Repairs 321,343 321,343 Transportation Sales Tax STM0414 – Pavement Major Rehab FY23/24 (200,000) (200,000) Transportation Sales Tax STL0454 – ADA Pedestr Curb Ramps Program FY22 200,000 200,000 Parking Meter STL0480 – Third Ave ADA Parking Stalls 100,000 100,000 Sewer Facility
Replacement SWR0308 – Sewer Access Rd Rehab Prog FY18/19 14,585 14,585 Total Other Funds $ 114,585 $ 114,585
DECISION-MAKER CONFLICT
Staff have reviewed the decision contemplated by this action and have determined that it is not site-specific and consequently, the real property holdings of the City Council members do not create a disqualifying real property-related financial conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et seq.).
Staff are not independently aware and have not been informed by any City Council member, of any other fact that may constitute a basis for a decision-maker conflict of interest in this matter.
CURRENT-YEAR FISCAL IMPACT
The First Quarter Report presents projected revenue and expenditure amounts as of September 30, 2025, with updates through October 3 0, 2025, as the most current information available. Approval of the resolution amending the fiscal year 202 5-26 budget and the fiscal year 202 5-26 Capital Improvement Program budget will result in the following impacts:
General Fund – The proposed adjustments result in no net impact to the fiscal year 202 5-26 budget. This includes an increase in General Fund appropriations of approximately $ 1,070,160 offset by an increase in estimated revenues of $1,070,160.
Other Funds – The proposed adjustments result in a negative net impact to the fiscal year 202 5-26 budget of the Other (non -General Fund) Funds of $ 770,331. This includes an increase in appropriatio ns of approximately $5,973,986 and an increase in estimated revenues of $5,203,655.
ONGOING FISCAL IMPACT
Staff will review the impacted budgets to identify potential ongoing impacts and may recommend budgetary adjustments to Council during fiscal year 2025-26.
P a g e | 8
ATTACHMENTS
1. Fiscal Year 2026 First Quarter Report
2. General Fund Budget Transfers
3. General Fund Budget Amendments
Staff Contact: Ed Prendell, Budget and Analysis Manager Maritza Vargas, Fiscal and Management Analyst
Sarah Schoen, Director of Finance/Treasurer