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March 17, 2026
ITEM TITLE
Financial Report and Appropriations: Quarterly Financial Report and Budget Appropriations for the Quarter Ending December 31, 2025 (Second Quarter Report) and Acceptance of Police Foundation Donations Report Number: 26-0069
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 December 31, 2025 and adopt resolutions: A) 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 appropriati ng funds for that purpose (4/5 Vote Required); and B) accepting donations in the amount of $182,953.90 from the Chula Vista Police Foundation in support of Police Department operations.
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 Second Quarter Report is as of December 31, 2025 and is submitted in accordance 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.
In preparin g the Second 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 Transfer Authority” was established in Januar y 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 Second Quarter Report identifies recommended budget adjustments in the General Fund and other funds to address identified fiscal needs.
This item also includes a request that the City Council accept donations in support of Police Department operations.
ENVIRONMENTAL REVIEW
The proposed activity has been reviewed for compliance with the California Environmental Quality Act (CEQA), and it has been 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. Therefore, 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 July 10, 2025, the Measure A Citizen s’ Oversight Committee voted to recommend approval of the use of Measure A available fund balance for the City’s required grant match to acquire equipment in compliance with the Measure A Expenditure Plan . Budget adjustments associated with the se acquisitions 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, while 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 CIPs 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. Accordingly, this report describes the reallocation of Measure P CIP funds between projects within the same categor y that have not been individually 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 expenditures, and highlight major variances that may require additional action or changes to the Amended Budget. The Second 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 Second Quarter Report is developed using six months of actual financial activity for fiscal year 2025-26 as of December 31, 2025. The data in this report represents the most cu rrent data available; however, the projections are likely to change.
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The Second Quarter Financial Report provides summary information for the following areas:
Current economic environment
Overview of the General Fund
Details of General Fund revenues and expenditures
Discussion on significant General Fund revenue and expenditure variances Overview of Non-General Operating Funds
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 Second Quarter Report.
This space is intentionally left blank.
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General Fund Overview
General Fund revenues are projected to be lower than the Amended Budget by approximately $3.9 million, and expenditures are projected to align with the Amended Budget. Staff anticipates major revenues to come in lower than budget by $ 5.7 million and other revenues to exceed the Amended Budget by $1. 8 million, detailed in the General Fund Revenues section. The Second 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 Discretionary Revenues
Property Tax $ 58.4 $ 58.4 $ 55.3 $ (3.1) Property Tax in lieu of VLF 33.8 33.8 34.0 0.2 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 16.0 0.6 Transient Occupancy Tax 21.7 21.7 18.4 (3.4) Utility Users Tax 3.7 3.7 3.7 - Major Discretionary Revenues Subtotal 246.0 246.0 240.3 (5.7) Other General Fund Revenues
Other Revenues 59.6 60.7 62.5 1.8 Other General Fund Revenues Subtotal 59.6 60.7 62.5 1.8
Total Revenues/Sources $ 305.6 $ 306.7 $ 302.8 $ (3.9) Expenditures
Personnel Services $ 161.8 $ 161.7 $ 162.6 $ (0.9)
Non-Personnel
Supplies and Services 28.6 33.5 33.8 (0.3) Other Expenses 2.7 3.3 3.6 (0.2) Transfers Out 100.0 103.1 100.7 2.4 Internal Services 4.6 4.6 4.6 - Utilities 7.7 7.7 8.7 (1.0) Other Expenditures Category² 0.2 0.4 0.4 - Total Non-Personnel 143.8 152.7 151.8 0.9
Total Expenditures $ 305.6 $ 314.4 $ 314.4 $ -
Use of Prior Year Fund Balance $ - $ (7.7) $ (7.7) $ -
Total General Fund Surplus/(Deficit) $ - $ - $ (3.9) $ 3.9 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
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General Fund Revenues
The City’s General Fund revenues are projected to be approximately $3.9 million lower than the Amended Budget. This variance is primarily driven by lower-than-anticipated Property Tax and Transient Occupancy Tax (TOT) revenues. Property Tax revenues are projected to be $3.1 million below the Adopted B udget, which was developed based on the assessed valuation report provided by the County. While we are seeing growth in property tax over the prior fiscal year’s actuals of 6.6%, this growth is lower than anticipat ed in the budget. TOT revenues are projected to be $3 .4 million below budget, reflecting the delayed opening of two new hotels and revised revenue assumptions informed by actual receipts in the current fiscal year.
Franchise Fees , Property Tax in Lieu of V LF, and Other Revenues are projected to exceed the Amended Budget by approximately $2.6 million combined.
General Fund Expenditures
The City’s General Fund expenditures are projected to align with the Amended Budget. The projected overage in Personnel Services, Supplies and Services, Other Expenses, and Utilities totaling $2.4 million combined are expected to be offset with a decrease in Transfers Out of $2.4 million, resulting in no net fiscal impact. The reduction in Transfers Ou t is primarily attributable to Bayfront -related revenue shortfalls in Property Tax and Transient Occupancy Tax (TOT), which correspond with lower transfers from the General Fund to the City’s Lease Revenue Fund.
Fiscal Year 2025-26 Budget Adjustments
Staff is 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 Second Quarter Report (Attachment 1).
General Fund Adjustments
In the General Fund, some of the budget transfers are between expenditure categories within the same Department and some transfers are between Departments. There are also proposed budget adjustments reflecting increased revenues and increased expenditures where neede d to address unantic ipated 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.
General Fund Budget Adjustments Summary
Table 2
Department Personnel Non-Personnel Total Total
Services Expenditures Expenditures Revenue Net Impact
Public Works $ 113,000 $ 268,701 $ 381,701 $ (113,000) $ 268,701 Information Technology - 231,220 231,220 - 231,220 Development Services - 142,633 142,633 - 142,633
Library - 80,000 80,000 - 80,000 City Clerk - 17,885 17,885 - 17,885 Boards & Commissions - 5,000 5,000 - 5,000 Non-Departmental - (495,439) (495,439) (250,000) (745,439) Fire 1,264,073 33,623 1,297,696 (1,297,696) - P a g e | 6
General Fund Budget Adjustments Summary
Table 2
Parks and Recreation 210,000 115,000 325,000 (325,000) - Police (161,367) 279,367 118,000 (118,000) - Total General Fund $ 1,425,706 $ 677,990 $ 2,103,696 $ (2,103,696) $ - Below are additional details of recommended expenditure budget adjustments exceeding $75,000:
Public Works: Increase to Non-Personnel Expenditures of $ 268,701 in the Utilities and Non -CIP Project Expenditures categories for increased water expenses and a correction to a prior year budget amendment .
Increase to Personnel Expenditures of $113,000 which is fully offset by an increase to estimated revenues for staff time reimbursements.
Information Technology: Increase to Non-Personnel Expenditures of $231,220 to pay for software contract cost increases and equipment.
Development Services: Increase to Non-Personnel Expenditures of $142,633 in the Supplies & Services and Other Expenses categories for unanticipated expenses related to mobile home park fees, recruitment , and abatement.
Library: Increase to Non-Personnel Expenditures in the Supplies & Services category of $80,000 for security services contract.
Non-Departmental: Net decrease to Non-Personnel Expenditures of $495,439 comprised of a decrease of $745,439 from a reduction in general liability insurance cost and a reallocat ion of existing encumbrance partially offset by an i ncrease of $250,000 due to expenditures for the Higher Education grant. The expenditures of the Higher education grant are fully offset by an increase to estimated grant revenues of $250,000.
Fire: Increase to Personnel Expenditures of $1,264,073 and Non -Personnel Expenditures of $33,623 offset with an increase to estimated revenues of $1,297,696 for reimbursed overtime costs associated with strike team activities.
Parks & Recreation: Increase to Personnel Services of $210,000 and Non-Personnel Expenditures of $115,000 fully offset with an increase of estimated revenues from recreational and class registration fees.
Police: Increase to Non -Personnel Expenditures of $ 279,367 offset by a combination of a de crease in Personnel Expenditures of $161,367 and an increase to estimated revenues of $118,000 for software costs and mandated handguns replacement.
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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.
Other Fund Budget Adjustments Summary
Table 3
Personnel Non-Personnel Total Total
Other Funds Services Expenditures Expenditures Revenue Net Impact Park Benefit Fees $ - $ 1,000,000 $ 1,000,000 $ - $ 1,000,000 Public Liability Trust - (1,651,481) (1,651,481) 2,501,481 850,000 Public Facilities DIF - 269,188 269,188 - 269,188 Otay Ranch Village 1,2,6,7,12 - 176,349 176,349 - 176,349 CFD 14M-B-EUC Millenia - 15,000 15,000 - 15,000
Other Grants - 15,000 15,000 - 15,000
Federal Grants - 558,321 558,321 (554,590) 3,731
CFD 13-M Otay Ranch Village 2 - - - (93,115) (93,115)
CFD 99-2 Otay Ranch Vlg 1 West - - - (39,774) (39,774)
CFD 08M Vlg 6 McMillin & OR - - - (23,080) (23,080)
CFD 12M Village 7 Otay Ranch - - - (11,874) (11,874)
CFD 19M Freeway Commercial 2 - - - (5,555) (5,555)
State Grants (27,501) 25,527 (1,974) (1,757) (3,731)
CFD 98-3 Sunbow 2 - - - (2,952) (2,952)
Capital Improvement Projects - 2,584,894 2,584,894 (2,584,894) - Donations - 83,464 83,464 (83,464) -
Total Other Funds $ (27,501) $ 3,076,262 $ 3,048,761 $ (899,574) $2,149,187
Below are additional details of recommended expenditure budget adjustments exceeding $75,000:
Park Benefit Fees: Increase to Non-Personnel Expenditures from available fund balance of $1,000,000 for CIP Project# PRK0340 (Eucalyptus Park Improv FY22).
Public Liability Trust: Decrease Non-Personnel Expenditures by $2,501,481 in the Transfers Out category and decrease estimated revenues by $2,501,481 to eliminate a transfer that is no longer required because the expense will be incurred in the Capital Projects Fund . Increase Non -Personnel Expenditures by $850,000 from available fund balance for anticipated legal costs.
Public Facilities DIF : Increase to Non -Personnel Expenditures of $269,188 from fund balance for Bayfront Fire Station costs.
Otay Ranch Village 1,2,6,7,12 : Increase to Non -Personnel Expenditures of $176,349 in the Transfers Out category to distribute residual balances following fund closure.
CFD 13-M Otay Ranch Village 2: Increase to estimated revenues in the Transfers In category of $93,115 from residual balances following a fund closure.
Capital Improvement Projects : Increase to Non -Personnel Expenditures of $ 2,584,894 fully offset by an P a g e | 8
increase to estimated revenues for CIP Projects # GV027 8 (224 Third Avenue Improvements ), CTY0242 (Water Damage at CC Library) and CTY0244 (Sewer Damage and CC Library).
Donations: Increase to Non -Personnel Expenditures and estimated revenues of $83,464 for donations received for El Grito, Beautify Chula Vista and Starlite Parade special events.
Capital Improvement Project Budget Amendments:
Staff are recommending several adjustments to the Capital Improvement Project Bu dget, which include transfer of expenditures and increases to various projects. Details of these amendments are provided in Table 4 below.
Capital Improvement Project Fund Budget Adjustments
Table 4
Fund Project
CIP Project
Expenditures
Total
Expenditures
Capital Improvement Projects GGV0278 – 224 Third Avenue Improvements $ 2,501,481 $ 2,501,481 Capital Improvement Projects CTY0242 – Water Damage at CC Library 51,833 51,833 Capital Improvement Projects CTY0244 – Sewer Damage at CC Library 31,580 31,580 2016 Measure P Sales Tax DRN0216 – CMP Emergency Repair 300,000 300,000 2016 Measure P Sales Tax
DRN0219 – CMP Rehab Outside ROW Ph3
Measure P (300,000) (300,000)
Transportation Sales Tax
STM0416 – Pavement Major Rehabilitation
FY26 (175,000) (175,000)
Transportation Sales Tax TRF0332 – Signing and Striping Program 100,000 100,000 Transportation Sales Tax CTY0242 – Water Damage at CC Library 75,000 75,000 Park Benefit Fees PRK0340 – Eucalyptus Park Improv FY22 1,000,000 1,000,000 Total Other Funds $ 3,584,894 $ 3,584,894
Donations Acceptance
In accordance with Donations Policy 270-01, the Police Department is requesting City Council approval for the acceptance of donations received between July 15, 2020 and April 4, 2025, with a cumulative value of $182,953.90. Council approval is required to ensure compliance with the Donations Policy governing the acceptance of donated goods and services. Acceptance of these donations will have no fiscal impact on the fiscal year 2025 –26 budget. The donated items consist of operational and technological resou rces that support public safety functions, including unmanned aerial systems (drones), iPads, batteries, receivers, and docking stations for drone use, as well as subscriptions for public safety related software. These resources enhance the Police Department’s operational capabilities and investigative effectiveness while aligning with established City policies and procedures.
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.
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CURRENT-YEAR FISCAL IMPACT
The Second Quarter Report presents projected revenue and expenditure amounts as of December 31, 2025, with updates through February 17, 2026, reflecting the most current information available. Approval of the resolution amending the fiscal year 2025 -26 budget and the fiscal year 2025 -26 Capital Improvement Program budget will result in the following fiscal impacts:
General Fund – The proposed adjustments result in no net impact to the fiscal year 2025 -26 General Fund budget. This includes an increase in General Fund appropriations of approximately $2,103,696 of fset by an increase in estimated revenues of $2,103,696.
Other Funds – The proposed adjustments result in a negative net impact to the fiscal year 2025-26 budgets of the Other (non -General Fund) Funds of $2,149,187. This includes an increase in appropriat ions of approximately $3,048,761 and an increase in estimated revenues of $899,574.
ONGOING FISCAL IMPACT
Staff will review the impacted budgets to identify potential ongoing fiscal impacts and may recommend budgetary adjustments to City Council during fiscal year 2026-27 budget development process.
ATTACHMENTS
1. Fiscal Year 2025-26 Second Quarter Report
2. General Fund Budget Transfers
3. General Fund Budget Amendments
4. Police Department Donations
Staff Contact: Ed Prendell, Budget and Analysis Manager Maritza Vargas, Fiscal and Management Analyst
Sarah Schoen, Director of Finance/Treasurer