Page | 1
Quarterly Financial Report
Period Ending March 31, 2026
INTRODUCTION
Chula Vista City Council adopted the fiscal year 2025 -26 budget on May 20, 2025. The Finance Department, in collaboration with other City of Chula Vista (“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. Per Se ction 505 (f) of the City Charter, the Director of Finance has prepared and submitted the quarterly financial report for the quarter ended March 31, 2026 (Third Quarter Report) through the City Manager.
The Third Quarter Report is developed using nine months of actual financial activity for fiscal year 2025-26 as of March 31, 2026. The data in this report is the most current data available; however, due to the limited data available, projections are likely to change as the year progresses.
The Third Quarter Report provides summary information for the following areas:
Current economic environment
Overview of the General Fund
Details on major General Fund revenues and expenditure categories 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 expenditure budgets
The Finance Department will continue to monitor the City’s actual revenues and expenditures and will provide year-end actuals in the next quarterly financial report.
ECONOMIC OVERVIEW
City staff reviewed information from various sources including the following: federal data (U.S.
Bureaus of Economic Analysis, Labor Statistics; Federal Reserve; U.S. Treasury), the quarterly UCLA Anderson Economic Outlooks, HdL (City sales tax consultant), the San Diego Tourism Authority, and other sources to develop the economic assumptions and growth rates included in the Third Quarter Report.
Highlights – National
The UCLA Anderson Forecast (“Forecast”) for Spring 2026 expects stronger growth for 2026.1 The
1 UCLA Anderson School of Management. U.S. Economy Poised to Reaccelerate in 2026 as Fiscal Stimulus and AI Investment Intensify; California Growth Outpaces Nation Despite Ongoing Employment Weakness . 4 Mar. 2026. UCLA Anderson Forecast.
Page | 2
balance of risks, between tariffs and a stagnant labor market, have shifted toward reacceleration, mostly fueled by income tax cuts, expansion of fiscal stimulus and sustained artificial intelligence investment.1
Unemployment
The labor market remained unchanged at a national unemployment rate of 4.3%, with notable gains in health care, transportation and warehousing, though, federal government continued to decline.2 The Forecast reflects the labor market beginning to show early signs of improvement.1
Inflation
Despite periods of trending downward in 2025, inflation continues to be elevated. 3 The seasonally adjusted annual rate of Consumer Price Index was 3.3% in March, the highest since June 2024.4 The Forecast predicts inflation to increase slightly as a result of tariffs before gradually settling in the mid-to-low twos through 2027 and 2028. 1
Interest Rates
The Federal Open Market Committee (FOMC), part of the Federal Reserve, is committed to Congress’s mandate to promote maximum employment, stable prices (i.e., limited inflation), and moderate long -term interest rates. Reporting that job gains have remained low this year and unemployment remaining stabilized , in its latest meeting in March 2026 the Federal Reserve maintained the federal funds target at 3-1/2 to 3-3/4 percent.5
The “federal funds rate” established by the FOMC sets the interest rate at which banks lend money to other banks to maintain overnight reserves of funds. When the federal funds rate increases, the cost to banks for lending increases and passed on to businesses and consumers on other borrowing, such as for business investments, credit cards, cars, mortgages and other bank loans. Interest rate fluctuations impact the City’s finances by affecting borrow ing costs for capital projects and long - term investments; private investments growth; and investment returns on its cash balances.
Real Gross Domestic Product (GDP)
The chart below from the U.S. Bureau of Economic Analysis displays recent quarterly results of real GDP, a measure of the value of all goods and services produced in a country over a period of time (adjusted for inflation), which is an economic indicator o f growth. In the fourth quarter (Q 4) of 2025, real GDP grew at an annualized rate of 0.5%, a stark decline from the third quarte r (Q3) of
4.4%.6 Continued positive growth each quarter generally allays economists’ concerns that a recession is forthcoming. T he Q4 results largely reflect decreases in government spending due to the government shutdown and exports.6 The Federal Reserve will be closely monitoring this
2 U.S. Bureau of Labor Statistics. Economic News Release: Employment Situation Summary. Apr. 2026 . U.S. Bureau of Labor Statistics.
3 U.S. Bureau of Labor Statistics. Consumer Price Index – April 2026. 10 Apr. 2026. U.S. Bureau of Labor Statistics. 4 Federal Open Market Committee. Press Release: Federal Reserve issues FMOC statement. 18 March. 2026. Federal Open Market Committee.
5 U.S. Bureau of Economic Analysis. Gross Domestic Product, 3rd Quarter 2025 (Third Estimate), GDP by Industry, Corporate Profits (Revised), and Annual Update. U.S. Bureau of Economic Analysis. 6 Reuters. US economic growth likely slowed to a still-brisk pace in fourth quarter. 19 Feb. 2026. Reuters.
Page | 3
marginal positive economic growth in its policy decisions to reduce inflation.
GDP: Percent Change from Preceding Quarter
The Forecast predicts GDP growth to approach 3% in 2026 and moderate in 2027 and 2028 as fiscal stimulus fades and AI infrastructure stabilizes.7
Highlights – California
The Forecast for California highlighted a contrasting pattern in the economy with strong output growth paired with weak payroll employment. 7 The Legislative Analyst Office indicate s, despite improvements in revenues, the California budget problem is larger than anticipated. The strong income tax collections driven by enthusiasm around AI, have driven the stock market to be overheated and possibly not sustainable.8
The latest state employment reports show a 5.3% unemployment rate, marking the fifth consecutive month of reductions .9 Some factors impacting California labor include changes in H -1B visas and artificial intelligence (AI) development in the technology sector and a general decline in manufacturing. National immigration policies are also exhibiting impacts on the non-durable goods (food) and agriculture sectors.
Overall, both the nation and the state economies are expected to see sluggish growth in early 2026, with potential improvement beginning in late 2026 and into 2027. The outlook for the state’s economy remains subject to several uncertainties, including federal immigration policies and
7 UCLA Anderson. Los Angeles on the Global Stage: World Cup, Super Bowl and the Olympics: Spring 2026 U.S.
Economic Outlook. [Webinar]. 4 Mar. 2026. UCLA Anderson. 8 California Legislative Analyst’s Office. The 2026-27 California’s Fiscal Outlook. 19 Nov. 2025. California Legislative Analyst's Office.
9 California Employment Development Department. California Added 28,700 Jobs in March 2026. 1 May 2026. California Employment Development Department.
Page | 4
associated deportations, the scope and impact of tariffs and related trade responses and the pace and practical application of artificial intelligence technologies.7
GENERAL FUND OVERVIEW
General Fund revenues are projected to be lower than the Amended Budget by $2.4 million, and expenditures are also projected to be lower than the Amended Budget by $2. 4 million. Staff anticipates major revenues to come in lower than budget by $ 3.7 million and other revenues to exceed the Amended Budget by $1. 3 million, detailed in the General Fund Revenues section. Third quarter projections for expenditures, as well as any known significant expenditure budget adjustments are detailed in the General Fund Expenditures section.
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 $ (3.2) Property Tax in lieu of VLF 33.8 33.8 34.0 0.2 Sales Tax 51.2 51.2 51.1 (0.1) Measure P Sales Tax 30.8 30.8 30.9 0.1 Measure A Sales Tax 30.8 30.8 30.9 0.1 Franchise Fees 15.4 15.4 16.0 0.6 Transient Occupancy Tax 21.7 21.7 20.4 (1.3) Utility Users Tax 3.7 3.7 3.7 -
Major Discretionary Revenues Subtotal 246.0 246.0 242.3 (3.7) Other General Fund Revenues
Other Revenues 59.6 62.8 64.1 1.3 Other General Fund Revenues Subtotal 59.6 62.8 64.1 1.3
Total Revenues/Sources $ 305.6 $ 308.8 $ 306.4 $ (2.4) Expenditures
Personnel Services $ 161.8 $ 163.0 $ 161.7 $ 1.2
Non-Personnel
Supplies and Services 28.6 33.8 32.7 1.1 Other Expenses 2.7 3.6 4.1 (0.6) Transfers Out 100.0 103.0 101.7 1.3 Internal Services 4.6 4.6 4.6 - Utilities 7.7 8.0 8.6 (0.6) Other Expenditures Category² 0.2 0.5 0.5 - Total Non-Personnel 143.8 153.5 152.6 1.0
Total Expenditures $ 305.6 $ 316.5 $ 314.1 $ 2.4
Use of Prior Year Fund Balance $ - $ (7.7) $ (7.7) $ -
Total General Fund Surplus/(Deficit) $ - $ - $ - $ - 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
Page | 5
GENERAL FUND REVENUES
As identified in Table 1 above, the City’s General Fund revenues are projected to be lower than the Amended Budget by approximately $ 2.4 million. The shortfall in Property Tax of $3. 2 million, Transient Occupancy Tax (TOT) of $ 1.3 million, and Sales Tax of $0.1 million is anticipated to be partially offset by the projected increase in Property Tax in Lieu of VLF, Franchise Fees, Measure A Sales Tax, Measure P Sales Tax, and Other Revenues of approximately $2.3 million combined.
Fiscal Year 2025-26 General Fund Overview
Table 2 in millions
Revenue Source Adopted
Budget
Amended
Budget
Year-end
Projection Variance
Major Discretionary Revenues
Property Tax $ 58.4 $ 58.4 $ 55.3 $ (3.2) Property Tax in lieu of VLF 33.8 33.8 34.0 0.2
Sales Tax 51.2 51.2 51.1 (0.1)
Measure P Sales Tax 30.8 30.8 30.9 0.1
Measure A Sales Tax 30.8 30.8 30.9 0.1
Franchise Fees 15.4 15.4 16.0 0.6
Transient Occupancy Tax 21.7 21.7 20.4 (1.3)
Utility Users’ Tax 3.7 3.7 3.7 -
Major Discretionary Revenues Subtotal 246.0 246.0 242.3 (3.7) Other General Fund Revenues
Other Revenues 59.6 62.8 64.1 1.3
Other General Fund Revenues Subtotal 59.6 62.8 64.1 1.3 Total General Fund Revenues Surplus/(Deficit) $ 305.6 $ 308.8 $ 306.4 $ (2.4)
Property Tax
Property tax revenue derived from ad valorem taxes on real property and tangible personal property within the City boundaries. Property tax is administered by the County of San Diego and is limited by Proposition 13 to a general rate of 1% of assessed value. Currently, the City receives approximately 12.4% of property taxes revenues as sessed for Chula Vista properties.
Property tax is the City’s largest revenue source, representing 19.1% of General Fund revenues in the Adopted Budget. Property tax is projected to be $55.3 million; a $3.2 million decrease compared to the Adopted Budget , consistent with the Second Quarter Financial Report projection .
Approximately $1.3 million of the shortfall is attributable to the property taxes associated with timing of the supplemental property tax assessments for the Gaylord Pacific Resort and Convention Center project. This reduction in projected revenues also results in a corresponding decrease to expenditures in the Transfers Out category, result in an overall net zero fiscal impact to the General Fund.
In addition, final updates to receivables from the County Assessor, combined with a decline in home sales, contributed to property tax growth that was lower than originally assumed in the
Page | 6
budget. Based on trends observed in the current and prior fiscal years, staff revised the forecasting methodology to a more conservative approach to better reflect current market conditions.
Based on the Zillow Home Value Index – March 2026, Chula Vista’s median home price for a single- family home was $ 846,372, a 1.8% year-over-year decline. A cooling trend in the housing market is apparent, with declines in sales across the San Diego region. Buyer enthusiasm has waned due to affordability constraints and mortgage rates remaining high despite recent Federal Reserve interest cuts. A slowdown in home sales will have some degree of impact on the growth of property taxes in the City as homes are typically reassessed at higher values upon major construction/improvements or sale, with home prices generally increasing over time. Property tax growth is otherwise limited by the cap on Proposition 13 on assessed value growth to the lesser of the California Consumer Price Index (CPI) or 2%.
Source: Chula Vista Zillow Home Values Index (https://www.zillow.com/home-values/51405/chula-vista-ca/) Property Tax in Lieu of VLF
Property tax in lieu of vehicle license fees (“VLF”) revenues are generated from vehicle license fees paid with vehicle registrations with the State of California and then allocated to cities and counties.
VLF fluctuate with changes in assessed values within the City.
Property tax in lieu of VLF is projected to be $3 4.0 million, a $0.2 million increase compared to the Adopted Budget, consistent with the Second Quarter Financial Report projections. Projections for fiscal year 2026 are based on updated information from the County.
Sales Tax
The Bradley -Burns Uniform Local Sales and Use Tax (Sales Tax) tax revenue is generated from a percentage tax imposed on the sale of retail goods and services that occur within the City. Sales tax revenue is highly sensitive to economic conditions and reflects the factors that drive taxable sales, including levels of unemployment, consumer confidence, per-capita income, and business investment. The total citywide sales tax rate is 8.75%, of which the City’s General Fund receives 1.0% of all taxable sales tra nsactions within the City, excluding voter- approved sales tax measures for Measure P and A.
$400,000
$500,000
$600,000
$700,000
$800,000
$900,000
Mar 2020 Mar 2021 Mar 2022 Mar 2023 Mar 2024 Mar 2025 Mar 2026 Median Home Price
Chula Vista Single Family Homes
Page | 7
Sales tax revenue is the second largest General Fund source, representing 16.8% of the total General Fund revenues in the Adopted Budget. Sales tax is projected to be $51.1 million, a slight decrease from the Adopted Budget of $51.2 million, reflecting softer-than-expected performance in select economic sectors.
Chula Vista’s largest economic segments include general consumer goods, state & county pools (sales tax revenues from transaction with no specific place of sale, allocated to local jurisdictions on a proportional basis), restaurants & hotels and autos & transportation. Combined, these categories account for approximately 76% of total sales tax revenues. Recent data for the third quarter of fiscal year 2026 indicates a 3.2% increase in taxable sales compared to the same quarter of 2025. Despite these gains, the City’s revenue fell slightly short of budgeted expectations due to uneven sector performance. The opening of the Gaylord Pacific Resort and Convention Center on May 15, 2025, is anticipated to continue to generate a boost in sales tax revenue from visitor spending beyond the Gaylord Pacific Resort and Convention Center property, as guests venture into surrounding areas and contribute to broader local retail and dining activity.
While the Adopted Budget assumed stable employment and consumer confidence, it did not anticipate ongoing fluctuations in consumer behavior and broader economic uncertainty. The City remains mindful of recent declines in consumer confidence and concerns about geopolitical instability. Nevertheless, local dining activity and new business openings continue to provide meaningful support to overall taxable sales.
Sales tax revenue will continue to be closely monitored and updated in the Fourth Quarter Report to account for any changes in spending trends or other economic indicators impacting sales tax receipts.
Measure P Sales Tax - Voters approved Measure P in November 2016 as a temporary, ten- year, half-cent sales tax dedicated to addressing high -priority deferred maintenance needs.
In 2024, voters approved the continuation of Measure P through 2037. While the revenue generated from the Measure P sales tax is collected in th e General Fund, the General Fund transfers this revenue to the Measure P Sales Tax Fund for accountability and transparency in the usage of these funds. These actions result in an overall net zero fiscal impact to the General Fund. Measure P sales tax is projected to be $30.9 million, reflecting a slight increase of $0.1 million from the Adopted Budget.
Measure A Sales Tax - Voters approved Measure A in June 2018, established as a permanent half-cent sales tax to fund critical public safety needs and enh ance staffing levels. Similar to Measure P sales tax, revenue is collected and tracked within the General Fund, and transfer to the Measure A Sales Tax Fund for accountability and transparency in the usage of these funds. Separate accounts (one for the Fi re department and one for the Police department) were established to support the monitoring and allocation of these funds. These actions result in an overall net zero fiscal impact to the General Fund. Measure A sales tax is projected to be $30. 9 million, reflecting a slight increase of $0.1 million from the Adopted Budget.
Page | 8
Franchise Fees
Franchise fee revenues are generated from agreements with private utility companies in exchange for use of the City’s rights -of-way. The fee compensates the City for the use of its property, such as its streets. Franchise fees are collected from three primary sources: San Diego Gas & Electric (“SDG&E”) (2% on gas and 1.25% on electricity), Republic Services trash collection franchises (20% fee), and AT&T and Cox Communications cable franchises (5% fee).
Franchise fee revenue is projected to be $ 16.0 million, a $0. 6 million increase compared to the Adopted Budget , consistent with the Second Quarter Financial Report projection. The change is largely due to an increase in trash collection revenue from Republic Services, the city’s solid waste services provider. SDG&E franchise revenues remain static, while cable franchise revenues are down. The decrease represents the number of subscription service subscribers for cable television providers (premium video, equipment rental, on -demand, and programming services) as more customers continue to move to streaming services.
Transient Occupancy Tax
Transient Occupancy Tax ( “TOT”) is a tax imposed on occupants of hotel and motel rooms, short-term rentals, and RV parks within the City. The current TOT tax rate in the City is 10%. Major economic drivers for TOT revenue include room rates, average occupancy rates, and seasonal and non -seasonal tourism. The City has experienced stron g growth in TOT in recent years with a number of new hotel developments on both the west and eastern portions of the City as well as an expansion of the short -term rentals compliance program.
Additionally, it is important to note that the TOT revenue gener ated from the RV Park and the Gaylord Pacific Resort & Convention Center in the Bayfront area is transferred out from the General Fund to a separate fund as part of the contractual requirements for the Gaylord Pacific Resort & Convention Center project.
TOT revenue is projected to be $ 20.4 million, an increase of $2.0 million compared to the Second Quarter Financial Report projection , though still $1.3 million below the Adopted Budget. This revised projection reflects stronger -than-anticipated revenue perf ormance, driven primarily by increased business travel and conferences at the Gaylord Pacific Resort & Convention Center . The remaining $1.3 million shortfall is due to the delay in anticipated opening of two hotels —now expected in future fiscal years beyond 2025‑ 26—as well as updated revenue assumptions based on actual collections to date. Together, these factors reduce the estimated growth rate relative to the Adopted Budget, as reported in the Second Quarter Financial Report.
Utility Users’ Tax
Utility User’s Tax ( “UUT”) is a local excise tax imposed on the consumption of utility services by residents and businesses. Specifically, the City imposes a UUT on the use of telecommunications (cable, telephone) at the rate of 4.75% of gross receipts and UU T on natural gas services of $0.00919 per therm and $0.00250 per kilowatt on electricity services, which equates to approximately a 1% tax. UUT is collected by utility companies as part of its regular billing and then remit to the City.
UUT is projected to align with the Second Quarter Financial Report projection and Adopted Budget at $3.7 million. While some modest growth is anticipated in revenues from the natural gas and
Page | 9
electricity utilities based upon population growth and the increases in utility prices, adoption of solar energy and conservations efforts suggest a decline in consumption of those utilities which reduce revenues. Additionally, consumption of telecommunica tions utilities is also expected to continue to decline due to changes in technology and consumer preferences.
Other Revenues
Other Revenues include the following revenue categories: Charges for Services, Federal Revenue, Fines and Penalties, Licenses & Permits, Other Revenue, State Revenue, Transfers In and Use of Money/Property. Other Revenues category is anticipated to exceed the Adopted Budget by $1. 3 million. Transfers In and Use of Money/Property reflects a positive variance of $ 1.6 million combined related to a transfer from the O ther Post Employment Benefit (OPEB) Reserve Fund to reimburse the General Fund for eligible OPEB expenditures in the General Fund and an increase of anticipated investment earnings. Charges for Services, Federal Revenue, Fines and Penalties and Licenses and Permits reflect a $0. 5 million positive variance combined primarily related to increased staff time reimbursements and permit fees. Other Revenue and State Revenue reflect a negative variance of $0. 7 million combined, mostly driven by a reduction i n actual tax receipts collected from cannabis businesses when compared to previous years.
Fiscal Year 2025-26 General Fund Overview
Table 3 in millions
Revenue Source Adopted
Budget
Amended
Budget
Year-end
Projection Variance
Other Revenues
Charges for Services $ 13.6 $ 14.1 $ 14.3 $ 0.2 Federal Revenue 0.5 0.5 0.6 0.1
Fines and Penalties 1.1 1.1 1.2 0.1
Licenses & Permits 2.0 2.0 2.1 0.1
Other Revenue 20.7 23.2 22.6 (0.6)
State Revenue 1.0 1.0 0.9 (0.1)
Transfers In 15.0 15.0 15.8 0.8
Use Money/Property 5.6 5.6 6.4 0.8
Other Agency Revenue - 0.3 0.3 -
Total Other Revenues $ 59.6 $ 62.8 $ 64.1 $ 1.3 Departmental Revenues
Table 4 below provides the Amended General Fund revenues budget, projected year-end revenues, and the variance (difference) between both at the department level. Additionally, Appendix A contains a net impact summary of each department within the General Fund.
Page | 10
Fiscal Year 2025-26 General Fund Departmental Revenues
Table 4 in thousands
Department Amended
Budget
Year-end
Projection Variance
City Clerk $ 65.6 $ 91.6 $ 26.0 City Attorney 439.0 313.6 (125.4) Administration 167.7 168.8 1.0 Information Technology 336.0 256.0 (80.0) Human Resources 1,595.4 1,535.3 (60.2) Finance 1,203.3 1,386.5 183.2 Non-Departmental 17,739.4 18,046.7 307.3 Animal Care Facility 1,090.3 1,227.2 136.9 Economic Development 1,643.2 1,382.7 (260.5) Development Services 2,264.9 2,076.1 (188.8) Engineering/Capital Projects 8,579.3 8,557.0 (22.3) Police 6,436.5 7,007.6 571.1 Fire 6,851.1 6,735.3 (115.8) Public Works 9,210.9 10,002.9 792.0 Parks and Recreation 4,597.4 4,699.0 101.6 Library 585.2 610.5 25.3 Total Departmental Revenue $ 62,805.2 $ 64,096.7 $ 1,291.4 This section documents the justifications for significant budget variances with an anticipated impact greater than $250,000.
Non-Departmental – Increase of $ 0.3 million in Use of Money/Property for projected higher investment earnings.
Economic Development – Decrease of $0.3 million mainly in Other Revenues due to decreased staff time reimbursements following department restructuring.
Police – Increase of $0.6 million in Charges for Services and Fines and Penalties from special events reimbursements and an increase in penalties collected.
Public Works – Increase of $0.8 million in Charges for Services and Other Revenue from increased staff reimbursements from development fees and community facility districts.
GENERAL FUND EXPENDITURES
General Fund expenditures are projected to be $2.4 million below the Amended Budget. A combined overage of $1.2 million in Other Expenses and Utilities is expected to be fully offset by a combined $3.6 million decrease in Personnel Services, Supplies and Services, and Transfers Out. Overall, these adjustments result in a positive fiscal impact.
Page | 11
Fiscal Year 2025-26 General Fund Overview
Table 5 in millions
Expenditures Adopted
Budget
Amended
Budget
Year-end
Projection Variance
Personnel Services $ 161.8 $ 163.0 $ 161.7 $ 1.2 Non-Personnel
Supplies and Services 28.6 33.8 32.7 1.1
Other Expenses 2.7 3.6 4.1 (0.6)
Transfers Out 100.0 103.0 101.7 1.3
Internal Services 4.6 4.6 4.6 -
Utilities 7.7 8.0 8.6 (0.6)
Other Expenditures Category 0.2 0.5 0.5 -
Total Non-Personnel 143.8 153.5 152.3 1.0
Total Expenditures $ 305.6 $ 316.5 $ 314.1 $ 2.4 Personnel Services
Updated projections for Personnel Services category are expected to be $1.2 million below the Amended Budget. The decrease is primarily driven by vacancies in both the Police and Fire Departments, which offset the overage reflected in the Public Works Department. The overage in the Public Works Department is expected to be offset by excess revenues from staff ‑ time reimbursements.
Fiscal Year 2025-26 General Fund Overview
Table 6 in millions
Expenditure Category Adopted
Budget
Amended
Budget
Year-end
Projection Variance
Personnel Services
Salary $ 103.7 $ 103.5 $ 98.0 $ 5.5 Hourly 4.5 4.5 5.1 (0.6)
Overtime 10.9 12.2 14.2 (1.9)
PERS 20.9 20.9 20.2 0.7
FLEX 15.9 15.9 14.2 1.7
Other Personnel 6.0 6.0 10.2 (4.2)
Total Personnel Services $ 161.8 $ 163.0 $ 161.7 $ 1.2 Supplies and Services
The Supplies and Services category is projected to be $1.1 million below the Amended Budget. This savings is primarily due to $0.2 million in the City Clerk’s Department resulting from the removal of an elected official from the June 2026 ballot, and a combined $0.6 million reduction in the Human Resources and Finance Departments due to lower‑ than‑ anticipated contracted services.
Fiscal Year 2025-26 General Fund Overview
Table 7 in millions
Expenditure Category Adopted
Budget
Amended
Budget
Year-end
Projection Variance
Supplies and Services $ 28.6 $ 33.8 $ 32.7 $ 1.1 Total Supplies and Services $ 28.6 $ 33.8 $ 32.7 $ 1.1
Page | 12
Other Expenses
The Other Expenses category includes a wide variety of relatively minor costs within the General Fund, such as sales tax administration costs, small tools, credit card transaction fees and bank charges, and reimbursements to other agencies. The Other Expenses category is projected to exceed the Amended Budget by $0. 6 million. This variance is primarily due to increased credit card transaction fees, bank charges and reimbursements to other agencies.
Fiscal Year 2025-26 General Fund Overview
Table 8 in millions
Expenditure Category Adopted
Budget
Amended
Budget
Year-end
Projection Variance
Other Expenses $ 2.7 $ 3.6 $ 4.1 $ (0.6) Total Other Expenses $ 2.7 $ 3.6 $ 4.1 $ (0.6) Transfers Out
The Transfers Out category represents authorized transfers of cash between City funds and is projected to be below the Amended Budget by $ 1.3 million. The variance is primarily due to a reduction in debt service payment transfers from the General Fund , resulting from the use of the Bond Call Reserve Fund for these expenses.
Fiscal Year 2025-26 General Fund Overview
Table 9 in millions
Expenditure Category Adopted
Budget
Amended
Budget
Year-end
Projection Variance
Transfers Out $ 100.0 $ 103.0 $ 101.7 $ 1.3 Total Transfers Out $ 100.0 $ 103.0 $ 101.7 $ 1.3 Internal Services
Expenditures in this category are for vehicle maintenance charges associated with the use of City vehicles and equipment. These charges are based on the actual vehicles that reside within a department and include costs ranging from routine maintenance (oil changes, preventive maintenance) to major repairs (drivetrain, repairs, accident repairs), as well as fuel costs. Internal services are projected to remain at budget through fiscal year end.
Fiscal Year 2025-26 General Fund Overview
Table 10 in millions
Expenditure Category Adopted
Budget
Amended
Budget
Year-end
Projection Variance
Internal Services $ 4.6 $ 4.6 $ 4.6 $ - Total Internal Services $ 4.6 $ 4.6 $ 4.6 $ - Utilities
The Utilities category is currently projected to exceed the Amended Budget by $0.6 million.
Projections account for an 8% rate increase in water and electric rates effective January 2026 and current consumption in both San Diego Gas & Electric (SDG &E) and water. The Engineering Department is impacted by rising costs to power city streetlights and traffic si gnals. The Library Department is experiencing higher electricity costs due to Heating, Ventilation, and Air Conditioning (HVAC) system issues requiring additional temporary cooling units. The Police Department reflects
Page | 13
increased utility expenses caused by HVAC issues, while the Public Works Department is projected to exceed budget primarily related to pending solar system repairs.
Fiscal Year 2025-26 General Fund Overview
Table 11 in millions
Expenditure Category Adopted
Budget
Amended
Budget
Year-end
Projection Variance¹
Utilities $ 7.7 $ 8.0 $ 8.6 $ (0.6) Total Utilities $ 7.7 $ 8.0 $ 8.6 $ (0.6) Other Expenditures Category
The Other Expenditures Category includes Other Capital, Non -CIP Projects Expenditures and CIP Project Expenditures budget categories. The Other Expenditures category is expected to align with the Amended Budget of $0.5 million.
Fiscal Year 2025-26 General Fund Overview
Table 12 in millions
Expenditure Category Adopted
Budget
Amended
Budget
Year-end
Projection Variance
Other Expenditures Category $ 0.2 $ 0.5 $ 0.5 $ - Total Other Expenditures $ 0.2 $ 0.5 $ 0.5 $ - Departmental Expenditures
Table 13 below provides the Amended General Fund expenditure budget, projected year -end expenditures, and the variance (difference) between both at the department level. Additionally, Appendix A contains a net impact summary of each department within the General Fund.
Fiscal Year 2025-26 General Fund Departmental Expenditures Table 13 in thousands
Department Amended
Budget
Year-end
Projection Variance
City Council $ 1,888.0 $ 1,880.5 $ 8.0 Boards & Commissions 7.1 7.1 - City Clerk 2,356.2 2,190.1 166.1 City Attorney 4,111.4 3,779.2 332.2 Administration 3,284.6 3,000.6 284.0 Information Technology 5,469.8 5,521.4 (51.6) Human Resources 4,181.6 4,060.4 121.2 Finance 5,785.7 5,462.1 323.6 Non-Departmental 118,820.2 118,399.9 420.3 Animal Care Facility 4,022.9 3,947.9 75.0 Economic Development 1,834.7 1,792.8 41.9 Development Services 3,476.1 3,441.3 34.8 Engineering/Capital Projects 11,815.4 11,815.9 (0.4) Police 66,402.0 65,824.5 577.5 Fire 42,764.7 42,059.1 705.6 Public Works 28,612.3 29,255.6 (643.3) Parks and Recreation 6,961.9 7,053.0 (91.1) Library 4,707.0 4,806.9 (99.9) Total Expenditure Budget $ 316,501.5 $ 314,298.0 $ 2,204.0 This section documents the justifications for significant budget variances with an anticipated impact
Page | 14
greater than $250,000.
City Attorney – Decrease of $0.3 million in Personnel Services from department vacancies.
Administration – Decrease of $0.3 million in Personnel Services from department vacancies.
Finance – Decrease of $0.3 million in Supplies and Services driven by a reduction in contracted services.
Non-Departmental – Decrease of $ 0.4 million in Transfers Out from a reduction to debt service payments from the General Fund.
Police – Decrease of $0.6 million, primarily in Personnel Services savings offset with an increase in utility cost s. The decrease in Personnel Service savings is attributable to department vacancies , while Utilities reflect overages in SDG&E costs exceeding budget by $0.1 million.
Fire – Decrease of $0.7 million in Personnel Services from department vacancies.
Public Works – Increase of $0.6 million in Personnel Services and Utilities. The overage in Personnel Services is mostly attributable to an increase in overtime and hourly costs related to Capital Improvement Projects , of which is expected to be offset by excess revenues from staff time reimbursements. Increase in Utilities reflect overages in SDG&E costs exceeding budget by $0. 1 million.
OTHER FUNDS
The following section i ncludes projections for other funds that provide support for significant operating activities throughout the City. These funds have an operating budget of over $15.0 million, with all fund projections available in Appendix B.
2018 Measure A Sales Tax
This fund accounts for the permanent half -cent sales tax voters approved to fund critical public safety needs and enhance public safety staffing levels.
2018 Measure A Sales Tax revenues are projected to exceed the Amended Budget by $1.2 million due to strike team reimbursements in the Fire Department. Similarly, expenditures are projected to exceed the Amended Budget by $0.9 million , also due to overtime expenses from strike team deployments.
Page | 15
Fiscal Year 2025-26 Measure A Fund Overview
Table 14 in millions
Adopted
Budget
Amended
Budget
Year-End
Projection Variance
Revenue $ 30.9 $ 30.9 $ 32.1 $ 1.2 Expenditures
Personnel Services 26.7 28.1 28.8 (0.8)
Non-Personnel 6.9 23.3 23.4 (0.1)
Expenditure Subtotal 33.7 51.3 52.3 (0.9)
Total Fund Surplus/(Deficit) $ (2.7) $ (20.4) $ (20.2) $ 0.2 Development Services
This fund accounts for revenues and expenses related to the processing of development plans and permits.
Development Services revenues are projected to be lower than the Amended Budget by $4.0 million by year -end, largely based on timing of receipts for building permits and developer fees and deposits. Expenditure projections are expected to be lower than the Amended Budget by $1. 8 million, primarily in the Personnel Services category due to vacancies.
Fiscal Year 2025-26 Development Services Fund Overview
Table 15 in millions
Adopted
Budget
Amended
Budget
Year-End
Projection Variance
Revenue $ 13.2 $ 13.1 $ 9.1 $ (4.0) Expenditures
Personnel Services 10.1 10.1 9.0 1.1
Non-Personnel 5.3 5.4 4.7 0.7
Expenditure Subtotal 15.4 15.5 13.6 1.8
Total Fund Surplus/(Deficit) $ (2.2) $ (2.4) $ (4.5) $ (2.2) Transport Enterprise
This fund was established to account for all activities related to providing Ambulance Transport Services to the residents of Chula Vista, Bonita, and Imperial Beach.
Transport Enterprise revenues are expected to exceed the Amended Budget by $ 1.4 million based on current trend of ambulance transports. Expenditure projections are expected to be less than the Amended Budget by $1. 7 million in the Other Capital category, driven primarily from deferred vehicle replacements.
Page | 16
Fiscal Year 2025-26 Transport Enterprise Fund Overview
Table 16 in millions
Adopted
Budget
Amended
Budget
Year-End
Projection Variance
Revenue $ 21.3 $ 21.3 $ 22.6 $ 1.4 Expenditures
Personnel Services 9.3 9.3 9.1 0.2
Non-Personnel 12.0 13.9 12.5 1.4
Expenditure Subtotal 21.3 23.3 21.6 1.7
Total Fund Surplus/(Deficit) $ - $ (2.0) $ 1.1 $ 3.1 Sewer Service Revenue Fund
This fund is used to account for all activities related to providing sewer services to the residents of Chula Vista.
Sewer Service revenues are projected to exceed the Amended Budget by $ 0.1 million by year-end.
Expenditure projections are expected to be lower than the Amended Budget by $0.7 million, mainly in the Transfers Out category attributable to projected staff time reimbursements on Sewer related projects.
Fiscal Year 2025-26 Sewer Fund Overview
Table 17 in millions
Adopted
Budget
Amended
Budget
Year-End
Projection Variance
Revenue Subtotal $ 47.6 $ 47.6 $ 47.7 $ 0.1 Expenditures
Personnel Services 5.9 5.9 5.7 0.2
Non-Personnel 41.7 44.6 44.1 0.5
Expenditure Subtotal 47.6 50.5 49.8 0.7
Total Fund Surplus/(Deficit) $ - $ (2.9) $ (2.1) $ 0.8
FISCAL YEAR 2025-26 BUDGET ADJUSTMENTS
General Fund Adjustments
The recommended adjustment i n the General Fund reflects a transfer in the Public Works Department of Non -Personnel Expenditures from Supplies and Services to Transfers Out of $300,000 for CIP Project# GGV0279 (Norman Park Senior Ctr Elevator Mod).
Other Funds Adjustments
The recommended adjustmen ts in Table 1 8 are for funds outside of the General Fund . The adjustments are offset by additional revenues or from available fund balance of the respective funds.
Page | 17
Table 18
Personnel
Non-
Personnel Total Total
Other Funds Services Expenditures Expenditures Revenue Net Impact Pension/Debt Reserve $ - $ 4,685,854 $ 4,685,854 $ - $ 4,685,854 Trunk Sewer Capital Reserve - 3,335,000 3,335,000 (340,000) 2,995,000 State Grants - 465,000 465,000 (70,000) 395,000
Parking Meter - 350,000 350,000 - 350,000
Public Facilities DIF - 340,000 340,000 - 340,000
Other Grants - 57,500 57,500 (52,500) 5,000 Capital Improvement Projects - 351,368 351,368 (351,368) - Equipment Vehicle Replacement - 100,000 100,000 (100,000) - Donations - 32,632 32,632 (32,632) - Total Other Funds $ - $ 9,717,354 $ 9,717,354 $ (946,500) $ 8,770,,854 Pension/Debt Reserve Fund: Increase to Non-Personnel Expenditures from available fund balance of $4,685,854 for OPEB expenditures and for debt service payments from the Bond Call Reserve Fund.
Trunk Sewer Capital Reserve: Increase to Non-Personnel Expenditures for CIP Project# SWR0321 (RIDA Bayfront Sewer Improvements) of $3,335,000 partially offset by estimated revenues of $340,000 from the Public Facilities DIF Fund.
State Grants: Increase to Non -Personnel Expenditures of $465,000 p artially offset from available fund balance of $395,000 and estimated revenues of $70,000 for grants in the Economic Development and Police Departments.
Parking Meter : Increase to Non -Personnel Expenditures from fund balance for CIP Project # GGV0280 (Third Ave Parking Elevator Mod).
Public Facilities DIF : Increase to Non -Personnel Expenditures by $340,000 in the Other Expenses category from available fund balance for interfund loan interest expense.
Other Grants: Increase to Non-Personnel Expenditures of $57,500 partially offset with increased estimated revenues of $52,500.
Capital Improvement Projects: Increase to Non-Personnel Expenditures of $351,368 for CIP Project# GGV0279 (Norman Park Senior Ctr Elevator Mod) and CTY0246 (Water Damage at Fire Station #12) fully offset by an increase to estimated revenues.
Equipment Vehicle Replacement: Increase to Non -Personnel Expenditures of $100,000 fully offset by estimated revenues for vehicle replacement purchases.
Donations: Increase to Non -Personnel Expenditures and estimated revenues of $32,632 for donations received from LiveNation.
Capital Improvement Project Adjustments
The recommended adjustments for the Capital Improvement Project expenditure budgets are included in the table below. The adjustments are offset by additional revenues or the available fund
Page | 18
balance of the respective funds.
Table 19
Fund Project
CIP Project
Expenditures
Total
Expenditures
Capital Improvement Projects GGV0279 – Norman Park Senior Ctr Elevator Mod $ 300,000 $ 300,000 Capital Improvement Projects STM0408 – Pavement Rehabilitation Prog FY22 (300,000) (300,000) Capital Improvement Projects STL0464 – F Street Promenade Phase 1 200,000 200,000 Capital Improvement Projects DRN0214 – Install Full Capture Trash BMPs 100,000 100,000 Capital Improvement Projects CTY0246 – Water Damage at Fire Station #2 51,368 51,368 Parking Meter GGV0280 – Third Ave Parking Elevator Mod 350,000 350,000 Transportation Sales Tax CTY0202 – CIP Advanced Planning 75,000 75,000 Transportation Sales Tax CTY0242 – Water Damage at CC Library (75,000) (75,000) Trunk Sewer Capital Reserve SWR0321 - RIDA Bayfront Sewer Improvements 3,335,000 3,335,000 Total Amendments $ 4,036,368 $ 4,036,368
CONCLUSION
The City takes great pride in being good stewards of taxpayer funds and providing transparent financial reporting. The Third Quarter Financial Report updates the preliminary fiscal year 2025 - 26 trajectory with year-to-date results. The financial outlook continues to remain cautious but stable, further details will be provided in the Fourth Quarter Financial Report.
APPENDICES
A. General Fund Net Impact
B. Other Funds Year-End Projections
Page | 19
APPENDIX A
General Fund Net Impact
The following table outlines the net impact of each department within the General Fund . Department generated revenues are broadly defined as those revenues generated by a given activity (e.g., grant revenues, charges for services, licenses, permits). General revenues, or “discretionary revenues,” are broadly defined as those revenues that are generated not by any given activity, but by general or specific taxing authority such as property taxes and sales tax that are included in Non -Departmental and not assigned to a specific department.
Fiscal Year 2025-26 General Fund Net Impact
in thousands
Department
Year-end Expenditures
Projection
Year-end Revenue
Projection Net Impact
City Council $ 1,880.5 $ - $ 1,880.5 Boards & Commissions 7.1 - 7.1
City Clerk 2,190.1 91.6 2,098.5
City Attorney 3,779.2 313.6 3,465.6
Administration 3,000.6 168.8 2,831.8
Information Technology 5,521.4 256.0 5,265.4
Human Resources 4,060.4 1,535.3 2,525.1
Finance 5,462.1 1,386.5 4,075.6
Animal Care Facility 3,947.9 1,227.2 2,720.7
Economic Development 1,792.8 1,382.7 410.1
Development Services 3,441.3 2,076.1 1,365.2
Engineering/Capital Projects 11,815.9 8,557.0 3,258.9 Police 65,824.5 7,007.6 58,816.8
Fire 42,059.1 6,735.3 35,323.8
Public Works 29,255.6 10,002.9 19,252.7
Parks and Recreation 7,053.0 4,699.0 2,354.0
Library 4,806.9 610.5 4,196.4
Total General Fund1 $ 195,898.1 $ 46,050.0 $ 149,848.2 1 Excludes Non-Departmental Department since activity is not directly related to any single department.
Page | 20
The chart below compares the projections as detailed in the report above to the net impact that was anticipated in the Adopted Budget.
Fiscal Year 2025-26 General Fund Net Impact
in thousands
Department
Adopted Budget
Net Impact
Year-end Projection
Net Impact
Net Impact
Variance
City Council $ 1,862.2 $ 1,880.5 $ 18.3 Boards & Commissions 2.1 7.1 5.0
City Clerk 2,208.1 2,098.5 (109.6)
City Attorney 3,490.8 3,465.6 (25.2)
Administration 3,079.8 2,831.8 (248.0)
Information Technology 4,874.9 5,265.4 390.5
Human Resources 2,586.0 2,525.1 (60.9)
Finance 4,579.3 4,075.6 (503.7)
Animal Care Facility 2,917.2 2,720.7 (196.5)
Economic Development 67.9 410.1 342.2
Development Services 1,065.7 1,365.2 299.5
Engineering/Capital Projects 2,967.7 3,258.9 291.2 Police 59,963.9 58,816.8 (1,147.1)
Fire 35,720.6 35,323.8 (396.8)
Public Works 18,923.0 19,252.7 329.7
Parks and Recreation 2,358.4 2,354.0 (4.4)
Library 3,996.7 4,196.4 199.7
Total General Fund1 $ 150,664.3 $ 149,848.2 $ (816.1) 1 Excludes Non-Departmental Department since activity is not directly related to any single department.
As you can see from the chart below, the majority of discretionary revenue is allocated to public safety services, with the Police Department expenditure at $58.8 million followed by the Fire Department at $35.3 million. The next highest portion is allocated to Public Works Department at $19.3 million.
$-
$10,000.0
$20,000.0
$30,000.0
$40,000.0
$50,000.0
$60,000.0
$70,000.0
Net Impact
Net Impact
Page | 21
APPENDIX B
Other Funds Year-End Projections
The following table outlines the year-end projection for other funds that provide support for significant operating activities throughout the City.
Fiscal Year 2025-26 Other Funds Year-End Projections
in millions
Other Funds Revenue/Expense
Adopted
Budget
Amended
Budget
Year-end
Projection Variance
2018 Measure A Sales Tax Revenue 30.9 30.9 32.1 1.2 Expense 33.7 51.3 52.3 (0.9)
Net Year-End Projection (2.7) (20.4) (20.2) 0.2
Advanced Life Support Program Revenue 3.0 3.0 3.3 0.3
Expense 3.1 3.1 3.3 (0.2)
Net Year-End Projection (0.1) (0.1) - 0.1
Parking Meter Revenue 1.1 1.1 1.0 (0.1) Expense 1.0 1.2 1.1 0.1
Net Year-End Projection 0.1 (0.1) (0.1) -
Local Grants Revenue - - 0.2 0.2
Expense 2.5 2.7 2.4 0.3
Net Year-End Projection (2.5) (2.7) (2.2) 0.5
Federal Grants Revenue 0.1 0.3 0.3 -
Expense 0.1 0.3 0.3 -
Net Year-End Projection - - - -
State Grants Revenue 0.7 0.7 0.8 0.1
Expense 0.7 0.8 0.7 0.1
Net Year-End Projection - (0.1) 0.1 0.2
Environmental Services Revenue 2.0 2.0 2.3 0.3
Expense 3.1 3.1 2.7 0.4
Net Year-End Projection (1.1) (1.1) (0.4) 0.7
Chula Vista Housing Authority Revenue 2.7 2.7 6.7 4.0
Expense 2.6 8.2 7.2 1.0
Net Year-End Projection 0.2 (5.5) (0.5) 5.0
Central Garage Fund Revenue 6.3 6.3 7.0 0.7
Expense 6.3 6.4 7.0 (0.6)
Net Year-End Projection - (0.1) - 0.1
Development Services Fund Revenue 13.2 13.1 9.1 (4.0) Expense 15.4 15.5 13.6 1.8
Net Year-End Projection (2.2) (2.4) (4.5) (2.2)
Transport Enterprise Revenue 21.3 21.3 22.6 1.4 Expense 21.2 23.3 21.6 1.7
Net Year-End Projection - (2.0) 1.1 3.1
Sewer Service Revenue Revenue 47.6 47.6 47.7 0.1 Expense 47.6 50.5 49.8 0.7
Net Year-End Projection - (2.9) (2.1) 0.8