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June 2, 2026
ITEM TITLE
Accept Financial Report and Appropriations: Quarterly Financial Report and Budget Appropriations for the Quarter Ending March 31, 2026 (Third Quarter Report)
Report Number: 26-0189
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 March 31, 2026 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 appropriating funds for that purpose (4/5 Vote Required); and B) accepting donations in the amount of $31,600 from Tree San Diego in support of Public Works Department operations.
SUMMARY
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 highlights major variances that may require additional action or budgetary changes to the Amended Bud get. This Third Quarter Report is as of March 31, 2026, 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 preparing the Third 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 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 Third Quarter Report identifies recommended budget adjustments in the General Fund and other funds to address identified fiscal needs.
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 physi cal 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
Not applicable.
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 B udget. The Third 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 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 represents the most current data available; staff will monitor the City’s actual revenues and expenditures and will provide year-end actuals in the next quarterly financial report. The Third 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 Third Quarter Report
General Fund Overview
General Fund revenues and expenditures are both projected to be lower than the Amended Budget by approximately $2.4 million each. Staff anticipate major revenues to come in lower than budget by $3.7 million and other revenues to exceed the Amended Budget by $1.3 million, as detailed in the General Fund Revenues P a g e | 3
section. The Third 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 $ (3.2) 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 143.8 153.5 152.3 1.2
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
General Fund Revenues
The City’s General Fund revenues are projected to be approximately $2.2 million lower than the Amended Budget. This variance is primarily driven by lower-than-anticipated Property Tax, Transient Occupancy Tax P a g e | 4
(“TOT”) and Sales Tax revenues. Property Tax revenues are projected to be $3.2 million below the Adopted Budget, which was developed based on the assessed valuation report provided by the County. While we continue to see growth in property tax over the prior fiscal year’s actuals of 6.6%, this growth is lower than anticipated in the budget. TOT revenues are projected to be $1.3 million below budget, reflecting the delayed opening of two new hotels and revised revenue assumptions informed by actual receipts in the current fiscal year. Sales Tax revenues are projected to be $0.1 million below budget, att ributable to an increase in Bayfront revenues that are reverted into the project. Franchise Fees, Property Tax in Lieu of VLF, Measure A Sales Tax and Measure P Sales Tax are projected to exceed the Amended Budget by approximately $ 1.0 million combined. Other Revenues are projected to also exceed the Amended Budget by $ 1.3 million primarily from a transfer from the Other Post Employment Benefit (“OPEB”) Reserve Fund of $0.8 million for eligible OPEB expenditures in the General Fund and an increase of anticipated investment earnings.
General Fund Expenditures
The City’s General Fund expenditures are projected to be lower than the Amended Budget by $2.4 million.
The projected overage in Other Expenses and Utilities totaling $ 1.2 million combined are exp ected to be offset with a decrease in Personnel Services, Supplies and Services and Transfers Out of $2. 4 million combined, resulting in a positive fiscal impact. The reduction in Personnel Services and Supplies and Services is primarily attributable to savings from vacant positions citywide and lower than anticipated operational expenses in various departments. The reduction in Transfers Out is largely attributable to a decrease of $0.5 million for debt service obligations and $0.6 million to the Pension/Debt Reserve Fund.
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 Third Quarter Report (Attachment 1).
General Fund Adjustments
In the General Fund, there are no budget adjustments.
Other Fund Adjustments
The recommended adjustments in Table 2 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.
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Other Fund Budget Adjustments Summary
Table 2
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
Below are additional details of recommended expenditure budget adjustments exceeding $75,000:
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) partially offset by estimated revenues of $340,000 from interfund loan interest payment.
State Grants : Increase to Non -Personnel Expenditures of $465,000 partially 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.
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 a t 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.
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 3 below.
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Capital Improvement Project Fund Budget Adjustments
Table 3
Fund Project
CIP Project
Expenditures
Total
Expenditures
Capital Improvement Projects GGV0279 – Norman Park Sr. 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
Donations Acceptance
In accordance with Donations Policy 270 -01, the Public Works Department is requesting City Council approval for the acceptance of various trees, supplies , and planting services with an estimated value of $31,600. These donations will provide trees in City Open Space and parks for long-term ecosystem services and environmental benefits.
Preparation of the Annual Comprehensive Financial Report Staff recommend that the City Council authorize the City Manager to amend the fiscal year 202 5-26 budget and approve appropriations and transfers in the General Fund and various other funds in order to ensure audited actuals resulting from final year-end closing entries do not exceed budget.
Staff recommend that the Director of Finance report any amendments to the fiscal year 2025-26 budget and appropriations and transfers to the General Fund and various other funds approved by the City Manager in the next quarterly financial report.
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 Third Quarter Report presents projected revenue and expenditure amounts as of March 31, 2026, and reflects 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:
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General Fund – The proposed amendment results in no net fiscal impact to the fiscal year 2025-26 budget.
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 $ 8,770,854. This includes an increase in appropriations of approximately $9,717,354 and an increase in estimated revenues of $946,500.
ONGOING FISCAL IMPACT
Staff will review the impacted budgets to identify potential ongoing fiscal impacts and will incorporate as required during the fiscal year 2026-27 quarterly monitoring process.
ATTACHMENTS
1. Fiscal Year 2025-26 Third 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
Adrian Del Rio, Director of Finance/Treasurer