Cotati City Council
Agenda Staff Report
Item type: REGULAR AGENDA (ACTION)
To: City Council
Subject: FISCAL YEAR 2025/26 -FIRST QUARTER FINANCIAL
UPDATE - REPORT FOR SUMMARY OF REVENUE
SOURCES, CASH AND INVESTMENTS, AND FISCAL
RESILIENCE
Date: October 28, 2025
Written by: Angela Courter, Director of Administrative Services Recommendation
It is recommended that the City Council receive the presentation on the un-audited financial position for the City as of the First Quarter Fiscal Year 2025/26.
Background
City staff are committed to continued financial updates to report on receipts of key revenues and the overall City cash position.
Analysis/Discussion
The financial results for the first quarter of Fiscal Year 2025/26 reflect a stable fiscal position and overall performance consistent with historical trends. As is customary for this stage of the fiscal year, several General Fund revenue categories are below proportionate year-to-date expectations, primarily due to the timing of major receipts such as property tax and sales tax.
Expenditure levels across all funds remain largely within budgetary parameters, with variances primarily attributable to the timing of payments and one-time obligations incurred early in the fiscal year.
General Fund:
Revenues:
General Fund operating revenues for the first quarter were approximately $99,000, or 9.1%, lower than the same period in Fiscal Year 2024/25, representing 8.8% of the annual budget. This performance is consistent with the prior year’s results, when revenues totaled 9.9% of the annual budget through September 30, 2024. The percent of receipts at this point in the fiscal year remains below 25% due to the timing of key revenue sources. Property tax revenues, which comprise more than $2 million of the annual General Fund budget, will not be received until December and April.
Sales tax, the City’s largest General Fund revenue source, is currently approximately 18.3% below the same period in the prior year. When adjusted for the pending October remittance, total sales tax receipts are estimated to represent approximately 23% of the annual budget, which is consistent with historical collection patterns. Staff will continue to monitor sales tax receipts closely and will present any material changes to projections during the mid-year financial review. Other revenue categories, including Other Taxes, Licenses and Permits, and Franchises, reflect typical collection timing variations, while Rents and Charges for Services have increased due to expanded community programming and continued development activity. Investment earnings have decreased modestly due to lower invested balances, reduced pooled cash subject to allocation, and a decline in market interest rates.
Expenditures:
Cumulative first-quarter General Fund expenditures increased approximately $826,000, or
34.4%, compared to the same period in the previous fiscal year. Most of this increase is attributable to the timing of transfers for capital projects, increased contract services for information technology and program operations, and one-time costs such as tree removals for public safety purposes. Departmental spending remains generally consistent with prior years, with notable increases due to allocations for insurance, data management, and professional services. As of September 30, 2025, total expenditures represent approximately 23.1% of the annual budget, which is within the expected range for the first quarter.
Enterprise Funds:
Revenues within the Water and Sewer Enterprise Funds continue to perform favorably. Increases are primarily the result of rate adjustments implemented in accordance with the City’s adopted rate studies, as well as one-time connection fees related to the 902 E. Cotati Avenue development. Water Fund revenues are tracking at 35.8% of budget and are approximately
25.9% higher than the prior year, while Sewer Fund revenues are tracking at 28.7% of budget and 29.7% higher than the same period last year.
Water Fund expenditures are at 29.6% of the budget, primarily reflecting payments to the Sonoma County Water Agency for aqueduct water usage, early-year costs for contract services and insurance, and one-time maintenance and repair expenses. Sewer Fund operating expenditures decreased by approximately $56,000, or 5.4%, compared to the prior year, largely due to lower banking and merchant fees and fewer one-time repairs. Both enterprise funds remain financially sound, and staff will continue to monitor their performance throughout the fiscal year.
City-Wide Cash and Investments:
As of September 30, 2025, the City’s cash and investment balances are consistent with the City’s adopted Investment Policy and sufficient to meet anticipated expenditure obligations for the remainder of the fiscal year. Liquidity and reserve levels continue to align with the City’s long- term fiscal sustainability objectives.
Financial Considerations
There is no immediate fiscal impact or budget action necessary. City Staff will continue to report to Council and the community quarterly.
Environmental Issues
The presentation of recurring financial position has been identified to have no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA review. This general rule can be applied to activities which could be subject to the CEQA process, but which logic dictates should not be subject to CEQA review. Therefore, based on the information provided above, the proposed resolution is exempt from CEQA pursuant to Section 14.03.021 of the CEQA Guidelines in that there is no possibility that the activity may have a significant impact on the environment.