Business Item 5a
STAFF REPORT
City Council Business Item
DATE: June 16, 2025
TO: Honorable Mayor and Council Members
FROM: Aaron Felmlee, Finance Director
THRU: Amy Nilsen, City Manager
SUBJECT: Adopt the City of Fortuna’s Annual Operating Budget for Fiscal Year (FY) 2025-26, Resolution 2025-18
STAFF RECOMMENDATION:
1. Conduct a Public Hearing to consider the FY 2025-26 Annual Operating Budget.
2. Adopt the City of Fortuna’s Annual Operating Budget for Fiscal Year 2025-26 by adopting Resolution 2025-18.
EXECUTIVE SUMMARY:
Staff is pleased to present a balanced budget for FY 2025-26. Staff prepared the budget with the intent of providing the maximum amount of services to the community while still presenting a balanced budget. Staff prepared the budget primarily focusing on the following principles:
• Current services will be preserved at existing levels to the highest degree possible. • The budget will comply with State Constitution, City Charter and Municipal Code provisions.
• Working Capital balances will be examined to ensure balances are healthy enough to protect the City from any future uncertainties.
• Staff will strive to balance recurring expenditures with recurring revenues. • Department budgets will be developed to reflect the best estimates possible for the true cost of operations.
The City Council held (2) two public special budget workshops on the proposed fiscal year 2025- 26 Operating Budget. The first workshop was held on May 1 where staff presented the Proposed Budget and reviewed General Fund revenues and expenditures in depth with the City Council. The second workshop, held on May 5, focused on answering outstanding questions from the first workshop as well as reviewing in depth the City’s enterprise funds. An enterprise fund is a selfsupporting governmental fund that sells goods and services to the public for a fee. Monies generated from these funds cannot be used for General Fund purposes. These funds rely more heavily on service charges and less on tax and license revenue resulting in less volatility than the General Fund. The City’s enterprise funds consist of the Water Fund, Wastewater Fund, and Transit Fund.
In summary, the General Fund has an operating surplus of $679 and one-time expenses of $381,400 being paid for from reserves that have been built up with surplus funds over the previous Business Item 5a
few years. Revenues in the General Fund and Measure E Fund are heavily dependent on sales tax, making up approximately $4 million or 50% of revenue in those funds. Sales tax revenue is monitored quarterly by staff through a consultant, HdL, due to this heavy reliance. HdL is provided not only the City’s sales tax data but also County and Statewide data. This is helpful because it can point to wider trends in the economy in both the local area (County) and Statewide. For instance in 4Q 2024 the City of Fortuna had a decrease of 3.2% in quarter over quarter sales tax receipts however, the County was up 1.3% and the State was down 1.1%.
Additional information on the Cities fiscal year 2025-26 budget can be found in the attached budget document.
RECOMMENDED CITY COUNCIL ACTIONS:
1. Receive staff presentation and review Council questions with staff
2. Open the public hearing.
3. Motion to close the public hearing.
4. Motion to adopt Resolution 2025-18; read by title only. Roll call vote.
ATTACHMENTS:
A. Resolution 2025-18; A Resolution Of The City Council Of The City Of Fortuna Adopting The City of Fortuna’s Annual Operating Budget for Fiscal Year 2025-26 B. Fiscal Year 2025-26 Proposed Budget