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9 DATE: June 16, 2025
TO: Mayor and Members of the City Council
President and Members of the Estero Municipal Improvement District (EMID) Board of Directors
FROM: Stefan Chatwin, City/District Manager
Nate Cruz, Finance Director
DEPARTMENT: City Manager, Finance
SUBJECT: ADOPTION OF FY 2025-2026 CITY/DISTRICT BUDGET
RECOMMENDATION
It is recommended that the City Council/EMID Board of Directors (City Council) approve the attached resolutions approving the Fiscal Year 2025-2026 City/EMID Budget.
EXECUTIVE SUMMARY
As part of the City/EMID’s annual budget process, the City Council held budget study sessions on January 23rd, March 24th, and May 22nd to review various sections of the budget, including CIP Funds, Enterprise Funds, Internal Service Funds, and the General Fund. The Council then held a public hearing regarding the Preliminary Budget on June 2. Staff now recommends City Council’s approval of the FY 2025-2026 City/EMID Budget. There have been no changes to the budget since the June 2, 2025 public hearing.
Notably, the legislature’s version of the 2025-2026 State Budget (SB101) includes a provision to reimburse local governments to the VLF shortfall. If the Final Budget approved by the Governor includes this provision, General Fund revenues are estimated to increase by $2.2 million.
BACKGROUND/ANALYSIS
On May 22, City staff presented the FY 2025-2026 Preliminary Budget and 5-year financial plan for all Funds, including the General Fund (Funds 001 to 003). The budget
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9 indicated a $3.83 million General Fund structural deficit for FY 2025-2026 as well as structural deficits for the entirety of the 5-year financial plan. Budget revisions were presented to the City Council on June 2, including revenue adjustments to Permits, Rentals/EMID, and Other Revenue (Fines, Shared Services, Street Sweeping, Other) for a revised FY 2025-2026 deficit of $3.79 million. No further revisions to the FY 2025- 2026 budget have been made1.
The FY 2025-2026 City/EMID Budget for all funds totaling $219.7 million includes direction received from the City Council at various budget study sessions and a public hearing. The City Council also provided direction to use the General Fund reserves to address the FY 2025-2026 General Fund budget shortfall and for staff to develop strategies to address subsequent deficits.
Having reviewed the Preliminary Budget and having held a public hearing on the Preliminary Budget, it is recommended that the City Council/EMID Board adopt the attached resolutions approving the proposed FY 2025-2026 City/EMID Budget. The financial and personnel summary pages of the FY 2025-2026 Budget are attached to this report (Attachment 3). The entire proposed FY 2025-2026 Budget is available on the City’s website at https://www.fostercity.org/finance/page/annual-budget.
CEQA
Not Applicable
FISCAL IMPACT
Adoption of the annual budget authorizes expenditures identified in the budget for FY 2025-2026.
CITY COUNCIL VISION, MISSION, AND VALUE/PRIORITY AREA
Staff Empowerment and Operational Excellence
ATTACHMENTS:
Attachment 1 - City Resolution
Attachment 2 - EMID Resolution
Attachment 3 - Exhibit to City/EMID Resolutions: Financial and Personnel Summaries 1 The current year (FY 2024-25) projection of interest earnings for fund 326 was increased to reflect actual interest earnings. This increase had no impact on General Fund or the FY 2025-26 budget.