CITY OF GONZALES
INDEPENDENT AUDITOR’S REPORT
AND
FINANCIAL STATEMENTS
JUNE 30, 2025
TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR’S REPORT 1 – 3
BASIC FINANCIAL STATEMENTS:
Government-Wide Financial Statements
Statement of Net Position 4
Statement of Activities 5
Fund Financial Statements
Balance Sheet – Governmental Funds 6
Reconciliation of Total Governmental Fund Balance to
Net Position of Governmental Activities 7
Statement of Revenue, Expenditures and Changes in
Fund Balance – Governmental Funds 8
Reconciliation of Statement of Revenue, Expenditures
and Changes in Fund Balance of Governmental Funds
to the Statement of Activities 9
Statement of Net Position – Proprietary Funds 10
Statement of Revenue, Expenses and Changes in Fund Net
Position - Proprietary Funds 11
Statement of Cash Flows – Proprietary Funds 12 – 13
Statement of Fiduciary Net Position – Private Purpose Trust Fund 14 2Statement of Changes in Fiduciary Net Position – Private Purpose Trust Fund 15 Notes to Basic Financial Statements 16 – 46
TABLE OF CONTENTS (Continued)
Page
Required Supplementary Information
Budgetary Comparison Schedule – General Fund 47
Budgetary Comparison Schedule – Community Development Block Grant 48 Budgetary Comparison Schedule – TAMC Measure X 49
Schedule of the City’s Proportionate Share of Net Pension Liability 50 Schedule of Contributions 51
Supplemental Only Information
Combining Balance Sheet – Nonmajor Governmental Funds 52 – 55 Combining Statement of Revenue, Expenditures and
Changes in Fund Balance – Nonmajor Governmental Funds 56 – 59 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING AND ON COMPLIANCE AND
OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 60 – 61 BRYANT L. JOLLEY
CERTIFIED PUBLIC ACCOUNTANTS Bryant L. Jolley C.P.A.
Ryan P. Jolley C.P.A.
Darryl L. Smith C.P.A.
Luis A. Perez C.P.A.
Lan T. Kimoto
INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and City Council
City of Gonzales, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Gonzales (the “City”), California, as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2025, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.
We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.
2 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
Required Supplementary Information
Management has omitted the management’s discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements.
Such missing information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. Our opinion on the basic financial statements is not affected by this missing information.
Accounting principles generally accepted in the United States of America require that the budgetary comparison information on pages 47–49, the schedule of the City’s proportionate share of net pension liability on page 50, and the schedule of contributions on page 51, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and 3 comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying combining and individual nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 13, 2026 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.
February 13, 2026
See accompanying notes. 4
CITY OF GONZALES
STATEMENT OF NET POSITION
JUNE 30, 2025
Governmental Business-Type
Activities Activities Total
ASSETS
Cash and investments 13,627,851 $ 10,358,866 $ 23,986,717 $ Accounts receivable, net - 746,649 746,649 Due from other governments 1,791,917 - 1,791,917 Interest receivable 23,973 42,646 66,619 Notes and loans receivable 1,580,896 - 1,580,896 Other assets - deposits 24,408 - 24,408 Internal balances (564,815) 564,815 - Capital assets, net of allowance for depreciation 43,546,841 27,402,219 70,949,060
Total assets 39,115,195 60,031,071 99,146,266 DEFERRED OUTFLOWS OF RESOURCES 192,241 1,356,769 1,549,010 LIABILITIES Accounts payable and accrued expense 1,581,943 783,476 2,365,419 Deposits payable 16,955 77,113 94,068 Interest payable 64,681 22,235 86,916 Line of credit - 722,869 722,869 Long-term liabilities
Due within one year 430,166 411,548 841,714
Due in more than one year 10,702,908 7,570,524 18,273,432 Lease liability 27,629 142,592 170,221 Net pension liability 4,092,631 579,857 4,672,488 Compensated absences - 405,018 405,018 Total liabilities 10,310,214 17,321,931 27,632,145 DEFERRED INFLOWS OF RESOURCES 18,176 128,286 146,462 NET POSITION Net investment in capital assets 32,413,767 17,633,835 50,047,602 Restricted for specific projects and programs 6,461,361 - 11,543,391 Restricted for capital improvements 5,082,030 1,203,644 1,203,644 Unrestricted (19,535) 10,141,567 10,122,032 Total net position $ 28,979,046 43,937,623 $ 72,916,669 $ See accompanying notes. 5
CITY OF GONZALES
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2025
Operating Capital
Charges for Grants and Grants and Governmental Business-Type Expense Services Contributions Contributions Activities Activities Total Primary Government
Governmental activities
General government 711,100 $ 4 $ 12,029 $ - $ (699,067) $ - $ (699,067) $ Public safety 5,855,354 32,108 1,142,749 - (4,680,497) - (4,680,497) Public works 1,481,652 255,252 503,207 3,502,772 2,779,579 - 2,779,579 Parks and recreation 1,465,341 165,317 19,002 - (1,281,022) - (1,281,022) Community development 907,869 140,875 7,441 - (759,553) - (759,553) Debt Service Interest and fiscal charges - 422,125 - - (422,125) - (422,125) Total governmental activities 593,556 10,843,441 1,684,428 3,502,772 (5,062,685) - (5,062,685) Business-type activities Water 1,795,002 2,678,322 - - - 883,320 883,320 Sewer 1,824,335 2,802,138 - 759,938 - 1,737,741 1,737,741 Garbage 1,404,958 1,701,738 - - - 296,780 296,780 Solar Energy - 116,086 - - - (116,086) (116,086) Total business-type activities 7,182,198 5,140,381 - 759,938 - 2,801,755 Total primary government 7,775,754 15,983,822 1,684,428 4,262,710 (5,062,685) 2,801,755 (2,260,930) General Revenue Property taxes 3,601,595 - 3,601,595 Sales taxes 3,881,665 - 3,881,665 Franchise and other taxes 177,732 - 177,732 Utility users tax 374,166 - 374,166 Business licenses 34,414 - 34,414 Investment income 838,938 349,772 1,188,710 Other 223,367 - 223,367 Gain/(loss) on disposal of property 1,326,674 - 1,326,674 Transfers (263,983) 263,983 - Total general revenue and transfers 85,789 10,722,534 10,808,323 Change in Net Position 2,887,544 5,659,849 8,547,393 Net Position Beginning of year 38,277,774 26,091,502 64,369,276 End of year 43,937,623 $ 28,979,046 $ 72,916,669 $ Functions/Programs
Net Revenue/(Expense) and
Program Revenue Changes in Net Position
See accompanying notes. 6
CITY OF GONZALES
BALANCE SHEET – GOVERNMENTAL FUNDS
JUNE 30, 2025
Formerly Major
Capital Project Fund Debt Service Fund
Gonzales Community TAMC Nonmajor Total
Community Public Financing Development Measure Governmental Governmental General Center Debt Authority Block Grant X Funds Funds ASSETS
Cash and investments 1,198,774 $ 5,131,719 $ - $ 279,181 $ - $ 7,018,177 $ 13,627,851 $ Due from other governments 1,208,982 426,972 - - 40,380 115,583 1,791,917 Interest receivable 5,120 1,251 - 772 - 16,830 23,973 Due from other funds 833,627 - - - - - 833,627 Notes and loans receivable - - - 1,481,164 - 99,732 1,580,896 Other assets - deposits - 24,408 - - - - 24,408 Total assets $ 5,559,942 3,270,911 $ - $ 1,761,117 $ 40,380 $ 7,250,322 $ 17,882,672 $
LIABILITIES
Accounts payable and accrued expense 340,216 $ 1,153,709 $ - $ - $ - $ 88,018 $ 1,581,943 $ Interest payable - - - - - 64,681 64,681 Due to other funds - - - - - 804,442 804,442 Deposits and other liabilities 16,955 - - - - - 16,955 Advances from other funds - 594,000 - - - - 594,000 Total liabilities 1,153,709 951,171 - - - 957,141 3,062,021 DEFERRED INFLOWS OF RESOURCES Deferred loans - - - 1,481,164 - 99,732 1,580,896 Total deferred inflows of resources - - - 1,481,164 - 99,732 1,580,896 FUND BALANCE Restricted
Lighting, landscape & park maintenance - - - - - 3,811,173 3,811,173 Community development - - - 279,953 - 1,358,360 1,638,313 Street improvements - - - - 40,380 949,903 990,283 Public safety - - - - - 21,592 21,592 Community center - 4,406,233 - - - 675,797 5,082,030 Committed for community center financing 1,200,000 - - - - - 1,200,000 Committed for contingency reserve 1,000,000 - - - - - 1,000,000 Unassigned - 119,740 - - - (623,376) 496,364 Total fund balance 2,319,740 4,406,233 - 279,953 40,380 6,193,449 13,239,755 Total liabilities, deferred inflows of resources,
and fund balance $ 3,270,911 $ 5,559,942 $ - $ 1,761,117 $ 40,380 $ 7,250,322 $ 17,882,672 Special Revenue Funds
See accompanying notes. 7
CITY OF GONZALES
RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCE TO NET POSITION
OF GOVERNMENTAL ACTIVITIES
JUNE 30, 2025
Total governmental fund balance $ 13,239,755
Amounts reported for governmental activities in the Statement of Net Position are different because:
Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds 43,546,841 Governmental long-term liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds (11,160,703) Compensated absences are not due and payable in the current period and therefore are not reported in the governmental funds (405,018) Deferred outflows of resources related to net pension liability, represent an consumption of net position or fund balance that applies to future period(s) and so will not be recognized as an outflow of resources (expense) until that time 1,356,769 Net pension liability applicable to governmental activities is not due and payable in the current period and accordingly is not reported in the governmental funds (4,092,631) Deferred inflows of resources related to net pension liability, represent an acquisition of net position or fund balance that applies to future period(s) and so will not be recognized as an inflow of resources (revenue) until that time (128,286) In governmental funds, receivables which are not considered available are deferred. Such items are not deferred in the Statement of Net Position 1,580,896 Net position of governmental activities $ 43,937,623
See accompanying notes. 8
CITY OF GONZALES
STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE – GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2025
Capital Formerly Major
Project Fund Debt Service Fund
Gonzales Community TAMC Nonmajor Total
Community Public Financing Development Measure Governmental Governmental General Center Debt Authority Block Grant X Funds Funds Revenue
Taxes and assessments 6,597,713 $ - $ - $ - $ - $ 1,108,486 $ 7,706,199 $ Licenses, permits and impact fees 459,856 - - - - 2,933 462,789 Intergovernmental 825,447 3,460,315 - - 363,373 826,879 5,476,014 Charges for services 130,767 - - - - - 130,767 Fines and forfeitures 30,906 - - - - - 30,906 Loan repayments - - - 46,822 - 192,677 239,499 Use of money and property 129,820 86,966 - 23,986 - 598,169 838,941 Other - 223,367 - - - 8,312 231,679 Total revenue 3,547,281 8,397,876 - 70,808 363,373 2,737,456 15,116,794 Expenditures Current
General government 678,127 - - - - - 678,127 Public safety 4,988,110 - - - - 186,893 5,175,003 Public works 284,692 - - 27,355 - 588,952 900,999 Parks and recreation 874,774 5,024 - - - 255,220 1,135,018 Community development 526,952 - - 81,863 - 19,095 627,910 Capital outlay 436,206 15,704,915 - - - - 16,141,121 Debt Service Principal 139,036 - - - 311,291 24,675 475,002 Interest and fiscal charges - 22,755 - - 36,436 362,934 422,125 Total expenditures 15,709,939 7,950,652 - 109,218 347,727 1,437,769 25,555,305 Revenue over/(under) expenditures 447,224 (12,162,658) - (38,410) 15,646 1,299,687 (10,438,511) Other Financing Sources/(Uses) Contributions - 43,650 - - - - 43,650 Loan proceeds 1,326,674 - - - - - 1,326,674 Transfers in/(out) - net 743,240 (233,181) - (15,000) - (231,076) 263,983 786,890 1,093,493 - (15,000) - (231,076) 1,634,307 Change in Fund Balance (11,375,768) 1,540,717 - (53,410) 15,646 1,068,611 (8,804,204) Fund Balance Beginning of year, as previously report 779,023 15,782,001 691,645 333,363 24,734 4,433,193 22,043,959 Change within financial reporting entity (major to nonmajor) - - (691,645) - - 691,645 - End of year $ 4,406,233 2,319,740 $ - $ 279,953 $ 40,380 $ 6,193,449 $ 13,239,755 $ Special Revenue Funds
See accompanying notes. 9
CITY OF GONZALES
RECONCILIATION OF STATEMENT OF REVENUE, EXPENDITURES, AND CHANGES IN
FUND BALANCE OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITES YEAR ENDED JUNE 30, 2025
Net change in fund balance - total governmental funds (8,804,204) $ Amounts reported for governmental activities in the Statement of Activities are different because:
Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is capitalized and allocated over their estimated lives and reported as depreciation expense Capital outlay expenditures are therefore added back to fund balances 16,141,121 Depreciation and amortization expense not reported in governmental funds (1,244,201) 14,896,920
Repayment of long-term debt and lease liability is an expenditure in governmental funds, but the repayment reduces long-term liabilities in the statement of net position 475,002 Pension expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the Governmental Funds (706,406) Repayment of long-term loans receivable is revenue in governmental funds, but the repayment reduces long-term assets in the statement of net position. Issuance of long-term loans receivable produces the opposite effect (239,498) Compensated absence costs in the Statement of Activities does not require the use of current financial resources and, therefore, is not reported as expenditures in Governmental Funds 38,035 Change in net position of governmental activities $ 5,659,849 See accompanying notes. 10
CITY OF GONZALES
STATEMENT OF NET POSITION – PROPRIETARY FUNDS
JUNE 30, 2025
Total
Solar Proprietary
Water Sewer Garbage Energy Funds
ASSETS
Current assets
Cash and investments 5,611,805 $ 4,718,294 $ - $ 28,767 $ 10,358,866 $ Accounts receivable, net 263,226 259,378 224,045 - 746,649 Interest receivable 14,781 24,290 3,498 77 42,646 Total current assets 4,992,453 5,899,321 227,543 28,844 11,148,161 Non-current assets Advances to other funds 594,000 - - - 594,000 Property, plant and equipment, net of allowance for depreciation 17,317,776 7,202,582 - 2,881,861 27,402,219 Total non-current assets 17,317,776 7,796,582 - 2,881,861 27,996,219 Total assets 22,310,229 13,695,903 227,543 2,910,705 39,144,380 DEFERRED OUTFLOWS OF RESOURCES 78,844 78,854 34,543 - 192,241 LIABILITIES Current liabilities
Accounts payable and accrued expenses 59,915 596,871 126,690 - 783,476 Due to other funds - - 29,185 - 29,185 Deposits 77,113 - - - 77,113 Interest payable - 20,363 - 1,872 22,235 Line of credit - 722,869 - - 722,869 Current portion of long-term debt - - - 411,548 411,548 Total current liabilities 1,340,103 137,028 155,875 413,420 2,046,426 Non-current liabilities Long-term debt - 6,886,523 - 684,001 7,570,524 Lease liability 10,433 - - 132,159 142,592 Net pension liability 237,830 237,830 104,197 - 579,857 Total noncurrent liabilities 7,124,353 248,263 104,197 816,160 8,292,973 Total liabilities 8,464,456 385,291 260,072 1,229,580 10,339,399 DEFERRED INFLOWS OF RESOURCES 7,455 7,455 3,266 - 18,176 NET POSITION Net investment in capital assets 7,202,582 10,431,253 - - 17,633,835 Restricted for capital improvements 1,203,644 - - - 1,203,644 Unrestricted/(deficit) 3,485,909 4,975,785 (1,252) 1,681,125 10,141,567 Total net position $ 13,917,162 13,382,011 $ (1,252) $ 1,681,125 $ 28,979,046 $ Business-Type Activities - Enterprise Funds
See accompanying notes. 11
CITY OF GONZALES
STATEMENT OF REVENUE, EXPENSE, AND CHANGES IN FUND NET POSITION –
PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2025
Total
Solar Proprietary
Water Sewer Garbage Energy Funds
Operating Revenue
Charges for services 2,678,322 $ 2,693,483 $ 1,701,738 $ - $ 7,073,543 $ Other revenues 108,655 - - - 108,655 Total operating income 2,802,138 2,678,322 1,701,738 - 7,182,198 Operating Expense Contractual services and utilities 716,746 546,974 1,196,636 21,063 2,481,419 Personnel 611,235 611,386 183,895 - 1,406,516 Supplies and materials 195,489 444,118 24,427 - 664,034 Depreciation 153,014 271,532 - 52,145 476,691 Total operating expense 1,755,492 1,795,002 1,404,958 73,208 5,028,660 Operating income/(loss) 1,046,646 883,320 296,780 (73,208) 2,153,538 Nonoperating Revenue/(Expense) Development impact fees - 759,938 - - 759,938 Interest income 171,040 175,932 2,647 153 349,772 Interest expense (68,843) - - (42,878) (111,721) Total nonoperating revenue/(expense) 867,027 171,040 2,647 (42,725) 997,989 Net income/(loss) before transfers 1,054,360 1,913,673 299,427 (115,933) 3,151,527 Operating Transfers In/(Out) (116,155) (324,528) (282,385) 459,085 (263,983) Change in Net Position 1,797,518 729,832 17,042 343,152 2,887,544 Net Position Beginning of year 12,119,644 12,652,179 (18,294) 1,337,973 26,091,502 End of year $ 13,917,162 13,382,011 $ (1,252) $ 1,681,125 $ 28,979,046 $ Business-Type Activities - Enterprise Funds
See accompanying notes. 12
CITY OF GONZALES
STATEMENT OF CASH FLOW - PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2025
Total
Solar Business-Type
Water Sewer Garbage Energy Funds
Operating Activities
Receipts from customers and users 2,629,238 $ 2,727,166 $ 1,721,896 $ - $ 7,078,300 $ Payments for contractual services and utilities (691,953) (90,394) (1,126,677) (21,063) (1,930,087) Payments to employees (592,917) (593,058) (184,525) - (1,370,500) Payment to suppliers (444,118) (195,489) (24,427) - (664,034) Net cash provided by (used in) operating activities 1,599,596 1,148,879 386,267 (21,063) 3,113,679 Non-capital Financial Activities Payments (to)/from developers - 759,938 - - 759,938 Transfers (to)/from other funds 660,630 (116,155) (398,605) 459,085 604,955 Net cash provided by (used in) noncapital financing activities 660,630 643,783 (398,605) 459,085 1,364,893 Capital and Related Financing Activities Purchase of property, plant and equipment (36,575) (8,869,479) - - (8,906,054) Loan proceeds - 6,886,523 - - 6,886,523 Line of credit proceeds - 6,735,611 - - 6,735,611 Line of credit payments - (6,012,742) - - (6,012,742) Principal paid on long-term debt and lease liability (25,943) - - (383,301) (409,244) Interest paid on long-term debt - (48,480) - (43,020) (91,500) Net cash provided by (used in) capital and related financing activities (1,308,567) (62,518) - (426,321) (1,797,406) Investing Activities Interest received 198,072 - 3,067 179 201,318 Payments received on notes - 175,667 - - 175,667 Net cash provided by (used in) investing activities 198,072 175,667 3,067 179 376,985 Net Increase (Decrease) in Cash 1,110,479 1,945,063 (9,271) 11,880 3,058,151 Cash Beginning of year 3,607,815 3,666,742 9,271 16,887 7,300,715 End of year $ 4,718,294 5,611,805 $ - $ 28,767 $ 10,358,866 $ Business-Type Activities - Enterprise Funds
See accompanying notes. 13
CITY OF GONZALES
STATEMENT OF CASH FLOW - PROPRIETARY FUNDS (CONTINUED)
YEAR ENDED JUNE 30, 2025
Total
Solar Business-Type
Water Sewer Garbage Energy Funds
Cash Flows from Operating Activities
Operating income (loss) 883,320 $ 1,046,646 $ 296,780 $ (73,208) $ 2,153,538 $ Adjustments to reconcile operating income (loss)
to net cash provided (used) by operating activities:
Depreciation 271,532 153,014 - 52,145 476,691 (Increase) Decrease in Accounts Receivable (34,829) (74,972) 20,158 - (89,643) (Increase) Decrease in Deferred Outflows of Resources 65,746 65,755 37,264 - 168,765 Increase (Decrease) in Accounts Payable and Accrued Liabilities 24,793 456,580 69,959 - 551,332 Increase (Decrease) in Deposits (14,255) - - - (14,255) Increase (Decrease) in Net Pension Liability (39,617) (39,617) (33,579) - (112,813) Increase (Decrease) in Deferred Inflows of Resources (7,810) (7,811) (4,315) - (19,936) Net Cash Provided by (Used in) Operating Activities $ 1,599,596 1,148,879 $ 386,267 $ (21,063) $ 3,113,679 $ See accompanying notes. 14
CITY OF GONZALES
STATEMENT OF FIDUCIARY NET POSITION
PRIVATE-PURPOSE TRUST FUNDS
JUNE 30, 2025
Redevelopment
Successor
Agency
Assets
Current assets
Cash and investments 118,615 $
Restricted cash and investments 20,346
Total current assets 139,049
Noncurrent assets
Notes receivable 315,635 Property, plant and equipment, net of allowance for depreciation 461,051
Total noncurrent assets 776,686
Total assets 915,735
Liabilities
Current liabilities
Accounts payable and accrued liabilities 7,750 Interest payable 71,847 Bonds - current portion 850,208 Total current liabilities 929,805
Noncurrent liabilities
Bonds - long term portion 6,187,561
Total noncurrent liabilities 6,187,561
Total liabilities 7,117,366
Net Position
Held in trust for other governments (6,201,631) $
See accompanying notes. 15
CITY OF GONZALES
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
PRIVATE-PURPOSE TRUST FUND
JUNE 30, 2025
Redevelopment
Successor
Agency
Additions
Property taxes 1,241,201 $
Investment earnings 9,786
Total additions 1,250,987 Deductions
Administrative expenses 119,350 Interest and fiscal expenses 227,702 Total deductions 347,052
Change In Net Position 903,935
Net Position
Beginning of year (7,105,566) End of year (6,201,631) $ 16 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 1 – Summary of Significant Accounting Policies
Reporting Entity
The City of Gonzales (the City) is a municipal corporation, operating as a general law city, and governed by a city council of five members. As required by accounting principles generally accepted in the United States of America, as prescribed by the Governmental Accounting Standards Board (GASB), these financial statements present the City of Gonzales (the primary government) and its component units. The component units discussed below are included in the City's reporting entity because of the significance of their operational or financial relationship with the City.
The Gonzales Public Financing Authority (the Authority) is governed by the City Council of the City of Gonzales.
Although, it is legally separate from the City, the Authority is reported as if it were part of the primary government because the City Council is the governing board and is able to impose its will on the Authority and management has the same operational responsibility for the Authority as it does for the rest of the City. The activity of the Authority is included as separate funds in the special revenue fund and debt service fund types. Separate financial statements are not issued by the Authority.
Basis of Presentation
The City has conformed to the pronouncements of the GASB, which are the primary authoritative statements of accounting principles generally accepted in the United States of America applicable to state and local governments.
Government-Wide Financial Statements
The Government-Wide Financial Statements (the Statement of Net Position and the Statement of Activities) report information of all of the nonfiduciary activities of the primary government and its component units. Eliminations have been made to minimize the double counting of internal activities. These statements distinguish between the governmental and business-type activities of the City. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely significantly on fees charged to external parties.
The Statement of Activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the City and for each function of the City’s governmental activities. Direct expenses are those that are specifically associated with a program or function and are clearly identifiable to a particular function.
Program revenues include 1) charges paid by the recipients of goods or services offered by the programs and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program.
Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.
Fund Financial Statements
The accounts of the City are organized on the basis of funds each of which is considered a separate accounting entity.
The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Government resources are allocated to, and accounted for, in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.
17 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 1 – Summary of Significant Accounting Policies (Continued) The fund financial statements provide information about the City's funds, including fiduciary funds and blended component units. Separate statements for each fund category - governmental, proprietary, and fiduciary – are presented. The emphasis of fund financial statements is on major individual funds, each of which is displayed in a separate column. All remaining funds are aggregated and reported as non-major funds.
Governmental Fund Financial Statements Funds
Major funds are defined as funds that have assets, liabilities, revenues, or expenditures/expenses equal to ten percent of their fund-type (governmental and enterprise funds, respectively) total and five percent of the grand total. The General Fund is always a major fund. The City may also select other funds it believes should be presented as major funds.
The following types of governmental funds are used:
General Fund
The General fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund.
Special Revenue Funds
Special revenue funds are used to account for and report the proceeds of specific revenue sources (other than debt service and capital projects) that are restricted or committed to expenditures for specified purposes.
Debt Service Funds
Debt service funds are used to account for and report the financial resources that are restricted, committed or assigned for the payment of long-term debt principal, interest, and related costs.
The City reported the following major governmental funds in the accompanying financial statements:
General Fund – This fund accounts for all financial resources except those to be accounted for in another fund.
It is the general operating fund of the City.
Community Center Capital Project Fund – This fund accounts for grant/contribution monies restricted for the building of the new community center.
Community Development Block Grant Fund – This fund accounts for Federal Grant monies restricted for specific community programs, which includes the activity related to loans provided to homeowners and businesses and the repayment of these loans.
TAMC Measure X Fund – The fund is used to account for the City’s Transportation Safety and Investment Plan activities.
18 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 1 – Summary of Significant Accounting Policies (Continued) Fund Balance Classifications
The City’s fund balance policy establishes the procedures for reporting unrestricted fund balance (comprised of Committed, Assigned, and Unassigned categories) within the City’s governmental funds: General Fund, Special Revenue Funds, Debt Service Fund, and Capital Projects Funds.
Definitions
Fund balance is the difference between the assets and liabilities reported in the City’s governmental funds. There are generally limitations on the purpose for which all or a portion of the resources of a governmental fund may be used.
The force behind these limitations can vary significantly, depending upon their source. Consequently, the fund balance reported in the annual financial statements is categorized into five components whereby each component identifies the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the fund can be spent. The five components of fund balance are as follows:
Nonspendable: Resources that are 1) not in spendable form, such as inventories, prepaids, long-term receivables, or non-financial assets held for resale, or 2) required to be maintained intact such as an endowment.
Restricted: Resources that are subject to externally enforceable legal restrictions; these restrictions would be either 1) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or 2) imposed by law through constitutional provisions or enabling legislation.
Committed: Resources that are constrained to specific purposes by a formal action of the City Council such as an ordinance or resolution. The constraint remains binding unless removed in the same formal manner by the City Council. Council action to commit fund balance must occur within the fiscal reporting period while the amount committed may be determined subsequently.
Assigned: Resources that are constrained by the City’s intent to be used for specific purposes, but that are neither restricted nor committed. Intent is expressed by the City Council or to an official which the City Council has delegated this authority.
Unassigned: Within the General Fund, the residual resources, either positive or negative, in excess of what can be properly classified in one of the other four fund balance categories. Within all other governmental funds, the negative residual resources in excess of what can be properly classified as nonspendable, restricted, or committed.
Policy
1. Unless necessary by other requirements and circumstances, when expenditures are incurred for purposes for which both restricted and unrestricted (committed, assigned, or unassigned) fund balances are available, the City’s policy is to first apply restricted fund balance. When expenditures are incurred for purposes for which committed, assigned, or unassigned fund balances are available, the City’s policy is to first apply committed fund balance, then assigned fund balance, and finally unassigned fund balance.
2. The City’s Fund Balance policy delegates to the Finance Director the authority to assign unrestricted fund balance amounts where the City’s intent is for those amounts to be used for specific purposes. This delegation of authority is for the sole purpose of reporting these amounts in the annual financial statements. 19 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 1 – Summary of Significant Accounting Policies (Continued) Proprietary Fund Financial Statements
Proprietary fund financial statements include a Statement of Net Position, a Statement of Revenues, Expenses, and Change in Net Position, and a Statement of Cash Flows.
Proprietary fund types are accounted for using the “economic resources” measurement focus and accrual basis of accounting. This means that all assets and liabilities (whether current or non-current) associated with the activity are included on the Statement of Net Position. Their reported fund equity presents total net position. The operating statement of the proprietary funds presents increases (revenues) and decreases (expenses) in total net position.
Revenues are recognized when they are earned and expenses are recognized when the liability is incurred.
Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s enterprise funds are charges to customers for sales and services. Operating expenses for the enterprise funds include the costs of sales and services, the costs of employee benefits, maintenance of capital assets, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.
The City reported the following major proprietary (enterprise) funds:
Water Fund - This fund accounts for the activities for providing water service to the residents of the City. Sewer Fund - This fund accounts for the activities of providing sewer service to the residents of the City. Garbage Fund - This fund accounts for the activities of providing garbage service to the residents of the City. Solar Energy Fund – This fund accounts for the activities, the debt and the resources generated from the installation of solar energy panels.
Fiduciary Fund Financial Statements
Fiduciary funds are used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, and other governmental units. The City maintains the Private Purpose Trust Fund for the Successor Agency of the former Redevelopment Agency.
Basis of Accounting
The government-wide, proprietary funds and fiduciary fund financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.
Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The City considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after fiscal year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent that they have matured. Capital asset acquisitions are reported as expenditures in governmental funds.
Proceeds of long-term debt and acquisitions under capital leases are reported as other financing sources. 20 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 1 – Summary of Significant Accounting Policies (Continued) Non-exchange transactions, in which the City gives or receives value without directly receiving or giving equal value in exchange, include property taxes, grants, entitlements, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied.
Other revenues susceptible to accrual include other taxes, intergovernmental revenues, interest, and charges for services.
Grant revenues are recognized in the fiscal year in which all eligibility requirements are met. Under the terms of grant agreements, the City may fund certain programs with a combination of cost-reimbursement grants, categorical block grants, and general revenues. Thus, both restricted and unrestricted net position may be available to finance program expenditures/expenses. The City's policy is to first apply restricted net position to such programs, followed by unrestricted net position.
Financial Statement Amounts
Cash and Cash Equivalents – The City maintains a pooled cash and investment program. Therefore, for purposes of the statement of cash flows, the City considers the entire pooled cash and investment balance to be cash and cash equivalents.
Investments of the pool include only those investments authorized by the California Government Code such as, United States Treasury securities, agencies guaranteed by the United States Government, registered state warrants, and other investments. Investments primarily consist of deposits in the State of California Local Agency Investment Fund and certificates of deposit. Investments are recorded at amortized cost or fair value. Fair value is based upon quoted market prices.
Changes in fair value that occur during a fiscal year are recognized as investment income reported for that fiscal year.
Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation, maturity, or sale of investments.
The City pools its cash and investments of all funds with the City’s pool, except for assets held by fiscal agents.
Investment income earned by the pooled investments is allocated to the various funds based on each fund’s average cash and investment balance.
Accounts Receivable – Billed, but unpaid, services provided to individuals or non-governmental entities are recorded as accounts receivable. The Proprietary Funds include a year end accrual for services through the end of the fiscal year which have not yet been billed. Accounts receivable are reported net of an allowance for uncollectibles.
Property taxes in the State of California are administered for all local agencies at the county level, and consist of secured, unsecured, and utility tax rolls. The following is a summary of major policies and practices relating to property taxes:
21 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 1 – Summary of Significant Accounting Policies (Continued) Property Valuations - are established by the Assessor of the County of Monterey for the secured and unsecured property tax rolls; the utility property tax roll is valued by the State Board of Equalization. Under the provisions of Article XIIIA of the State Constitution (Proposition 13 adopted by the voters on June 6, 1978), properties are assessed at 100 percent of full value. From this base of assessment, subsequent annual increases in valuation are limited to a maximum of 2 percent. However, increases to full value are allowed for property improvements or upon change in ownership. Personal property is excluded from these limitations, and is subject to annual reappraisal.
Tax Levies - are limited to 1 percent of assessed value which results in a tax rate of $1 per $100 assessed valuation, under the provisions of Proposition 13. Tax rates for voter-approved indebtedness are excluded from this limitation.
Tax Levy Dates - are attached annually on January 1st, proceeding the fiscal year for which the taxes are levied. The fiscal year begins July 1st and ends June 30th of the following year. Taxes are levied on both real and unsecured personal property as it exists at that time. Liens against real estate, as well as the tax on personal property, are not relieved by subsequent renewal or change in ownership.
Tax Collections – are the responsibility of the county tax collector. Taxes and assessments on secured and utility rolls which constitute a lien against the property, may be paid in two installments: The first installment is due on November 1 st of the fiscal year and is delinquent, if not paid, by December 10th; and the second installment is due on March 1st of the fiscal year and is delinquent, if not paid, by April 10th. Unsecured personal property taxes do not constitute a lien against real property unless the taxes become delinquent. Payment must be made in one installment, which is delinquent, if not paid, by August 31st of the fiscal year. Significant penalties are imposed by the County for late payments.
Advances To/From Other Funds – This classification represents non-current portions of any long-term lending/borrowing transactions between funds. This amount will be equally offset by a reserve of fund balance which indicates that it does not represent available financial resources and therefore, is not available for appropriation. The current portion of any interfund long-term loan (advance) is included as an interfund receivable/payable.
Capital Assets – Capital outlays are recorded as expenditures of the General, Special Revenue, and Capital Projects Funds and as assets in the Government-Wide Financial Statements to the extent the City’s capitalization threshold are met.
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities column in the Government-Wide Financial Statements. Capital assets are defined by the government as assets with an initial individual cost of more than $5,000 and with an estimated useful life of at least two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Betterments and major improvements which significantly increase values, change capacities or extend useful lives are capitalized. Upon sale or retirement of fixed assets, the cost and related accumulated depreciation are removed from the respective accounts and any resulting gain or loss is included in the results of operations.
22 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 1 – Summary of Significant Accounting Policies (Continued) Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed.
Property, plant, and equipment of the primary government, as well as the component units, are depreciated using the straight line method over the following estimated useful lives:
Years
Buildings 40
Improvements 20 - 40
Equipment 5 - 15
Infrastructure 20 - 70
Compensated Absences – The City provides vacation and sick leave benefits to its employees in accordance with its employee handbook and applicable California laws.
In accordance with the provisions of GASB Statement No. 16, Accounting for Compensated Absences, and as amended by GASB Statement No. 101, Compensated Absences, the City has recognized a liability for compensated absences related to leave that is attributable to services already rendered and that is probable of resulting in a future payment when the leave is used or paid out. Under GASB 101, compensated absences are accrued if they meet the following criteria: (1) the leave is earned, (2) the leave is attributable to services already rendered, (3) the leave accumulates, and (4) the leave is more likely than not to be used for time off or paid upon separation.
Management has elected to classify the entire compensated absences balance as current to ensure that sufficient resources are available, if needed, to meet potential employee leave payouts.
Employees are only allowed to carry forward one year worth of vacation hours as of January 1 of each year. Vacation is accrued for employees as follows:
Years of Service Monthly Accrual Annually
0 to 2 6-2/3 hours Two weeks
3 to 9 10 hours Three weeks
10 to 15 11-2/3 hours Three weeks and 2-1/2 days
15+ 13-1/3 hours Four weeks
Upon termination of employment and, after completion of at least six months of service with the City, the accrued vacation leave shall be paid to the terminated employee.
Unearned Revenue – Unearned revenue is that for which asset recognition criteria have been met, but for which revenue recognition criteria have not been met. The City typically records unearned revenue related to uncollected outstanding performing loans and intergovernmental revenues received but not earned (qualifying expenditures not yet incurred). 23 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 1 – Summary of Significant Accounting Policies (Continued) Deferred Compensation Plan – City employees may defer a portion of their compensation under a City sponsored deferred compensation plan created in accordance with Internal Revenue Code Section 457. Under this Plan, participants are not taxed on the deferred portion of their compensation until distributed to them; distributions may be made only upon termination, retirement, death, or in an emergency as defined by the Plan. The assets of the Plan are not included within the City's financial statements.
Pension Plan – All full-time City employees are members of the State of California Public Employees’ Retirement System. The City’s policy is to fund all pension costs accrued; such costs to be funded are determined annually as of July 1 by the System’s actuary.
For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s Pension Plan and additions to/deductions from the City’s Pension Plan’s fiduciary net position have been determined on the same basis as they are reported by the City’s Pension Plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.
Leases – The City is a lessee for a noncancellable lease of equipment. The City recognizes a lease liability and an intangible right-to-use lease asset (lease asset) in the government-wide and enterprise fund financial statements.
The City recognizes lease liabilities with an initial, individual value of $5,000 or more.
At the commencement of a lease, the City initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs. Subsequently, the lease asset is amortized on a straight-line basis over its useful life.
Key estimates and judgments related to leases include how the City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments. The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for leases.
The lease term includes the noncancellable period of the lease. Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that the City is reasonably certain to exercise.
The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability.
Long-Term Obligations – In the Government-Wide Financial Statements and in the Proprietary Fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or Proprietary Fund Type Statement of Net Position. Debt principal payments of both government and business-type activities are reported as decreases in the balance of the liability on the Statement of Net Position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. 24 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 1 – Summary of Significant Accounting Policies (Continued) In the fund financial statements, however, debt principal payments of Governmental Funds are recognized as expenditures when paid. Governmental Fund types recognize bond premiums and discounts during the current period.
The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.
Net Position – The government-wide and business-type activities financial statements utilize a net position presentation. Net position are categorized as net investment in capital assets, restricted and unrestricted. Net Investment in Capital Assets – This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce the balance in this category. Restricted Net Position – This category presents external restrictions on net position imposed by creditors, grantors, contributors, laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation.
Unrestricted Net Position – This category represents net position of the City not restricted for any project or other purpose.
When expenditures are incurred for purposes for which both restricted and unrestricted (committed, assigned, or unassigned) fund balances are available, the City’s policy is to apply restricted first. When expenditures are incurred for purposes for which committed, assigned, or unassigned fund balances are available, the City’s policy is to apply committed fund balance first, then assigned fund balance, and finally unassigned fund balance.
Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates.
Note 2 – Stewardship, Compliance and Accountability
California law authorizes the City to invest in obligations of the United States Treasury, agencies and instrumentalities, certificates of deposit or time deposits in banks and savings and loan associations which are insured by the Federal Deposit Insurance Corporation.
In accordance with applicable sections of the California Government Code and the Gonzales Municipal Code, the City prepares and legally adopts an annual balanced budget on a basis consistent with accounting principles generally accepted in the United States of America. Annual appropriated budgets are adopted for the General Fund, specific Special Revenue Funds, and specific Capital Projects Funds. Budget plans are adopted for Proprietary Funds. A proposed budget is presented to the City Council during June of each year for review. The Council holds public hearings and may add to, subtract from, or change appropriations within the revenues and reserves estimated as available. Expenditures may not legally exceed budgeted appropriations at the fund level. Supplementary appropriations which alter the total expenditures of any fund, or expenditures in excess of total budgeted fund appropriations, must be approved by the City Council.
All annual appropriations lapse at fiscal year end to the extent they have not been expended or encumbered. 25 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 3 – Cash and Investments
The City pools all of its cash and investments except those funds required to be held by outside fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash is allocated to the various funds on average cash balances. Interest income from cash investments held with fiscal agents is credited directly to the related funds.
Cash and investments as of June 30, 2025 are classified in the accompanying financial statements as follows:
Statement of Net Position:
Cash and Investments 23,986,717 $
Private Purpose Trust:
Cash and Investments 118,615 Restricted cash and investments 20,346 Total Cash and Investments $ 24,125,678
Cash and investments as of June 30, 2025 consist of the following:
Cash on hand 2,504 $
Deposits with Financial Institutions 2,295,351 Local Agency Investment Fund 4,835,943 Certificates of Deposit 10,970 Money Market Accounts 11,656,788 Cash Held by Fiscal Agent 5,324,122 Total Cash and Investments $ 24,125,678
Fair Value Measurements
The framework for measuring fair value provides a fair value hierarchy that categorizes the inputs to valuation techniques used to measure fair value into three levels. The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described as follows:
Level 1: Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets that a government can access at the measurement date.
Level 2: Inputs to valuation methodology include inputs – other than quoted prices included within Level 1 – that are observable for an asset or liability, either directly or indirectly.
Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The asset’s or liability’s fair value measurement level within a fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. 26 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 3 – Cash and Investments (Continued)
Following is a description of the valuation methodologies used for assets measured at fair value.
LAIF is valued based on the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (Level 2 input).
The City had the following recurring fair value measurements as of June 30, 2025:
Level 1 Level 2 Level 3
June 30, 2025
Balance
Investments by fair value level:
Equity Securities:
CDS 10,970 $ - $ - $ 10,970 $
LAIF - 4,835,943 - 4,835,943
Total Equity Securities 10,970 4,835,943 - 4,846,913 Cash equivalents carried at amortized cost:
Deposits 2,297,855 Money Market Mutual Funds 11,656,788 Cash Held by Fiscal Agent 5,324,122 Total cash and equivalents amortized at cost 19,278,765 Total Cash Equivalents & Investments 24,125,678 $ 27 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 3 – Cash and Investments (Continued)
Investments Authorized by the California Government Code and the City’s Investment Policy The table below identifies the investment types that are authorized for the City by the California Government Code (or the City’s investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the City’s investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy.
Maximum Maximum
Maximum Percentage Investment
Maturity of Portfolio In One Issuer
U.S. Treasury Obligations 5 years None None
U.S. Agency Securities 5 years None None
Banker's Acceptances 270 days 40% 30%
Commercial Paper 180 days 15% 10%
Time Certificates of Deposit 3 years 25% None
Negotiable Certificates of Deposit 3 years 30% None
Repurchase Agreements 1 year 20% None
Medium-Term Notes 5 years 30% 15%
Mutual Funds 5 years 20% 10%
Money Market Mutual Funds 5 years 15% 10%
Local Agency Investment Fund (LAIF) N/A None None
County Investment Pool N/A None None
Authorized Investment Type
28 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 3 – Cash and Investments (Continued)
Investments Authorized by Debt Agreements
Investments of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City’s investment policy. The table below identifies the investment types that are authorized for investments held by the bond trustee. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.
Maximum Maximum
Maximum Percentage Investment
Maturity of Portfolio In One Issuer
U.S. Treasury Obligations None None None
U.S. Agency Securities None None None
Banker's Acceptances 180 days None None
Commercial Paper 270 days None None
Money Market Mutual Funds N/A None None
Investment Contracts None None None
Certificates of Deposits 1 year None None
Repurchase Agreements 30 days None None
Local Agency Investment Fund (LAIF) N/A None None
Municipal Bonds None None None
Authorized Investment Type
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment.
Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates.
Information about the sensitivity of the fair values of the City’s investments (including investments held by bond trustee) to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity:
12 Months 13 to 24 25 to 60 More than
Fair Value or Less Months Months 60 Months
Local Agency Investment Fund 4,835,943 $ 4,835,943 $ - $ - $ - $ Certificates of deposit 10,970 10,970 - - - Total $ 4,846,913 4,846,913 $ - $ - $ - $ Investment Type
Remaining Maturity (in months)
29 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 3 – Cash and Investments (Continued)
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization.
Presented below is the minimum rating required by (where applicable) the California Government Code, the City’s investment policy, or debt agreements, and the actual rating as of year-end for each investment type:
Minimum
Rating Unrated
Local Agency Investment Fund $ N/A 4,835,943 4,835,943 $ Certificates of deposit 10,970 N/A 10,970
Total $ 4,846,913 4,846,913 $
Investment Type
Concentration of Credit Risk
The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. There were no investments in any one issuer, other than U.S.
Treasury securities, mutual funds, and external investment pools, that represent 5% or more of total City-wide investments as of June 30, 2025.
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The California Government Code and the City’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.
At June 30, 2025, the balances held in bank accounts were (comprised of deposits, CD’s and money market accounts) collateralized by the pledging financial institution, but not in the City’s name. At June 30, 2025, total cash held in bank was $1,786,771, of which $1,536,771 was in excess of federal depository insurance limits.
30 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 3 – Cash and Investments (Continued)
Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis.
LAIF is a governmental investment pool managed and directed by the California State Treasurer and is not registered with the Securities and Exchange Commission. An oversight committee comprised of California State officials and various participants provide oversight to the management of the fund. The daily operations and responsibilities of LAIF fall under the auspices of the State Treasurer's office. The City is a voluntary participant in the investment pool.
Note 4 – Notes Receivable and Deferred Loans Receivable Loans as of fiscal year ended June 30, 2025 were as follows:
Balance Balance
June 30, 2024 Additions Deletions June 30, 2025
Governmental Funds
Developer Loans 110,046 $ - $ (110,046) $ - $
Rehabilitation Loans 1,710,348 - (129,452) 1,580,896 $ - 1,820,394 $ (239,498) $ 1,580,896 $ 31 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 4 – Notes Receivable and Deferred Loans Receivable (Continued) Rehabilitation Loans
Original Balance as of
Date of Note Principal Interest Rate Maturity Date Collateral June 30, 2025 May 24, 2006 132,400 $ 2% May 24, 2036 Deed of Trust 132,400 $ May 24, 2006 50,000 2% May 24, 2036 Deed of Trust 50,000 May 24, 2006 17,500 2% May 24, 2036 Deed of Trust 17,500 May 24, 2006 50,000 2% May 24, 2036 Deed of Trust 50,000 May 24, 2006 50,000 2% May 24, 2036 Deed of Trust 50,000 May 24, 2006 50,000 2% May 24, 2036 Deed of Trust 50,000 May 24, 2006 50,000 2% May 24, 2036 Deed of Trust 50,000 May 24, 2006 50,000 2% May 24, 2036 Deed of Trust 50,000 May 24, 2006 50,000 2% May 24, 2036 Deed of Trust 50,000 November 18, 2008 111,184 3% November 18, 2038 Deed of Trust 119,228 December 23, 2008 97,346 3% December 23, 2038 Deed of Trust 97,346 April 18, 2014 59,486 0% April 18, 2044 Deed of Trust 60,089 August 25, 2014 38,531 0% August 25, 2044 Deed of Trust 38,531 October 21, 2014 89,715 0% October 21, 2044 Deed of Trust 89,715 May 1, 2012 105,000 3% May 1, 2022 Security Agreement 21,845 April 11, 2014 91,511 3% April 11, 2024 Security Agreement 64,134 September 30, 2015 175,000 2% September 30, 2030 Security Agreement 107,295 June 8, 2017 104,777 3% June 8, 2027 Security Agreement 64,318 July 24, 2019 70,000 2% July 24, 2031 Security Agreement 63,313 December 21, 2021 115,000 1% December 21, 2023 Security Agreement 115,000 June 10, 2022 55,000 1% June 10, 2038 Security Agreement 47,181 August 24, 2022 100,000 1% December 21, 2038 Security Agreement 93,269 May 12, 2004 43,500 3% March 12, 2024 Deed of Trust 19,690 July 22, 2008 48,643 0% July 22, 2023 Deed of Trust 36,943 April 8, 2008 23,802 0% April 8, 2023 Deed of Trust 14,514 July 8, 2008 57,440 0% July 8, 2023 Deed of Trust 7,500 March 5, 2009 16,000 0% March 5, 2024 Deed of Trust 13,226 February 19, 2008 170,000 4% February 19, 2028 Deed of Trust 7,859 $ 1,580,896
32 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 5 – Capital Assets – Capital asset activities for the year ended June 30, 2025 were as follows:
Balance Balance
July 1, 2024 Additions Retirements June 30, 2025
Governmental Activities
Capital assets, not being depreciated
Land 8,342,583 $ - $ - $ 8,342,583 $
Construction in progress 15,620,563 3,952,894 (227,795) 19,345,662 Total capital assets, not being depreciated 15,620,563 12,295,477 (227,795) 27,688,245 Capital assets, being depreciated Buildings and improvements 10,563,825 340,190 - 10,904,015 Infrastructure 36,520,519 408,163 - 36,928,682 Machinery and equipment - 2,940,599 - 2,940,599 Total capital assets, being depreciated 748,353 50,024,943 - 50,773,296 Less accumulated depreciation for Buildings and improvements (3,883,227) (313,215) - (4,196,442) Infrastructure (27,075,265) (851,727) - (27,926,992) Machinery and equipment (2,796,185) (22,606) - (2,818,791) Total accumulated depreciation (1,187,548) (33,754,677) - (34,942,225) Total capital assets, being depreciated, net (439,195) 16,270,266 - 15,831,071 Right of use assets, being amortized Vehicles 283,268 - - 283,268 Less: amortization (56,653) (199,090) - (255,743) Total right of use assets, being amortized, net (56,653) 84,178 - 27,525 Governmental activities capital assets, net $ 15,124,715 28,649,921 $ (227,795) $ 43,546,841 $ Business-Type Activities
Capital assets, not being depreciated
Land 2,872,931 $ - $ - $ 2,872,931 $
Construction in progress 8,466,550 - - 8,466,550 Total capital assets, not being depreciated 8,466,550 2,872,931 - 11,339,481 Capital assets, being depreciated Buildings and improvements 46,939 - - 46,939 Infrastructure 26,179,598 439,504 - 26,619,102 Machinery and equipment - 528,501 - 528,501 Total capital assets, being depreciated 439,504 26,755,038 - 27,194,542 Less: accumulated depreciation (442,430) (10,775,258) - (11,217,688) Total capital assets, being depreciated, net (2,926) 15,979,780 - 15,976,854 Right of use assets, being amortized Improvements 143,525 - - 143,525 Vehicles 147,483 - - 147,483 Less: amortization (34,261) (170,863) - (205,124) Total right of use assets, being amortized, net (34,261) 120,145 - 85,884 Business-type activities capital assets, net $ 8,429,363 18,972,856 $ - $ 27,402,219 $ 33 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 5 – Capital Assets (Continued)
Depreciation expense was charged to the following functions in the Statement of Activities:
Government Activities:
General Government 36,538 $
Public Safety 92,976 Public Works 520,864 Parks and Recreation 288,080 Community Development 249,090
$ 1,187,548
Business-Type Functions:
Water 271,532 $
Sewer 153,014 Solar 52,145
$ 476,691
Note 6 – Interfund Receivables, Payables and Transfers
Due From/To Other Funds
Current interfund balances and other short-term borrowings between funds were attributed to negative cash balances and are expected to be repaid shortly after the end of the fiscal year. The following is a summary of interfund balances as of June 30, 2025.
Due From Due To
Major Governmental Funds:
General Fund 833,627 $ - $
Major Enterprise Funds:
Garbage Fund - 29,185 Nonmajor Governmental Funds:
Infrastructure Improvement Fund - 362,148 Supplemental Local Law Enforcement - 48,987 Housing Successor - 84,314 California Breeze Maintenance District - 308,993 $ 833,627 833,627 $ Advances
During fiscal year 2009-2010 the City of Gonzales formalized an advance agreement between the City’s General Fund and the Water Fund for the amount of $594,000. The amount is payable by the General Fund to the Water Fund over a period of 20 years at an interest rate of 1 percent payable in annual payments of $33,057. During the fiscal year 2024- 2025, the General Fund did not make any payments.
34 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 6 – Interfund Receivables, Payables and Transfers (Continued) Interfund Transfers
In general, the City uses interfund transfers to (1) move revenues from the funds that collect them to the funds’ that statute or budget requires to expend them, (2) use unrestricted revenues collected in the General Fund to help finance various programs and capital projects accounted for in other funds in accordance with budgetary authorization, and (3) move cash to debt service funds from the funds responsible for payment as debt service payments become due. In general, the effect of the interfund activity has been eliminated from the government-wide financial statements.
Transfers In Transfers Out
Major Governmental Funds:
General Fund - $ (233,181) $
Community Center Capital Project Fund 743,240 - CDBG Block Grant - (15,000) Proprietary Funds:
Water - (324,528) Sewer - (116,155)
Garbage - (282,385)
Solar Energy 459,085 - Supplemental Local Law Enforcement Fund - (314,957) Public Safety Fund 168,421 - California Breeze Maintenance District Fund - (22,500) Canyon Creek Park Maintenance District Fund - (26,787) Cipriani Estates Park & Maintenance District Fund - (17,000) Gonzales Industrial Park Landscape & Maintenance Fund - (18,253) $ (1,370,746) 1,370,746 $ The following describe the significant transfers made during the year:
The Supplemental Local Law Enforcement Fund transferred $314,957 to the Public Safety Fund in order to finance various programs.
Various nonmajor funds transferred $99,540 to the General Fund, principally as reimbursements to the General Fund for various costs including administrative costs.
General Fund transferred $168,421 to Public Safety Fund to reimburse costs related to safety. Community Center Capital Project Fund received $743,240 to cover expansion related costs related to the Community Center.
Water, Sewer, and Garbage transferred $459,085 to Solar Energy to cover costs for energy used by the enterprise funds.
35 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 7 – Long-Term Debt
The City generally incurs long-term debt to finance projects or purchase assets which will have useful lives equal to or greater than the related debt.
Long-term debt payable at June 30, 2025 was comprised of the following individual issues:
Balance Balance Current
July 1, 2024 Additions Retirements June 30, 2025 Portion Governmental Activities Long Term Debt
Direct Financing:
2024A Lease Revenue Bonds $ - 9,825,000 $ - $ 9,825,000 $ - $ Direct Borrowings:
Pool Site Financed Purchase 816,628 - (106,896) 709,732 109,996 Note Payable TAMC Measure X Note Payable 909,632 - (311,290) 598,342 320,170 Total Governmental Activities Debt $ 11,551,260 - $ (418,186) $ 11,133,074 $ 430,166 $ Business-Type Activities Long Term Debt
Direct Borrowings:
Note Payable
Solar Panel Energy Financed Purchase 581,384 $ - $ (265,824) $ 315,560 $ 290,664 $ Solar Panel Energy Financed Purchase 897,466 - (117,477) 779,989 120,884 Industrial Sewer Plant Loan 6,866,523 - - 6,866,523 - Total Business-Type Activities Debt $ 1,478,850 6,866,523 $ (383,301) $ 7,962,072 $ 411,548 $ Compensated Absences
Governmental Activities $ 443,053 - $ (38,035) $ 405,018 $ Net Pension Liability
Governmental Activities $ 4,041,915 50,716 $ - $ 4,092,631 $ Business-type Activities $ 692,670 - $ (112,813) $ 579,857 $ 2020A Lease Revenue Bonds– On May 22, 2024, the City entered into an agreement with the Gonzales Public Financing Authority for $9,825,000 at 3.95% interest rate. Proceeds go towards financing the construction of a new community center, which would include teen innovation center, community meeting rooms, library, performing arts place, a community hall, offices and commercial kitchen and other amenities. Principal and interest payments are made semi-annually on November 1st and May 1st until May 1, 2044.
Pool Site Financed Purchase – On March 1, 2016, the City entered into an agreement with the Gonzales Public Financing Authority to purchase the pool site for $1,575,000 at 2.88% interest rate. Purchase agreement terminates on February 1, 2031.
TAMC Measure X Loan – On August 23, 2017, the City entered into a project loan agreement for the street rehabilitation. The amount financed was $2,500,000 at 2.5% and monthly payments are determined by the lender. 36 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 7 – Long-Term Debt (Continued)
2005 Water Tank & Sewer Expansion Refinance – On November 1, 2005, the Gonzales Public Financing Authority entered into a funding agreement with a financial institution to provide $3,131,500 for the Sewer Expansion and Water Tank Projects (the Project). The Note accrues interest at a rate of 4.55 percent. Principal and interest payments are due semi-annually on June 30th and December 30th.
The Financing Authority simultaneously entered into an installment sale agreement with the City of Gonzales where the Authority sells the Project to the City and the City purchases the Project from the Authority. The installment sale agreement accrues interest at the rate of 4.55 percent (the same rate as the Note) and the City is required to make semiannual installment payments to the Authority in the same amounts due under the Note. The Authority has assigned the right to receive these installment payments to the Note holder.
In June of 2012, the above note was refinanced. The amount financed was $2,475,000 at the interest rate of 3.35 percent and payable in semi-annual installments on December 29th and June 29th of each year beginning on December 29, 2012.
Solar Panel Energy Financed Purchase – In February of 2012, the City entered into a purchase agreement for the purchase of Solar Panels. The amount financed was $2,697,589 and is payable over a 14-year term with payments commencing in October of 2012.
Solar Panel Energy Financed Purchase – In March of 2016, the City entered into a lease purchase agreement for the purchase of Solar Panels. The amount financed was $1,679,189 and is payable over a 15-year term with payments commencing in August of 2016.
Industrial Sewer Plant Loan – In connection with the City’s construction of a new industrial sewer plant, a loan for up to $34,884,000 was obtained from the State of California at 1.7% interest rate. As of June 30, 2025, the City drew down $6,886,523. The City anticipates project completion in Spring 2027 with a final loan balance of $34,884,000.
The first of thirty equal annual principal payments will be due one year from completion.
The annual requirement to amortize the principal and interest on all long-term debt at June 30, 2025 were as follows:
Years ending June 30, Principal Interest Principal Interest 2026 430,166 $ 422,674 $ 436,445 $ 27,848 $
2027 776,359 411,479 245,382 193,669 2028 516,471 386,060 309,892 129,159 2029 534,849 366,882 316,697 122,354
2030 558,326 347,013 323,662 115,388
2031-2035 2,556,903 1,435,809 1,129,187 496,131
2036-2040 2,950,000 913,638 1,076,755 406,076
2041-2045 2,810,000 283,018 1,171,445 311,387
2046-2050 - - 1,274,461 208,370
2051-2055 - - 1,386,537 96,295 2056 - - 291,609 4,957 $ 11,133,074 4,566,572 $ 7,962,072 $ 2,111,634 $ Governmental Activities Business-Type Activities
37 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 8 – Line of Credit
The City obtained a line of credit for $10,000,000 in January 2025 with Banner Bank for the industrial sewer improvements project to help pay for construction costs until bonds can be issued by the City to pay for the construction. Interest rate is at 4.34% and during the year the City paid $48,486 in interest expense and ending balance of the line of credit at June 30, 2025 was $772,869.
Note 9 – Lease Liability
Balance Balance Current
July 1, 2024 Additions Retirements June 30, 2025 Portion Lease Liability
Governmental Activities
Vehicles $ - 84,445 $ (56,816) $ 27,629 $ 27,639 $
Total Governmental Activities Lease Liability $ - 84,445 $ (56,816) $ 27,629 $ 27,639 $ Business-type Activities
Improvements 132,159 $ - $ - $ 132,159 $ 21,170 $
Vehicles - 36,376 (25,943) 10,433 10,433 Total Business-type Activities Lease Liability $ - 168,535 $ (25,943) $ 142,592 $ 31,603 $ The City entered into several sixty (60) month lease agreements as lessee for the acquisition and use of vehicles.
An initial lease liability was recorded in the amount of $430,751 during the year the lease was entered. As of June 30, 2025, the value of the lease liability was $38,062. The City is required to make monthly principal and interest payments of $411 to $6,873. The lease has an interest rate of 0.9%. The equipment has a five-year estimated useful life. The value of the right-to-use asset as of the end of the current fiscal year was $120,426 and had accumulated amortization of $391,473.
On March 2012, the City entered into a lease agreement with a Winery, for the rental of their rooftops in connection with the solar panels purchased by the City. The lease rental payments are equal to $5,000 annually for the first ten years and $10,000 for the sixteenth year at 3% interest, with a three percent annual escalator applied to each subsequent year of the agreement which terminates on December 31, 2042.
The future principal and interest lease payments as of June 30, 2025, were as follows:
Years ending June 30, Principal Interest Principal Interest 2026 27,629 $ 29 $ 27,479 $ 3,835 $
2027 - - 6,269 3,731 2028 - - 6,460 3,540
2029 - - 6,656 3,344
2030 - - 6,859 3,141
2031-2035 - - 37,554 12,446 2036-2040 - - 43,623 6,377 2041-2043 - - 7,691 637 $ 27,629 29 $ 142,592 $ 37,051 $ Governmental Activities Business-Type Activities
38 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 10 – Fund Balance
The following is a summary of deficit fund balances as of June 30, 2025:
Major Enterprise Funds:
Garbage Fund (1,252) $
Nonmajor Funds:
Infrastructure Improvements Fund (362,148) Housing Successor (84,134) California Breeze Maintenance District (170,005) Public Safety Special Revenue Fund (7,089)
This deficit is expected to be relieved from future revenues or transfers from other funds.
Note 11 – Deferred Outflows/Inflows of Resources
GASB No. 65 establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows or resources, certain items that were previously reported as assets and liabilities.
In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows or resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position or fund balance that applies to a future period(s) and thus, will not be recognized as an outflow of resources (expense/expenditure) until then. The City has one item to report in this category:
The City has $1,549,010 in pension related items that qualify to be reported in deferred outflows of resources. The pension related deferred outflows of resources are described in Note 14.
In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represent an acquisition of net position or fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has two items to report in this category:
The City has $146,462 in pension related items that qualify to be reported in deferred inflows of resources. The pension related deferred inflows of resources are described in Note 14.
Unavailable revenues arise only under a modified accrual basis of accounting and is reported only in the governmental funds balance sheet. The City has $1,580,896 in notes and loans receivable reported as deferred inflows of resources reported for unavailable revenues. Of this amount $1,481,164 and $99,732 is reported in the Community Block Grant Fund and Housing Successor Fund, respectively. See Note 4 for details. 39 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 12 – Commitments and Contingencies
General
The City participates in a number of Federal and State assisted grant programs which are subject to financial and compliance audits. Audits for these programs and the respective findings are to be determined at a future date, and the City expects the amount, if any, of the expenditures which may be disallowed by the granting agency to be immaterial.
The City is a defendant in various lawsuits and claims. The City attorney anticipates that actual or potential claims against the City, not covered by insurance, would not materially affect the financial position of the City.
Note 13 – Risk Management
The City provides for workers' compensation and liability through a self-funded joint powers agency, Monterey Bay Area Self Insurance Authorities. Joint Powers Agreement (JPA) accounts are not separately maintained for each participant.
Description of Self-Insurance Pool Pursuant to Joint Powers Agreement The City is a member of the Monterey Bay Area Self Insurance Authority (MBASIA). MBASIA is composed of 10 California public entities and is organized under a joint powers agreement pursuant to California Government Code 6500 et seq. The purpose of MBASIA is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group-purchased insurance for property and other coverage.
General Liability: The City is self-insured for the first $10,000 of each liability claims. Claims above $10,000 up to $499,000 are paid by MBASIA. Claims above $499,000 up to $20 million are covered by insurance purchased by MBASIA.
Workers’ Compensation: The City does not retain a self-insured portion of workers’ compensation claims. Annual premiums for coverage up to statutory levels are paid to MBASIA based on the level of claims activity. A third party claims administrator is contracted by MBASIA to manage claims activity.
Adequacy of Protection
During the past three fiscal (claims) years none of the above programs of protection have had settlements or judgments that exceeded insured coverage. There have been no significant reductions in insured liability coverage from coverage in the prior year. Audited financial statements for MBASIA can be obtained from their management at 100 Pine Street, 11th Floor, San Francisco, CA 94111.
40 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 14 – Pension Plan
Plan Description – The City contributes to the California Public Employees' Retirement System (PERS), an agent multiple-employer public employee defined benefit pension plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statute and city ordinance. Copies of PERS' annual financial report may be obtained from their Executive Office - 400 P Street - Sacramento, CA 95814.
Funding Policy – Active plan members in the Plan are required to contribute 7% of their covered salary for both miscellaneous and public safety members. The City contributes 3.5% of the employees required share of 7%.
The City is required to contribute the actuarially determined remaining amounts necessary to fund the benefits for its members. The actuarial methods and assumptions used are those adopted by the CalPERS Board of Administration.
The required employer contribution rate for the fiscal year ended June 30, 2025 was 10.150%, 16.560%, 7.870%, and
11.050% for the miscellaneous, safety, PEPRA miscellaneous, and PEPRA safety, respectively. The contribution requirements of plan members are established by State statute and the employer contribution is established and may be amended by PERS.
The Plans’ provisions and benefits in effect at June 30, 2025, are summarized as follows:
Miscellaneous Safety
Hire Date
Prior to
January 1, 2013
Prior to
January 1, 2013
Benefit Formula 2.0% at 60;
maximum 2%
COLA
2.0% at 55;
maximum 2%
COLA
Benefit Vesting Schedule 5 years service 5 years service Benefit Payments monthly for life monthly for life
Retirement Age 60 55
Monthly Benefits, as a % of Eligible Compensation 2.00% 2.00% Required Employee Contribution Rates 7.00% 7.00%
Required Employer Contribution Rates 10.150% 16.560%
PEPRA
Miscellaneous
PEPRA Safety
Police and Fire
Hire Date
On or after
January 1, 2013
On or after
January 1, 2013
Benefit Formula 2.0% at 62;
maximum 2%
COLA
2.0% at 57;
maximum 2%
COLA
Benefit Vesting Schedule 5 years service 5 years service Benefit Payments monthly for life monthly for life
Retirement Age 62 57
Monthly Benefits, as a % of Eligible Compensation 2.00% 2.00% Required Employee Contribution Rates 7.75% 11.00%
Required Employer Contribution Rates 7.870% 11.050%
41 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 14 – Pension Plan (Continued)
Contributions – Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all employers be determined on an annual basis by the actuary and shall be effective on July 1 following the notice of change in the rate. Funding contributions for the Plan are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.
For the year ended June 30, 2025, $716,133 in contributions was recognized as part of the pension expense.
Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions As of June 30, 2025, the City reported net pension liabilities for its proportionate shares of the net pension liability as follows:
Proportionate Share of
Net Pension Liability
Total Net Pension Liability – Miscellaneous $ 2,408,725 Total Net Pension Liability – Safety $ 2,263,763
General Information about the Pension Plan
The City’s net pension liability is measured as the proportionate share of the net pension liability. The net pension liability of each Plan is measured as of June 30, 2024, and the total pension liability for each Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2023 rolled forward to June 30, 2024 using standard update procedures. The City’s proportion of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. The City’s proportionate share of the net pension liability for the Plan as of June 30, 2024 and 2025 was as follows:
Miscellaneous Safety
Proportion – June 30, 2024 0.04843% .03094%
Proportion – June 30, 2025 0.04980% .03105%
Change – Increase/(Decrease) 0.00137% .00011%
42 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 14 – Pension Plan (Continued)
For the year ended June 30, 2025, the City recognized pension expense of $1,202,853. At June 30, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to pension from the following sources:
Deferred Outflows
of Resources
Deferred Inflows
of Resources
Pension contributions subsequent to
measurement date $ 468,155 $ - Change in employer's proportion 229,660 - Changes of assumptions 117,683 - Difference between employer's contributions and proportionate share of contributions 92,414 (132,329) Differences between projected and actual investment earnings - 248,087 Differences between expected and actual experience (14,133) 393,011 Total 1,549,010 $ (146,462) $ The $468,155 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2026. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:
Year Ended
June 30
2026 387,678 $
2027 607,795 2028 23,868 2029 (84,958) Total 934,383 $
43 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 14 – Pension Plan (Continued)
Actuarial Methods and Assumptions – The collective total pension liability for the June 30, 2024 measurement period was determined by an actuarial valuation as of June 30, 2023, with update procedures used to roll forward the total pension liability to June 30, 2024. The collective total pension liability was based on the following assumptions:
Valuation Date June 30, 2023
Measurement Date June 30, 2024
Actuarial Cost Method Entry-Age Normal Cost Method in
accordance with the requirements of
GASB Statement No. 68
Actuarial Assumptions:
Discount Rate 6.90%
Inflation 2.30%
Payroll Growth 2.30%
Salary Increases Varies by Entry Age and Service
Mortality Rate Table Derived using CalPERS' Membership
Date for all Funds
1 Post Retirement Benefit
Increase
Contract COLA up to 2.30% until
Purchasing Power Protection
Allowance Floor on Purchasing Power
applies
1 The mortality table was developed based on CalPERS-specific data. The rates incorporate Generational Mortality to capture ongoing mortality improvement using 80% of Scale MP 2020 published by the Society of Actuaries. For more details, please refer to the 2021 experience study report that can be found on the CalPERS website.
All other actuarial assumptions used in the June 30, 2018 valuation was based on the results of an December 2017 experience study report (based on CalPERS demographic data from 1997 to 2015), including updates to salary increase, mortality and retirement rates. The Experience Study can be obtained at CalPERS’ website.
Change of assumptions – None.
44 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 14 – Pension Plan (Continued)
Discount rate – The discount rate used to measure the total pension liability for PERF C was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability.
In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. Projected returns for all asset classes are estimated and, combined with risk estimates, are used to project compound (geometric) returns over the long term. The discount rate used to discount liabilities was informed by the long-term projected portfolio return. The long-term expected real rates of return by asset class can be found in CalPERS’ Comprehensive Annual Financial Report for the fiscal year ended June 30, 2024.
The table below reflects long-term expected real rates of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. The geometric rates of return are net of administrative expenses.
Asset Class
New Strategic
Allocation
Real Return
Years 1-101,2
Global Equity - cap-weighted 30% 4.45%
Global Equity - noncap-weighted 12% 3.84%
Private Equity 13% 7.28%
Treasury 5% 0.27%
Mortgage-backed Securities 5% 0.50%
Investment Grade Corporates 10% 1.56%
High Yield 5% 2.27%
Emerging Market Debt 5% 2.48%
Private Debt 5% 3.57%
Real Assets 15% 3.21%
Leverage. -5% -0.59%
Total 100%
1 An expected inflation of 2.30% used for this period.
2 Figures are based on the 2021-22 Asset Liability Management study. 45 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 14 – Pension Plan (Continued)
Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the City’s proportionate share of the net pension liability for each Plan, calculating using the discount rate of each Plan, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower (5.90%) or 1-percentage point higher (7.90%) than the current rate:
1% Decrease
(5.90%)
Current Discount
Rate
(6.90%)
1% Increase
(7.90%)
Miscellaneous 3,979,004 $ 2,408,725 $ 1,116,153 $
Safety 3,849,667 $ 2,263,763 $ 966,715 $
Pension Plan Fiduciary Net Position – Detailed information about each pension plan’s fiduciary net position is available in the separately issue CalPERS financial reports.
Note 15 – Excess of Expenditures over Appropriations
The excess of expenditures over appropriations are as follows:
General Fund:
Current:
General government $ 90,051
Public safety $ 488,092
Public works $ 1,645
Parks and recreation $ 110,619
Community development $ 227,001
Debt service:
Principal $ 32,140
Community Development Block Grant:
Current:
Public works $ 22,355
Community development $ 79,363
Measure X:
Debt service:
Principal $ 22,291
The excess of expenditures over appropriations are covered by excess revenues over appropriations and available fund balance in the corresponding funds.
Note 16 – Subsequent Events
The City evaluated subsequent events for recognition and disclosure through February 13, 2026, the date which these financial statements were available to be issued. Management concluded that no material subsequent events have occurred since June 30, 2025, that required recognition or disclosure in such financial statements. 46 CITY OF GONZALES
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2025
Note 17 – Restatement of Beginning Fund Balance
A. Fund Reclassifications
During the fiscal year ended 2025, the City conducted an annual review of its fund structure. As part of this review and in compliance with GASB Statement No. 100, Accounting Changes and Error Corrections, the City identified necessary reclassifications to enhance transparency, improve financial reporting accuracy, and ensure consistency with updated accounting standards. As a result, the following funds were reclassified:
Fund Financial Statements
Gonzales Public Financing
Debt Authority
Fund Balance, June 30, 2024, as previously reported 691,645 $ Change from major to nonmajor fund (691,645) Fund Balance, July 1, 2024, as restated - $ These reclassifications have been applied retrospectively to prior-period financial statements for comparability.
The following table summarizes the impact of these reclassifications on beginning fund balances and net position:
Fund Name Previous Classification New Classification Reason for Reclassification Gonzales Public Financing Debt Authority Major Nonmajor The decrease in overall activity caused the fund to n
longer meet the criteria for a
major fund, resulting in its
classification as nonmajor
REQUIRED SUPPLEMENTARY INFORMATION
47 CITY OF GONZALES
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
YEAR ENDED JUNE 30, 2025
Variance with
Final Budget
Budgeted Amounts Actual Positive/
Original Final Amounts (Negative)
Revenue
Taxes and assessments 5,970,997 $ 5,970,997 $ 6,597,713 $ 626,716 $ Licenses, permits and impact fees 268,050 268,050 459,856 191,806 Intergovernmental 287,500 287,500 825,447 537,947 Charges for services 60,000 60,000 130,767 70,767 Fines and forfeitures 55,500 55,500 30,906 (24,594) Use of money and property 71,000 71,000 129,820 58,820 Other 158,150 158,150 223,367 65,217 Total revenue 6,871,197 6,871,197 8,397,876 1,526,679 Expenditures Current
General government 588,077 588,077 678,127 (90,050) Public safety 4,500,018 4,500,018 4,988,110 (488,092) Public works 283,047 283,047 284,692 (1,645) Parks and recreation 764,155 764,155 874,774 (110,619) Community development 299,951 299,951 526,952 (227,001) Debt service
Principal 106,896 106,896 139,036 (32,140) Interest and fiscal charges 22,755 22,755 22,755 - Total expenditures 6,641,399 6,641,399 7,950,652 (1,309,253) Revenue over (under) expenditures 229,798 229,798 447,224 217,426 Other Financing Sources Sale of assets (1,287,890) (1,287,890) - 1,287,890 Transfers in (out) - net (1,335,502) (1,335,502) (233,181) 1,102,321 Net Change in Fund Balance $ (2,393,594) (2,393,594) $ 1,540,717 $ 3,934,311 Fund Balance
Beginning of year 779,023
End of year $ 2,319,740
48 CITY OF GONZALES
BUDGETARY COMPARISON SCHEDULE
COMMUNITY DEVELOPMENT BLOCK GRANT
YEAR ENDED JUNE 30, 2025
Variance with
Final Budget
Budgeted Amounts Actual Positive/
Original Final Amounts (Negative)
Revenue
Loan repayments 20,000 $ 20,000 $ 46,822 $ 26,822 $
Use of money and property 10,000 10,000 23,986 13,986 Total revenue 30,000 30,000 70,808 40,808 Expenditures Public works 5,000 5,000 27,355 (22,355) Community development 2,500 2,500 81,863 (79,363) Total expenditures 7,500 7,500 109,218 (101,718) Revenue over expenditures 22,500 22,500 (38,410) (60,910) Other Financing Sources/(Uses) Transfers in/(out) - net (15,000) (15,000) (15,000) - Change in Fund Balance $ 7,500 7,500 $ (53,410) $ (60,910) Fund Balance
Beginning of year 333,363
End of year $ 279,953
49 CITY OF GONZALES
BUDGETARY COMPARISON SCHEDULE
MEASURE X FUND
YEAR ENDED JUNE 30, 2025
Variance with
Final Budget
Budgeted Amounts Actual Positive/
Original Final Amounts (Negative)
Revenue
Taxes and assessments $ 335,000 335,000 $ 363,373 $ 28,373 $ Total revenue 335,000 335,000 363,373 28,373 Expenditures Debt service
Principal 289,000 289,000 311,291 (22,291) Interest 46,000 46,000 36,436 9,564 Total expenditures 335,000 335,000 347,727 (12,727) Change in Fund Balance $ - - $ 15,646 $ 15,646 Fund Balance
Beginning of year 24,734
End of year $ 40,380
50 CITY OF GONZALES
SCHEDULE OF THE CITY’S NET PROPORTIONATE SHARE OF NET PENSION LIABILITY LAST 10 YEARS*
YEAR ENDED JUNE 30, 2025
Proportion of the net pension
liability
Proportionate share of the net
pension liability
Covered -
employee
payroll
Proportionate share of the net pension
liability as a percentage of
covered-employee payroll
Plan's fiduciary net
position
Plan's fiduciary net
position as a percentage of
the Total Pension Liability
2016 0.03955% 1,084,895 $ 982,675 $ 110.40% 5,044,102 $ 82.298% 2017 0.03916% 1,360,265 $ 947,145 $ 143.62% 4,725,496 $ 77.648% 2018 0.03895% 1,535,641 $ 1,378,772 $ 111.38% 5,518,046 $ 78.229% 2019 0.01890% 712,326 $ 1,366,906 $ 52.11% 4,468,191 $ 86.250% 2020 0.03936% 1,576,056 $ 1,678,041 $ 93.92% 6,694,872 $ 80.945% 2021 0.04195% 1,769,575 $ 1,820,163 $ 97.22% 6,952,747 $ 79.712% 2022 0.03965% 752,859 $ 1,917,739 $ 39.26% 8,606,543 $ 91.956% 2023 0.04722% 2,209,444 $ 1,561,819 $ 141.47% 8,118,682 $ 78.608% 2024 0.04843% 2,421,545 $ 1,750,224 $ 138.36% 8,319,199 $ 77.455% 2025 0.04980% 2,408,725 $ 1,728,044 $ 1586.90% 9,228,117 $ 79.301% 2016 0.01684% 693,833 $ 1,039,081 $ 66.77% 3,797,755 $ 84.550% 2017 0.02010% 1,040,872 $ 1,098,540 $ 94.75% 4,298,623 $ 84.550% 2018 0.02090% 1,248,529 $ 1,181,291 $ 105.69% 4,968,043 $ 79.916% 2019 0.02135% 1,252,487 $ 1,297,002 $ 96.57% 5,511,384 $ 81.483% 2020 0.02256% 1,408,172 $ 1,395,445 $ 100.91% 6,011,305 $ 81.021% 2021 0.02444% 1,628,411 $ 1,509,649 $ 107.87% 6,814,985 $ 80.714% 2022 0.01700% 596,588 $ 1,579,112 $ 37.78% 8,385,699 $ 93.358% 2023 0.02957% 2,032,166 $ 1,806,192 $ 112.51% 7,951,687 $ 79.645% 2024 0.03094% 2,313,040 $ 2,095,818 $ 110.36% 8,381,608 $ 78.372% 2025 0.03105% 2,263,762 $ 2,139,435 $ 1372.95% 9,346,163 $ 80.501% Miscellaneous
Safety
51 CITY OF GONZALES
SCHEDULE OF CONTRIBUTIONS
LAST 10 YEARS*
YEAR ENDED JUNE 30, 2025
Contractually required
contribution (actuarially
determined)
Contributions in relation to the
actuarially determined
contributions
Contributions
deficiency
(excess) Covered-employee payroll
Contributions as a
percentage of coveredemployee payroll
2016 137,778 $ (137,778) $ - $ 982,675 $ 14.02%
2017 185,525 $ (185,525) $ - $ 947,145 $ 19.59%
2018 231,233 $ (231,233) $ - $ 1,378,772 $ 16.77%
2019 149,308 $ (149,308) $ - $ 1,366,906 $ 10.92%
2020 189,303 $ (189,303) $ - $ 1,678,041 $ 11.28%
2021 232,321 $ (232,321) $ - $ 1,820,163 $ 12.76%
2022 263,908 $ (263,908) $ - $ 1,917,739 $ 13.76%
2023 290,579 $ (290,579) $ - $ 1,561,819 $ 18.61%
2024 286,691 $ (286,691) $ - $ 1,750,224 $ 16.38%
2025 290,144 $ (290,144) $ - $ 1,728,044 $ 16.79%
2016 152,643 $ (152,643) $ - $ 1,039,081 $ 14.69%
2017 159,930 $ (159,930) $ - $ 1,098,540 $ 14.56%
2018 185,473 $ (185,473) $ - $ 1,181,291 $ 15.70%
2019 193,362 $ (193,362) $ - $ 1,297,002 $ 14.91%
2020 235,139 $ (235,139) $ - $ 1,395,445 $ 16.85%
2021 274,368 $ (274,368) $ - $ 1,509,649 $ 18.17%
2022 305,992 $ (305,992) $ - $ 1,579,112 $ 19.38%
2023 351,533 $ (351,533) $ - $ 1,806,192 $ 19.46%
2024 403,405 $ (403,405) $ - $ 2,095,818 $ 19.25%
2025 425,989 $ (425,989) $ - $ 2,139,435 $ 19.91%
Miscellaneous
Safety
SUPPLEMENTAL ONLY INFORMATION
See accompanying notes. 52
CITY OF GONZALES
COMBINING BALANCE SHEET
NON-MAJOR GOVERNMENTAL FUNDS
JUNE 30, 2025
Supplemental Ag Industrial
Infrastructure Gas Local Law Public Park Federal
Improvements Tax Enforcement Safety Grant AQMD
ASSETS
Cash and investments - $ 37,583 $ - $ - $ 5,361 $ - $
Due from other governments - 19,951 48,988 - - -
Interest receivable - - 1 56 14 -
Notes and loans receivable - - - - - -
Total assets $ 57,534 - $ 48,989 $ 56 $ 5,375 $ - $
LIABILITIES
Accounts payable and accrued expense - 55,989 - 7,145 - - Interest payable - - - - - -
Due to other funds 362,148 - 48,987 - - -
Total liabilities 362,148 55,989 48,987 7,145 - -
DEFERRED INFLOWS OF RESOURCES
Unavailable revenues - - - - - -
Total deferred inflows of resources - - - - - -
FUND BALANCE
Restricted
Lighting, landscape & park maintenance - - - - - -
Low-income housing activities - - - - - -
Community development - - - - 5,375 -
Street improvements - 1,545 - - - -
Public safety - - 2 - - -
Community center - - - - - -
Unassigned - (362,148) - (7,089) - -
Total fund balance (362,148) 1,545 2 (7,089) 5,375 -
Total liabilities, deferred inflows
of resources and fund balance - $ 57,534 $ 48,989 $ 56 $ 5,375 $ - $ Special Revenue
See accompanying notes. 53
CITY OF GONZALES
COMBINING BALANCE SHEET
NON-MAJOR GOVERNMENTAL FUNDS (CONTINUED)
JUNE 30, 2025
Cipriani Gonzales
Estates Park & Industrial Park Intersection Circulation Maintenance Landscape & Improvements Police Park Fire System District Maintenance Impact Fees Impact Fees Impact Fees Impact Fees Impact Fees ASSETS
Cash and investments 905,816 $ 670,651 $ - $ 11,776 $ 9,128 $ 9,691 $ 278,089 $ Due from other governments - - - - - - - Interest receivable 2,430 1,799 - 97 24 26 743 Notes and loans receivable - - - - - - - Total assets $ 672,450 908,246 $ - $ 11,873 $ 9,152 $ 9,717 $ 278,832 $
LIABILITIES
Accounts payable and accrued expense 4,082 3,961 - - - - - Interest payable - - - - - - - Due to other funds - - - - - - - Total liabilities 3,961 4,082 - - - - - DEFERRED INFLOWS OF RESOURCES Unavailable revenues - - - - - - - Total deferred inflows of resources - - - - - - - FUND BALANCE Restricted
Lighting, landscape & park maintenance 904,164 668,489 - - - - - Community development - - - - 9,152 - - Street improvements - - - - - - 278,832 Public safety - - - 11,873 - 9,717 - Community center - - - - - - - Unassigned - - - - - - - Total fund balance 904,164 668,489 - 11,873 9,152 9,717 278,832 Total liabilities, deferred inflows
of resources and fund balance 908,246 $ 672,450 $ - $ 11,873 $ 9,152 $ 9,717 $ 278,832 $ Special Revenue
See accompanying notes. 54
CITY OF GONZALES
COMBINING BALANCE SHEET
NON-MAJOR GOVERNMENTAL FUNDS (CONTINUED)
JUNE 30, 2025
Storm California Canyon Creek
Drainage Public Public Uses Breeze Park &
Facility Facilities Mitigation State Housing Maintenance Maintenance Impact Fees Impact Fees Fees Grants Successor District District ASSETS
Cash and investments 37,031 $ 54,506 $ 4,029 $ - $ 180 $ 148,885 $ 2,239,063 $ Due from other governments - - - 5,538 - - - Interest receivable 99 147 11 - - 405 5,996 Notes and loans receivable - - - - 99,732 - - Total assets $ 37,130 54,653 $ 4,040 $ 5,538 $ 99,912 $ 149,290 $ 2,245,059 $
LIABILITIES
Accounts payable and accrued expense - $ - $ - $ - $ - 10,302 6,539 Interest payable - - - - - - - Due to other funds - - - - 84,314 308,993 - Total liabilities - - - - 84,314 319,295 6,539 DEFERRED INFLOWS OF RESOURCES Unavailable revenues - - - - 99,732 - - Total deferred inflows of resources - - - - 99,732 - - FUND BALANCE Restricted
Lighting, landscape & park maintenance - - - - - - 2,238,520 Community development 37,130 54,653 4,040 5,538 - - - Street improvements - - - - - - - Public safety - - - - - - - Community center - - - - - - - Unassigned - - - - (84,134) (170,005) - Total fund balance 37,130 54,653 4,040 5,538 (84,134) (170,005) 2,238,520 Total liabilities, deferred inflows
of resources and fund balance 37,130 $ 54,653 $ 4,040 $ 5,538 $ 99,912 $ 149,290 $ 2,245,059 $ Special Revenue
See accompanying notes. 55
CITY OF GONZALES
COMBINING BALANCE SHEET
NON-MAJOR GOVERNMENTAL FUNDS (CONTINUED)
JUNE 30, 2025
Formerly Major
Debt Service
Enhanced Total
Sphere of CDBG Infrastructure Gonzales Non-major
Influence General Plan SB1 Urban Financing Public Financing Governmental Impact Fees Impact Fees Road County Grant District Debt Authority Funds ASSETS
Cash and investments 277,140 $ 91,275 $ 626,747 $ 350,962 $ 519,786 $ $ 7,018,177 740,478 $ Due from other governments - - 41,106 - - - 115,583 Interest receivable 743 244 1,673 937 1,385 - 16,830 Notes and loans receivable - - - - - - 99,732 Total assets $ 91,519 277,883 $ 669,526 $ 351,899 $ 521,171 $ 740,478 $ 7,250,322 $
LIABILITIES
Accounts payable and accrued expense - $ - $ - $ - $ - $ - $ 88,018 $ Interest payable - - - - - 64,681 64,681 Due to other funds - - - - - - 804,442 Total liabilities - - - - - 64,681 957,141 DEFERRED INFLOWS OF RESOURCES Unavailable revenues - - - - - - 99,732 Total deferred inflows of resources - - - - - - 99,732 FUND BALANCE Restricted
Lighting, landscape & park maintenance - - - - - - 3,811,173 Community development 277,883 91,519 - 351,899 521,171 - 1,358,360 Street improvements - - 669,526 - - - 949,903 Public safety - - - - - - 21,592 Community center - - - - - 675,797 675,797 Unassigned - - - - - - (623,376) Total fund balance 277,883 91,519 669,526 351,899 521,171 675,797 6,193,449 Total liabilities, deferred inflows
of resources and fund balance 277,883 $ 91,519 $ 669,526 $ 351,899 $ 521,171 $ 740,478 $ 7,250,322 $ See accompanying notes. 56
CITY OF GONZALES
COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
NON-MAJOR GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2025
Supplemental Ag Industrial
Infrastructure Gas Local Law Public Park Federal
Improvements Tax Enforcement Safety Grant AQMD
Revenue
Taxes and assessments - $ - $ - $ - $ - $ - $
Licenses, permits and impact fees - - - 2,933 - - Intergovernmental - 502,132 310,876 8,333 - - Use of money and property 21,414 - 4,083 110 198 - Loan repayments 110,046 - - - - - Other revenue - - - - - - Total revenue 502,132 131,460 314,959 11,376 198 - Expenditures Public safety - - - 186,893 - - Public works - 504,090 - - - - Parks and recreation - - - - - - Community development - - - - - - Debt service Principal - - - - - - Interest and fiscal charges - - - - - - Total expenditures 504,090 - - 186,893 - - Revenue over (under) expenditures 131,460 (1,958) 314,959 (175,517) 198 - Other financing sources/(uses) Operating transfers in/(out) - net - - (314,957) 168,421 - - - - (314,957) 168,421 - - Change in Fund Balance (1,958) 131,460 2 (7,096) 198 - Fund Balance Beginning of year (493,608) 3,503 - 7 5,177 - Change within financial reporting entity (major to nonmajor) - - - - - - End of year (362,148) $ 1,545 $ 2 $ (7,089) $ 5,375 $ - $ Special Revenue
See accompanying notes. 57
CITY OF GONZALES
COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
NON-MAJOR GOVERNMENTAL FUNDS
YEAR ENDED JUNE 30, 2025
Cipriani Gonzales
Estates Park & Industrial Park Intersection Circulation Maintenance Landscape & Improvements Police Park Fire System District Maintenance Impact Fees Impact Fees Impact Fees Impact Fees Impact Fees Revenue
Taxes and assessments 96,501 $ 144,248 $ - $ - $ - $ - $ - $ Licenses, permits and impact fees - - - - - - - Intergovernmental - - - - - - - Use of money and property 27,300 21,723 - 1,413 354 376 10,388 Loan repayments - - - - - - - Other revenue - - 8,312 - - - - Total revenue 165,971 123,801 8,312 1,413 354 376 10,388 Expenditures Public safety - - - - - - - Public works 11,042 65,508 8,312 - - - - Parks and recreation 16,300 - - - - - - Community development - - - - - - - Debt service Principal - - - 24,675 - - - Interest and fiscal charges - - - - - - - Total expenditures 65,508 27,342 8,312 24,675 - - - Revenue over (under) expenditures 96,459 100,463 - (23,262) 354 376 10,388 Other financing sources/(uses) Operating transfers in/(out) - net (18,253) (17,000) - - - - - (17,000) (18,253) - - - - - Change in Fund Balance 82,210 79,459 - (23,262) 354 376 10,388 Fund Balance Beginning of year 824,705 586,279 - 35,135 8,798 9,341 268,444 Change within financial reporting entity (major to nonmajor) - - - - - - - End of year 904,164 $ 668,489 $ - $ 11,873 $ 9,152 $ 9,717 $ 278,832 $ Special Revenue
See accompanying notes. 58
CITY OF GONZALES
COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
NON-MAJOR GOVERNMENTAL FUNDS (CONTINUED)
YEAR ENDED JUNE 30, 2025
Storm California Canyon Creek
Drainage Public Public Uses Breeze Park &
Facility Facilities Mitigation State Housing Maintenance Maintenance Impact Fees Impact Fees Fees Grants Successor District District Revenue
Taxes and assessments - $ - $ - $ - $ - $ 143,880 $ 291,226 $ Licenses, permits and impact fees - - - - - - - Intergovernmental - - - 5,538 - - - Use of money and property 1,437 1,134 156 - 23,453 3,364 72,138 Loan repayments - - - - 82,631 - - Other revenue - - - - - - - Total revenue 1,134 1,437 156 5,538 106,084 147,244 363,364 Expenditures Public safety - - - - - - - Public works - - - - - - - Parks and recreation - - - - - 165,941 72,979 Community development - - - - - - - Debt service Principal - - - - - - - Interest and fiscal charges - - - - - - - Total expenditures - - - - - 165,941 72,979 Revenue over (under) expenditures 1,437 1,134 156 5,538 106,084 (18,697) 290,385 Other financing sources/(uses) Operating transfers in/(out) - net - - - - - (22,500) (26,787) - - - - - (22,500) (26,787)
Change in Fund Balance 1,134 1,437 156 5,538 106,084 (41,197) 263,598 Fund Balance Beginning of year 53,519 35,693 3,884 - (190,218) (128,808) 1,974,922 Change within financial reporting entity (major to nonmajor) - - - - - - - End of year 37,130 $ 54,653 $ 4,040 $ 5,538 $ (84,134) $ (170,005) $ 2,238,520 $ Special Revenue
See accompanying notes. 59
CITY OF GONZALES
COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE
NON-MAJOR GOVERNMENTAL FUNDS (CONTINUED)
YEAR ENDED JUNE 30, 2025
Formerly Major
Debt Service
Enhanced Total
Sphere of CDBG Infrastructure Gonzales Non-major
Influence General Plan SB1 Urban Financing Public Financing Governmental Impact Fees Impact Fees Road County Grant District Debt Authority Funds Revenue
Taxes and assessments - $ - $ 233,267 $ - $ 199,364 $ - $ 1,108,486 $ Licenses, permits and impact fees - - - - - - 2,933 Intergovernmental - - - - - - 826,879 Use of money and property 9,037 5,069 20,160 13,743 14,033 598,169 347,086 Loan repayments - - - - - - 192,677 Other revenue - - - - - - 8,312 Total revenue 5,069 9,037 253,427 13,743 213,397 347,086 2,737,456 Expenditures Public safety - - - - - - 186,893 Public works - - - - - - 588,952 Parks and recreation - - - - - - 255,220 Community development 19,095 - - - - - 19,095 Debt service Principal - - - - - - 24,675 Interest and fiscal charges - - - - - 362,934 362,934 Total expenditures - 19,095 - - - 362,934 1,437,769 Revenue over (under) expenditures (10,058) 5,069 253,427 13,743 213,397 (15,848) 1,299,687 Other financing sources/(uses) Operating transfers in/(out) - net - - - - - - (231,076) - - - - - - (231,076)
Change in Fund Balance 5,069 (10,058) 253,427 13,743 213,397 (15,848) 1,068,611 Fund Balance Beginning of year 287,941 86,450 416,099 338,156 307,774 - 4,433,193 Change within financial reporting entity (major to nonmajor) - - - - - 691,645 691,645 End of year 277,883 $ 91,519 $ 669,526 $ 351,899 $ 521,171 $ 675,797 $ 6,193,449 $ Special Revenue Funds
BRYANT L. JOLLEY
CERTIFIED PUBLIC ACCOUNTANTS Bryant L. Jolley C.P.A.
Ryan P. Jolley C.P.A.
Darryl L. Smith C.P.A.
Luis A. Perez C.P.A.
Lan T. Kimoto
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER
MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Honorable Mayor and City Council
City of Gonzales, California
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of City of Gonzales (the “City”), California, as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise City’s basic financial statements, and have issued our report thereon dated February 13, 2026.
Report on Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements, on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements.
However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 59 Purpose of This Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
February 13, 2026